UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
ANNUAL | REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
for the fiscal year ended December 31, 2011
2013 Commission File Number 0-99
PETRÓLEOS MEXICANOS
(Exact name of registrant as specified in its charter)
Mexican Petroleum | United Mexican States | |
(Translation of registrant’s name into English) | (Jurisdiction of incorporation or organization) |
Avenida Marina Nacional No. 329
Colonia Petróleos Mexicanos
11311 México D.F., México
(Address of principal executive offices)
Rolando Galindo Gálvez
(5255) 1944 9700
ri@pemex.com
Avenida Marina Nacional No. 329
Torre Ejecutiva Piso 38 Colonia Petróleos Mexicanos
11311 México D.F., México
(Name, telephone, e-mail and/or facsimile number
and address of company contact person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.None
Securities registered or to be registered pursuant to Section 12(g) of the Act.None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
Title of Each Class
9.50% Global Guaranteed Bonds due 2027
9 1/⁄4% Global Guaranteed Bonds due 2018
8.625% Bonds due 2022
7.375% Notes due 2014
5.75% Notes due 2015
5.75% Guaranteed Notes due 2018
9 1/⁄4% Guaranteed Bonds due 2018
8.625% Guaranteed Bonds due 2023
9.50% Guaranteed Bonds due 2027
6.625% Guaranteed Bonds due 2035
6.625% Guaranteed Bonds due 2038
8.00% Guaranteed Notes due 2019
4.875% Notes due 2015
6.000% Notes due 2020
5.50% Notes due 2021
6.500% Bonds due 2041
4.875% Notes due 2022
5.50% Bonds due 2044
3.500% Notes due 2018
Floating Rate Notes due 2018
3.500% Notes due 2023
4.875% Notes due 2024
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes¨ Nox
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes¨ Nox
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yesx No¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
N/A
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act,Act. (Check one):
Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ¨ IFRS as issued by the IASB ¨x Other x¨
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
Item 17¨ Item 18x¨
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes¨ Nox
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Item 12. | Description of Securities Other than Equity Securities | 208 | ||||
Item 13. | Defaults, Dividend Arrearages and Delinquencies | 209 | ||||
Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds | 209 | ||||
Item 15. | Controls and Procedures | 209 | ||||
Item 16A. | ||||||
Item 16B. | ||||||
Item 16C. | ||||||
Item 16D. | ||||||
Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers | |||||
Item 16F. | ||||||
Item 16G. | ||||||
Item 16H. | Mine Safety Disclosure | 213 | ||||
Item 17. | ||||||
Item 18. | ||||||
Item 19. |
i
Petróleos Mexicanos and its four subsidiary entities,Pemex-Exploración y Producción (Pemex-Exploration and Production),Pemex-Refinación (Pemex-Refining),Pemex-Gas y Petroquímica Básica (Pemex-Gas and Basic Petrochemicals) andPemex-Petroquímica (Pemex-Petrochemicals and together with Pemex-Exploration and Production, Pemex-Refining and Pemex-Gas and Basic Petrochemicals, collectively referred to as the subsidiary entities), comprise the state oil and gas company of the United Mexican States, which we refer to as Mexico. Each of Petróleos Mexicanos and the subsidiary entities is a decentralized public entity of the Federal Government of Mexico, which we refer to as the Mexican Government, and is a legal entity empowered to own property and carry on business in its own name. In addition, a number of subsidiary companies that are defined in Note 21 and listed in Note 3(b)3(a) to our consolidated financial statements incorporated in Item 18, including the Pemex Project Funding Master Trust (which we refer to as the Master Trust) andFideicomiso Irrevocable de Administración No. F/163 (which we refer to as Fideicomiso F/163) (which are described below under “Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Commitments for Capital Expenditures and Sources of Funding”), are incorporated into the consolidated financial statements; these subsidiary companies are also identified with the corresponding ownership percentages in “––“—Consolidated Structure of PEMEX” on page 3.4. Petróleos Mexicanos, the subsidiary entities and the subsidiary companies are collectively referred to as “PEMEX” or “we.”
References herein to “U.S. $,” “$,” “U.S. dollars” or “dollars” are to United States dollars. References herein to “pesos” or “Ps.” are to the legal currency of Mexico. References herein to “euros” or “€” are to the legal currency of the European Economic and Monetary Union. References herein to “pounds” or “£” are to the legal currency of the United Kingdom. References herein to “Swiss Francs”francs” or “CHF” are to the legal currency of the Swiss Confederation. References herein to “Japanese yen” or “¥” are to the legal currency of Japan. References herein to “Australian dollars” or “A$”“AUD” are to the legal currency of Australia. The term “billion” as used herein means one thousand million.
Our consolidated financial statements included in this report were prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. We refer in this report to “International Financial Reporting Standards as issued by the International Accounting Standards Board” as IFRS. In addition, these financial statements were audited in accordance with the International Standards on Auditing, as required by theComisión Nacional Bancaria y de Valores (National Banking and Securities Commission, which we refer to as the CNBV) for purposes of filing with theBolsa Mexicana de Valores (which we refer to as BMV or the Mexican Stock Exchange) and with the CNBV, and in accordance with the standards of the Public Company Accounting Oversight Board (United States) for purposes of filings with the U.S. Securities and Exchange Commission, or SEC.
The regulations of the SEC do not require foreign private issuers that prepare their financial statements on the basis of IFRS to reconcile such financial statements to United States Generally Accepted Accounting Principles (which we refer to as U.S. GAAP). Accordingly, while we have in the past reconciled our consolidated financial statements prepared in accordance withNormas de Información Financiera Mexicanas (Mexican Financial Reporting Standards, or Mexican FRS) to U.S. GAAP, those reconciliations are no longer presented in our filings with the SEC. We do, however, continue to provide the disclosure required under the U.S. Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 932 “Extractive Activities—Oil and Gas” (which we refer to as ASC Topic 932), as this is required regardless of the basis of accounting on which we prepare our financial statements.
We maintain our consolidated financial statements and accounting records in pesos. Unless otherwise indicated, we have translated all peso amounts to U.S. dollars in this Form 20-F, including all convenience translations of our consolidated financial statements included herein, at an exchange rate of Ps. 13.990413.0765 = U.S. $1.00, which is the exchange rate thatSecretaría de Hacienda y Crédito Público (Ministry of Finance and Public Credit, or the SHCP) instructed us to use on December 31, 2011.2013. You should not construe these translations from pesos into dollars as actually representing such U.S. dollar amounts or meaning that you could convert such amounts into U.S. dollars at the rates indicated. The pesoMexico has depreciated substantially in relation to the U.S. dollar since the end of 1994, when a free market for foreign exchange, and
the Mexican Government allowedallows the peso to float freely against the U.S. dollar anddollar. There can be no assurance that the Mexican Government established a broad economic reform programwill maintain its current policies with regard to the peso or that the peso will not depreciate or appreciate significantly in response to these and other events.the future. Due to the volatility of the peso/U.S. dollar exchange rate, the exchange rate on any date subsequent to the date hereof could be materially different from the rate indicated above. See “Item 3—Key Information—Exchange Rates” for information regarding the rates of exchange between pesos and U.S. dollars.
SPECIAL NOTE REGARDING MEXICAN ENERGY REFORM
On December 12, 2013, the Permanent Commission of the Mexican Congress approved amendments to Articles 25, 27 and 28 of theConstitución Política de los Estados Unidos Mexicanos (Political Constitution of the United Mexican States, or the Mexican Constitution), which were subsequently approved by a majority of Mexico’s state legislatures and signed into law by the President of Mexico, Enrique Peña Nieto. On December 20, 2013, these amendments were published as theDecreto por el que se reforman y adicionan diversas disposiciones de la Constitución Política de los Estados Unidos Mexicanos, en Materia de Energía (Decree that amends and supplements various provisions of the Mexican Constitution relating to energy matters, which we refer to as the Energy Reform Decree) in theDiario Oficial de la Federación(Official Gazette of the Federation) and took effect on December 21, 2013.
The Energy Reform Decree includes transitional articles (orartículos transitorios) that set forth the general framework for the secondary legislation or implementing laws, which have not been enacted as of the date of this report. See “Item 4—Information on the Company—History and Development—Energy Reform” for more details regarding the Energy Reform Decree, transitional articles and secondary legislation.
The transitional articles of the Energy Reform Decree outline a process, commonly referred to as Round Zero, for the determination of our initial allocation of rights to continue to carry out exploration and production activities in Mexico. Round Zero is being administered by theSecretaría de Energía (the Ministry of Energy), with technical assistance from theComisión Nacional de Hidrocarburos (National Hydrocarbons Commission, which we refer to as the NHC). In connection with Round Zero, we have submitted to the Ministry of Energy a request that we be assigned the right to explore and develop areas in which we currently operate based on our technical, financial and operational capabilities. As of the date of this report, the Round Zero process has not yet been completed. See “Item 4—Information on the Company—History and Development—Energy Reform—Round Zero” for more details regarding the Round Zero process and our submission.
PRESENTATION OF INFORMATION CONCERNING RESERVES
The estimates of Mexico’s proved reserves of crude oil and natural gas for the five years ended December 31, 2013 included in this report have been calculated according to the technical definitions required by the SEC. Although DeGolyer and MacNaughton, Netherland, Sewell International, S. de R.L. de C.V. (which we refer to as Netherland Sewell) and Ryder Scott Company, L.P. (which we refer to as Ryder Scott) conducted reserves audits of our estimates of the proved hydrocarbon reserves of Mexico as of December 31, 2013 or January 1, 2014, as applicable, all reserves estimates involve some degree of uncertainty. See “Item 3—Key Information—Risk Factors—Risk Factors Related to Our Relationship with the Mexican Government—Information on Mexico’s hydrocarbon reserves in this report is based on estimates, which are uncertain and subject to revision” and “—Our ability to maintain and increase our oil production levels depends on our ability to successfully develop proved hydrocarbon reserves, and failure to do so may limit our ability to maintain and increase our production” for a description of the risks relating to reserves and reserves estimates.
We include these estimates of Mexico’s proved reserves in this report and describe the reserves replacement rate by reference to these proved reserves because, as of December 31, 2013, Pemex-Exploration and Production
had the right to extract, but not own, these reserves, and to sell the resulting production under theLey de Petróleos Mexicanos (Petróleos Mexicanos Law). Following the adoption of the Energy Reform Decree, our ability in the future to extract these reserves, and to sell the resulting production, will be determined by Round Zero, as described above. See “Item 3—Key Information—Risk Factors—Risk Factors Related to Our Relationship with the Mexican Government—The Mexican nation, not us, owns the hydrocarbon reserves located in the subsoil of Mexico and our right to continue to exploit these reserves is subject to the approval of the Ministry of Energy.”
FORWARD-LOOKING STATEMENTS
This Form 20-F contains words, such as “believe,” “expect,” “anticipate” and similar expressions that identify forward-looking statements, which reflect our views about future events and financial performance. We have made forward-looking statements that address, among other things, our:
drillingexploration and other exploration activities;
activities relating to import, export, refining, petrochemicals and export activities;
projected and targeted capital expenditures and other costs, commitments and revenues; and
liquidity.
Actual results could differ materially from those projected in such forward-looking statements as a result of various factors that may be beyond our control. These factors include, but are not limited to:
changes in international crude oil and natural gas prices;
effects on us from competition;
limitations on our access to sources of financing on competitive terms;
significant economic or political developments in Mexico;
developments affecting the energy sector; and
changes in our legal regime or regulatory environment.
Accordingly, you should not place undue reliance on these forward-looking statements. In any event, these statements speak only as of their dates, and we undertake no obligation to update or revise any of them, whether as a result of new information, future events or otherwise.
For a discussion of important factors that could cause actual results to differ materially from those contained in any forward-looking statement, you should see “Item 3—Key Information—Risk Factors.”
PRESENTATION OF INFORMATION CONCERNING RESERVES
The estimates of Mexico’s proved reserves of crude oil and natural gas for the five years ended December 31, 2011 included in this annual report have been calculated according to the technical definitions required by the U.S. Securities and Exchange Commission, or SEC. Although DeGolyer and MacNaughton, Netherland, Sewell International, S. de R.L. de C.V. and Ryder Scott Company, L.P. conducted reserves audits of our estimates of the proved hydrocarbon reserves of Mexico as of December 31, 2011 or January 1, 2012, as applicable, all reserves estimates involve some degree of uncertainty. See “Item 3—Key Information—Risk Factors—Risk Factors Related to the Relationship between PEMEX and the Mexican Government—The Mexican nation, not PEMEX, owns the hydrocarbon reserves in Mexico” and “—Information on Mexico’s hydrocarbon reserves is based on estimates, which are uncertain and subject to revision” for a description of the risks relating to reserves and reserves estimates.
PART I
Item 1. | Identity of Directors, Senior Management and Advisers |
Not applicable.
Item 2. | Offer Statistics and Expected Timetable |
Not applicable.
Item 3. | Key Information |
SELECTED FINANCIAL DATA
The selected statement of comprehensive income, statement of financial position and cash flows data set forth below as of and for the three years ended December 31, 2013 have been derived from, and should be read in conjunction with, our consolidated financial statements included in Item 18.
The selected financial data set forth below as of and for the five years ended December 31, 2011 have been derived from our consolidated financial statements2012 and 2013 and for the years ended December 31, 20072011, 2012 and 2008, which are not included herein, and the consolidated financial statements of PEMEX for the years ended December 31, 2009, 2010 and 2011,2013, which are included in Item 18 of this report. PEMEX’sOur consolidated financial statements for each of the fivetwo fiscal years ended December 31, 20112012 were audited by KPMG Cárdenas Dosal, S.C., an independent registered public accounting firm.
Our consolidated financial statements for the yearsfiscal year ended December 31, 2007, 2008, 2009, 2010 and 20112013 were prepared in accordance withNormas de Información Financiera Mexicanas(Mexican Financial Reporting Standards, or Mexican FRS or NIFs). Our consolidated financial statements include the recognition of the effects of inflation on the financial information through December 31, 2007, based on the Mexican National Consumer Price Index (NCPI) publishedaudited byBanco de México and in accordance with Mexican FRS B-10 “Effects of Inflation” Castillo Miranda y Compañía, S.C. (which we refer to as FRS B-10). Commencing January 1, 2008, we have no longer used inflationBDO Mexico), an independent registered public accounting because the economic environment in which we operate, in which the accumulated inflation over the past three years was below 26%, has not qualified as “inflationary,” as defined by Mexican FRS. As a result, amounts in this report are presented in nominal terms; however, such amounts do reflect accumulated inflationary effects recognized up to December 31, 2007.firm.
In addition to the above, our consolidated financial statements for the years ended December 31, 2007, 2008, 2009 and 2010 have been reclassified in certain accounts with the purpose of making them comparable with our consolidated financial statements as of December 31, 2011.
During 2011, accounting changes were made, as disclosed in Note 3(ab) to the consolidated financial statements. As a result, the consolidated financials statements as of December 31, 2010, the statements of financial position as of December 31, 2008, 2009 and 2010 and the statements of income for the years then ended, were adjusted to recognize the effects of the application of FRS C-4 “Inventories.”
Mexican FRS differ in certain significant respects from United States Generally Accepted Accounting Principles (which we refer to as U.S. GAAP). The principal differences between our net income and equity under U.S. GAAP and Mexican FRS are described in Note 21 to our consolidated financial statements included herein and in “Item 5—Operating and Financial Review and Prospects—U.S. GAAP Reconciliation.”
Beginning with the fiscal year starting January 1, 2012, Mexican issuers that disclose information through the Bolsa Mexicana de Valores, S.A.B. de C.V. (the Mexican Stock Exchange, which we refer to as the BMV) are required to prepare financial statements in accordance with International Financial Reporting Standards(IFRS) as issued by the International Accounting Standards Board (IASB). In addition, these financial statementsmust be audited in accordance with International Standards on Auditing, as required by theComisión Nacional Bancaria y de Valores (National Banking and Securities Commission, which we refer to as the CNBV), and in accordance with the standards of the Public Company Accounting Oversight Board (United States) for SEC filing
purposes. We will begin presenting financial statements in accordance with IFRS for the year ending December 31, 2012, with an official IFRS “adoption date” of January 1, 2012 and a “transition date” to IFRS of January 1, 2011.
Selected Financial Data of PEMEX
Year Ended December 31,(1) | ||||||||||||||||||||||||
2007(2) | 2008 | 2009 | 2010 | 2011 | 2011(3) | |||||||||||||||||||
(in millions of pesos, except ratios) | (in millions of U.S. dollars) | |||||||||||||||||||||||
Income Statement Data | ||||||||||||||||||||||||
Amounts in accordance with Mexican FRS: | ||||||||||||||||||||||||
Net sales | Ps. 1,139,257 | Ps. 1,328,950 | Ps. 1,089,921 | Ps. 1,282,064 | Ps. 1,558,429 | U.S. $ | 111,393 | |||||||||||||||||
Operating income | 593,652 | 572,365 | 428,570 | 546,457 | 681,425 | 48,707 | ||||||||||||||||||
Comprehensive financing result | (20,047 | ) | (107,512 | ) | (15,308 | ) | (11,969 | ) | (91,641 | ) | (6,550 | ) | ||||||||||||
Net income (loss) for the year | (18,308 | ) | (110,823 | ) | (94,370 | ) | (46,527 | ) | (91,483 | ) | (6,539 | ) | ||||||||||||
Amounts in accordance with U.S. GAAP: | ||||||||||||||||||||||||
Net sales | 1,139,257 | 1,328,950 | 1,089,921 | 1,282,064 | 1,558,429 | 111,393 | ||||||||||||||||||
Operating income | 584,703 | 629,119 | 460,239 | 567,525 | 675,896 | 48,311 | ||||||||||||||||||
Comprehensive financing result (cost) income | (25,610 | ) | (123,863 | ) | (5,094 | ) | (3,277 | ) | (106,616 | ) | (7,621 | ) | ||||||||||||
Net income (loss) for the period | (32,642 | ) | (66,512 | ) | (52,280 | ) | (16,507 | ) | (109,949 | ) | (7,859 | ) | ||||||||||||
Balance Sheet Data (end of period) | ||||||||||||||||||||||||
Amounts in accordance with Mexican FRS: | ||||||||||||||||||||||||
Cash and cash equivalents | 170,997 | 114,224 | 159,760 | 133,587 | 117,100 | 8,370 | ||||||||||||||||||
Total assets | 1,330,281 | 1,238,091 | 1,333,583 | 1,395,197 | 1,533,345 | 109,600 | ||||||||||||||||||
Long-term debt | 424,828 | 495,487 | 529,258 | 575,171 | 672,275 | 48,053 | ||||||||||||||||||
Total long-term liabilities | 990,909 | 1,033,987 | 1,155,917 | 1,299,245 | 1,473,794 | 105,343 | ||||||||||||||||||
Equity (deficit) | 49,908 | 28,139 | (65,294 | ) | (111,302 | ) | (193,919 | ) | (13,861 | ) | ||||||||||||||
Amounts in accordance with U.S. GAAP: | ||||||||||||||||||||||||
Total assets | 1,211,719 | 1,240,718 | 1,321,570 | 1,402,672 | 1,515,359 | 108,314 | ||||||||||||||||||
Equity (deficit) | (198,083 | ) | (144,166 | ) | (423,159 | ) | (227,882 | ) | (326,202 | ) | (23,316 | ) | ||||||||||||
Other Financial Data | ||||||||||||||||||||||||
Amounts in accordance with Mexican FRS: | ||||||||||||||||||||||||
Depreciation and amortization | 72,592 | 89,840 | 76,891 | 96,482 | 97,753 | 6,987 | ||||||||||||||||||
Investments in fixed assets at cost(4) | 155,121 | 132,092 | 213,232 | 184,584 | 175,850 | 12,569 | ||||||||||||||||||
Ratio of earnings to fixed charges: | ||||||||||||||||||||||||
Mexican FRS(5) | — | — | — | — | — | — | ||||||||||||||||||
U.S. GAAP(5) | — | — | — | — | — | — |
Year ended December 31,(1)(2) | ||||||||||||||||
2011 | 2012 | 2013 | 2013(3) | |||||||||||||
(in millions of pesos, except ratios) | (in millions of U.S. dollars) | |||||||||||||||
Statement of Comprehensive Income Data | ||||||||||||||||
Net sales | Ps. | 1,558,454 | Ps. | 1,646,912 | Ps. | 1,608,205 | U.S. $ | 122,984 | ||||||||
Operating income | 861,311 | 905,339 | 727,622 | 55,644 | ||||||||||||
Financing income | 30,584 | 23,215 | 24,527 | 1,876 | ||||||||||||
Financing cost | (63,236 | ) | (72,951 | ) | (54,067 | ) | (4,135 | ) | ||||||||
Exchange (loss) gain—Net | (60,143 | ) | 44,846 | (3,951 | ) | (302 | ) | |||||||||
Net (loss) income for the period | (106,942 | ) | 2,600 | (170,058 | ) | (13,005 | ) | |||||||||
Statement of Financial Position Data (end of period) | ||||||||||||||||
Cash and cash equivalents | 114,977 | 119,235 | 80,746 | 6,175 | ||||||||||||
Total assets | 1,981,374 | 2,024,183 | 2,047,390 | 156,570 | ||||||||||||
Long-term debt | 672,657 | 672,618 | 750,563 | 57,398 | ||||||||||||
Total long-term liabilities | 1,624,752 | 2,059,445 | 1,973,446 | 150,915 | ||||||||||||
Total equity (deficit) | 103,177 | (271,066 | ) | (185,247 | ) | (14,166 | ) | |||||||||
Statement of Cash Flows | ||||||||||||||||
Depreciation and amortization | 127,380 | 140,538 | 148,492 | 11,356 | ||||||||||||
Acquisition of wells, pipelines, properties, plant and equipment(4) | 167,014 | 197,509 | 245,628 | 18,784 | ||||||||||||
Other Financial Data | ||||||||||||||||
Ratio of earnings to fixed charges(5)(6) | — | 1.14 | — | — |
(1) | We have not included selected consolidated financial data as of and for the years ended December 31, 2009 and 2010, as we began presenting our financial statements in accordance with IFRS for the fiscal year ending December 31, 2012, with an official IFRS “adoption date” of January 1, 2012 and a “transition date” to IFRS of January 1, 2011. Based on such adoption and transition dates, we were not required to prepare financial statements in accordance with IFRS as of and for the years ended December 31, 2009 and 2010 and therefore are unable to present selected financial data in accordance with IFRS for this period without unreasonable effort and expense. |
(2) | Includes Petróleos Mexicanos, the subsidiary entities and the subsidiary companies |
(3) | Translations into U.S. dollars of amounts in pesos have been made at the exchange rate established by the SHCP for accounting purposes of Ps. |
(4) | Includes capitalized |
(5) |
(6) | Earnings for the years ended December 31, |
Source: PEMEX’s consolidated financial statements.statements, prepared in accordance with IFRS, as it relates to the Selected Statements of Comprehensive Income, Statement of Financial Position and Statement of Cash Flows Data; and Petróleos Mexicanos, as it relates to Other Financial Data.
EXCHANGE RATES
The following table sets forth, for the periods indicated, the high, low, average and period-end exchange rates for the purchase of U.S. dollars, expressed in pesos per U.S. dollar. These rates have not been restated in constant currency units.
Period | Exchange Rate | |||||||||||||||
Year Ended December 31, | High | Low | Average(1) | Period End | ||||||||||||
2007 | 11.269 | 10.667 | 10.925 | 10.917 | ||||||||||||
2008 | 13.935 | 9.917 | 11.212 | 13.832 | ||||||||||||
2009 | 15.406 | 12.632 | 13.578 | 13.058 | ||||||||||||
2010 | 13.194 | 12.156 | 12.635 | 12.383 | ||||||||||||
2011 | 14.254 | 11.505 | 12.427 | 13.951 | ||||||||||||
November 2011 | 14.254 | 13.383 | 13.695 | 13.620 | ||||||||||||
December 2011 | 13.993 | 13.489 | 13.775 | 13.951 | ||||||||||||
2012 | ||||||||||||||||
January 2012 | 13.750 | 12.925 | 13.383 | 13.036 | ||||||||||||
February 2012 | 12.951 | 12.625 | 12.783 | 12.794 | ||||||||||||
March 2012 | 12.990 | 12.628 | 12.752 | 12.812 | ||||||||||||
April 2012(2) | 13.229 | 12.730 | 13.030 | 13.121 |
Period | Exchange Rate | |||||||||||||||
High | Low | Average(1) | Period End | |||||||||||||
Year Ended December 31, | ||||||||||||||||
2009 | 15.406 | 12.632 | 13.578 | 13.058 | ||||||||||||
2010 | 13.194 | 12.156 | 12.635 | 12.383 | ||||||||||||
2011 | 14.254 | 11.505 | 12.464 | 13.951 | ||||||||||||
2012 | 14.365 | 12.625 | 13.140 | 12.964 | ||||||||||||
2013 | 13.433 | 11.976 | 12.857 | 13.098 | ||||||||||||
November 2013 | 13.243 | 12.871 | 13.060 | 13.111 | ||||||||||||
December 2013 | 13.217 | 12.851 | 13.010 | 13.098 | ||||||||||||
2014 | ||||||||||||||||
January 2014 | 13.456 | 12.997 | 13.222 | 13.359 | ||||||||||||
February 2014 | 13.509 | 13.204 | 13.293 | 13.226 | ||||||||||||
March 2014 | 13.332 | 13.056 | 13.193 | 13.056 | ||||||||||||
April 2014 | 13.143 | 12.950 | 13.067 | 13.084 | ||||||||||||
May 2014(2) | 13.053 | 12.946 | 12.996 | 12.986 |
(1) | Average of month-end rates, except for |
(2) | For the period from |
Source:Noon buying rate for cable transfers in New York reported by the Federal Reserve.
Source: | Noon buying rate for cable transfers in New York reported by the Federal Reserve. |
The noon buying rate for cable transfers in New York reported by the Federal Reserve on April 20, 2012May 9, 2014 was Ps. 13.12112.986 = U.S. $1.00.
RISK FACTORS
Risk FactorsConsiderations Related to the Operations of PEMEXMexico
Crude oil and natural gas prices are volatile and low crude oil and natural gas prices adversely affect PEMEX’s income and cash flows and the amount of Mexico’s hydrocarbon reserves.
International crude oil and natural gas prices are subject to global supply and demand and fluctuate due to many factors beyond our control. These factors include competition within the oil and natural gas industry, the prices and availability of alternative sources of energy, international economic trends, exchange rate fluctuations, expectations of inflation, domestic and foreign government regulations or international laws, political and other events in major oil and natural gas producing and consuming nations and actions taken by OrganizationThe effects of the Petroleum Exporting Countries (OPEC) membersEnergy Reform Decree and other oil exporting countries, trading activityits implementation are uncertain but likely to be material.
The Energy Reform Decree, which was enacted in oilDecember 2013, included transitional articles that set forth the framework for the implementation of secondary legislation and natural gasprovided for certain transitional steps, including the Round Zero process described below. We expect that the effects of these developments on our business and transactions in derivative financial instruments (which we refer to as DFIs) related to oil and gas.
When international crude oil and natural gas prices are low, we earn less export sales revenue and, therefore, generate lower cash flows and earn less income, because our costs remain roughly constant. Conversely, when crude oil and natural gas prices are high, we earn more export sales revenue and our income before taxes and duties increases. As a result, future fluctuations in international crude oil and natural gas pricesoperations will be material. Among the features of the Energy Reform Decree that could have a directan effect on our resultsoperations are the following:
• | theComisión Reguladora de Energía (Energy Regulatory Commission) will have the authority to grant permits to us and private sector companies to engage in natural gas processing, oil refining and transport, storage, distribution and selling of hydrocarbons and petrochemicals and their derivatives in Mexico; |
PEMEX is an integrated oil and gas company and is exposed to production, equipment and transportation risks, criminal acts and deliberate acts of terror.
We are subject to several risks that are common among oil and gas companies. These risks include production risks (fluctuations in production due to operational hazards, natural disasters or weather, accidents, etc.), equipment risks (relating to the adequacy and condition of our facilities and equipment) and transportation risks (relating to the condition and vulnerability of pipelines and other modes of transportation). More specifically, our business is subject to the risks of explosions in pipelines, refineries, plants, drilling wells and other facilities, hurricanes in the Gulf of Mexico and other natural or geological disasters and accidents, fires and mechanical failures. Criminal attempts to divert our crude oil, natural gas or refined products from our pipeline network and facilities for illegal sale have resulted in explosions, property and environmental damage, injuries and loss of lives.
Our facilities are also subject to the risk of sabotage, terrorism and cyber attacks. In July 2007, two of our pipelines were attacked. In September 2007, six different sites were attacked and 12 of our pipelines were affected. The occurrence of any of these events or of accidents connected with production, processing and transporting oil and oil products could result in personal injuries, loss of life, environmental damage with resulting containment, clean-up and repair expenses, equipment damage and damage to our facilities. A shutdown of the affected facilities could disrupt our production and increase our production costs. As of the date of this report there have been no similar occurrences since 2007. Thoughand until the secondary legislation related to the Energy Reform Decree becomes effective and private sector companies enter into contractual agreements to operate in the Mexican energy sector, we are the only entity that conducts the petroleum industry in Mexico on behalf of Mexico.
As of the date of this report, one key aspect of the Energy Reform Decree—our initial allocation of oil and gas exploration and extraction rights—is being implemented pursuant to a process outlined in the transitional articles and referred to as Round Zero. As part of Round Zero, we have established cybersecurity systemssubmitted a request that the Ministry of Energy assign to us certain oil and proceduresgas exploration and extraction rights. The Ministry of Energy has a deadline of September 17, 2014 to protectrespond to our information technologyrequest. See “—Risk Factors Related to Our Relationship with the Mexican Government—The Mexican nation, not us, owns the hydrocarbon reserves located in the subsoil of Mexico and haveour right to continue to exploit these reserves is subject to the approval of the Ministry of Energy” below in this Item 3.
The secondary legislation implementing the Energy Reform Decree is expected to include, among other things, additional details regarding the contractual and fiscal regime that will be applicable to us and changes to our corporate structure as part of Petróleos Mexicanos’ conversion from a decentralized public entity to a “productive state-owned company” by December 2015. As of the date of this report, this secondary legislation has not yet sufferedbeen adopted. The impact of the Energy Reform Decree on us will largely depend on how it is implemented by the secondary legislation and on the outcome of Round Zero. It would therefore be premature to predict the long-term effects of the Energy Reform Decree and the new framework it contemplates, but these effects could be adverse to our interests in significant respects. In addition, as a cyber attack, if the integrityresult of longstanding restrictions included in certain of our information technologyfinancing agreements that were ever compromised duebased on the legal framework in effect before the Energy Reform Decree was enacted, these effects may cause us to a cyber attack, our business operations could be disrupted and our proprietary information could be lost or stolen.
We purchase comprehensive insurance policies covering most ofdefault on these risks; however, these policies may not cover all liabilities, and insurance may not be available for some of the consequential risks. There can be no assurance that accidents or acts of terror will not occuragreements in the future, that insurance will adequately cover the entire scope or extent of our losses orevent that we may not be found directly liable in connection with claims arisingare unable to obtain waivers from theseour lenders or other events. Seebondholders, as applicable. For more information, see “Item 4—Information on the Company—Business Overview—PEMEX Corporate Matters—Insurance.History and Development—Energy Reform.”
PEMEX hasEconomic conditions and government policies in Mexico and elsewhere may have a substantial amount of liabilities thatmaterial impact on our operations.
A deterioration in Mexico’s economic condition, social instability, political unrest or other adverse social developments in Mexico could adversely affect our business and financial condition. Those events could also
lead to increased volatility in the foreign exchange and financial markets, thereby affecting our ability to obtain new financing and service our debt. Additionally, the Mexican Government may cut spending in the future. These cuts could adversely affect our business, financial condition and resultsprospects. In the past, Mexico has experienced several periods of slow or negative economic growth, high inflation, high interest rates, currency devaluation and other economic problems. These problems may worsen or reemerge, as applicable, in the future, and could adversely affect our business and our ability to service our debt. A worsening of international financial or economic conditions, including a slowdown in growth or recessionary conditions in Mexico’s trading partners, including the United States, or the emergence of a new financial crisis, could have adverse effects on the Mexican economy, our financial condition and our ability to service our debt.
Changes in exchange rates or in Mexico’s exchange control laws may hamper our ability to service our foreign currency debt.
The Mexican Government does not currently restrict the ability of Mexican companies or individuals to convert pesos into U.S. dollars or other currencies, and Mexico has not had a fixed exchange rate control policy since 1982. However, in the future, the Mexican Government could impose a restrictive exchange control policy, as it has done in the past. We cannot provide assurances that the Mexican Government will maintain its current policies with regard to the peso or that the peso’s value will not fluctuate significantly in the future. The peso has been subject to significant devaluations against the U.S. dollar in the past and may be subject to significant fluctuations in the future. Mexican Government policies affecting the value of the peso or preventing us from exchanging pesos into U.S. dollars could prevent us from paying our foreign currency obligations.
Most of our debt is denominated in U.S. dollars. In the future, we may incur additional indebtedness denominated in U.S. dollars or other currencies. Declines in the value of the peso relative to the U.S. dollar or other currencies may increase our interest costs in pesos and result in foreign exchange losses to the extent that we have not hedged our exposure with derivative financial instruments, which we refer to as DFIs.
For information on historical peso/U.S. dollar exchange rates, see “—Key Information—Exchange Rates” in this Item 3.
Political conditions in Mexico could materially and adversely affect Mexican economic policy and, in turn, our operations.
WePolitical events in Mexico may significantly affect Mexican economic policy and, consequently, our operations. On December 1, 2012, Enrique Peña Nieto, a member of thePartido Revolucionario Institucional(Institutional Revolutionary Party, or PRI), formally assumed office for a six-year term as the President of Mexico. As of the date of this report, no political party holds a simple majority in either house of the Mexican Congress.
Mexico has experienced a period of increasing criminal violence and such activities could affect our operations.
Recently, Mexico has experienced a period of increasing criminal violence, primarily due to the activities of drug cartels and related criminal organizations. In response, the Mexican Government has implemented various security measures and has strengthened its military and police forces. Despite these efforts, drug-related crime continues to exist in Mexico. These activities, their possible escalation and the violence associated with them, in an extreme case, may have a substantial amount of debt. As of December 31, 2011, our total indebtedness, excluding accrued interest, was approximately U.S. $55.3 billion, in nominal terms, which is a 3.9% increase as compared to our total indebtedness, excluding accrued interest, of approximately U.S. $53.2 billion at December 31, 2010. Our level of debt may increase further in the near or medium term and may have an adverse effectnegative impact on our financial condition and results of operations.
To service our debt, we have relied and may continue to rely on a combination of cash flows provided by operations, drawdowns under our available credit facilities and the incurrence of additional indebtedness. Certain rating agencies have expressed concerns regarding the total amount of our debt, our increase in indebtedness over the last several years and our substantial unfunded reserve for retirement pensions and seniority premiums, which as of December 31, 2011 was equal to approximately U.S. $52.2 billion. Due to our heavy tax burden, we have resorted to financings to fund our capital investment projects. Any further lowering of our credit ratings may have adverse consequences on our ability to access the financial markets and/or our cost of financing. If we were unable to obtain financing on favorable terms, this could hamper our ability to obtain further financing as well as hamper investment in facilities financed through debt. As a result, we may not be able to make the capital expenditures needed to maintain our current production levels and to maintain, as well as increase, Mexico’s proved hydrocarbon reserves, which may adversely affect our financial condition and results of operations. See “—Risk Factors Related to theOur Relationship between PEMEX andwith the Mexican Government—PEMEX must make significant capital expenditures to maintain its current production levels, and to maintain, as well as
increase, Mexico’s proved hydrocarbon reserves. Mexican Government budget cuts, reductions in PEMEX’s income and inability to obtain financing may limit PEMEX’s ability to make capital investments.”
PEMEX’s compliance with environmental regulations in Mexico could result in material adverse effects on its results of operations.
A wide range of general and industry-specific Mexican federal and state environmental laws and regulations apply to our operations; these laws and regulations are often difficult and costly to comply with and carry substantial penalties for non-compliance. This regulatory burden increases our costs because it requires us to make significant capital expenditures and limits our ability to extract hydrocarbons, resulting in lower revenues. For an estimate of our accrued environmental liabilities, see “Item 4—Information on the Company—Environmental Regulation—Environmental Liabilities.” In addition, we have agreed with third parties to make investments to reduce our carbon emissions. See “Item 4—Information on the Company—Environmental Regulation—Carbon Dioxide Emissions Reduction.”
PEMEX publishes less U.S. GAAP financial information than U.S. companies are required to file with the SEC.
We prepare our financial statements according to Mexican FRS, which differ in certain significant respects from U.S. GAAP. See “Item 3—Key Information—Selected Financial Data,” “Item 5—Operating and Financial Review and Prospects—U.S. GAAP Reconciliation” and Note 21 to our consolidated financial statements included herein. As a foreign issuer, we are not required to prepare quarterly U.S. GAAP financial information, and we therefore generally prepare a reconciliation of our net income (loss) and equity (deficit) under Mexican FRS to U.S. GAAP as well as explanatory notes and additional disclosure required under U.S. GAAP on a yearly basis only. As a result, there may be less or different publicly available information about us than there is about U.S. issuers.
Risk Factors Related to the Relationship between PEMEX and the Mexican Government
The Mexican Government controls PEMEXus and it could limit PEMEX’sour ability to satisfy itsour external debt obligations or could reorganize or transfer PEMEXus or itsour assets.
Each of Petróleos Mexicanos and the subsidiary entities is a decentralized public entity of the Mexican Government, and therefore the Mexican Government controls us, as well as, as of the date of this report, our
annual budget, which is approved by theCámara de Diputados (Chamber of Deputies). However,The Energy Reform Decree provides that by December 2015, Petróleos Mexicanos will be converted from a decentralized public entity to a productive state-owned company. Moreover, the proposed secondary legislation implementing the Energy Reform Decree provides us with, among other things, additional technical, managerial and budgetary autonomy designed to increase our financing obligations do not constitute obligations ofproduction and are not guaranteed byallow us to compete effectively with other oil and gas companies that enter the Mexican Government. Theenergy sector. See “Item 4—Information on the Company—History and Development—Energy Reform.” Notwithstanding this increased autonomy and our conversion to a productive state-owned company, Petróleos Mexicanos will continue to remain under the Mexican Government’s control, as the Mexican Government has (and, following the implementation of the Energy Reform Decree and related proposed secondary legislation, will continue to have, albeit to a lesser extent) the power to intervene directly or indirectly in our commercial and operational affairs. Intervention by the Mexican Government could adversely affect our ability to make payments under any securities issued by us. Although Petróleos Mexicanos is (and following its conversion to a productive state-owned company will remain) under the Mexican Government’s control, its financing obligations do not constitute obligations of and are not guaranteed by the Mexican Government.
The Mexican Government’s agreements with international creditors may affect our external debt obligations. In certain past debt restructurings of the Mexican Government, Petróleos Mexicanos’ external indebtedness was treated on the same terms as the debt of the Mexican Government and other public sector entities. In addition, Mexico has entered into agreements with official bilateral creditors to reschedule public sector external debt. Mexico has not requested restructuring of bonds or debt owed to multilateral agencies.
The Energy Reform Decree contemplates the transfer of certain of Pemex-Gas and Basic Petrochemicals’ assets to another decentralized public entity of the Mexican Government that will be created in the future. The Mexican Government would havehas the power, ifin connection with theConstitución Política de los Estados Unidos Mexicanos (Political Constitution implementation of the Unitedsecondary legislation relating to the Energy Reform Decree or if the Mexican States)Constitution and federal law were further amended, to reorganize PEMEX,us, including a transfer of all or a portion of Petróleos Mexicanos and the subsidiary entities or their assets to an entity not controlled by the Mexican Government. Such aThe reorganization and transfer of assets contemplated by the Energy Reform Decree or any other reorganization or transfer that the Mexican Government may effect, could adversely affect our production, cause a disruption in our workforce and our operations and cause us to default on certain obligations. See also “—Considerations Related to Mexico” below.
Petróleos Mexicanos and the subsidiary entities pay special taxes and duties to the Mexican Government, which may limit PEMEX’sour capacity to expand itsour investment program.
PEMEX paysWe pay a substantial amount of taxes and duties to the Mexican Government, particularly on the revenues of Pemex-Exploration and Production, which may limit PEMEX’sour ability to make capital investments. In 2011,2013, approximately 56.2%53.8% of theour sales revenues of PEMEX was used to pay taxes and duties to the Mexican Government. These special taxes and duties constitute a substantial portion of the Mexican Government’s revenues. For further information, see “Item 4—Information on the Company—Taxes and Duties” and “Item 5—Operating and Financial Review and Prospects—IEPS Tax, Hydrocarbon Duties and Other Taxes.” The Energy Reform Decree contemplates that the secondary legislation implementing it will include a new fiscal regime applicable to us. See “—Considerations Related to Mexico—The effects of the Energy Reform Decree and its implementation are uncertain but likely to be material” above in this Item 3.
The Mexican Government has entered into agreements with other nations to limit production.
Although Mexico is not a member of OPEC, in the past it has entered into agreements with OPEC and non-OPEC countries to reduce global crude oil supply. We do not control the Mexican Government’s international affairs and the Mexican Government could agree with OPEC or other countries to reduce our crude oil production or exports in the future. A reduction in our oil production or exports could reduce our revenues.
The Mexican Government has imposed price controls in the domestic market on PEMEX’sour products.
The Mexican Government has from time to time imposed price controls on the sales of natural gas, liquefied petroleum gas (LPG), gasoline, diesel, gas oil intended for domestic use, and fuel oil number 6, among others.and other products. As a result of these price controls, PEMEX haswe have not been able to pass on all of the increases in the prices of itsour product purchases to itsour customers in the domestic market. We do not control the Mexican Government’s domestic policies and the Mexican Government could impose additional price controls on the domestic market in the future. The imposition of such price controls would adversely affect our results of operations. For more information, see “Item
“Item 4—Information on the Company—Business Overview—Refining—Pricing Decrees” and “Item 4—Information on the Company—Business Overview—Gas and Basic Petrochemicals—Pricing Decrees.”
The Mexican nation, not PEMEX,us, owns the hydrocarbon reserves located in Mexico.the subsoil of Mexico and our right to continue to exploit these reserves is subject to the approval of the Ministry of Energy.
The PoliticalMexican Constitution of the United Mexican States provides that the Mexican nation, not PEMEX,us, owns all petroleum and other hydrocarbon reserves located in the subsoil of Mexico. Although
Following the adoption of the Energy Reform Decree, Article 27 of the Mexican law gives Pemex-ExplorationConstitution provides that the Mexican Government will carry out exploration and Productionextraction activities through agreements with private sector companies and through assignments to and agreements with us. Once the exclusivesecondary legislation related to the Energy Reform Decree is fully implemented, we and other oil and gas companies will have the right to exploit Mexico’sthe petroleum and other hydrocarbon reserves it does not precludelocated in the Mexican Congress from changing current law and assigning some or allsubsoil of Mexico, subject to assignment of these rights by the Ministry of Energy and entry into agreements pursuant to another company. Sucha competitive bidding process.
On March 21, 2014, as part of Round Zero, we submitted to the Ministry of Energy a request that we be assigned the right to continue to explore and develop areas that together contain 96% of Mexico’s estimated proved reserves of crude oil and natural gas as of December 31, 2013. The transitional articles of the Energy Reform Decree provide that the Ministry of Energy will take the following factors into consideration when determining whether to grant us an event would adversely affectassignment:
The Ministry of Energy has a deadline of September 17, 2014 to respond to our request. The Ministry of Energy may not approve the assignment of certain of the proved oil and gas reserves we requested.
Access to crude oil and natural gas reserves is essential to an oil and gas company’s sustained production and generation of income, and our ability to generate income.income would be materially and adversely affected if we do not receive a significant percentage of the proved oil and gas reserves that we have requested pursuant to Round Zero or if the Mexican Government were to restrict or prevent us from exploiting any crude oil and natural gas reserves that it assigns to us. For more information, see “Item 4—Information on the Company—History and Development—Energy Reform—Round Zero.”
Information on Mexico’s hydrocarbon reserves in this report is based on estimates, which are uncertain and subject to revisions.
The information on oil, gas and other reserves set forth in this Form 20-Freport is based on estimates. Reserves valuation is a subjective process of estimating underground accumulations of crude oil and natural gas that cannot be measured in an exact manner; the accuracy of any reserves estimate depends on the quality and reliability of available data, engineering and geological interpretation and subjective judgment. Additionally, estimates may be revised based on subsequent results of drilling, testing and production. These estimates are also subject to certain adjustments based on changes in variables, including crude oil prices. Therefore, proved reserves estimates may differ materially from the ultimately recoverable quantities of crude oil and natural gas. See “—Risk Factors Related to the Operations of PEMEX—Our Operations—Crude oil and natural gas prices are volatile and low crude oil and natural gas prices adversely affect PEMEX’sour income and cash flows and the amount of Mexico’s hydrocarbon reserves.reserves that we have the right to extract and sell.” Pemex-Exploration and Production revises its estimates of Mexico’s hydrocarbon reserves that it is entitled to extract and sell annually, which may result in material
revisions to our estimates of Mexico’s hydrocarbon reserves.
PEMEXWe must make significant capital expenditures to maintain itsour current production levels, and to maintain, as well as increase, Mexico’sany proved hydrocarbon reserves.reserves that may be assigned to us pursuant to Round Zero. Mexican Government budget cuts, reductions in PEMEX’sour income and inability to obtain financing may limit PEMEX’sour ability to make capital investments.
We invest fundsOur ability to maintain, as well as increase, the amount of extractableour oil production levels is highly dependent upon our ability to successfully develop existing hydrocarbon reserves and, in Mexico. the long term, upon our ability to obtain the right to develop additional reserves.
We also continually invest capital to enhance our hydrocarbon recovery ratio and improve the reliability and productivity of our infrastructure. WhileDespite these investments, the replacement rate for proved hydrocarbon reserves has increaseddecreased to 67.8% in recent years, from 77.1% in 2009 to 85.8% in 2010, the overall replacement rate remained less than 100% until 2011, which represents2013, representing a significant decline in Mexico’s proved hydrocarbon reserves. Nevertheless, in 2011 the replacement rate for proved hydrocarbon reserves was 101.1%. Pemex-Exploration and Production’s crude oil production decreased by 6.8% from 2008 to 2009, by 1.0% from 20092010 to 2010,2011, by 0.2% from 2011 to 2012 and by 1.0% from 20102012 to 2011,2013, primarily as a result of the decline of production in the Cantarell project. and Delta del Grijalva projects.
The development of the reserves that are assigned to us pursuant to Round Zero, particularly any reserves in the deep waters of the Gulf of Mexico and in shale oil and gas fields in the Burgos basin, will demand significant capital investments and will pose significant operational challenges. We cannot guarantee that we will have or will be able to obtain, in the time frame that we expect, sufficient resources necessary to exploit the reserves that the Mexican Government assigns to us as part of Round Zero, or that it may grant to us in the future. In addition, increased competition in the oil and gas sector in Mexico may increase the costs of obtaining additional acreage in bidding rounds for the rights to new reserves.
Our ability to make capital expenditures is limited by the substantial taxes and duties that we pay to the Mexican Government and cyclical decreases in our revenues primarily related to lower oil prices. In addition, budgetBudget cuts imposed by the Mexican Government and the availability of financing may also limit our ability to make capital investments.investments that are necessary to maintain current production levels and increase the proved hydrocarbon reserves we are entitled to exploit. For more information, see “Item 4—Information on the Company—History and Development—Capital Expenditures and Investments.Investments” and “—Energy Reform.”
PEMEXIncreased competition in the Mexican energy sector may have a negative impact on our results of operations and financial conditions.
Once the secondary legislation related to the Energy Reform Decree is fully implemented, we and other oil and gas companies will have the right to carry out certain activities related to the energy sector in Mexico, including exploration and extraction activities. The Mexican Government will carry out exploration and extraction activities through agreements with private sector companies and through allocations to or agreements with us. Any oil and gas fields that we do not request or are not assigned to us pursuant to Round Zero will be subject to a competitive bidding process open to participation by private sector companies in which we will not have a preferential right. We will also likely face competition for the right to develop new oil and gas fields in Mexico, as well as in connection with certain refining, transportation and processing activities. For more information, see “Item 4—Information on the Company—History and Development—Energy Reform.” If we are unable to compete successfully with private sector companies in the energy sector in Mexico, our results of operations and financial condition may be adversely affected.
We may claim some immunities under the Foreign Sovereign Immunities Act and Mexican law, and your ability to sue or recover may be limited.
Petróleos Mexicanos and the subsidiary entities are decentralized public entities of the Mexican Government. Accordingly, you may not be able to obtain a judgment in a U.S. court against us unless the U.S.
court determines that we are not entitled to sovereign immunity with respect to that action. In addition, Mexican law does not allow attachment prior to judgment or attachment in aid of execution upon a judgment by Mexican courts upon the assets of Petróleos Mexicanos or the subsidiary entities. As a result, your ability to enforce judgments against us in the courts of Mexico may be limited. We also do not know whether Mexican courts would enforce judgments of U.S. courts based on the civil liability provisions of the U.S. federal securities laws. Therefore, even if you were able to obtain a U.S. judgment against us, you might not be able to obtain a judgment in Mexico that is based on that U.S. judgment. Moreover, you may not be able to enforce a judgment against our property in the United States except under the limited circumstances specified in the Foreign Sovereign Immunities Act of 1976, as amended. Finally, if you were to bring an action in Mexico seeking to enforce our obligations under any of our securities, satisfaction of those obligations may be made in pesos, pursuant to the laws of Mexico.
PEMEX’sOur directors and officers, as well as some of the experts named in this Form 20-F, reside outside the United States. Substantially all of our assets and those of most of our directors, officers and experts are located outside the United States. As a result, you may not be able to effect service of process on our directors or officers or those experts within the United States.
ConsiderationsRisk Factors Related to MexicoOur Operations
Economic conditionsCrude oil and government policies in Mexiconatural gas prices are volatile and elsewhere may have a material impact on PEMEX’s operations.
A deterioration in Mexico’s economic condition, social instability, political unrest or other adverse social developments in Mexico couldlow crude oil and natural gas prices adversely affect our businessincome and financial condition. Those events could also leadcash flows and the amount of Mexico’s hydrocarbon reserves.
International crude oil and natural gas prices are subject to increased volatility inglobal supply and demand and fluctuate due to many factors beyond our control. These factors include competition within the oil and natural gas industry, the prices and availability of alternative sources of energy, international economic trends, exchange rate fluctuations, expectations of inflation, domestic and foreign exchange and financial markets, thereby affecting our ability to obtain new financing and service foreign debt. Additionally, the Mexican Government may cut spending in the future. These cuts could adversely affect our business, financial condition and prospects. In the past, Mexico has experienced several periods of slowgovernment regulations or negative economic growth, high inflation, high interest rates, currency devaluationinternational laws, political and other economic problems. These problems may worsen or reemerge, as applicable,events in major oil and natural gas producing and consuming nations and actions taken by Organization of the future,Petroleum Exporting Countries (OPEC) members and could adversely affectother oil exporting countries, trading activity in oil and natural gas and transactions in DFIs related to oil and gas.
When international crude oil and natural gas prices are low, we earn less export sales revenue and, therefore, generate lower cash flows and earn less income, because our businesscosts remain roughly constant. Conversely, when crude oil and natural gas prices are high, we earn more export sales revenue and our ability to service our debt. A worsening of international financial or economic conditions, including a slowdown in growth or recessionary conditions in Mexico’s trading partners, including the United States, or the emergence of a new financial crisis, could have adverse effects on the Mexican economy, our financial conditionincome before taxes and our ability to service our debt.
Changes in exchange rates or in Mexico’s exchange control laws may hamper the ability of PEMEX to service its foreign currency debt.
The Mexican Government does not currently restrict the ability of Mexican companies or individuals to convert pesos into U.S. dollars or other currencies, and Mexico has not had a fixed exchange rate control policy since 1982. However, in the future, the Mexican Government could impose a restrictive exchange control policy, as it has done in the past. We cannot provide assurances that the Mexican Government will maintain its current policies with regard to the peso or that the peso’s value will not fluctuate significantly in the future. The peso has been subject to significant devaluations against the U.S. dollar in the past and may be subject to significant fluctuations in the future. Mexican Government policies affecting the value of the peso could prevent us from paying our foreign currency obligations.
Most of our debt is denominated in U.S. dollars. In the future, we may incur additional indebtedness denominated in U.S. dollars or other currencies. Declines in the value of the peso relative to the U.S. dollar or other currencies may increase our interest costs in pesos and result in foreign exchange losses to the extent that we have not hedged the exposure with derivative financial instruments.
For information on historical peso/U.S. dollar exchange rates, see “Item 3—Key Information—Exchange Rates.”
Political conditions in Mexico could materially and adversely affect Mexican economic policy and, in turn, PEMEX’s operations.
Political events in Mexico may significantly affect Mexican economic policy and, consequently, our operations. On December 1, 2006, Felipe de Jesús Calderón Hinojosa, a member of thePartido Acción Nacional(National Action Party, or PAN), formally assumed office for a six-year term as the President of Mexico. Currently, no political party holds a simple majority in either house of the Mexican Congress.
Presidential and federal congressional elections in Mexico will be held in July 2012. The Mexican presidential election will result in a change in administration, as presidential reelection is not permitted in Mexico.duties increases. As a result, we cannot predict whether changesfuture fluctuations in Mexican governmental policyinternational crude oil and natural gas prices will result from the change in administration. Any such changes could adversely affect economic conditions or the industry in which we operate in Mexico and thereforehave a direct effect on our results of operations and financial position.condition, and may affect Mexico’s hydrocarbon reserves estimates. See “—Risk Factors Related to Our Relationship with the Mexican Government—Information on Mexico’s hydrocarbon reserves in this report is based on estimates, which are uncertain and subject to revisions” above in this Item 3 and “Item 11—Quantitative and Qualitative Disclosures about Market Risk—Hydrocarbon Price Risk.”
We are an integrated oil and gas company and are exposed to production, equipment and transportation risks, criminal acts and deliberate acts of terror.
We are subject to several risks that are common among oil and gas companies. These risks include production risks (fluctuations in production due to operational hazards, natural disasters or weather, accidents, etc.), equipment risks (relating to the adequacy and condition of our facilities and equipment) and transportation risks (relating to the condition and vulnerability of pipelines and other modes of transportation). More specifically, our business is subject to the risks of explosions in pipelines, refineries, plants, drilling wells and other facilities, hurricanes in the Gulf of Mexico has experiencedand other natural or geological disasters and accidents, fires and mechanical failures. Criminal attempts to divert our crude oil, natural gas or refined products from our pipeline network and facilities for illegal sale have resulted in explosions, property and environmental damage, injuries and loss of life.
Our facilities are also subject to the risk of sabotage, terrorism and cyber attacks. In July 2007, two of our pipelines were attacked. In September 2007, six different sites were attacked and 12 of our pipelines were affected. The occurrence of any of these events or of accidents connected with production, processing and transporting oil and oil products could result in personal injuries, loss of life, environmental damage with resulting containment, clean-up and repair expenses, equipment damage and damage to our facilities. A shutdown of the affected facilities could disrupt our production and increase our production costs. As of the date of this report, there have been no similar occurrences since 2007. Although we have established cybersecurity systems and procedures to protect our information technology and have not yet suffered a periodcyber attack, if the integrity of increasing criminal violenceour information technology were ever compromised due to a cyber attack, our business operations could be disrupted and such activitiesour proprietary information could be lost or stolen.
We purchase comprehensive insurance policies covering most of these risks; however, these policies may not cover all liabilities, and insurance may not be available for some of the consequential risks. There can be no assurance that accidents or acts of terror will not occur in the future, that insurance will adequately cover the entire scope or extent of our losses or that we may not be found directly liable in connection with claims arising from these or other events. See “Item 4—Information on the Company—Business Overview—PEMEX Corporate Matters—Insurance.”
We have a substantial amount of liabilities that could adversely affect PEMEX’sour financial condition and results of operations.
Recently, Mexico has experiencedWe have a periodsubstantial amount of increasing criminal violence, primarily duedebt. As of December 31, 2013, our total indebtedness, excluding accrued interest, was approximately U.S. $63.6 billion, in nominal terms, which is a 6.4% increase as compared to our total indebtedness, excluding accrued interest, of approximately U.S. $59.8 billion at December 31, 2012. Our level of debt may increase further in the activities of drug cartelsnear or medium term and related criminal organizations. In response, the Mexican Government has implemented various security measures and has strengthened its military and police forces. Despite these efforts, drug-related crime continues to exist in Mexico. These activities, their possible escalation and the violence associated with them, in an extreme case, may have a negative impactan adverse effect on our financial condition and results of operations.
To service our debt, we have relied and may continue to rely on a combination of cash flows provided by operations, drawdowns under our available credit facilities and the incurrence of additional indebtedness. Certain rating agencies have expressed concerns regarding the total amount of our debt, our increase in indebtedness over the last several years and our substantial unfunded reserve for retirement pensions and seniority premiums, which as of December 31, 2013 was equal to approximately U.S. $85.6 billion. Due to our heavy tax burden, we have resorted to financings to fund our capital investment projects. Any lowering of our credit ratings may have adverse consequences on our ability to access the financial markets and/or our cost of financing. If we were unable to obtain financing on favorable terms, this could hamper our ability to obtain further financing as well as hamper investment in projects financed through debt. As a result, we may not be able to make the capital expenditures needed to maintain our current production levels and to maintain, as well as increase, Mexico’s proved hydrocarbon reserves, which may adversely affect our financial condition and results of operations. See “—Risk Factors Related to Our Relationship with the Mexican Government—We must make significant capital expenditures to maintain our current production levels, and to maintain, as well as increase, any proved hydrocarbon reserves that may be assigned to us pursuant to Round Zero. Mexican Government budget cuts, reductions in our income and inability to obtain financing may limit our ability to make capital investments.”
Our compliance with environmental regulations in Mexico could result in material adverse effects on our results of operations.
A wide range of general and industry-specific Mexican federal and state environmental laws and regulations apply to our operations; these laws and regulations are often difficult and costly to comply with and carry substantial penalties for non-compliance. This regulatory burden increases our costs because it requires us to make significant capital expenditures and limits our ability to extract hydrocarbons, resulting in lower revenues. For an estimate of our accrued environmental liabilities, see “Item 4—Information on the Company—Environmental Regulation—Environmental Liabilities.” In addition, we have agreed with third parties to make investments to reduce our carbon dioxide emissions. See “Item 4—Information on the Company—Environmental Regulation—Global Climate Change and Carbon Dioxide Emissions Reduction.”
Item 4. | Information on the Company |
HISTORY AND DEVELOPMENT
We are the largest company in Mexico, and according to the December 12, 2011November 18, 2013 issue ofPetroleum Intelligence Weekly, we were the fourthseventh largest crude oil producer and the eleventh largest oil and gas company in the world based on data from the year 2010.2012. In 1938, President Lázaro Cárdenas del Río nationalized the foreign-owned oil companies which were then operating in Mexico, and the Mexican Congress established Petróleos Mexicanos by a decree effective on July 20, 1938. Since 1938, Mexican federal laws and regulations have entrusted Petróleos Mexicanos with a central role in the central planning and management of Mexico’s petroleum industry. On July 17, 1992, the Mexican Congress created the subsidiary entities out of operations that had previously been directly managed by Petróleos Mexicanos. Petróleos Mexicanos and its four subsidiary entities, Pemex-Exploration and Production, Pemex-Refining, Pemex-Gas and Basic Petrochemicals andPemex-Petrochemicals, are decentralized public entities of the Mexican Government, and each is a legal entity empowered to own property and carry on business in its own name.
PEMEX’sOur executive offices are located at Avenida Marina Nacional No. 329, Colonia Petróleos Mexicanos, México, D.F. 11311, México. PEMEX’sOur telephone number is (52-55) 1944-2500.
TheAs of the date of this report, the activities of Petróleos Mexicanos and its subsidiary entities are regulated primarily by:
• | theLey Reglamentaria del Artículo 27 Constitucional en el Ramo del Petróleo (Regulatory Law to Article 27 of the Political Constitution of the United Mexican States Concerning Petroleum Affairs, which we |
the Petróleos Mexicanos Law. We anticipate that the regulatory regime applicable to the activities of Petróleos Mexicanos and its subsidiary entities will be modified significantly pursuant to the changes contemplated by the Energy Reform Decree. See “—Information on the Company—History and Development—Energy Reform” below in this Item 4. |
The Regulatory Law and the Petróleos Mexicanos Law grant Petróleos Mexicanos and certain of theits subsidiary entities the exclusive right to:
explore, exploit, refine, transport, store, distribute and sell (first-hand) crude oil;
explore, exploit, produce and sell (first-hand) natural gas and transport and store natural gas, to the extent the transportation and storage activities are inextricably linked with such exploitation and production; and
produce, store, transport, distribute and sell (first-hand) the derivatives of petroleum (including petroleum products) and natural gas used as basic industrial raw materials that constitute basic petrochemicals, which include ethane, propane, butanes, pentanes, hexanes, heptanes, naphthas, carbon black feedstocks and methane, but, in the case of methane, only if obtained from hydrocarbons used as basic raw materials by the petrochemical industry and obtained from deposits located in Mexico.
The operating activities of Petróleos Mexicanos are allocated among the four subsidiary entities, each of which has the characteristics of a subsidiary of Petróleos Mexicanos. The principal business lines of the subsidiary entities are as follows:
Pemex-Exploration and Production explores for and exploits crude oil and natural gas and transports, stores and markets these hydrocarbons;
Pemex-Refining refines petroleum products and derivatives that may be used as basic industrial raw materials and stores, transports, distributes and markets these products and derivatives;
Pemex-Gas and Basic Petrochemicals processes natural gas, natural gas liquids and derivatives that may be used as basic industrial raw materials and stores, transports, distributes and markets these products and derivatives and produces, stores, transports, distributes and markets basic petrochemicals; and
Pemex-Petrochemicals engages in industrial petrochemical processes and stores, distributes and markets petrochemicals other than basic petrochemicals.
Under the Petróleos Mexicanos Law, which replaced theLey Orgánica de Petróleos Mexicanos y Organismos Subsidiarios(Organic (Organic Law of Petróleos Mexicanos and the Subsidiary Entities), the subsidiary entities were to continue to conduct business in accordance with their mandates under existing law until the President of Mexico issued a reorganization decree, based on a proposal by the Board of Directors of Petróleos Mexicanos. The Board of Directors of Petróleos Mexicanos submitted a proposal to the President of MexicoprovidingMexico providing that the existing structure of the subsidiary entities be maintained, and on March 22,21, 2012, the President of Mexico issued theDecreto que tiene por objeto establecer la estructura, el funcionamiento y el control de los organismos subsidiarios de Petróleos Mexicanos(Decree (Decree to establish the structure, operation and control of the subsidiary entities of Petróleos Mexicanos, which we refer to as the Subsidiary Entities Decree)Mexicanos), which was published in the Official Gazette of the Federation and became effective as of that date. The Subsidiary Entities Decree,the following day. This decree consistent with the recommendation of the Board of Directors of Petróleos Mexicanos, maintains the existence of the four subsidiary entities.
In 1995, the Mexican Congress amended the Regulatory Law to allow private and social sector companies, which include labor-controlled organizations and industries, to participate, with the Mexican Government’s approval, in the storage, distribution and transportation of natural gas. Pursuant to the Regulatory Law, as amended, these types of companies may construct, own and operate pipelines, installations and equipment. Since 1997, the Mexican Government has required that we divest our existing natural gas distribution assets, but has allowed us to retain exclusiveretaining authority over the exploration, exploitation, production and first-hand sale of natural gas, as well as the transportation and storage inextricably linked with this type of exploitation and production. See “Item 4—Information on the Company—Business Overview—Gas and Basic Petrochemicals—Private Sector Participation in Natural Gas Distribution.”
