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Pemex reviews ESG, security to attract bank financing

Pemex reviews ESG, security to attract bank financing

Mexican oil will reformulate its environmental and safety procedures, and anticipates implementation in the second half of the year. The initiative seeks to attract much-needed financing amid mounting debt at Mexico’s state oil company, according to people familiar with the project.

The plan, which aims to improve Pemex’s environmental, social and corporate governance (ESG) record, is necessary to obtain loans from international banks such as HSBC Holdings Plc, people familiar with the plan said.

A Pemex representative did not respond to a request for comment. A representative for HSBC declined to comment.

Pemex is under pressure to step up its ESG efforts and improve its reputation after three fires last month at its facilities caused five deaths and many more injuries. The company’s accident frequency rate skyrocketed by 40% last year.

Alejandra Andrade, an analyst at JPMorgan Chase & Co., said in a research note on Wednesday that while the company is committed to ESG and provides information in its earnings release, these recent trends and events are certainly worrisome and undermine credibility. of any plans the company may disclose.

Pemex also recognized in its latest five-year business plan that it faces “limitations” to receive ESG funding and must improve its environmental and safety metrics.

Pemex is under pressure to find new sources of financing, with $107.7 billion in outstanding debt at the end of 2022. About $8 billion is due this year, according to a Jan. 31 note from Moody’s Investors Service. The government has provided nearly $45 billion to Pemex in capital injections, tax breaks and other aid since 2019, and has indicated it could step in if necessary.

Since late last year, Pemex has been asking banks for innovative solutions to help manage its debt. The most recent includes an agreement with JPMorgan and Goldman Sachs Group Inc. to provide at least $1 billion in guaranteed loans. Bloomberg News previously reported that Pemex has been in talks with Goldman Sachs and HSBC about financing linked to reducing greenhouse gas emissions.

Source: Gestion

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