Mexico's Pemex adjustment signals pragmatic strategy

Significance

The loss -- nearly double that recorded during 2014 -- was an all-time record for the company and marked 13 consecutive quarters in the red. Moreover, a pre-tax loss of 7.9 billion dollars was recorded, the first time ever that this has happened for a year as a whole.

Impacts

• The announced cuts may prove just sufficient to avoid a downgrading of Pemex's foreign currency bonds by the main rating agencies.
• However, any slippage in the adjustment effort would probably trigger such a downgrade.
• The recognition that oil production is at best set to stagnate confirms that Mexico can no longer be considered a significant oil power.
• While the opening of the oil sector will continue, any contribution to crude output by non-Pemex players will be marginal for several years.