The Regulatory Law and the Petróleos Mexicanos Law have allowed us to co-generate electric energy and to enter into agreements with theComisión Federal de Electricidad (Federal Electricity Commission) to sell our excess production to this entity. The funds and the public investment projects required to carry out these co-generation works and allow the acquisition of any excess production by the Federal Electricity Commission must be included in the annualPresupuesto de Egresos de la Federación (Federal ExpendituresExpenditure Budget), which is subject to discussion by and approval of the Chamber of Deputies.
On November 13, 2008, amendments to theLey Federal de Presupuesto y Responsabilidad Hacendaria(Federal Law of Budget and Fiscal Accountability) were published in the Official Gazette of the Federation, which became effective on November 14, 2008. Under these amendments:
• | As of January 30, 2009, our debt related toProyectos de Infraestructura Productiva de Largo Plazo |
During the second half of 2009, Petróleos Mexicanos assumed, as primary obligor, all payment obligations under PIDIREGAS financing entered into by the Master Trust and Fideicomiso F/163, our principal PIDIREGAS financing vehicles.
In November 2008, the Petróleos Mexicanos Law was adopted by the Mexican Congress and several other laws were adopted or amended, as part of what we refer to below as the 2008 reforms.Energy Reform. None of these laws included any amendment to the Political Constitution of the United Mexican States.
PEMEX expects to benefit in several ways from the 2008 reforms. In particular, we expect to improve, among other things, our decision-making processes and our execution capabilities through the adoption of corporate governance practices in line with international standards, the creation of seven executive committees to support the Board of Directors of Petróleos Mexicanos, the appointment of professional members to the Boards of Directors of Petróleos Mexicanos and each of the subsidiary entities (see “Item 6—Directors, Senior Management and Employees”) and the ability to issuebonos ciudadanos (Citizen Bonds) linked to our performance.Constitution.
As a result of the 2008 reforms, we are now permitted to have a more flexible contracting structure for our core production activities. In order to strengthen our ability to enter into these contracts,Energy Reform, we are authorized to offer cash incentives to contractors that provide us with access to new technologies, faster execution or greater profits, subject to the requirements that our payment obligations under construction and services contracts must always be satisfied in cash and that in no case may we grant ownership rights over hydrocarbons to our contractors. See “Item 4—Information on the Company—Business Overview—Exploration and Production—Integrated Exploration and Production Contracts.”
Energy Reform
On December 12, 2013, the Permanent Commission of the Mexican Congress approved amendments to Articles 25, 27 and 28 of the Mexican Constitution, which were subsequently approved by a majority of Mexico’s state legislatures and signed into law by President Peña Nieto. On December 20, 2013, the Energy Reform Decree was published in the Official Gazette of the Federation and took effect on December 21, 2013. The Energy Reform Decree includes transitional articles that set forth the general framework for the secondary legislation or implementing laws, which have not been enacted as of the date of this report.
We describe below the key features of the Energy Reform Decree that relate to the hydrocarbons sector in Mexico and our operations:
• | Ownership by Mexican Nation: Solid, liquid and gaseous hydrocarbons located in the subsoil of Mexico remain the property of the Mexican nation. |
• | Private Sector Participation: The Mexican Government will carry out the exploration and extraction of hydrocarbons in Mexico through assignments to productive state-owned companies (as described below) or through agreements with these productive state-owned companies or with private sector companies. As part of the secondary legislation to be adopted, the Mexican Congress must make the necessary adjustments to the legal framework regulating the contractual regime for exploration and extraction activities, which may include the following contractual arrangements: |
The Mexican Government will have the flexibility to combine elements of these contractual frameworks in order to maximize the income attributable to the Mexican nation and thereby help ensure its long-term development. In addition, the Energy Reform Decree specifies the process by which the Mexican Government grants any such contract will be governed by rules that ensure its transparency, and information about payments made or taxes paid under any such contract will be made publicly available.
• | Conversion: The Energy Reform Decree provides that Petróleos Mexicanos is to be converted from a decentralized public entity to a productive state-owned company within two years from the enactment of the Energy Reform Decree, or by December 21, 2015. During the two-year transition period, we will be entitled to be awarded the assignments and contracts mentioned above. The Energy Reform Decree |
provides that the corporate purpose of a productive state-owned company will be to create economic value and increase the income of the Mexican nation while adhering to principles of equity as well as social and environmental responsibility, and we will be granted technical, managerial and budgetary autonomy, subject to certain controls. The Mexican Government will continue to control Petróleos Mexicanos once it is converted to a productive state-owned company. As a productive state-owned company, Petróleos Mexicanos’ Chief Executive Officer will be appointed by the President of Mexico and its Board of Directors will consist of five representatives of the Mexican Government, including the Secretary of Energy (who will serve as Chairperson of the Board), and five independent members. |
• | Initial Assignments and Subsequent Bidding Process: The transitional articles of the Energy Reform Decree outline a process, commonly referred to as Round Zero, for the determination of the initial allocation of rights to carry out exploration and production activities in Mexico. Round Zero is being administered by the Ministry of Energy, with technical assistance from the NHC. Pursuant to Round Zero, we have requested that the Ministry of Energy assign to us certain exploration and extraction areas in which we currently explore, operate or have an interest in developing based on our operational capabilities, as described below. Any such areas that we do not request or are not assigned to us will be subject to a competitive bidding process open to participation by private sector companies. |
• | Booking of Reserves: Productive state-owned companies and private companies will be allowed to report assignments or contracts and the corresponding expected benefits for accounting and financial purposes, with the understanding that any solid, liquid or gaseous hydrocarbons that are in the subsoil will remain the property of the Mexican nation. |
• | Pipeline System: The Centro Nacional de Control del Gas Natural (National Center of Natural Gas Control), a decentralized public entity of the Mexican Government, will be created to own and operate the national gas pipeline system and storage infrastructure. Pursuant to the applicable secondary legislation, Pemex-Gas and Basic Petrochemicals will transfer and assign to the National Center of Natural Gas Control the assets and contracts necessary for it to manage this system and infrastructure. |
• | Regulatory Oversight and Authority: The Ministry of Energy, the NHC and the Energy Regulatory Commission will be granted additional technical and administrative authority over certain of our operations and the energy sector generally, as described below. |
• | Safety and the Environment: The Agencia Nacional de Seguridad Industrial y de Protección al Medio Ambiente del Sector Hidrocarburos (National Agency of Industrial Safety and Environmental Protection for the Hydrocarbon Sector) will be created to regulate and supervise activities and facilities related to the hydrocarbons industry with respect to industrial safety and environmental protection. This new entity will operate as an administrative body of theSecretaría de Medio Ambiente y Recursos Naturales (Ministry of the Environment and Natural Resources) and will, among other things, |
supervise the decommissioning and abandonment of facilities. Relatedly, companies participating in the hydrocarbons sector will be subject to regulations intended to reduce greenhouse gas emissions and help ensure that energy and natural resources are used efficiently. |
• | Mexican Oil Fund: TheFondo Mexicano del Petróleo para la Estabilización y el Desarrollo(Mexican Petroleum Fund for Stabilization and Development) will be created and entrusted with receiving, administering and distributing the income that the Mexican Government derives from exploration and extraction activities carried out under assignments or agreements, excluding any tax revenues generated as a result of such activities. This public trust will first use the income to make the payments required pursuant to the various assignments or agreements; it will then transfer part of the income to various funds that finance public expenses and will allocate the remaining funds to long-term savings, including investments in financial assets. TheBanco de México (the Mexican central bank) will act as trustee, and the allocation of the fund’s assets will be supervised by a technical committee composed of the Secretary of Energy, the Secretary of Finance and Public Credit, the Governor ofBanco de México and four independent members. |
• | Anticorruption: Modifications to the current legal framework will be made to allow for the supervision, and, if necessary, investigation and prosecution, of entities, individuals and public officials participating in the Mexican energy sector. |
The impact of the Energy Reform Decree on us will largely depend on how it is implemented by the secondary legislation. On April 30, 2014, President Enrique Peña Nieto submitted to the Mexican Congress bills proposing secondary legislation intended to implement certain provisions of the Energy Reform Decree. Among other things, these proposed bills provide us with additional technical, managerial and budgetary autonomy designed to increase our production and allow us to compete effectively with other oil and gas companies that enter the Mexican energy sector.
As of the date of this report, the proposed bills are subject to review, debate and revision by the Mexican Congress, and therefore we do not know what the final scope and terms of any approved bill will be. Accordingly, we cannot currently predict the effects of the Energy Reform Decree and the new framework it contemplates, although such effects are likely to be material and impact our structure, results of operations and financial position.
Round Zero
Transitional article six of the Energy Reform Decree, which outlines the Round Zero process, required us to submit a proposal to the Ministry of Energy requesting that we be assigned the right to explore and develop areas in which we currently operate based on our technical, financial and operational capabilities. Accordingly, on March 21, 2014, we submitted to the Ministry of Energy a request that we retain rights that we believe will allow us to maintain our current production and provide sufficient exploration opportunities to increase our production in the future. Together, the areas that we requested contain 96% of Mexico’s estimated proved reserves of crude oil and natural gas as of December 31, 2013.
Exploration Areas. With respect to our exploration activities, we requested rights that we believe will allow our oil and gas production to continue to grow. Our submission sought to ensure that we maintain a number of areas that would allow us to continue our investment program in exploratory activities. Specifically, we requested to retain the right to explore offshore and onshore areas in the Southeastern basins in which we have identified opportunities that would allow us to increase production in the short-term. We also requested the right to continue to explore certain deepwater areas and areas containing unconventional deposits that we believe will allow us to increase production in the medium and long-term. The primary consideration used to determine which exploration areas to request was the continuity of our exploration strategy. Other factors that we considered included the potential hydrocarbons content and expected monetary value of the area, as well as the risks (both technical and geological) involved.
Our proposal grouped the exploration areas that we requested according to the following criteria:
• | Conventional onshore areas: We requested oil opportunities in which discoveries could be developed within a short amount of time (ideally less than 12 months) and gas areas that are expected to be profitable in the medium-term. We intend to pursue partnerships with the private sector in these areas only where necessary to mitigate risks and increase our operational capacity. |
• | Shallow waters: We requested areas with oil opportunities and existing infrastructure that would allow for discoveries to be developed quickly. Given our experience in shallow waters, we do not expect to involve partners from the private sector in connection with these areas. |
• | Deep waters: We requested areas with potential commercial opportunities in which we expect to be able to enter into partnerships with private sector companies. These partnerships would help us bear the risks and costs associated with deepwater operations and facilitate the transfer of technology and expertise. |
• | Unconventional areas: We requested areas with potential commercial opportunities in order to be able to enter into partnerships with the private sector that will help us develop the technological capacity to exploit shale and other unconventional deposits in the future. |
Production Fields. With respect to our production activities, we requested the right to continue operating our most profitable fields in order to help ensure the maintenance of our production. We also requested the right to continue developing complex and capital-intensive areas, such as deepwater fields, that we believe we can successfully operate by entering into strategic partnerships with the private sector. Altogether, we requested the right to continue operating all of the fields that are currently in production, as well as many of the fields that are being developed or are close to being developed.
Our proposal grouped the production fields that we requested according to the following criteria:
• | Conventional onshore fields: We primarily requested profitable fields for which we have the expertise and technology necessary to develop, as well as certain less profitable fields for strategic reasons. |
• | Chicontepec: We requested fields that, despite their complexity, are strategically valuable due to the volume of oil and gas deposits. We also requested fields that are subject to existing contractual arrangements, including Integrated Exploration and Production Contracts (which we refer to as the Integrated E&P Contracts). |
• | Shallow waters: We primarily requested profitable fields containing heavy, light and extra-light crude oil deposits that were already in production or under development. We also requested certain fields containing extra-heavy crude oil deposits that we are developing or will develop in the near future. |
• | Deep waters: We requested fields that are currently under development, including fields inÁrea Perdido. |
Initial Assignments. The Ministry of Energy will take the following factors into consideration when determining whether to grant us an assignment:
Although the Ministry of Energy has, in accordance with the transitional articles of the Energy Reform Decree, until September 17, 2014 to respond to our requests, the Ministry of Energy has publicly announced that
it is possible that its responses may be issued in multiple stages, beginning with areas in which we currently operate. Any areas that we do not request or are not assigned to us will be subject to a competitive bidding process. The transitional articles of the Energy Reform Decree provide that we will be entitled to receive compensation in accordance with a valuation established by the Ministry of Energy in the event that areas that we are currently operating are not assigned to us.
Once a particular area is assigned to us, we may request that the Ministry of Energy permit us to convert the assignment into one of the contractual frameworks described above. If, in connection with the conversion of an assignment, we decide to enter into an agreement with a private sector company, the NHC will conduct a public tender in a manner similar to the bidding process described above to determine who will be our partner.
Capital Expenditures and Investments
The following table shows our capital expenditures, excluding maintenance, for each of the five years ended December 31, 2011,2013, and the budget for such expenditures for 20122014 and 2013.2015. Capital expenditure amounts are derived from our budgetary records, which record such amounts on a cash basis. Accordingly, these capital expenditure amounts do not correspond to capital expenditure amounts included in our consolidated financial statements prepared in accordance with Mexican FRS.IFRS.
Capital Expenditures
Year ended December 31,(1) | Budget 2012 | Budget 2013 | Year ended December 31,(1) | Budget 2014 | Budget 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2009 | 2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||||||||||||||||||||||
(in millions of pesos)(2) | (in millions of pesos)(2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pemex-Exploration and Production | Ps. 115,563 | Ps. 136,102 | Ps. 180,507 | Ps. 194,838 | Ps. 177,059 | Ps. 192,953 | Ps. 208,575 | Ps. | 180,507 | Ps. | 194,838 | Ps. | 177,059 | Ps. | 193,801 | Ps. | 212,556 | Ps. | 230,879 | Ps. | 229,982 | |||||||||||||||||||||||||||||||||||
Pemex-Refining | 15,979 | 17,380 | 18,526 | 22,636 | 25,157 | 45,930 | 58,871 | 18,526 | 22,636 | 25,157 | 28,944 | 29,794 | 40,699 | 77,744 | ||||||||||||||||||||||||||||||||||||||||||
Pemex-Gas and Basic Petrochemicals | 4,004 | 4,203 | 3,941 | 3,887 | 3,019 | 6,126 | 8,074 | 3,941 | 3,887 | 3,019 | 4,468 | 5,405 | 7,548 | 8,234 | ||||||||||||||||||||||||||||||||||||||||||
Pemex-Petrochemicals | 1,139 | 1,614 | 2,053 | 2,462 | 2,426 | 4,212 | 15,130 | 2,053 | 2,462 | 2,426 | 2,892 | 4,003 | 5,396 | 6,109 | ||||||||||||||||||||||||||||||||||||||||||
Petróleos Mexicanos | 227 | 439 | 560 | 206 | 717 | 700 | 2,137 | 560 | 206 | 717 | 943 | 1,707 | 2,189 | 5,554 | ||||||||||||||||||||||||||||||||||||||||||
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Total capital expenditures | Ps. 136,913 | Ps. 159,738 | Ps. 205,587 | Ps. 224,029 | Ps. 208,378 | Ps. 249,921 | Ps. 292,787 | Ps. | 205,587 | Ps. | 224,029 | Ps. | 208,378 | Ps. | 231,048 | Ps. | 253,465 | Ps. | 286,711 | Ps. | 327,623 | |||||||||||||||||||||||||||||||||||
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Note: Numbers may not total due to rounding.
(1) | Includes capitalized interest during construction period for the |
(2) | Figures for |
Source: Petróleos Mexicanos.
Total Capital Expenditures.Expenditures
The following table sets forth our total capital expenditures by project, excluding maintenance, for the five years ended December 31, 2011,2013, as well as the budget for such expenditures for 2012.2014.
Capital Expenditures
Year ended December 31,(1)(2) | Year ended December 31,(1)(2) | Budget 2014(3) | ||||||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | Budget 2012(3) | 2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||||||||||||||||||||||||
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Cantarell | P | s. 21,009 | P | s. 29,073 | P | s. 41,002 | P | s. 38,437 | P | s. 36,303 | P | s. 48,249 | ||||||||||||||||||||||||||||||||||||
Strategic Gas Program | 20,211 | 26,717 | 28,626 | 27,944 | 27,790 | 34,819 | ||||||||||||||||||||||||||||||||||||||||||
Ku-Maloob-Zaap | Ps. | 20,894 | Ps. | 18,350 | Ps. | 21,554 | Ps. | 22,720 | Ps. | 29,738 | Ps. | 34,292 | ||||||||||||||||||||||||||||||||||||
Cantarell(5) | 41,002 | 38,437 | 36,303 | 42,139 | 28,171 | 24,375 | ||||||||||||||||||||||||||||||||||||||||||
Aceite Terciario del Golfo | 4,103 | 8,998 | 20,607 | 28,262 | 21,919 | 15,378 | 20,607 | 28,262 | 21,919 | 20,864 | 20,049 | 5,242 | ||||||||||||||||||||||||||||||||||||
Ku-Maloob-Zaap | 32,165 | 21,124 | 20,894 | 18,350 | 21,554 | 22,804 | ||||||||||||||||||||||||||||||||||||||||||
Tsimin-Xux(6) | — | — | — | — | 13,312 | 20,179 | ||||||||||||||||||||||||||||||||||||||||||
Antonio J. Bermúdez(5)(7) | 10,442 | 9,853 | 11,218 | 13,126 | 11,489 | 10,751 | ||||||||||||||||||||||||||||||||||||||||||
Burgos | 12,106 | 13,182 | 19,410 | 29,704 | 19,564 | 11,128 | 19,410 | 29,704 | 19,564 | 17,324 | 10,316 | 9,935 | ||||||||||||||||||||||||||||||||||||
Antonio J. Bermúdez | 6,568 | 8,728 | 10,442 | 9,853 | 11,218 | 13,311 | ||||||||||||||||||||||||||||||||||||||||||
Crudo Ligero Marino(6)(8) | — | — | — | — | 10,000 | 13,402 | ||||||||||||||||||||||||||||||||||||||||||
Chuc(9) | 3,469 | 2,619 | 3,730 | 7,870 | 9,897 | 12,245 | ||||||||||||||||||||||||||||||||||||||||||
Ogarrio-Magallanes(7) | — | — | — | — | 6,693 | 5,229 | ||||||||||||||||||||||||||||||||||||||||||
Delta del Grijalva | 1,596 | 4,078 | 4,571 | 5,904 | 6,501 | 5,326 | 4,571 | 5,904 | 6,501 | 5,671 | 6,169 | 6,934 | ||||||||||||||||||||||||||||||||||||
Bellota-Chinchorro | 2,364 | 3,912 | 4,496 | 5,518 | 4,912 | 4,053 | ||||||||||||||||||||||||||||||||||||||||||
Integral Poza Rica | 469 | 1,382 | 2,122 | 2,936 | 4,687 | 2,921 | ||||||||||||||||||||||||||||||||||||||||||
Tamaulipas-Constituciones | 147 | 768 | 987 | 1,967 | 3,800 | 1,516 | ||||||||||||||||||||||||||||||||||||||||||
Chuc | 1,931 | 1,702 | 3,469 | 2,619 | 3,730 | 8,205 | ||||||||||||||||||||||||||||||||||||||||||
Jujo-Tecominoacán | 2,851 | 5,655 | 5,419 | 6,584 | 3,658 | 3,779 | ||||||||||||||||||||||||||||||||||||||||||
Cactus-Sitio Grande | 669 | 1,069 | 1,127 | 1,384 | 1,995 | 1,885 | ||||||||||||||||||||||||||||||||||||||||||
Cactus-Sitio Grande(6)(10) | 1,127 | 1,384 | 1,995 | 2,544 | 4,208 | 3,526 | ||||||||||||||||||||||||||||||||||||||||||
Integral Yaxché | 593 | 1,722 | 4,552 | 3,963 | 1,986 | 4,342 | 4,552 | 3,963 | 1,986 | 2,485 | 3,858 | 8,173 | ||||||||||||||||||||||||||||||||||||
El Golpe-Puerto Ceiba | 1,492 | 1,924 | 1,706 | 847 | 1,274 | 2,381 | 1,706 | 847 | 1,274 | 2,691 | 3,708 | 1,438 | ||||||||||||||||||||||||||||||||||||
Arenque | 3,143 | 1,629 | 1,829 | 1,155 | 1,159 | 1,048 | ||||||||||||||||||||||||||||||||||||||||||
Och-Uech-Kax | 19 | 100 | 324 | 1,160 | 1,084 | 979 | ||||||||||||||||||||||||||||||||||||||||||
Veracruz Basin(6) | — | — | — | — | 3,703 | 5,102 | ||||||||||||||||||||||||||||||||||||||||||
Bellota-Chinchorro(11) | 4,496 | 5,518 | 4,912 | 3,101 | 3,607 | 3,356 | ||||||||||||||||||||||||||||||||||||||||||
Jujo-Tecominoacán(5) | 5,419 | 6,584 | 3,658 | 3,555 | 3,336 | 2,576 | ||||||||||||||||||||||||||||||||||||||||||
Tamaulipas-Constituciones | 987 | 1,967 | 3,800 | 3,313 | 2,736 | 847 | ||||||||||||||||||||||||||||||||||||||||||
Ek-Balam | 1,114 | 1,406 | 4,143 | 2,766 | 725 | 1,692 | 4,143 | 2,766 | 725 | 1,023 | 2,549 | 4,752 | ||||||||||||||||||||||||||||||||||||
Caan | 682 | 827 | 1,654 | 1,112 | 658 | 1,407 | ||||||||||||||||||||||||||||||||||||||||||
Lakach | 43 | 1,032 | 128 | 194 | 1,829 | 11,824 | ||||||||||||||||||||||||||||||||||||||||||
Integral Poza Rica | 2,122 | 2,936 | 4,687 | 4,948 | 1,721 | 3,738 | ||||||||||||||||||||||||||||||||||||||||||
Arenque(5) | 1,829 | 1,155 | 1,159 | 1,241 | 1,696 | 1,501 | ||||||||||||||||||||||||||||||||||||||||||
Ixtal-Manik(6) | — | — | — | — | 1,631 | 3,312 | ||||||||||||||||||||||||||||||||||||||||||
Strategic Gas Program(5)(6) | 28,626 | 27,944 | 27,790 | 29,870 | 1,394 | — | ||||||||||||||||||||||||||||||||||||||||||
Cuenca de Macuspana(6) | — | — | — | — | 614 | 1,088 | ||||||||||||||||||||||||||||||||||||||||||
Costero Terrestre(6) | — | — | — | — | 516 | 903 | ||||||||||||||||||||||||||||||||||||||||||
Och-Uech-Kax(8) | 324 | 1,160 | 1,084 | 964 | 80 | — | ||||||||||||||||||||||||||||||||||||||||||
Lankahuasa(6) | — | — | — | — | 37 | 1,866 | ||||||||||||||||||||||||||||||||||||||||||
Ayín-Alux | 15 | 34 | 1,116 | 1,212 | 591 | 85 | 1,116 | 1,212 | 591 | 56 | 34 | 438 | ||||||||||||||||||||||||||||||||||||
Carmito-Artesa | 118 | 160 | 160 | 452 | 319 | 684 | ||||||||||||||||||||||||||||||||||||||||||
Cárdenas(5) | 325 | 669 | 1,111 | 1,062 | 226 | — | ||||||||||||||||||||||||||||||||||||||||||
Lakach | — | 152 | 43 | 1,032 | 128 | 700 | ||||||||||||||||||||||||||||||||||||||||||
Other Exploratory Projects(6) | — | — | — | — | — | 4,856 | ||||||||||||||||||||||||||||||||||||||||||
Carmito-Artesa(10) | 160 | 452 | 319 | 611 | 30 | — | ||||||||||||||||||||||||||||||||||||||||||
Caan(9) | 1,654 | 1,112 | 658 | 1,093 | 27 | — | ||||||||||||||||||||||||||||||||||||||||||
Cárdenas(11) | 1,111 | 1,062 | 226 | 4 | — | — | ||||||||||||||||||||||||||||||||||||||||||
Other Exploratory Projects(5)(12)(13) | — | — | — | 4,208 | 28,070 | 31,698 | ||||||||||||||||||||||||||||||||||||||||||
Other Development Projects | — | — | — | — | — | 463 | ||||||||||||||||||||||||||||||||||||||||||
Administrative and Technical Support | 1,874 | 1,091 | 695 | 613 | 1,280 | 1,406 | 695 | 613 | 1,280 | 2,188 | 1,338 | 1,694 | ||||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||||||
Total | 115,563 | 136,102 | 180,507 | 194,838 | 177,059 | 192,953 | 180,507 | 194,838 | 177,059 | 193,801 | 212,556 | 230,879 | ||||||||||||||||||||||||||||||||||||
Pemex-Refining | ||||||||||||||||||||||||||||||||||||||||||||||||
New Refinery at Tula | 39 | 139 | 60 | 446 | 5,204 | 3,714 | ||||||||||||||||||||||||||||||||||||||||||
Fuel Quality Investments | — | — | 429 | 3,313 | 6,571 | 10,119 | 429 | 3,313 | 6,571 | 6,558 | 2,801 | 5,894 | ||||||||||||||||||||||||||||||||||||
Residual Conversion from Salamanca Refinery | 104 | 64 | 78 | 155 | 909 | 4,480 | ||||||||||||||||||||||||||||||||||||||||||
Tuxpan Pipeline and Storage and Distribution Terminals | 650 | 823 | 770 | 597 | 255 | 347 | ||||||||||||||||||||||||||||||||||||||||||
Minatitlán Refinery Reconfiguration | 9,257 | 7,156 | 5,159 | 4,633 | 2,850 | 1,357 | 5,159 | 4,633 | 2,850 | 5,366 | — | — | ||||||||||||||||||||||||||||||||||||
Tuxpan Pipeline and Storage and Distribution Terminals | — | — | 650 | 823 | 770 | 1,090 | ||||||||||||||||||||||||||||||||||||||||||
Residual Conversion from Salamanca Refinery | — | — | 104 | 64 | 78 | 4,140 | ||||||||||||||||||||||||||||||||||||||||||
New Refinery at Tula | — | — | 39 | 139 | 60 | 6,155 | ||||||||||||||||||||||||||||||||||||||||||
Others | 6,722 | 10,223 | 12,145 | 13,664 | 14,827 | 23,068 | 12,145 | 13,664 | 14,827 | 15,822 | 20,625 | 26,264 | ||||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||||||
Total | 15,979 | 17,380 | 18,526 | 22,636 | 25,157 | 45,930 | 18,526 | 22,636 | 25,157 | 28,944 | 29,794 | 40,699 | ||||||||||||||||||||||||||||||||||||
Pemex-Gas and Basic Petrochemicals | ||||||||||||||||||||||||||||||||||||||||||||||||
Rehabilitation of Fire Protection Network at GPCs | 292 | 162 | 125 | 156 | 545 | 180 | ||||||||||||||||||||||||||||||||||||||||||
Cryogenic Plant at Poza Rica GPC | — | — | 640 | 1,767 | 1,103 | 601 | 640 | 1,767 | 1,103 | 801 | 498 | 34 | ||||||||||||||||||||||||||||||||||||
Refurbishment, Modification and Modernization of Nationwide Pumping and Compression Stations | 67 | 39 | 47 | 134 | 255 | 376 | ||||||||||||||||||||||||||||||||||||||||||
Preservation of Processing Capacity at the Nuevo Pemex GPC | — | — | 2 | 280 | 228 | 214 | 2 | 280 | 228 | 268 | 237 | 253 | ||||||||||||||||||||||||||||||||||||
Rehabilitation of Fire Protection Network at GPCs | — | 189 | 292 | 162 | 125 | 396 | ||||||||||||||||||||||||||||||||||||||||||
Conservation of Operational Reliability at Poza Rica GPC | — | 85 | 294 | 166 | 92 | 169 | ||||||||||||||||||||||||||||||||||||||||||
Refurbishment, Modification and Modernization of Nationwide Pumping and Compression Stations | 20 | 38 | 67 | 39 | 47 | 205 | ||||||||||||||||||||||||||||||||||||||||||
Rehabilitation and Integration of Burners Venting System at Ciudad Pemex GPC | — | 15 | 252 | 205 | 31 | 163 | ||||||||||||||||||||||||||||||||||||||||||
Modernization of Systems for Monitoring, Control and Supervision of Transportation by Pipeline | — | — | — | — | 24 | 96 | ||||||||||||||||||||||||||||||||||||||||||
Petrochemical Pipelines via Agave 2004 | — | — | — | 2 | — | 585 | ||||||||||||||||||||||||||||||||||||||||||
Infrastructure for Transportation of Petrochemical Products from Nuevo Pemex-Cactus to Coatzacoalcos | — | — | — | 2 | — | 472 | ||||||||||||||||||||||||||||||||||||||||||
Modular Cryogenic Plants in Station 19 in Reynosa GPC | 1,707 | 1,333 | 275 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Others | 2,277 | 2,543 | 2,119 | 1,264 | 1,369 | 3,226 | ||||||||||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||||||||||||
Total | 4,004 | 4,203 | 3,941 | 3,887 | 3,019 | 6,126 | ||||||||||||||||||||||||||||||||||||||||||
Modernization of Areas of Transportation Products of GPCs | — | — | — | — | 155 | 156 | ||||||||||||||||||||||||||||||||||||||||||
Project of Rehabilitation and Integration of Burners Venting System at Ciudad Pemex GPC | 252 | 205 | 31 | 60 | 120 | 1 |
Year ended December 31,(1)(2) | Year ended December 31,(1)(2) | Budget 2014(3) | ||||||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | Budget 2012(3) | 2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||||||||||||||||||||||||
(in millions of pesos)(4) | (in millions of pesos)(4) | |||||||||||||||||||||||||||||||||||||||||||||||
Conservation of Operational Reliability at Poza Rica GPC | 294 | 166 | 92 | 126 | 56 | 22 | ||||||||||||||||||||||||||||||||||||||||||
Modernization of Systems for Monitoring, Control and Supervision of Transportation by Pipeline | — | — | 24 | 79 | 36 | 352 | ||||||||||||||||||||||||||||||||||||||||||
Integral Maintenance of Pipeline Systems for Ethane, Basic Petrochemicals and Secondary Petrochemicals | — | — | — | — | 13 | 311 | ||||||||||||||||||||||||||||||||||||||||||
Integral Project of Electric Reliability at GPCs | — | — | — | — | — | 226 | ||||||||||||||||||||||||||||||||||||||||||
Refurbishment and Modernization of Natural Gas Turbocompressors of the Cryogenic Plants at the Nuevo Pemex GPC | — | — | — | — | — | 195 | ||||||||||||||||||||||||||||||||||||||||||
Integral Maintenance of Pipeline Systems for Natural Gas and LPG Stage II | — | — | — | — | — | 174 | ||||||||||||||||||||||||||||||||||||||||||
Operational Reliability of the Pipeline Division Assets | — | — | — | — | — | 57 | ||||||||||||||||||||||||||||||||||||||||||
Refurbishment and Modernization of the Processing Systems and Equipment of La Venta GPC | — | — | — | — | — | 41 | ||||||||||||||||||||||||||||||||||||||||||
Petrochemical Pipelines via Agave 2004 | — | 2 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Infrastructure for Transportation of Petrochemical Products from Nuevo Pemex-Cactus to Coatzacoalcos | — | 2 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Modular Cryogenic Plants in Station 19 in Reynosa GPC | 275 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Others | 2,119 | 1,264 | 1,369 | 2,845 | 3,490 | 5,170 | ||||||||||||||||||||||||||||||||||||||||||
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Total | 3,941 | 3,887 | 3,019 | 4,468 | 5,405 | 7,548 | ||||||||||||||||||||||||||||||||||||||||||
Pemex-Petrochemicals | ||||||||||||||||||||||||||||||||||||||||||||||||
Modernization and Expansion of Capacity of Aromatics Train I at Cangrejera PC | 218 | 16 | 442 | 1,354 | 941 | 728 | ||||||||||||||||||||||||||||||||||||||||||
Modernization and Expansion of Production Capacity of Aromatics Train I at Cangrejera PC | 442 | 1,354 | 941 | 777 | 495 | 10 | ||||||||||||||||||||||||||||||||||||||||||
Maintaining Production Capacity of Ethylene Plant at Cangrejera PC | — | — | — | 20 | 375 | 125 | ||||||||||||||||||||||||||||||||||||||||||
Maintaining Production Capacity of Ethane Derivatives Chain IV at Morelos PC | — | 4 | 78 | 206 | 288 | 34 | ||||||||||||||||||||||||||||||||||||||||||
Modernization and Expansion of Production Capacity of Ethane Derivatives Chain I at Morelos PC | 284 | 56 | 86 | 5 | 208 | 318 | ||||||||||||||||||||||||||||||||||||||||||
Maintaining Production Capacity of Ethane Derivatives Chain II at Morelos PC | 218 | 224 | 78 | 125 | 163 | 131 | ||||||||||||||||||||||||||||||||||||||||||
Maintaining Production Capacity of Ethane Derivatives Chain II at Cangrejera PC | 16 | 3 | 50 | 65 | 98 | — | ||||||||||||||||||||||||||||||||||||||||||
Modernization and Optimization of Auxiliary Services Infrastructure I at Morelos PC | 57 | 57 | 45 | — | 85 | — | ||||||||||||||||||||||||||||||||||||||||||
Maintaining Production Capacity, Storage and Distribution of Ammonia at the Cosoleacaque PC | — | — | — | — | 110 | 440 | — | — | 110 | 441 | 65 | 18 | ||||||||||||||||||||||||||||||||||||
Modernization and Expansion of Capacity of Ethane Derivatives Chain I at Morelos PC | 506 | 507 | 284 | 56 | 86 | 30 | ||||||||||||||||||||||||||||||||||||||||||
Maintaining Production Capacity of Ethane Derivatives Chain IV at Morelos PC | — | — | — | 4 | 78 | 395 | ||||||||||||||||||||||||||||||||||||||||||
Maintaining Production Capacity of Ethane Derivatives Chain II at Morelos PC | — | 267 | 218 | 224 | 78 | 240 | ||||||||||||||||||||||||||||||||||||||||||
Maintaining Production Capacity of Ethane Derivatives II at Cangrejera PC | 1 | 10 | 16 | 3 | 50 | 153 | ||||||||||||||||||||||||||||||||||||||||||
Modernization and Optimization of Auxiliary Services Infrastructure I at Morelos PC | 6 | 70 | 57 | 57 | 45 | — | ||||||||||||||||||||||||||||||||||||||||||
Maintaining Production Capacity of Auxiliary Services Infrastructure I at Pajaritos PC | — | 7 | 3 | 7 | 41 | 142 | 3 | 7 | 41 | 125 | 64 | — | ||||||||||||||||||||||||||||||||||||
Rehabilitation of Facilities for Physical Security at Morelos PC | — | 6 | 1 | 73 | 51 | 1 | ||||||||||||||||||||||||||||||||||||||||||
Maintaining Production Capacity of Aromatics Train II at Cangrejera PC | 21 | 29 | 73 | 53 | 30 | 39 | 73 | 53 | 30 | 29 | 16 | 10 | ||||||||||||||||||||||||||||||||||||
Rehabilitation of Facilities for Physical Security at Morelos PC | — | — | — | 6 | 1 | 152 | ||||||||||||||||||||||||||||||||||||||||||
Maintaining Production Capacity of Ethylene Plant at Cangrejera PC | — | — | — | — | — | 157 | ||||||||||||||||||||||||||||||||||||||||||
Expansion of Styrene Plant at Cangrejera PC | 46 | 16 | 1 | — | — | — | 1 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Others | 341 | 693 | 958 | 698 | 966 | 1,736 | 958 | 698 | 966 | 1,025 | 2,095 | 4,749 | ||||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||||||
Total | 1,139 | 1,614 | 2,053 | 2,462 | 2,426 | 4,212 | 2,053 | 2,462 | 2,426 | 2,892 | 4,003 | 5,396 | ||||||||||||||||||||||||||||||||||||
Petróleos Mexicanos | ||||||||||||||||||||||||||||||||||||||||||||||||
Total | 227 | 439 | 560 | 206 | 717 | 700 | 560 | 206 | 717 | 943 | 1,707 | 2,189 | ||||||||||||||||||||||||||||||||||||
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Total capital expenditures | Ps. 136,913 | Ps. 159,738 | Ps. 205,587 | Ps. 224,029 | Ps. 208,378 | Ps. 249,921 | Ps. | 205,587 | Ps. | 224,029 | Ps. | 208,378 | Ps. | 231,048 | Ps. | 253,465 | Ps. | 286,711 | ||||||||||||||||||||||||||||||
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|
Notes: Numbers may not total due to rounding.
Notes: | Numbers may not total due to rounding. |
GPC = Gas Processing Complex.
PC = Petrochemical Complex.
(1) | Amounts based on cash basis method of accounting. |
(2) | Includes capitalized interest during construction period for the |
(3) | Amended budget after the initial authorized budget. |
(4) | Figures for |
(5) | As of January 1, 2013, the Antonio J. Bermúdez, Arenque, Cantarell, Jujo-Tecominoacán and Strategic Gas Program exploratory projects, which formerly constituted an exploratory component, were designated as separate projects and funds were allocated to them as stand-alone projects. |
(6) | As of January 1, 2013, the Veracruz Basin, Lankahuasa, Costero Terrestre, Crudo Ligero Marino, Ixtal-Manik, Cuenca de Macuspana and Tsimin-Xux projects (projects formerly supported by the Strategic Gas Program project resources) were designated as separate projects and funds were allocated to them as stand-alone projects and the San Manuel project (a project formerly supported by the Strategic Gas Program project resources) was separated from the Strategic Gas Program and was merged into the Cactus-Sitio Grande project. |
(7) | As of January 1, 2013, the Ogarrio-Magallanes project was separated from the Antonio J. Bermúdez project. |
(8) | As of January 1, 2013, the Och-Uech-Kax project was merged into the Crudo Ligero Marino project. |
(9) | As of January 1, 2013, the Caan project was merged into the Chuc project. |
(10) | As of January 1, 2013, the Carmito Artesa project was merged into the Cactus-Sitio Grande project. |
(11) | As of January 1, 2012, the Cárdenas project was merged into the Bellota-Chinchorro project. |
As of January 1, 2012, the Campeche Oriente exploratory project (a project formerly supported by Ku-Maloob-Zaap project resources) and the Comalcalco exploratory project (a project formerly supported by Bellota-Chinchorro project resources) were designated as separate projects and funds were allocated to them as stand-alone projects. |
Source: Petróleos Mexicanos.
Capital Expenditures Budget.Budget
The following table sets forth our approved capital expenditures budget for 20122014 and estimates for the years 20132015 through 2015.2017. These figures are subject to change in accordance with our future investment plans and the provisions of subsequent budgetary approvals.
Approved Capital Expenditures Budget
Year ended December 31,(1) | Year ended December 31,(1) | |||||||||||||||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2014 | 2015 | 2016 | 2017 | |||||||||||||||||||||||||
(in millions of constant 2012 pesos) | (in millions of constant 2014 pesos) | |||||||||||||||||||||||||||||||
Pemex-Exploration and Production | ||||||||||||||||||||||||||||||||
Ku-Maloob-Zaap | Ps. | 34,292 | Ps. | 34,338 | Ps. | 31,663 | Ps. | 22,403 | ||||||||||||||||||||||||
Cantarell | Ps. 48,249 | Ps. 46,632 | Ps. 39,669 | Ps. 22,324 | 24,375 | 26,713 | 23,525 | 20,601 | ||||||||||||||||||||||||
Strategic Gas Program | 34,819 | 37,339 | 30,210 | 24,102 | ||||||||||||||||||||||||||||
Ku-Maloob-Zaap | 22,804 | 30,123 | 27,741 | 19,467 | ||||||||||||||||||||||||||||
Tsimin-Xux(2)(3) | 20,179 | 14,711 | 12,827 | 16,417 | ||||||||||||||||||||||||||||
Crudo Ligero Marino(2)(3) | 13,402 | 12,539 | 10,317 | 10,588 | ||||||||||||||||||||||||||||
Chuc | 12,245 | 12,577 | 13,825 | 13,998 | ||||||||||||||||||||||||||||
Lakach | 11,824 | 7,538 | 602 | 526 | ||||||||||||||||||||||||||||
Antonio J. Bermúdez(4) | 10,751 | 8,427 | 8,762 | 7,016 | ||||||||||||||||||||||||||||
Burgos | 9,935 | 3,746 | 3,862 | 8,105 | ||||||||||||||||||||||||||||
Integral Yaxché | 8,173 | 15,041 | 8,238 | 4,929 | ||||||||||||||||||||||||||||
Delta del Grijalva | 6,934 | 4,166 | 2,656 | 1,729 | ||||||||||||||||||||||||||||
Aceite Terciario del Golfo | 15,378 | 14,032 | 14,199 | 18,419 | 5,242 | 4,287 | 7,860 | 6,615 | ||||||||||||||||||||||||
Antonio J. Bermúdez | 13,311 | 6,924 | 5,033 | 2,548 | ||||||||||||||||||||||||||||
Burgos | 11,128 | 13,954 | 16,359 | 13,914 | ||||||||||||||||||||||||||||
Chuc | 8,205 | 10,615 | 6,348 | 735 | ||||||||||||||||||||||||||||
Delta del Grijalva | 5,326 | 4,909 | 1,803 | 2,109 | ||||||||||||||||||||||||||||
Integral Yaxché | 4,342 | 4,945 | 1,518 | 1,676 | ||||||||||||||||||||||||||||
Bellota-Chinchorro | 4,053 | 2,405 | 1,956 | 1,392 | ||||||||||||||||||||||||||||
Ogarrio-Magallanes(4) | 5,229 | 5,470 | 6,380 | 6,642 | ||||||||||||||||||||||||||||
Veracruz Basin(2)(3) | 5,102 | 4,449 | 4,513 | 4,859 | ||||||||||||||||||||||||||||
Ek-Balam | 4,752 | 4,053 | 4,810 | 4,259 | ||||||||||||||||||||||||||||
Integral Poza Rica | 3,738 | 2,720 | 1,893 | 1,487 | ||||||||||||||||||||||||||||
Cactus-Sitio Grande(2) | 3,526 | 3,133 | 2,914 | 1,758 | ||||||||||||||||||||||||||||
Bellota Chinchorro | 3,356 | 2,916 | 3,637 | 2,782 | ||||||||||||||||||||||||||||
Ixtal-Manik(2)(3) | 3,312 | 3,986 | 2,557 | 2,194 | ||||||||||||||||||||||||||||
Jujo-Tecominoacán | 3,779 | 3,033 | 3,315 | 1,823 | 2,576 | 1,713 | 1,204 | 2,287 | ||||||||||||||||||||||||
Integral Poza Rica | 2,921 | 1,352 | 1,424 | 651 | ||||||||||||||||||||||||||||
Lankahuasa(2)(3) | 1,866 | 418 | 41 | 22 | ||||||||||||||||||||||||||||
Arenque | 1,501 | 1,712 | 2,515 | 1,187 | ||||||||||||||||||||||||||||
El Golpe-Puerto Ceiba | 2,381 | 1,785 | 1,229 | 391 | 1,438 | 1,112 | 1,238 | 1,274 | ||||||||||||||||||||||||
Cactus-Sitio Grande | 1,885 | 1,235 | 354 | 240 | ||||||||||||||||||||||||||||
Ek-Balam | 1,692 | 4,242 | 1,996 | 1,238 | ||||||||||||||||||||||||||||
Cuenca de Macuspana(2)(3) | 1,088 | 825 | 635 | 193 | ||||||||||||||||||||||||||||
Costero Terrestre(2)(3) | 903 | 1,357 | 517 | 261 | ||||||||||||||||||||||||||||
Tamaulipas-Constituciones | 1,516 | 1,155 | 1,347 | 1,164 | 847 | 661 | 551 | 474 | ||||||||||||||||||||||||
Caan | 1,407 | 1,797 | 1,766 | 1,001 | ||||||||||||||||||||||||||||
Arenque | 1,048 | 2,236 | 2,552 | 3,738 | ||||||||||||||||||||||||||||
Och-Uech-Kax | 979 | 324 | 76 | 46 | ||||||||||||||||||||||||||||
Lakach | 700 | 10,808 | 5,336 | 578 | ||||||||||||||||||||||||||||
Carmito-Artesa | 684 | 309 | 206 | 188 | ||||||||||||||||||||||||||||
Ayín-Alux | 85 | 330 | 105 | 361 | 438 | 120 | 1,626 | 3,192 | ||||||||||||||||||||||||
Other Exploratory Projects | 4,856 | 7,138 | 8,378 | 11,647 | ||||||||||||||||||||||||||||
Other Exploratory Projects(5) | 31,698 | 46,832 | 56,853 | 54,049 | ||||||||||||||||||||||||||||
Other Development Projects | 463 | 2,385 | 1,707 | 143 | ||||||||||||||||||||||||||||
Administrative and Technical Support | 1,406 | 953 | 265 | 202 | 1,694 | 2,307 | 2,344 | 3,125 | ||||||||||||||||||||||||
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Total | 192,953 | 208,575 | 173,185 | 129,952 | 230,879 | 229,982 | 220,075 | 203,114 | ||||||||||||||||||||||||
Pemex-Refining | ||||||||||||||||||||||||||||||||
Fuel Quality Investments | 10,119 | 7,630 | — | — | 5,894 | 5,649 | — | — | ||||||||||||||||||||||||
Residual Conversion from Salamanca Refinery | 4,480 | 9,407 | 8,561 | 8,531 | ||||||||||||||||||||||||||||
New Refinery at Tula (pre-investment study) | 6,155 | 1,036 | 1,141 | 763 | 3,714 | 5,109 | 889 | 457 | ||||||||||||||||||||||||
Residual Conversion from Salamanca Refinery | 4,140 | 15,121 | 11,760 | 5,023 | ||||||||||||||||||||||||||||
Minatitlán Refinery Reconfiguration | 1,357 | — | — | — | ||||||||||||||||||||||||||||
Tuxpan Pipeline and Storage and Distribution Terminals | 1,090 | — | — | — | 347 | 472 | — | — | ||||||||||||||||||||||||
Others | 23,068 | 35,085 | 11,153 | 4,765 | 26,264 | 57,107 | 42,428 | 21,734 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Total | 45,930 | 58,871 | 24,055 | 10,551 | 40,699 | 77,744 | 51,878 | 30,722 | ||||||||||||||||||||||||
Pemex-Gas and Basic Petrochemicals | ||||||||||||||||||||||||||||||||
Cryogenic Plant at Poza Rica GPC | 601 | — | — | — | ||||||||||||||||||||||||||||
Petrochemical Pipelines via Agave 2004 | 585 | 410 | — | — | ||||||||||||||||||||||||||||
Infrastructure for Transportation of Petrochemical Products from Nuevo Pemex-Cactus to Coatzacoalcos | 472 | 1,168 | 701 | — | ||||||||||||||||||||||||||||
Rehabilitation of Fire Protection Network at GPCs | 396 | 272 | 721 | 369 |
Year ended December 31,(1) | Year ended December 31,(1) | |||||||||||||||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2014 | 2015 | 2016 | 2017 | |||||||||||||||||||||||||
(in millions of constant 2012 pesos) | (in millions of constant 2014 pesos) | |||||||||||||||||||||||||||||||
Pemex-Gas and Basic Petrochemicals | ||||||||||||||||||||||||||||||||
Refurbishment, Modification and Modernization of Nationwide Pumping and Compression Stations | 376 | 536 | — | — | ||||||||||||||||||||||||||||
Modernization of Systems for Monitoring, Control and Supervision of Transportation by Pipeline | 352 | 13 | — | — | ||||||||||||||||||||||||||||
Integral Maintenance of Pipeline Systems for Ethane, Basic Petrochemicals and Secondary Petrochemicals | 311 | 205 | 319 | 102 | ||||||||||||||||||||||||||||
Preservation of Processing Capacity at the Nuevo Pemex GPC | 214 | 288 | 344 | 415 | 253 | 375 | — | — | ||||||||||||||||||||||||
Refurbishment, Modification and Modernization of Nationwide Pumping and Compression Stations | 205 | 266 | 266 | 400 | ||||||||||||||||||||||||||||
Integral Project of Electric Reliability at GPCs | 226 | 212 | 382 | — | ||||||||||||||||||||||||||||
Refurbishment and Modernization of Natural Gas Turbocompressors of the Cryogenic Plants at the Nuevo Pemex GPC | 195 | 240 | 292 | — | ||||||||||||||||||||||||||||
Rehabilitation of Fire Protection Network at GPCs | 180 | — | — | — | ||||||||||||||||||||||||||||
Integral Maintenance of Pipeline Systems for Natural Gas and LPG Stage II | 174 | 276 | 256 | 255 | ||||||||||||||||||||||||||||
Modernization of Areas of Transportation Products of GPCs | 156 | 472 | 582 | 588 | ||||||||||||||||||||||||||||
Operational Reliability of the Pipeline Division Assets | 57 | 170 | 170 | 153 | ||||||||||||||||||||||||||||
Refurbishment and Modernization of the Processing Systems and Equipment of La Venta GPC | 41 | 158 | 188 | 110 | ||||||||||||||||||||||||||||
Cryogenic Plant at Poza Rica GPC | 34 | — | — | — | ||||||||||||||||||||||||||||
Conservation of Operational Reliability at the Poza Rica GPC | 169 | 10 | — | — | 22 | 3 | — | — | ||||||||||||||||||||||||
Rehabilitation and Integration of Burners Venting System in Ciudad Pemex GPC | 163 | — | — | — | ||||||||||||||||||||||||||||
Modernization of Systems for Monitoring, Control and Supervision of Transportation by Pipeline | 96 | 153 | — | — | ||||||||||||||||||||||||||||
Station of Compression of the Gulf | — | 265 | — | — | ||||||||||||||||||||||||||||
Project of Rehabilitation and Integration of Burners Venting System in Ciudad Pemex GPC | 1 | — | — | — | ||||||||||||||||||||||||||||
Others | 3,226 | 5,242 | 5,793 | 2,514 | 5,170 | 5,574 | 2,935 | 317 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Total | 6,126 | 8,074 | 7,825 | 3,698 | 7,548 | 8,234 | 5,124 | 1,526 | ||||||||||||||||||||||||
Pemex-Petrochemicals | ||||||||||||||||||||||||||||||||
Modernization and Expansion of Capacity of the Aromatics Train I at Cangrejera PC | 728 | 1,625 | 2,195 | 296 | ||||||||||||||||||||||||||||
Maintaining Production Capacity, Storage and Distribution of Ammonia at the Cosoleacaque PC | 440 | 75 | 189 | — | ||||||||||||||||||||||||||||
Maintaining Production Capacity of Ethane Derivatives Chain IV at Morelos PC | 395 | 220 | 308 | 230 | ||||||||||||||||||||||||||||
Modernization and Expansion of Production Capacity of Ethane Derivatives Chain I at Morelos PC | 318 | 799 | 1,249 | 519 | ||||||||||||||||||||||||||||
Maintaining Production Capacity of Ethane Derivatives Chain II at Morelos PC | 240 | 160 | 623 | — | 131 | — | — | 68 | ||||||||||||||||||||||||
Maintaining Production Capacity of Ethylene Plant at Cangrejera PC | 157 | 587 | 79 | — | 125 | 201 | 199 | — | ||||||||||||||||||||||||
Maintaining Production Capacity of Ethane Derivatives II at Cangrejera PC | 153 | 168 | 429 | 393 | ||||||||||||||||||||||||||||
Rehabilitation of Facilities for Physical Security at Morelos PC | 152 | 93 | — | — | ||||||||||||||||||||||||||||
Maintaining Production Capacity of Auxiliary Services Infrastructure I at Pajaritos PC | 142 | 38 | 39 | — | ||||||||||||||||||||||||||||
Maintaining Production Capacity of Ethane Derivatives Chain IV at Morelos PC | 34 | — | — | 83 | ||||||||||||||||||||||||||||
Maintaining Production Capacity, Storage and Distribution of Ammonia at the Cosoleacaque PC | 18 | 205 | 150 | — | ||||||||||||||||||||||||||||
Modernization and Expansion of Production Capacity of the Aromatics Train I at Cangrejera PC | 10 | 132 | 224 | 144 | ||||||||||||||||||||||||||||
Maintaining Production Capacity of Aromatics Train II at Cangrejera PC | 39 | 88 | 72 | — | 10 | — | — | — | ||||||||||||||||||||||||
Modernization and Expansion of Capacity of Ethane Derivatives Chain I at Morelos PC | 30 | 1,723 | 1,404 | 95 | ||||||||||||||||||||||||||||
Expansion of Styrene Plant at Cangrejera PC | — | 693 | 1,071 | 249 | ||||||||||||||||||||||||||||
Modernization and Optimization of Auxiliary Services Infrastructure I at Morelos PC | — | 135 | 222 | — | ||||||||||||||||||||||||||||
Refurbishing of Facilities for Physical Security at Morelos PC | 1 | 103 | — | — | ||||||||||||||||||||||||||||
Others | 1,736 | 9,524 | 7,443 | 2,354 | 4,749 | 4,669 | 4,709 | 6,566 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Total | 4,212 | 15,130 | 14,074 | 3,618 | 5,396 | 6,109 | 6,532 | 7,380 | ||||||||||||||||||||||||
Petróleos Mexicanos | ||||||||||||||||||||||||||||||||
Total | 700 | 2,137 | 1,468 | 416 | 2,189 | 5,554 | 782 | 148 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Total Capital Expenditures Budget | Ps. 249,921 | Ps. 292,787 | Ps. 220,607 | Ps. 148,235 | Ps. | 286,711 | Ps. | 327,623 | Ps. | 284,391 | Ps. | 242,890 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
Notes: Numbers may not total due to rounding.
Notes: | Numbers may not total due to rounding. |
GPC = Gas Processing Complex.
PC = Petrochemical Complex.
(1) | Amounts based on cash basis method of accounting. |
(2) | As of January 1, 2013, the Veracruz, Lankahuasa, Costero Terrestre, Crudo Ligero Marino, Ixtal-Manik, Cuenca de Macuspana and Tsimin-Xux projects (projects formerly supported by the Strategic Gas Program project resources) were designated as separate projects and funds were allocated to them as stand-alone projects and the San Manuel project (a project formerly supported by the Strategic Gas Program project resources) was separated from the Strategic Gas Program and was merged into the Cactus-Sitio Grande project. |
(3) | As of January 1, 2013, the Veracruz Basin, Lankahuasa, Costero Terrestre, Crudo Ligero Marino, Ixtal-Manik, Cuenca de Macuspana, Tsimin-Xux and San Manuel projects were separated from the Strategic Gas Program. |
(4) | As of January 1, 2013, the Ogarrio-Magallanes project was designated as a separate project from the Antonio J. Bermúdez project. |
(5) | As of January 1, 2013, the Alosa, Chalabil, Cuichapa, Han, Holok, Lebranche, Oyamel, Pakal, Área Perdido, Tlancanán and Uchukil exploratory projects were designated as separate projects and funds were allocated to them as stand-alone projects. |
Source: Petróleos Mexicanos.
We have budgeted a total of Ps. 249.9286.7 billion in constant 20122014 pesos for capital expenditures in 2012.2014. We expect to direct Ps. 193.0230.9 billion (or 77.2%80.5% of our total capital expenditures) to exploration and production programs in 2012.2014. This significant investment in exploration and production activities reflects our focus on maximizing the potential of Mexico’s hydrocarbon reserves as we begin operating under the new framework established by the Energy Reform Decree. The allocation of capital expenditures may be impacted by the Mexican Congress’ enactment of secondary legislation implementing the Energy Reform Decree.
See “—Information on the Company—History and Development—Energy Reform” in this Item 4. In addition, we continuously review our capital expenditures portfolio in accordance with our current and future business plans and upcoming opportunities.
Our main objectives for upstream investment are to maximize the long-term economic value, and to increase and improve the quality of Mexico’s oil and gas reserves, enhance Pemex-Exploration and Production’s reserves recovery ratio, improve the reliability of its production and transportation infrastructure for crude oil and natural gas operations and continue to emphasize industrial safety and environmental compliance. Our 20122014 budget objectives include increasing crude oil production from the 20112013 production level and increasing the supply of natural gas for the domestic market in the medium to long term. In addition, we plan to increase our investments in the deep waters of certain areas of the Gulf of Mexico, including Golfo de México B, Golfo de México Sur and Área Perdido, investments which are currently funded by the Cantarell project and the Lakach project and may be funded as stand-alone projects in the future.
Our downstream investment program seeks to improve the quality of our product selection and the reliability of our logistics and distribution services, to achieve a level of efficiency similar to that of our international competitors and to continue to emphasize industrial safety and environmental compliance. In addition, on August 12, 2009, with the required donation of land for the project by the government of
To this end, we are currently developing a new refinery in Tula, in the state of Hidalgo, having been completed, we announced the construction of a new refinery in Tula. The refinerywhich is expected to begin production in 2016 and to have a crude oil processing capacity of 250 thousand barrels per day.day of Maya crude oil, 163 thousand barrels per day of gasoline and 117 thousand barrels per day of diesel. See “—Business Overview—Refining—New Refinery at Tula” in this Item 4. We are also planning to renovate and upgrade ourIn addition, we announced in June 2013 that the Miguel Hidalgo refinery in Salamanca,Tula will be reconfigured to process its vacuum residue for conversion into high value fuels such as gasoline and diesel. See “—Business Overview—Refining—Vacuum Residue Processing at Miguel Hidalgo Refinery” in the state of Guanajuato.this Item 4.
BUSINESS OVERVIEW
Overview by Business Segment
Exploration and Production
Pemex-Exploration and Production’s primary objectives for 20122014 include: (1) increasing current crude oil production levels in order to satisfy domestic demand and have surpluses available for export; (2) maintaining natural gas production levels in order to attempt to satisfy domestic demand and avoid increasing our dependence on natural gas imports; (3) continuing to increase the replacement rate of proved and total reserves; (4) maintaining discovery and development costs similar to those of our international competitors; and (5) improving performance in terms of industrial security and environmental protection, as well as continuing to build relationships with the communities in which we operate. Our upstream investment program seeks to meet these objectives by: maximizing the value of produced reserves; improving the quality of our product selection; and improving the reliability of our logistics and distribution services to achieve an optimal level of efficiency, while continuing to emphasize industrial safety and environmental compliance.
Pemex-Exploration and Production explores for and produces crude oil and natural gas, primarily in the northeastern and southeastern regions of Mexico and offshore in the Gulf of Mexico. In nominal peso terms, our capital investment in exploration and production activities decreasedincreased by 9.1%9.7% in 2011.2013. As a result of our investments in previous years, our total hydrocarbon production reached a level of approximately 3,7203,671 thousand barrels of oil equivalent per day in 2011.2013. Pemex-Exploration and Production’s crude oil production decreased by 1.0% from 20102012 to 2011,2013, averaging 2,550.12,522 thousand barrels per day in 2011,2013, primarily as a result of the decline of the Cantarell, project,Delta del Grijalva, Jujo-Tecominoacán, Ixtal-Manik and Crudo Ligero Marino projects, which was partially offset by increased crude oil production in the following projects: Ku-Maloob-Zaap, Crudo Ligero Marino, Delta del Grijalva, Ixtal Manik, YaxchéTsimin-Xux, Chuc, Ek-Balam, El Golpe-Puerto Ceiba, Burgos and Ogarrio-Magallanes.Veracruz. Pemex-Exploration and Production’s natural gas production (excluding natural gas liquids) decreased by 6.1%0.2% from 20102012 to 2011,2013, averaging 6,594.16,370.3 million cubic feet per day in 2011.2013. This decrease in natural gas production was a result of lower volumes from the Cantarell, BurgosVeracruz, Delta del Grijalva, Crudo Ligero Marino, Ixtal-Manik and VeracruzCostero Terrestre projects. Exploration drilling activity decreasedincreased by 15.4%2.7% from 20102012 to 2011,2013, from 3937 exploratory wells completed in 20102012 to 3338 exploratory wells
completed in 2011.2013. Development drilling activity decreased by 20.8%34.6% from 20102012 to 2011,2013, from 1,2641,201 development wells completed in 20102012 to 1,001785 development wells completed in 2011.2013. In 2011,2013, we completed the drilling of 1,034823 wells in total. Our drilling activity in 20112013 was focused on increasing the production of non-associated gas in the Burgos, VeracruzAceite Terciario del Golfo (or ATG) and MacuspanaOgarrio-Magallanes projects and of heavy crude oil in the Cantarell and Ku-Maloob-Zaap projects.
In 2011, our2013, the reserves replacement rate (which we refer to as the RRR) was 101.1%67.8%, which was 15.336.5 percentage points higherlower than ourthe RRR in 2010,2012, which was 85.8%104.3%.
Our well-drilling activities during 20112013 led to significant onshore and offshore discoveries. The main discoveries included heavylight crude oil reserves located in the Southeastern and Veracruz basins, specifically in the Northeastern and Southwestern Marine regions, and light crude oil reserves located in both the Southwestern MarineNorthern and Southern regions. In addition, exploration activities in the Northern region led to the discovery of additional non-associated gas reserves in the Veracruz and Burgos basins.basin. Our current challenge with respect to these discoveries is their immediate development in order to increase current production levels.
Pemex-Exploration and Production’s production goals for 20122014 include increasing its crude oil production to approximately 2.62.55 million barrels per day and maintaining natural gas production above 6.06.7 billion cubic feet per day, in order to better satisfy domestic demand for natural gas, and thus lower the rate of increase of imports of natural gas and natural gas derivatives. We aim to meet these production goals by managing the decline in field production through the application of primary, secondary and enhanced oil recovery processes, developing extra-heavy crude oil fields and accelerating production at new fields.
Refining
Pemex-Refining converts crude oil into gasoline, jet fuel, diesel, fuel oil, asphalts and lubricants. It also distributes and markets most of these products throughout Mexico, where it experiences significant demand for its refined products. At the end of 2011,2013, Pemex-Refining’s atmospheric distillation refining capacity reached 1,690 thousand barrels per day, incorporating additional capacity due to the reconfiguration of the Minatitlán refinery.day. In 2011,2013, Pemex-Refining produced 1,1901,276 thousand barrels per day of refined products as compared to 1,2291,226 thousand barrels per day of refined products in 2010.2012. The 3.2% decrease4.1% increase in refined products production was mainly due to several operational issues faced bythe startup of new plants following the reconfiguration of the Minatitlán refinery and to the improved performance of the national refining system.
Gas and Basic Petrochemicals
Pemex-Gas and Basic Petrochemicals processes wet natural gas in order to obtain dry natural gas, LPG and other natural gas liquids. Additionally, it transports, distributes and sells natural gas and LPG throughout Mexico and produces and sells several basic petrochemical feedstocks which are used by Pemex-Refining orand Pemex-Petrochemicals. In 2011,2013, Pemex-Gas and Basic Petrochemicals’ total sour natural gas processing capacity remained constant at 4,503 million cubic feet per day. Pemex-Gas and Basic Petrochemicals processed 3,4454,404 million cubic feet per day of sourwet natural gas in 2011,2013, a 0.7%0.5% increase from the 3,4224,382 million cubic feet per day of sourwet natural gas processed in 2010.2012. It produced 389362 thousand barrels per day of natural gas liquids in 2011,2013, a 1.6% increase0.8% decrease from the 383365 thousand barrels per day of natural gas liquids production in 2010.2012. It also produced 3,6923,693 million cubic feet of dry gas (which is natural gas with a methane content of more than 90.5%) per day in 2011, 2.0%2013, 1.8% more than the 3,6183,628 million cubic feet of dry gas per day produced in 2010.2012.
