Energy and Commodities
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The permanent reduction of Pemex's tax burden and the possible additional contribution of resources to Pemex beyond 2022, should be supplemented with changes in tax policies that help keep federal government revenues relatively stable and do not risk meeting fiscal targets.
To paraphrase Dickens: It is both the best of times and the worst of times for oil-producing countries. The outlook for OPEC is bleak. Despite production cuts, the price of Brent crude oil remains below $70 per barrel.
OPEC+ will most likely extend the output deal through the rest of the year. Weaker economic growth to lead to slower demand for oil. Escalation of tensions between U.S. and Iran, as well as trade negotiations between China and the U.S. are the main sources of uncertainty.
June 7, 2019
Mexico | Underinvestment in E&P prompts Fitch to downgrade Pemex’s bonds to junk status
Fitch downgrades Pemex’s bonds to junk status as the company keeps facing serious underinvestment in E&P because of its relatively high fiscal burden.
May 13, 2019
Mexico |Higher probability of stabilizing production w/greater fiscal incentives for Pemex
Today Pemex signed a letter of commitment with three financial institutions to refinance USD 2.5 billion of its debt. It also renewed two lines of credit worth USD 5.5 billion, extending the repayment period from three to five years.
OPEC+ cuts are tightening the market and driving up prices. The deal could be extended for the entire year. Sanctions to Venezuela and Iran could tighten supply further. However, OPEC has significant spare capacity to offset upward price pressures. In 2019, U.S oil production will expand further while substantial transporta…
The Peruvian mining sector initiates a new investment cycle, particularly in copper mines, in a context in which metal prices cover production costs and where financing costs are still relatively low. The new investment cycle will give important support to the growth of the activity in 2019.
Recently, especially in the aftermath of Fitch downgrading Pemex's rating from BBB+ to BBB-, there has been nervousness in the markets because Pemex's situation is perceived as a significant risk to the country's macroeconomic stability.