Petrochemicals
Pemex-Petrochemicals manufactures different petrochemical products, including: (1) methane derivatives, such as ammonia and methanol; (2) ethane derivatives, such as ethylene, polyethylene, vinyl chloride monomer, ethylene oxide and ethylene oxide;glycols; (3) aromatics and their derivatives, such as styrene, toluene, paraxylene, benzene and xylene; (4) the propylene chain and its derivatives, such as acrylonitrile and propylene; (5) the petroleum derivatives chain, such as octane base gasoline and (5)heavy naphtha; and (6) other products such as oxygen, nitrogen and other products. pentanes. As of September 12, 2013, the vinyl chloride and ethylene plants at the Pajaritos petrochemical complex were divested from Pemex-Petrochemicals to become part of a joint venture between Pemex-Petrochemicals and the Mexican chemical company Mexichem S.A.B. de C.V. (which we refer to as Mexichem). See “—Petrochemicals—Joint Venture with Mexichem” in this Item 4.
Pemex-Petrochemicals’ total annual production (excluding ethane and butane gases) decreasedincreased by 8.8%15.3% in 2011,2013, from 8,9436,367 thousand tons in 20102012 to 8,1557,339 thousand tons in 2011,2013, mainly due to the business decision to
reducestartup of the new continuous catalytic regeneration reactor at the Cangrejera petrochemical complex, which increased production of gasoline componentsgasolines and gasoline blends in order to improve the economic performance of that line of business, as well as the maintenance work done to the ethylene plant in the Morelos petrochemical complex completed in 2011, which was not undertaken in the previous year. Beginning in 2010, we replaced crude oil as the raw material in our production at the aromatics sector facilities with naphtha and natural gasoline. As a result, Pemex-Petrochemicals no longer produces refined products, which consisted almost entirely of virgin stock.aromatics.
International Trading
In 2011,2013, our crude oil exports decreased by 1.7%5.3%, from 1,360.51,255.5 thousand barrels per day in 20102012 to 1,337.91,188.8 thousand barrels per day in 2011.2013. Natural gas imports increased by 47.6%18.4% in 2011,2013, from 535.81,089.3 million cubic feet per day in 20102012 to 790.81,289.7 million cubic feet per day in 2011.2013. In 2011,2013, exports of petrochemical products by volume decreased by 36.5%0.6%, from 697.61,344.7 thousand metric tons in 20102012 to 442.91,336.9 thousand metric tons in 2011,2013, while imports of petrochemical products by volume also decreased by 43.0%35.3%, from 394.9445.1 thousand metric tons in 20102012 to 225.0287.8 thousand metric tons in 2011.2013. In 2011,2013, exports of petroleum products by volume increased by 7.8%, from 152.6 thousand barrels per day in 2012 to 164.5 thousand barrels per day in 2013, while imports of petroleum products by volume decreased by 9.2%9.6%, from 194.5570.9 thousand barrels per day in 20102012 to 176.6516.2 thousand barrels per day in 2011, while imports of petroleum products by volume increased by 0.7%, from 627.9 thousand barrels per day in 2010 to 632.6 thousand barrels per day in 2011.2013.
We are a major supplier of crude oil to the United States. P.M.I. Comercio Internacional, S.A. de C.V. (which we refer to as PMI), P.M.I. Trading, Ltd. and their affiliates (which, together with PMI, we collectively
refer to as the PMI Group) providemake up our international trading arm, which provides us and a number of independent customers with international trading, distribution, risk management, insurance and relatedtransportation services. The PMI Group sells, buys and transports crude oil, refined products and petrochemicals in world markets. The PMI Group also provides us with related risk management, insurance, transportation and storage services. The PMI Group has offices in Mexico City, Houston, Singapore and Madrid. Our trading volume of exports and imports totaled U.S. $85,516.9$75,511.6 million in 2011,2013 and U.S. $81,703.1 million in 2012, including U.S. $49,325.5$42,723.2 million in crude oil exports.
Infrastructure of PEMEX
Exploration and Production
Exploration and Drilling
We seek to identify new oil reservoirs through our exploration program in order to increase the future replacement rate of proved reserves. From 1990 to 2011,2013, we completed 10,09112,154 exploration and development wells. During 2011,2013, our average success rate for exploratory wells was 48%61% and our average success rate for development wells was 95%96%. From 20072009 to 2011,2013, we discovered 2019 new crude oil fields and 3226 new natural gas fields, bringing the total number of our crude oil and natural gas producing fields to 416454 at the end of 2011.2013.
Our 20112013 exploration program was comprised of exploration in both onshore and offshore regions, including the deep waters inof the Gulf of Mexico, where we discovered new reservoirs that represent new drilling opportunities.Mexico. These exploratory activities yielded 153.1101.8 million barrels of oil equivalent of proved reserves in 2011.2013. A total of seventen fields were discovered, fourfive of which contain non-associated gas and threefive of which contain crude oil. In addition, within the currently producing fields, four reservoirs wereone reservoir was discovered, one of which contains non-associated gas and threegas. We continued our main seismic data acquisition activities, in particular, those related to three-dimensional seismic data. We acquired 15,063 square kilometers of three-dimensional seismic data in 2013, of which contain crude oil. Two10,111 square kilometers or 67% was in the deep waters of the Gulf
of Mexico. During 2013, no fields were delineated, a process that involves the drilling of several wells to determine the extent of the reserves found at each field. We also continued our main seismic data acquisition activities, in particular, those related to three-dimensional seismic data. We acquired 44,288 square kilometers of three-dimensional seismic data in 2011, of which 39,892 square kilometers or 90% was in the deep waters of the Gulf of Mexico.
The following table summarizes our drilling activity for the five years ended December 31, 2011,2013, all of which occurred in Mexican territory.
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2009 | 2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||||||
Wells initiated(1) | 615 | 822 | 1,490 | 994 | 1,000 | 1,490 | 994 | 1,000 | 1,290 | 705 | ||||||||||||||||||||||||||||||
Exploratory wells initiated(1) | 49 | 68 | 71 | 40 | 32 | 71 | 40 | 32 | 36 | 40 | ||||||||||||||||||||||||||||||
Development wells initiated(1) | 566 | 754 | 1,419 | 954 | 968 | 1,419 | 954 | 968 | 1,254 | 665 | ||||||||||||||||||||||||||||||
Wells drilled(2) | 659 | 729 | 1,150 | 1,303 | 1,034 | 1,150 | 1,303 | 1,034 | 1,238 | 823 | ||||||||||||||||||||||||||||||
Exploratory wells | 49 | 65 | 75 | 39 | 33 | 75 | 39 | 33 | 37 | 38 | ||||||||||||||||||||||||||||||
Productive exploratory wells(3) | 24 | 21 | 27 | 23 | 16 | 29 | 23 | 16 | 21 | 23 | ||||||||||||||||||||||||||||||
Dry exploratory wells | 25 | 44 | 48 | 16 | 17 | 46 | 16 | 17 | 16 | 15 | ||||||||||||||||||||||||||||||
Success rate % | 49 | 32 | 36 | 59 | 48 | 39 | 59 | 48 | 57 | 61 | ||||||||||||||||||||||||||||||
Development wells | 610 | 664 | 1,075 | 1,264 | 1,001 | 1,075 | 1,264 | 1,001 | 1,201 | 785 | ||||||||||||||||||||||||||||||
Productive development wells | 569 | 612 | 1,014 | 1,200 | 955 | 1,014 | 1,200 | 955 | 1,159 | 747 | ||||||||||||||||||||||||||||||
Dry development wells | 41 | 52 | 61 | 64 | 46 | 61 | 64 | 46 | 42 | 32 | ||||||||||||||||||||||||||||||
Success rate %(4) | 94 | 92 | 94 | 95 | 95 | 94 | 95 | 95 | 97 | 96 | ||||||||||||||||||||||||||||||
Producing wells (annual averages) | 6,280 | 6,382 | 6,890 | 7,476 | 8,315 | 6,890 | 7,476 | 8,315 | 9,439 | 9,836 | ||||||||||||||||||||||||||||||
Marine region | 434 | 453 | 469 | 477 | 500 | 469 | 477 | 500 | 537 | 559 | ||||||||||||||||||||||||||||||
Southern region | 926 | 947 | 1,005 | 1,067 | 1,136 | 1,005 | 1,067 | 1,136 | 1,230 | 1,340 | ||||||||||||||||||||||||||||||
Northern region | 4,920 | 4,982 | 5,416 | 5,932 | 6,679 | 5,416 | 5,932 | 6,679 | 7,672 | 7,937 | ||||||||||||||||||||||||||||||
Producing wells (at year end) | 5,942 | 6,247 | 6,814 | 7,414 | 8,271 | 6,814 | 7,414 | 8,271 | 9,476 | 9,379 | ||||||||||||||||||||||||||||||
Crude oil | 2,884 | 3,127 | 3,713 | 4,382 | 5,139 | 3,713 | 4,406 | 5,193 | 6,188 | 6,164 | ||||||||||||||||||||||||||||||
Natural gas | 3,058 | 3,120 | 3,101 | 3,032 | 3,132 | 3,101 | 3,008 | 3,078 | 3,288 | 3,215 | ||||||||||||||||||||||||||||||
Producing fields | 352 | 345 | 394 | 405 | 416 | 394 | 405 | 416 | 449 | 454 | ||||||||||||||||||||||||||||||
Marine region | 30 | 30 | 33 | 34 | 36 | 33 | 34 | 36 | 38 | 42 | ||||||||||||||||||||||||||||||
Southern region | 87 | 93 | 97 | 98 | 99 | 97 | 98 | 99 | 101 | 102 | ||||||||||||||||||||||||||||||
Northern region | 235 | 222 | 264 | 273 | 281 | 264 | 273 | 281 | 310 | 310 | ||||||||||||||||||||||||||||||
Drilling rigs | 116 | 143 | 176 | 130 | 128 | 176 | 130 | 128 | 136 | 139 | ||||||||||||||||||||||||||||||
Kilometers drilled | 1,798 | 2,199 | 3,770 | 2,352 | 2,494 | 3,770 | 2,532 | 2,494 | 3,007 | 1,627 | ||||||||||||||||||||||||||||||
Average depth by well (meters) | 2,744 | 2,748 | 2,494 | 2,605 | 2,418 | 2,494 | 2,605 | 2,418 | 2,429 | 2,710 | ||||||||||||||||||||||||||||||
Discovered fields | 14 | 13 | 13 | 5 | 7 | 13 | 5 | 8 | 9 | 10 | ||||||||||||||||||||||||||||||
Crude oil | 4 | 5 | 6 | 2 | 3 | 6 | 2 | 4 | 2 | 5 | ||||||||||||||||||||||||||||||
Natural gas | 10 | 8 | 7 | 3 | 4 | 7 | 3 | 4 | 7 | 5 | ||||||||||||||||||||||||||||||
Crude oil and natural gas output by well (barrels of oil equivalent per day) | 699 | 621 | 548 | 508 | 450 | 548 | 508 | 448 | 392 | 371 | ||||||||||||||||||||||||||||||
Total developed acreage (km2) | 8,132 | 8,088 | 8,376 | 8,463 | 8,536 | 8,376 | 8,463 | 8,536 | 8,652 | 8,706 | ||||||||||||||||||||||||||||||
Total undeveloped acreage (km2) | 616 | 690 | 953 | 828 | 987 | 953 | 828 | 987 | 1,040 | 977 |
Note: Numbers may not total due to rounding.
(1) | “Wells initiated” refers to the number of wells the drilling of which commenced in a given year, regardless of when the well was or will be completed. |
(2) | “Wells drilled” refers to the number of wells the drilling of which was completed in a given year, regardless of when the drilling of the well commenced. |
(3) | Excludes non-commercial productive wells. |
(4) | Excludes injector wells. |
(5) |
All productive wells, and all other wells referred to in this table, are “net,” because we do not grant others any fractional working interests in any wells that we own; we also have not acquired any fractional working interest in wells owned by others. |
Includes only fields with proved reserves. |
All acreage is net because |
Source: Pemex-Exploration and Production.
Extensions and Discoveries
During 2011,2013, we discovered new sources of crude oil and natural gas reserves in seventen fields, sixall of which were discovered onshore, foureight in the Northern region and two in the Southern region. We made one offshore field discoveryThese discoveries, along with revisions, resulted in the Southwestern Marine region. In addition, four reservoirs were discoveredincreases in currently producing fields.
Mexico’s proved reserves. During 2011,2013, in the Northeastern Marine region, revisions and the drillingcompletion of one well was completed, which23 wells led to the additionan increase of 60.5405.7 million barrels of oil equivalent of proved reserves. In the Southwestern Marine region, revisions and the delineationdevelopment of the Tsimin fieldKuil, Kab and Yaxché fields through the drilling of the Tsimin 1-DL well12 wells led to the additionan increase of 71.5313.1 million barrels of oil equivalent of proved reserves. In the Northern region’s Burgos, ATG, Poza Rica-Altamira and Veracruz basins,business units, the drilling of the Bragado-1, Bocaxa-1, Chancarro-1 and Gasífero-1460 development wells, as well as the discovery of a new reservoir in an existing field,eight fields, led to the addition of 17.488.6 million barrels of oil equivalent of proved reserves. In the SabinasBurgos basin, the drilling and completion of one well, Emergente-1, was completed, whichthree wells led to the discovery of a shale oil field and two shale gas and wefields. We plan to continue to drill additional wells in this basin in order to assesscontinue assessing the potential for shale oil and gas resources in this area. Finally, in the Southern region, the drilling of the Pareto-1 and Tokal-1286 development wells and the delineationrevisions resulted in an increase of the Terra field, led to the addition of 47.796.0 million barrels of oil equivalent of proved reserves. In sum, new discoveries of crude oil and natural gas proved reserves during 2011 led to the addition of 153.1 million barrels of oil equivalent, while activities related to extensions yieled 89.1 million barrels of oil equivalent.
In the Aceite Terciario del Golfo (or ATG) project,During 2013, Pemex-Exploration and Production has contractedlaunched a call for bids for Integrated E&P Contracts relating to 12 fields in the ATG project in order to develop and exploit their hydrocarbon reserves. In July 2013, Pemex entered into Integrated E&P Contracts with five firms to installthree companies for the development of the Humapa, Miquetla and Soledad blocks. In connection with the awarding of these contracts, four field laboratories in orderthe ATG project were dismantled, which resulted in a decrease in the number of completed wells in 2013, as compared to increase production volume and2012. As of the date of this report, the only field laboratory that remains in operation is the Coyotes Laboratory, which continues to develop new production mechanisms to increase the reservoir’s productivity through technological improvements. These laboratoriesconduct development activities aimed at optimizing well productivity. The Integrated E&P Contracts entered into during 2013 are expected to improve oilsignificantly increase the number of wells drilled and gas recoverycompleted at the ATG project in the near future. For more information, see “—Integrated Exploration and lower our operating costs. The firms that have installed these field laboratories are Weatherford International Ltd., Halliburton Company, Baker Hughes Incorporated, Tecpetrol Internacional S.A. and Schlumberger Limited. The initiatives undertakenProduction Contracts” in these field laboratories in 2011 include:this Item 4.
subsurface studies through seismic inversion, a process to determine which physical characteristics of rocks and fluids produced the observed seismic record;
wells completed through multiple hydraulic fractures;
enhanced oil recovery pilot testing based on “huff and puff” (or cyclic steam) technology; and
secondary recovery pilot tests with waterflooding and high-angle wells.
Reserves
Under the PoliticalMexican Constitution of the United Mexican States and the Regulatory Law, all oil and other hydrocarbon reserves withinlocated in the subsoil of Mexico are owned by the Mexican nation and not by us. UnderAs of the Petróleos Mexicanos Law,date of this report, Pemex-Exploration and Production has the exclusive right to extract, but not own, these reserves, and to sell the resulting production. The exploration and development activities of Petróleos Mexicanos and the subsidiary entities are limited to reserves located in Mexico.
Effective January 1, 2010, certain of the SEC’s rules were revised in order to modernize the reporting requirements applicable to companies such as PEMEX in respect of oil and other hydrocarbon reserves. The most significant of these revisions include the following:
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There has been no material change in Mexico’s proved reserves as a result of the application of these revised SEC rules.
Proved oil and natural gas reserves are those estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be economically producible from a given date forward, from known reservoirs and under existing economic conditions, operating methods and government regulations.
Proved reserves estimates as of December 31, 20112013 were prepared by Pemex-Exploration and Production and were reviewed by the Independent Engineering Firms (as defined below), which audit ourPemex-Exploration and Production’s hydrocarbon reserves. In addition, pursuant to theReglamento de la Ley Reglamentaria del Artículo 27 Constitucional en el Ramo del Petróleo(Regulations (Regulations to the Regulatory Law to Article 27 of the Political Constitution of the United Mexican States Concerning Petroleum Affairs, which we refer to as the Regulations to the Regulatory Law), the National Hydrocarbons Commission (which we refer to as the NHC)NHC reviewed and approved the proved reserves reports estimates as of December 31, 20112013 provided by Pemex-Exploration and Production. TheProduction on March 11, 2014. These reserves estimates were then registered and published by the Ministry of Energy.Energy on March 18, 2014.
Pemex-Exploration and Production estimates Mexico’s reserves based on generally accepted petroleum engineering and evaluation methods and procedures, which are based primarily on applicable SEC regulations and, as necessary, the Society of Petroleum Engineers’ (which we refer to as the SPE) publication entitled “Standards
Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information”, dated February 19, 2007 and other SPE publications, including the SPE’s publication entitledPetroleum Resources Management System, as well as other technical sources, includingEstimation and Classification of Reserves of Crude Oil, Natural Gas, and Condensate, by Chapman Cronquist, andDetermination of Oil and Gas Reserves, Petroleum Society Monograph Number 1, published by the Canadian Institute of Mining and Metallurgy & Petroleum. The choice of method or combination of methods employed in the analysis of each reservoir is determined by:
experience in the area;
stage of development;
quality and completeness of basic data; and
production and pressure histories.
Reserves data set forth herein represent only estimates. Reserves valuation is a subjective process of estimating underground accumulations of crude oil and natural gas that cannot be measured in an exact manner. The accuracy of any reserves estimate depends on the quality of available data, engineering and geological interpretation and professional judgment. As a result, estimates of different engineers may vary. In addition, the results of drilling, testing and producing subsequent to the date of an estimate may lead to the revision of an estimate.
During 2011,2013, we did not record any material increase in Mexico’s hydrocarbons reserves as a result of the use of new technologies.
In order to ensure the reliability of our reserves estimation efforts, we have undertaken the internal certification of our estimates of Mexico’s reserves since 1996. We have established certain internal controls in connection with the preparation of our proved reserves estimates. Initially, teams of geoscientists from Pemex-
ExplorationPemex-Exploration and Production’s exploration and exploitation business units (with each of these units covering several projects) prepare the reserves estimates, using distinct estimation processes for valuations relating to new discoveries and developed fields, respectively. Subsequently, the regional reserves offices collect these reserves estimates from the units and request the review and certification of such valuations and the booking of the related reserves from theGerencia de Recursos y Reservas (Office of Resources and Reserves), the central hydrocarbon reserves management body of Pemex-Exploration and Production. This internal certification process is undertaken in accordance with internal guidelines for estimating and classifying proved reserves, which are based on the SEC’s rules and definitions. The Hydrocarbons Reserves and Resources Management Office, which additionally oversees and conducts an internal audit of the above process, consists entirely of professionals with geological, geophysical, petrophysical and reservoir engineering backgrounds. The engineers who participate in our reserves estimation process are experienced in: reservoir numerical simulation; well drilling and completion; pressure, volume and temperature (PVT) analysis; NODALTM(an analytical tool used in forecasting the performance of the various elements comprising the production system) analysis; and design strategies in petroleum field development. Furthermore, all of our personnel have been certified by theSecretaría de Educación Pública(Ministry of Public Education), most have earned master’s degrees in areas of study such as petroleum engineering, geology and geophysical engineering and they possess an average of over ten years of professional experience.
In addition to the above internal review process, Pemex-Exploration and Production’s final reserves estimates are audited by independent engineering firms. Three independent engineering firms auditedPemex-Exploration and Production’s estimates of Mexico’s proved reserves as of December 31, 2011:2013: Netherland Sewell International, S. de R.L. de C.V. (Netherland Sewell);Sewell; DeGolyer and MacNaughton (D&M);MacNaughton; and Ryder Scott Company, L.P. (Ryder Scott, and,(we refer to these firms together with Netherland Sewell and D&M,as the Independent Engineering Firms). The reserves estimates reviewed by the Independent Engineering Firms totaled 98.9%99.3% of Mexico’s reserves. The remaining 1.1%0.7% of reserves consisted of reserves located in certain areas in which third parties provide drilling services to Pemex-Exploration and Production. Netherland Sewell reviewed the reserves in the Northeastern Marine region and Southern region, D&M reviewed the reserves in the Southwestern Marine region and Ryder Scott reviewed the reserves in the Northern region. Under such agreements, the corresponding third party is responsible for assessing the volume of reserves. Netherland Sewell audited the
reserves in the Northeastern Marine region and Southern region, DeGolyer and MacNaughton audited the reserves in the Southwestern Marine region and Ryder Scott audited the reserves in the Northern region. The audits conducted by the Independent Engineering Firms consisted primarily of: (1) analysis of historical static and dynamic reservoir data provided by Pemex-Exploration and Production; (2) construction or updating of the Independent Engineering Firms’ own static and dynamic reservoir characterization models of Mexican oil fields; (3) economic analysis of selected fields; and (4) review ofPemex-Exploration and Production’s production forecasts and reserves estimates.
Since reserves estimates are, by definition, only estimates, they cannot be reviewed for the purpose of verifying exactness. Instead, the Independent Engineering Firms conducted a detailed review of Pemex-Exploration and Production’s reserves estimates so that they could express an opinion as to whether, in the aggregate, the reserves estimates we furnished were reasonable and had been estimated and presented in conformity with generally accepted petroleum engineering and evaluation methods and procedures.
All questions, including any suggested modifications to proved reserves estimates, that arose during the Independent Engineering Firms’ review process were resolved by Pemex-Exploration and Production to the satisfaction of the Independent Engineering Firms. The Independent Engineering Firms have concluded that our estimated total proved oil and natural gas reserve volumes set forth in this report are, in the aggregate, reasonable and have been prepared in accordance withRule 4-10(a) ofRegulation S-X of the SEC, as amended (which we refer to asRule 4-10(a)), are consistent with international reserves reporting practice and are in accordance with the revised oil and gas reserves disclosure provisions of the U.S. Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC)ASC Topic 932-10-5 “Extractive Activities—Oil and Gas” (which we refer to as Topic 932).932.
Mexico’s total proved developed and undeveloped reserves of crude oil, condensates and liquefiable hydrocarbons recoverable from field processing plants decreased by 0.3%3.0% in 2011,2013, from 11,394 million barrels at
December 31, 2010 to 11,36211,424 million barrels at December 31, 2011.2012 to 11,079 million barrels at December 31, 2013. Mexico’s proved developed reserves of crude oil, condensates and liquefiable hydrocarbons recoverable from processing plants decreased by 2.2%5.5% in 2011,2013, from 7,7937,790 million barrels at December 31, 20102012 to 7,6187,360 million barrels at December 31, 2011.2013. These decreases were principally due to decreased crude oilfewer positive revisions to our reserves estimates in 2013, as well as a decrease in extensions and condensates production during 2011, which was largely offset bydiscoveries, particularly in connection with the decrease in field development activities that ledat the ATG project, where the dismantling of four field laboratories resulted in a decrease in the number of wells completed, and the decrease in the number of exploratory activities carried out in the deep waters of the Gulf of Mexico. The amount of crude oil, condensate and liquefiable hydrocarbon reserves added in 2013 was insufficient to reclassifications from proved undeveloped, probableoffset the level of production in 2013, which amounted to 1,037 million barrels of crude oil, condensates and possible reserves to proved developed reserves, as well as exploratory additions, as described below.liquefiable hydrocarbons.
Mexico’s total proved developed and undeveloped dry gas reserves increaseddecreased by 1.9%3.5% in 2011,2013, from 12,49412,713 billion cubic feet at December 31, 20102012 to 12,73412,273 billion cubic feet at December 31, 2011.2013. Mexico’s proved developed dry gas reserves increaseddecreased by 0.2%6.2% in 2011,2013, from 7,9417,951 billion cubic feet at December 31, 20102012 to 7,9577,461 billion cubic feet at December 31, 2011.2013. These decreases were principally due to fewer positive revisions to our reserves estimates in 2013, as well as a decrease in extensions and discoveries. The amount of dry gas reserves added in 2013 was insufficient to offset the level of production in 2013, which amounted to 1,539 billion cubic feet of dry gas. Mexico’s proved undeveloped dry gas reserves increased by 4.9%1.0% in 2011,2013, from 4,5534,762 billion cubic feet at December 31, 20102012 to 4,7764,811 billion cubic feet at December 31, 2011. These increases were principally2013. This increase was primarily due to field development activities in the Burgos basin.and Veracruz basins.
Due to various field development activities performed during 2011, 1,118.4During 2013, 903.4 million barrels of oil equivalent were reclassified from proved undeveloped, probable and possible reserves to proved developed reserves, at a cost of Ps. 145,926181,670 million. Field development activities, including well drilling and completion, contributed most significantly to the reclassification of proved undeveloped, probable and possible reserves to proved developed reserves, accounting for 655.4 million barrels of oil equivalent, or 72.5%, of the total amount of reclassified reserves in 2013. The only fieldfields containing material volumes of Mexico’s proved reserves that hashave remained undeveloped for five years or more isare the Ayatsil, Ayín field. The Ayín field remainsand Alux fields, which are all located offshore. These fields remain undeveloped due to a lackdelays in
construction related to certain unique field characteristics. In particular, the design of infrastructure. Thethe development plan for the Ayatsil field, the largest of the three, has required additional time due to the complexity of this project, which is expected to represent Pemex-Exploration and Production’s first offshore project producing extra-heavy crude oil. As of the date of this report, three drilling platforms have been installed at the Ayatsil field and drilling activity is expected to begin in 2013, when the infrastructure necessary for its development is schedulednear future. We also expect to be completed.continue to develop the Ayín and Alux fields during 2014.
The following three tables of crude oil and dry gas reserves set forth our estimates of Mexico’s proved reserves determined in accordance with Rule 4-10(a).
Summary of Oil and Gas(1) Proved Reserves as of December 31, 20112013
Based on Average Fiscal Year Prices
Crude Oil and Condensates(2) | Dry Gas(3) | Crude Oil and Condensates(2) | Dry Gas(3) | |||||||||||||
(in millions of barrels) | (in billions of cubic feet) | (in millions of barrels) | (in billions of cubic feet) | |||||||||||||
Proved developed and undeveloped reserves | ||||||||||||||||
Proved developed and undeveloped reserves | ||||||||||||||||
Proved developed reserves | 7,618 | 7,957 | 7,360 | 7,461 | ||||||||||||
Proved undeveloped reserves | 3,744 | 4,776 | 3,719 | 4,811 | ||||||||||||
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Total proved reserves | 11,362 | 12,734 | 11,079 | 12,273 | ||||||||||||
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Note: | Numbers may not total due to rounding. |
(1) | We do not currently produce synthetic oil or synthetic gas, or other natural resources from which synthetic oil or synthetic gas can be produced. |
(2) | Crude oil and condensate reserves include the fraction of liquefiable hydrocarbons recoverable in natural gas processing plants located at fields. |
(3) | Reserve volumes reported in this table are volumes of dry gas, although natural gas production reported in other tables refers to sour wet gas. There is a shrinkage in volume when natural gas liquids and impurities are extracted to obtain dry gas. Therefore, reported natural gas volumes are greater than dry gas volumes. |
Source: Pemex-Exploration and Production. |
Crude Oil and Condensate Reserves
(including natural gas liquids)(1)
2007 | 2008 | 2009 | 2010 | 2011 | 2009 | 2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||||||
(in millions of barrels) | (in millions of barrels) | |||||||||||||||||||||||||||||||||||||||
Proved developed and undeveloped reserves | ||||||||||||||||||||||||||||||||||||||||
At January 1 | 12,849 | 12,187 | 11,865 | 11,691 | 11,394 | 11,865 | 11,691 | 11,394 | 11,362 | 11,424 | ||||||||||||||||||||||||||||||
Revisions(2) | 455 | 444 | 577 | 515 | 824 | 577 | 515 | 824 | 1,012 | 630 | ||||||||||||||||||||||||||||||
Extensions and discoveries | 150 | 370 | 311 | 246 | 194 | 311 | 246 | 194 | 103 | 62 | ||||||||||||||||||||||||||||||
Production | (1,268 | ) | (1,135 | ) | (1,062 | ) | (1,059 | ) | (1,050 | ) | (1,062 | ) | (1,059 | ) | (1,050 | ) | (1,053 | ) | (1,037 | ) | ||||||||||||||||||||
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At December 31 | 12,187 | 11,865 | 11,691 | 11,394 | 11,362 | 11,691 | 11,394 | 11,362 | 11,424 | 11,079 | ||||||||||||||||||||||||||||||
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Proved developed reserves at December 31 | 8,436 | 8,618 | 8,167 | 7,793 | 7,618 | 8,167 | 7,793 | 7,618 | 7,790 | 7,360 | ||||||||||||||||||||||||||||||
Proved undeveloped reserves at December 31 | 3,751 | 3,247 | 3,524 | 3,601 | 3,744 | 3,524 | 3,601 | 3,744 | 3,634 | 3,719 |
Note: | Numbers may not total due to rounding. |
(1) | Crude oil and condensate reserves include the fraction of liquefiable hydrocarbons recoverable in natural gas processing plants located at fields. |
(2) | Revisions include positive and negative changes due to new data from well drilling, and revisions made when actual reservoir performance differs from expected performance. |
Source: Pemex-Exploration and Production.
Dry Gas Reserves
2007 | 2008 | 2009 | 2010 | 2011 | 2009 | 2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||||||
(in billions of cubic feet) | (in billions of cubic feet) | |||||||||||||||||||||||||||||||||||||||
Proved developed and undeveloped reserves | ||||||||||||||||||||||||||||||||||||||||
At January 1 | 13,856 | 13,162 | 12,702 | 11,966 | 12,494 | 12,702 | 11,966 | 12,494 | 12,734 | 12,713 | ||||||||||||||||||||||||||||||
Revisions(1) | 879 | 730 | 504 | 1,449 | 1,592 | 504 | 1,449 | 1,592 | 1,377 | 1,010 | ||||||||||||||||||||||||||||||
Extensions and discoveries | 171 | 454 | 404 | 770 | 249 | 404 | 770 | 249 | 162 | 89 | ||||||||||||||||||||||||||||||
Production(2) | (1,744 | ) | (1,643 | ) | (1,644 | ) | (1,691 | ) | (1,601 | ) | (1,644 | ) | (1,691 | ) | (1,601 | ) | (1,560 | ) | (1,539 | ) | ||||||||||||||||||||
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At December 31 | 13,162 | 12,702 | 11,966 | 12,494 | 12,734 | 11,966 | 12,494 | 12,734 | 12,713 | 12,273 | ||||||||||||||||||||||||||||||
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Proved developed reserves at December 31 | 8,163 | 8,206 | 7,586 | 7,941 | 7,957 | 7,586 | 7,941 | 7,958 | 7,951 | 7,461 | ||||||||||||||||||||||||||||||
Proved undeveloped reserves at December 31 | 4,999 | 4,496 | 4,380 | 4,553 | 4,776 | 4,380 | 4,553 | 4,776 | 4,762 | 4,811 |
Note: | Numbers may not total due to rounding. |
(1) | Revisions include positive and negative changes due to new data from well drilling, and revisions made when actual reservoir performance differs from expected performance. |
(2) | Production refers here to dry gas, although natural gas production reported in other tables refers to sour wet gas. There is a shrinkage in volume when natural gas liquids and impurities are extracted to obtain dry gas. Therefore, reported natural gas volumes are greater than dry gas volumes. |
Source: Pemex-Exploration and Production. |
The following table sets forth, as of December 31, 2011,2013, the volumes of proved developed and undeveloped reserves, the number of producing wells and the number of proved undeveloped locations for the fields that contained 88%89% of Mexico’s proved reserves.
Reserves | ||||||||||||||||||||||||||||||||||||||||
Number of Producing Wells | Number of Undeveloped Locations(2) | |||||||||||||||||||||||||||||||||||||||
Field | Proved Reserves(1) | Developed Reserves(1) | Undeveloped Reserves(1) | Number of Producing Wells | Number of Undeveloped Locations(2) | Proved(1) | Developed(1) | Undeveloped(1) | ||||||||||||||||||||||||||||||||
(in millions of barrels of oil equivalent) | (in millions of barrels of oil equivalent) | |||||||||||||||||||||||||||||||||||||||
Ku-Maloob-Zaap | 3,114.2 | 2,568.1 | 546.1 | 143 | 23 | 3,115.8 | 2,660.6 | 455.2 | 172 | 22 | ||||||||||||||||||||||||||||||
Akal | 1,888.3 | 1,888.3 | 0.0 | 153 | 0 | 1,666.2 | 1,666.2 | 0.0 | 140 | 0 | ||||||||||||||||||||||||||||||
Antonio J. Bermudez(3) | 1,441.2 | 684.5 | 756.7 | 110 | 49 | |||||||||||||||||||||||||||||||||||
Antonio J. Bermúdez(3) | 1,323.8 | 599.6 | 724.2 | 264 | 150 | |||||||||||||||||||||||||||||||||||
Aceite Terciario del Golfo | 743.0 | 191.4 | 551.7 | 2,002 | 6,085 | 806.3 | 260.6 | 545.7 | 2,675 | 5,545 | ||||||||||||||||||||||||||||||
Jujo-Tecominoacán | 652.2 | 444.8 | 207.4 | 43 | 23 | 636.2 | 436.5 | 199.7 | 42 | 22 | ||||||||||||||||||||||||||||||
Tsimin | 433.9 | 0.0 | 433.9 | 0 | 22 | 498.1 | 186.0 | 312.1 | 7 | 19 | ||||||||||||||||||||||||||||||
Ayatsil | 315.3 | 0.0 | 315.3 | 0 | 17 | 316.7 | 0.0 | 316.7 | 0 | 17 | ||||||||||||||||||||||||||||||
Kayab | 184.3 | 0.0 | 184.3 | 0 | 8 | |||||||||||||||||||||||||||||||||||
Sihil | 177.9 | 124.2 | 53.7 | 21 | 8 | |||||||||||||||||||||||||||||||||||
Ixtal | 167.8 | 104.7 | 63.0 | 11 | 6 | |||||||||||||||||||||||||||||||||||
Pit | 151.5 | 0.0 | 151.5 | 0 | 12 | |||||||||||||||||||||||||||||||||||
May | 132.4 | 105.8 | 26.6 | 16 | 6 | |||||||||||||||||||||||||||||||||||
Ek | 127.2 | 63.9 | 63.4 | 15 | 14 | |||||||||||||||||||||||||||||||||||
Kuil | 117.2 | 86.4 | 30.8 | 6 | 3 | |||||||||||||||||||||||||||||||||||
Xux | 112.5 | 0.0 | 112.5 | 0 | 12 | |||||||||||||||||||||||||||||||||||
Lakach | 103.2 | 0.0 | 103.2 | 0 | 5 | |||||||||||||||||||||||||||||||||||
Costero | 102.0 | 86.1 | 16.0 | 12 | 3 | |||||||||||||||||||||||||||||||||||
Sinán | 99.9 | 68.1 | 31.9 | 14 | 8 | |||||||||||||||||||||||||||||||||||
Caparroso-Pijije-Escuintle | 168.7 | 152.0 | 16.7 | 20 | 1 | 94.3 | 69.3 | 25.0 | 14 | 4 | ||||||||||||||||||||||||||||||
Ixtal | 166.4 | 145.1 | 21.3 | 12 | 5 | |||||||||||||||||||||||||||||||||||
May | 160.9 | 133.3 | 27.6 | 13 | 7 | |||||||||||||||||||||||||||||||||||
Terra | 88.8 | 50.3 | 38.5 | 7 | 11 | |||||||||||||||||||||||||||||||||||
Sen | 158.9 | 144.2 | 14.7 | 20 | 5 | 85.6 | 58.7 | 26.9 | 14 | 6 | ||||||||||||||||||||||||||||||
Costero | 144.8 | 144.8 | 0.0 | 10 | 0 | |||||||||||||||||||||||||||||||||||
Kayab | 144.3 | 0.0 | 144.3 | 0 | 8 | |||||||||||||||||||||||||||||||||||
Pit | 135.0 | 0.0 | 135.0 | 0 | 5 | |||||||||||||||||||||||||||||||||||
Xanab | 127.1 | 67.1 | 60.0 | 4 | 8 | 84.9 | 48.1 | 36.9 | 5 | 9 | ||||||||||||||||||||||||||||||
Sihil | 119.6 | 102.4 | 17.2 | 14 | 3 | |||||||||||||||||||||||||||||||||||
Sinán | 117.6 | 101.7 | 16.0 | 14 | 4 | |||||||||||||||||||||||||||||||||||
Xux | 114.1 | 0.0 | 114.1 | 0 | 7 | |||||||||||||||||||||||||||||||||||
Ek | 109.1 | 46.0 | 63.1 | 14 | 6 | |||||||||||||||||||||||||||||||||||
Lakach | 103.2 | 0.0 | 103.2 | 0 | 5 | |||||||||||||||||||||||||||||||||||
Bricol | 90.3 | 34.3 | 55.9 | 4 | 6 | |||||||||||||||||||||||||||||||||||
Arenque | 78.2 | 30.5 | 47.6 | 15 | 10 | |||||||||||||||||||||||||||||||||||
Homol | 74.2 | 46.4 | 27.8 | 6 | 4 | |||||||||||||||||||||||||||||||||||
Cárdenas | 80.5 | 58.1 | 22.4 | 12 | 7 | 71.7 | 57.3 | 14.4 | 12 | 4 | ||||||||||||||||||||||||||||||
Arenque | 78.9 | 32.7 | 46.2 | 15 | 10 | |||||||||||||||||||||||||||||||||||
Yaxché | 75.5 | 31.0 | 44.5 | 7 | 12 | |||||||||||||||||||||||||||||||||||
Ogarrio | 72.5 | 44.8 | 27.7 | 74 | 34 | |||||||||||||||||||||||||||||||||||
Bolontikú | 69.8 | 40.0 | 29.9 | 6 | 8 | |||||||||||||||||||||||||||||||||||
Bellota | 68.0 | 44.5 | 23.5 | 8 | 4 | |||||||||||||||||||||||||||||||||||
Homol | 68.0 | 35.6 | 32.3 | 5 | 6 | |||||||||||||||||||||||||||||||||||
Mora | 60.6 | 47.5 | 13.1 | 8 | 3 | |||||||||||||||||||||||||||||||||||
Chuc | 59.6 | 56.4 | 3.2 | 16 | 0 | |||||||||||||||||||||||||||||||||||
Puerto Ceiba | 57.1 | 38.2 | 18.9 | 13 | 6 | |||||||||||||||||||||||||||||||||||
Tamaulipas Constituciones | 54.9 | 29.6 | 25.2 | 322 | 124 | |||||||||||||||||||||||||||||||||||
Teotleco | 49.6 | 37.7 | 12.0 | 5 | 3 | |||||||||||||||||||||||||||||||||||
Balam | 45.9 | 40.6 | 5.3 | 3 | 1 | |||||||||||||||||||||||||||||||||||
Cactus | 45.8 | 22.2 | 23.6 | 18 | 0 | |||||||||||||||||||||||||||||||||||
Cauchy | 42.9 | 42.0 | 0.8 | 36 | 3 | |||||||||||||||||||||||||||||||||||
San Ramón | 42.3 | 30.1 | 12.1 | 51 | 15 | |||||||||||||||||||||||||||||||||||
Chiapas-Copanó | 41.5 | 41.5 | 0.0 | 11 | 0 | |||||||||||||||||||||||||||||||||||
Ayín | 41.2 | 0.0 | 41.2 | 0 | 3 | |||||||||||||||||||||||||||||||||||
Caan | 39.7 | 39.7 | 0.0 | 15 | 0 | |||||||||||||||||||||||||||||||||||
Terra | 37.6 | 24.1 | 13.6 | 3 | 3 | |||||||||||||||||||||||||||||||||||
Arcabuz-Culebra | 34.4 | 25.9 | 8.5 | 597 | 70 | |||||||||||||||||||||||||||||||||||
Nejo | 33.3 | 20.2 | 13.1 | 129 | 46 | |||||||||||||||||||||||||||||||||||
Poza Rica | 33.3 | 28.6 | 4.7 | 218 | 17 | |||||||||||||||||||||||||||||||||||
Onel | 33.2 | 0.0 | 33.2 | 0 | 5 | |||||||||||||||||||||||||||||||||||
Abkatún | 32.4 | 32.4 | 0.0 | 9 | 0 | |||||||||||||||||||||||||||||||||||
Paredón | 31.2 | 13.5 | 17.7 | 3 | 1 |
Reserves | ||||||||||||||||||||||||||||||||||||||
Number of Producing Wells | Number of Undeveloped Locations(2) | |||||||||||||||||||||||||||||||||||||
Field | Proved Reserves(1) | Developed Reserves(1) | Undeveloped Reserves(1) | Number of Producing Wells | Number of Undeveloped Locations(2) | Proved(1) | Developed(1) | Undeveloped(1) | ||||||||||||||||||||||||||||||
(in millions of barrels of oil equivalent) | (in millions of barrels of oil equivalent) | |||||||||||||||||||||||||||||||||||||
Bricol | 71.7 | 30.2 | 41.5 | 7 | 7 | |||||||||||||||||||||||||||||||||
Onel | 67.4 | 31.3 | 36.1 | 2 | 5 | |||||||||||||||||||||||||||||||||
Chuc | 62.4 | 59.3 | 3.2 | 16 | 0 | |||||||||||||||||||||||||||||||||
Balam | 59.7 | 31.5 | 28.2 | 7 | 1 | |||||||||||||||||||||||||||||||||
Abkatún | 58.0 | 57.7 | 0.2 | 13 | 0 | |||||||||||||||||||||||||||||||||
Mora | 56.8 | 46.6 | 10.2 | 7 | 4 | |||||||||||||||||||||||||||||||||
Puerto Ceiba | 56.6 | 33.1 | 23.5 | 21 | 20 | |||||||||||||||||||||||||||||||||
Pareto | 54.8 | 33.2 | 21.6 | 4 | 5 | |||||||||||||||||||||||||||||||||
Ogarrio | 54.2 | 47.4 | 6.8 | 115 | 17 | |||||||||||||||||||||||||||||||||
Bellota | 52.3 | 34.0 | 18.4 | 7 | 5 | |||||||||||||||||||||||||||||||||
Teotleco | 51.3 | 41.1 | 10.2 | 11 | 3 | |||||||||||||||||||||||||||||||||
Tizón | 27.8 | 27.8 | 0.0 | 7 | 0 | 50.8 | 39.7 | 11.1 | 9 | 4 | ||||||||||||||||||||||||||||
Papán | 27.4 | 27.4 | 0.0 | 21 | 0 | |||||||||||||||||||||||||||||||||
Cinco Presidentes | 26.6 | 21.1 | 5.5 | 36 | 8 | |||||||||||||||||||||||||||||||||
Bolontikú | 49.4 | 32.0 | 17.4 | 7 | 4 | |||||||||||||||||||||||||||||||||
Ébano Pánuco Cacalilao | 49.2 | 19.2 | 30.1 | 389 | 356 | |||||||||||||||||||||||||||||||||
Edén-Jolote | 48.3 | 26.8 | 21.5 | 8 | 9 | |||||||||||||||||||||||||||||||||
Tamaulipas Constituciones | 45.3 | 20.2 | 25.0 | 353 | 110 | |||||||||||||||||||||||||||||||||
Yaxché | 43.5 | 27.1 | 16.5 | 10 | 7 | |||||||||||||||||||||||||||||||||
Kab | 41.5 | 20.5 | 20.9 | 7 | 8 | |||||||||||||||||||||||||||||||||
Gasífero | 39.6 | 16.9 | 22.7 | 14 | 20 | |||||||||||||||||||||||||||||||||
Madrefil | 36.7 | 17.8 | 18.9 | 2 | 1 | |||||||||||||||||||||||||||||||||
Cuervito | 36.6 | 16.6 | 20.0 | 89 | 65 | |||||||||||||||||||||||||||||||||
Poza Rica | 35.4 | 32.3 | 3.1 | 120 | 15 | |||||||||||||||||||||||||||||||||
Eltreinta | 34.2 | 1.3 | 32.9 | 1 | 16 | |||||||||||||||||||||||||||||||||
Sunuapa | 33.9 | 30.9 | 2.9 | 13 | 1 | |||||||||||||||||||||||||||||||||
San Ramón | 30.9 | 25.0 | 5.9 | 62 | 15 | |||||||||||||||||||||||||||||||||
Caan | 30.3 | 30.3 | 0.0 | 14 | 0 | |||||||||||||||||||||||||||||||||
Chinchorro | 24.9 | 21.5 | 3.4 | 4 | 1 | 29.9 | 21.0 | 8.9 | 4 | 4 | ||||||||||||||||||||||||||||
Santuario | 29.5 | 24.6 | 4.9 | 20 | 20 | |||||||||||||||||||||||||||||||||
Cuitláhuac | 24.6 | 18.0 | 6.5 | 189 | 28 | 29.0 | 17.6 | 11.3 | 209 | 26 | ||||||||||||||||||||||||||||
Lum | 24.0 | 12.2 | 11.8 | 0 | 2 | 27.0 | 14.4 | 12.6 | 2 | 4 | ||||||||||||||||||||||||||||
Nejo | 24.1 | 22.5 | 1.6 | 235 | 14 | |||||||||||||||||||||||||||||||||
Arcabuz-Culebra | 22.7 | 16.9 | 5.8 | 607 | 51 | |||||||||||||||||||||||||||||||||
Yagual | 22.4 | 19.6 | 2.9 | 7 | 1 | 22.7 | 14.0 | 8.7 | 5 | 4 | ||||||||||||||||||||||||||||
Cráter | 21.4 | 21.4 | 0.0 | 4 | 0 | |||||||||||||||||||||||||||||||||
Cinco Presidentes | 19.5 | 16.5 | 3.0 | 50 | 9 | |||||||||||||||||||||||||||||||||
Rodador | 19.7 | 18.6 | 1.2 | 23 | 2 | 19.2 | 18.0 | 1.2 | 38 | 8 | ||||||||||||||||||||||||||||
Lizamba | 19.6 | 18.6 | 1.0 | 39 | 1 | |||||||||||||||||||||||||||||||||
Magallanes-Tucán-Pajonal | 18.2 | 14.9 | 3.3 | 45 | 7 | 18.9 | 10.8 | 8.1 | 62 | 8 | ||||||||||||||||||||||||||||
Pol | 17.3 | 17.3 | 0.0 | 8 | 0 | |||||||||||||||||||||||||||||||||
Tekel | 16.5 | 0.0 | 16.5 | 0 | 1 | 16.5 | 0.0 | 16.5 | 0 | 1 | ||||||||||||||||||||||||||||
Narváez | 12.8 | 12.8 | 0.0 | 10 | 0 | |||||||||||||||||||||||||||||||||
Fundador | 8.2 | 8.2 | 0.0 | 35 | 0 | |||||||||||||||||||||||||||||||||
Arcos | 7.6 | 7.4 | 0.2 | 123 | 2 | |||||||||||||||||||||||||||||||||
Velero | 7.2 | 5.8 | 1.4 | 117 | 10 | |||||||||||||||||||||||||||||||||
Tintal | 15.5 | 4.1 | 11.4 | 6 | 10 | |||||||||||||||||||||||||||||||||
Paredón | 15.2 | 11.7 | 3.5 | 4 | 1 | |||||||||||||||||||||||||||||||||
Papán | 14.8 | 13.8 | 1.0 | 18 | 1 | |||||||||||||||||||||||||||||||||
Cauchy | 14.7 | 14.5 | 0.2 | 31 | 1 | |||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||
Total | 12,104.1 | 7,977.6 | 4,126.5 | 4,828 | 6,733 | 11,986.8 | 7,831.8 | 4,155.0 | 6,067.0 | 6,768.0 | ||||||||||||||||||||||||||||
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|
| |||||||||||||||||||||||||||||
Mexico’s proved reserves | 13,810.3 | 9,148.0 | 4,662.3 | 13,438.5 | 8,794.9 | 4,643.6 | ||||||||||||||||||||||||||||||||
Percentage | 88% | 87% | 89% | 89 | % | 89 | % | 89 | % |
Note: | Numbers may not total due to rounding. |
(1) | Proved reserves, developed reserves and undeveloped reserves are expressed in millions of barrels of oil equivalent. To convert dry gas to barrels of oil equivalent, a factor of 5.201 thousand cubic feet of dry gas per barrel of oil equivalent is used. |
(2) | Undeveloped Locations refers to the number of geographic sites or locations where a well will be drilled to produce undeveloped proved reserves. |
(3) | Includes the Cunduacán, Iride, Oxiacaque, Platanal and Samaria fields. |
Source: Pemex-Exploration and Production.
Pemex-Exploration and Production’s RRR has steadily improved over recent years. The RRR for a given period is calculated by dividing the sum of proved reserves additions due to discoveries, developments, delineations and revisions by that period’s total production. In 2011,2013, the RRR was 101.1%67.8%, which was 15.336.5 percentage points higherlower than the 20102012 RRR of 85.8%, and represented104.3%. The fact that the highest rate attained since our adoption of Rule 4-10(a).RRR was less than 100% in 2013 represents a decline in Mexico’s proved reserves during this period. This increasedecrease in ourthe RRR was mainly due to a significant decrease in the reclassificationamount of proved reserves that were added as a result of discoveries, extensions and positive revisions in 2013 as compared to 2012. Specifically, lower levels of field development revisions of reservoir pressure-production behavior and field delineation, undertaken largelyactivities in the Maloob, Ku, Tsimin, May, Pijije, Costero fields,ATG project as well as the decrease in the Aceite Terciario del Golfo Project. Moreover,number of exploratory activities carried out in the additiondeep waters of the Gulf of Mexico, where the lack of infrastructure precluded us from booking proved reserves, due to discoveries also contributed to the increasedecrease in our RRR.RRR in 2013.
Our goal is to continue to increase ourthe RRR during 2012,2014, in part by increasing Mexico’s proved reserves over the coming years. We aim to accomplish this primarily through development of the Ku-Maloob-Zaap, Crudo Ligero Marino and Aceite Terciario del GolfoATG projects, as well as through the performance of delineation activities. We have developed these objectives based on reserves estimates, which are subject to the uncertainty and risks associated with hydrocarbon exploration and production activities. Additionally, future decisions regarding authorized exploration and exploitation investment levels may lead to related changes.
Our reserves production ratio, which is presented in terms of years, is calculated by dividing the estimated remaining reserves at the end of the relevant year by the total production of hydrocarbons for that year. As of December 31, 2011,2013, this ratio was equal to 10.210.1 years for proved reserves, which represents an increasea decrease of 2.0%1.0% as compared to the 20102012 reserves production ratio of 10.010.2 years for proved reserves.
Sales Prices and Production Costs
The following table sets forth our average sales price per unit of oil and gas produced and our average production cost per unit of production, in the aggregate and for each field containing 15% or more of Mexico’s proved reserves.
Unit Sales Prices and Production Costs(1)
Ku-Maloob-Zaap | Akal | Other Fields | All Fields | Ku-Maloob-Zaap | Akal | Other Fields | All Fields | |||||||||||||||||||||||||
(in U.S. dollars) | (in U.S. dollars) | |||||||||||||||||||||||||||||||
Year ended December 31, 2011 | ||||||||||||||||||||||||||||||||
Year ended December 31, 2013 | ||||||||||||||||||||||||||||||||
Average sales prices | ||||||||||||||||||||||||||||||||
Crude oil, per barrel | U.S. $ | 92.71 | U.S. $ | 97.69 | U.S. $ | 105.45 | U.S. $ | 100.01 | U.S. $ | 92.50 | U.S. $ | 98.72 | U.S. $ | 104.62 | U.S. $ | 99.92 | ||||||||||||||||
Natural gas, per thousand cubic feet | U.S. $ | 4.78 | U.S. $ | 4.47 | U.S. $ | 4.72 | U.S. $ | 4.68 | U.S. $ | 5.03 | U.S. $ | 4.95 | U.S. $ | 5.00 | U.S. $ | 4.93 | ||||||||||||||||
Average production costs, per barrel of oil equivalent | U.S. $ | 4.59 | U.S. $ | 6.70 | U.S. $ | 6.32 | U.S. $ | 6.12 | U.S. $ | 4.88 | U.S. $ | 11.01 | U.S. $ | 10.79 | U.S. $ | 7.91 | ||||||||||||||||
Year ended December 31, 2010 | ||||||||||||||||||||||||||||||||
Year ended December 31, 2012 | ||||||||||||||||||||||||||||||||
Average sale prices | ||||||||||||||||||||||||||||||||
Crude oil, per barrel | U.S. $ | 66.76 | U.S. $ | 69.85 | U.S. $ | 76.21 | U.S. $ | 72.25 | U.S. $ | 95.53 | U.S. $ | 100.96 | U.S. $ | 106.55 | U.S. $ | 102.36 | ||||||||||||||||
Natural gas, per thousand cubic feet | U.S. $ | 5.06 | U.S. $ | 4.20 | U.S. $ | 4.55 | U.S. $ | 4.52 | U.S. $ | 4.18 | U.S. $ | 4.11 | U.S. $ | 4.18 | U.S. $ | 4.03 | ||||||||||||||||
Average production costs, per barrel of oil equivalent | U.S. $ | 4.06 | U.S. $ | 7.36 | U.S. $ | 5.28 | U.S. $ | 5.22 | U.S. $ | 4.86 | U.S. $ | 9.11 | U.S. $ | 6.88 | U.S. $ | 6.84 | ||||||||||||||||
Year ended December 31, 2009 | ||||||||||||||||||||||||||||||||
Year ended December 31, 2011 | ||||||||||||||||||||||||||||||||
Average sale prices | ||||||||||||||||||||||||||||||||
Crude oil, per barrel | U.S. $ | 52.18 | U.S. $ | 54.29 | U.S. $ | 58.02 | U.S. $ | 55.41 | U.S. $ | 92.71 | U.S. $ | 97.69 | U.S. $ | 105.45 | U.S. $ | 100.01 | ||||||||||||||||
Natural gas, per thousand cubic feet | U.S. $ | 4.60 | U.S. $ | 4.78 | U.S. $ | 3.83 | U.S. $ | 4.06 | U.S. $ | 4.78 | U.S. $ | 4.47 | U.S. $ | 4.72 | U.S. $ | 4.68 | ||||||||||||||||
Average production costs, per barrel of oil equivalent | U.S. $ | 3.77 | U.S. $ | 5.48 | U.S. $ | 5.10 | U.S. $ | 4.85 | U.S. $ | 4.59 | U.S. $ | 6.70 | U.S. $ | 6.32 | U.S. $ | 6.12 |
Note: | Numbers may not total due to rounding. |
(1) | Average of sales prices as of the last day of each month of the year. |
Source: Pemex-Exploration and Production.
In 2011,2013, our average production cost was U.S. $6.12$7.91 per barrel of oil equivalent, and represented an increase of 17.2%15.6%, as compared to our average production cost of U.S. $5.22$6.84 per barrel in 2010.2012. This increase resulted primarily from a 35%19.4% net increase in the costs associated with the maintenance of wells and related equipment and facilities and other costs, such asincluding fees for general services a 1.7% appreciation in the annual average value of the Mexican peso in dollar terms and a 1.9%1.5% decrease in total hydrocarbons production in 20112013 as compared to 2010,2012, from 1,3841,353 million barrels of oil equivalent in 20102012 to 1,3581,333 million barrels of oil equivalent in 2011.2013.
Pemex-Exploration and Production calculates and discloses our production costs pursuant to international practices, which are based on U.S. GAAP under Accounting Standards Codification (ASC)ASC Topic 932 “Extractive Activities—Oil and Gas.”932. In accordance with ASC Topic 932, the production cost per barrel of oil equivalent is calculated by dividing total production expenses (in U.S. dollars) by total production of hydrocarbons (in barrels of oil equivalent) for the relevant period.
Our total production cost consists of all direct and indirect costs incurred to produce crude oil and gas, including costs associated with the operation and maintenance of wells and related equipment and facilities. In addition, it includes costs of labor to operate the wells and facilities, the costs of materials, supplies and fuel consumed, including gas used for gas lifting, nitrogen and other chemicals, repair and non-capitalized maintenance costs, and other costs, such as fees for general services, a labor fund for active personnel, corporate services and indirect overhead. However, it excludes non-cash expenses such as amortization of capitalized well expenses, the depreciation of fixed assets, expenses associated with the distribution and handling of hydrocarbons and other expenses that are related to exploration and drilling activities.
Crude Oil and Natural Gas Production
In 2011,2013, we produced an average of 2,5502,522 thousand barrels per day of crude oil, 1.0% less than our average daily production in 20102012 of 2,5762,548 thousand barrels per day of crude oil. The decrease in 20112013 was equal togreater than the decrease in 2010,2012, and resulted primarily from the declinedecrease of production in the Cantarell, project, which was only partially offset by an increase in crude oil production in the Ku-Maloob-Zaap, Delta del Grijalva, Yaxché,Jujo-Tecominoacán, Ixtal-Manik and Ogarrio-Magallanes projects to maintain our production levels.Crudo Ligero Marino projects. Accordingly, our average production of heavy crude oil decreased by 4719.9 thousand barrels per day, to 3.2%or 1.4% less than the average daily production in 2010; however,2012; additionally, our average light and extra-light crude oil production during 2011 increased2013 decreased by 215.8 thousand barrels per day, or a 1.9% increase0.5% decrease as compared to 2010.2012.
Crude oil can be classified by its sulfur content. “Sour” or heavy crude oil contains 3.4% or greater sulfur content by weight and “sweet” or light crude oil contains less than 1.0% sulfur content by weight. Most of our production is classified as sour or heavy crude oil.
Pemex-Exploration and Production produces four types of crude oil:
Altamira, a heavy crude oil;
Maya, a heavy crude oil;
Isthmus, a light crude oil; and
Olmeca, an extra-light crude oil.
Most of Pemex-Exploration and Production’s production consists of Isthmus and Maya crude oil. In 2011, 55.6%2013, 54.1% of Pemex-Exploration and Production’s total production of crude oil consisted of heavy crude oil and 44.4%45.9% consisted of light and extra-light crude oil. The Marine regions yield mostly heavy crude oil (69.5%(66.4% of these regions’ production in 2011)2013), although significant volumes of light crude oil are also produced there (30.5%(33.6% of these regions’ production in 2011)2013). The Southern region yields mainly light and extra-light crude oil (together, 96.9%94.5% of this region’s production in 2011)2013), and the Northern region yields both heavy crude oil (66.8%(55.3% of this region’s production in 2011)2013) and light and extra-light crude oil (33.2%(44.7% of this region’s production in 2011)2013).
The most productive crude oil and natural gas fields in the Gulf of Mexico are located in the Ku-Maloob-Zaap and Cantarell business units in the Northeastern Marine region, and in the Ixtal, Xanab, Yaxché, Chuc Caan, Sinán and IxtalHomol fields in the Southwestern Marine region. In particular, the Ku-Maloob-Zaap business unit was the most important crude oil producer in 2011,2013, producing an average of 842863.8 thousand barrels per day of crude oil in 2011,2013, or 33%34.2% of our total crude oil production for the year, and 331405.1 million cubic feet per day of natural gas, or 5.0%6.4% of our total natural gas production for the year. Our second most important business unit, the Cantarell business unit, produced an average of 500.7439.8 thousand barrels per day of crude oil in 2011,2013, or 19.6%17.4% of our total crude oil production for the year, and an average of 1,0751,007.1 million cubic feet per day of natural gas, or 16.3%15.8% of our total natural gas production for the year.
The following table sets forth our annual crude oil production rates by type of oil for the five years ended December 31, 2011.2013.
Crude Oil Production
| 2011 vs. 2010 | |||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | ||||||||||||||||||||
(in thousands of barrels per day) | (%) | |||||||||||||||||||||||
Marine regions | ||||||||||||||||||||||||
Heavy crude oil | 1,975.7 | 1,701.8 | 1,446.1 | 1,380.4 | 1,322.8 | (4.2 | ) | |||||||||||||||||
Light crude oil(1) | 547.9 | 544.0 | 564.4 | 561.2 | 580.5 | 3.4 | ||||||||||||||||||
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| |||||||||||||||
Total | 2,523.6 | 2,245.8 | 2,010.4 | 1,941.6 | 1,903.3 | (2.0 | ) | |||||||||||||||||
Southern region | ||||||||||||||||||||||||
Heavy crude oil | 10.7 | 11.1 | 13.3 | 16.8 | 16.7 | (0.6 | ) | |||||||||||||||||
Light crude oil(1) | 454.5 | 447.6 | 484.5 | 515.1 | 513.9 | (0.2 | ) | |||||||||||||||||
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| |||||||||||||||
Total | 465.2 | 458.7 | 497.7 | 531.9 | 530.6 | (0.2 | ) | |||||||||||||||||
Northern region | ||||||||||||||||||||||||
Heavy crude oil | 53.0 | 52.8 | 60.7 | 66.7 | 77.6 | 16.3 | ||||||||||||||||||
Light crude oil(1) | 33.9 | 34.3 | 32.7 | 35.7 | 38.6 | 8.1 | ||||||||||||||||||
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| |||||||||||||||
Total | 86.9 | 87.1 | 93.3 | 102.4 | 116.2 | 13.5 | ||||||||||||||||||
Total heavy crude oil | 2,039.4 | 1,765.7 | 1,520.0 | 1,464.0 | 1,417.1 | (3.2 | ) | |||||||||||||||||
Total light crude oil(1) | 1,036.3 | 1,025.9 | 1,081.5 | 1,111.9 | 1,133.0 | 1.9 | ||||||||||||||||||
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Total crude oil | 3,075.7 | 2,791.6 | 2,601.5 | 2,575.9 | 2,550.1 | (1.0 | ) | |||||||||||||||||
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| 2013 vs. 2012 | |||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||||||
(in thousands of barrels per day) | (%) | |||||||||||||||||||||||
Marine regions | ||||||||||||||||||||||||
Heavy crude oil | 1,446.1 | 1,380.5 | 1,322.8 | 1,280.2 | 1,258.3 | (1.7 | ) | |||||||||||||||||
Light crude oil(1) | 564.4 | 561.2 | 580.5 | 614.5 | 638.1 | 3.8 | ||||||||||||||||||
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| |||||||||||||||
Total | 2,010.4 | 1,941.6 | 1,903.3 | 1,894.6 | 1,896.4 | 0.1 | ||||||||||||||||||
Southern region | ||||||||||||||||||||||||
Heavy crude oil | 13.3 | 16.8 | 16.7 | 18.5 | 26.5 | 43.2 | ||||||||||||||||||
Light crude oil(1) | 484.5 | 515.1 | 513.9 | 489.6 | 454.3 | (7.2 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 497.7 | 531.9 | 530.6 | 508.2 | 480.8 | (5.4 | ) | |||||||||||||||||
Northern region | ||||||||||||||||||||||||
Heavy crude oil | 60.7 | 66.7 | 77.6 | 86.3 | 80.2 | (7.1 | ) | |||||||||||||||||
Light crude oil(1)(2) | 32.7 | 36.8 | 41.2 | 58.8 | 64.7 | 10.0 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 93.3 | 103.6 | 118.8 | 145.1 | 144.9 | (0.1 | ) | |||||||||||||||||
Total heavy crude oil | 1,520.0 | 1,464.0 | 1,417.1 | 1,385.0 | 1,365.1 | (1.4 | ) | |||||||||||||||||
Total light crude oil(1) | 1,081.5 | 1,113.0 | 1,135.5 | 1,162.9 | 1,157.1 | (0.5 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total crude oil | 2,601.5 | 2,577.0 | 2,552.6 | 2,547.9 | 2,522.1 | (1.0 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Note: Numbers may not total due to rounding.
Note: | Numbers may not total due to rounding. |
(1) | Includes extra-light crude oil. |
(2) | Since 2010, includes extra-light crude oil from the Nejo field in the Burgos business unit. |
Source: Source:Pemex-Exploration and Production.
The following table sets forth our annual crude oil production by region and business unit for the five years ended December 31, 2011.2013.
Crude Oil Production
| 2011 vs. 2010 | |||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | ||||||||||||||||||||
(in thousands of barrels per day) | (%) | |||||||||||||||||||||||
Marine regions | ||||||||||||||||||||||||
Ku-Maloob-Zaap | 527.2 | 706.0 | 808.0 | 839.2 | 842.0 | 0.3 | ||||||||||||||||||
Cantarell | 1,490.5 | 1,039.5 | 684.8 | 558.0 | 500.7 | (10.3 | ) | |||||||||||||||||
Litoral de Tabasco | 193.6 | 192.2 | 212.3 | 248.1 | 284.4 | 14.6 | ||||||||||||||||||
Abkatún-Pol-Chuc | 312.3 | 308.1 | 305.4 | 296.3 | 276.2 | (6.8 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 2,523.6 | 2,245.8 | 2,010.4 | 1,941.6 | 1,903.3 | (2.0 | ) | |||||||||||||||||
Southern region | ||||||||||||||||||||||||
Samaria-Luna | 186.7 | 184.7 | 199.9 | 217.5 | 222.7 | 2.4 | ||||||||||||||||||
Bellota-Jujo | 190.0 | 174.8 | 172.2 | 160.3 | 143.4 | (10.5 | ) | |||||||||||||||||
Cinco Presidentes | 44.6 | 47.3 | 56.6 | 71.7 | 83.5 | 16.5 | ||||||||||||||||||
Muspac | 33.6 | 36.1 | 42.1 | 49.5 | 48.5 | (2.0 | ) | |||||||||||||||||
Macuspana | 10.4 | 15.7 | 27.1 | 32.9 | 32.5 | (1.2 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 465.2 | 458.7 | 497.7 | 531.9 | 530.6 | (0.2 | ) | |||||||||||||||||
Northern region | ||||||||||||||||||||||||
Poza Rica-Altamira | 85.1 | 55.7 | 59.1 | 56.5 | 60.2 | 6.5 | ||||||||||||||||||
Aceite Terciario del Golfo | — | 29.3 | 29.5 | 41.0 | 52.8 | 28.8 | ||||||||||||||||||
Veracruz | 1.8 | 2.1 | 4.6 | 4.9 | 3.2 | (34.7 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 86.9 | 87.1 | 93.3 | 102.4 | 116.2 | 13.5 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total crude oil | 3,075.7 | 2,791.6 | 2,601.5 | 2,575.9 | 2,550.1 | (1.0 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2013 vs. 2012 | |||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||||||
(in thousands of barrels per day) | (%) | |||||||||||||||||||||||
Marine regions | ||||||||||||||||||||||||
Ku-Maloob-Zaap | 808.0 | 839.2 | 842.1 | 855.1 | 863.8 | 1.0 | ||||||||||||||||||
Cantarell | 684.8 | 558.0 | 500.7 | 454.1 | 439.8 | (3.1 | ) | |||||||||||||||||
Litoral de Tabasco | 212.3 | 248.1 | 284.4 | 319.2 | 299.2 | (6.3 | ) | |||||||||||||||||
Abkatún-Pol-Chuc | 305.4 | 296.3 | 276.2 | 266.3 | 293.6 | 10.3 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 2,010.4 | 1,941.6 | 1,903.3 | 1,894.6 | 1,896.4 | 0.1 | ||||||||||||||||||
Southern region | ||||||||||||||||||||||||
Samaria-Luna | 199.9 | 217.5 | 222.7 | 205.1 | 172.5 | (15.9 | ) | |||||||||||||||||
Bellota-Jujo | 172.2 | 160.2 | 143.4 | 130.3 | 134.3 | 3.1 | ||||||||||||||||||
Cinco Presidentes | 56.6 | 71.7 | 83.5 | 96.0 | 93.1 | (3.0 | ) | |||||||||||||||||
Macuspana-Muspac(1) | 69.1 | 82.4 | 81.1 | 76.8 | 80.9 | 5.3 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 497.7 | 531.9 | 530.6 | 508.2 | 480.8 | (5.4 | ) | |||||||||||||||||
Northern region | ||||||||||||||||||||||||
Aceite Terciario del Golfo | 29.5 | 41.0 | 52.8 | 68.6 | 66.2 | (3.5 | ) | |||||||||||||||||
Poza Rica-Altamira | 59.1 | 56.5 | 60.2 | 67.8 | 61.5 | (9.3 | ) | |||||||||||||||||
Burgos(2) | n.a. | 1.2 | 2.5 | 4.8 | 8.0 | 66.7 | ||||||||||||||||||
Veracruz | 4.6 | 4.9 | 3.2 | 4.0 | 9.3 | 132.5 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 93.3 | 103.6 | 118.8 | 145.1 | 144.9 | (0.1 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total crude oil | 2,601.5 | 2,577.0 | 2,552.6 | 2,547.9 | 2,522.1 | (1.0 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Note: Numbers may not total due to rounding.
Note: | Numbers may not total due to rounding. |
(1) | As of 2012, the Macuspana and Muspac business units were merged into the Macuspana-Muspac business unit. |
(2) | As of February 2010, the Burgos business unit includes the hydrocarbons production from the Nejo field. |
Source: Pemex-Exploration and Production.
The Marine regions, which are comprised of the Northeastern Marine region and the Southwestern Marine region, are located on the continental shelf and its slope in the Gulf of Mexico. They cover a surface area of approximately 550,000 square kilometers, located entirely within Mexican territorial waters, along the coast of the states of Tabasco, Campeche, Yucatán, Quintana Roo and the southern coast of the state of Veracruz. In 2011,2013, the average crude oil production from the 3642 fields located in these regions was 1,903.31,896.4 thousand barrels per day.
The Southern region covers an area of approximately 392,000 square kilometers, including the states of Guerrero, Oaxaca, Chiapas, Tabasco, Yucatán, Quintana Roo, Campeche and Veracruz. In 2011,2013, the average crude oil production from the 93102 fields located in this region was 530.6480.8 thousand barrels per day.
The Northern region, including its offshore area, is located on the continental shelf in the Gulf of Mexico along the coast of the state of Tamaulipas and the northern coast of the state of Veracruz. It covers an area of approximately 1.8 million square kilometers. Our production area in the onshore portion of this region is located in, among others, the states of Veracruz, Tamaulipas, Nuevo León, Coahuila, San Luis Potosí and Puebla; we also produce offshore on the continental shelf in the Gulf of Mexico. In 2011,2013, the average crude oil and natural gas production in the Northern region totaled 116.2144.9 thousand barrels of crude oil per day and 2,287.92,060.6 million cubic feet of natural gas per day, respectively, from the 308310 oil and gas fields in this region.
The following table sets forth our annual natural gas production by region and business unit for the five years ended December 31, 2011.2013.
Natural Gas Production
| 2013 vs. 2012 | |||||||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2011 vs. 2010 | 2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||||||||||||||||||||||||
(in millions of cubic feet per day) | (%) | (in millions of cubic feet per day) | (%) | |||||||||||||||||||||||||||||||||||||||||||||
Marine regions | ||||||||||||||||||||||||||||||||||||||||||||||||
Cantarell | 944.9 | 1,628.5 | 1,455.3 | 1,251.9 | 1,074.7 | (14.2 | ) | 1,455.3 | 1,251.9 | 1,074.7 | 1,004.2 | 1,007.1 | 0.3 | |||||||||||||||||||||||||||||||||||
Litoral de Tabasco | 448.4 | 453.9 | 531.3 | 577.5 | 649.3 | 12.4 | 531.3 | 577.6 | 649.3 | 735.6 | 747.6 | 1.6 | ||||||||||||||||||||||||||||||||||||
Abkatún-Pol-Chuc | 544.2 | 569.0 | 580.2 | 594.2 | 559.0 | (5.9 | ) | 580.2 | 594.2 | 559.0 | 523.6 | 579.4 | 10.7 | |||||||||||||||||||||||||||||||||||
Ku-Maloob-Zaap | 212.2 | 272.8 | 327.2 | 331.8 | 330.9 | (0.3 | ) | 327.2 | 331.8 | 330.9 | 329.7 | 405.1 | 22.9 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
2,149.7 | 2,924.2 | 2,894.0 | 2,755.4 | 2,613.9 | (5.1 | ) | ||||||||||||||||||||||||||||||||||||||||||
Total | 2,894.0 | 2,755.4 | 2,613.9 | 2,593.1 | 2,739.2 | 5.6 | ||||||||||||||||||||||||||||||||||||||||||
Southern region | ||||||||||||||||||||||||||||||||||||||||||||||||
Samaria-Luna | 517.6 | 572.4 | 678.6 | 773.9 | 715.7 | (7.5 | ) | 678.6 | 773.9 | 715.7 | 695.9 | 606.3 | (12.9 | ) | ||||||||||||||||||||||||||||||||||
Macuspana | 223.1 | 260.5 | 312.4 | 306.5 | 292.4 | (4.6 | ) | |||||||||||||||||||||||||||||||||||||||||
Macuspana-Muspac(1) | 591.0 | 580.0 | 571.5 | 542.9 | 515.1 | (5.1 | ) | |||||||||||||||||||||||||||||||||||||||||
Bellota-Jujo | 239.6 | 250.7 | 260.8 | 305.9 | 288.2 | (5.8 | ) | 260.8 | 305.9 | 288.2 | 297.4 | 319.7 | 7.5 | |||||||||||||||||||||||||||||||||||
Muspac | 310.9 | 299.5 | 278.6 | 273.5 | 279.1 | 2.0 | ||||||||||||||||||||||||||||||||||||||||||
Cinco Presidentes | 61.4 | 67.5 | 69.2 | 104.9 | 116.9 | 11.4 | 69.2 | 104.9 | 116.9 | 116.3 | 129.4 | 11.3 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total | 1,599.6 | 1,764.7 | 1,692.3 | 1,652.4 | 1,570.5 | (5.0 | ) | |||||||||||||||||||||||||||||||||||||||||
Northern region | ||||||||||||||||||||||||||||||||||||||||||||||||
Burgos(2) | 1,515.2 | 1,478.4 | 1,344.1 | 1,269.3 | 1,286.6 | 1.4 | ||||||||||||||||||||||||||||||||||||||||||
Veracruz | 809.6 | 818.9 | 716.7 | 601.2 | 494.5 | (17.7 | ) | |||||||||||||||||||||||||||||||||||||||||
Aceite Terciario del | ||||||||||||||||||||||||||||||||||||||||||||||||
Golfo | 78.7 | 85.3 | 111.9 | 148.8 | 167.0 | 12.2 | ||||||||||||||||||||||||||||||||||||||||||
Poza Rica-Altamira | 133.5 | 117.3 | 115.2 | 120.0 | 112.4 | (6.3 | ) | |||||||||||||||||||||||||||||||||||||||||
1,352.8 | 1,450.6 | 1,599.6 | 1,764.7 | 1,692.3 | (4.1 | ) |
|
|
|
|
| |||||||||||||||||||||||||||||||||||||
Northern region | ||||||||||||||||||||||||||||||||||||||||||||||||
Burgos | 1,411.8 | 1,382.7 | 1,515.2 | 1,478.4 | 1,344.1 | (9.1 | ) | |||||||||||||||||||||||||||||||||||||||||
Veracruz | 921.7 | 956.7 | 809.6 | 818.9 | 716.7 | (12.5 | ) | |||||||||||||||||||||||||||||||||||||||||
Poza Rica-Altamira | 222.5 | 152.5 | 133.5 | 117.3 | 115.2 | (1.8 | ) | |||||||||||||||||||||||||||||||||||||||||
Aceite Terciario del Golfo | — | 52.0 | 78.7 | 85.3 | 111.9 | 31.2 | ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||
2,556.0 | 2,543.9 | 2,537.1 | 2,499.9 | 2,287.9 | (8.5 | ) | ||||||||||||||||||||||||||||||||||||||||||
Total | 2,537.1 | 2,499.9 | 2,287.8 | 2,139.3 | 2,060.6 | (3.7 | ) | |||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total natural gas | 6,058.5 | 6,918.6 | 7,030.7 | 7,020.0 | 6,594.1 | (6.1 | ) | 7,030.7 | 7,020.0 | 6,594.1 | 6,384.7 | 6,370.3 | (0.2 | ) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Note: | Numbers may not total due to rounding. |
(1) | As of 2012, the Macuspana and Muspac business units were merged into the Macuspana-Muspac business unit. |
(2) | As of February 2010, the Burgos business unit includes the hydrocarbons production from the Nejo field. |
Note: Numbers may not total due to rounding.
Source: Pemex-Exploration and Production.
In 2011,2013, the Marine regions produced 2,613.92,739.2 million cubic feet per day of natural gas, or 39.6%43.0% of our total natural gas production, an increase of 5.6% as compared to the regions’ 2012 production of 2,593.1 million cubic feet per day. In 2013, the Southern region produced 1,570.5 million cubic feet per day of natural gas, or 24.7% of our total natural gas production, a decrease of 5.1%5.0% as compared to the regions’ 2010region’s 2012 production of 2,755.41,652.4 million cubic feet per day. In 2011,2013, the SouthernNorthern region produced 1,692.32,060.6 million cubic feet per day of natural gas, or 25.7%32.3% of our total natural gas production, a decrease of 4.1%3.7% as compared to the region’s 20102012 production of 1,764.7 million cubic feet per day. In 2011, the Northern region produced 2,287.9 million cubic feet per day of natural gas, or 34.7% of our total natural gas production, a decrease of 8.5% as compared to the region’s 2010 production of 2,499.92,139.3 million cubic feet per day.
Pemex-Exploration and Production’s average natural gas production decreased by 0.2% in 2013, from 6,385 million cubic feet per day in 2012 to 6,370 million cubic feet per day in 2013. Natural gas production associated with crude oil production accounted for 72.3% of total natural gas production in 2013, with the remainder of natural gas production consisting of extraction from fields holding natural gas reserves. Although natural gas production is more geographically diverse than crude oil production, 182 fields (or 40.1% of the 454 producing fields) accounted for 27.7% of all natural gas production in 2013. Of total natural gas production, 43.0% originated in the Marine regions, 24.7% in the Southern region and the remainder, 32.3%, originated in the Northern region.
Investments in Exploration and Production
In nominal peso terms, our capital expenditures for exploration and production were Ps. 177,059212,556 million in 2011,2013, as compared to Ps. 194,838193,801 million in 2010,2012, representing a 9.1% decrease9.7% increase in nominal terms. Of our total capital expenditures, Ps. 36,30329,738 million was directed to theKu-Maloob-Zaap fields, Ps. 28,171 million was directed to the Cantarell fields, Ps. 27,790 million was directed to the Strategic Gas Program, Ps. 21,91920,049 million was directed to the ATG project, Ps. 21,55413,312 million was directed to the Ku-Maloob-ZaapTsimin-Xux project, Ps. 11,489 million was directed to the Antonio J. Bermúdez fields, Ps. 19,56410,316 million was used for development of the Burgos natural gas fields (including Ps. 9,6063,042 million of investments made through the Financed Public Works Contracts Program, see “—Business Overview—Exploration and Production—Financed Public Works Contracts” in this Item 4), Ps. 11,21810,000 million was directed to the Antonio J. Bermúdez fields,Crudo Ligero Marino project, Ps. 6,5019,897 million was directed to the Chuc project, Ps. 6,693 million was directed to the Ogarrio-Magallanes project, Ps. 6,169 million was directed to the Delta del
Grijalva fields and Ps. 4,9124,208 million was directed to the Bellota-Chinchorro fields, Ps. 4,687 million was directed to the Integral Poza Rica fields, Ps. 3,800 million was directed to the Tamaulipas Constituciones project and Ps. 3,730 million was directed to the ChucCactus-Sitio Grande project. During 2011,2013, expenditures for these 11 projects amounted to 91.5%70.6% of all our capital expenditures for exploration and production. The remaining 8.5%29.4% amounted to Ps. 15,08262,514 million in nominal terms, which was directed to the 1219 remaining projects, as well as to other exploratory projects and administrative and technical support.
20122014 Exploration and Production Capital Expenditures Budget. For 2012,2014, Pemex-Exploration and Production has a total capital expenditures budget of Ps. 192,953230,879 million, as compared to Ps. 177,059212,556 million of capital expenditures made in 2011,2013, representing an increase of 9.0%8.6%. The 20122014 budget includes all of the 2326 ongoing strategic exploration and production projects and Ps. 4,85631,698 million in other exploratory projects. Approximately Ps. 159,298197,281 million, or 82.6%85.4% of our 20122014 capital expenditures budget, is to be allocated to projects relating to field development and pipelines. Approximately Ps. 33,65533,598 million, or 17.4%14.6% of the total budget, will be allocated to exploration activities.
The 20122014 exploration and production budget includes Ps. 48,24934,292 million for investments in the Ku-Maloob-Zaap project, Ps. 24,375 million for the Cantarell project, Ps. 34,81920,179 million for the Strategic Gas Program,Tsimin-Xux project, Ps. 22,80413,402 million for the Ku-Maloob-ZaapCrudo Ligero Marino project, Ps. 15,37812,245 million for the ATGChuc project, Ps. 13,31111,824 million for the Lakach project, Ps. 10,751 million for the Antonio J. Bermúdez project, Ps. 11,1289,935 million for the Burgos project, Ps. 8,2058,173 million for the ChucIntegral Yaxché project, Ps. 5,3266,934 million for the Delta del Grijalva project, Ps. 4,3425,242 million for the Integral Yaché project, Ps. 4,053 million for the Bellota-Chinchorro project, Ps. 3,779 million for the Jujo-TecominoacánATG project and Ps. 21,55973,527 million for the remaining projects, as well as for other exploratory and development projects and administrative and technical support.
Exploration and Production Investment Trends. In 2011,2013, we invested Ps. 31,13332,179 million in nominal terms, or 17.6%15.1% of the total capital expenditures of Pemex-Exploration and Production, in exploration activities, which represents a 5.6% increase3.0% decrease from the Ps. 29,47433,161 million invested in exploration activities in 2010.2012. In 2011,2013, we invested Ps. 145,926180,377 million in nominal terms, or 82.4%84.9% of the total capital expenditures for Pemex-Exploration and Production, in development activities, which represents an 11.8% decreasea 12.3% increase from the Ps. 165,364160,640 million invested in development activities in 2010.2012.
In 2012,2014, we have budgeted Ps. 33,65533,598 million, or 17.4%14.6% of total capital expenditures, for exploration activities of Pemex-Exploration and Production, which represents an 8.1%a 4.4% increase in nominal terms from the amount invested in exploration activities in 2011.2013. For development activities, we have budgeted Ps. 159,298197,281 million, or 82.6%85.4% of total capital expenditures, which represents a 9.2%9.4% increase in nominal terms from the amount that Pemex-Exploration and Production invested in development activities in 2011.2013. In 2013,2015, we expect to invest Ps. 39,79337,835 million, or 19.1% of total capital expenditures of Pemex-Exploration and Production, in exploration activities, which represents an 18.2% increase in nominal terms from the amount budgeted for 2012. In 2014, we expect to invest Ps. 41,114 million, or 23.7%16.5% of total capital expenditures of Pemex-Exploration and Production, in exploration activities, which represents a 3.3%12.6% increase in nominal terms from the amount budgeted for 2014. In 2016, we expect to invest Ps. 33,741 million, or 15.3% of total capital expenditures of Pemex-Exploration and Production, in exploration activities, which represents a 10.8% decrease in nominal terms from the amount projected for 2013.2015. In 2017, we expect to invest Ps. 28,578 million, or 14.1% of total capital expenditures of Pemex-Exploration and Production, in exploration activities, which represents a 15.3% decrease in nominal terms from the amount projected for 2016.
The capital expenditures of Pemex-Exploration and Production have constituted 83.9% or more than 84% of our total capital expenditures in each of the last five years. In 2012,2014, Pemex-Exploration and Production’s budgeted capital expenditures constitute 77.2%80.5% of our total.
The following table sets forth our capital expenditures related to exploration and development during the five years ended December 31, 2011.2013.
Exploration and Development Capital Expenditures for 2007-20112009-2013
Year ended December 31,(1) | Year ended December 31,(1) | |||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2009 | 2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||||||
(in millions of nominal pesos) | (in millions of nominal pesos) | |||||||||||||||||||||||||||||||||||||||
Exploration | Ps. 13,624 | Ps. 24,082 | Ps. 30,372 | Ps. 29,474 | Ps. 31,133 | Ps. | 30,372 | Ps. | 29,474 | Ps. | 31,133 | Ps. | 33,161 | Ps. | 32,179 | |||||||||||||||||||||||||
Development | 101,939 | 112,020 | 150,135 | 165,364 | 145,926 | 150,135 | 165,364 | 145,926 | 160,640 | 180,377 | ||||||||||||||||||||||||||||||
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|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total | Ps. 115,563 | Ps. 136,102 | Ps. 180,507 | Ps. 194,838 | Ps. 177,059 | Ps. | 180,507 | Ps. | 194,838 | Ps. | 177,059 | Ps. | 193,801 | Ps. | 212,556 | |||||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
Note: Numbers may not total due to rounding.
Note: | Numbers may not total due to rounding. |
(1) | Amounts based on cash basis method of accounting. |
Source: Pemex-Exploration and Production.
The following table sets forth our estimated capital expenditures budget for exploration and development for 20122014 through 2015.2017.
Estimated Exploration and Development Capital Expenditures for 2012-20152014-2017
Year ended December 31,(1) | Year ended December 31,(1) | |||||||||||||||||||||||||||||||
2012(2) | 2013 | 2014 | 2015 | 2014(2) | 2015 | 2016 | 2017 | |||||||||||||||||||||||||
(in millions of constant 2012 pesos) | (in millions of constant 2014 pesos) | |||||||||||||||||||||||||||||||
Exploration(3) | Ps. 33,655 | Ps. 39,793 | Ps. 41,114 | Ps. 28,406 | Ps. | 33,598 | Ps. | 37,835 | Ps. | 33,741 | Ps. | 28,578 | ||||||||||||||||||||
Development(3) | 159,298 | 168,782 | 132,071 | 101,546 | 197,281 | 192,147 | 186,333 | 174,536 | ||||||||||||||||||||||||
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Total | Ps. 192,953 | Ps. 208,575 | Ps. 173,185 | Ps. 129,952 | Ps. | 230,879 | Ps. | 229,982 | Ps. | 220,075 | Ps. | 203,114 | ||||||||||||||||||||
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Note: Numbers may not total due to rounding.
Note: | Numbers may not total due to rounding. |
(1) | Amounts based on cash basis method of accounting. |
(2) | Approved budget. |
(3) | Estimated budgets for |
Source: Pemex-Exploration and Production.
Investments and Production by Project
We conduct exploration, production and development activities in fields throughout Mexico. Our 11 main projects are Ku-Maloob-Zaap, Cantarell, the Strategic Gas Program, Aceite Terciario del Golfo, Ku-Maloob-Zaap, Burgos,ATG, Tsimin-Xux, Antonio J. Bermúdez, Burgos, Crudo Ligero Marino, Chuc, Ogarrio Magallanes, Delta del Grijalva Bellota-Chinchorro, Integral Poza Rica, Tamaulipas-Constituciones and Chuc.Cactus-Sitio Grande. These projects are described below.
Ku-Maloob-Zaap Project. The Ku-Maloob-Zaap project was our most important producer of heavy crude oil and plays an important part in the production of the Maya crude oil mix. It is the most important project in Mexico in terms of total proved hydrocarbon reserves and crude oil production. It is composed of the Bacab, Lum, Ku, Maloob and Zaap fields, and extends over an area of 149.5 square kilometers. As of December 31, 2013, there were a total of 217 wells completed, 177 of which were producing. The project produced an average of 863.8 thousand barrels of crude oil per day, 34.2% of our total production, and 405.1 million cubic feet of natural gas per day in
2013. As of December 31, 2013, cumulative production was 4.2 billion barrels of crude oil and 2.0 trillion cubic feet of natural gas. As of December 31, 2013, proved hydrocarbon reserves totaled 3.3 billion barrels of crude oil and 1.4 trillion cubic feet of natural gas. Total proved reserves were 3.6 billion barrels of oil equivalent, of which 2.7 billion barrels were developed.
In nominal peso terms, Pemex-Exploration and Production’s capital expenditures for this project were Ps. 21,554 million in 2011, Ps. 22,720 million in 2012 and Ps. 29,738 million in 2013. For 2014, we anticipate that capital expenditures will be Ps. 34,292 million and that total accumulated capital expenditures for this project will reach approximately U.S. $20.1 billion. In 2013, Pemex-Exploration and Production paid approximately U.S. $36.2 million to acquire approximately 106.5 billion cubic feet of nitrogen for the pressure maintenance project in the fifth module of the Cantarell nitrogen cryogenic plant, which began operations in November 2006. In 2014, we expect to spend approximately U.S. $35.9 million to acquire approximately 108.6 billion cubic feet of nitrogen for injection into theKu-Maloob-Zaap fields.
Cantarell Project. The Cantarell project is located on the continental shelf of the Gulf of Mexico. It consists of the Akal, Chac, Ixtoc, Kutz, Nohoch, Sihil and Takin fields, which extend over an area of 185.5 square kilometers. As of December 31, 2011,2013, there were a total of 514543 wells drilled in the Cantarell project, 198 of which were producing. During 2011,2013, the Cantarell business unit, of which the Cantarell project is part, was the second most important producer of crude oil in Mexico, averaging 500.7439.8 thousand barrels per day of crude oil. This was 10.3%3.1% less than 20102012 production, which was 558.0454.1 thousand barrels per day, as a result of the decline of these fields. Natural gas production from the Cantarell business unit during 20112013 averaged 1,074.71,007.1 million cubic feet per day. This was 14.2% less0.3% more than the 20102012 average natural gas production, which was 1,251.91,004.2 million cubic feet per day.day, due to the higher gas-to-oil ratio of the producing wells located close to the secondary gas-cap of the Cantarell reservoir.
The Cantarell project averaged 448.9379.6 thousand barrels per day of crude oil production during 2011.2013. This was 10.3%6.2% less than production in 2010,2012, which was 500.7404.5 thousand barrels per day. Natural gas production from the Cantarell project during 20112013 averaged 1,071.81,001.5 million cubic feet per day. This was 14.2% less0.01% more than the 20102012 average natural gas production, which was 1,248.71,001.4 million cubic feet per day.
As of December 31, 2011,2013, cumulative production of the Cantarell project was 13.714.0 billion barrels of crude oil and 7.38.0 trillion cubic feet of natural gas. As of December 31, 2011,2013, proved hydrocarbon reserves of the Cantarell project totaled 1.91.8 billion barrels of crude oil and 1.31.2 trillion cubic feet of natural gas. As of December 31, 2011,2013, total proved reserves were 2.22.0 billion barrels of oil equivalent, 2.11.9 billion of which were developed.
The Akal field, which is the most important field in the Cantarell project, averaged 313.6203.3 thousand barrels per day of crude oil production during 2011.2013. This was 15.2%13.2% less than the average production in 2010,2012, which was 369.6234.1 thousand barrels per day.
In nominal peso terms, Pemex-Exploration and Production’s capital expenditures for the Cantarell project totaled Ps. 41,002 million in 2009, Ps. 38,437 million in 2010 and Ps. 36,303 million in 2011.2011, Ps. 42,139 million in 2012 and Ps. 28,171 million in 2013. For 2012,2014, we have budgeted Ps. 48,24924,375 million for capital expenditures for the Cantarell project. By the end of 2012,2014, we expect our capital expenditures to total approximately U.S. $36.7$40.1 billion for this project.
On October 10, 1997, we awarded a build-own-operate contract for a nitrogen cryogenic plant at the Cantarell project to a consortium formed by BOC Holdings, Linde, Marubeni, West Coast Energy and ICA Fluor Daniel. Under this contract, the consortium is responsible for the financing, design, construction and operation of the plant. The plant began operations in 2000 and cost approximately Ps. 10,131 million in nominal terms. Pursuant to the terms of the agreement, Pemex-Exploration and Production has the right to acquire the nitrogen plant in the case of a default by the consortium. Pemex-Exploration and Production has the obligation to acquire the nitrogen plant if it defaults under the contract. Under the terms of the contract, Pemex-Exploration and
Production has committed to purchase 1.2 billion cubic feet per day of nitrogen from the consortium for a period of 15 years. Because less pressure will be necessary as the Cantarell fields decline, the volume of nitrogen needed for injection into these fields will decrease over time. We therefore plan to direct an increasing amount of this nitrogen to the Ku-Maloob-Zaap project.
During 2011,2013, Pemex-Exploration and Production paid approximately U.S. $53.4$66.5 million under this contract for an approximate total volume of 348.8418.2 billion cubic feet of nitrogen, which was injected into the Cantarell fields. In 2012,2014, Pemex-Exploration and Production expects to pay approximately U.S. $61.6$66.2 million under this contract for an approximate total volume of 427.3426.4 billion cubic feet of nitrogen to be injected into the fields.
Strategic Gas Program (SGP). In 2001, Pemex-Exploration and Production began a nine-year, U.S. $8.1 billion Strategic Gas Program. Following the scheduled expiration of the SGP, Pemex-Exploration and Production decided to continue the SGP for as long as it continues to be profitable. Based on the expected acceleration of growth in the demand for natural gas in the medium- and long-term as compared to its projected supply, Pemex-Exploration and Production reviewed its energy policy. With the objective of addressing natural gas shortages, Pemex-Exploration and Production identified and selected a portfolio of investment options aimed at increasing gas production. Field development and production optimization represents 76% of SGP expenditures, with the goal of increasing the production of natural gas in the SGP to 2,308 million cubic feet per day by 2015. Exploration activities, which include twelve different exploratory natural gas and integral gas projects, represent 12% of SGP expenditures, with the goal of increasing proved reserves. Development of newly discovered fields represents 12% of SGP expenditures. The Veracruz project in the Northern region and the Crudo Ligero Marino and Ixtal-Manik projects in the Southwestern Marine regions are the SGP’s most important projects:
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In nominal peso terms, Pemex-Exploration and Production’s capital expenditures for the SGP were Ps. 28,626 in 2009, Ps. 27,944 million in 2010 and Ps. 27,790 million in 2011. For 2012, we have budgeted Ps. 34,819 million for capital expenditures for the SGP, which would bring our total capital expenditures for the program to approximately U.S. $22.4 billion through December 31, 2012.
From 2007 to 2011, average production from the SGP was 1.9 billion cubic feet of natural gas per day. During 2011, 2 fields were discovered in the Veracruz basin through the drilling of two wells, which added 52.8 billion cubic feet of natural gas and 3.4 million barrels of oil to proved reserves. Development activities have focused mainly on the Veracruz, Crudo Ligero Marino and Ixtal-Manik projects. For the Veracruz project, 3.6 million barrels of oil equivalent were added from the drilling of ten wells at the Arquimia and Cauchy fields during 2011. Similar development activities were performed in the Crudo Ligero Marino project, where 63.2 million barrels of oil equivalent were added from the drilling of three wells. Finally, the Ixtal-Manik project increased its proved reserves by 8.8 million barrels of oil equivalent through the completion of two producing wells.
Aceite Terciario del Golfo Project (formerly Paleocanal de Chicontepec). The Aceite Terciario del GolfoATG project is located in the Northern region and covers an area of 4,243 square kilometers.Thiskilometers. This project is comprised of 29 fields, which are divided among eight sectors. As of December 31, 2011,2013, there were a total of 3,6324,427 wells completed, of which 2,0022,790 were producing. The project produced an average of 52.9 thousand barrels per day of crude oil as compared to 41.066.2 thousand barrels per day of crude oil in 2010,2013 as compared to 68.6 thousand barrels per day of crude oil in 2012, which represented a 29% increase,3.5% decrease, and 111.8167.0 million cubic feet of natural gas per day in 20112013 as compared to 85.3148.8 million cubic feet of natural gas per day in 2010,2012, which represented a 31%12.2% increase. The decrease in crude oil production was primarily due to the decline in pressure in certain reservoirs, whereas the increase in natural gas production was primarily due to the use of unconventional wells and artificial lift systems. As of December 31, 2011,2013, cumulative production was 204.9was254.1 million barrels of crude oil and 369.8485.3 billion cubic feet of natural gas. As of December 31, 2011,2013, proved hydrocarbon reserves totaled 568.3606.7 million barrels of crude oil and 880.8948.8 billion cubic feet of natural gas. Total
proved reserves were 743.0806.3 million barrels of oil equivalent, of which 191.4260.6 million were developed. During 2011,2013, field development activities at the project included the drilling of 465102 wells, and the completion of 513205 wells. Of these 513All 205 completed wells 490 were classified as producing, reflecting a success factor of 95.5%100%. As of December 31, 2011, 67%2013, 72% of the total producing wells were operating with artificial lift systems, such as beam pumps and gas lifts, while the remaining 33%28% were “flowing wells” that are classified as suchaccordingly because they did not require any means of artificial lift.
In nominal peso terms, Pemex-Exploration and Production’sour capital expenditures for the Aceite Terciario del GolfoATG project were Ps. 20,60721,919 in 2009,2011, Ps. 28,26220,864 million in 20102012 and Ps. 21,91920,049 million in 2011.2013. For 2012,2014, we anticipate that capital expenditures for this project will be Ps. 15,3785,242 million and that total accumulated investments in this project will be approximately U.S. $8.8$11.7 billion.
Ku-Maloob-ZaapTsimin-Xux Project. The Ku-Maloob-ZaapThis project was our most important producerconsists of heavy crudethe Tsimin and Xux fields, which include volatile oil and plays an important partgas condensate reservoirs in the productionshallow waters of the Maya crude oil mix. ItGulf of Mexico. The Tsimin field is located 62 kilometers from the most important projectDos Bocas Marine Terminal in Mexico in terms of total proved hydrocarbon reserves and crude oil production. ItParaíso, Tabasco, while the Xux field is composedlocated on the continental shelf of the Bacab, Lum, Ku, MaloobGulf of Mexico, approximately ten kilometers off the coast of Tabasco. This project is geographically bounded by a 500-meter isobath to the north and Zaap fields,the coast of Tabasco. During 2013, four new wells were completed at the Tsimin field and extends over an area of 149.5 square kilometers. As of December 31, 2011, there were a total of 197 wellsone new well was completed 146 of which were producing. Theat the Xux field. During 2013, average daily production at the Tsimin-Xux project produced an average of 842.0totaled 40.0 thousand barrels of crude oil 33% of our total production, and 330.9160.0 million cubic feet of natural gasgas. The development plan for this project estimates that average daily production will peak at 144 thousand barrels of crude oil and 663 million cubic feet of natural gas. During 2013, the sales prices of the light and extra-light crude oil produced at this field averaged more than U.S. $90.00 per daybarrel, making this one of our most important projects in 2011. terms of revenue generation.
As of December 31, 2011,2013, cumulative production was 3.6totaled 12.1 billion barrels of crude oil and 1.753.4 trillion cubic feet of natural gas. As of December 31, 2011, provedProved hydrocarbon reserves totaled 3.3 billion278.2 million barrels of crude oil and 1.51.6 trillion cubic feet of natural gas. Total proved reserves were 3.6 billion610.6 million barrels of oil equivalent, of which 2.6 billion186.0 million barrels were developed.
In nominal peso terms, Pemex-Exploration and Production’s capital expenditures for this project were Ps. 20,894 million in 2009, Ps. 18,350 million in 2010 and Ps. 21,554 million in 2011. For 2012, we anticipate that capital expenditures will be Ps. 22,804 million and that total accumulated capital expenditures for this project will reach approximately U.S. $15.9 billion. In 2011, Pemex-Exploration and Production paid approximately U.S. $71.4 million to acquire approximately 88.8 billion cubic feet of nitrogen for the pressure maintenance project in the fifth module of the Cantarell nitrogen cryogenic plant, which began operations in November 2006. In 2012, we expect to spend approximately U.S. $81.6 million to acquire approximately 108.8 billion cubic feet of nitrogen for injection into the Ku-Maloob-Zaap fields.
Burgos Project. The Burgos project is the largest producer of non-associated gas in Mexico. In 1997, Pemex-Exploration and Production initiated a development program for the Burgos natural gas fields. The purpose of the Burgos project is to enable us to meet increasing domestic demand for natural gas. The fields in Burgos accounted for 20.4% of our total natural gas production in 2011. The project is located in northeastern Mexico.
During 2011, the Burgos project produced an average of 1.3 billion cubic feet of natural gas per day. As of December 31, 2011, a total of 7,425 wells had been completed, including wells completed prior to 1997. Between 1997 and 2011, a total of 4,047 wells had been completed, 2,813 of which were producing. The most important fields are the Arcabuz-Culebra, Cuitláhuac, Cuervito, Arcos, Santa Anita, Nejo and Palmito fields, which together produced 39.2% of the total production of the Burgos project in 2011.
Main Fields of the Burgos Project
(as of December 31, 2011)
Arcabuz- Culebra | Cuitláhuac | Cuervito | Arcos | Santa Anita | Nejo | Palmito | ||||||||||||||||||||||
Total acreage (square kilometers) | 386 | 211 | 45 | 46 | 46 | 103 | 54 | |||||||||||||||||||||
Developed acreage | 359 | 197 | 30 | 46 | 35 | 80 | 54 | |||||||||||||||||||||
Undeveloped acreage | 27 | 14 | 15 | 0 | 11 | 23 | 0 | |||||||||||||||||||||
Wells completed | 938 | 409 | 115 | 195 | 64 | 159 | 118 | |||||||||||||||||||||
Producing wells | 597 | 189 | 77 | 123 | 48 | 129 | 76 | |||||||||||||||||||||
2011 production of natural gas (million cubic feet per day) | 154.5 | 87.4 | 43.5 | 24.1 | 36.9 | 141.1 | 38.6 | |||||||||||||||||||||
Cumulative production of natural gas (billion cubic feet) | 1,816.4 | 639.5 | 120.1 | 632.9 | 190.0 | 149.2 | 56.4 | |||||||||||||||||||||
Proved reserves of natural gas (billion cubic feet) | 186.8 | 114.4 | 136.4 | 43.0 | 65.7 | 144.3 | 52.8 | |||||||||||||||||||||
Proved developed reserves | 139.2 | 84.0 | 80.9 | 41.8 | 48.2 | 87.8 | 51.6 | |||||||||||||||||||||
Proved undeveloped reserves | 47.6 | 30.5 | 55.5 | 1.2 | 17.5 | 56.5 | 1.2 |
From 2007 to 2011, exploration activities and the reclassification of reserves increased estimated proved reserves in Burgos by 445.5 million barrels of oil equivalent. Production during this period totaled 529.0 million barrels of oil equivalent. During 2011, proved reserves decreased by 15.8 million barrels of oil equivalent, from 403.8 million barrels of oil equivalent in 2010 to 388.0 million barrels of oil equivalent in 2011.
In nominal peso terms, our capital expenditures (including capital expenditures made pursuant to Financed Public Works Contracts) for the BurgosTsimin-Xux project were Ps. 19,41013,312 million in 2009, Ps. 29,704 million in 2010 and Ps. 19,564 million in 2011. For 2012,2013. In 2014, we anticipate that ourexpect capital expenditures for this project will amount to total Ps. 11,128 million and that our total accumulated capital expenditures will reach approximately U.S. $17.3 billion.20,179 million.
Antonio J. Bermúdez Project. In 2002, we began investing in the Antonio J. Bermúdez project, the main investment project in the Southern region and the sixthfifth largest in Mexico. This project is designed to accelerate reserves recovery, as well as increase the recovery factor by drilling additional wells and implementing a system of pressure maintenance through nitrogen injection. It consists of the Samaria, Cunduacán, Oxiacaque, Iride and Platanal fields, and covers an area of 163 square kilometers. As of December 31, 2011,2013, a total of 446789 wells had been completed, of which 166244 were producing. During 2011,2013, the project produced an average of 67.567.3 thousand barrels per day of crude oil and 234.2223.8 million cubic feet of natural gas per day. As of December 31, 2011,2013, cumulative production was 2.82.9 billion barrels of crude oil and 4.24.4 trillion cubic feet of natural gas. As of December 31, 2011,2013, proved hydrocarbon reserves in this field totaled 0.8 billion barrels of crude oil and 2.12.0 trillion cubic feet of natural gas. As of December 31, 2011,2013, total proved reserves were 1.41.3 billion barrels of oil equivalent, of which 0.70.6 billion were developed.
In nominal peso terms, our capital expenditures for the Antonio J. Bermúdez project were Ps. 10,442 million in 2009, Ps. 9,853 million in 2010 and Ps. 11,218 million in 2011.2011, Ps. 13,126 million in 2012 and Ps. 11,489 million in 2013. For 2012,2014, we anticipate that our capital
expenditures for this project will be Ps. 13,31110,751 million and that our total accumulated investments in the project will reach approximately U.S. $7.0$8.5 billion. In March 2005, we entered into a contract with Praxair México, S. de R.L. de C.V. to build, own and operate a nitrogen cryogenic plant. Construction of this plant was completed in June 2008. After completing testing in July 2008, we began injecting 190 million cubic feet per day of nitrogen into the project. In 2011,2013, we paid approximately Ps. 62068.3 million to acquire nitrogen from this plant that enabled us to inject approximately 152187.1 million cubic feet per day during 20112013 for pressure maintenance in connection with the project. From 20122014 to 2022, we plan to continue to inject thisthe same volume of nitrogen.
Delta del GrijalvaBurgos Project. The Delta del GrijalvaBurgos project is the most importantlargest producer of non-associated gas in the Southern region in terms of both oil and gas production. The project covers an area of 1,343 square kilometers and has been exploited byMexico. In 1997, Pemex-Exploration and Production since 1982. Asinitiated a development program for the Burgos natural gas fields. The purpose of December 31, 2011, there were athe Burgos project is to enable us to meet increasing domestic demand for natural gas. The fields inBurgos accounted for 20.2% of our total of 162 wells drilled, of which 60 were producing. natural gas production in 2013. The project is located in northeastern Mexico.
During 2011,2013, the Burgos project produced an average of 155.1 thousand barrels of crude oil and 481.5 million1.3 billion cubic feet of natural gas per day. As of December 31, 2013, the drilling of 7,762 wells had been completed, 3,170 of which were producing. The most important fields are Sen, Caparroso-Pijije-Escuintlethe Arcabuz-Culebra, Cuitláhuac, Cuervito, Topo, Santa Anita, Nejo and Tizón.Palmito fields, which together produced 43.6% of the total production of the Burgos project in 2013.
Main Fields of the Burgos Project
(as of December 31, 2013)
Total acreage (square kilometers) Developed acreage Undeveloped acreage Wells completed Producing wells 2013 production of natural gas (million cubic feet per day) Cumulative production of natural gas (billion cubic feet) Proved reserves of natural gas (billion cubic feet) Proved developed reserves Proved undeveloped reserves |
From 2009 to 2013, exploration activities and the reclassification of reserves increased estimated proved reserves in Burgos by 465.2 million barrels of oil equivalent. Production during this period totaled 510.6 million barrels of oil equivalent. During 2013, proved reserves decreased by 36.4 million barrels of oil equivalent, from 382.2 million barrels of oil equivalent in 2012 to 345.8 million barrels of oil equivalent in 2013.
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In nominal peso terms, our capital expenditures (including capital expenditures made pursuant to Financed Public Works Contracts, or FPWC) for the Burgos project were Ps. 19,564 million in 2011, Ps. 17,324 million in 2012 and Ps. 10,316 million in 2013. For 2014, we anticipate that our capital expenditures for this project will amount to Ps. 9,935 million and that our total accumulated capital expenditures will reach approximately U.S. $19.3 billion.
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Crudo Ligero Marino Project. In 2013, the SHCP approved designating the Crudo Ligero Marino project as a stand-alone project, thereby separating it from the Strategic Gas Program of which it formed part from 2001 through 2012. In 2013, the Och-Uech-Kax project was integrated into this project. The main objectives for the Crudo Ligero Marino project during the years 2013 to 2037 are to continue constructing seven ships, implement secondary recovery techniques at the May and Bolontiku fields and carry out optimization and maintenance activities at its facilities. As of December 31, 2011,2013, a total of 89 wells had been completed at this project, of which 56 were producing. During 2013, average daily production totaled 159.0 thousand barrels of crude oil and 546.8 million cubic feet of natural gas. As of December 31, 2013, cumulative production in the Delta del Grijalva project was 0.60.8 billion barrels of crude oil and 2.32.0 trillion cubic feet of natural gas. Proved hydrocarbon reserves as of December 31, 2011 totaled 257.5259.9 million barrels of crude oil and 783.5 billion0.9 trillion cubic feet of natural gas. As of December 31, 2011, totalTotal proved reserves were 442.1428.8 million barrels of oil equivalent, 390.7of which 300.5 million of whichbarrels were developed.
In nominal peso terms, our capital expenditures for the Delta del GrijalvaCrudo Ligero Marino project weretotaled Ps. 4,57110,000 million in 2009, Ps. 5,904 million in 2010 and Ps. 6,501 million in 2011. In 2012,2013. For 2014, we expectanticipate our capital expenditures to betotal Ps. 5,326 million, bringing our total capital expenditures for the project to approximately U.S. $2.4 billion.13,402 million.
Bellota-Chinchorro Project. The Bellota-Chinchorro project is the fourth most important crude oil producer in the Southern region. This project covers an area of 111 square kilometers and has been exploited by Pemex-Exploration and Production since 1981. In addition to the Bellota and Chinchorro fields, the fields in the project include Chipilín, Cobra, Cupache and Edén-Jolote. Since 2004, our investments in the Bellota-Chinchorro fields have been focused on field development. As of December 31, 2011, a total of 127 wells had been completed, of which 25 were producing. During 2011, the project produced an average of 66.8 thousand barrels of crude oil and 110.5 million cubic feet of natural gas per day.
As of December 31, 2011, cumulative production was 677.8 million barrels of crude oil and 1,093.9 billion cubic feet of natural gas. Proved hydrocarbon reserves totaled 243.1 million barrels of crude oil and 531.8 billion cubic feet of natural gas. As of December 31, 2011, total proved reserves were 375.2 million barrels of oil equivalent, 236.2 million of which were developed.
In nominal peso terms, our capital expenditures for the Bellota-Chinchorro project were Ps. 4,496 million in 2009, Ps. 5,518 million in 2010 and Ps. 4,912 million in 2011. In 2012, we expect our capital expenditures to be Ps. 4,053 million, bringing our total capital expenditures for the project to approximately U.S. $2.6 billion.
Integral Poza Rica Project. The Integral Poza Rica project is the second-largest crude oil producer in the Northern region. This project covers an area of 649 square kilometers. Since 2002, our investments in this project have been focused on accelerating the development of mature oil and gas fields located at the Poza Rica, San Andrés and Faja de Oro Terrestre areas, as well as the development of the fields corresponding to the Tres Hermanos Project, through the use of artificial lift systems, secondary recovery techniques, and 3-D seismic acquisition. A total of 141 wells were completed between 2002 and 2011, and as of December 31, 2011, a total of 769 wells were producing. During 2011, the project produced an average of 28.5 thousand barrels of crude oil and 33.6 million cubic feet of natural gas per day. In addition, as of December 31, 2011, cumulative production was 3,772.4 million barrels of crude oil and 3,733.4 billion cubic feet of natural gas. Proved hydrocarbon reserves totaled 79.0 million barrels of crude oil and 80.0 billion cubic feet of natural gas as of the same date. As of December 31, 2011, total proved reserves were 86.3 million barrels of oil equivalent, 78.8 million of which were developed.
In nominal peso terms, our capital expenditures for the Integral Poza Rica project were Ps. 2,122 million in 2009, Ps. 2,936 million in 2010 and Ps. 4,687 million in 2011. In 2012, we expect our capital expenditures to be Ps. 2,921 million, bringing our total capital expenditures for the project to approximately U.S. $1.2 billion.
Tamaulipas-Constituciones Project. The Tamaulipas-Constituciones project is the third-largest producer in the Northern region. This project covers an area of 850 square kilometers. This project is mainly composed of the Tamaulipas-Constituciones, Ébano, Pánuco, Cacalilao, Barcodón and Limón fields. Since 2001, our investments in this project have been focused on field development, as well as exploiting the production potential and reserves from the Ébano-Pánuco-Cacalilao area, based on testing and recovery technology, such as 3-D seismic acquisition, the drilling of development wells, infill drilling, and the waterflooding system at the Tamaulipas-Constituciones area. A total of 233 wells were completed between 2001 and 2011, and as of December 31, 2011, a total of 763 wells were producing. During 2011, the project produced an average of 16.3 thousand barrels of crude oil and 17.1 million cubic feet of natural gas per day. As of December 31, 2011, cumulative production was 1,302.5 million barrels of crude oil and 2,919.8 billion cubic feet of natural gas. Proved hydrocarbon reserves totaled 82.6 million barrels of crude oil and 47.6 billion cubic feet of natural gas as of the same date. As of December 31, 2011, total proved reserves were 90.2 million barrels of oil equivalent, 50.7 million of which were developed.
In nominal peso terms, our capital expenditures for the Tamaulipas-Constituciones project were Ps. 987 million in 2009, Ps. 1,967 million in 2010 and Ps. 3,800 million in 2011. In 2012, we expect our capital expenditures for this project to be Ps. 1,516 million, and anticipate that our total accumulated capital expenditures for the project will reach approximately U.S. $0.7 billion.
Chuc Project. The Chuc project is the third-largest producer of light crude oil in the Southwestern Marine region, and includes the operation and maintenance of the Pol-A facility and water injection complexes. In 2013, the SHCP approved the integration of the Caan project into the Chuc project. This project covers an area of 213 square kilometers and has been exploited by Pemex-Exploration and Production since 1981. The fields of this project are located on the continental shelf of the Gulf of Mexico, off the coast of the states of Tabasco and Campeche, at a depth of between the 20- and 100-meter isobaths, approximately 132 kilometers from the Dos Bocas Marine Terminal in Paraíso, Tabasco, and 79 kilometers northeast of Ciudad del Carmen, Campeche. The fields in the project include Batab, Ché, Chuc, Chuhuk, Etkal, Homol, Kuil, Onel, Pokoch, Pol, Tumut, Uchak and Wayil. In January 2007, the Pol and Batab projects were merged into the Chuc
project. As of December 31, 2011, 892013, 99 wells had been completed, of which 3680 were producing. During 2011,2013, average production totaled 100.1220.9 thousand barrels per day of crude oil and 137.1410.7 million cubic feet of natural gas per day. As of December 31, 2011,2013, cumulative production totaled 1.95.5 billion barrels of crude oil and 2.06.2 trillion cubic feet of natural gas. As of December 31, 2011,2013, proved hydrocarbon reserves totaled 209.2422.5 million barrels of oil and 389.5818.8 billion cubic feet of natural gas, or a total of 281.8573.1 million barrels of oil equivalent. As of December 31, 2011,2013, total proved developed reserves were 122.1411.8 million barrels of oil equivalent.
In nominal peso terms, our capital expenditures for the Chuc project were Ps. 3,469 million in 2009, Ps. 2,619 million in 2010 and Ps. 3,730 million in 2011.2011, Ps. 7,870 million in 2012 and Ps. 9,897 million in 2013. In 2012,2014, we expect our capital expenditures for the Chuc project to be Ps. 8,20512,245 million and anticipate that our total accumulated capital expenditures for thethis project will reach approximately U.S. $2.8$4.4 billion.
Ogarrio-Magallanes Project. The Ogarrio-Magallanes project is composed of 20 crude oil and natural gas producing fields and forms part of the Cinco Presidentes business unit. This project is located between the state borders of Veracruz and Tabasco and covers an area of 10,820 square kilometers. From a geological standpoint, this project pertains to the Isthmus Saline basin, specifically the southeastern basins at the Tertiary level. The Ogarrio-Magallanes project is geographically bounded by the Gulf of Mexico to the north, the geological folds of
the Sierra Madre of Chiapas to the south, the Tertiary basin of Veracruz to the west and the Comalcalco Tertiary basin to the east. The primary objective of this project is to increase production levels through the drilling of development wells and infill wells, which are drilled between producing wells to more efficiently recover hydrocarbon reserves, the execution of workovers of wells and the implementation of secondary and enhanced oil recovery processes. In addition, we aim to optimize the infrastructure of this project in order to counteract the decreases in production levels that result from the natural depletion of its reservoirs.
As of December 31, 2013, the Ogarrio-Magallanes project had 582 producing wells and 117 new wells had been completed during 2013. Average daily production totaled 93.1 thousand barrels of crude oil and 129.4 million cubic feet of natural gas during 2013. As of December 31, 2013, cumulative production was 1.9 billion barrels of crude oil and 2.3 trillion cubic feet of natural gas. Proved hydrocarbon reserves totaled 193.7 million barrels of crude oil and 305.6 billion cubic feet of natural gas. Total proved reserves were 259.1 million barrels of oil equivalent, of which 216.0 million barrels were developed.
In nominal peso terms, our capital expenditures for the Ogarrio-Magallanes project were Ps. 6,693 million in 2013. For 2014, we anticipate that our capital expenditures will total Ps. 5,229 million.
Delta del Grijalva Project. The Delta del Grijalva project is the most important project in the Southern region in terms of both oil and gas production. The project covers an area of 1,343 square kilometers and has been exploited by Pemex-Exploration and Production since 1982. As of December 31, 2013, there were a total of 175 wells drilled, of which 54 were producing. During 2013, the project produced an average of 105.2 thousand barrels per day of crude oil and 382.5 million cubic feet of natural gas per day. The most important fields are Sen, Caparroso-Pijije-Escuintle and Tizón.
• | Sen. This field covers an area of 45.1 square kilometers. As of December 31, 2013, a total of 48 wells had been completed, 17 of which were producing. During 2013, the field produced an average of 29.0 thousand barrels per day of crude oil and 67.8 million cubic feet of natural gas per day. As of December 31, 2013, cumulative production was 303.5 million barrels of crude oil and 827.8 billion cubic feet of natural gas. Proved hydrocarbon reserves totaled 51.4 million barrels of crude oil and 140.8 billion cubic feet of natural gas. As of December 31, 2013, total proved reserves were 85.6 million barrels of oil equivalent, 58.7 million of which were developed. |
• | Caparroso-Pijije-Escuintle.This field covers an area of 28.2 square kilometers. As of December 31, 2013, a total of 50 wells had been completed, 15 of which were producing. During 2013, the field produced an average of 26.8 thousand barrels per day of crude oil and 74.4 million cubic feet of natural gas per day. As of December 31, 2013, cumulative production was 216.9 million barrels of crude oil and 607.9 billion cubic feet of natural gas. Proved hydrocarbon reserves totaled 54.8 million barrels of crude oil and 162.7 billion cubic feet of natural gas. As of December 31, 2013, total proved reserves were 94.3 million barrels of oil equivalent, 69.3 million of which were developed. |
• | Tizón.This field covers an area of 17.8 square kilometers. As of December 31, 2013, a total of 13 wells had been completed, nine of which were producing. During 2013, the field produced an average of 26.6 thousand barrels per day of crude oil and 141.1 million cubic feet of natural gas perday. As of December 31, 2013, cumulative production was 46.3 million barrels of crude oil and 264.1 billion cubic feet of natural gas. Proved hydrocarbon reserves totaled 21.4 million barrels of crude oil and 121.0 billion cubic feet of natural gas. As of December 31, 2013, total proved reserves were 50.8 million barrels of oil equivalent, 39.7 million of which were developed. |
As of December 31, 2013, cumulative production in the Delta del Grijalva project was 0.7 billion barrels of crude oil and 2.6 trillion cubic feet of natural gas. Proved hydrocarbon reserves as of December 31, 2013 totaled 184.1 million barrels of crude oil and 662.4 billion cubic feet of natural gas. As of December 31, 2013, total proved reserves were 344.9 million barrels of oil equivalent, 241.4 million of which were developed.
In nominal peso terms, our capital expenditures for the Delta del Grijalva project were Ps. 6,501 million in 2011, Ps. 5,671 million in 2012 and Ps. 6,169 million in 2013. In 2014, we expect our capital expenditures to be Ps. 6,934 million, bringing our total capital expenditures for the project to approximately U.S. $3.3 billion.
Cactus-Sitio Grande Project. The Cactus-Sitio Grande project forms part of the Macuspana-Muspac business unit and is located in the northern region of the state of Chiapas, 32 kilometers southwest of Villahermosa in the state of Tabasco. This project covers an area of 33,747 square kilometers and is geographically bounded by the coastal plain of the Gulf of Mexico to the north and the Sierra Madre of Chiapas to the south, east and west. The primary objective for this project is to increase production levels through the development of the Teotleco, Juspí, Artesa, Gaucho and Chintul fields, in part through the drilling of new high-angle wells and the recovery of the remaining hydrocarbon reserves. To this end, we additionally plan to carry out major workovers of producing wells to extend their productive lifespans, strengthen and stabilize production levels by means of cleaning and stimulation services based on the nature of the natural gas liquids produced and reopen wells that have been out of operation.
As of December 31, 2013, there were 133 producing wells at the Cactus-Sitio Grande project and 18 new wells had been completed during 2013. Average daily production totaled 52.4 thousand barrels of crude oil and 275.9 million cubic feet of natural gas during 2013. As of December 31, 2013, cumulative production in the Cactus-Sitio Grande project was 1.8 billion barrels of crude oil and 9.7 trillion cubic feet of natural gas. Proved hydrocarbon reserves totaled 93.1 million barrels of crude oil and 707.1 billion cubic feet of natural gas. Total proved reserves were 257.8 million barrels of oil equivalent, of which 227.9 million barrels were developed.
In nominal peso terms, our capital expenditures for the Cactus-Sitio Grande project were Ps. 4,208 million in 2013. For 2014, we anticipate capital expenditures to total Ps. 3,526 million.
Crude Oil Sales
During 2011,2013, domestic consumption of crude oil amounted to approximately 1,172.31,229.1 thousand barrels per day, which represented 47%48.7% of our total crude oil production. Through PMI’s activities, we sold the remainder of our crude oil production abroad. See “—Business Overview—International Trading” in this Item 4. Maya crude oil accounted for 76%81.4% of exported crude oil volume sold by PMI in 2011.2013. See “—Business Overview—International Trading” in this Item 4.
The following table sets forth crude oil distribution for the past five years.
Crude Oil Distribution
At December 31, | 2011 vs. 2010 | At December 31, | 2013 vs. 2012 | |||||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2009 | 2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||||||||||||||
(in thousands of barrels per day) | (%) | (in thousands of barrels per day) | (%) | |||||||||||||||||||||||||||||||||||||||||||||
Production | 3,075.7 | 2,791.6 | 2,601.5 | 2,575.9 | 2,550.1 | (1.0 | ) | 2,601.5 | 2,577.0 | 2,552.6 | 2,547.9 | 2,522.1 | (1.0 | ) | ||||||||||||||||||||||||||||||||||
Distribution | ||||||||||||||||||||||||||||||||||||||||||||||||
Refineries | 1,230.9 | 1,216.2 | 1,264.4 | 1,190.7 | 1,172.3 | (1.5 | ) | 1,264.4 | 1,190.7 | 1,172.3 | 1,211.0 | 1,229.1 | 1.5 | |||||||||||||||||||||||||||||||||||
Petrochemicals(1) | 125.5 | 131.1 | 97.4 | 0.0 | 0.0 | — | ||||||||||||||||||||||||||||||||||||||||||
Petrochemicals(1) | 97.4 | 0.0 | 0.0 | 0.0 | 0.0 | — | ||||||||||||||||||||||||||||||||||||||||||
Export terminals | 1,701.3 | 1,406.9 | 1,231.7 | 1,358.0 | 1,342.9 | (1.1 | ) | 1,231.7 | 1,358.0 | 1,342.9 | 1,268.3 | 1,190.4 | (6.1 | ) | ||||||||||||||||||||||||||||||||||
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Total | 3,057.8 | 2,754.2 | 2,593.5 | 2,548.7 | 2,515.2 | (1.3 | ) | 2,593.5 | 2,548.7 | 2,515.2 | 2,479.3 | 2,419.5 | (2.4 | ) | ||||||||||||||||||||||||||||||||||
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Statistical differences in stock measurements(2) | 17.9 | 37.4 | 8.0 | 27.2 | 34.9 | 28.3 | 8.0 | 28.3 | 37.4 | 68.6 | 102.6 | 49.6 |
Note: Numbers may not total due to rounding.
(1) | There was no crude oil distributed to Pemex-Petrochemicals for the production of refined products in 2010, 2011, 2012 and |
(2) | Includes measurement inconsistencies, shrinkage and |
Source: Pemex-Exploration and Production.
Maya crude oil accounted for 40% of domestic consumption in 2011. Due to its high sulfur content, Maya crude oil requires extra processing and has lower refining yields than most valuable sweet crudes, and thus requires extra investment by the purchaser to refine. Therefore, we receive a lower price for Maya crude oil than we do for sweeter crude oils that cost less to refine. As a consequence of this price difference, we have supported the export value of sour crude oil such as Maya crude oil in relation to other grades of crude oil by creating incentives for refiners to invest in high-conversion refineries capable of upgrading the relatively large proportion of residue produced from processing sour crude oil. We have done this by entering into long-term Maya crude oil supply agreements pursuant to which purchasers have agreed to undertake projects to expand the capacity of their respective refineries to upgrade residue from Maya crude oil, and we have provided, for a limited period, support mechanisms to protect refinery margins in certain adverse market conditions. See “—Business Overview—International Trading—Geographic Distribution of Export Sales” in this Item 4.
Gas Flaring
The flaring of produced gas, which consists of the burning off of surplus combustible vapors from a well, usually occurs as a result of operational adjustments to carry out maintenance at production facilities, and in some cases is due to limitations in the ability to handle, process or transport natural gas. In addition, the flaring of produced gas is also used as a safety measure to relieve well pressure. Gas flaring is considered to be one of the most significant sources of air emissions from offshore oil and gas installations. In 2011,2013, gas flaring represented 5.3%1.9% of total natural gas production, which represents a declinedecrease from 2010,2012, when gas flaring represented 8.5%2.0% of total natural gas production. This decrease reflects a lower frequency of operational problems and the resulting decreased need for maintenance of platforms equipment. Pemex-Exploration and Production’s goal is to reduce gas flaring to 3.5%1.3% of total natural gas production by the end of 2012.2014. To achieve this goal, we are implementingwill continue to implement programs to reduce gas flaring in all of our business units and we are building additional infrastructure to improve gas extraction efficiency, and use.including strategies to optimize the exploitation of wells with high associated gas content at the Cantarell project.
Pipelines
The crude oil and natural gas pipeline network owned by Pemex-Exploration and Production connects crude oil and natural gas producing centers with refineries and petrochemical plants. At the end of 2011,2013, this pipeline network consisted of approximately 39,40740,240 kilometers of pipelines, of which 3,4903,581 kilometers were located in the Marine region, 11,56611,235 kilometers were located in the Southern region and 24,35125,424 kilometers were located in the Northern region. For a description of products transported by the pipeline network, see “—Business Overview—Transportation and Distribution” in this Item 4.
Financed Public Works Contracts
Our Financed Public Works ContractsFPWC program, or FPWC, previously known as the Multiple Services Contracts program, was first announced in December 2001. The objective of the program is to provide a contractual framework that promotes an efficient execution of public works, in order to increase Mexico’s hydrocarbons production. The FPWC are public works contracts based on unit prices that aggregate a number of different services into a single contract. Under the FPWC framework, Pemex-Exploration and Production retains the rights and title to all hydrocarbons produced and works performed under each FPWC.
The following table summarizes Pemex-Exploration and Production’s existing FPWCs as of December 31, 2011.2013.
Block | Contractor | Contract Amount (in millions of U.S. dollars) | ||||
Reynosa-Monterrey | Repsol Exploración México, S.A. de C.V. | U.S. $ | 2,437.2 | |||
Cuervito | PTD Servicios Múltiples, S. de R.L. de C.V. | 260.1 | ||||
Misión | Servicios Múltiples de Burgos, S.A. de C.V. | 1,529.2 | ||||
Fronterizo | PTD Servicios Múltiples, S. de R.L. de C.V. | 265.0 | ||||
Olmos | Lewis Energy México, S. de R.L. de C.V. | 343.6 | ||||
Pirineo | Monclova Pirineo Gas, S.A. de C.V. | 645.3 | ||||
| ||||||
Monclova | GPA Energy, S.A. de C.V. | 1,070.0 | ||||
Total | U.S. $ | 6,550.4 | ||||
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Source: Pemex-Exploration and Production.
On March 1, 2013, the contract governing the Nejo block, which was previously an FPWC, was modified to adopt a structure similar to that of our Integrated E&P Contracts. As a result, the contract was removed from the
During 2011, among other works performed under the FPWC program 80as of the date of its modification. The contractor Iberoamericana de Hidrocarburos, S.A. de C.V. has committed to invest approximately U.S. $400 million to develop the Nejo block under this new scheme.
Among other FPWC works during 2013, 17 wells were drilled in the Burgos project under the FPWC program, which represents approximately 40%13% of all wells drilled in Burgos. Also in 2011, 742013, 37 wells were completed, consisting of 6833 development wells and 6four exploratory wells. All but 3six of these completed wells were productive. The works carried out in 20112013 represented an investment of approximately U.S. $745$234 million. By the end of 2011,2013, natural gas production in the existing FPWC blocks reached 415233 million cubic feet per day, which represents approximately 31%20% of all natural gas production from Burgos during 2011.2013.
On January 8, 2014, the contract corresponding to the Reynosa-Monterrey block expired and Pemex-Exploration and Production became solely responsible for the activities carried out in connection with this block.
Integrated Exploration and Production Contracts
Our Integrated Exploration and Production Contracts (which we refer to as the Integrated E&P Contracts)Contracts program is based on the various laws and amendments enacted as part of the 2008 reforms.Energy Reform. See “—History and Development” in this Item 4. The objective of these Integrated E&P Contracts is to increase PEMEX’sour execution capabilities, Mexico’s reserves and PEMEX’sas well as our production. The hydrocarbons reserves located in and extracted from the contractual areas will continue to be exclusively owned by Mexico. Payments to the contractors pursuant to the Integrated E&P Contracts will be made on a per-barrel basis, plus recovery costs, provided that the payments to the contractor may not exceed PEMEX’sour cash flow from the particular block subject to each contract.block.
On March 1, 2011, Pemex-Exploration and Production publishedawarded its invitation for bids for the first threeround of Integrated E&P Contracts, relating to the Santuario, Carrizo and Magallanes blocks, which are located in mature fields in the Southern Regionregion in Mexico, in August 2011. In July and August of Mexico. On August 18, 2011, PEMEX awarded the contracts for Santuario and Magallanes blocks to Petrofac, a British energy services firm, and the contract for the Carrizo block toAdministradora en Proyectos de Campos(APC), a Mexican firm. However, after APC failed to comply with the legal requirements for entering into the contract, and in accordance to the bidding rules, the contract for the Carrizo block was awarded to Dowell Schlumberger de México, S.A. on October 25, 2011. The contracts for the Santuario and Magallanes blocks were signed on October 17, 2011, while the contract for Carrizo was signed on December 14, 2011. Each contract has a term of up to 25 years.
On January 19, 2012, Pemex-Exploration and Production published the call for bids for sixawarded its second round of Integrated E&P Contracts for areas in therelating to Mexico’s Northern Region:region, including four onshore (Altamira, Pánuco, San Andrés and Tierra Blanca) and twoone offshore (Arenque(Arenque) block, to Petrofac, Schlumberger, Cheiron (Pico Petroleum) and Atún) blocks. A totalMonclova Pirineos Gas/Alfacid del Norte. Under these first eight Integrated E&P Contracts, contractors have committed to invest at least U.S. $425 million to develop proved reserves of 23 groups have purchased bidding rules for this roundaround 393 million barrels of contracts, and we have announced that offers are due on June 20,oil equivalent.
On December 14, 2012, with contract signing scheduled for June 20, 2012 through August 20, 2012. Pemex-Exploration and Production plans to initiate additional bidding roundssigned an Integrated E&P Contract for Chicontepec and for deep watersthe Ébano block with Grupo Diavaz, S.A. de C.V., a contractor developing this block. This contract replaced the previous contract, thereby modifying the framework under which Grupo Diavaz, S.A. de C.V. carries out activities in the Gulfarea.
On December 20, 2012, Pemex-Exploration and Production launched a call for bids for the third round of MexicoIntegrated E&P Contracts relating to six blocks (Soledad, Amatitlán, Humapa, Pitepec, Miquetla and Miahuapan) located onshore in the coming months.
Collaboration Agreements
During 2007,Chicontepec basin. On July 11, 2013, Pemex-Exploration and Production awarded Integrated E&P Contracts for the Humapa, Miquetla and Soledad blocks to Halliburton de México S. de R.L. de C.V., Operadora de Campos DWF (part of Grupo Diavaz, S.A. de C.V.) and Petrolite de México (part of Baker Hughes Inc.), respectively. In January 2014, following a new call for bids for the three remaining blocks that did not receive bids, Pemex-Exploration and Production awarded Integrated E&P Contracts to Consorcio Sinopa, S.A. for the Miahuapan block, Andes Energía Argentina, S.A., together with GAIA Ecológica, S.A. de C.V. and Integra Oil & Gas S.A.S. for the Amatitlán block and Constructora y Perforadora Latina, S.A. de C.V. for the Pitepec block. Together, these six blocks encompass an area of 953 square kilometers and represent combined investment commitments of more than U.S. $769 million during the first two years of their terms.
Collaboration and Other Agreements
Pemex-Exploration and Production has entered into non-commercial scientific and technology agreements with Statoil, Royal Dutch Shell, ExxonMobil, Chevron, Maersk Olie og Gas, Nexen, Japan Oil, Gas and Metals National Corporation and Eni S.p.A., E&P (Exploration and Production) Division. In 2008, Pemex-Exploration and Production entered into non-commercial scientific and technology agreements with Ecopetrol S.A., Chevron Deepwater Mexico, Inc., Total Cooperation Technique Mexique and Sociedad por Acciones Simplificada (S.A.S.). In 2009, Pemex-Exploration and Production entered into additional collaboration agreements with Chevron Deepwater Mexico, Inc., Statoil, Repsol Exploración México, S.A. de C.V., the following parties, which as of the date of this report remain in effect:
Through these agreements, we seek to increase our technical and scientific knowledge in areas including deep-waterdeepwater subsalt
exploration and drilling; enhanced oil recovery processes, such as air injection; and reservoir characterization of complex structures. These broad agreements of technological and scientific collaboration are strictly non-commercial,i.e., there is no transfer of resources among the parties.
On April 12, 2012, Pemex-Exploration and Production and Comercial Cupet S.A., on behalf of Unión Cuba-Petróleo (also known as Cupet), a Cuban state oil company, signed a non-binding letter of intent to discuss possible alternatives for future collaboration and participation in certain exploration and production blocks in the Cuban exclusive economic zone. The parties anticipate further discussions during 2012, but there has been no agreement about the nature or scope of any actual participation in oil exploration projects.Refining
Refining
Refining Processes and Capacity
Pemex-Refining’s production processes include the following:
• | Atmospheric |
• | Vacuum |
• |
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• |
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• | Reforming |
• | Hydrotreatment or residual |
• | Alkylation and |
• |
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These production processes together constitute Pemex-Refining’s production capacity as set forth in the table below.
Refining Capacity by Production Process
At December 31, | At December 31, | |||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2009 | 2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||||||
(in thousands of barrels per day) | (in thousands of barrels per day) | |||||||||||||||||||||||||||||||||||||||
Production Process | ||||||||||||||||||||||||||||||||||||||||
Atmospheric distillation | 1,540.0 | 1,540.0 | 1,540.0 | 1,540.0 | 1,690.0 | 1,540.0 | 1,540.0 | 1,690.0 | 1,690.0 | 1,690.0 | ||||||||||||||||||||||||||||||
Vacuum distillation | 754.0 | 754.0 | 754.0 | 754.0 | 832.0 | 754.0 | 754.0 | 832.0 | 832.0 | 832.0 | ||||||||||||||||||||||||||||||
Cracking | 380.5 | 380.5 | 380.5 | 380.5 | 422.5 | 380.5 | 380.5 | 422.5 | 422.5 | 422.5 | ||||||||||||||||||||||||||||||
Visbreaking | 91.0 | 91.0 | 91.0 | 91.0 | 91.0 | 91.0 | 91.0 | 91.0 | 91.0 | 91.0 | ||||||||||||||||||||||||||||||
Reforming | 279.3 | 279.3 | 279.3 | 279.3 | 279.3 | 279.3 | 279.3 | 279.3 | 279.3 | 279.3 | ||||||||||||||||||||||||||||||
Hydrotreatment | 926.1 | 926.1 | 926.1 | 1,010.1 | 1,067.5 | 926.1 | 1,010.1 | 1,067.5 | 1,067.5 | 1,067.5 | ||||||||||||||||||||||||||||||
Alkylation and isomerization | 152.5 | 128.5 | 128.5 | 128.5 | 141.9 | 128.5 | 128.5 | 141.9 | 155.3 | 155.3 | ||||||||||||||||||||||||||||||
Coking | 100.0 | 100.0 | 100.0 | 100.0 | 155.8 | 100.0 | 100.0 | 155.8 | 155.8 | 155.8 |
Source: Base de Datos Institucional (Pemex Institutional Database, or Pemex BDI).
At the end of 2011,2013, Pemex-Refining owned and operated six refineries: Cadereyta, Madero, Minatitlán, Salamanca, Salina Cruz and Tula. Our refineries are comprised of atmospheric and vacuum distillation units, where the bulk of crude oil input is processed. Secondary processing facilities include desulfurization units and facilities for catalytic cracking, reforming and hydrotreating. During 2011,2013, our refineries processed 1,1671,224 thousand barrels per day of crude oil (171(189 thousand barrels per day at Cadereyta, 118130 thousand barrels per day at Madero, 152183 thousand barrels per day at Minatitlán, 171195 thousand barrels per day at Salamanca, 279282 thousand barrels per day at Salina Cruz and 277246 thousand barrels per day at Tula), which in total consisted of 732730 thousand barrels per day of Olmeca and Isthmus crude oil and 435495 thousand barrels per day of Maya crude oil.
Since 1993, through our subsidiary company, P.M.I. Norteamérica, S.A. de C.V., we have participated in a limited partnership with Shell Oil Company in a refinery located in Deer Park, Texas, which has the capacity to process 340 thousand barrels per day of crude oil. Under the Deer Park Limited Partnership agreement, P.M.I. Norteamérica, S.A. de C.V. and Shell Oil Company each provide 50% of the refinery’s crude oil input and own 50% of the refinery’s output.
Production
Pemex-Refining produces a wide range of products derived from crude oil and natural gas, including LPG, gasoline, jet fuel, diesel, fuel oil, asphalts, lubricants and other refined products. Pemex-Refining produced 1,1901,276 thousand barrels per day of refined products (including dry gas by-products of the refining process) in 2011, a decrease2013, an increase of 3.2%4.1% from 20102012 levels. This decreaseincrease in refined products production was mainly due to operational issues at ourthe startup of new plants following the reconfiguration of the Minatitlán refinery and to the improved performance of the national refining facilities.system.
The following table sets forth, by category, Pemex-Refining’s production of petroleum products from 20072009 through 2011.2013.
Pemex-Refining Production
Year ended December 31, | 2011 vs. 2010 | Year ended December 31, | 2013 vs. 2012 | |||||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2009 | 2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||||||||||||||
(in thousands of barrels per day) | (%) | (in thousands of barrels per day) | (%) | |||||||||||||||||||||||||||||||||||||||||||||
Refinery Crude Oil Runs | 1,269.8 | 1,261.0 | 1,294.9 | 1,184.1 | 1,166.7 | (1.5 | ) | 1,294.9 | 1,184.1 | 1,166.6 | 1,199.3 | 1,224.1 | 2.1 | |||||||||||||||||||||||||||||||||||
Refined Products | ||||||||||||||||||||||||||||||||||||||||||||||||
Liquefied petroleum gas | 26.6 | 25.9 | 27.1 | 25.5 | 21.4 | (16.1 | ) | 27.1 | 25.5 | 21.4 | 25.2 | 25.2 | 0 | |||||||||||||||||||||||||||||||||||
Gasoline | ||||||||||||||||||||||||||||||||||||||||||||||||
Pemex Magna | 425.7 | 418.7 | 364.0 | 341.2 | 324.2 | (5.0 | ) | 364.0 | 341.2 | 324.2 | 336.8 | 360.5 | 7.0 | |||||||||||||||||||||||||||||||||||
Ultra Low Sulfur Magna(1) | — | — | 81.8 | 67.3 | 61.7 | (8.3 | ) | 81.8 | 67.3 | 61.7 | 61.5 | 56.7 | (7.8 | ) | ||||||||||||||||||||||||||||||||||
Pemex Premium(2) | 26.1 | 25.4 | 22.7 | 12.5 | 13.7 | 9.6 | 22.7 | 12.5 | 13.7 | 19.7 | 19.8 | 0.5 | ||||||||||||||||||||||||||||||||||||
Base | 4.5 | 6.5 | 3.0 | 3.0 | 0.7 | (76.7 | ) | 3.0 | 3.0 | 0.7 | 0.0 | 0.2 | — | |||||||||||||||||||||||||||||||||||
Others | 0.1 | 0.1 | 0.1 | 0.1 | 0.0 | (100.0 | ) | 0.1 | 0.1 | 0.0 | 0.0 | 0.0 | 0 | |||||||||||||||||||||||||||||||||||
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Total | 456.4 | 450.7 | 471.5 | 424.2 | 400.3 | (5.6 | ) | 471.5 | 424.2 | 400.3 | 418.1 | 437.3 | 4.6 | |||||||||||||||||||||||||||||||||||
Kerosene (Jet fuel) | 66.3 | 64.0 | 57.1 | 51.9 | 56.3 | 8.5 | 57.1 | 51.9 | 56.3 | 56.6 | 60.8 | 7.4 | ||||||||||||||||||||||||||||||||||||
Diesel | ||||||||||||||||||||||||||||||||||||||||||||||||
Pemex Diesel(3) | 326.2 | 336.1 | 291.4 | 221.0 | 193.6 | (12.4 | ) | 291.4 | 221.0 | 193.6 | 225.9 | 217.7 | (3.6 | ) | ||||||||||||||||||||||||||||||||||
Ultra Low Sulfur Diesel(1) | — | — | 44.5 | 67.7 | 80.1 | 18.3 | 44.5 | 67.7 | 80.1 | 72.6 | 92.1 | 26.9 | ||||||||||||||||||||||||||||||||||||
Others | 7.8 | 7.4 | 1.0 | 0.8 | 0.1 | (87.5 | ) | 1.0 | 0.8 | 0.1 | 1.0 | 3.7 | 270.0 | |||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||||||||
Total | 334.0 | 343.5 | 337.0 | 289.5 | 273.8 | (5.4 | ) | 337.0 | 289.5 | 273.8 | 299.6 | 313.4 | 4.6 | |||||||||||||||||||||||||||||||||||
Fuel oil | 301.5 | 288.7 | 316.2 | 322.3 | 307.5 | (4.6 | ) | 316.2 | 322.3 | 307.5 | 273.4 | 268.8 | (1.7 | ) | ||||||||||||||||||||||||||||||||||
Other refined products | ||||||||||||||||||||||||||||||||||||||||||||||||
Asphalts | 31.9 | 34.3 | 31.9 | 24.9 | 26.1 | 4.8 | 31.9 | 24.9 | 26.1 | 23.1 | 18.7 | (19.0 | ) | |||||||||||||||||||||||||||||||||||
Lubricants | 5.2 | 5.1 | 4.2 | 4.3 | 3.7 | (14.0 | ) | 4.2 | 4.3 | 3.7 | 3.9 | 4.4 | 12.8 | |||||||||||||||||||||||||||||||||||
Paraffins | 1.1 | 1.0 | 0.8 | 0.8 | 0.7 | (12.5 | ) | 0.8 | 0.8 | 0.7 | 0.8 | 0.7 | (12.5 | ) | ||||||||||||||||||||||||||||||||||
Still gas | 55.2 | 54.9 | 54.9 | 54.2 | 62.6 | 15.5 | 54.9 | 54.2 | 62.6 | 67.8 | 70.7 | 4.3 | ||||||||||||||||||||||||||||||||||||
Other refined products(4) | 34.2 | 38.8 | 42.0 | 31.7 | 37.9 | 19.6 | 42.0 | 31.7 | 37.9 | 57.3 | 75.7 | 32.1 | ||||||||||||||||||||||||||||||||||||
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Total | 127.6 | 134.1 | 133.8 | 115.8 | 131.0 | 13.1 | 133.8 | 115.8 | 131.0 | 152.9 | 170.2 | 11.3 | ||||||||||||||||||||||||||||||||||||
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Total refined products | 1,312.4 | 1,306.9 | 1,342.7 | 1,229.1 | 1,190.2 | (3.2 | ) | 1,342.7 | 1,229.1 | 1,190.2 | 1,225.9 | 1,275.8 | 4.1 | |||||||||||||||||||||||||||||||||||
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Note: Numbers may not total due to rounding.
(1) | Production started in January 2009. |
(2) | Pemex Premium is an Ultra Low Sulfur gasoline with 0.003% sulfur content. |
(3) | Pemex Diesel is sold in the northern border market with 0.0015% sulfur content. |
(4) | Includes principally coke, along with other products such as aeroflex 1-2, furfural extract and light cyclic oil. |
Source:Pemex BDI.
Fuel oil, automotive gasoline and diesels represent the bulk of Pemex-Refining’s production. In 2011,2013, fuel oil represented 25.8%21.1%, gasoline represented 33.6%34.3% and diesel fuel represented 23.0%24.6% of total petroleum products production. Jet fuel represented 4.7%4.8% and LPG represented 1.8%2.0% of total production of petroleum products in 2011.2013. The remainder of Pemex-Refining’s production consisted of a variety of other refined products.
As a result of our strategy of investing in technology to improve the quality of our fuels, over the past several years Pemex-Refining has increased its production of unleaded gasoline (including Pemex Premium) as opposed to leaded gasoline (gasoline base, a leaded gasoline, is produced only as a base for other products). All
all of our automotive gasoline production now consists of unleaded gasoline. In addition, we have introduced new environmentally sound products such as Ultra Low Sulfur gasoline and diesel. We also promote LPG as an environmentally sound substitute fuel for gasoline in motor vehicles.
Domestic Sales
We market a full range of refined products, including gasoline, jet fuel, diesel, fuel oil and petrochemicals. We are one of a few major producers of crude oil worldwide that experiences significant domestic demand for our refined products.
For the five years ended December 31, 2011,2013, the value of Pemex-Refining’s domestic sales of refined products and petrochemicals was as follows:
Value of Domestic Sales of Pemex-Refining(1)
Year ended December 31, | 2011 vs. 2010 | Year ended December 31, | 2013 vs. 2012 | |||||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2009 | 2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||||||||||||||
(in millions of pesos)(2) | (%) | (in millions of pesos)(2) | (%) | |||||||||||||||||||||||||||||||||||||||||||||
Refined Products | ||||||||||||||||||||||||||||||||||||||||||||||||
Gasoline | ||||||||||||||||||||||||||||||||||||||||||||||||
Pemex Magna | Ps. 209,006.5 | Ps. 231,071.4 | Ps. 233,307.2 | Ps. 270,121.9 | Ps. 300,936.8 | 11.4 | Ps. | 233,307.2 | Ps. | 270,121.9 | Ps. | 300,936.8 | Ps. | 326,187.2 | Ps. | 340,751.9 | 4.5 | |||||||||||||||||||||||||||||||
Pemex Premium | 38,331.9 | 34,909.6 | 25,180.3 | 24,987.2 | 27,520.1 | 10.1 | 25,180.3 | 24,987.2 | 27,520.1 | 42,486.0 | 63,723.4 | 50.0 | ||||||||||||||||||||||||||||||||||||
Aviation fuels | 212.9 | 236.9 | 240.9 | 247.1 | 353.4 | 43.0 | 240.9 | 247.1 | 353.4 | 396.2 | 370.8 | (6.4 | ) | |||||||||||||||||||||||||||||||||||
Others | 74.1 | 69.0 | 49.6 | 74.4 | 59.9 | (19.5 | ) | 49.6 | 74.4 | 59.9 | 95.6 | 43.4 | (54.6 | ) | ||||||||||||||||||||||||||||||||||
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Total | 247,625.4 | 266,286.8 | 258,778.0 | 295,430.7 | 328,870.2 | 11.3 | 258,778.0 | 295,430.7 | 328,870.2 | 369,165.1 | 404,889.5 | 9.7 | ||||||||||||||||||||||||||||||||||||
Kerosene | ||||||||||||||||||||||||||||||||||||||||||||||||
Jet fuel | 23,369.3 | 31,936.4 | 18,320.7 | 22,935.3 | 31,560.2 | 37.6 | 18,320.7 | 22,935.3 | 31,560.2 | 36,336.5 | 35,417.9 | (2.5 | ) | |||||||||||||||||||||||||||||||||||
Other kerosenes | 183.2 | 101.9 | 119.2 | 179.0 | 215.9 | 20.6 | 119.2 | 179.0 | 215.9 | 224.0 | 275.4 | 22.9 | ||||||||||||||||||||||||||||||||||||
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Total | 23,552.5 | 32,038.3 | 18,439.9 | 23,114.3 | 31,776.1 | 37.5 | 18,439.9 | 23,114.3 | 31,776.1 | 36,560.5 | 35,693.3 | (2.4 | ) | |||||||||||||||||||||||||||||||||||
Diesel | ||||||||||||||||||||||||||||||||||||||||||||||||
Pemex Diesel | 84,752.0 | 96,434.7 | 106,129.0 | 125,556.4 | 142,559.8 | 13.5 | 106,129.0 | 125,556.4 | 142,559.8 | 163,113.6 | 178,929.4 | 9.7 | ||||||||||||||||||||||||||||||||||||
Others | 12,168.2 | 14,990.0 | 15,392.4 | 18,453.2 | 23,681.4 | 28.3 | 15,392.4 | 18,453.2 | 23,681.4 | 30,609.0 | 32,542.0 | 6.3 | ||||||||||||||||||||||||||||||||||||
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Total | 96,920.1 | 111,424.7 | 121,521.5 | 144,009.6 | 166,241.2 | 15.4 | 121,521.5 | 144,009.6 | 166,241.2 | 193,722.6 | 211,471.4 | 9.2 | ||||||||||||||||||||||||||||||||||||
Fuel oil | ||||||||||||||||||||||||||||||||||||||||||||||||
Total | 42,395.7 | 61,670.2 | 51,907.6 | 56,766.7 | 80,265.5 | 41.4 | 51,907.6 | 56,766.7 | 80,265.5 | 99,839.9 | 78,001.8 | (21.9 | ) | |||||||||||||||||||||||||||||||||||
Other refined products | ||||||||||||||||||||||||||||||||||||||||||||||||
Asphalts | 6,107.4 | 11,492.9 | 10,277.1 | 8,814.1 | 10,539.1 | 19.6 | 10,277.1 | 8,814.1 | 10,539.1 | 11,165.0 | 7,865.4 | (29.6 | ) | |||||||||||||||||||||||||||||||||||
Lubricants | 2,167.9 | 3,318.1 | 2,000.5 | 2,429.8 | 3,153.8 | 29.8 | 2,000.5 | 2,429.8 | 3,153.8 | 3,097.7 | 2,991.2 | (3.4 | ) | |||||||||||||||||||||||||||||||||||
Paraffins | 247.7 | 371.6 | 235.3 | 297.5 | 304.2 | 2.3 | 235.3 | 297.5 | 304.2 | 377.1 | 339.4 | (10.0 | ) | |||||||||||||||||||||||||||||||||||
Coke | 98.0 | 112.7 | 99.0 | 106.4 | 104.5 | (1.8 | ) | 99.0 | 106.4 | 104.5 | 346.3 | 473.4 | 36.7 | |||||||||||||||||||||||||||||||||||
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Total | Ps. 8,621.1 | Ps. 15,295.3 | Ps. 12,611.9 | Ps. 11,647.7 | Ps. 14,101.6 | 21.1 | Ps. | 12,611.9 | Ps. | 11,647.7 | Ps. | 14,101.6 | Ps. | 14,986.1 | Ps. | 11,669.4 | (22.1 | ) | ||||||||||||||||||||||||||||||
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Total Refined Products | Ps. 419,114.8 | Ps. 486,715.3 | Ps. 463,258.8 | Ps. 530,969.0 | Ps. 621,254.5 | 17.0 | Ps. | 463,258.8 | Ps. | 530,969.0 | Ps. | 621,254.5 | Ps. | 714,274.2 | Ps. | 741,725.4 | 3.8 | |||||||||||||||||||||||||||||||
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Petrochemicals(3) | Ps. 2,508.1 | Ps. 3,288.4 | Ps. 2,859.0 | Ps. 4,089.7 | Ps. 4,424.3 | 8.2 | Ps. | 2,859.0 | Ps. | 4,089.7 | Ps. | 4,424.3 | Ps. | 6,544.9 | Ps. | 6,957.7 | 6.3 |
Note: Numbers may not total due to rounding.
(1) | Excludes IEPS tax and value added tax. See “—Taxes and Duties” in this Item 4. |
(2) | Figures |
(3) | These are petrochemical products produced at refineries operated by Pemex-Refining. |
Source:Pemex BDI.
The largest consumers of fuels in Mexico are the Federal Electricity Commission and our subsidiary entities. The Federal Electricity Commission consumed approximately 87%92% of our fuel oil production during 2011,2013, pursuant to a fuel oil supply contract entered into in November 1995 and amended effective January 1, 2005. Pursuant to this amendment, the minimum amount of fuel oil that we agreed to supply to the Federal Electricity Commission during 20112013 was 116,789155,700 barrels per day, in accordance with the supply capacity of
Pemex-Refining and the requirements of the Federal Electricity Commission under its official program of substitution of fuel oil with natural gas. The price per cubic meter of the fuel oil supplied to the Federal Electricity Commission is based on the three-month average spot price per cubic meter of Fuel Oil No. 6 (3% sulfur) at Houston, Texas, as quoted in Platt’s U.S. Marketscan and adjusted for quality and transportation cost differentials. In addition, the price of the fuel oil is discounted by a commercial margin on each cubic meter of fuel oil. In 2011,2013, this volume discount amounted to approximately 0.5%0.4% of our total fuel oil sales to the Federal Electricity Commission. The contract can be terminated by either party upon six months’ notice. The total amount paid to us by the Federal Electricity Commission under this contract in 20112013 was Ps. 70,13372,099 million, which represented 11.3%9.7% of our total revenues from domestic sales of refined products.
In 2011,2013, our domestic sales of refined products increased by Ps. 90,285.527,451.2 million, or 17.0%3.8% in value, as compared to 20102012 levels. This increase was primarily due to a 0.8%9.7% increase in domestic sales of gasoline and a 9.2% increase in domestic sales of diesel. This increase was partially offset by a 21.9% decrease in the sales of fuel oil, a 1.8% decrease in the volume of domestic distillates sales and higherlower international prices of refined products in 2011.2013.
The volume of Pemex-Refining’s domestic sales of refined products for the five-year period ended December 31, 20112013 was distributed as follows.follows:
Volume of Domestic Sales of Pemex-Refining
Year ended December 31, | 2011 vs. 2010 | Year ended December 31, | 2013 vs. 2012 | |||||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2009 | 2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||||||||||||||
(in thousands of barrels per day, except where otherwise indicated) | (%) | (in thousands of barrels per day, except where otherwise indicated) | (%) | |||||||||||||||||||||||||||||||||||||||||||||
Refined Products | ||||||||||||||||||||||||||||||||||||||||||||||||
Gasoline | ||||||||||||||||||||||||||||||||||||||||||||||||
Pemex Magna | 658.9 | 706.2 | 727.7 | 743.7 | 738.6 | (0.7 | ) | 727.7 | 743.7 | 738.6 | 715.3 | 667.6 | (6.7 | ) | ||||||||||||||||||||||||||||||||||
Pemex Premium | 101.3 | 85.7 | 64.1 | 57.8 | 60.5 | 4.7 | 64.1 | 57.8 | 60.5 | 87.7 | 119.2 | 35.9 | ||||||||||||||||||||||||||||||||||||
Aviation fuels | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 | 0.0 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 | 0.0 | ||||||||||||||||||||||||||||||||||||
Others | 0.2 | 0.1 | 0.1 | 0.2 | 0.1 | (50.0 | ) | 0.1 | 0.2 | 0.1 | 0.2 | 0.1 | (50.0 | ) | ||||||||||||||||||||||||||||||||||
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Total | 760.9 | 792.6 | 792.4 | 802.2 | 799.7 | (0.3 | ) | 792.4 | 802.2 | 799.7 | 803.7 | 787.3 | (2.0 | ) | ||||||||||||||||||||||||||||||||||
Kerosenes | ||||||||||||||||||||||||||||||||||||||||||||||||
Jet fuel | 67.9 | 65.0 | 55.0 | 55.8 | 56.1 | 0.5 | 55.0 | 55.8 | 56.1 | 59.3 | 62.2 | 4.9 | ||||||||||||||||||||||||||||||||||||
Other kerosenes | 0.9 | 0.4 | 0.4 | 0.6 | 0.6 | 0.0 | 0.4 | 0.6 | 0.6 | 0.6 | 0.7 | 16.7 | ||||||||||||||||||||||||||||||||||||
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Total | 68.8 | 65.4 | 55.4 | 56.4 | 56.8 | 0.7 | 55.4 | 56.4 | 56.8 | 59.9 | 62.9 | 5.0 | ||||||||||||||||||||||||||||||||||||
Diesel | ||||||||||||||||||||||||||||||||||||||||||||||||
Pemex Diesel | 314.5 | 332.0 | 314.5 | 325.1 | 330.6 | 1.7 | 314.5 | 325.1 | 330.6 | 339.4 | 333.2 | (1.8 | ) | |||||||||||||||||||||||||||||||||||
Others | 43.9 | 50.0 | 44.5 | 46.0 | 52.9 | 15.0 | 44.5 | 46.0 | 52.9 | 61.1 | 58.5 | (4.3 | ) | |||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||||||||
Total | 358.4 | 382.0 | 359.0 | 371.1 | 383.6 | 3.4 | 359.0 | 371.1 | 383.6 | 400.5 | 391.7 | (2.2 | ) | |||||||||||||||||||||||||||||||||||
Fuel oil | ||||||||||||||||||||||||||||||||||||||||||||||||
Total | 256.9 | 219.6 | 209.0 | 184.9 | 200.6 | 8.5 | 209.0 | 184.9 | 200.6 | 214.4 | 189.3 | (11.7 | ) | |||||||||||||||||||||||||||||||||||
Other refined products | ||||||||||||||||||||||||||||||||||||||||||||||||
Asphalts | 29.9 | 32.6 | 30.7 | 23.6 | 24.6 | 4.2 | 30.7 | 23.6 | 24.6 | 22.3 | 17.3 | (22.4 | ) | |||||||||||||||||||||||||||||||||||
Lubricants | 5.7 | 5.6 | 4.5 | 4.7 | 4.2 | (10.6 | ) | 4.5 | 4.7 | 4.2 | 4.1 | 4.7 | 14.6 | |||||||||||||||||||||||||||||||||||
Paraffins | 1.1 | 1.0 | 0.8 | 0.8 | 0.8 | 0.0 | 0.8 | 0.8 | 0.8 | 0.8 | 0.7 | (12.5 | ) | |||||||||||||||||||||||||||||||||||
Coke | 33.1 | 35.9 | 38.0 | 30.0 | 31.0 | 3.3 | 38.0 | 30.0 | 31.0 | 49.8 | 47.8 | (4.0 | ) | |||||||||||||||||||||||||||||||||||
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Total | 69.8 | 75.0 | 73.9 | 59.1 | 60.6 | 2.5 | 73.9 | 59.1 | 60.6 | 77.1 | 70.6 | (8.4 | ) | |||||||||||||||||||||||||||||||||||
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Total refined products | 1,514.8 | 1,534.6 | 1,489.7 | 1,473.6 | 1,501.2 | 1.9 | 1,489.7 | 1,473.6 | 1,501.2 | 1,555.5 | 1,501.8 | (3.5 | ) | |||||||||||||||||||||||||||||||||||
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Petrochemicals(1) | 290.9 | 278.9 | 365.4 | 325.0 | 292.0 | (10.2 | ) | 365.4 | 325.0 | 292.0 | 656.3 | 743.4 | 13.3 |
Note: Numbers may not total due to rounding.
(1) | In thousands of metric tons. These are petrochemical by-products of the refining process produced and sold by Pemex-Refining. |
Source:Pemex BDI.
The volume of our domestic gasoline sales decreased by 0.3%2.0% in 2011,2013, from 802.2803.7 thousand barrels per day in 20102012 to 799.7787.3 thousand barrels per day in 2011.2013. The volume of our domestic diesel sales increaseddecreased by 3.4%2.2%, from 371.1400.5 thousand barrels per day in 20102012 to 383.6391.7 thousand barrels per day in 2011.2013. The volume of our domestic sales of fuel oil increaseddecreased by 8.5%11.7%, from 184.9214.4 thousand barrels per day in 20102012 to 200.6189.3 thousand barrels per day in 2011,2013, primarily due to an increasea decrease in the Federal Electricity Commission’s demand for fuel oil.
Since 1998, at the retail level, we have offered standard and premium grades of unleaded gasoline throughout Mexico. Since October 2006, all Pemex Premium gasoline has had an ultra-low sulfur content of 0.003%. Since January 2007, diesel sold at the northern border of Mexico has had a sulfur content of 0.0015%. Our efforts to build and enhance our brands have also progressed during the past five years. All of Mexico’s independent gasoline service stations now participate in our franchise program, which provides financial assistance to upgrade equipment and facilities, as well as technical assistance in the development of marketing and customer service programs. At the end of 2011,2013, there were 9,63710,416 retail service stations franchised or owned by Pemex-Refining, of which 9,58810,368 were privately owned and operated as franchises and 4948 were owned by Pemex-Refining. This total number of retail service stations represented an increase of 4.4%3.7% from the 9,23210,042 service stations as of December 31, 2010.2012.
Pricing Decrees
In September 2007, the Mexican Government announced that it was suspending the periodic increases in retail prices of unleaded gasoline and diesel from October 2007 to December 2007. On December 21, 2007, the Mexican Government renewed the periodic increases in these prices. During 2008, these increases ranged from two to ten Mexican cents per liter per month for unleaded gasoline.
On January 7, 2009, President Calderón announced theAcuerdo Nacional en favor de la Economía Familiar y el Empleo (National Agreement in Favor of Family Economy and Employment), an agreement aimed at mitigating the effects on Mexico of the global economic crisis. The agreement suspended the periodic increases in the retail price of unleaded gasoline until December 18, 2009. From December 19, 2009 to February 5, 2010, the Mexican Government renewed these periodic price increases, which ranged from three to nine Mexican cents per liter per month. From February 6, 2010 to December 9, 2011, the Mexican Government continued theseestablished periodic price increases, which ranged from four to eight Mexican cents per liter per month. From December 10, 2011 to April 14, 2012,January 4, 2013, the increases ranged from five to nine Mexican cents per liter per month
Periodic increases in diesel prices ranged from two to eight Mexican cents per liter per month during the first seven months of 2008, and from 20 to 30 Mexican cents per liter per month from August 2008 to February 6, 2009.month. From February 7, 2009January 5 to December 25, 2009, diesel prices were periodically increased by five31, 2013, the increases continued in increments of eleven Mexican cents per liter per month. On January 1, 2014, pursuant to theImpuesto a los Combustibles Fósiles (IEPS Tax on Fossil Fuels) approved under theLey del Impuesto Especial sobre Producción y Servicios(Special Tax on Production and Services Law, which we refer to as the IEPS Law), unleaded gasoline became subject to a one-time price increase of tenMexican cents per liter. See “—Information on the Company—Taxes and Duties” in this Item 4. From January 1 to April 30, 2014, periodic increases ranged from nine to eleven Mexican cents per liter per month. See “Item 5—Operating and Financial Review and Prospects—IEPS Tax, Hydrocarbon Duties and Other Taxes.”
From December 26, 2009 to December 9, 2011, the Mexican Government renewed theseestablished periodic price increases in increments of eight Mexican cents per liter per month. From December 10, 2011 to April 14, 2012,January 4, 2013, these periodic price increases continued in increments of tennine Mexican cents per liter per month. From January 5 to December 31, 2013 the increases continued in increments of eleven Mexican cents per liter per month. On January 1, 2014, pursuant to the IEPS Tax on Fossil Fuels, diesel became subject to a one-time price increase of thirteen Mexican cents per liter. From January 1 to April 30, 2014, periodic increases continued at a rate of eleven Mexican cents per liter per month. Despite these increases, diesel prices in Mexico have remained below most international diesel reference prices.
Since the early 1980s, the Mexican Government has also established a discount of 30% on the price at which we sell gas oil intended for domestic use to the state of Chihuahua during the months of January, February and December of each year.
On January 29, 2008, the Mexican Government established a discount of 10% on the price at which we sell fuel oil1, 2014, pursuant to the Federal Electricity Commission. This discount was effective from January 1, 2008IEPS Tax on Fossil Fuels, such gas oil became subject to March 31, 2008. From April 2008 to November 2008, the discount was 8%. a one-time price increase of 10.857 Mexican cents per liter.
Since December 2008, the price at which we sell fuel oil to the Federal Electricity Commission has been linked to international market prices in accordance with a pricing methodology established by the Mexican Government. This methodology is based on the price of fuel oil in the U.S. Gulf of Mexico coastal region, and is then adjusted for quality as well as expenses related to distribution.
In addition, during 2009, pursuant to the National Agreement in Favor of Family Economy and Employment, the international reference price we use in sales of fuel oil to the Federal Electricity Commission was changed from a three-month daily average to a one-month daily average in an effort to reduce the cost of electricity to end users. On January 8, 2009, and also under the National Agreement in Favor of Family Economy and Employment, a resolution was issued establishing terms and conditions applicable to the transportation, storage, distribution and first-hand sale of fuel oil and basic petrochemicals, as well as related pricing methodologies.
On January 1, 2014, pursuant to the IEPS Tax on Fossil Fuels, periodic prices increases in fuel oil of 13.45 Mexican cents per liter per month became effective.
On February 13, 2014, the Energy Regulatory Commission authorized Pemex-Refining to decrease the prices at which it sells wholesale fuel oil to the Federal Electricity Commission from February to August 2014. This period may be modified by the Energy Regulatory Commission. Pemex-Refining requested this price decrease with the aim of increasing the Federal Electricity Commission’s demand for fuel oil processed at the Miguel Hidalgo refinery in Tula.
The Mexican Government could modify these price controls or impose additional price controls in the future. See “Item 3—Key Information—Risk Factors—Risk Factors Related to theOur Relationship between PEMEX andwith the Mexican Government—The Mexican Government has imposed price controls in the domestic market on PEMEX’sour products.”
Investments
Over the past several years, Pemex-Refining has focused its investment program on enhancing the quality of the gasoline and diesel it produces to meet new environmental standards in Mexico, improving its ability to process heavy crudescrude oils in order to optimize the crude oil blend in its refineries and increasing the production of unleaded gasoline and diesel to supply growing demand at low cost, as opposed to increasing its overall crude oil processing capacity.Thiscapacity. This focus is primarily the result of the abundance of heavy crudescrude oils in Mexico. In addition, due to the reduced availability of heavy crude oil in the export markets, the lower cost of raw materials in Mexico leads to higher profit margins on the heavy crude oil we do export. In the medium term, Pemex-Refining will continue to import unleaded gasoline to satisfy domestic demand. During 2011,2013, Pemex-Refining imported approximately 405357 thousand barrels per day of unleaded gasoline, which represented approximately 50.7%45% of total domestic demand for unleaded gasoline in that year. In 2011,2013, Pemex-Refining invested Ps. 25,15729,794 million in capital expenditures, 11.1%2.9% more than its Ps. 22,63628,944 million of capital expenditures in 2010.2012. Of this total investment, Pemex-Refining allocated Ps. 2,850 million to the Minatitlán project, Ps. 2,130 million to its investments to expand and upgrade refineries and related installations, Ps. 8,506 million to environmental and industrial safety projects, Ps. 9,279 million to rehabilitation projects, Ps. 2,332 million to other projects and acquisitions and Ps. 605,204 million to the new refinery in Tula, Hidalgo, of which Ps. 351,639 million was for preinvestmentpre-investment studies and Ps. 25469 million was for other expenses related to this refinery, Ps. 2,801 million to fuel quality investments, Ps. 909 million to the residual conversion from the Salamanca refinery, Ps. 255 million to the Tuxpan pipeline and corresponding storage and distribution terminals and Ps. 20,625 million to investments related to other projects. The following sections provide a description of each of these projects.
New Refinery at Tula. On August 12, 2009, we announced the construction of a new refinery in Tula. The new refinery is expected to have a Maya crude oil processing capacity of 250 thousand barrels per day, and to produce approximately 163 thousand barrels per day of gasoline and 117 thousand barrels per day of diesel. All distilled products processed at the refinery will meet ultra-low sulfur content specifications and no fuel oil will be produced. During 2013, we spent a total amount of Ps. 5,204 million on this project, of which Ps. 1,639 million was spent on pre-investment studies and Ps. 469.0 million on other investments at this new refinery. In June 2013, we announced a change in the scope of the project. See “—Vacuum Residue Processing at Miguel Hidalgo Refinery” below in this Item 4. As of the date of this report, we are conducting engineering studies that are necessary to complete prior to beginning construction of the refinery and are in the basic engineering design phase. These studies consist of conceptual studies related to material balances and process flowsheets, a
preliminary plot plan, preliminary piping and instrument diagrams, definition and sizing of main equipment resulting in process specifications, specification of effluents and definition of control and safety devices.
During 2013, the following contracts were awarded in connection with the construction of the refinery at Tula:
Contractor(s) & facilities | Contract Date | Contract Amount (in millions of U.S. dollars) | Startup Date | |||||
Instituto Mexicano del Petróleo | January 2013 | U.S. $ | 7.2 | January 2013 | ||||
For the processing design package, as well as technical assistance and the licensing of refinery technologies, for the naphtha hydrotreater plant that is expected to have a processing capacity of 44 thousand barrels per day. | ||||||||
Instituto Mexicano del Petróleo | January 2013 | U.S. $ | 7.0 | January 2013 | ||||
For the processing design package, as well as technical assistance and the licensing of refinery technologies, for the diesel hydrotreater plant that is expected to have a processing capacity of 61 thousand barrels per day. | ||||||||
Universidad Nacional Autónoma de México (Facultad de Química) | January 2013 | U.S. $ | 5.6 | January 2013 | ||||
For environmental impact studies. | ||||||||
Instituto Mexicano del Petróleo | February 2013 | U.S. $ | 7.0 | February 2013 | ||||
For technical assistance to Pemex-Refining during the Front End Engineering Design (or FEED) phase, which consists of studies related to the technical requirements and investment costs necessary for a project. | ||||||||
Comisión Federal de Electricidad | February 2013 | U.S. $ | 0.2 | February 2013 | ||||
For the inspection and approval of the relocation of the 400 kV Tula-Querétaro and Tula-Poza Rica electric transmission lines to the security zone associated with the terrain where the new refinery is being developed, as well as support in the evaluation of related bids. | ||||||||
Construcciones e Instalaciones del Noreste S.A. de C.V. and Isolux de México, S.A. de C.V. | April 2013 | U.S. $ | 12.1 | May 2013 | ||||
For the relocation of two high tension electric transmission lines that run across the land on which the refinery is being developed. | ||||||||
Universidad Nacional Autónoma de México (Facultad de Química) | May 2013 | U.S. $ | 1.9 | May 2013 | ||||
For technical assistance during the FEED phase of water management. | ||||||||
Technip USA, Inc. | May 2013 | U.S. $ | 1.4 | May 2013 | ||||
For the processing design package, as well as technical assistance and the licensing of refinery technologies, for the hydrogen plant that is expected to have a processing capacity of 80 thousand million square feet per day. | ||||||||
Comisión Federal de Electricidad | May 2013 | U.S. $ | 1.8 | May 2013 | ||||
For the geohydrologic evaluation to determine the underground water supply’s potential for use at the new refinery. | ||||||||
Emerson Process Management, S.A. de C.V. | July 2013 | U.S. $ | 2.0 | July 2013 | ||||
For engineering services for the supply of the comprehensive control and safety systems. |
As of December 31, 2013, the total estimated cost of the refinery at Tula was Ps. 149.8 billion (equivalent to U.S. $11,610.0 million).
Vacuum Residue Processing at Miguel Hidalgo Refinery. The new refinery at Tula was originally slated to process vacuum residue from the existing Miguel Hidalgo refinery for conversion into high value fuels. However, in June 2013, we announced that the Miguel Hidalgo refinery would instead be reconfigured to process its vacuum residue on site. The reconfigured refinery is expected to process 76 thousand barrels per day of vacuum residue in order to convert it into high value fuels such as gasoline and diesel. All distilled products processed at the refinery will meet ultra-low sulfur content specifications and no fuel oil will be produced. In addition, the reconfigured refinery is expected to have a crude oil processing capacity of 315 thousand barrels per day, of which 35% will be Maya crude oil and 65% will be Isthmus crude oil, and to produce approximately 161 thousand barrels per day of gasoline and 101 thousand barrels per day of diesel. During 2013, we spent Ps. 26.0 million on pre-investment studies for the Miguel Hidalgo reconfiguration project. As of the date of this report, we are in the process of evaluating the nature and timing of this project.
In September 2013, ICA Fluor Daniel, S. de R.L. was awarded a U.S. $94.8 million contract to carry out studies and to provide engineering services for the first phase of the reconfiguration of the Miguel Hidalgo refinery.
As of December 2013, the total estimated cost of the reconfiguration of the Miguel Hidalgo refinery for vacuum residue processing was Ps. 53.4 billion (equivalent to U.S. $4,140.0 million) and the project is scheduled to be completed by the beginning of 2018.
Clean Fuels Project.This project is being developed in our six refineries, with a first phase involving the installation of eight ultra-low sulfur gasoline (ULSG) post-treatment units, the capacities of which are set forth below by refinery. This phase of the project is being carried out among 3three groups of our refineries, as follows: group 1, Tula (43.9% complete) and Salamanca (41.3% complete) (group 1); Cadereyta (68.4% complete)(73.3% and Madero (54.8% complete) (group 2); and Minatitlán and Salina Cruz (30.5% and 29.8%76.7% complete, respectively) (group 3), with construction expected to be completed by 2013.2015; group 2, Cadereyta and Madero (98.5% and 92.1% complete, respectively), with construction completed at Cadereyta in December 2013 and construction at Madero expected to be completed by the end of 2014; and group 3, Minatitlán and Salina Cruz (81.2% and 84.7% complete, respectively), with construction expected to be completed by 2015.
|
Cadereyta | Madero | Minatitlán | Salamanca | Salina Cruz | Tula | |||||||
ULSG units (tbpd) | 1(42) | 2(20) | 1(25) | 1(25) | 2(25) | 1(30) |
Note: tbpd = thousand barrels per day.
Source: Pemex-Refining.
The second phase of the Clean Fuels Project involves the construction of five new ultra-low sulfur diesel facilities and the reconfiguration of 17 existing units. This portion of the project will be carried out in two phases: (i) a Cadereyta diesel phase and (ii) a diesel phase for the 5five remaining refineries. The engineering development for the Cadereyta diesel phase was completed in 2010 and an independent expert delivered his final due diligence report on the project in MarchFebruary 2012. Construction began in March 2013 and is expected to beginbe completed in October 2012.2016. Basic engineering for the facilities associated with the diesel phase in the 5five remaining refineries is expected to bewas completed in August 2012,December 2013, and construction is expected to begin in the second quarter of 2013.2014 and end in 2017. Until construction is completed, we will import ultra-low sulfur fuels in order to meet local demand.
The following table sets forth, by refinery, the number of new as well as reconfigured units under the Clean Fuels Project diesel phase.
Clean Fuels Project New and Reconfigured Units
Refineries | ||||||||||||||||||||||||||||
Processing plants | Cadereyta | Madero | Minatitlán | Salamanca | Salina Cruz | Tula | Total | |||||||||||||||||||||
New gasoline post-treatment units | 1 | 2 | 1 | 1 | 2 | 1 | 8 | |||||||||||||||||||||
New diesel units | 1 | 2 | 1 | 1 | — | — | 5 | |||||||||||||||||||||
Reconfigured diesel units | 3 | 1 | 1 | 3 | 4 | 5 | 17 |
Source: Pemex-Refining.
New Refinery at Tula. On August 12, 2009, with the required donation of land for the project by the government of Hidalgo having been completed, we announced the construction of a new refinery in Tula in the state of Hidalgo. The new refinery is expected to have a Maya crude oil processing capacity of 250 thousand barrels per day, and to produce approximately 142 thousand barrels per day of gasoline, 130 thousand barrels per day of diesel and 12 thousand barrels per day of jet fuel. All distilled products processed at the refinery will meet ultra-low sulfur content specifications and no fuel oil will be produced. During 2011, we spent Ps. 35 million on pre-investment studies and Ps. 25 million on other investments for this new refinery. On February 15, 2012, we awarded to ICA Fluor Daniel, an industrial engineering company jointly owned by Empresas ICA, S.A.B. de C.V. and Fluor Corporation, a U.S. $135 million contract for engineering and management services for the first phase of the construction of the new refinery. This contract has a term of 421 days, and will go into effect on March 12, 2012. As of December 2011, the total estimated cost of the refinery was Ps. 149.8 billion (equivalent to U.S. $11,610 million), and the project is scheduled to be completed in 2016.
Reconfiguration of the Salamanca Refinery.Refinery. The reconfiguration of the “Ingeniero Antonio M. Amor” refinery in Salamanca focuses on the conversion of residuals into high-value distillates (without a need for increased crude oil processing), as well as on upgrading of the lubricants train to produce group II lubricants (which contain almost no impurities and therefore have superior anti-oxidation properties). As part of the reconfiguration, Pemex-Refining will construct new plants, which will include the following: a delayed coker unit, a catalytic cracking unit, a hydrogen plant, a coker naphtha hydrotreater, a gas oil hydrotreater, a lubricants plant, a naphtha reformer, a sulfur plant, an amine regeneration unit, a sour water treatment facility, utilities and outside battery limits infrastructure, which includes water treatment facilities, feed tanks and other utilities and support facilities required to maintain a plant. Other units, including certain distillation vacuum units (including the AA, AS and AI units) will undergo renovations. In addition, the reconfiguration will involve site preparation, the development of temporary infrastructure and the erection of a perimeter wall surrounding the refinery. The timeline for the project is as follows:
Minatitlán Project. This refining project is intendedexpected to increase production of high quality gasoline and middle distillates and to increase Maya crude oil processing to 70% of all crude oil processing performed. The work associated with Minatitlán project was subdivided into six contracts awarded through competitive bidding from 2003 to 2005. The contract amount and date of commencement of operations of the facilities comprising each contract package are as follows:
Package | Contractor(s) & facilities | Contract Date | Contract Amount (in millions of U.S. dollars) | Startup Date | ||||||
1 | Tradeco Infraestructura, S.A. de C.V. and Pager de Tabasco, S.A. de C.V. | November 2003 | U.S. $ | 43.8 | November 2003 | |||||
2 | ICA Fluor Daniel, S. de R.L. de C.V.
Utilities Outside Battery Limits Sour water treatment facility | October 2004 | U.S. $ | 756.4 | September 2009 May 2009 August 2010 | |||||
3 | Dragados Proyectos Industriales de México, S.A. de C.V. and Dragados Industrial, S.A. | October 2004 | U.S. $ | 534.1 | ||||||
Atmospheric and vacuum unit to process Catalytic cracking unit Diesel hydrotreatment unit | July 2011 August 2011 July 2010 | |||||||||
4 | Mina-Trico, S. de R.L. de C.V.
Gas oil hydrotreatment plant Hydrogen unit Sulfur Recovery unit | February 2005 | U.S. $ | 317.0 | October 2011 August 2010 September 2010 | |||||
5 | Proyectos Ebramex, S. de R.L. de C.V.
Delayed coker unit Amine regenerator plant Coker naphtha hydrotreatment unit | February 2005 | U.S. $ | 317.9 | December 2011 December 2011 May 2011 | |||||
6 | Samsung Ingeniería Minatitlán, S.A. de C.V. and Samsung Engineering Co. Ltd. | February 2005 | U.S. $ | 154.1 | ||||||
Alkylation unit—U-18000 Alkylation unit—U-19000 | November 2011 February 2012 |
During 2011, we spent an estimated Ps. 2,850 million on the Minatitlán project.
Tuxpan Pipeline.Pipeline. This project is intended to help meet the increasing demand for refined products in the metropolitan area of the Mexico Valley. The total cost of the project is Ps. 3,3743,564 million, which includes the construction of a pipeline measuring 18 inches in diameter and 109 kilometers in length, five storage tanks located at the Tuxpan Maritime Terminal with a capacity of 100,000 barrels each and a research study to determine the best option for the discharge of refined products from tankers and pipelines to these storage tanks. ARB Arendal, S. de R.L. de C.V. began construction of the pipeline in June 2009. The pipeline is scheduled to bewas completed in JuneOctober 2012 and started full operations in November 2012. Tradeco Infraestructura, Tradeco Industrial, ITECSA and Grupo OLRAM were, in association, awarded the contract for construction of the storage tanks, which they began in October 20092009. Two of the five storage tanks are in operation and the three remaining tanks are scheduledexpected to complete in September 2012. Finally,begin operating during the first half of 2014. The Federal Electricity Commission conducted the research study, the results of which were delivered to us in April 2010. The Federal Electricity Commission concluded that we do not need to invest in additional discharge systems, due to our having a sufficient amount of monobuoys already in operation.
Minatitlán Project. This refining project is intended to increase production of high quality gasoline and middle distillates and to increase Maya crude oil processing to 70% of all crude oil processing performed. The work associated with the Minatitlán project was subdivided into six contracts awarded through competitive bidding from 2003 to 2005. The original and final contract amount and date of commencement of operations of the facilities comprising each contract package are as follows:
Package | Contractor(s) & facilities | Contract Date | Original Contract Amount (in millions of U.S. dollars) | Final Contract Amount (in millions of U.S. dollars)(1) | Startup Date | |||||||||
1 | Tradeco Infraestructura, S.A. de C.V. and Pager de Tabasco, S.A. de C.V. | November 2003 | U.S. $ | 40.0 | U.S. $ | 43.8 | July 2005 | |||||||
2 | ICA Fluor Daniel, S. de R.L. de C.V. | October 2004 | U.S. $ | 692.6 | U.S. $ | 1,170.4 | ||||||||
Utilities | September 2009 | |||||||||||||
Outside Battery Limits | May 2009 | |||||||||||||
Sour water treatment facility | August 2010 | |||||||||||||
3 | Dragados Proyectos Industriales de México, S.A. de C.V. and Dragados Industrial, S.A. | October 2004 | U.S. $ | 534.1 | U.S. $ | 867.3 | ||||||||
Atmospheric and vacuum unit to process 100% Maya crude oil |
September 2011 | |||||||||||||
Catalytic cracking unit | October 2011 | |||||||||||||
Diesel hydrotreatment unit | August 2010 | |||||||||||||
4 | Mina-Trico, S. de R.L. de C.V. | February 2005 | U.S. $ | 317.0 | U.S. $ | 538.8 | ||||||||
Gas oil hydrotreatment plant | November 2011 | |||||||||||||
Hydrogen unit | August 2010 | |||||||||||||
Sulfur Recovery unit | October 2010 | |||||||||||||
5 | Proyectos Ebramex, S. de R.L. de C.V. | February 2005 | U.S. $ | 317.9 | U.S. $ | 516.4 | ||||||||
Delayed coker unit |
December 2011 | |||||||||||||
Amine regenerator plant | December 2011 | |||||||||||||
Coker naphtha hydrotreatment unit | July 2011 | |||||||||||||
6 | Samsung Ingeniería Minatitlán, S.A. de C.V. and Samsung Engineering Co. Ltd. | February 2005 | U.S. $ | 154.1 | U.S. $ | 190.9 | ||||||||
Alkylation unit—U-18000 | November 2011 | |||||||||||||
Alkylation unit—U-19000 | January 2012 |
(1) | Final contract amounts include an additional payment made pursuant to the terms of the contracts, which in each case was authorized by theSecretaría de la Función Pública (Ministry of Public Function, which we refer to as the SFP). |
As of January 2012, all units and facilities of the Minatitlán project have been completed and are in operation. Accordingly, all contracts awarded in connection with the Minatitlán project were completed in 2013. The estimated total cost of the project was U.S. $4,044 million.
2014 Refining Investment Budget. For 2012,2014, Pemex-Refining has budgeted Ps. 45,93040,699 million of capital expenditures. Pemex-Refining will invest 21%24% of this amount to expand and upgrade refineries and related installations, 13.5%6% on the planning of the new refinery in Tula, 29%24% on environmental and industrial safety projects, 27.5%35% on rehabilitation projects and 9%11% on other projects and acquisitions.
Gas and Basic Petrochemicals
Natural Gas and Condensates
Pemex-Exploration and Production’s average natural gas production decreased by 6.1%0.2% in 2011,2013, from 7,0206,385 million cubic feet per day in 20102012 to 6,5946,370 million cubic feet per day in 2011,2013, while the average wet natural gas processed by Pemex-Gas and Basic Petrochemicals increased by 1.2%0.5%, from 4,4724,382 million cubic feet per day in 20102012 to 4,5274,404 million cubic feet per day in 2011. Natural gas production associated with crude oil production accounted for 66.6% of total natural gas production in 2011, with the remainder of natural gas production consisting of extraction from fields holding natural gas reserves. Although natural gas production is more geographically diverse than crude oil production, 166 fields (or 39.9% of the 416 producing fields) accounted for 33.4% of all natural gas production in 2011. Of total natural gas production, 39.6% originated in the Marine regions, 25.7% in the Southern region and the remainder, 34.7%, originated in the Northern region.2013.
All wet natural gas production is directed to Pemex-Gas and Basic Petrochemicals’ gas processing facilities. At the end of 2011,2013, Pemex-Gas and Basic Petrochemicals owned 11nine facilities.
The following facilities are located in the Southern region:
• | Nuevo Pemex. This facility contains 13 plants that together in |
• | Cactus. This facility contains 22 plants that together in |
• | Ciudad Pemex. This facility contains eight plants that together in |
• | La Venta. This facility contains one plant that produced |
• | Matapionche. This facility contains five plants that together in |
• | Morelos. This facility contains one plant that in 2013 produced 35 thousand barrels per day of ethane, 41 thousand barrels per day of liquefied gas and eleven thousand barrels per day of naphtha. |
• |
|
• |
|
Pajaritos. This facility contains one plant that produced |
The following facilities are located in the Northern region:
• | Burgos. This facility contains nine plants that together in |
• | Poza Rica. This facility contains |
• | Arenque. This facility contains three plants that together in |
The following tables set forth Pemex-Gas and Basic Petrochemicals’ total natural gas processing and production, as well as processing capacity, for the five years ended December 31, 2011.2013.
Natural Gas and Condensates Processing and Production(1)
Year ended December 31, | 2011 vs. 2010 | Year ended December 31, | 2013 vs. 2012 | |||||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2009 | 2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||||||||||||||
(in millions of cubic feet per day, except where otherwise indicated) | (%) | (in millions of cubic feet per day, except where otherwise indicated) | (%) | |||||||||||||||||||||||||||||||||||||||||||||
Processing | ||||||||||||||||||||||||||||||||||||||||||||||||
Wet gas | 4,283 | 4,240 | 4,436 | 4,472 | 4,527 | 1.2 | 4,436 | 4,472 | 4,527 | 4,382 | 4,404 | 0.5 | ||||||||||||||||||||||||||||||||||||
Sour gas | 3,162 | 3,188 | 3,381 | 3,422 | 3,445 | 0.7 | 3,381 | 3,422 | 3,445 | 3,395 | �� | 3,330 | (1.9 | ) | ||||||||||||||||||||||||||||||||||
Sweet gas(2) | 1,120 | 1,052 | 1,055 | 1,050 | 1,082 | 3.0 | 1,055 | 1,050 | 1,082 | 987 | 1,074 | 8.8 | ||||||||||||||||||||||||||||||||||||
Condensates(3) | 79 | 54 | 51 | 53 | 57 | 7.5 | 51 | 53 | 57 | 46 | 46 | 0.0 | ||||||||||||||||||||||||||||||||||||
Gas to natural gas liquids extraction | 4,264 | 4,224 | 4,399 | 4,458 | 4,483 | 0.6 | 4,399 | 4,458 | 4,483 | 4,346 | 4,381 | 0.8 | ||||||||||||||||||||||||||||||||||||
Wet gas | 4,134 | 4,085 | 4,252 | 4,304 | 4,347 | 1.0 | 4,252 | 4,304 | 4,347 | 4,206 | 4,234 | 0.7 | ||||||||||||||||||||||||||||||||||||
Reprocessing streams(4) | 130 | 139 | 146 | 154 | 136 | (11.7 | ) | 146 | 154 | 136 | 140 | 147 | 5.0 | |||||||||||||||||||||||||||||||||||
Production | ||||||||||||||||||||||||||||||||||||||||||||||||
Dry gas(5) | 3,546 | 3,461 | 3,572 | 3,618 | 3,692 | 2.0 | 3,572 | 3,618 | 3,692 | 3,628 | 3,693 | 1.8 | ||||||||||||||||||||||||||||||||||||
Natural gas liquids(6)(7) | 405 | 376 | 378 | 383 | 389 | 1.6 | 378 | 383 | 389 | 365 | 362 | (0.8 | ) | |||||||||||||||||||||||||||||||||||
Liquefied petroleum gas(6) | 199 | 182 | 181 | 184 | 185 | 0.5 | 181 | 184 | 185 | 176 | 178 | 1.1 | ||||||||||||||||||||||||||||||||||||
Ethane(6) | 119 | 117 | 121 | 119 | 121 | 1.7 | 121 | 119 | 121 | 115 | 109 | (5.2 | ) | |||||||||||||||||||||||||||||||||||
Naphtha(6)(8) | 85 | 74 | 76 | 79 | 82 | 3.8 | 76 | 79 | 82 | 72 | 73 | 1.4 | ||||||||||||||||||||||||||||||||||||
Sulfur(9) | 659 | 660 | 712 | 670 | 636 | (5.1 | ) | 712 | 670 | 636 | 592 | 620 | 4.7 |
Note: Numbers may not total due to rounding.
(1) | Excludes operations of Pemex-Exploration and Production. Pemex-Exploration and Production produced a total of |
(2) | Includes sweet vapor from condensates. |
(3) | Includes internal streams. |
(4) | Reprocessing of pipeline dry gas at |
(5) | Does not include ethane reinjected into the natural gas stream. |
(6) | In thousands of barrels per day. |
(7) | Includes stabilized condensates, reprocessing streams from the Cangrejera petrochemical complex and other streams for fractionating. |
(8) | Includes pentanes. |
(9) | In thousands of tons. |
Source:Pemex BDI.
Processing Capacity
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2009 | 2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||||||
(in millions of cubic feet per day, except where otherwise indicated) | (in millions of cubic feet per day, except where otherwise indicated) | |||||||||||||||||||||||||||||||||||||||
Sweetening plants | ||||||||||||||||||||||||||||||||||||||||
Sour condensates(1) | 144 | 144 | 144 | 144 | 144 | 144 | 144 | 144 | 144 | 144 | ||||||||||||||||||||||||||||||
Sour natural gas | 4,503 | 4,503 | 4,503 | 4,503 | 4,503 | 4,503 | 4,503 | 4,503 | 4,503 | 4,503 | ||||||||||||||||||||||||||||||
Natural gas liquids recovery plants | ||||||||||||||||||||||||||||||||||||||||
Cryogenics(2) | 5,392 | 5,592 | 5,792 | 5,792 | 5,712 | 5,792 | 5,792 | 5,712 | 5,912 | 5,912 | ||||||||||||||||||||||||||||||
Absorption(3) | 350 | 350 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
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Total | 5,742 | 5,942 | 5,792 | 5,792 | 5,712 | 5,792 | 5,792 | 5,712 | 5,912 | 5,912 | ||||||||||||||||||||||||||||||
Natural gas liquids fractionating(1)(4) | 587 | 587 | 569 | 569 | 569 | 569 | 569 | 569 | 569 | 569 | ||||||||||||||||||||||||||||||
Processing of hydrosulfuric acid | 219 | 219 | 219 | 219 | 219 | 219 | 219 | 219 | 219 | 219 |
(1) | In thousands of barrels per day. |
(2) | In |
(3) | On August 31, 2009, the absorption plant at the Reynosa complex was shut down. |
(4) | The liquids fractionating plant at the Reynosa complex has been out of service since August 31, 2009. |
Source:Pemex BDI.
Domestic consumption of dry gas totaled 5,573.05,735.7 million cubic feet per day in 2011,2013, a 1.2%1.3% increase from the 20102012 domestic consumption of 5,508.95,660.8 million cubic feet per day. The subsidiary entities consumed approximately 39.3%39.6% of the total domestic dry gas consumed in 2011,2013, while the industrial-distributor sector consumed 21.3%19.8%, the electrical sector consumed 33.8%33.5%, the electrical autogeneration sector consumed 2.5% and the trading sector consumed 3.1%4.6%.
We import dry gas to satisfy shortfalls in our production and to meet demand in areas of northern Mexico that, due to their distance from the fields, can be supplied more efficiently by importing natural gas from the United States. WeIn addition, in August 2013, we announced a natural gas supply strategy developed in partnership with the Mexican Government to address the domestic natural gas shortages. Under this strategy, we will increase our liquefied natural gas imports in the short-term. See “—Business Overview—Gas and Basic Petrochemicals—Natural Gas Supply Strategy” in this Item 4. In 2013, we imported 790.81,289.7 million cubic feet per day of natural gas, in 2011, an increase of 47.6%18.4% from the 535.81,089.3 million cubic feet per day imported in 2010.2012, due to lower availability of sour wet natural gas and dry gas from Pemex-Exploration and Production’s fields. The total amount of natural gas imported per day in 2013 included 114.3 million cubic feet of liquefied natural gas imported through Manzanillo.
Pemex-Gas and Basic Petrochemicals processes sour and sweet condensates in order to obtain stabilized natural gas liquids and also producesrecovers liquid hydrocarbons obtained from the processing of sweet natural gas. In addition, we obtain natural gas liquids from internal streams and recovered in surface separating facilities, as well as liquid hydrocarbons condensed in naturalsour wet gas pipelines. Our production of natural gas liquids, including stabilized condensates, and reprocessing and other fractionating streams, increaseddecreased by 1.6%0.8% from 383365 thousand barrels per day in 20102012 to 389362 thousand barrels per day in 2011.2013.
Pemex-Gas and Basic Petrochemicals processes sour condensates, which have a higher sulfur content, to produce stabilized sweet condensates. The volume of sour condensates we processed from Pemex-Exploration and Production and internal streams of Pemex-Gas and Basic Petrochemicals amounted to 42.435.0 thousand barrels per day in 2011,2013, a 9.6% increase2.8% decrease from the 38.736.0 thousand barrels per day processed in 2010.2012. Pemex-Gas and Basic Petrochemicals also processes sweet condensates at its Burgos facilities to produce naphthalight and heavy naphtha.natural gasoline.
In January 2009, Pemex-Gas and Basic Petrochemicals began the construction of a cryogenic plant at the Poza Rica gas processing complex (GPC),GPC, which is expected to havehas a processing capacity of 200 million cubic feet per day of sweet wet gas, as well as a liquids fractionating plant.gas. The project also includes, among others installations, the construction of two storage tanks for liquid gas, each with an expecteda capacity of 20 thousand barrels. This cryogenic plant is scheduled to beginbegan operating in AugustNovember 2012.
Since January 2011, the cryogenic plant at Cangrejera has been out of service due to a lack of raw material necessary for this plant to operate. In October 2011, the Nuevo Pemex complex cryogenic plant’s total capacity was adjusted from 1,550 to 1,500 million cubic feet per day.
The Regulatory Law currently limits basic petrochemicals to the following nine products that are used in the petrochemical production process: ethane, propane, butane, pentanes, hexane, heptane, carbon black naphthasfeedstocks, natural gasoline and methane, when obtained from hydrocarbon reservoirs in Mexico and used as raw material for petrochemical industrial processes. All other petrochemical products may be produced by Pemex-Petrochemicals, byPemex-Refining or by private sector companies. However, the Regulatory Law also allows companies that produce basic petrochemicals, as by-products of non-basic petrochemical production, to sell them either internally, within plants in the same unit or complex, or to sell them to Petróleos Mexicanos and the subsidiary entities.
Natural Gas Supply Strategy
On August 13, 2013, we and the Mexican Government presented a strategy to address domestic natural gas shortages in the short, medium and long term. In the short-term, we will increase our liquefied natural gas
imports and switch from using natural gas to using fuel oil at our facilities. In the medium-term, we plan to construct additional pipelines and compression stations. Finally, we expect to continue to increase oil and shale gas reserves in order to satisfy domestic demand for natural gas in the long-term. The specific components of this strategy, including our role, may be impacted by the changes contemplated as part of the Energy Reform Decree. See “—Information on the Company—History and Development—Energy Reform” in this Item 4.
Over the five years ended December 31, 2011,2013, the value of Pemex-Gas and Basic Petrochemicals’ domestic sales was distributed as follows.follows:
Value of Domestic Sales of Pemex-Gas and Basic Petrochemicals(1)
Year ended December 31, | 2011 vs. 2010 | Year ended December 31, | 2013 vs. 2012 | |||||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2009 | 2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||||||||||||||
(in millions of pesos)(2) | (%) | (in millions of pesos)(2) | (%) | |||||||||||||||||||||||||||||||||||||||||||||
Natural gas | Ps. 78,644.1 | Ps. 105,436.3 | Ps. 58,102.1 | Ps. 67,141.3 | Ps. 64,468.8 | (4.0 | ) | Ps. | 58,102.1 | Ps. | 67,141.3 | Ps. | 64,466.3 | Ps. | 50,233.0 | Ps. | 68,128.7 | 35.6 | ||||||||||||||||||||||||||||||
Liquefied petroleum gas | 54,456.5 | 55,972.1 | 49,461.3 | 53,385.9 | 57,981.0 | 8.6 | 49,461.3 | 53,385.9 | 57,981.0 | 64,966.5 | 71,728.9 | 10.4 | ||||||||||||||||||||||||||||||||||||
Petrochemicals | ||||||||||||||||||||||||||||||||||||||||||||||||
Hexane | 344.8 | 484.6 | 367.5 | 278.5 | 408.2 | 46.6 | 367.5 | 278.5 | 408.2 | 4.8 | 44.3 | 822.9 | ||||||||||||||||||||||||||||||||||||
Dissolving agents | 81.6 | 140.9 | 18.2 | 56.0 | 29.2 | (47.9 | ) | |||||||||||||||||||||||||||||||||||||||||
Ethane(3) | — | — | — | — | 32.3 | — | ||||||||||||||||||||||||||||||||||||||||||
Solvent agents | 18.2 | 56.0 | 29.2 | 85.7 | 28.0 | (67.3 | ) | |||||||||||||||||||||||||||||||||||||||||
Sulfur | 236.1 | 1,817.7 | 32.4 | 662.8 | 1,354.7 | 104.4 | 32.4 | 662.8 | 1,354.7 | 1,167.2 | 659.6 | (43.5 | ) | |||||||||||||||||||||||||||||||||||
Carbon black | 1,038.5 | 1,423.6 | 1,149.9 | 1,808.9 | 2,368.2 | 30.9 | ||||||||||||||||||||||||||||||||||||||||||
Carbon black(4) | 1,149.9 | 1,808.9 | 2,368.2 | 1,115.7 | — | — | ||||||||||||||||||||||||||||||||||||||||||
Pentanes | 63.1 | 115.2 | 73.6 | 144.4 | 232.0 | 60.7 | 73.6 | 144.4 | 232.0 | 46.9 | 165.8 | 253.5 | ||||||||||||||||||||||||||||||||||||
Heptane | 68.3 | 85.8 | 55.1 | 60.6 | 105.7 | 74.4 | 55.1 | 60.6 | 105.7 | 8.6 | 62.7 | 629.1 | ||||||||||||||||||||||||||||||||||||
Butane | 141.1 | 168.5 | 119.2 | 188.7 | 240.7 | 27.6 | 119.2 | 188.7 | 240.7 | 264.9 | 259.1 | (2.2 | ) | |||||||||||||||||||||||||||||||||||
Propane | 60.5 | 78.7 | 49.3 | 74.2 | 93.5 | 26.0 | 49.3 | 74.2 | 93.5 | 69.6 | 70.3 | 1.0 | ||||||||||||||||||||||||||||||||||||
Others | 3.4 | — | 0.2 | — | — | — | 0.2 | — | — | — | 4.4 | — | ||||||||||||||||||||||||||||||||||||
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Total Petrochemicals | 2,037.4 | 4,315.0 | 1,865.3 | 3,274.1 | 4,832.2 | 47.6 | 1,865.3 | 3,274.2 | 4,832.2 | 2,763.4 | 1,326.5 | (52.0 | ) | |||||||||||||||||||||||||||||||||||
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Total | Ps. 135,137.9 | Ps. 165,723.4 | Ps. 109,428.7 | Ps. 123,801.3 | Ps. 127,282.1 | 2.8 | Ps. | 109,428.7 | Ps. | 123,801.4 | Ps. | 127,279.6 | Ps. | 117,962.8 | Ps. | 141,184.1 | 19.7 | |||||||||||||||||||||||||||||||
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Note: Numbers may not total due to rounding.
(1) | Excludes value added tax. |
(2) | Figures |
(3) | Ethane sales to Petroquímica Mexicana de Vinilo, S.A. de C.V., (which we refer to as PMV) began in October 2013. See “—Business Overview—Petrochemicals—Joint Venture with Mexichem” in this Item 4. |
(4) | Since May 2012, carbon black is sold by Pemex-Refining. |
Source:Pemex BDI.
The volume of Pemex-Gas and Basic Petrochemicals’ domestic sales for the five-year period ended December 31, 2013 was distributed as follows:
Volume of Domestic Sales of Pemex-Gas and Basic Petrochemicals
Year ended December 31, | 2013 vs. 2012 | |||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||||||
(in thousands of barrels per day, except where otherwise indicated) | (%) | |||||||||||||||||||||||
Natural gas(1) | 3,118.8 | 3,254.9 | 3,382.7 | 3,387.7 | 3,463.5 | 2.2 | ||||||||||||||||||
Liquefied petroleum gas(2) | 281.0 | 287.9 | 284.8 | 285.5 | 282.8 | (0.9 | ) | |||||||||||||||||
Petrochemicals(3) | ||||||||||||||||||||||||
Hexane | 33.6 | 23.0 | 29.3 | 0.3 | 2.9 | 866.7 | ||||||||||||||||||
Ethane(4) | — | — | — | — | 16.7 | — | ||||||||||||||||||
Solvent agents | 5.1 | 5.7 | 2.7 | 7.2 | 2.1 | 70.8 | ||||||||||||||||||
Sulfur | 593.3 | 582.1 | 647.8 | 649.1 | 520.7 | (19.8 | ) | |||||||||||||||||
Carbon black(5) | 330.7 | 419.1 | 429.6 | 167.1 | — | — | ||||||||||||||||||
Pentanes | 10.7 | 15.0 | 19.1 | 3.9 | 14.6 | 274.4 | ||||||||||||||||||
Heptane | 4.9 | 4.9 | 7.1 | 0.5 | 3.9 | 680.0 | ||||||||||||||||||
Butane | 17.2 | 19.7 | 20.6 | 23.0 | 26.4 | 14.8 | ||||||||||||||||||
Propane | 7.7 | 8.6 | 8.7 | 8.2 | 9.3 | 13.4 | ||||||||||||||||||
Others | — | — | — | — | 0.4 | — | ||||||||||||||||||
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Total petrochemicals | 1,003.2 | 1,078.1 | 1,164.9 | 859.2 | 597.0 | (30.5 | ) | |||||||||||||||||
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Note: Numbers may not total due to rounding.
(1) | In millions of cubic feet per day. |
(2) | In thousands of barrels per day. |
(3) | In thousands of tons. |
(4) | Ethane sales to PMV began in October 2013. See “—Business Overview—Petrochemicals—Joint Venture with Mexichem” in this Item 4. |
(5) | Since May 2012, carbon black is sold by Pemex-Refining. |
Source:Pemex BDI.
The value of the domestic sales of Pemex-Gas and Basic Petrochemicals increased by 19.7%, or Ps. 23,221.3 million, as compared to 2012, primarily as a result of a 35.6% increase in domestic sales of natural gas and a 10.4% increase in domestic sales of LPG, each due to price increases. This increase was partially offset by a 52.0% decrease in total petrochemicals sales of Pemex-Gas and Basic Petrochemicals, primarily as a result of a decrease in the volume and prices of certain products sold, including sulfur, in addition to carbon black being sold by Pemex-Refining since May 2012.
Subsidiaries of Pemex-Gas and Basic Petrochemicals
Pemex-Gas and Basic Petrochemicals conducts certain management, real estate and distribution activities through its subsidiaries and through certain joint ventures. The following table lists Pemex-Gas and Basic Petrochemicals’ subsidiaries, their principal operating activities and Pemex-Gas and Basic Petrochemicals’ ownership interest as of December 31, 2011.2013.
Subsidiaries of Pemex-Gas and Basic Petrochemicals(1)
Subsidiary | Principal Activity | Ownership Interest (%) | ||||
Mex Gas International, Ltd.(2) | Holding company | 100.00 | ||||
Pasco International, Ltd. | Holding company | 100.00 | ||||
Pasco Terminals, Inc.(3) | Storage and distribution of liquid sulfur | 100.00 | ||||
Pan American Sulphur, Ltd.(4) | Storage and handling of petroleum, petrochemical and chemical products through the loading/unloading of vessels and delivering/receiving of products by pipeline or truck | 100.00 | ||||
Terrenos para Industrias, S.A. | Real estate holding company | 100.00 |
(1) | As of December 31, |
(2) | Mex Gas International, Ltd. is the only subsidiary of Pemex-Gas and Basic Petrochemicals that is a consolidated subsidiary company. See Note |
(3) | Pasco Terminals, Inc. is a wholly owned subsidiary company of Pasco International, Ltd. |
(4) | During |
Source: Pemex-Gas and Basic Petrochemicals.
The following table lists Pemex-Gas and Basic Petrochemicals’ joint ventures, their principal operating activities and Pemex-Gas and Basic Petrochemicals’ ownership interest as of December 31, 2011.2013.
Joint Ventures of Pemex-Gas and Basic Petrochemicals(1)
Subsidiary | Principal Activity | Ownership Interest (%) | ||||
Gasoductos de Chihuahua, S. de R.L. de | 50.00 | |||||
CH4 Energía, S.A. de C.V. | 50.00 |
(1) | As of December 31, |
Source: Pemex-Gas and Basic Petrochemicals.
Pipelines
Private Sector Participation in Natural Gas Distribution
. The Regulatory Law provides that private and “social sector” companies may, with governmental authorization, store, distribute and transport natural gas, and may construct, own and operate natural gas pipelines, facilities and equipment.
Since 1997, the Regulatory Law has required us to provide the private sector with open access to our transportation system for distribution, ending our prior exclusive rights over the distribution lines. We continue to market natural gas and may develop natural gas storage systems.
In 1996, theComisión Reguladora de Energía(Energy Regulatory Commission)Commission approved the Gradual Access Program for 1996-1997, which required that we open access to our natural gas distribution system to the private sector and prohibited vertical integration between transportation and distribution. As a result, Pemex-Gas and Basic Petrochemicals’ distribution assets located within the following official distribution zones have been privatized: Chihuahua, Toluca, Saltillo, Nuevo Laredo, Río Pánuco, Norte deNorthern Tamaulipas, Distrito Federal, Valle de Cuautitlán, Texcoco, Hidalgo,n-Texcoco-Hidalgo, Hermosillo, Monterrey, Mexicali, El Bajío, Cananea, Querétaro, La Laguna, Bajío Norte, Puebla, Tlaxcala,
Guadalajara, Piedras Negras and Ciudad Juárez. As of 1999, all of our natural gas distribution pipelines were opened to private sector useMost recently, Pemex-Gas and there were no furtherBasic Petrochemicals’ distribution assets left to divest pursuant to the program, although a portion of these assets are still heldlocated within Altamira and Morelos were privatized in trust2012 and the distribution assets located within Veracruz have not yet been divested.were privatized in 2013.
In addition, with respect to first-hand sales of natural gas, Pemex-Gas and Basic Petrochemicals in coordination withsubmitted to the Energy Regulatory Commission has informed customers of the advantages of moving from the current transitoryits proposal for a new payment system, (which is based on the volume of natural gas transported to each customer, but does not allow the customer to reserve transportation capacity) to a new permanent payment system that provideswhich would provide customers with the option to reserve transportation capacity of natural gas and make payments based on the volume consumed. This new payment system willwould allow customers to better estimate their consumption of natural gas, as well as enhance PEMEX’sour ability to manage costs and capacity related to the transportation of natural gas. Pemex-Gas and Basic Petrochemicals is prepared to operate under the new system; however, as of the date of this report,system once the Energy Regulatory Commission has not declared it effectiveapproves the new system and onlyissues final regulations to govern natural gas sales under it.
Los Ramones Gas Pipeline. On January 16, 2013, the Federal Electricity Commission, independent power producers and customers with self-generated electric power have expressed interest in movingBoard of Directors of Petróleos Mexicanos was informed of modifications to the new system. With regardLos Ramones pipeline project, which is part of a strategy to first-hand salessupply central Mexico with natural gas imported from the United States. The Los Ramones pipeline project will be implemented in two phases. Phase one consists of natural gas,the construction of a pipeline from the U.S. border near Ciudad Camargo, Tamaulipas to Los Ramones, Nuevo León, which will be developed and owned by Gasoductos de Chihuahua, S. de R.L. de C.V., a joint venture between Pemex-Gas and Basic Petrochemicals and Sempra Gasoductos Holding, S. de R.L. de C.V. The phase one pipeline is expected to begin operating in conjunctionDecember 2014 with an initial capacity of 1.0 billion cubic feet per day and will have its capacity increased to 2.1 billion cubic feet per day by late 2015. Phase one will require an estimated U.S. $688 million investment. Phase two of the project consists of a pipeline from Los Ramones, Nuevo León, to Apaseo el Alto, Guanajuato, which is expected to begin operating in December 2015 with a capacity of 1.43 billion cubic feet per day. On October 15, 2013, Pemex-Gas and Basic Petrochemicals voided the tender process for the construction of the second phase of the project, after the bid received from the consortium formed by Enagás and GDF Suez was rejected due to its failure to meet the project’s technical and economic requirements. Phase two of the project has since been subdivided into two stages, Ramones Norte and Ramones Sur, and was directly awarded to the selected contractors based on their experience with projects of this nature. Ramones Norte, which consists of a 447 kilometer portion of the pipeline from Los Ramones to San Luis Potosí, will require an estimated U.S. $1,052 million investment and will be constructed by a joint venture between TAG Pipelines, S. de R.L. de C.V. (an indirect subsidiary of Pemex-Gas and Basic Petrochemicals) and Gasoductos de Chihuahua, S. de R.L. de C.V. (or any of its subsidiaries). Ramones Sur consists of a 291 kilometer portion of the pipeline from San Luis Potosí to Apaseo el Alto, Guanajuato, will require an estimated U.S. $795 million investment and will be constructed by a joint venture between GDF Suez and TAG Pipelines.
Energy Reform. The Energy Reform Decree contemplates the transfer of certain of Pemex-Gas and Basic Petrochemicals’ assets related to the national gas pipeline system to another decentralized public entity of the Mexican Government that will be created in the future. The secondary legislation implementing the Energy Regulatory Commission,Reform Decree is reviewingexpected to include, among other things, additional details regarding this transfer of assets. See “—Information on the rules that will govern gas sales under the new permanent payment system described above.Company—History and Development—Energy Reform” in this Item 4.
Pricing Decrees
Natural gas prices for domestic sale are calculated in accordance with directives issued by the Energy Regulatory Commission on July 20, 2009 and the related Resolutions of December 20, 2010, March 3, 2011, December 20, 2012, January 17, 2013 and March 3, 2011.21, 2013. These prices reflect natural gas opportunity costs and competitive conditions in international markets and at the point of sale.
Since 2003, price control mechanisms for LPG have been implemented through governmental decrees. On December 28, 2007, President Calderónthe Mexican Government issued a decree establishing the maximum LPG price for first-hand and end-user sales. The decree became effective in January 2008, and established a monthly price increase from January 2008 to May 2008 of Ps. 0.0317 per kilogram over the weighted average end-user price of LPG after taxes. From June 2008 to December 2008, the amount of these price increases varied from month to month.
On December 29, 2008, the Mexican Government issued a decree establishing a national weighted average end-user price of LPG before taxes of Ps. 8.92 per kilogram, effective January 2009. Subsequently, on January 9, 2009, the Mexican Government issued a decree modifying the national weighted average end-user price of LPG before taxes to Ps. 8.03 per kilogram, representing a discount of almost 10%. This decree also suspended the periodic increases in the retail price of LPG, beginning on January 12, 2009 and effective through December 31, 2009.
In January 2010, the Mexican Government issued a decree establishing the maximum weighted average end-user price of LPG before taxes of Ps. 8.08 per kilogram. Subsequently, as of February 2010, the Mexican Government established monthly maximum price increases in cents per kilogram before taxes, as follows:
Period | Mexican Cents per Kilogram | |||
February 2010 to July 2011 | 5 | |||
August to November 2011 | 7 | |||
December 2011 | 8 | |||
January 2012 to | 7 | |||
November to December 2013. | 9 | |||
January to April 30, 2014 | 9 | * |
* | On January 1, 2014, pursuant to the IEPS Tax on Fossil Fuels, a one-time price increase of 12 Mexican cents per kilogram went into effect in addition to the monthly price increase of nine Mexican cents per kilogram. |
The Mexican Government could modify these price controls or impose additional price controls in the future. See “Item 3—Key Information—Risk Factors—Risk Factors Related to theOur Relationship between PEMEX andwith the Mexican Government—The Mexican Government has imposed price controls in the domestic market on PEMEX’sour products.”
Natural Gas Hedging Operations
Pemex-Gas and Basic Petrochemicals offers, as a value added service, various hedging contracts to its domestic customers to protect them against fluctuations in the prices of natural gas. For information on hedging contracts offered to natural gas domestic customers, see “Item 11—Quantitative and Qualitative Disclosures about Market Risk—Instruments Entered into for Trading Purposes.”
Investments
In nominal peso terms, Pemex-Gas and Basic Petrochemicals invested Ps. 3,0195,405 million in 2011,2013, as compared to Ps. 3,8874,468 million in 2010,2012, in projects primarily related to natural gas and condensates processing, as well as for the transportation and storage.storage of other products. For 2012,2014, the Mexican Government has approved Ps. 6,1267,548 million in nominal terms of capital expenditures for Pemex-Gas and Basic Petrochemicals, including Ps. 6011,536 million forto recondition the cryogenic plant atinfrastructure used to supply ethane to the Poza Rica GPC.Etileno XXI project and the remaining Ps. 6,012 million to ensure the safe and reliable operation of its facilities.
Cryogenic Plant at the Poza Rica GPC
In orderDuring 2013, Pemex-Gas and Basic Petrochemicals completed the construction of a new cryogenic plant at the Poza Rica GPC, which was built to provide the infrastructure necessary to process the wet natural gas produced by the Aceite Terciario del Golfo project, Pemex-Gas and Basic Petrochemicals is constructing aATG project. The new cryogenic plant at the Poza Rica GPC, which will havehas a processing capacity of 200 million cubic feet per day of sweet wet gas and a liquids fractionating plant, which will be located on Pemex-Gas and Basic Petrochemicals’ property and will utilize the facilities of the Poza Rica GPC.per day. This project also includes,included, among others,other things, the construction of two storage tanks for liquid gas, each with a capacity of 20 thousand barrels, an ecological burner, an effluent treatment plant and supporting infrastructure. The tender for this project was awarded on May 15, 2009 to ICA Flúor Daniel and Linde Process Plants, Inc., in association, withDuring 2013, operations at the contract signed on June 12, 2009. Construction began on August 17, 2009, and the project is scheduled to be completed in June 2012 and commence operations the following month. The project has been modified to reflect the 2012 planning cycle and the revised projections of the natural gas supply expected to be produced from the Aceite Terciario del Golfo project.new cryogenic plant were normal.
Electric Energy Cogeneration Program
As part of ourPrograma de Cogeneración de Energía Eléctrica (Electric Energy Cogeneration Program), we launched an international tender for the construction of our first large-scale cogeneration plant at the Nuevo Pemex GPC in the state of Tabasco on August 28, 2008. Pemex-Gas and Basic Petrochemicals will be able to use the electric energyThis plant began operating on April 1, 2013. Power generated by the plant atis supplied to the Nuevo Pemex GPC and may use any surplus electric energy production in other PEMEXPetróleos Mexicanos facilities.
The Electric Energy Cogeneration Program is a two-stage program. In the short term, the program is intended to permit us to reduce our reliance on energy supplied by the Federal Electricity Commission. Over the medium and long term, we expect that this large-scale cogeneration project will permit us to replace inefficient equipment at the end of its useful life and to sell excess energy production to the Federal Electricity Commission. See “Item 4—“—Information on the Company—History and Development.”Development” in this Item 4.
Collaboration Agreements
On August 24, 2011,March 15, 2012, Pemex-Gas and Basic Petrochemicals and the state of SonoraZacatecas signed a collaboration agreement to develop a pipeline to deliver natural gas to that state. On October 26, 2012, Pemex-Gas and Basic Petrochemicals, Compañía Cervecera de Zacatecas, S.A. de C.V. (part of Grupo Modelo) and Gas Natural Industrial de Colombia S.A. E.S.P., signed an agreement to transport compressed natural gas by tank cars,develop this pipeline, which will be 12 inches in order to supplydiameter and 172 kilometers long. During the industries and local businesses located far away fromfirst stage of this project, the pipeline network. This agreement is expected to reduce costshave a transportation capacity of 20 million cubic feet of natural gas per day. Following the construction of a new compression station during the second stage, the pipeline’s transportation capacity is expected to increase to 40 million cubic feet per day. In December 2013, the Energy Regulatory Commission authorized Transportadora de Gas Natural de Zacatecas, S.A. de C.V., the company created by Gas Natural Industrial de Colombia S.A. E.S.P. to carry out this project, to transport natural gas. As of the date of this report, the pipeline remains under construction and emissionsis expected to begin operating in June 2014. Pemex-Gas and Basic Petrochemicals will be capable of pollutants,supplying natural gas to customers who require it until the pipeline is completed.
On April 19, 2012, Pemex-Gas and Basic Petrochemicals and the state of San Luis Potosi signed a collaboration agreement to define and develop an infrastructure development plan concerning the supply of natural gas. During 2013, this agreement enabled us to obtain rights of way in the state, thereby facilitating the second phase of the Los Ramones pipeline project. See “—Business Overview—Gas and Basic Petrochemicals—Los Ramones Gas Pipeline” in this Item 4.
Ethane Supply Contract
On February 19, 2010, Pemex-Gas and Basic Petrochemicals entered into a contract to supply 66,000 barrels of ethane per day to the Etileno XXI project, a petrochemical complex in Nanchital, Veracruz that will produce ethylene and polyethylene. The Etileno XXI project is being developed and will be owned and operated by replacingBraskem-IDESA, a Brazilian-Mexican consortium. In order to meet its obligations under this contract, Pemex-Gas and Basic Petrochemicals made adjustments to the more expensiveinfrastructure of its processing plants in the Ciudad Pemex, Nuevo Pemex and higher polluting fuels used by industriesCactus GPCs. Additional ethane will be transported from the GPCs located at Tabasco, in southeastern Mexico, to Coatzacoalcos, Veracruz. This contract provides for “take or pay—delivery or pay” obligations for the parties, and business locatedthus, in case of breach of its supply obligation, Pemex-Gas and Basic Petrochemicals is subject to the payment of liquidated damages. In the event of termination as a consequence of Pemex-Gas and Basic Petrochemicals’ material default under the ethane supply contract, Pemex-Gas and Basic Petrochemicals may be obligated to pay to the other parties involved in the project an amount equal to the termination value of this project (the value of which is determined pursuant to the contract and takes into consideration, among other factors, the outstanding debt of the project and the amount invested in the project at such areas.time).
Petrochemicals
Capacity
At the end of 2011,2013, Pemex-Petrochemicals owned seveneight petrochemical complexes and one petrochemical unit for the production of non-basic petrochemical products. Pemex-Petrochemicals had a total installed capacity of 10,27610,186 thousand tons of petrochemical products per year in 2011.2013.
Pemex-Petrochemicals’ total production capacity for the last five years was distributed among its facilities as set forth below.
Pemex-Petrochemicals’ Total Capacity
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||||||||||||||||||
Petrochemical Facility | 2007 | 2008 | 2009 | 2010(1) | 2011 | 2009 | 2010(1) | 2011 | 2012 | 2013(2) | ||||||||||||||||||||||||||||||
(in thousands of tons) | (in thousands of tons) | |||||||||||||||||||||||||||||||||||||||
Cosoleacaque | 4,975 | 4,975 | 4,975 | 2,150 | 2,150 | 4,975 | 2,150 | 2,150 | 2,150 | 3,225 | ||||||||||||||||||||||||||||||
Cangrejera | 3,280 | 4,214 | 4,137 | 4,438 | 4,328 | 4,137 | 4,438 | 4,328 | 4,328 | 3,964 | ||||||||||||||||||||||||||||||
Morelos | 2,263 | 2,575 | 2,575 | 2,261 | 2,286 | 2,575 | 2,261 | 2,286 | 2,286 | 2,263 | ||||||||||||||||||||||||||||||
Pajaritos | 1,021 | 1,244 | 1,244 | 1,758 | 1,180 | 1,244 | 1,758 | 1,180 | 1,180 | 547 | (3) | |||||||||||||||||||||||||||||
Escolín | 337 | 337 | 337 | 55 | 55 | 337 | 55 | 55 | 55 | — | ||||||||||||||||||||||||||||||
San Martín Texmelucan | 288 | 286 | 286 | 222 | 222 | |||||||||||||||||||||||||||||||||||
Independencia | 286 | 222 | 222 | 222 | 187 | |||||||||||||||||||||||||||||||||||
Camargo | 333 | 333 | 333 | — | — | 333 | — | — | — | — | ||||||||||||||||||||||||||||||
Tula | 76 | 68 | 68 | 55 | 55 | 68 | 55 | 55 | 55 | — | ||||||||||||||||||||||||||||||
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Total | 12,571 | 14,034 | 13,955 | 10,939 | 10,276 | 13,955 | 10,939 | 10,276 | 10,276 | 10,186 | ||||||||||||||||||||||||||||||
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Note: Numbers may not total due to rounding.
(1) | Beginning in 2010, total capacity includes capacity from those plants available for operation, while in previous years it included capacity from plants that were not in operation and had a stand-by status. |
(2) | As of 2013, Pemex-Petrochemicals’ capacity does not include subproducts for our own consumption. |
(3) | As of September 12, 2013, the vinyl chloride and ethylene plants at the Pajaritos petrochemical complex were divested from Pemex-Petrochemicals to form a joint venture with PMV. |
(4) | As of 2013, the Escolín and Camargo petrochemical complexes’ capacities are no longer included because these complexes have been out of operation for more than three years. |
Source:Pemex BDI.Petrochemicals.
Production
Pemex-Petrochemicals manufactures various non-basic petrochemical products, including:
methane derivatives, such as ammonia and methanol;
ethane derivatives, such as ethylene, polyethylene, vinyl chloride monomer, ethylene oxide and glycols;
aromatics and their derivatives, such as high octane hydrocarbon, paraxylene, styrene, benzene, toluene and xylenes;
propylene chain and its derivatives, such as acrylonitrile and propylene;
other products, such as oxygen, nitrogen, hexane, heptane, pyrolysis liquids, specialty petrochemical products, hydrochloric acid and muriatic acid; and
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The total annual production of Pemex-Petrochemicals in 20112013 was 8,1557,339 thousand tons. Our combined total annual petrochemical production (including all subsidiaries) decreasedincreased by 6.1%7.3% in 2011,2013, from 13,18810,693 thousand
tons in 2012 to 11,470 thousand tons in 2010 to 12,384 thousand tons in 2011.2013. Of this amount, Pemex-Petrochemicals produced 8,1557,339 thousand tons, representing an 8.8% decreasea 15.3% increase from Pemex-Petrochemicals’ production of 8,9436,367 thousand tons of
petrochemical products in 2010.2012. The remainder of these petrochemical products was produced byPemex-Refining and Pemex-Gas and Basic Petrochemicals. The decreaseincrease in petrochemical production was mainly a resultdue to the incorporation of the business decision to reducenew continuous catalytic regeneration reactor in the plant at the Cangrejera petrochemical complex, which increased output and restored the production volume of gasoline components and gasoline blends in orderpetroleum aromatics as compared to improve2012, when the economic performancearomatics train was out of that line of business. In addition, maintenanceoperations for eight months to allow for the installation of the ethylene plant in the Morelos petrochemical complex was undertaken in 2011, which did not take place in the previous year.new reactor.
For information on Pemex-Gas and Basic Petrochemicals’ petrochemical production, see “—Gas and Basic Petrochemicals” above.
The following table summarizes the annual production associated with the principal petrochemical activities of Pemex-Petrochemicals for the five years ended December 31, 2011.2013.
Pemex-Petrochemicals Production
Year ended December 31, | 2011 vs. 2010 | Year ended December 31, | 2013 vs. 2012 | |||||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2009 | 2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||||||||||||||
(in thousands of tons per year) | (%) | (in thousands of tons per year) | (%) | |||||||||||||||||||||||||||||||||||||||||||||
Liquids | ||||||||||||||||||||||||||||||||||||||||||||||||
Hexanes | 56 | 54 | 46 | 51 | 45 | (11.8 | ) | 46 | 51 | 45 | 5 | 22 | 340.0 | |||||||||||||||||||||||||||||||||||
Heptanes | 13 | 23 | 20 | 20 | 19 | (5.0 | ) | 20 | 20 | 19 | 3 | 8 | 166.7 | |||||||||||||||||||||||||||||||||||
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Total | 69 | 77 | 66 | 71 | 64 | (9.9 | ) | 65 | 71 | 64 | 8 | 30 | 275.0 | |||||||||||||||||||||||||||||||||||
Other inputs | ||||||||||||||||||||||||||||||||||||||||||||||||
Oxygen | 410 | 455 | 445 | 460 | 447 | (2.8 | ) | 445 | 460 | 447 | 418 | 434 | 3.8 | |||||||||||||||||||||||||||||||||||
Nitrogen | 106 | 135 | 149 | 167 | 165 | (1.2 | ) | 149 | 167 | 165 | 164 | 172 | 4.9 | |||||||||||||||||||||||||||||||||||
Hydrogen | 161 | 148 | 110 | 159 | 128 | (19.5 | ) | 110 | 159 | 128 | 20 | 61 | 205.0 | |||||||||||||||||||||||||||||||||||
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Total | 677 | 738 | 704 | 786 | 740 | (5.9 | ) | 703 | 786 | 740 | 602 | 667 | 10.8 | |||||||||||||||||||||||||||||||||||
Petrochemicals | ||||||||||||||||||||||||||||||||||||||||||||||||
Methane derivatives | 1,859 | 2,202 | 1,962 | 2,282 | 2,306 | 1.1 | 1,962 | 2,282 | 2,306 | 2,473 | 2,460 | (0.5 | ) | |||||||||||||||||||||||||||||||||||
Ethane derivatives | 2,607 | 2,604 | 2,695 | 2,831 | 2,750 | (2.9 | ) | 2,695 | 2,831 | 2,750 | 2,775 | 2,473 | (10.9 | ) | ||||||||||||||||||||||||||||||||||
Aromatics and derivatives(1) | 1,338 | 1,354 | 1,233 | 1,042 | 923 | (11.4 | ) | 1,233 | 1,042 | 923 | 166 | 799 | 381.3 | |||||||||||||||||||||||||||||||||||
Propylene and derivatives | 47 | 17 | 31 | 84 | 62 | (26.2 | ) | 31 | 84 | 62 | 49 | 52 | 6.1 | |||||||||||||||||||||||||||||||||||
Petroleum derivatives(1) | — | — | — | 610 | 451 | (26.1 | ) | — | 610 | 451 | 26 | 321 | 1,134.6 | |||||||||||||||||||||||||||||||||||
Others(1) | 708 | 707 | 767 | 1,094 | 744 | (32.0 | ) | 768 | 1,093 | 744 | 115 | 443 | 285.2 | |||||||||||||||||||||||||||||||||||
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Total | 6,559 | 6,884 | 6,688 | 7,943 | 7,236 | (8.9 | ) | 6,689 | 7,943 | 7,237 | 5,604 | 6,549 | 16.9 | |||||||||||||||||||||||||||||||||||
Other products | ||||||||||||||||||||||||||||||||||||||||||||||||
Hydrochloric acid | 141 | 93 | 92 | 109 | 98 | (10.1 | ) | 92 | 109 | 98 | 108 | 63 | (41.7 | ) | ||||||||||||||||||||||||||||||||||
Muriatic acid | 50 | 49 | 37 | 34 | 16 | (52.9 | ) | 37 | 34 | 16 | 45 | 30 | (33.3 | ) | ||||||||||||||||||||||||||||||||||
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Total | 191 | 142 | 129 | 144 | 114 | (20.8 | ) | 129 | 144 | 114 | 153 | 93 | (39.2 | ) | ||||||||||||||||||||||||||||||||||
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Subtotal | 7,496 | 7,841 | 7,587 | 8,943 | 8,155 | (8.8 | ) | 7,587 | 8,943 | 8,155 | 6,367 | 7,339 | 15.3 | |||||||||||||||||||||||||||||||||||
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Refined products(2) | 5,068 | 5,323 | 3,899 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Refined products(2) | 3,899 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
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Total(3) | 12,565 | 13,164 | 11,486 | 8,943 | 8,155 | (8.8 | ) | 11,486 | 8,943 | 8,155 | 6,367 | 7,339 | 15.3 | |||||||||||||||||||||||||||||||||||
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Notes:Note: Numbers may not total due to rounding.
(1) | In 2010, petrochemical products were reorganized between the aromatics and derivatives chain and the “others” chain. In addition, a new chain, named petroleum derivatives, was created. In 2009, the aromatics and derivatives chain included the following products: heavy aromatics, aromina 100, benzene, styrene, ethyl benzene, fluxoil, amorphous gasoline, octane base gasoline, high octane hydrocarbon, orthoxylene, paraxylene, solcan, toluene and xylenes. However, in 2010, amorphous gasoline and octane base gasoline were moved from the aromatics and |
derivatives chain to the petroleum derivatives chain, which also consisted of |
(2) | Refined products produced at these plants consisted almost entirely of virgin stock, which is a residual by-product that results from the use of crude oil as the raw material in production in the aromatics chain. Beginning in 2010, Pemex-Petrochemicals replaced crude oil as the raw material in production of refined products with naphtha and natural gasoline, thereby eliminating virgin stock production. Accordingly, as of 2010,Pemex-Petrochemicals no longer produces any refined products. |
(3) | Figures include petrochemical products used as raw materials in the manufacturing of other petrochemical products. |
Source: Pemex BDI.
Investments
Pemex-Petrochemicals invested Ps. 2,4264,003 million on capital expenditures in 2011,2013, which was allocated among the following ongoing projects as follows: Ps. 941495 million for the modernization and expansion of the production capacity of the aromatics train (first phase) at the Cangrejera petrochemical complex, which involves the use of new technology in the conversion of naphthas to aromatics, such as the use of a continuous catalytic regeneration reactor; Ps. 110375 million for maintaining the production capacity and expandingof the storage and distribution capacity of ammoniaethylene plant at the CosoleacaqueCangrejera petrochemical complex; Ps. 86288 million for maintaining the production capacity of the ethane derivatives chain IV at the Morelos petrochemical complex; Ps. 208 million for the modernizationexpansion and expansion of production capacitymodernization of the ethane derivatives chain I at the Morelos petrochemical complex in order to increase production of ethylene oxide from 225 thousand tons per year to 360 thousand tons per year; Ps. 78163 million for maintaining the production capacity of the ethane derivatives chain II at the Morelos petrochemical complex; Ps. 98 million for maintaining the production capacity of the ethane derivatives train II at the Cangrejera petrochemical complex; Ps. 85 million for the modernization and optimization of auxiliary services infrastructure I at the Morelos petrochemical complex; Ps. 65 million for maintaining the production capacity, storage and distribution of ammonia and the refurbishing of auxiliary services equipment at the ammonia plant V at the Cosoleacaque petrochemical complex; Ps. 64 million for maintaining the production capacity of auxiliary services infrastructure I at the Pajaritos petrochemical complex; Ps. 51 million for refurbishing facilities to improve security at the Morelos petrochemical complex; Ps. 16 million for maintaining the production capacity of the aromatics train II at the Cangrejera petrochemical complex; and Ps. 2,095 million for other sustainability, safety, modernization, optimization and infrastructure projects.
Pemex-Petrochemicals’ 2014 budget includes Ps. 5,396 million in capital expenditures, of which Ps. 318 million has been allocated for the expansion and modernization of the production capacity of the ethane derivatives chain I at the Morelos petrochemical complex in order to increase production of ethylene oxide from 280 thousand tons per year to 360 thousand tons per year; Ps. 131 million for maintaining the production capacity of the ethane derivatives chain II at the Morelos petrochemical complex; Ps. 125 million for maintaining the production capacity of the ethylene plant at the Cangrejera petrochemical complex; Ps. 34 million for maintaining the production capacity of the ethane derivatives chain IV at the Morelos petrochemical complex; Ps. 7818 million for maintaining the production capacity, storage and distribution of the ethane derivatives chain IIammonia at the MorelosCosoleacaque petrochemical complex; Ps. 5010 million for maintaining the production capacity of the ethane derivatives chain IIaromatics train I at the Cangrejera petrochemical complex; Ps. 45 million for modernization and optimization of the auxiliary services infrastructure I at the Morelos petrochemical complex; Ps. 41 million for maintaining the production capacity of the auxiliary services infrastructure I at the Pajaritos petrochemical complex; Ps. 3010 million for maintaining the production capacity of the aromatics train II at the Cangrejera petrochemical complex; Ps. 1 million for rehabilitation ofrefurbishing facilities for physicalto improve security at the Morelos petrochemical complex; and Ps. 9664,749 million for other sustainability, safety, modernization, optimization and infrastructure projects.
Pemex-Petrochemicals’ 2012 budget includes Ps. 4,212 million in capital expenditures, of which Ps. 728 million has been allocated for the modernization and expansion of production capacity of the aromatics train (first phase) at the Cangrejera petrochemical complex, which involves new technology in the reforming of naphthas to aromatics using a continuous catalytic regeneration reactor; Ps. 440 million has been allocated for maintaining production capacity, storage and distribution of ammonia at the Cosoleacaque petrochemical complex; Ps. 395 million has been allocated for maintaining the production capacity of the ethane derivatives chain IV at the Morelos petrochemical complex; Ps. 240 million has been allocated for maintaining the production capacity of ethane derivatives chain II at the Morelos petrochemical complex; Ps. 157 million has been allocated for maintaining the production capacity of the ethylene plant at the Cangrejera petrochemical complex; Ps. 153 million has been allocated for maintaining the production capacity of the ethane derivatives chain II at the Cangrejera petrochemical complex; Ps. 152 million has been allocated for rehabilitation of facilities for physical security at the Morelos petrochemical complex; Ps. 142 million has been allocated for maintaining the production capacity of the auxiliary services infrastructure I at the Pajaritos petrochemical complex; Ps. 39 million has been allocated for maintaining production capacity of the aromatics train II at the Cangrejera petrochemical complex; Ps. 30 million has been allocated for the modernization and expansion of production capacity of the ethane derivatives chain I at Morelos petrochemical complex in order to increase production of ethylene oxide from 225 thousand tons per year to 360 thousand tons per year; and Ps. 1,736 million has been allocated for other modernization, optimization and infrastructure projects.
Domestic Sales
In 2011,2013, the value of the domestic sales of Pemex-Petrochemicals increaseddecreased by 15.9%4.5%, from Ps. 24,898.327,761.0 million in 20102012 to Ps. 28,853.526,525.3 million in 2011.2013. This decrease was primarily due to the low supply of products, which resulted from: the low availability of raw materials such as natural gas and ethane; the unscheduled shutdown of the styrene plant and the linear polyethylene and high density polyethylene plant; operational problems at the vinyl chloride plant; and the divestment of the vinyl chloride and ethylene plants at the Pajaritos petrochemical complex from Pemex-Petrochemicals to form a joint venture with Mexichem in September 2013, thereby leading to lower revenues from vinyl sales. In addition, the decrease in toluene and
methanol sales that resulted from, among other factors, competition with imported products, contributed to the decrease in the value of domestic sales. While Pemex-Petrochemical’s overall production levels increased in 2013, this increase was primarily due to higherthe increased production of aromatics, petroleum derivatives and other products, which did not generate a sufficient amount of sales to offset the overall decrease in the value of Pemex-Petrochemicals’ domestic sales in 2013.
During 2013, the impact of the low supply of products was partially offset by the fact that sales prices generally remained stable as compared to the sales prices of petrochemical products and a higher volume2012, with the exception of styrene and methanolthe sales as a resultprice of greater product availability and an increase in the domestic demand for linear low density polyethylene.ammonia.
Over the five years ended December 31, 2011,2013, the value of Pemex-Petrochemicals’ domestic sales was distributed as set forth in the table below.
Value of Domestic Sales of Pemex-Petrochemicals(1)
Year ended December 31, | 2011 vs. 2010 | Year ended December 31, | 2013 vs. 2012 | |||||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2009 | 2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||||||||||||||
(in millions of pesos)(2) | (%) | (in millions of pesos)(2) | (%) | |||||||||||||||||||||||||||||||||||||||||||||
Petrochemical Product | ||||||||||||||||||||||||||||||||||||||||||||||||
Ethane derivatives | Ps. 11,742.2 | Ps. 14,137.8 | Ps. 11,983.9 | Ps. 15,899.2 | Ps. 16,539.6 | 4.0 | ||||||||||||||||||||||||||||||||||||||||||
Ethane and derivatives | Ps. | 11,983.9 | Ps. | 15,814.8 | Ps. | 16,539.6 | Ps. | 16,945.1 | Ps. | 15,566.0 | (8.1 | ) | ||||||||||||||||||||||||||||||||||||
Aromatics and derivatives | 5,898.5 | 5,335.1 | 2,704.0 | 2,725.5 | 4,387.0 | 61.0 | 2,704.0 | 2,718.8 | 4,387.0 | 2,979.4 | 3,641.4 | 22.2 | ||||||||||||||||||||||||||||||||||||
Methane derivatives | 3,124.9 | 5,438.8 | 3,895.0 | 4,465.8 | 5,956.0 | 33.4 | ||||||||||||||||||||||||||||||||||||||||||
Methane and derivatives | 3,895.0 | 4,454.9 | 5,956.0 | 6,562.6 | 6,059.9 | (7.7 | ) | |||||||||||||||||||||||||||||||||||||||||
Propylene and derivatives | 346.8 | 386.6 | 400.5 | 1,441.3 | 1,467.1 | 1.8 | 400.5 | 1,384.4 | 1,467.1 | 1,134.8 | 1,212.1 | 6.8 | ||||||||||||||||||||||||||||||||||||
Others | 311.8 | 525.3 | 345.9 | 366.5 | 503.8 | 37.5 | 345.9 | 365.6 | 503.9 | 139.1 | 45.9 | (67.0 | ) | |||||||||||||||||||||||||||||||||||
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Total | Ps. 21,424.2 | Ps. 25,823.5 | Ps. 19,329.3 | Ps. 24,898.3 | Ps. 28,853.5 | 15.9 | Ps. | 19,329.3 | Ps. | 24,738.4 | Ps. | 28,853.7 | Ps. | 27,761.0 | Ps. | 26,525.3 | (4.5 | ) | ||||||||||||||||||||||||||||||
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Note: Numbers may not total due to rounding.
(1) | Excludes value added tax. |
(2) | Figures |
(3) | Includes naphtha gas. |
Source:Pemex BDI.
Joint Venture with Mexichem
In September 2013, Pemex-Petrochemicals entered into a joint venture with Mexichem through an investment in Petroquímica Mexicana de Vinilo, S.A. de C.V., (which we refer to as PMV), a Mexican entity incorporated by Mexichem in 2011. In connection with this joint venture, we increased our investment in PPQ Cadena Productiva, S.L. by Ps. 2,993.5 million, which allowed this subsidiary company to acquire a 44.09% interest in PMV, and the ethylene and vinyl chloride monomer plants and related infrastructure at the Pajaritos petrochemical complex were divested from Pemex-Petrochemicals and contributed to PMV. This contribution, together with Mexichem’s contribution of its chlorine-caustic soda plant, allowed for the integration of the caustic soda-salt-chlorine-ethylene-vinyl chloride monomer production chain, which has streamlined operations and is expected to reduce manufacturing costs. Plants associated with this project began operating on September 12, 2013. In October 2013, Pemex-Gas and Basic Petrochemicals began supplying ethane to PMV pursuant to a long-term supply contract approved by the Energy Regulatory Commission.
Acquisition of Fertilizer Production Facility
On January 16, 2014, our subsidiary company P.M.I. Norteamérica, S.A. de C.V. signed an agreement through one of its subsidiaries to purchase the existing assets of Agro Nitrogenados, S.A. de C.V., a subsidiary of Minera del Norte, S.A. de C.V., including a closed fertilizer production facility located in Pajaritos, Veracruz, Mexico, for the purchase price of U.S. $275 million. P.M.I. Norteamérica, S.A. de C.V. expects to renovate and, through a subsidiary, subsequently operate the production facility, which is expected to begin production in 2015 and to have an annual production capacity of up to 990,000 tons of urea.
International Trading
The PMI Group
The PMI Group conducts international commercial activities for our crude oil, refined and petrochemical products, except for natural gas, which is marketed directly by Pemex-Gas and Basic Petrochemicals. The PMI Group’s main objective isobjectives are to assist in maximizing our profitability and optimizing our operations through the use of international trade, facilitating our link with the international markets and pursuing new business opportunities in marketing our products. The PMI Group manages the international sales of our crude oil and petroleum products and acquires in the international markets those petroleum products that we import to satisfy domestic demand. Sales of crude oil are carried out through PMI. Sales and purchases of petroleum products in the international markets are carried out through P.M.I. Trading, Ltd., which also performs third-party trading, transportation and risk management activities.
Exports and Imports
PMI purchases crude oil from Pemex-Exploration and Production and then sells it to PMI’s customers. PMI sold an average of 1,337.91,188.8 thousand barrels per day of crude oil in 2011,2013, which represented 52.5%47.1% of our total crude oil production.
The following tables set forth the composition and average prices of our crude oil exports for the periods indicated.
Year ended December 31, | ||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | ||||||||||||||||||||||||||||||||||||
(tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | |||||||||||||||||||||||||||||||
Crude oil exports (by volume) | ||||||||||||||||||||||||||||||||||||||||
Olmeca (API gravity of 38°-39°) | 173 | 10 | 130 | 9 | 143 | 12 | 212 | 16 | 203 | 15 | ||||||||||||||||||||||||||||||
Isthmus (API gravity of 32°-33°) | 41 | 2 | 23 | 2 | 14 | 1 | 75 | 6 | 99 | 7 | ||||||||||||||||||||||||||||||
Maya (API gravity of 21°-22°) | 1,460 | 87 | 1,240 | 88 | 1,052 | 86 | 1,065 | 78 | 1,022 | 76 | ||||||||||||||||||||||||||||||
Altamira (API gravity of 15.0°-16.5°) | 13 | 1 | 11 | 1 | 13 | 1 | 9 | 1 | 14 | 1 | ||||||||||||||||||||||||||||||
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Total | 1,686 | 100 | 1,403 | 100 | 1,222 | 100 | 1,361 | 100 | 1,338 | 100 | ||||||||||||||||||||||||||||||
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Source: PMI operating statistics.
Year ended December 31, | ||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | ||||||||||||||||
(U.S. dollars per barrel) | ||||||||||||||||||||
Crude Oil Prices | ||||||||||||||||||||
Olmeca | U.S. $ | 70.89 | U.S. $ | 99.37 | U.S. $ | 65.79 | U.S. $ | 79.58 | U.S. $ | 109.83 | ||||||||||
Isthmus | 69.92 | 81.09 | 63.38 | 78.63 | 106.22 | |||||||||||||||
Maya | 60.38 | 82.92 | 56.22 | 70.65 | 98.81 | |||||||||||||||
Altamira | 53.71 | 79.69 | 53.50 | 68.80 | 96.63 | |||||||||||||||
Weighted average realized price | U.S. $ | 61.64 | U.S. $ | 84.38 | U.S. $ | 57.42 | U.S. $ | 72.46 | U.S. $ | 101.01 |
Year ended December 31, | ||||||||||||||||||||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||||||||||||||||||||||
(tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | |||||||||||||||||||||||||||||||
Crude oil exports (by volume) | ||||||||||||||||||||||||||||||||||||||||
Olmeca (API gravity of 38°-39°) | 143 | 12 | 212 | 16 | 203 | 15 | 194 | 15 | 99 | 8 | ||||||||||||||||||||||||||||||
Isthmus (API gravity of 32°-33°) | 14 | 1 | 75 | 6 | 99 | 7 | 99 | 8 | 103 | 9 | ||||||||||||||||||||||||||||||
Maya (API gravity of 21°-22°) | 1,052 | 86 | 1,065 | 78 | 1,022 | 76 | 944 | 75 | 968 | 81 | ||||||||||||||||||||||||||||||
Altamira (API gravity of15.0°-16.5°) | 13 | 1 | 9 | 1 | 14 | 1 | 19 | 2 | 20 | 2 | ||||||||||||||||||||||||||||||
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Total | 1,222 | 100 | 1,361 | 100 | 1,338 | 100 | 1,256 | 100 | 1,189 | 100 | ||||||||||||||||||||||||||||||
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Notes: Numbers may not total due to rounding.
tbpd = thousand barrels per day.
API gravity refers to the specific gravity or density of liquid petroleum products, measured in degrees on the American Petroleum Institute (API) scale. On the API scale, oil with the lowest specific gravity has the highest API gravity. In addition, holding all other factors constant, the higher the API gravity, the greater the value of the crude oil.
Source: PMI operating statistics as of February 15, 2012.January 10, 2014.
Year ended December 31, | ||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||
(U.S. dollars per barrel) | ||||||||||||||||||||
Crude Oil Prices | ||||||||||||||||||||
Olmeca | U.S. $ | 65.79 | U.S. $ | 79.58 | U.S. $ | 109.83 | U.S. $ | 109.38 | U.S. $ | 107.92 | ||||||||||
Isthmus | 63.38 | 78.63 | 106.22 | 107.25 | 104.76 | |||||||||||||||
Maya | 56.22 | 70.65 | 98.97 | 99.98 | 96.91 | |||||||||||||||
Altamira | 53.50 | 68.80 | 96.60 | 96.29 | 94.35 | |||||||||||||||
Weighted average realized price | U.S. $ | 57.42 | U.S. $ | 72.46 | U.S. $ | 101.13 | U.S. $ | 101.82 | U.S. $ | 98.46 |
Source: PMI operating statistics as of January 10, 2014.
Geographic Distribution of Export Sales
In 2011, 81.8%2013, 72.1% of PMI’s sales of our crude oil exports were to customers located in the United States. States, which represents a 4.1% decrease as compared to 2012. The decrease in our crude oil exports to the United States can be attributed mainly to a decrease in the availability of crude oil for export due to increased crude oil processing in our own refineries. During 2013, domestic production of light crude oil in the United States steadily rose, primarily as a result of shale discoveries and advances in technology that have made extraction of oil from shale rock commercially viable. However, this increase did not materially affect our exports because the majority of our exports are classified as heavy crude oil.
As of December 31, 2011,2013, PMI had 2326 customers in 11nine countries. Among these countries, the largest proportion of our exports has consistently been to customers in the United States, Spain, India, ChinaCanada and Canada.China. During 2014, in response to the developing trends in international demand for imported crude oil, we expanded the scope of our geographic distribution. In January 2014, PMI began exporting Olmeca crude oil to European countries, other than Spain, as part of a renewed strategy to diversify and strengthen the presence of Mexican crude oil in the international market.
The following table sets forth our crude oil export sales by country for the five years ended December 31, 2011.2013.
Crude Oil Exports by Country
Percentage of Exports | Percentage of Exports | |||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2009 | 2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||||||
United States | 80.2 | % | 81.3 | % | 86.8 | % | 83.8 | % | 81.8 | % | 86.8 | % | 83.8 | % | 81.8 | % | 76.2 | % | 72.1 | % | ||||||||||||||||||||
Spain | 7.4 | 8.8 | 6.6 | 8.9 | 8.3 | 6.6 | 8.9 | 8.3 | 13.2 | 14.4 | ||||||||||||||||||||||||||||||
Netherlands Antilles | 4.1 | 2.6 | — | — | — | |||||||||||||||||||||||||||||||||||
India | 2.1 | 2.5 | 2.5 | 1.7 | 2.8 | 2.5 | 1.7 | 2.8 | 6.0 | 8.2 | ||||||||||||||||||||||||||||||
Canada | 1.7 | 1.8 | 1.5 | 1.8 | 1.9 | |||||||||||||||||||||||||||||||||||
China | — | — | — | 1.9 | 2.7 | — | 1.9 | 2.7 | 0.8 | 1.6 | ||||||||||||||||||||||||||||||
Canada | 1.8 | 1.8 | 1.7 | 1.8 | 1.5 | |||||||||||||||||||||||||||||||||||
Others | 4.4 | 3.1 | 2.4 | 2.0 | 2.8 | 2.4 | 2.0 | 2.8 | 1.9 | 1.9 | ||||||||||||||||||||||||||||||
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Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.00 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||
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Note: Numbers may not total due to rounding.
Source: PMI operating statistics as of February 15, 2012.January 10, 2014.
The following table sets forth the geographic distribution of PMI’s sales of crude oil exports for the five years ended December 31, 2011.2013. The table also presents the distribution of exports among PMI’s crude oil types for those years.
Composition and Geographic Distribution of Crude Oil Export Sales
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2009 | 2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PMI Crude Oil Export Sales to: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
United States and Canada | 1,383 | 82 | 1,166 | 83 | 1,071 | 88 | 1,163 | 86 | 1,116 | 83 | 1,071 | 88 | 1,163 | 86 | 1,116 | 83 | 980 | 78 | 879 | 74 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Europe | 163 | 10 | 145 | 10 | 104 | 9 | 132 | 10 | 131 | 10 | 104 | 9 | 132 | 10 | 131 | 10 | 176 | 14 | 184 | 15 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Far East | 35 | 2 | 35 | 2 | 35 | 3 | 49 | 4 | 74 | 6 | 35 | 3 | 49 | 4 | 74 | 6 | 85 | 7 | 111 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Central and South America | 104 | 6 | 57 | 4 | 12 | 1 | 15 | 1 | 18 | 1 | 12 | 1 | 15 | 1 | 18 | 1 | 14 | 1 | 15 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Total | 1,686 | 100 | 1,403 | 100 | 1,222 | 100 | 1,361 | 100 | 1,338 | 100 | 1,222 | 100 | 1,361 | 100 | 1,338 | 100 | 1,256 | 100 | 1,189 | 100 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Olmeca (API gravity of 38°-39°) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
United States and Canada | 160 | 9 | 115 | 8 | 136 | 11 | 200 | 15 | 192 | 14 | 136 | 11 | 200 | 15 | 192 | 14 | 184 | 15 | 90 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Others | 13 | 1 | 14 | 1 | 7 | 1 | 12 | 1 | 11 | 1 | 7 | 1 | 12 | 1 | 11 | 1 | 9 | 1 | 8 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Total | 173 | 10 | 130 | 9 | 143 | 12 | 212 | 16 | 203 | 15 | 143 | 12 | 212 | 16 | 203 | 15 | 194 | 15 | 99 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Isthmus (API gravity of 32°-33°) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
United States and Canada | 16 | 1 | 12 | 1 | 8 | 1 | 53 | 4 | 80 | 6 | 8 | 1 | 53 | 4 | 80 | 6 | 58 | 5 | 62 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Others | 25 | 2 | 11 | 1 | 7 | — | 22 | 2 | 20 | 1 | 7 | — | 22 | 2 | 20 | 1 | 41 | 3 | 41 | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Total | 41 | 2 | 23 | 2 | 14 | 1 | 75 | 6 | 100 | 7 | 14 | 1 | 75 | 6 | 100 | 7 | 99 | 8 | 103 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Maya (API gravity of 21°-22°) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
United States and Canada | 1,195 | 71 | 1,028 | 73 | 917 | 75 | 903 | 66 | 830 | 62 | 917 | 75 | 903 | 66 | 830 | 62 | 719 | 57 | 707 | 60 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Others | 265 | 16 | 212 | 15 | 135 | 11 | 162 | 12 | 192 | 14 | 135 | 11 | 162 | 12 | 192 | 14 | 224 | 18 | 260 | 22 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Total | 1,460 | 87 | 1,240 | 88 | 1,052 | 86 | 1,065 | 78 | 1,022 | 76 | 1,052 | 86 | 1,065 | 78 | 1,022 | 76 | 944 | 75 | 968 | 81 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Altamira (API gravity of 15.0°-16.5°) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
United States and Canada | 13 | 1 | 11 | 1 | 11 | 1 | 9 | 1 | 14 | 1 | 11 | 1 | 9 | 1 | 14 | 1 | 18 | 1 | 20 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Others | — | — | — | — | 2 | — | — | — | — | — | 2 | — | — | — | — | — | 1 | 1 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Total | 13 | 1 | 11 | 1 | 13 | 1 | 9 | 1 | 14 | 1 | 13 | 1 | 9 | 1 | 14 | 1 | 19 | 2 | 20 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Notes: Numbers may not total due to rounding. tbpd = thousand barrels per day. API gravity refers to the specific gravity or density of liquid petroleum products, measured in degrees on the API scale. On the API scale, oil with the lowest specific gravity has the highest API gravity. In addition, holding all other factors constant, the higher the API gravity, the greater the value of the crude oil.
| ||
Source: PMI operating statistics as of February 15, 2012.January 10, 2014.
PMI sells a significant percentage of its crude oil under evergreen contracts, which can be terminated by either party pursuant to a three month phase-out clause. In addition, PMI enters into agreements with various international customers, including those located in the United States, Europe, India, China and Japan. PMI’s crude oil exports are sold on aFree On Board (FOB) basis.
Beginning in 1998, PMI entered into several long-term Maya crude oil supply agreements pursuant to which the purchasers agreed to undertake projects to expand the capacity of their respective refineries in order to upgrade residue from Maya crude oil. Under these agreements, PMI provided purchasers with certain support mechanisms that would protect, in certain adverse market conditions, the purchasers’ investments. In addition,
these long-term Maya crude oil supply agreements promotepromoted our strategy of increasing the export value of
Mexican heavy crude oil in relation to the value of other grades of oil by creating incentives for refiners to invest in new high-conversion refineries, which are capable of upgrading a significant proportion of the residue produced from processing Maya and Altamira crude oils.
UponThese support mechanisms ceased upon the expiration of these long-term Maya crude oil supply agreements, which occurred between July 2005 and inMarch 2009. In order to continue taking advantage of the created high-conversion capacity, the commercial relationships have continued under evergreen contracts that do not contain support mechanisms.
As of the date of this report, there are only threetwo long-term heavy crude oil supply agreements that are still in force (none of which stillcurrently has an effective support mechanism):
An agreement executed on May 1, 1999, among PMI, Pecten Trading Company, which is a trading subsidiary of Shell Oil Company, and P.M.I. Norteamérica, S.A. de C.V., to supply the Deer Park refinery joint venture with a total of approximately 200 thousand barrels per day of Maya crude oil, 50 thousand barrels of which were under the support mechanism for such agreement for a period of seven years following project completion, which occurred in April 2001. Effective May 2008, this agreement was amended to reduce the supply to approximately 170 thousand barrels per day of Maya crude oil from May 2008 (when the support mechanism ended) to March 2023 (when the agreement expires). In addition, PMI has agreed to supply additional volume depending on the availability of Maya crude oil. The additional volume is revised every two years. On January 1, 2012,Accordingly, PMI agreed to provideprovided an additional 30 thousand barrels per day of Maya crude oil and, accordingly, the total volume to be supplied from January 1, 2012 through December 31, 2013, is equalincreasing the total volume supplied during this period to 200 thousand barrels per day.
An agreement executed on December 19, 2005, with Hunt Crude Oil Supply Company, to supply its refinery in Tuscaloosa, Alabama with approximately 14 thousand barrels per day of Altamira crude oil for a period of five years following project completion, which occurred in June 2007. This agreement has been amended to extend the term until March 31, 2013.
An agreement executed on OctoberMay 1, 2008,2012, with Chevron Products Company, a division of Chevron U.S.A. Inc., to supply its refinery in Pascagoula, Mississippi with approximately 14595 thousand barrels per day of Maya crude oil for a period of three years, with an option to extend this agreement for an additional year subject to the express agreement of both parties. The term of this agreement will expire on April 30, 2012, and we expect to execute a new agreement shortly thereafter that will supply the refinery with 95 thousand barrels per day of Maya crude oil for a period of three years.
We expect to fulfill the majority of these supply commitments with both proved developed and proved undeveloped reserves.
In total, we exported 1.189 million barrels of crude oil per day in 2013. In 2014, we expect to export approximately 1.2 million barrels of crude oil per day.
The following table sets forth the average volume of our exports and imports of crude oil, natural gas and petroleum products for the five years ended December 31, 2011.2013.
Volume of Exports and Imports
Year ended December 31, | 2011 vs. 2010 | Year ended December 31, | 2013 vs. 2012 | |||||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2009 | 2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||||||||||||||
(in thousands of barrels per day, except as noted) | (%) | (in thousands of barrels per day, except as noted) | (%) | |||||||||||||||||||||||||||||||||||||||||||||
Exports | ||||||||||||||||||||||||||||||||||||||||||||||||
Crude Oil: | ||||||||||||||||||||||||||||||||||||||||||||||||
Olmeca | 172.7 | 129.6 | 143.5 | 211.7 | 202.9 | (4.2 | ) | 143.5 | 211.7 | 202.9 | 193.7 | 98.6 | (49.1 | ) | ||||||||||||||||||||||||||||||||||
Isthmus | 41.1 | 23.0 | 14.2 | 74.9 | 99.3 | 32.6 | 14.2 | 74.9 | 99.3 | 99.4 | 102.7 | 3.3 | ||||||||||||||||||||||||||||||||||||
Altamira | 12.7 | 10.6 | 12.5 | 8.6 | 14.1 | 64.0 | 12.5 | 8.6 | 14.0 | 18.8 | 19.9 | 5.9 | ||||||||||||||||||||||||||||||||||||
Maya | 1,459.6 | 1,240.0 | 1,052.0 | 1,065.3 | 1,021.7 | (4.1 | ) | 1,052.0 | 1,065.3 | 1,021.6 | 943.7 | 967.6 | 2.5 | |||||||||||||||||||||||||||||||||||
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Total crude oil | 1,686.1 | 1,403.4 | 1,222.1 | 1,360.5 | 1,337.9 | (1.7 | ) | 1,222.1 | 1,360.5 | 1,337.8 | 1,255.5 | 1,188.8 | (5.3 | ) | ||||||||||||||||||||||||||||||||||
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Natural gas(1) | 138.7 | 107.4 | 66.5 | 19.3 | 1.3 | (93.3 | ) | 66.5 | 19.3 | 1.3 | 0.9 | 3.1 | 244.4 | |||||||||||||||||||||||||||||||||||
Petroleum products | 176.9 | 184.1 | 244.8 | 194.5 | 176.6 | (9.2 | ) | 244.8 | 194.5 | 175.9 | 152.6 | 164.5 | 7.8 | |||||||||||||||||||||||||||||||||||
Petrochemical products(2)(3) | 746.0 | 539.6 | 779.4 | 697.6 | 442.9 | (36.5 | ) | 779.4 | 697.6 | 442.9 | 1,344.7 | 1,336.9 | (0.6 | ) | ||||||||||||||||||||||||||||||||||
Imports | ||||||||||||||||||||||||||||||||||||||||||||||||
Natural gas: | ||||||||||||||||||||||||||||||||||||||||||||||||
Natural gas(1) | 385.6 | 447.1 | 422.0 | 535.8 | 790.8 | 47.6 | 422.0 | 535.8 | 790.8 | 1,089.3 | 1,175.4 | 7.9 | ||||||||||||||||||||||||||||||||||||
Liquefied natural gas(1)(4) | — | — | — | — | 114.3 | — | ||||||||||||||||||||||||||||||||||||||||||
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Total natural gas | 422.0 | 535.8 | 790.8 | 1,089.3 | 1,289.7 | 18.4 | ||||||||||||||||||||||||||||||||||||||||||
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Petroleum products | 494.0 | 548.2 | 506.4 | 627.9 | 632.6 | 0.7 | 506.4 | 627.9 | 631.9 | 570.9 | 516.2 | (9.6 | ) | |||||||||||||||||||||||||||||||||||
Petrochemical products(2)(4) | 425.1 | 439.8 | 568.3 | 394.9 | 225.0 | (43.0 | ) | |||||||||||||||||||||||||||||||||||||||||
Petrochemical products(2)(5) | 568.3 | 394.9 | 224.9 | 445.1 | 287.8 | (35.3 | ) |
Note: | Numbers subject to adjustment because crude oil exports may be adjusted to reflect the percentage of water in each shipment. |
(1) | Numbers expressed in millions of cubic feet per day. |
(2) | Thousands of metric tons. |
(3) | Includes propylene. |
(4) | In 2013, we began importing liquefied natural gas through Manzanillo. |
(5) | Includes isobutane, butane and N-butane. |
Source: PMI operating statistics as of February 15, 2012, and Pemex-Gas and Basic Petrochemicals.
Source: | PMI operating statistics as of January 10, 2014, and Pemex-Gas and Basic Petrochemicals. |
Crude oil exports decreased by 1.7%5.3% in 2011,2013, from 1,360.51,255.5 thousand barrels per day in 20102012 to 1,337.91,188.8 thousand barrels per day in 2011,2013, mainly due to a 1.0% decrease in crude oil production.production and a decrease in the availability of crude oil for export due to increased crude oil processing in our own refineries.
Natural gas imports increased by 47.6%18.4% in 2011,2013, from 535.81,089.3 million cubic feet per day in 20102012 to 790.81,289.7 million cubic feet per day in 2011, due to increased domestic consumption2013, which includes imports of dryliquefied natural gas whichthrough Manzanillo. The lower availability of wet gas and natural gas from Pemex-Exploration and Production’s fields made it necessary to increase natural gas imports. We exported 1.33.1 million cubic feet per day of natural gas in 2011, a decrease2013, an increase of 93.3%244.4% as compared to natural gas exports in 20102012 of 19.30.9 million cubic feet per day, mainly due to higher compression of the decrease in production in Mexico and increased domestic demand for natural gas.gas pipeline.
In 2011,2013, exports of petroleum products increased by 7.8%, from 152.6 thousand barrels per day in 2012 to 164.5 thousand barrels per day in 2013, due to increased sales of fuel oil and cutter stock. Imports of petroleum products decreased by 9.2%,9.6% in 2013, from 194.5570.9 thousand barrels per day in 20102012 to 176.6516.2 thousand barrels per day in 2011,2013, due to decreased sales of fuel oil, cutter stock and diesel. Imports of petroleum products increased by 0.7% in 2011, from 627.9 thousand barrels per day in 2010 to 632.6 thousand barrels per day in 2011, due to increased domestic demand for ultra-low sulfurregular gasoline, diesel, fuel oil and fuel oil.liquid petroleum products. As of January 2007, clean fuels specifications for gasoline and diesel for transportation were established in Mexico. Since that time, imports of ultra-low sulfur diesel and ultra-low sulfur premium gasoline have been required to meet domestic demand.
During 2012,2014, imports of petroleum products, specifically gasoline, aviation gasoline, low and ultra-low sulfur diesel and low-sulfur fuel oil, are expected to continue to decrease because the Minatitlán refinery began operating a coker unit in January 2012, which transforms residual heavy oil by-products into high-quality gasolines and
diesel. As a result, we also expect exports of most petroleum products to decrease during 2012,2014, since the coker unit will reducereduces the amount of residual products such as fuel oil available for export.
P.M.I. Trading, Ltd. sells refined and petrochemical products on anFOB,Delivered Ex-ship andCost and Freight basis and buys refined and petrochemical products on anFOB,Cost and Freight andDeliveredEx-ship orDelivery at Frontier basis.
The following table sets forth the value of exports and imports of crude oil, natural gas and petroleum products for the five years ended December 31, 2011.2013.
Value of Exports and Imports(1)
Year ended December 31, | 2011 vs. 2010 | Year ended December 31, | 2013 vs. 2012 | |||||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2009 | 2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||||||||||||||
(in millions of U.S. dollars) | (%) | (in millions of U.S. dollars) | (%) | |||||||||||||||||||||||||||||||||||||||||||||
Exports | ||||||||||||||||||||||||||||||||||||||||||||||||
Olmeca | U.S. $ | 4,469.1 | U.S. $ | 4,712.2 | U.S. $ | 3,444.8 | U.S. $ | 6,149.2 | U.S. $ | 8,132.6 | 32.3 | U.S. $ | 3,444.8 | U.S. $ | 6,149.2 | U.S. $ | 8,133.0 | U.S. $ | 7,753.7 | U.S. $ | 3,883.9 | (49.9 | ) | |||||||||||||||||||||||||
Isthmus | 1,049.9 | 683.1 | 327.4 | 2,148.9 | 3,849.9 | 79.2 | 327.4 | 2,148.9 | 3,849.1 | 3,904.4 | 3,928.1 | 0.6 | ||||||||||||||||||||||||||||||||||||
Altamira | 248.7 | 309.2 | 244.3 | 216.3 | 497.0 | 129.8 | 244.3 | 216.3 | 492.7 | 661.6 | 683.7 | 3.3 | ||||||||||||||||||||||||||||||||||||
Maya | 32,169.9 | 37,637.1 | 21,588.9 | 27,471.1 | 36,846.0 | 34.1 | 21,588.9 | 27,471.1 | 36,904.9 | 34,466.5 | 34,227.4 | (0.7 | ) | |||||||||||||||||||||||||||||||||||
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Total crude oil(2) | U.S. $ | 37,937.5 | U.S. $ | 43,341.5 | U.S. $ | 25,605.4 | U.S. $ | 35,985.4 | U.S. $ | 49,325.5 | 37.1 | U.S. $ | 25,605.4 | U.S. $ | 35,985.4 | U.S. $ | 49,379.6 | U.S. $ | 46,786.2 | U.S. $ | 42,723.2 | (8.7 | ) | |||||||||||||||||||||||||
Natural gas | 350.5 | 316.3 | 103.5 | 31.9 | 1.6 | (95.0 | ) | 103.5 | 31.9 | 1.6 | 0.6 | 2.8 | 366.7 | |||||||||||||||||||||||||||||||||||
Petroleum products | 4,116.6 | 5,706.6 | 4,891.8 | 5,133.3 | 6,304.4 | 22.8 | 4,891.8 | 5,133.3 | 6,277.5 | 5,538.0 | 5,817.2 | 5.0 | ||||||||||||||||||||||||||||||||||||
Petrochemical products | 297.1 | 384.1 | 175.7 | 272.1 | 298.6 | 9.7 | 175.7 | 272.1 | 298.6 | 362.9 | 234.0 | (35.5 | ) | |||||||||||||||||||||||||||||||||||
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Total natural gas and products | U.S. $ | 4,764.2 | U.S. $ | 6,407.0 | U.S. $ | 5,171.0 | U.S. $ | 5,437.3 | U.S. $ | 6,604.6 | 21.5 | U.S. $ | 5,171.0 | U.S. $ | 5,437.3 | U.S. $ | 6, 577.7 | U.S. $ | 5,901.5 | U.S. $ | 6,054.0 | 2.6 | ||||||||||||||||||||||||||
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Total exports | U.S. $ | 42,701.7 | U.S. $ | 49,748.5 | U.S. $ | 30,776.4 | U.S. $ | 41,422.7 | U.S. $ | 55,930.1 | 35.0 | U.S. $ | 30,776.4 | U.S. $ | 41,422.7 | U.S. $ | 55,957.3 | U.S. $ | 52,687.7 | U.S. $ | 48,777.2 | (7.4 | ) | |||||||||||||||||||||||||
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Imports | ||||||||||||||||||||||||||||||||||||||||||||||||
Natural gas | U.S. $ | 995.7 | U.S. $ | 1,423.6 | U.S. $ | 632.8 | U.S. $ | 939.2 | U.S. $ | 1,272.2 | 35.5 | U.S. $ | 632.8 | U.S. $ | 939.2 | U.S. $ | 1,272.2 | U.S. $ | 1,216.2 | U.S. $ | 1,728.7 | 42.1 | ||||||||||||||||||||||||||
Liquefied natural gas(3) | — | — | — | — | 766.6 | — | ||||||||||||||||||||||||||||||||||||||||||
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Total natural gas | U.S. $ | 632.8 | U.S. $ | 939.2 | U.S. $ | 1,272.2 | U.S. $ | 1,216.2 | U.S. $ | 2,495.3 | 105.2 | |||||||||||||||||||||||||||||||||||||
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Petroleum products | 15,700.0 | 21,882.5 | 12,884.9 | 20,317.3 | 28,036.5 | 38.0 | 12,884.9 | 20,317.3 | 28,019.1 | 27,272.4 | 23,916.8 | (12.3 | ) | |||||||||||||||||||||||||||||||||||
Petrochemical products | 278.9 | 350.5 | 301.4 | 302.5 | 278.1 | (8.1 | ) | 301.4 | 302.5 | 277.5 | 526.9 | 322.3 | (38.8 | ) | ||||||||||||||||||||||||||||||||||
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Total imports | U.S. $ | 16,974.6 | U.S. $ | 23,656.6 | U.S. $ | 13,819.0 | U.S. $ | 21,559.0 | U.S. $ | 29,586.8 | 37.2 | U.S. $ | 13,819.0 | U.S. $ | 21,559.0 | U.S. $ | 29,568.9 | U.S. $ | 29,015.4 | U.S. $ | 26,734.4 | (7.9 | ) | |||||||||||||||||||||||||
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Net exports | U.S. $ | 25,727.1 | U.S. $ | 26,091.9 | U.S. $ | 16,957.4 | U.S. $ | 19,863.7 | U.S. $ | 26,343.3 | 32.6 | U.S. $ | 16,957.4 | U.S. $ | 19,863.7 | U.S. $ | 26,388.5 | U.S. $ | 23,672.3 | U.S. $ | 22,042.8 | (6.9 | ) | |||||||||||||||||||||||||
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Note: Numbers may not total due to rounding.
(1) | Does not include crude oil, refined products and petrochemicals purchased by P.M.I. Trading, Ltd. or P.M.I. Norteamérica, S.A. de C.V. from third parties outside of Mexico and resold in the international markets. The figures expressed in this table differ from the amounts contained under the line item “Net Sales” in our financial statements because of differences in methodology associated with the calculation of the exchange rates and other minor adjustments. |
(2) | Crude oil exports are subject to adjustment to reflect the percentage of water in each shipment. |
Source: PMI operating statistics as of January 10, 2014, which are based on information in bills of lading, and Pemex-Gas and Basic Petrochemicals.
Imports of natural gas increased in value by 35.5%105.2% during 2011,2013, mainly as a result of increased domestic consumption of drydemand for natural gas which was only partially offset by lowerand higher natural gas prices.
The following table describes the composition of our exports and imports of selected refined products in 2009, 20102011, 2012 and 2011.2013.
Exports and Imports of Selected Petroleum Products
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2009 | 2010 | 2011 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||||||||||||||||||
(tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | |||||||||||||||||||||||||||||||||||||
Exports | ||||||||||||||||||||||||||||||||||||||||||||||||
Gasoline | 71.3 | 29.1 | 67.9 | 34.9 | 74.8 | 42.4 | 74.1 | 42.0 | 76.8 | 50.3 | 71.8 | 43.6 | ||||||||||||||||||||||||||||||||||||
Diesel | 4.8 | 2.0 | 0.4 | 0.2 | 0.0 | 0.0 | ||||||||||||||||||||||||||||||||||||||||||
Liquefied petroleum gas(2) | 1.1 | 0.4 | 0.1 | 0.1 | 1.0 | 0.6 | 1.5 | 0.9 | 0.1 | 0.1 | 0.2 | 0.1 | ||||||||||||||||||||||||||||||||||||
Jet fuel | 4.2 | 1.7 | 1.3 | 0.7 | 1.8 | 1.0 | 1.8 | 1.0 | 0.0 | 0.0 | 1.2 | 0.7 | ||||||||||||||||||||||||||||||||||||
Fuel oil | 122.3 | 50.0 | 124.0 | 63.8 | 95.6 | 54.1 | 95.6 | 54.2 | 73.2 | 48.0 | 82.9 | 50.3 | ||||||||||||||||||||||||||||||||||||
Others | 41.2 | 16.8 | 0.7 | 0.4 | 3.4 | 1.9 | 3.4 | 1.9 | 2.5 | 1.6 | 8.6 | 5.2 | ||||||||||||||||||||||||||||||||||||
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Total | 244.8 | 100.0 | % | 194.5 | 100.0 | % | 176.6 | 100.0 | % | 176.4 | 100.0 | % | 152.6 | 100.0 | % | 164.7 | 100.0 | % | ||||||||||||||||||||||||||||||
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Imports | ||||||||||||||||||||||||||||||||||||||||||||||||
Gasoline(1) | 327.6 | 64.7 | 414.8 | 66.1 | 430.0 | 68.0 | ||||||||||||||||||||||||||||||||||||||||||
Gasoline(3) | 430.0 | 63.7 | 390.7 | 59.7 | 370.4 | 62.2 | ||||||||||||||||||||||||||||||||||||||||||
Fuel oil | 38.7 | 7.6 | 12.5 | 2.0 | 25.0 | 4.0 | 25.0 | 3.7 | 41.4 | 6.3 | 34.1 | 5.7 | ||||||||||||||||||||||||||||||||||||
Liquefied petroleum gas(2) | 80.2 | 15.8 | 78.7 | 12.5 | 39.7 | 6.3 | 82.4 | 12.2 | 85.6 | 13.1 | 79.5 | 13.3 | ||||||||||||||||||||||||||||||||||||
Diesel | 47.8 | 9.4 | 106.5 | 17.0 | 136.2 | 21.5 | 135.6 | 20.1 | 133.4 | 20.4 | 108.0 | 18.1 | ||||||||||||||||||||||||||||||||||||
Others | 12.1 | 2.4 | 15.5 | 2.5 | 1.6 | 0.2 | 1.6 | 0.2 | 3.7 | 0.6 | 3.7 | 0.6 | ||||||||||||||||||||||||||||||||||||
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Total | 506.4 | 100.0 | % | 627.9 | 100.0 | % | 632.6 | 100.0 | % | 674.6 | 100.0 | % | 654.8 | 100.0 | % | 595.7 | 100.0 | % | ||||||||||||||||||||||||||||||
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Notes: | Numbers may not total due to rounding. tbpd = thousand barrels per day. |
(1) | Includes gasoline and blendstock. |
(2) | Includes butanes. |
(3) | Includes methyl tert-butyl ether (MTBE), naphtha and pentanes. |
Source: PMI operating statistics as of January 10, 2014, based on INCOTERMS (International Commercial Terms).
Exports of petroleum products increased in value by 5.0% in 2013, due to increased sales of fuel oil. In 2013, imports of petroleum products decreased both in value, by 12.3%, and in volume, by 9.6%. These decreases were due to decreased domestic demand for regular gasoline, which resulted from the national refining system’s increased production of this type of gasoline as compared to previous years. Our net imports of petroleum products for 2013 totaled U.S. $18,099.6 million, which represents a decrease from our net imports of petroleum products of U.S. $21,734.4 million in 2012.
For the three years ended December 31, 2013, our exports and imports of selected petrochemicals were as follows:
Exports and Imports of Selected Petrochemicals
Year ended December 31, | ||||||||||||||||||||||||
2011 | 2012 | 2013 | ||||||||||||||||||||||
(tmt) | (%) | (tmt) | (%) | (tmt) | (%) | |||||||||||||||||||
Exports | ||||||||||||||||||||||||
Sulfur | 268.5 | 60.6 | 401.0 | 29.8 | 473.7 | 35.4 | ||||||||||||||||||
Ammonia | 31.0 | 7.0 | 105.8 | 7.9 | 39.0 | 2.9 | ||||||||||||||||||
Ethylene | 8.9 | 2.0 | 50.9 | 3.8 | 6.1 | 0.5 | ||||||||||||||||||
Polyethylenes | 71.9 | 16.2 | 42.7 | 3.2 | 29.8 | 2.2 | ||||||||||||||||||
Others | 62.6 | 14.1 | 744.3 | 55.4 | 788.4 | 59.0 | ||||||||||||||||||
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Total | 442.9 | 100.0 | % | 1,344.7 | 100.0 | % | 1,336.9 | 100.0 | % | |||||||||||||||
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Imports | ||||||||||||||||||||||||
Isobutane-butane-hexane-1 | 106.3 | 47.2 | 228.2 | 51.3 | 199.7 | 69.4 | ||||||||||||||||||
Methanol | 54.1 | 24.0 | 45.6 | 10.2 | 35.1 | 12.2 | ||||||||||||||||||
Xylenes | 6.3 | 2.8 | 66.0 | 14.8 | 18.0 | 6.3 | ||||||||||||||||||
Toluene | 0.0 | 0.0 | 61.5 | 13.8 | 8.4 | 2.9 | ||||||||||||||||||
Propylene | 31.3 | 13.9 | 6.9 | 1.6 | 0.0 | 0.0 | ||||||||||||||||||
Others | 27.0 | 12.0 | 36.8 | 8.3 | 26.6 | 9.3 | ||||||||||||||||||
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Total | 225.0 | 100.0 | % | 445.1 | 100.0 | % | 287.8 | 100.0 | % | |||||||||||||||
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Notes: | Numbers may not total due to rounding. |
tbpdtmt = thousand barrels per day.metric tons.
Exports include propylene. Imports include isobutane, butane and N-butane.
Source: PMI operating statistics as of February 15, 2012, based on INCOTERMS (International Commercial Terms).
Exports of petroleum products increased in value by 22.8% in 2011, in line with higher prices of these products in the international market. In 2011, imports of petroleum products increased both in value, by 38.0%, and in volume, by 0.7%. These increases were due to growing demand for ultra-low sulfur gasoline and diesel. Production from the national refining system decreased slightly with respect to previous years, leading to increased demand for imported products. Our net imports of petroleum products for 2011 totaled U.S. $21,732.1 million, a 43.1% increase from our net imports of petroleum products of U.S. $15,184.0 million in 2010.
For the three years ended December 31, 2011, our exports and imports of selected petrochemicals were as follows.
Exports and Imports of Selected Petrochemicals
Year ended December 31, | ||||||||||||||||||||||||
2009 | 2010 | 2011 | ||||||||||||||||||||||
(tmt) | (%) | (tmt) | (%) | (tmt) | (%) | |||||||||||||||||||
Exports | ||||||||||||||||||||||||
Sulfur | 570.0 | 73.1 | 436.4 | 62.6 | 268.5 | 60.6 | ||||||||||||||||||
Ammonia | — | — | 99.0 | 14.2 | 31.0 | 7.0 | ||||||||||||||||||
Ethylene | 96.9 | 12.4 | 18.5 | 2.7 | 8.9 | 2.0 | ||||||||||||||||||
Polyethylenes | 72.2 | 9.3 | 44.7 | 6.4 | 71.9 | 16.2 | ||||||||||||||||||
Others | 40.3 | 5.2 | 98.9 | 14.2 | 62.6 | 14.1 | ||||||||||||||||||
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Total | 779.4 | 100.0 | % | 697.6 | 100.0 | % | 442.9 | 100.0 | % | |||||||||||||||
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Imports | ||||||||||||||||||||||||
Isobutane-butane-hexane-1 | 166.6 | 29.3 | 103.9 | 26.3 | 106.3 | 47.2 | ||||||||||||||||||
Methanol | 185.2 | 32.6 | 157.6 | 39.9 | 54.1 | 24.0 | ||||||||||||||||||
Ammonia | 107.7 | 19.0 | 63.8 | 16.2 | 0.0 | 0.0 | ||||||||||||||||||
Xylenes | 31.8 | 5.6 | 0.0 | 0.0 | 6.3 | 2.8 | ||||||||||||||||||
Toluene | 42.1 | 7.4 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||||||||||||
Proplylene | 0.0 | 0.0 | 39.4 | 10.0 | 31.3 | 13.9 | ||||||||||||||||||
Others | 34.9 | 6.1 | 30.2 | 7.6 | 27.0 | 12.0 | ||||||||||||||||||
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Total | 568.3 | 100.0 | % | 394.9 | 100.0 | % | 225.0 | 100.0 | % | |||||||||||||||
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Source: PMI operating statistics as of February 15, 2012,January 10, 2014, based on INCOTERMS.
In 2011,2013, our exports of petrochemical products decreasedremained relatively constant, decreasing by 36.5%0.6%, from 697.61,344.7 thousand metric tons in 20102012 to 442.91,336.9 thousand metric tons in 2011, while2013. Our imports of petrochemical products also decreased by 43.0%35.3%, from 394.9445.1 thousand metric tons in 20102012 to 225.0287.8 thousand metric tons in 2011.2013. Petrochemical exports decreased in 20112013 due to lower sales of ethylene, ammonia and sulfur.polyethylenes. Imports of petrochemical products also decreased in 2011,2013, due to lower demand for methanoltoluene and propylene.xylenes.
Hedging Operations
P.M.I. Trading, Ltd. engages in hedging operations to cover its price exposure in the trading of petroleum products, as well as to protect the revenues of other companies within the PMI Group and to ensure the fulfillment of contractual obligations. The internal policies and procedures of P.M.I. Trading, Ltd. establish a limitlimits on the maximum capital at risk.risk and on the daily and accumulated annual loss for each business unit. Capital at risk is calculated daily in order to compare the actual figures with the aforementioned limit. Internal controls include a risk comptroller responsible for ensuring compliance, an internal auditing departmentsegregation of duties, position tracking by key personnel, regular stress testing and a risk management committee.subcommittee. See “Item 11—Quantitative and Qualitative Disclosures about Market Risk—Hydrocarbon Price Risk.”
Transportation and Distribution
During 2013, we transported approximately 4,831 million cubic feet of natural gas per day, 287 thousand barrels of LPG per day and 3,500 thousand barrels of crude oil per day to be processed in our refining system and to satisfy domestic demand for petroleum products, as compared to 4,859 million cubic feet of natural gas per
day, 180 thousand barrels of LPG per day and 3,025 thousand barrels of crude oil per day transported in 2012. Of the total amount we transported in 2013, we carried 82% through pipelines, 9% by vessels and the remaining 9% by train tank cars as well as tank trucks.
Our pipelines connect crude oil and natural gas producing centers with refineries and petrochemical plants, and our refineries and petrochemical plants with Mexico’s major cities. At the end of 2011,2013, our pipeline network measured approximately 67,54563,636 kilometers in length. Of these pipelines, 54,19750,542 kilometers are currently operational and 13,34813,094 kilometers are out of operation. Most of the pipelinesPipelines out of operation are classified as
being in “stand-by” status, which occurs when there is a decline in production in a field where the pipeline is located or when transportation service is irregular, making operation of the pipeline unprofitable. Once production is restored in such field, we change the status of the pipelines back to “operational.” Approximately 7,9567,181 kilometers of the pipelines currently in operation transport crude oil, 8,3508,496 kilometers transport petroleum products and petrochemicals, 11,29611,152 kilometers transport natural gas, 1,8111,538 kilometers transport LPG, 2,2211,253 kilometers transport basic and secondary petrochemicals, 6,636 kilometers are crude oil and natural gas gathering pipelines, 14,81219,327 kilometers are production lines (discharge lines) and 1,1151,595 kilometers correspond to other services, including aqueducts.oil and gas pipelines. Ownership of the pipelines is distributed among the subsidiary entities according to the products they transport.
Petróleos Mexicanos has been working to implement a pipeline integrity management plan, which is based on the guidelines of American Petroleum Institute (API)API Standard 1160, “Managing System Integrity for Hazardous Liquid Pipelines,” the American Society of Mechanical Engineers (ASME) B31.8S, “Managing System Integrity of Gas Pipelines” and theNorma Oficial de México(Official Mexican Standard)NOM-027-SESH-2010, “Integrity Management of Hydrocarbons Collection and Transportation Pipelines” (which we refer to asNOM-027).
The pipeline integrity management plan consists of the following stages:
collection of detailed records and the development of a pipeline database;
categorization and identification of threats that could affect pipeline integrity, safety and operation;
identification of critical points in the pipeline;
risk assessment and evaluation of pipeline integrity;
maintenance and risk-mitigation planning; and
ongoing monitoring during all stages.
We have made considerable progress in satisfying the requirements of NOM-027, which became effective in June 2010, concerning risk assessment and the evaluation of pipeline integrity. Specifically, as of December 31, 2011,2013, we have analyzed 60%100% of our overall pipeline network including 20%and 60% of our gathering pipelines, in length terms. In addition, we have implemented several of the measures relating to the other stages of the pipeline integrity management plan, including the data collection requirements of this standard.
As a result of the implementation of strategies focused on improving the integrity and operation of our transportation pipeline network, there was a 6% decrease in the number of leaks and spills in our pipelines arising from our day-to-day operations from 2012 to 2013. Of the 58 oil spills we experienced in transportation pipelines in 2013, 39 were due to a failure in the mechanical integrity of the pipelines, four due to third-party incidents and 15 due to other factors. During 2013, we experienced 95 oil spills in production pipelines, of which 46 were due to a failure in the mechanical integrity of the pipelines, five due to third-party incidents and 44 due to other factors. The number of spills in these pipelines decreased by 49.7% from 2012 to 2013. Petróleos Mexicanos did not experience any major oil spills that had significant environmental consequences during 2013.
The transportation of crude oil, natural gas and other products through a pipeline network is subject to various risks, including the risks of leaks and spills, explosions and theft. In 2011,2013, we incurred a total of U.S. $556.1Ps. 11,223 million in expenditures for the remediation and maintenance of our pipeline network and we have budgeted an additional U.S. $634.8
Ps. 9,502 million for these expenditures in 2012.2014. For more information on recent problems with our pipeline network, see “Item 3—Key Information—Risk Factors—Risk Factors Related to the Operations of PEMEX—PEMEX isOur Operations—We are an integrated oil and gas company and isare exposed to production, equipment and transportation risks, criminal acts and deliberate acts of terror” and “—Environmental Regulation—Environmental Liabilities” below.
During 2011, we transported approximately 3,385 million cubic feet of natural gas per day, 285 thousand barrels of liquefied petroleum gas per day and 3,193 thousand barrels of crude oil per day, to be processed in our refining system and to satisfy domestic demand for petroleum products, as compared to 3,255 million cubic feet of natural gas per day, 288 thousand barrels of liquefied petroleum gas per day and 3,002 thousand barrels of crude oil per day transported in 2010. Of the total amount we transported in 2011, we carried 80.4% through pipelines, 10.3% by vessels and the remainder by train tank cars as well as tank trucks.
At the end of 2011,2013, we owned five14 refined product tankers and leased another 22.five. We also owned 77 major wholesale storage and distribution centers, 1912 liquefied gas terminals, fivesix maritime terminals and tennine dock operation and maintenance facilities. These facilities, together with our pipeline network, constitute our hydrocarbon transportation and distribution infrastructure.
Fleet Developments
On July 25, 2013, Petróleos Mexicanos signed an agreement with theSecretaría de Marina- Armada de México (Mexican Navy) for the construction of 25 marine vessels for Pemex-Refining, which includes tugs, barges and shallow-draft product tankers, as part of a plan to modernize the fleet. This transaction is valued at U.S. $250 million. Pemex-Refining will provide the Mexican Navy with the technical specifications for the vessels and will supervise their construction.
On October 4, 2013, Petróleos Mexicanos signed a memorandum of understanding with Keppel Offshore & Marine in order to build a shipyard in Altamira, Tamaulipas, specializing in the construction, maintenance and repair of platforms and major marine vessels. This project is expected to involve an initial investment of U.S. $150 million.
On November 26, 2013, our subsidiary company, P.M.I. Holdings B.V., signed an agreement to purchase a 51% stake in Hijos de J. Barreras, S.A., a Spanish shipyard. This transaction closed on December 16, 2013. The purpose of this acquisition is to transfer specialized shipbuilding technology to Mexico in order to continue to modernize our fleet.
PEMEX Corporate Matters
In addition to the operating activities that we undertake through the activities of our subsidiary entities and subsidiary companies, we have certain centralized corporate operations that coordinate general labor, safety, insurance and legal matters.
Industrial Safety and Environmental Protection
Petróleos Mexicanos’ Corporate Operations Office is responsible for planning, conducting and coordinating programs to:
foster a company culture of safety and environmental protection;
improve the safety of our workers and facilities;
reduce risks to residents of the areas surrounding our facilities; and
protect the environment.
We intend to develop further the industrial safety and environmental programs for each subsidiary entity. The environmental and safety division of each subsidiary entity coordinates closely with the Corporate Operations Office.
Insurance
We maintain a comprehensive property and civil liability insurance program for onshore and offshore properties and liabilities. All onshore properties, such as refineries, processing plants, pipelines and storage facilities are covered, as are all of our offshore assets, such as drilling platforms, rigs, gas gathering systems, maritime terminals and production facilities. Our insurance covers risks of sudden and accidental physical damage to or destruction of our properties, as well as against all risk of physical loss, including as a consequence of purposeful terrorist acts. This insurance also provides coverage for the contents of pipelines, storage facilities and wells, and any liabilities of PEMEXour liabilities arising from such acts. Our offshore general and civil liability insurance also covers extraordinary costs related to the operation of offshore wells, such as control and re-drilling costs, evacuation expenses and liability costs associated with spills. We also maintain protection and indemnificationindemnity insurance for our full marine fleet, as well as life insurance, automobile and heavy equipment insurance, and cargo and marine hull insurance, risk insurance for deep water drilling activities and construction risk insurance.
In accordance with Mexican law, we have entered into all of our insurance contracts with Mexican insurance carriers. These policies have limits of U.S. $2.0 billion for onshore property, U.S. $1.3 billion for offshore property, U.S. $0.3 billion for extraordinary costs related to the operation of offshore wells, U.S. $1.0 billion for protection and indemnificationindemnity for marine-related liabilities, U.S. $0.5 billion for civil liabilities, U.S. $0.5 billion for offshore terrorist acts and U.S. $0.3 billion for onshore terrorist acts. Limits of insurance policies purchased for each category of risk are determined using professional risk management assessment surveys conducted by international companies on an annual basis and the market capacity available per risk.
Since June 2003, we have not maintained business interruption insurance, which in the past compensated us for loss of revenues resulting from damages to our facilities. We have discontinued such insurance based on the following factors: (1) the existence of mitigating factors across all of our facilities, (2) the nature and operation of our facilities, such as the ability of any of our six refineries to compensate for the loss of any one refinery and the physical separation of plants within the refineries, and (3) the excess processing capacity available across our different lines of business, vis-a-vis the restricted coverage available in the international reinsurance markets. These factors led us to conclude that the benefits of this type of coverage were outweighed by the costs. Instead, we purchase ad-hoc business interruption mitigation insurance coverage, which compensates us for the additional expenses necessary to recover our production capabilities in the shortest time possible.
During 2011,2013, we continued to engage in deep water exploratory and drilling activities that were covered by our existing insurance program. In August 2012, we planpurchased a new policy to increase our deep water exploratory and drilling activities and, accordingly, we are developing a new insurance program to coverthe coverage available for potential property damage, third-party liability and control of well risks related to these activities. Under this new program,policy, we will maintain coverage for each deep water well drilled, and the limits will beare determined based on the risk profile of the corresponding well. This policy will havehas an aggregate limit of U.S. $2.35$3.2 billion, including U.S. $1.1 billion for casualty, U.S. $0.8 billion for property damage and U.S. $1.3 billion for control of well risks, which represents the maximum amount of coverage we have been able to secure in the international reinsurance markets. In addition, we currently maintain coverage of up to U.S. $500 million for third-party liability relating to all of our operations. Under the proposed program, our coverage for third-party liability relating to deep water activities would be supplemented by at least U.S. $500 million. The proposed programnew policy also contemplates additional coverage for environmental liabilities and remediation activities relating to deep water exploration and drilling. Finally, under our current contractual structures, we and our third-party service providers and contractors are responsible for any claims or losses arising from the actions
All of our or their own employees, respectively. Also, pursuant to this contractual structure, neither we nor our third-party service providers or contractors have a right of subrogation with respect to personal injury or wrongful death claims filed by or on behalf of our or their respective employees.
All PEMEX insurance policies are in turn reinsured through Kot Insurance Company, AG, which we refer to as Kot AG. Kot AG is a wholly owned subsidiary company organized under the laws of Switzerland (previously organized under the laws of Bermuda as Kot Insurance Company, Ltd.), which is used as a risk management tool to structure and distribute risks across the international reinsurance markets. The purpose of Kot AG is to reinsure policies of the local insurance carriers of Petróleos Mexicanos and maintain control over the cost and quality of the insurance covering our risks. Kot AG reinsures over 96.8%98% of its reinsurance policies with unaffiliated third partythird-party reinsurers. Kot AG carefully monitors the financial performance of its reinsurers and actively manages counterparty credit risk across its reinsurance portfolio to ensure its own financial stability and maintain its creditworthiness. Kot AG maintains solid capitalization and solvency margins consistent with guidelines provided by Swiss insurance authorities and regulations. As of December 31, 2013, Kot AG’s net risk
retention is capped at U.S. $125$140 million, of which U.S. $100 million is for property, and is diversified across different reinsurance coverages to mitigate potential aggregation factors.
Investment in Repsol
We hold a synthetic long position on 58,679,79967,969,767 shares of Repsol, S.A. (formerly known as Repsol YPF, S.A. (whichand which we refer to as Repsol). See “Item 11—Quantitative and Qualitative Disclosures about Market Risk—Instruments Entered into for Trading Purposes”Risks Relating to the Portfolio of Third-Party Shares” for a description of this position. On July 13, 2011, we, through our wholly-owned subsidiary, P.M.I. Holdings, B.V., acquired 827,150 Repsol shares.
On August 29, 2011, we, together with P.M.I. Holdings, B.V. and Sacyr Vallehermoso S.A. (which we refer to as Sacyr), Repsol’s largest shareholder, signed a shareholder voting agreement to vote together on important decisions regarding Repsol. Pursuant to its obligations under this shareholder voting agreement, P.M.I. Holdings, B.V. acquired a total of 57,204,240 shares of Repsol, which increased our share of the economic and voting rights in Repsol from 4.806% to 9.492%. We spent a total of approximately €1.2 billion on the acquisition of these Repsol shares in 2011. On December 20, 2011, we received a notice from Sacyr of its intention to terminate the shareholder voting agreement and sell certain of its Repsol shares, and on January 31, 2012, we and Sacyr mutually agreed to terminate this agreement. On February 28, 2012, we and Repsol entered into a ten-year strategic industrial alliance agreement pursuant to which we and Repsol announced our intention to collaborate on upstream and liquefied natural gas projects in the Americas, and downstream activities in the Americas, Spain and Portugal. As part of this strategic industrial alliance agreement, we agreed to lock-up and standstill restrictions that prohibit us from owning, directly or indirectly, more than 10% or less than 5% of Repsol’s shares during the term of this agreement. In calculating our indirect ownership of Repsol shares pursuant to these restrictions, we include the Repsol shares on which we hold a synthetic long position as being indirectly owned by us.
On April 16,May 7, 2012, the PresidentGovernment of the Republic of Argentina submitted to the Argentine Congressenacted a billlaw that providesprovided for the expropriation of 51% of the Class D shares of Yacimientos Petrolíferos Fiscales S.A. (which we refer to as YPF), all of which are owned, directly or indirectly, by Repsol. On April 26, 2012,February 25, 2014, Repsol’s board of directors approved an agreement with the Argentine Senate approved this bill, which was then sent to the lower houseGovernment of the ArgentineRepublic of Argentina whereby the Republic of Argentina would pay U.S. $5 billion in the form of dollar-denominated government bonds of the Republic of Argentina as compensation for the expropriation of Repsol’s stake in Yacimientos Petrolíferos Fiscales S.A. In order to become effective, the agreement must also be approved by Repsol’s shareholders and both chambers of the Congress of the Republic of Argentina. On March 27, 2014, the Senate of the Republic of Argentina voted in favor of the settlement agreement. On March 28, 2014, Repsol’s shareholders ratified the agreement. On April 24, 2014, the Chamber of Deputies for its approval.Pursuant to the bill, the expropriation process will be governed by Argentina’s law on expropriation (Law No. 21499) and compensation will be determined by a national appraisal tribunal. On April 17, 2012, Repsol announced that it considers the proposed expropriation of its YPF shares to be unlawful, indicated it would take all available legal measures to preserve the value of its assets and the interests of its shareholders and requested U.S. $10.5 billion in compensation from the Republic of Argentina approved the agreement, which took effect on the same date.
On June 19, 2012, Repsol approved a dividend program under which Repsol shareholders had the option to receive their pro rata portion of the dividend declared at the annual meeting in the form of either (i) new shares of Repsol or (ii) cash. On June 29, 2012, Petróleos Mexicanos opted to receive its dividend in cash, which it received on July 13, 2012, while on July 9, 2012, P.M.I. Holdings, B.V. received its dividend in the form of 2,600,191 new Repsol shares. As part of the same program, on January 21 and July 16, 2013, PMI Holdings, B.V. opted to receive dividends in the form of 1,683,322 and 1,506,130 new Repsol shares, respectively.
On August 9, 2013, we divested our direct interest in 9,289,968 shares of Repsol, which resulted in a net profit of Ps. 278.8 million. On the same date, we entered into an equity swap for the YPFsame number of shares that would be expropriated by the bill.with a notional amount of Ps. 2,869.9 million through which we retain economic and voting rights in such shares. See Note 13(a)(iv) to our consolidated financial statements included herein.
As of December 31, 2013 we owned a total of 53,703,915 shares of Repsol. As described in Note 8 to our consolidated financial statements, we have recorded the 57,204,24053,703,915 Repsol shares acquired by P.M.I. Holdings, B.V. during 2011that we hold as an “available-for-sale investment”investments in equity instruments and valued our investment in these shares,them, as of December 31, 2011,2013, at approximately U.S. $1.765 billion. The market valuePs. 17,728.5 million. As of December 31, 2012, our investment in 59,804,431 shares of Repsol shares traded onwas valued at Ps. 15,771.2 million. As described in Note 8 to our consolidated financial statements, we recorded theBolsa de Madrid (Madrid Stock Exchange) has decreased approximately 37.3% since effect of the endvaluation of 2011, fromthe investment at fair value as a closing pricegain of U.S. $30.51 per share onPs. 3,098.4 million at December 30, 2011 to31, 2013 and a closing priceloss of U.S. $19.13 per share on April 26, 2012. For so long as these Repsol shares are recorded as available-for-sale,Ps. 10,125.9 million at December 31, 2012 in comprehensive income (loss) for the year in the consolidated statements of changes in their market value will be recognizedequity (deficit). In addition, we recorded dividend payments received from Repsol of Ps. 914.1 million and Ps. 685.7 million in the consolidated statements of comprehensive income at December 31, 2013 and at December 31, 2012, respectively.
Explosion at Headquarters
Our executive offices and headquarters (Centro Administrativo Pemex) are located in Mexico City. On January 31, 2013, an explosion took place at the B-2 building located at the Centro Administrativo Pemex. As a result component of the incident, 37 people died and 132 were injured. In response, we activated our equityfinancial operations contingency system, which allowed our production processes and willour response and execution capacity to continue without any irregularities. Operations at our headquarters resumed on February 6, 2013, once experts had confirmed that doing so did not affect our resultspresent any risks. Mexican Government officials determined that the explosion was caused by a buildup of operations. Asgas in the basement of the B-2 building. The root cause analysis performed by international experts recommended the implementation of ten corrective actions, six of which have been implemented as of the date of this report, with the four remaining actions to be completed once the B-2 building is fully reconstructed.
Security Strategy
In March 2014, the Board of Directors of Petróleos Mexicanos authorized the formation of theSubdirección de Salvaguardia Estratégica (Deputy Direction of Strategic Safeguarding) with the goal of strengthening our security policies in order to protect our facilities, equipment and petroleum products. The new Deputy Direction of Strategic Safeguarding is expected to enhance our cooperation with various areas of the Mexican Government, while acting under the guiding principles of managerial autonomy, efficiency and productivity. Brigadier General Eduardo León Trauwitz, who formerly served as the Associate Managing Director of Physical Security Services, will head the new deputy direction, which will carry out its functions through three groups: Strategy and Security Monitoring Systems, Physical Security and Inter-Institutional Coordination of Safeguarding and Logistics.
These changes form part of a strategy aimed at effectively utilizing our technological systems and resources to combat the illicit market in fuels and to minimize the risks to our operations associated with criminal violence. See “Item 8—Legal Proceedings—Actions Against the Illicit Market in Fuels.” In connection with this strategy, we arehave invested in refurbishment projects to improve the security of our facilities at the Morelos petrochemical complex. See “—Business Overview—Petrochemicals—Investments” in this Item 4.
Collaboration and Other Agreements
In January 2013, Petróleos Mexicanos and China International United Petroleum & Chemicals Co., Ltd., a subsidiary of SINOPEC, entered into an agreement to strengthen commercial ties and enhance crude oil exports to China. Pursuant to this agreement, Petróleos Mexicanos will export 30 thousand barrels per day of crude oil to China for a period of two years.
On April 6, 2013, Petróleos Mexicanos signed two memoranda of understanding and cooperation with China National Petroleum Corporation, a Chinese state-owned oil and gas company, and Xinxing Cathay International Group Co. Ltd., respectively, to establish terms for future cooperation on issues related to upstream activities, as well as technical exchanges in various areas.
On April 9, 2013, Petróleos Mexicanos and Mitsui Corporation, Ltd. signed a memorandum of understanding and cooperation to discuss future collaborations in oil and gas projects, including, among others, the possibility of developing a pipeline from the U.S. to Mexico to import natural gas.
On June 4, 2013, Petróleos Mexicanos signed a framework cooperation agreement with the Export-Import Bank of China to explore financing opportunities, including export credit facilities for an aggregate amount of up to U.S. $1.0 billion. Funds provided by these export credit facilities may be used to charter or acquire vessels, offshore equipment and related products of Chinese origin.
On July 3, 2013, Petróleos Mexicanos entered into a non-commercial collaboration agreement with Nacional Financiera, S.N.C., one of Mexico’s development banks, to, among other things, cooperate in the processprovision by Nacional Financiera, S.N.C. of evaluatinga line of credit to Petróleos Mexicanos’ domestic suppliers.
On July 30, 2013, Petróleos Mexicanos entered into a non-commercial collaboration agreement with Ecopetrol, a Colombian oil and gas company, to cooperate on technical and scientific matters relating to exploration, production, refining, petrochemicals and transportation.
On October 16, 2013, Petróleos Mexicanos signed a memorandum of understanding with the impact these developments will have onExport-Import Bank of Korea intended to help finance a range of our investmentprojects through a U.S. $2.0 billion line of credit. Funds provided under this line of credit may also be used by companies that provide services to Petróleos Mexicanos.
On January 24, 2014, Petróleos Mexicanos entered into a non-commercial cooperation agreement with Lukoil, a Russian oil and gas company, to exchange experience and knowledge of exploration and production activities in Repsol.order to, among other things, strengthen their respective operational and technological capabilities.
On April 10, 2014, Petróleos Mexicanos signed a memorandum of understanding with TOTAL, a French company, to establish a framework for cooperation in the exchange of experience, knowledge and best practices related to upstream activities and scientific, administrative and technical matters, as well as the development of a sustainable energy sector.
On April 10, 2014, Petróleos Mexicanos signed a memorandum of understanding with GDF Suez, a French company, to establish terms for technical cooperation and the exchange of knowledge and experience related to energy efficiency, water treatment and natural gas projects, among others.
Property, Plants and Equipment
General
Substantially all of our property, consisting of refineries, storage, production, manufacturing and transportation facilities and certain retail outlets, is located in Mexico, including Mexican waters in the Gulf of Mexico. The location, character, utilization and productive capacity of our exploration, drilling, refining, petrochemical production, transportation and storage facilities are described above. See “—Exploration and Production,” “—Refining,” “—Gas and Basic Petrochemicals,” “—Petrochemicals” and “—Transportation and Distribution.”
Reserves
Under Mexican law, all crude oil and other hydrocarbon reserves withinlocated in the subsoil of Mexico are owned by the Mexican nation and not by us. Pemex-ExplorationFollowing the adoption of the Energy Reform Decree, Article 27 of the Mexican Constitution provides that the Mexican Government will carry out exploration and Production hasextraction activities through agreements with private sector companies and through assignments to and agreements with us. Once the exclusivesecondary legislation related to the Energy Reform Decree is fully implemented, we and other oil and gas companies will have the right to exploit thosethe petroleum and other hydrocarbon reserves underlocated in the Petróleos Mexicanos Law and related laws and regulations.subsoil of Mexico, subject to assignment of these rights by the Ministry of Energy. Our estimates of Mexico’s hydrocarbon reserves are described under “—Exploration and Production—Reserves” above.
GENERAL REGULATORY FRAMEWORK
The Mexican Government and its ministries closely regulate and supervise our operations. TheSecretaría de Energía (Ministry Ministry of Energy)Energy monitors our activities and the Secretary of Energy acts as the chairperson of the Board of Directors of Petróleos Mexicanos. The SHCP approves the annual budget and financing program of Petróleos Mexicanos and the subsidiary entities. The Mexican Government incorporates the annual budget and financing program of Petróleos Mexicanos and the subsidiary entities into its budget, which the Chamber of Deputies must approve each year. The Mexican Government is not, however, liable for the financial obligations that we incur.
Under the Petróleos Mexicanos Law, Petróleos Mexicanos each year, beginning with the 2009 fiscal year provides to the SHCP, through the Ministry of Energy, its projected financial balance for each of the next five years. If Petróleos Mexicanos complies with these annual balance goals, and if its wage and salary expenditures have not increased, then the Board of Directors of Petróleos Mexicanos will be permitted to approve adjustments to its own budget and those of the subsidiary entities without approval from the SHCP. If these same conditions
are met, the Board of Directors of Petróleos Mexicanos will also be permitted to authorize, without SHCP approval, increases in the expenditures of Petróleos Mexicanos and the subsidiary entities to the extent that their revenues exceed the amounts contemplated in the budget.
TheSecretaría de Medio Ambiente y Recursos Naturales(Ministry of the Environment and Natural Resources), which we refer to as SEMARNAT,Resources, in conjunction with other Mexican federal and state authorities, regulates our activities that affect the environment.
In addition to the regulatory powers that the Energy Regulatory Commission already has over natural gas and LPG activities, this Commission is now vested, pursuant to the amendments to theLey de la Comisión Reguladora de Energía (Energy Regulatory Commission Law), withalso has the authority to regulate: (1) first-hand sales of gas, fuel oil and basic petrochemicals; (2) pipeline transportation and distribution of gas and refined products, as well as storage of such products to the extent that this is directly linked with such pipeline transportation and distribution, or forms an integral part of the importation and distribution terminals of such products; and (3) pipeline transportation and distribution of biofuels, as well as storage of such products to the extent that this is
directly linked with such pipeline transportation and distribution, or forms an integral part of the importation and distribution terminals of such products.
TheLey de la Comisión Nacional de Hidrocarburos (National Hydrocarbons Commission Law), which became effective on November 29, 2008, provides for the establishment of the NHC, which is responsible for regulating and supervising hydrocarbons exploration and exploitation as well as the processing, transportation and storage activities directly related to exploration and exploitation projects. Our estimates of Mexico’s proved reserves are reviewed by the NHC. See “Item 4—Information on the Company—“—Business Overview—Exploration and Production—Reserves.”Reserves” in this Item 4.
TheAuditoría Superior de la Federación (Superior Audit Office of the Federation, or the ASF) reviews annually theCuenta Pública(Public (Public Account) of the Mexican Government entities, including Petróleos Mexicanos and the subsidiary entities. This review focuses mainly on the entities’ compliance with budgetary benchmarks and budget and accounting laws. The ASF prepares reports of its observations based on this review. The reports are subject to our analysis and, if necessary, our clarification and explanation of any issues raised during the audit. Discrepancies in amounts spent may subject our officials to legal sanctions. However, in most instances, the observed issues are explained and clarified. The financial information provided to the ASF is prepared in accordance with Mexican Governmental Standards applicable to Mexican public sector entities, which differ in several respects from Mexican FRS.IFRS. As a result, our financial statements included herein reflect different financial data than those included in the Public Account.
The transitional articles of the Energy Reform Decree contemplate the grant of additional technical and administrative authority to the Ministry of Energy, the NHC and the Energy Regulatory Commission over certain of our operations and the Mexican energy sector generally. See “—Information on the Company—History and Development—Energy Reform—Regulatory Oversight and Authority” in this Item 4 for information regarding the specific authority that is expected to be granted to these regulatory entities.
ENVIRONMENTAL REGULATION
Legal Framework
We are subject to various laws related to the environmental protection of natural resources, as well as the management of hazardous and non-hazardous wastes. In particular, Petróleos Mexicanos and the subsidiary entities are subject to the provisions of theLey General del Equilibrio Ecológico y la Protección al Ambiente(General Law on Ecological Equilibrium and Environmental Protection), which we refer to as the Environmental Law, which was amended on January 28, 2011, and the regulations issued thereunder, theLey General de Cambio Climático (General Law on Climate Change), which was amended on June 6, 2012, and several technical environmental norms issued by the SEMARNAT. We are also subject to theLey General para la Prevención y Gestión Integral de los Residuos (General Law on Waste Prevention and Integral Management),Ley para el Aprovechamiento de Energías Renovables y el Financiamiento de la Transición Energética (Law of Use of Renewable Energy and Financing of the Energy Transition), as well as theLey para el Aprovechamiento Sustentable de la Energía (Sustainable Use of Energy Law), each of which became effective on November 29, 2008. TheSecretaría de Salud (Ministry of Health), the Secretaría de Comunicaciones y Transportes (Ministry of Communications and Transportation), theSecretaría de Marina(Ministry of the Navy) and the Ministry of Energy assist the SEMARNAT in its functions. In addition, Petróleos Mexicanos and the subsidiary entities are subject to the environmental laws and regulations issued by the governments of each state of Mexico where our facilities are located.
The Environmental Law and related regulations require that we obtain certain authorizations from the SEMARNAT beforeBefore we carry out any activity that may have an adverse effectimpact on the environment.environment, we are required to obtain certain authorizations from the SEMARNAT. In particular, these environmental regulations apply to chemical, petrochemical, crude oil refining and extraction activities, as well as the construction of crude oil and natural gas pipelines. Before authorizing a new project, the SEMARNAT requires the submission of an environmental impact analysis and any other information that it may request. The SEMARNAT is entitled to independently grant or deny its authorization of any activity.
The environmental regulations that apply generally to Mexican industry apply to us. These regulations specify, among other matters, the maximum permissible levels of emissions and water discharges and hazardous substances discharges as well as atmospheric pollution level limits. The technical regulations for oil and petrochemical industries set forth maximum permissible levels of pollution in residual water discharges and natural gas emissions.discharge. These regulations also establish procedures for measuring pollution levels.
Mexico generally updates and revises its environmental regulatory framework as necessary, and we participate with the Mexican Government in developing environmental regulations that are related to our activities. The Law of Use of Renewable Energy and Financing of the Energy Transition and the Sustainable Use of Energy Law are designed to further Mexico’s transition to cleaner, more environmentally friendly fuels and renewable energy sources. On January 30, 2006, the SEMARNAT issued Official Mexican Standard NOM-086-SEMARNAT-SENER-SCFI-2005, which sets forth environmental specifications for fossil fuels. As required by this standard, we are currently developing projects at our refineries to satisfy domestic market demand for low-sulfur fossil fuels.
On March 19, 2010, the Energy Regulatory Commission issued Official Mexican Standard NOM-001-SECRE-2010, which specifies quality parameters for the transportation, storage and distribution of natural gas. In order to comply with this standard, we will be requiredimplemented procedures to meet certain targets forcontrol the optimal usenitrogen concentration in the natural gas that we process and installed equipment to monitor the quality of energythe natural gas that we transport, store and distribute. In addition, the cryogenic plant at the Ciudad Pemex GPC was modified to comply with the standard, and three plants began operations in all2012 in order to control the liquid content of natural gas.
On February 2, 2012, the SEMARNAT issued Official Mexican Standard NOM-085-SEMARNAT-2011 (which we refer to as NOM-085), which sets forth environmental standards regarding the maximum levels of emissions to the atmosphere allowed from stationary sources. In April 2012, NOM-085 was amended to heighten some of these standards. In order to comply with NOM-085, we continued to reduce our processessulfur dioxide emissions and activitiesto gradually substitute fuel oil with natural gas in our operations. These efforts were carried out as well as to meet domestic market demand for low-sulfur fossil fuels.part of the reconfiguration of the refineries at Tula and Salamanca. See “—Business Overview—Refining—Vacuum Residue Processing at Miguel Hidalgo Refinery” and “—Reconfiguration of the Salamanca Refinery” in this Item 4.
In April 1997, the SEMARNAT issued regulations governing the procedures for obtaining an environmental license, under which new industrial facilities can comply with all applicable environmental requirements by way
of a single administrative procedure. Each environmental license integrates all of the different permits, licenses and authorizations related to environmental matters for a particular facility. Since these regulations went into effect, we have been required to obtain an environmental license for any new facility, while our facilities that existed prior to the effectiveness of these regulations are not subject to this obligation.
Federal and state authorities in Mexico may inspect any facility to determine compliance with the Environmental Law, local environmental laws, regulations and technical environmental regulations. Violations or non-compliance with environmental standards and regulations may result in the application of substantial fines, temporary or permanent shutdown of a facility, required capital expenditures to minimize the effect of our operations on the environment, cleanup of contaminated land and water, cancellation of a concession or revocation of authorization to carry out certain activities and, in certain cases, criminal prosecution of employees and individuals. See “Item 3—Key Information—Risk Factors—Risk Factors Related to the Operations of PEMEX—PEMEX’sOur Operations—Our compliance with environmental regulations in Mexico could result in material adverse effects on itsour results of operations.”
On November 28, 2007, the SEMARNAT issued NOM-148-SEMARNAT-2006 (which we refer to as NOM-148), which establishes standards for sulfur recovery in all refineries. TheAs of the date of this report, all of our refineries currentlyare in compliance with NOM-148 are located in Cadereyta, Nuevo León; Ciudad Madero, Tamaulipas; Minatitlán, Veracruz; Tula, Hidalgo; Salamanca, Guanajuato and Salina Cruz, Oaxaca. ComplianceNOM-148. During 2013, compliance with NOM-148 resulted in costs to Petróleos Mexicanos and the subsidiary entities of approximately Ps. 567 million in 2009, Ps. 408 million in 2010 and Ps. 2,000 million in 2011, related to the rehabilitation, optimization and construction of new sulfur recovery plants, as well as the construction of a2,500 million. The new sulfur recovery plant at the Salamanca refinery in 2011, which will startis expected to commence operations induring 2014. Amendments to NOM-148 are anticipated by the first halfend of 2012. We do not expect2014 and are expected to spend any additional funds in 2012 in orderestablish, among other things, a sulfur emissions monitoring system applicable to maintain and bring our remaining facilities into compliance with NOM-148.refineries.
As we increase our use of new drilling technologies, it is possible that Mexico’s environmental regulations will expand to address these developments. On January 11, 2011, the NHC issued new rules and regulations relating to our deep water drilling and exploration activities in the Gulf of Mexico. These new rules and regulations, which were promulgated in response to the Deepwater Horizon blow-out and resulting oil spill in
U.S. territory in the Gulf of Mexico that began in April 2010, require us to produce a series of reports on our safety measures for deep water drilling and exploration activities over the eight months following the promulgation of the rule, and to have our procedures certified by an independent expert. We must also certify that we have adequate insurance or other financial resources available to cover any losses or compensation claims stemming from a deep water accident. As of the date of this report, we are in compliance with the above requirements for projects at depths of 500-1,500 meters and wewith all requirements applicable to deepwater projects, which are inissued primarily by the process of preparing the reports necessary to comply with such requirements for projects at depths greater than 1,500 meters.NHC. On February 20, 2012, the United States and Mexico reached an agreement regulating oil and gas development along their maritime border in the Gulf of Mexico, which has the potential tomay facilitate an expansion of deepwaterdeep water drilling for Mexico. Mexico will retain its own regulatory system.
On May 14, 2012, we procured the services of Wild Well Control Inc., a company that specializes in controlling oil spills, in order to comply with the rules and regulations issued by the NHC. Our initial agreement with Wild Well Control Inc. expired on March 31, 2013 but was subsequently renewed and is in effect as of the date of this report.
We have also recently been producing natural gas located in shale deposits from the Emergente-1 well. Although this well was initially drilled through hydraulic fracturing, we have since relied on horizontal drilling to produce natural gas. Accordingly, we have produced very little waste water. However, shale well drilling could result in environmental concerns in the future. Mexico does not currently have any environmental regulation specific to shale gas development.
Global Climate Change and Carbon Dioxide Emissions Reduction
In May 2007, the Federal Executive Office submitted itsEstrategia Nacional de Cambio Climático (National Climate Change Strategy), which identified various opportunities to mitigate and adapt to climate change, as well as noted Mexico’s participation in the international community with respect to climate change awareness.
Since the National Climate Change Strategy was published, we have worked with the various government offices that participate in theComisión Intersecretarial de Cambio Climático(Inter-Ministry (Inter-Ministry Climate Change Commission) to develop thePrograma Especial de Cambio Climático 2009-2012(Special (Special Climate Change Program for 2009-2012, which we refer to as the PECC). We participated, with the Ministry of Energy, in the development of the portion of the PECC relating to the Energy Sector.Sector. We helped establish goals for the reduction of emissions by 2012. On August 28, 2009, SEMARNAT issued the PECC, which will allowallowed us to consolidate agreements, reinforce already negotiated commitments and identify, upon further consideration, new measures and additional changes necessary so that, progressively, Mexico’s greenhouse gas emissions levels will be reduced to acceptable levels under the National Climate Change Strategy.
We have identified several activities and projects to be undertaken in respect of issues addressed by the chapter of the PECC relating to mitigation measures, including increased energy efficiency, sour gas re-injection, co-generation and reduction in fugitive emissions, and we have set a goal of reducing our annual carbon dioxide emissions by 9.94 million tons during the period from January 1, 2009 through the end of 2012. During 2010,2011, we reduced our carbon dioxide emissions by approximately 4.84.0 million tons. During 2012, we reduced our carbon dioxide emissions further by approximately 1.8 million tons, which is a volume comparable to removing one0.3 million automobiles from circulation. During 2011, we reduced our carbon dioxide emissions further by approximately 5.0 million tons. In total, from January 1, 2009 through December 31, 2011,2012, we reduced annual carbon dioxide emissions by an estimated 14.415.1 million tons, which represents progress of approximately 44.9%51.8% more than our goal for such annual reductions of 9.94 million tons by 2012, as compared to 2008 carbon dioxide emissions. These emission reductions were achieved primarily through reduced gas flaring in connection to exploration and production and the more efficient use of natural gas. Also addressed in this chapter of the PECC is the goal of increased adaptability by energy sector participants in responding to climate change’s effects by designing and implementing: contingency programs in case of extreme hydrometeorological events, strategies of territorial planning and ecological territorial planning, as well as a vulnerability map reflecting the potential effects of climate change.
Our largest sources of greenhouse gas emissions are heating systems and the operation of mechanical equipment, which require the burning of fossil fuels and the creation of water vapor to generate energy. During 2013, we recorded greenhouse gas emissions of 47.1 million tons of carbon dioxide equivalent, which represented an 8.5% increase from the 43.4 million tons of carbon dioxide equivalent emitted in 2012. This increase was due to an increase in the burning of sour gas with a high nitrogen content in connection with Pemex-Exploration and Production’s operations. Despite this increase, we have continued to comply with the NHC’s rules and regulations by maintaining a level of gas usage of 98%.
As of the date of this report, the PECC for 2013 to 2018 is under development. The PECC’s greenhouse gas emissions reductions targets are expected to be based on existing greenhouse gas emissions reduction projects and will not consider possible emissions growth that may result from increases in productive activities. We are proposing a greenhouse gas emissions reductions level of approximately 5 million tons of carbon dioxide equivalent by 2018. Under the General Law on Climate Change, this goal may be updated every two years.
On June 6, 2012, the General Law on Climate Change was published in the Official Gazette of the Federation, with the objectives of regulating greenhouse gas emissions and reducing the vulnerability of Mexico’s infrastructure, population and ecosystems to the adverse effects of climate change. In 2010order to comply with the requirements of the General Law on Climate Change, we will promote policies intended to reduce
greenhouse gas emissions, such as reducing gas flaring and fugitive emissions, implementing reforestation projects and substituting liquid fuels for natural gas. We will also undertake efforts to minimize the vulnerability of our operations to climate change.
In 2011, PEMEX implemented,2012 and 2013, as part of itsourPlan de Acción Climática (Climate Action Plan), which embodies our internal strategy for reducing the Mexican energy sector’s carbon footprint and minimizing the effects of climate change on our operations, we implemented several conservation and reforestation projects. These projects were designed to counteract greenhouse gas emissions and protect surrounding communities and the environment. Our principal conservation projects consistinclude:
Since 2009, we have conducted studies to evaluate the risk of strategically important installations against events associated with climate change and natural phenomena, and as of the Alvarado, Tuxpan y Tampamachoco(Tampamachoco Wetlands). Our reforestation projects are located alongTampamachoco;coastal plainrestoration of mangrove habitats.Gulfdate of Mexico and in the states of Tabasco, Tamaulipas and Veracruz, as well as in the mountain regions of federally protected natural areas in Veracruz.
PEMEX’s Internal Monitoring
We believe thatthis report, we are in substantial compliance with current federal and state environmental laws as those laws have been historically interpreted and enforced. We maintain an internal structure designed to identify and solve environmental problems and we retain external consultants to perform operational audits at our industrial plants, including cost estimates for remedying any shortfall in compliance with Mexican environmental laws. Such remedies can include improving our operating efficiency, cleaning up contaminated land and water and capital expenditures to minimize the impact of our operations on the environment. In addition, the subsidiary entities have specialized departments, depending on the size and geographic distribution of their respective sites, which implement their own environmental programs and conduct internal environmental audits and inspections of their sites and their immediate surroundings based on the standardsupdating a study of the SEMARNAT. When these internal audits reveal problems or deficiencies, the subsidiary entities take the necessary remedial actionsoil and gas sector’s vulnerability to eliminate them. If soil or bodies of water are contaminated and the remediation requirements from these internal audits and inspection are known and estimable, then we record them in our financial statements as environmental liabilities.climate change.
In addition to our internal monitoring structure for identifying environmental compliance issues, Petróleos Mexicanos and the subsidiary entities’ environmental program is subject to the review of theProcuraduría Federal de Protección al Ambiente(Office of the Federal Attorney for Environmental Protection, which we refer to as PROFEPA). PROFEPA administers the Mexican environmental regulatory framework and establishes acceptable standards of environmental remediation. Although PROFEPA has the authority to review and inspect our remediation efforts and our compliance with permitted contamination levels, it does not determine our environmental liabilities. We maintain proper records of all of the studies, estimates, performed works and any other information that PROFEPA may request from time to time.
Since 1993, we have participated in the National Program of Environmental Auditing, a voluntary environmental audit program, with PROFEPA. This program was created by PROFEPA in 1992 as a regulatory incentive for companies to correct any environmental irregularity in their operations in a voluntary manner. The voluntary environmental audit consists of three stages: (i) an audit and compliance diagnosis; (ii) the development of an action plan to correct irregularities; and (iii) the execution of the action plan. If a company completes the three stages in a satisfactory manner, PROFEPA will provide them with a clean industry certificate, which means it complies with the applicable environmental legislation for their industry. As each environmental audit is completed, we send the audit report (which includes the estimated costs for remedying any environmental anomalies) to PROFEPA for its review and approval. If the audit report is approved by PROFEPA, we review the audits and determine which findings can be resolved by changing current plant or drilling operations and implementing the current capital expenditures plan. As of December 31, 2011, Petróleos Mexicanos and the subsidiary entities were in the process of completing audits of 735 facilities, with the objective of obtaining “clean industry” certificates for each facility. The 2011 audits resulted in the certification of 110 facilities, of which 81 were re-certified and 29 were certified for the first time. The audits of the remaining 625 facilities have begun, but are still under review. We will continue including new facilities under this program as we expand our activities in the areas of exploration, exploitation, refining and distribution of hydrocarbons.
During 2011, we experienced 219 oil spills in pipelines. The number of such spills increased by 8% from 2010 to 2011. This was due in part to the increase in illegal tapping of the pipelines (from 49 incidents in 2010 to 85 incidents in 2011, which represents an increase of 73%), thus affecting their mechanical integrity. There were 134 spills caused by leakages during 2011, of which 111 were due to a failure in the mechanical integrity of the pipes, 15 due to acts of vandalism and 8 to other factors. However, as a result of the implementation of strategies focused on improving the integrity and operation of our pipeline network, there was a 15% decrease of the number of events in the pipeline system, from 131 in 2010 to 111 in 2011.
Petróleos Mexicanos experienced one major oil spill that had significant environmental consequences during 2011. On December 31, 2011, an oil spill of 1,500 barrels caused by an illegal tap in the 30” diameter Nuevo Teapa—Poza Rica pipeline, resulted in water contamination as well as contamination of the left riverside of the Coatzacoalcos River. The damaged pipeline was repaired and resumed operations the same day, and oil recovery activities were initiated successfully.
In addition, Petróleos Mexicanos experienced four major incidents during 2011 that did not have significant environmental consequences, as described below:
Petróleos Mexicanos and a service provider, COTEMAR, S.A. de C.V., have concluded the recovery of the semi-submersible platform Jupiter 1, which partially sunk in the Campeche Sound on April 12, 2011, south of the Gulf of Mexico. More than 2 thousand barrels of diesel and 82 barrels of jet fuel stored in this platform were recovered. In addition, the service provider subcontracted services to extract the wrecked platform and sink it to a depth of 1,000 meters, following its insurance agent recommendations. Neither production nor other activities conducted in the area were negatively affected by this incident. Subsequent monitoring confirmed that no hydrocarbons were spilled in the surrounding areas.
We controlled and extinguished a fire at the Salamanca Refinery on April 23, 2011. The fire was triggered by a leak of a solvent in one of the seals of a pump in the deparaffinization plant. There were no injuries and the fire did not affect the operations of the other plants at the refinery. The deparaffinization plant resumed operations once it was repaired on May 23, 2011.
On July 30, 2011, there was an explosion and fire at the Tula Refinery Viscosity Reduction Plant due to overpressurization in a balance tank. The explosion damaged most of the plant equipment and caused 3 casualties among the operations personnel, who were aligning the equipment during the start-up of the plant following a general maintenance outage. The fire did not affect the operations of other plants in the refinery, but gasoline production was reduced by 1.8 thousand barrels per day until the refinery made process adjustments on August 2, 2011.
On November 14, 2011, an explosion and fire took place in the 36” diameter “Estación 19—Los Ramones” gas pipeline located in the Reynosa area, in the northern region of Mexico. The explosion was caused by a gas leak due to pipeline corrosion problems. This incident did not cause any harm to personnel or to the surrounding area. There were no gas transportation problems or reductions because all the gas from that pipeline was diverted to another pipeline. The damaged pipeline will resume operations once its inspection and maintenance process is completed.
We implemented an emergency action plan in each case, in coordination with local authorities, military and civil protection services, under which the damaged areas were rapidly isolated in order to mitigate damage to local residence and properties.
In order to protect itself from environmental liabilities, Petróleos Mexicanos mantains insurance covering most of the expenses directly related to such incidents. However, this insurance does not cover fines, public relations expenses and site clean-up not directly related to the incident, among other expenses.
In an effort to create a culture focused on improving industrial safety and environmental protection, we have developed the PEMEX Safety, Health and Environmental Protection System (which we refer to as the SSPA). This system, which we began to implement in January 2006, is a management tool that focuses on the identification, evaluation and continuous application of preventive measures related to industrial safety and environmental protection. The SSPA is based on international best practices and is designed to help us achieve our goal of zero incidents, injuries, emissions of pollutants and illnesses in all of our work centers, a goal that was ratified in 2011. The specific objectives of the SSPA include: establishing a guide to determine the root causes of incidents; process safety management, with a strong emphasis on the mechanical integrity of our plants and structures; improvements in environmental protection and occupational health; rigorous application of internal safety procedures; effective audits; updated emergency response plans; effective prevention tests; and risk analysis systems.
In March 2011, the Ministry of Energy issued official guidelines that Petróleos Mexicanos and its subsidiary entities must comply with regarding the implementation of the SSPA. For this reason, we introduced a program to comply with these guidelines and we took a series of actions, including implementing proactive and preventive process safety indicators based on the American Petroleum Institute’s Recommended Practice 754, which establishes process safety performance indicators for the refining and petroleum industries.
Notwithstanding our implementation of the SSPA, during 2011, our accident frequency rate increased by 29% from 2010 to 2011, from 0.42 to 0.54 injuries per million man hours worked with risk exposure. The area that contributed most to this increase was the production branch of Pemex-Refining. However, Pemex-Exploration and Production had its lowest accident frequency rate on record, 0.39, surpassing its previous goal set at 0.40. The indicator of lost days due to injuries increased by 16% from 2010 to 2011, from 25 to 29 lost days per million man hours worked with risk exposure. Lost days are those missed due to medical incapacity as a result of injuries suffered at work or those rewarded as compensation for partial, total or permanent incapacity or death. In order to address the increased accidents during 2011, we decided to undertake a second round of implementation of the SSPA. We created an enforcement program for work centers with poor performance in the SSPA, which mandates technical prevention training and consultation throughout the chain of command. In addition, beyond emphasizing the importance of strict compliance with the SSPA protocol, we have also asked all of our work centers to apply a number of new directives, including:
mandatory Environmental, Health and Safety (EHS) training for all workers and enhanced professional training for critical personnel;
adoption of recommendations made by EHS professionals after visits to work centers such as refineries;
the creation of a new program to improve critical issues in EHS culture, based on the findings of a 2009 internal study; and
third-party audits.
The implementation of the SSPA has been most successful thus far for our contractors, who reported a 20.5% decrease in their accident frequency rate from 2010 to 2011, from 0.39 to 0.31 injuries per million man-hours worked with exposure to risk.
Other than as disclosed in this report, there are currently no material legal or administrative proceedings pending against us with respect to any environmental matters.
Environmental Liabilities
At December 31, 2011, our estimated and accrued environmental liabilities totaled Ps. 5,527.9 million. Of this total, Ps. 1,437.5 million was attributable to Pemex-Exploration and Production, Ps. 4,065.7 million to Pemex-Refining, Ps. 19.5 million to Pemex-Gas and Basic Petrochemicals and Ps. 5.2 million to Pemex-Petrochemicals. There were no environmental liabilities at the subsidiary company level. The following tables detail our environmental liabilities by subsidiary entity and operating region at December 31, 2011.
Pemex-Exploration and Production
Estimated Affected Area | Estimated Liability | |||||||
(in hectares) | (in millions of pesos) | |||||||
Northern region | 129.27 | Ps. 1,102.8 | ||||||
Southern region | 60.90 | 98.0 | ||||||
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| |||||
Total(1) | 190.16 | Ps. 1,200.8 | ||||||
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Source: PEMEX.
Holding Ponds Drainage | ||||||||
Number of Holding Ponds Reported as Liabilities(1) | Estimated Liability | |||||||
(in millions of pesos) | ||||||||
Northern region | 151 | Ps. 210.7 | ||||||
Southern region | 13 | 26.0 | ||||||
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| |||||
Total | 164 | Ps. 236.7 | ||||||
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| |||||
Total estimated environmental liabilities of Pemex-Exploration and Production | Ps. 1,437.5 | |||||||
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Source: PEMEX.
Pemex-Refining
Estimated Affected Area | Estimated Liability | |||||||
(in hectares) | (in millions of pesos) | |||||||
Pipelines | 14.15 | Ps. 134.7 | ||||||
Refineries | 259.53 | 2,198.5 | ||||||
Storage and Distribution Terminals | 64.41 | 656.5 | ||||||
Areas Affected by Recent Incidents(1) | 101.00 | 1,076.0 | ||||||
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| |||||
Total(2) | 439.09 | Ps. 4,065.7 | ||||||
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Source: PEMEX.
Pemex-Gas and Basic Petrochemicals
| ||||||||
| ||||||||
Source: PEMEX.
Pemex-Petrochemicals
Estimated Affected Area | Estimated Liability | |||||||
(in hectares) | (in millions of pesos) | |||||||
Pajaritos petrochemical complex. | 1.20 | Ps. 0.7 | ||||||
Cangrejera petrochemical complex | 0.07 | 0.4 | ||||||
Pipelines | 0.34 | 4.2 | ||||||
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|
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| |||||
Total(1) | 1.61 | Ps. 5.2 | ||||||
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|
|
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Source: PEMEX.
Our estimates of environmental liabilities include cost estimates for site-specific evaluation studies, studies that draw upon aspects of previous evaluations for sites with comparable characteristics and the corresponding remediation. The remediation sites consist of sites identified in the audit process described above, as well as those previously identified sites in more mature petroleum operating areas that were not cleaned up in the past. Our environmental liabilities also include the elimination of holding ponds created by abandoned petroleum wells. Additionally, our environmental liabilities include an accrual based on information requested and received periodically from field managers regarding probable environmental liabilities identified in their respective areas of responsibility. We accrue environmental liabilities when sufficient basic knowledge is available to form a preliminary estimation as to remediation cost. Although the full potential scope of the remediation cost may not be known with certainty, these accruals are made when the liability is probable and the amount is reasonably estimable, in accordance with Bulletin C-9 “Liabilities, provisions, contingent assets and liabilities and commitments” for Mexican FRS purposes and with ASC Topic 450 “Contingencies” for U.S. GAAP purposes. These estimated liabilities include assumptions resulting from an initial evaluation of damage, including land acreage to be remediated, depth of contamination and type of contamination. While the initial evaluation is extensive, there is a possibility that the actual scope of remediation could vary depending upon information gathered during the remediation process. For a further discussion of our environmental liabilities, see Note 21 II(b) to our consolidated financial statements included herein.
Unasserted or additional claims are not reflected in our identified liabilities. We are not aware of any such claims that would be of such magnitude as to materially affect our estimates of environmental liabilities.
At the end of 2011, we were not aware of uncertainties with respect to joint and several liabilities that could affect our assessment of environmental contingencies or otherwise result in a major environmental liability. We are responsible for all production, processing, storage and distribution of petroleum and its derivatives in Mexico. As a result, we believe we are positioned to know immediately of any claims and are therefore directly accountable for any claims that may be brought against us.
Pemex-Exploration and Production remains responsible for handling existing environmental liabilities— these responsibilities are not part of the Integrated E&P Contracts. Nevertheless, the Integrated E&P Contracts
include environmental clauses related to contractors’ and PEP’s responsibility to ensure an adequate environmental performance, and also establish the terms for compensation and repair of any new environmental impacts.
The timing of remediation or cleanup of the sites to which these environmental liabilities relate is dependent upon the annual budget assigned to us by the Mexican Congress.
Carbon Dioxide Emissions Reduction
Emission Reduction Purchase Agreements
In 2000, Mexico ratified the Kyoto Protocol to the United Nations Framework Convention on Climate Change (which we refer to as the Kyoto Protocol) as a non-Annex B country. Accordingly, Mexico is not subject to emissionsemission caps under the Kyoto Protocol, but Mexican companies, such as PEMEX, are allowed to develop Clean Development Mechanism (CDM) projects. These CDM projects generate carbon dioxide emissions-reductionsemission-reduction certificates or credits that can be traded in international markets.
As of the date of this report,December 2012, we have signed three emission reduction purchase agreements for the marketing of carbon dioxide emission-reduction certificates. TwoOne of these agreements areis with Carbon Solutions de México, S.A. de C.V., another is with Statoil and the otherthird is with Statoil.Platinum Partners Value Arbitrage Fund L.P. Under these agreements, we will sell emission reduction certificates to be generated by the following three projects, each of which should reduce our greenhouse gas emissions: increasing thermal efficiency and recovery of combustion gases at the Dos Bocas Marine Terminal; installing dry seals in gas compressors in our facilities; and undertaking a project to reduce gas flaring at the Tres Hermanos oil field.field; and the switch from fuel oil to natural gas at the Ing. Antonio Dovalí Jaime refinery at Salina Cruz, Oaxaca. The first twoDos Bocas Marine Terminal and Tres Hermanos projects are in the process of being validated, while the flaring project hashave already been registered with the United Nations.Nations, while the remaining project is in the process of being registered. These projects could potentially reduce our greenhouse gas emissions by more than 214500 thousand tons of carbon dioxide annually.
Also in 2012, we signed the Dry Seals CDM Termination Agreement as part of Mexico’s Nationally Appropriate Mitigation Actions (which we refer to as NAMAs) program. NAMAs are a set of measurable, reportable and verifiable actions undertaken by countries to reduce emissions. NAMAs being carried out in Mexico include reducing fugitive emissions associated with the processing and transportation of natural gas, as well as mitigating the greenhouse gas emissions that result from the activities of the petroleum industry. It is estimated that this NAMA has the potential to reduce carbon dioxide emissions by 3 million tons per year. On October 21, 2013, Petróleos Mexicanos and the SEMARNAT registered this NAMA, along with the NAMA on Cogeneration in the Mexican Oil and Gas Industry, under the United Nations Framework Convention on Climate Change.
In connection with the “Bilateral Offset Credit Mechanism,” an initiative of the Japanese Ministry of Economy, Trading and Industry intended to address the issue of climate change, the Japanese government has funded feasibility studies related to the co-generation projects at the Cangrejera and Morelos petrochemical complexes. These studies were completed in May 2013. As of the date of this report, we are also cooperating with the Japanese Ministry of Foreign Relations and Ministry of the Environment as part of our effort to establish a bilateral emissions reduction agreement between Mexico and Japan. This proposed agreement, known as the “Joint Crediting Mechanism,” would facilitate our implementation of emissions reduction projects through mitigation actions that will be jointly developed by the governments of each country.
We have also pursued opportunities to engage in carbon emissions trading, and have developed several studies under the framework established by agreements signed with the World Bank, the Inter-American Development Bank and Sumitomo Bank in order to advance these efforts. Furthermore, the United States Agency for International Development, through the consulting firm TETRATECH, has financed the implementation of a system to record and estimate the extent to which our reductions in greenhouse gas emissions can be traded.
During 2013, pursuant to agreements with the Inter-American Development Bank, the World Bank and the Fund for Energy Transition and Sustainable Use of Energy, we began developing a methodology to measure the amount of greenhouse gases emitted by boilers and furnaces in connection with an efficiency project. This project aims to develop internationally recognized measurement instruments which meet the requirements of the General Law on Climate Change for greenhouse gas emissions reduction targets. If in the future this methodology enables us to sell Mexican carbon offsets in the California emissions trading market, it could be registered with state authorities in California.
PEMEX’s Internal Monitoring
We believe that we are in substantial compliance with current federal and state environmental laws as those laws have been historically interpreted and enforced. We maintain an internal structure designed to identify and solve environmental problems and we retain external consultants to perform operational audits at our industrial plants, including cost estimates for remedying any shortfall in compliance with Mexican environmental laws. Such remedies can include improving our operating efficiency, cleaning up contaminated land and water and capital expenditures to minimize the impact of our operations on the environment. In addition, the subsidiary entities have specialized departments, depending on the size and geographic distribution of their respective sites, which implement their own environmental programs and conduct internal environmental audits and inspections of their sites and their immediate surroundings based on the standards of the SEMARNAT. When these internal audits reveal problems or deficiencies, the subsidiary entities take the necessary remedial actions to eliminate them. If soil or bodies of water are contaminated and the remediation requirements from these internal audits and inspection are known and estimable, then we record them in our financial statements as environmental liabilities.
In addition to our internal monitoring structure for identifying environmental compliance issues, Petróleos Mexicanos and the subsidiary entities’ environmental program is subject to the review of theProcuraduría Federal de Protección al Ambiente (Office of the Federal Attorney for Environmental Protection, which we refer to as PROFEPA). PROFEPA administers the Mexican environmental regulatory framework and establishes acceptable standards of environmental remediation. Although PROFEPA has the authority to review and inspect our remediation efforts and our compliance with permitted contamination levels, it does not determine our environmental liabilities. We maintain proper records of all of the studies, estimates, performed works and any other information that PROFEPA may request from time to time.
Since 1993, we have participated in the National Program of Environmental Auditing, a voluntary environmental audit program, with PROFEPA. This program was created by PROFEPA in 1992 as a regulatory incentive for companies to correct any environmental irregularity in their operations in a voluntary manner. The voluntary environmental audit consists of three stages: (i) an audit and compliance diagnosis; (ii) the development of an action plan to correct irregularities; and (iii) the execution of the action plan. If a company
completes the three stages in a satisfactory manner, PROFEPA will provide them with a clean industry certificate, which means it complies with the applicable environmental legislation for their industry. As each environmental audit is completed, we send the audit report (which includes the estimated costs for remedying any environmental anomalies) to PROFEPA for its review and approval. If the audit report is approved by PROFEPA, we review the audits and determine which findings can be resolved by changing current plant or drilling operations and implementing the current capital expenditures plan. As of December 31, 2013, Petróleos Mexicanos and the subsidiary entities were in the process of completing audits of 627 facilities, with the objective of obtaining “clean industry” certificates for each facility. In 2012, 207 facilities were certified, while the 2013 audits resulted in the certification of 105 facilities, of which 77 were re-certified and 28 were certified for the first time. In total, 312 of our facilities have obtained “clean industry” certificates. The audits of the remaining 315 facilities have begun, but are still under review. We will continue including new facilities under this program as we expand our activities in the areas of exploration, exploitation, refining and distribution of hydrocarbons.
During 2013, Petróleos Mexicanos experienced two major incidents that had significant environmental consequences, as described below:
In addition, Petróleos Mexicanos experienced one major incident during 2013 that did not have significant environmental consequences. On October 1, 2013, an explosion occurred inside the Reformation ReactorDC-501C, located at the Naphtha Reformation Plant U-501-1 of the Miguel Hidalgo Refinery. At the time of the explosion, personnel were loading the catalyst inside the reactor while plant operations were suspended. Because the atmosphere had not been made inert, hydrocarbon, carbon dust and oxygen remained inside the reactor, causing the explosion. As a result of the accident, three of our employees and two contractors’ employees were injured and an employee of one contractor died.
In order to protect itself from environmental liabilities, Petróleos Mexicanos maintains insurance covering most of the expenses directly related to such incidents. However, this insurance does not cover fines, public relations expenses and site clean-up not directly related to the incident, among other expenses.
In an effort to create a culture focused on improving industrial safety and environmental protection, we have developed the PEMEX Safety, Health and Environmental Protection System (which we refer to as the SSPA). This system, which we began to implement in January 2006, is a management tool that focuses on the identification, evaluation and continuous application of preventive measures related to industrial safety, health and environmental protection. The SSPA is based on international best practices and is designed to help us promote the continual improvement of our safety, health and environmental protection performance in order to achieve our goal of zero incidents, injuries, emissions of pollutants and illnesses in all of our operations. The specific objectives of the SSPA include: reinforce process safety management, with a strong emphasis on the mechanical integrity of our plants and facilities; upgrade the guide to determine the root causes of incidents; improve in environmental protection and occupational health; rigorous application of internal critical safety
procedures; improve and execute preventive safety observation program (known as effective audits); upgrade emergency response plans; effective prevention tests; improve and execute preventive safety risk assessment and job-task safety analysis.
In January 2011, the Ministry of Energy issued official guidelines regarding the implementation of safety systems with which Petróleos Mexicanos and its subsidiary entities must comply. For this reason, we introduced a program to comply with these guidelines and we took a series of actions, including implementing reactive and preventive process safety management indicators. These indicators are based on the API’s Recommended Practice 754, which establishes process safety performance indicators for the refining and petroleum industries. During 2013, the preventive safety management indicators and reactive indicators were continuously monitored in order to develop effective safety strategies for our critical installations.
During 2013, our accident frequency rate decreased by 6.6% from 2012 to 2013, from 0.61 to 0.57 injuries per million man hours worked with risk exposure. The subsidiaries that contributed most to this decrease were Pemex-Refining, which accounted for 39% of the decrease, Pemex-Gas and Basic Petrochemicals, which accounted for 17% of the decrease, and Pemex-Exploration and Production, which accounted for 12% of the decrease. The indicator of lost days due to injuries remained unchanged from 2012 to 2013, at 32 lost days per million man hours worked with risk exposure. Lost days are those missed due to medical incapacity as a result of injuries suffered at work or those rewarded as compensation for partial, total or permanent incapacity or death.
In order to reduce the risk of serious accidents, we continued to direct our efforts toward the integration and operation of working groups focused on implementing an accident containment plan and a program to strengthen the efficacy of the SSPA’s risk management strategy. During 2013, the accident containment plan succeeded in decreasing the occurrence rate of serious accidents such as fatalities, amputations, fractures and burns by 30%, as compared to 2012. Additionally, in an effort to reverse the rising trend of minor and moderate accidents such as sprains, abrasions, bruises and cuts, we continued to promote our accident prevention campaigns, which specifically addressed the prevention of falls from heights and on the same level, hand safety, and lift and maneuver safety. Subsequent accident prevention campaigns will focus on working in teams, opening oil and gas lines and electrical maintenance. During the last four months of 2013, the number of falls from heights decreased by 33%, falls on the same level decreased by 20%, hand accidents decreased by 29% and accidents involving lifts and maneuvers decreased by 12%.
In addition, from 2012 to 2013, our contractors’ accident frequency rate decreased by 39.1%, from 0.46 to 0.28 injuries per million man hours worked with risk exposure.
Other than as disclosed in this report, there are currently no material legal or administrative proceedings pending against us with respect to any environmental matters.
Environmental Liabilities
At December 31, 2013, our estimated and accrued environmental liabilities totaled Ps. 5,467.0 million. Of this total, Ps. 781.7 million was attributable to Pemex-Exploration and Production, Ps. 4,085.1 million to Pemex-Refining, Ps. 596.1 million to Pemex-Gas and Basic Petrochemicals and Ps. 4.2 million to Pemex-Petrochemicals. There were no environmental liabilities at the subsidiary company level. The following tables detail our environmental liabilities by subsidiary entity and operating region at December 31, 2013.
Pemex-Exploration and Production
Estimated Affected Area | Estimated Liability | |||||||
(in hectares) | (in millions of pesos) | |||||||
Northern region | 98.91 | Ps. | 532.0 | |||||
Southern region | 63.44 | 106.0 | ||||||
|
|
|
| |||||
Total(1) | 162.35 | Ps. | 637.9 | |||||
|
|
|
|
Note: Numbers may not total due to rounding.
(1) | During 2013, environmental remediation was completed on 30.09 hectares. There were 28.82 hectares of additional affected areas in 2013, including 2.89 hectares in the Northern region and 25.93 hectares in the Southern region, as a result of spills from pipelines. |
Source: PEMEX.
Holding Ponds Drainage | ||||||||
Number of Holding Ponds Reported as Liabilities(1) | Estimated Liability | |||||||
(in millions of pesos) | ||||||||
Northern region | 76 | Ps. | 126.4 | |||||
Southern region | 8 | 17.4 | ||||||
|
|
|
| |||||
Total | 84 | Ps. | 143.8 | |||||
|
|
|
| |||||
Total estimated environmental liabilities of Pemex-Exploration and Production | Ps. | 781.7 | ||||||
|
|
Note: Numbers may not total due to rounding.
(1) | At December 31, 2012, we reported 88 holding ponds as liabilities. In 2013, there were 4 additional holding ponds, while 8 holding ponds were restored and the related liabilities were discharged. As a result, at December 31, 2013, 84 ponds remained to be reported as liabilities. |
Pemex-Refining
Estimated Affected Area | Estimated Liability | |||||||
(in hectares) | (in millions of pesos) | |||||||
Pipelines | 11.12 | Ps. | 103.3 | |||||
Refineries | 259.53 | 2,142.6 | ||||||
Storage and distribution terminals | 69.28 | 506.1 | ||||||
Areas affected by recent incidents(1) | 123.47 | 1,333.1 | ||||||
|
|
|
| |||||
Total(2) | 463.40 | Ps. | 4,085.1 | |||||
|
|
|
|
Note: Numbers may not total due to rounding.
(1) | These areas relate to environmental liabilities resulting from spills in facilities and pipelines that are immediately addressed through the use of a special remediation fund. |
(2) | During 2013, environmental remediation was completed on 18.89 hectares, which resulted in adjustments that were excluded from the environmental liabilities total for 2013 due to the outcome of assessment studies. |
Source: PEMEX.
Pemex-Gas and Basic Petrochemicals
Estimated Affected Area | Estimated Liability | |||||||
(in hectares) | (in millions of pesos) | |||||||
Gas complex processors at Reynosa | 11.50 | Ps. | 19.5 | |||||
Texistepec Mining Unit(1) | 382.00 | 576.6 | ||||||
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|
| |||||
Total | 393.50 | Ps. | 596.1 | |||||
|
|
|
|
Notes: Numbers may not total due to rounding.
n.a. = not available.
(1) | Pemex-Gas and Basic Petrochemicals, as jointly responsible for the remediation of environmental liabilities attributable to its subsidiary Terrenos para Industrias, S.A., has accrued an environmental liability totaling Ps. 576.6 million at December 31, 2013 in connection to the Texistepec Mining Unit. |
Source: PEMEX.
Pemex-Petrochemicals
Estimated Affected Area | Estimated Liability | |||||||
(in hectares) | (in millions of pesos) | |||||||
Pajaritos petrochemical complex | 0.34 | Ps. | 4.2 | |||||
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|
|
| |||||
Total(1) | 0.34 | Ps. | 4.2 | |||||
|
|
|
|
Note: Numbers may not total due to rounding.
(1) | All of Pemex-Petrochemicals’ plants have been audited and the table above reflects the only plant determined to require environmental remediation. |
Source: PEMEX.
Our estimates of environmental liabilities include cost estimates for site-specific evaluation studies, studies that draw upon aspects of previous evaluations for sites with comparable characteristics and the corresponding remediation. The remediation sites consist of sites identified in the audit process described above, as well as those previously identified sites in more mature petroleum operating areas that were not cleaned up in the past. Our environmental liabilities also include the elimination of holding ponds created by abandoned petroleum wells. Additionally, our environmental liabilities include an accrual based on information requested and received periodically from field managers regarding probable environmental liabilities identified in their respective areas of responsibility. We accrue environmental liabilities when sufficient basic knowledge is available to form a preliminary estimation as to remediation cost. Although the full potential scope of the remediation cost may not be known with certainty, these accruals are made when the liability is probable and the amount is reasonably estimable, in accordance with IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” for IFRS purposes. These estimated liabilities include assumptions resulting from an initial evaluation of damage, including land acreage to be remediated, depth of contamination and type of contamination. While the initial evaluation is extensive, there is a possibility that the actual scope of remediation could vary depending upon information gathered during the remediation process. For a further discussion of our environmental liabilities, see Note 3(l) to our consolidated financial statements included herein.
Unasserted or additional claims are not reflected in our identified liabilities. We are not aware of any such claims that would be of such magnitude as to materially affect our estimates of environmental liabilities. At the end of 2013, we were not aware of uncertainties with respect to joint and several liabilities that could affect our assessment of environmental contingencies or otherwise result in a major environmental liability. As of the date of this report, we are responsible for all production, processing, storage and distribution of petroleum and its derivatives in Mexico. As a result, we believe we are positioned to know immediately of any claims and are therefore directly accountable for any claims that may be brought against us.
Pemex-Exploration and Production remains responsible for handling existing environmental liabilities—these responsibilities are not part of the Integrated E&P Contracts. Nevertheless, the Integrated E&P Contracts include environmental clauses related to contractors’ and Pemex-Exploration and Production’s responsibility to ensure an adequate environmental performance, and also establish the terms for compensation and repair of any new environmental impacts.
The timing of remediation or cleanup of the sites to which these environmental liabilities relate is dependent upon the annual budget assigned to us by the Mexican Congress.
Social Responsibility
Petróleos Mexicanos has implemented various initiatives in the area of corporate social responsibility, primarily with respect to the protection and preservation of the environment, community relations with communities involved in Mexico’s oil and gas industry, ethical work practices, respect for labor rights and the general promotion of quality of life for employees. Our corporate and social responsibility goals are carried out through the following mechanisms:
mutually beneficial public works and investment projects;
cash donations;
donations of fuels and asphalts;
support of local suppliers;
higher education collaboration agreements;
environmental protection projects; and
programs to promote investment and employment.
Our total donations, contributions and mutual benefit projects in 20112013 amounted to more than Ps. 5.03.5 billion. Our donations and contributions amounted to Ps. 1.62.8 billion, or 32%80.0% of this total. The remaining Ps. 3.40.7 billion of the total donations contributions and mutual benefit projects consisted of infrastructure investments in the states of Campeche, Chiapas, Guanajuato, Hidalgo, México, Michoacán, Oaxaca, Puebla, Tabasco, Tamaulipas, Veracruzwhere Pemex-Exploration and Mexico City.Production operates. Approximately 67.9%56% of our donations and contributions were directed to the states principally involved in the crude oil industry (Campeche, Chiapas, Tabasco, Tamaulipas and Veracruz); 23.0%21% to the states with medium involvement in the crude oil industry (Coahuila, Guanajuato, Hidalgo, Nuevo León, Oaxaca, Puebla and Puebla)San Luis Potosí); and 24% to the remaining 9.1% to states that do not participate in the crude oil industry.states.
Most importantly, we took the following specific actions in 2011:2013:
• | Conservación, manejo y restauración de los ecosistemas naturales de la cuenca media del río Usumacinta(Conservation, management and restoration of the ecosystems in the middle basin of the Usumacinta River) in the state of Chiapas for approximately Ps. 10.0 million; |
• | Programa de investigación, educación ambiental y operación de la casa del agua en los pantanos de Centla, Tabasco (Program of research, environmental education and operation of the water house in the Centla marshes in the state of Tabasco) for approximately Ps. 8.5 million; |
• | Proyecto de educación ambiental y restauración forestal en las areas naturales protegidas del golfo de México, subregión planicie costera (Environmental education and reforestation project in the natural protected areas of the gulf of Mexico, sub-region of the coastal plains); |
• | Corredor socio-cultural ambiental del sur de Veracruz: rescate del orgullo regional (Sociocultural and environmental corridor of southern Veracruz: rescue of the regional pride); |
• | Educación ambiental y recuperación ecológica de manglares y selvas bajas en el estado de Veracruz (Environmental education and ecological recovery of the swamps and low rainforests of Veracruz); and |
• | Programa de construcción de ecotecnias en la cuenca de Valle de Bravo (Environmentally sustainable construction in the Valle de Bravo basin). |
During 2013, our primary social responsibility initiatives included projects focused on biodiversity conservation, reforestation, hydrologic improvement to ensure water supply and other environmental services, particularly carbon sequestration, in seven protected areas locatededucation in the states of Tamaulipas, Veracruz, and Tabasco;
we provided various forms of environmental support, including support to ensure that oil installations located in the Tabasqueña plain had sufficient water supply, contributions to reduce the environmental impact caused by extreme weather events, such as for hurricanes that recurrently occur along the coastal areas in the state of Tabasco, and support to increase the supply of nutrients in the Gulf of Mexico to support the food chain;
we provided support for environmental education and related programs in several states, including environmental education and programs for environmental recovery and reforestation in the state of Veracruz, environmental education and the operation of the “Casa del Agua” in Pantanos de Centla, Tabasco, environmental education in the communities of the biosphere reserve in Montes Azules and Marqués de Comillas, Chiapas, as well as various education-related projects in the states of Chihuahua and Sinaloa;
we made contributions to improve the infrastructure of several states of Mexico, including supporting the Parallel Aqueduct Chicbul-Carmen project in the state of Campeche, the construction, maintenance, extension and restoration of urban, hydraulic and sanitary infrastructure work in the municipalities of Reforma, Pichucalco, Juárez, Ostuacán and Sunuapa, in the state of Chiapas and hydraulic concrete paving in the state of Guanajuato and in the Oleoducto avenue in the Salinas Cruz municipality in the state of Oaxaca; andCampeche.
we provided support for the program aimed at the conservation, handling and restoration of natural ecosystems located in the Middle Basin of the Usumacinta River in the state of Chiapas.
Environmental Projects and Expenditures
In 2011,2013, we spent approximately Ps. 10,0657,093 million on environmental projects and related expenditures, as compared to Ps. 10,0838,894 million in 2010.2012. For 2012,2014, we have budgeted Ps. 12,69211,411 million for environmental projects and expenditures, including modernization of installations, implementation of systems and mechanisms to monitor and control atmospheric pollution, acquisition of equipment to address contingencies related to hydrocarbon spills, the expansion of water effluent systems, restoration and reforestation of affected areas, studies for environmental investigation and the conducting of environmental audits. In addition, we continue to conduct extensive research and development efforts to increase our capacity to produce gasoline, diesel and fuel oil with lower sulfur content at our refineries in Mexico.
We do not believe that the cost of complying with environmental laws or environmental requirements related to the North American Free Trade Agreement (NAFTA) among the governments of Mexico, the United States and Canada, the Vienna Convention for the Protection of the Ozone Layer, the Agreement on Environmental Cooperation between the Governments of Mexico and Canada or Mexico’s membership in the Organization for Economic Cooperation and Development, has caused or will cause a significant increase in our environmental expenditures.
TRADE REGULATION AND EXPORT AGREEMENTS
Though Mexico is not a member of OPEC, it has periodically announced increases and decreases in PEMEX’sour crude oil exports reflecting production revisions made by other oil producing countries, in order to contribute to crude oil prices stabilization. However, PEMEX haswe have not changed itsour export goals because of announcements made by OPEC since 2004, and we believe that Mexico has no current plans to change PEMEX’sour current level of crude oil exports.
NAFTA did not affect Mexico’s exclusive rights, through Pemex-Exploration and Production, Pemex-Refining and Pemex-GasPemex Gas and Basic Petrochemicals, to explore and exploit crude oil and natural gas in Mexico, to refine and process crude oil and natural gas and to produce basic petrochemicals in Mexico. Since 2003, non-basic petrochemical products have enjoyed a zero tariff under NAFTA and, subject to limited exceptions, exports of crude oil and petroleum products from Mexico to the United States and Canada have been free or exempt from tariffs. Similarly, since 2003, Mexico’s imports of petroleum products from the United States and Canada have also been exempt from tariffs. In addition, in 2004, NAFTA approved lower tariffs on certain materials and equipment imported by Mexico. The zero tariff on Mexico’s imports of non-basic petrochemicals from the United States and Canada could have increased competition in the non-basic petrochemicals industry in Mexico. To the extent that domestic and international prices for our products remain constant, lower tariffs on products, materials and equipment that we import from and export to the United States and Canada, reduce our expenses and increase our revenue.
TAXES AND DUTIES
General
Taxes and duties applicable to PEMEXus are a significant source of revenues to the Mexican Government. We contributed approximately 32.9%32.8% of the Mexican Government’s revenues in 20102012 and 33.7%32.2% in 2011.2013. In 2011,2013, we paid a number of special hydrocarbon taxes and duties, in addition to the other taxes and duties paid by some of the subsidiary companies, as described below under “—Other Taxes.” Until 2006, the rates at which the Mexican Congress assessed hydrocarbon taxes and duties could vary from year to year and were set after taking into consideration our operating budget, our capital expenditure program and our financing needs. A newThe fiscal regime for Petróleos Mexicanos and the subsidiary entities, described below, became effective in 2006.
Fiscal Regime for PEMEX
The Mexican Congress approved a newthe current fiscal regime for Petróleos Mexicanos and the subsidiary entities on November 10, 2005, which was published in the Official Gazette of the Federation on December 21, 2005. The new fiscal regime went into effect on January 1, 2006, but was modified in 2007, with effect from January 1, 2008; in 2008, with effect from January 1, 2009; in 2009, with effect from January 1, 2010;2010, 2011 and in 2010, with effect from January 1, 2011.Under2013. Under the current fiscal regime, Pemex-Exploration and Production is governed by theLey Federal de Derechos (Federal Duties Law), while the other subsidiary entities are governed by theLey de Ingresos de la Federación(Federal Revenue Law) for the applicable fiscal year.
In 20112013 and 2012,2014, the fiscal regime for Pemex-Exploration and Production consisted of the following duties:
Derecho Ordinario sobre Hidrocarburos | This duty is applied to the annual value of extracted production of crude oil and natural gas minus certain permitted deductions (including specific investments, certain costs and expenses, and the other duties referred to below, subject to certain conditions), and applies to all crude oil and natural gas productionother than |
Derecho Especial sobre Hidrocarburos | A rate |
Paleocanal de Chicontepec and in the deep waters | ||
Derecho sobre
| A rate of 15% is applied to the value of extracted production of crude oil and natural gas for the year from fields located in the Paleocanal de Chicontepec and in the deep waters |
Derecho Adicional sobre Hidrocarburos | A rate of 52% is applied to the value resulting from the multiplication of (i) the difference between the annual Mexican crude oil export price corresponding to the field from which such crude oil is extracted, and a threshold price of U.S. |
Derecho sobre Hidrocarburos para el | Rates between 1% and 10% are applied to the value of the extracted crude oil production when the weighted average Mexican crude oil export price for a certain year exceeds between U.S. $22.00 and U.S. $31.00 per barrel. These rates apply to all crude oil production other than production from fields located (1) in the Paleocanal de Chicontepec and (2) in the deep waters of the Gulf of Mexico and (3) production in excess of an annual “base” level of production from specified marginal fields. |
Derecho para la Investigación Científica y | A rate of |
Derecho para la Fiscalización Petrolera | A rate of 0.003% is applied to the value of extracted production of crude oil and natural gas for the year. |
Derecho Extraordinario sobre la | A rate of 13.1% is applied to the value resulting from the multiplication of (i) the difference between the annual weighted average Mexican crude oil export price and the budgeted crude oil price, by (ii) the annual export volume. The budgeted crude oil price for |
Derecho para Regular y Supervisar la | A rate of 0.03% is applied to the value of extracted production of crude oil and natural |
The Federal Duties Law, for purposes of the duties mentioned above, defines the deep water fields as those located in waters with an average depth of 500 meters or greater, and the Paleocanal de Chicontepec fields as those located in the following areas: Castillo de Teayo, Coatzintla, Coyutla, Chicontepec, Espinal, Ixhuatlán de Madero, Temapache, Papantla, Poza Rica de Hidalgo, Tepetzintla and Tihuatlán, in the state of Veracruz; and Francisco Z. Mena, Pantepec and Venustiano Carranza, in the state of Puebla.greater.
The Federal Duties Law defines marginal fields as those fields that are abandoned or in the process of being abandoned. In 2011, the following2013 and 2014, 101 fields were categorized as marginal fields: the Blasillo, Cinco Presidentes, La Venta, Magallanes, Ogarrio, Otates, Rodador, San Alfonso and San Ramón fields, located in the area of Magallanes Cinco Presidentes; the Arenque, Atún, Bagre, Carpa, Escualo, Isla de Lobos, Jurel, Lobina, Marsopa, Mejillón, Morsa, Náyade and Tiburón fields, located in the area of Arenque; and the Altamira, Barcodón, Cacalilao, Corcovado, Ébano, Limón, Pánuco, Salinas, Tamaulipas Constituciones and Topila fields, located in the area of Altamira. In addition, the following103 fields were categorized as marginal fields, in 2012: San Andrés, Remolino, Tierra Blanca, Potrero del llano-Horcones, Hallazgo, Cerro Viejo, Temapache, Alazán, Vara Alta, Kach, Amoca, Alak, Tecoalli and Ichalkil.respectively.
On January 1, 2011, an amendment to the Federal Duties Law became effective, which revoked theDerecho Único sobre Hidrocarburos(Sole Hydrocarbons Duty). In its place, the Ordinary Hydrocarbons Duty, the Duty for Scientific and Technological Research on Energy, the Duty for Oil Monitoring, the Hydrocarbons Duty for the Stabilization Fund and the Extraordinary Duty on Crude Oil Exports are applied to the annual base production (production below a certain threshold) from each of the marginal fields in accordance with the Federal Duties Law.
Once the annual base production level is reached, any production above that threshold will be subject to the Extraction of Hydrocarbons Duty, the Special Hydrocarbons Duty and the Additional Duty on Hydrocarbons.
As described above, fluctuating crude oil price levels directly affect the level of certain taxes and duties that we pay. The Extraordinary Duty on Crude Oil Exports did not have an impact on our cash outflow, because it was credited against the Hydrocarbons Duty for the Stabilization Fund. The fiscal regime for Petróleos Mexicanos and its subsidiary entities, with the exception of Pemex-Exploration and Production, consists of the following taxes and duties:
Impuesto a los Rendimientos Petroleros | A tax rate of 30% is applied to net income, as determined in accordance with the Federal Revenue Law for the applicable fiscal year. | |
IEPS | The IEPS tax is an indirect tax on domestic sales of gasoline and diesel that Pemex-Refining collects on behalf of the Mexican Government. The IEPS tax on the sale of gasoline and diesel is equivalent to the difference between the international reference price of each product (adjusted by freight costs and quality factors) and the retail price of the product (not including value added tax, the retailers’ margin and freight costs). Thus, the Mexican Government ensures that we retain an amount reflecting the international prices (adjusted as described above) of these products, while the Mexican Government collects the difference between the international prices and the prices at which these products are sold in Mexico. |
Since 2005, as a result of the |
Impuesto Especial sobre Producción y Servicios a beneficio de entidades federativas, municipios y demarcaciones territoriales (IEPS Tax in favor of states, municipalities and territories) | The IEPS Tax in favor of states, municipalities and territories is an indirect tax on domestic sales of gasoline and diesel that Pemex-Refining collects on behalf of the Mexican Government. The applicable rates for the tax are 36 cents per liter of Magna gasoline, 43.92 cents per liter of Premium gasoline and 29.88 cents per liter of |
diesel. The resources obtained will be allocated to states, municipalities and territories, as provided in theLey de Coordinación Fiscal (Tax Coordination Law). |
IEPS sobre Combustibles Fósiles (IEPS Tax on Fossil Fuels) | Beginning in 2014, Pemex-Refining and Pemex-Gas and Basic Petrochemicals will collect, on behalf of the Mexican Government, an IEPS tax on the sale of fossil fuels. The applicable rates will be as follows: 5.91 cents per liter for propane; 7.66 cents per liter for butane; 10.38 cents per liter for gasolines and aviation gasoline; 12.40 cents per liter for jet fuel and other kerosenes; 12.59 cents per liter for diesel; 13.45 cents per liter for fuel oil; and 15.60 pesos per ton for petroleum coke. |
Fluctuating crude oil price levels directly affect the level of certain taxes and duties that we pay. See “Item 3—Key Information—Risk Factors—Risk Factors Related to Our Relationship with the Mexican Government—Petróleos Mexicanos and the subsidiary entities pay special taxes and duties to the Mexican Government, which may limit our capacity to expand our investment program.”
In 2011,2013, we paid total taxes and duties in the amount of Ps. 876.0864.9 billion (56.2%(53.8% of nettotal sales), as compared to the Ps. 654.1902.6 billion (51.0%(54.8% of sales revenues)total sales) of taxes and duties that we paid in 2010,2012, mainly due to the increasedecrease in Mexican crude oil export prices in 2011.2013.
Other Taxes
Since 1994, our interest payments on our external debt have been subject to Mexican Government withholding taxes. Nevertheless, withholding taxes do not represent a substantial portion of our total tax liability.
We are subject to municipal and state taxes, such as real property and payroll taxes. However, because most of our facilities are located on federal property, which is not subject to municipal taxation, real property taxes are not a significant part of our overall taxes. Similarly, payroll taxes do not represent a substantial portion of our total tax liability.
Petróleos Mexicanos and the subsidiary entities are exempt from Mexican corporate income tax; however, some of our subsidiary companies are Mexican corporations and are subject to the tax regime applicable to all other Mexican corporations. In 2013, Mexican companies paypaid the higher of the two tax rates described below: The first iswas a corporate income tax at a rate of 30% applied to revenues, less certain deductions. Thedeductions; the second iswas theImpuesto Empresarial a Tasa Única (Flat Rate Business Tax), which replaced the asset tax at the beginning of 2008 and imposed a minimum tax equal to 17.0%17.5% of a corporation’s sales revenues (less certain deductions and certain investment expenditures) for 2009;. Effective 2014, the rate of this tax increased to 17.5% for 2010 and thereafter.Flat Rate Business Tax was eliminated.
In addition, we have a number of non-Mexican subsidiary companies that may be subject to taxation in the jurisdiction of their incorporation or operations. The aggregate taxes paid by the subsidiary companies were Ps. 1,755.8769.6 million in 2009,2012 and Ps. 1,724.82,660.4 million in 2010 and Ps. 3,620.5 million in 2011.2013.
No assurance can be given that our tax regime will not change in the future. The Energy Reform Decree contemplates that the secondary legislation implementing it will include a new fiscal regime applicable to us. See “Item 3—Key Information—Risk Factors—Considerations Related to Mexico—The effects of the Energy Reform Decree and its implementation are uncertain but likely to be material” and “—Risk Factors Related to theOur Relationship between PEMEX andwith the Mexican Government—Petróleos Mexicanos and the subsidiary entities pay special taxes, duties and dividends to the Mexican Government, which may limit PEMEX’sour capacity to expand itsour investment program.”
UNITED MEXICAN STATES
The information in this section with regard to Mexico has been included due to Petróleos Mexicanos’Mexicanos and the subsidiary entities’ relationship with the Mexican Government and has been reviewed by the SHCP.
Form of Government
The President is the chief of the executive branch of the Mexican Government. The President is elected by the popular vote of Mexican citizens who are 18 years of age or older. The Mexican Constitution limits the President to one six-year term; the President is not allowed to run for reelection. In accordance with Mexico’s electoral law, on September 5, 2006,August 31, 2012, theTribunal Electoral del Poder Judicial de la Federación (the federal electoral court)(Federal Electoral Court) officially validated the results of the presidential election held in Mexico on July 2, 20061, 2012, and declared Felipe de Jesús Calderón Hinojosa,Mr. Enrique Peña Nieto, a member of the PAN,PRI, President-elect. President CalderónMr. Peña Nieto took office on December 1, 20062012 and his term expireswill expire on November 30, 2012. The Political Constitution of the United Mexican States limits the President to one six-year term and does not allow reelection for any additional terms. The next presidential election will occur on July 1, 2012.2018.
ThePartido Revolucionario Institucional (Institutional Revolutionary Party, or PRI) was the dominant political party in Mexico for more than seven decades. From 1929 to 1994, the PRI won all presidential elections, and, from 1929 until July 1997, the PRI held a majority of the seats in both chambers of the Mexican Congress. Until 1989, the PRI also won all of the state gubernatorial elections. However, inIn July 2000, the candidate offrom theAlianza por el Cambio(Alliance (Alliance for Change), a coalition betweenof the PAN,Partido Acción Nacional (National Action Party, or PAN), the oldest opposition party in Mexico,the country, and thePartido Verde Ecologista de México(Ecological (Ecological Green Party of Mexico)Party), won the presidential election. TheIn addition, in 2006, Mr. Felipe de Jesús Calderón Hinojosa, a member of the PAN, currently holds sixwas elected President. However, in 2012, the PRI candidate was once again elected President. Each of Mexico’s 31 states is headed by a state governorships,governor. Mexico’s Federal District, Mexico City, is headed by an elected mayor. Local elections were most recently held on July 7, 2013. These elections were for the Baja California governorship. By forming an alliance with thePartido de la Revolución Democrática(Democratic (Democratic Revolution Party, or PRD) holds twoand thePartido Nueva Alianza (New Alliance Party), the PAN was able to retain the Baja California governorship.
As a result of this election, Mexico’s state governorships and are now composed as follows:
Legislative authority is vested in the Mexican Congress, which is composed of theCámara de Senadores(Senate) and theCámara de Diputados (Chamber Chamber of Deputies).Deputies. Members of the Mexican Congress are elected either directly or through a system of proportional representation by the popular vote of Mexican citizens who are 18 years of age or older. Senators serve a six-year term, deputies serve a three-year term and neither may serve consecutive terms in the same chamber. The Senate is composed of 128 members, 96 of whom are elected directly, while the other 32 are elected through a system of proportional representation. The Chamber of Deputies is composed of 500 members, 300 of whom are elected directly by national electoral districts, andwhile the other 200 of whom are elected through a system of proportional representation. Under this proportional representation that
allocates thosesystem, seats are allocated to political party representatives based on the proportion of the votes cast for those parties that receive at least 2.0% of the national vote.vote, among other requirements. The PoliticalMexican Constitution of the United Mexican States provides that the President may veto bills and that the Mexican Congress may override such vetoes with a two-thirds majority vote of each chamber.
In
Congressional elections for all 128 seats in the congressional election held on July 5, 2009, theSenate and 500 seats in the Chamber of Deputies were up for election. The members of the Senate were electedheld on July 2, 2006.1, 2012. The following table provides the current distribution of congressional seats, reflecting certainpost-election changes in the party affiliations of certain senators and deputies.
Party Representation in the Mexican Congress
Senate | Chamber of Deputies | Senate | Chamber of Deputies | |||||||||||||||||||||||||||||
Seats | % of Total | Seats | % of Total | Seats | % of Total | Seats | % of Total | |||||||||||||||||||||||||
Institutional Revolutionary Party | 54 | 42.2 | % | 213 | 42.6 | % | ||||||||||||||||||||||||||
National Action Party | 50 | 39.1 | % | 142 | 28.4 | % | 38 | 29.7 | 114 | 22.8 | ||||||||||||||||||||||
Institutional Revolutionary Party | 33 | 25.8 | 239 | 47.9 | ||||||||||||||||||||||||||||
Democratic Revolution Party | 24 | 18.8 | 68 | 13.8 | 22 | 17.2 | 101 | 20.2 | ||||||||||||||||||||||||
Ecological Green Party of Mexico | 7 | 5.5 | 23 | 4.6 | 7 | 5.5 | 28 | 5.6 | ||||||||||||||||||||||||
Labor Party | 5 | 3.9 | 14 | 2.8 | ||||||||||||||||||||||||||||
Citizen Movement Party | 5 | 3.9 | 6 | 1.2 | 1 | 0.8 | 20 | 4.0 | ||||||||||||||||||||||||
Labor Party | 5 | 3.9 | 13 | 2.6 | ||||||||||||||||||||||||||||
New Alliance | 0 | 0.0 | 7 | 1.4 | 1 | 0.8 | 10 | 2.0 | ||||||||||||||||||||||||
Unaffiliated | 4 | 3.1 | 1 | 0.2 | 0 | 0.0 | 0 | 0.0 | ||||||||||||||||||||||||
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|
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|
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|
| |||||||||||||||||||||||||
Total | 128 | 100.0 | % | 500 | 100.0 | % | 128 | 100.0 | % | 500 | 100.0 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
Note: Numbers may not total due to rounding.
Source: Senate and Chamber of Representatives.Deputies.
The Economy
Program forNational Development Plan
ThePlan Nacional de Desarrollo 2013-2018 (National Development Plan), published in the Promotion of Growth and Employment
ThePrograma para Impulsar el Crecimiento y el Empleo(“Program for the Promotion of Growth and Employment”), announced on October 8, 2008, was intended to mitigate the impactOfficial Gazette of the deteriorationFederation on May 20, 2013, establishes the basic goals and objectives of the international economic environment on the Mexican economy. In creating this program, the Mexican Government expected that the extreme contraction of liquidity in the international financial markets and equity, debt and foreign exchange market volatility, as well as the economic recessions experienced by Mexico’s trading partners, were likely to have adverse effects on the Mexican economy, including:President Peña Nieto during his six-year term. These objectives are:
1. | to achieve peace in Mexico, thereby promoting a firm base for democracy, governance and security; |
a decrease
2. | to make Mexico more inclusive for its citizens and better protect their social rights; |
3. | to improve the quality of, and increase access to, Mexico’s education system; |
4. | to promote prosperity by stimulating sustainable economic growth, with a particular emphasis on improving equality of opportunities; and |
5. | to emphasize Mexico’s role as a responsible global actor, by: (i) focusing on its external policy goals; (ii) promoting free international trade; and (iii) being a positive and proactive force in the international community. |
In addition, the National Development Plan proposes the following three general strategies that will be incorporated in exports, remittances, tourism revenues and foreign direct investment inflows;
reduced availability of credit, as financial intermediaries adopted more conservative lending policies, thereby diminishing access to foreign credit; and
lower oil prices, leading to decreased public sector revenues.
The specific goals of the Program for the Promotion of Growth and Employment were to:all government policies:
Strategy | Rationale | |
Democratization of productivity | This strategy: (1) facilitates the growth and competitiveness of the Mexican economy; (2) carries out public policies that eliminate obstacles limiting the productivity of Mexican citizens and corporations; and (3) encourages participants in the Mexican economy to efficiently utilize resources. | |
Create an effective and modern government | This strategy: (1) guarantees access to information and the protection of personal data; (2) expands the use and development of information and communication technologies in order to improve the effectiveness of governmental actions; and (3) consolidates a government that is productive and effective at attaining its objectives through the appropriate allocation of resources, promotion based on individual merit, promulgation of best practices and implementation of automated administrative systems. | |
Promote gender equality | This strategy incorporates the principle of gender equality in all government policies and actions. |
compensate for the expected lower government revenues, which would ordinarily require a reduction in programmable expenditures;
stimulate economic activity and create jobs through a variety of infrastructure projects aimed at specific sectors such as education, housing and highways;
increase the availability of financing and credit, for financing infrastructure and for supporting small- and medium-sized firms, through the Mexican development banks; and
foster long-term economic growth.
Gross Domestic Product
According to preliminary figures,The following table sets forth the percentage change in Mexico’s real gross domestic product (GDP) contracted by 6.1%economic sector in 2009, as compared to 2008. Global economic activity began to recover beginning inconstant 2008 pesos for the second half of 2009, after a deep contraction observed in the previous six months. The recovery was drivenperiods indicated.
Real GDP Growth by fiscal and monetary stimulus programs implemented in many advanced economies and in some emerging market countries, as well as the several measures taken to stabilize the operation of the international financial system.Sector
(% change against prior years)(1)
2008 | 2009 | 2010(2) | 2011(2) | 2012(2) | 2013(2) | |||||||||||||||||||
GDP (constant 2008 prices) | 1.4 | % | (4.7 | )% | 5.1 | % | 4.0 | % | 3.9 | % | 1.1 | % | ||||||||||||
Primary Activities: | ||||||||||||||||||||||||
Agriculture, forestry, fishing, hunting and livestock | 1.3 | (2.5 | ) | 0.8 | (2.3 | ) | 7.3 | 0.3 | ||||||||||||||||
Secondary Activities: | ||||||||||||||||||||||||
Mining | (3.7 | ) | (4.0 | ) | 0.9 | (0.4 | ) | 0.8 | (1.7 | ) | ||||||||||||||
Utilities | 1.3 | 1.3 | 4.5 | 6.7 | 2.3 | 0.2 | ||||||||||||||||||
Construction | 3.8 | (6.1 | ) | 0.8 | 4.0 | 2.0 | (4.5 | ) | ||||||||||||||||
Manufacturing | (1.0 | ) | (8.4 | ) | 8.5 | 4.6 | 3.8 | 1.4 | ||||||||||||||||
Tertiary activities: | ||||||||||||||||||||||||
Wholesale and retail trade | 0.2 | (12.5 | ) | 11.9 | 9.4 | 4.4 | 2.8 | |||||||||||||||||
Transportation and warehousing | (0.1 | ) | (7.2 | ) | 7.7 | 4.0 | 4.4 | 1.5 | ||||||||||||||||
Information | 6.0 | 8.5 | 1.0 | 4.2 | 16.4 | 5.5 | ||||||||||||||||||
Finance and insurance | 21.9 | 3.4 | 21.0 | 7.1 | 8.5 | 3.8 | ||||||||||||||||||
Real estate, rental and leasing | 3.3 | 1.1 | 2.8 | 2.8 | 2.5 | 1.5 | ||||||||||||||||||
Professional, scientific and technical services | 3.1 | (5.0 | ) | (0.1 | ) | 5.0 | 1.1 | (1.0 | ) | |||||||||||||||
Management of companies and enterprises | 7.5 | (8.2 | ) | 5.3 | 3.4 | 6.7 | (5.7 | ) | ||||||||||||||||
Administrative support, waste management and remediation services | 2.2 | (7.0 | ) | 0.7 | 5.9 | 4.4 | 3.9 | |||||||||||||||||
Education services | 1.1 | 0.2 | 0.2 | 1.6 | 2.2 | 1.1 | ||||||||||||||||||
Health care and social assistance | 1.3 | 2.0 | (0.1 | ) | 2.1 | 2.1 | 2.0 | |||||||||||||||||
Arts, entertainment and recreation | 0.3 | (4.1 | ) | 4.1 | (0.8 | ) | 2.9 | 0.1 | ||||||||||||||||
Accommodation and food services | 0.1 | (9.6 | ) | 1.9 | 1.5 | 5.4 | 2.1 | |||||||||||||||||
Other services (except public administration) | 1.3 | (0.6 | ) | 1.0 | 1.8 | 2.8 | 1.7 | |||||||||||||||||
Public administration | 2.0 | 2.0 | 2.4 | (1.4 | ) | 3.8 | 0.8 |
Note: | Numbers may not total due to rounding. |
(1) | Based on GDP calculated in constant 2008 pesos. |
(2) | Preliminary figures. |
Source: INEGI.
According to preliminary figures, Mexico’s GDP increased by 5.5%1.1% in real terms during 2010,2013, as compared with 2009,to 2012. The decrease in the growth rate of GDP, as compared to the growth rate in prior periods, was due to a decrease in productive activity during the first half of 2013, which recovered during the second half of 2013 as Mexico’s economic activity experienced an upward trend. The economic recovery experienced since the third quarter of 2013 is a result of greater external demand and a recovery of some domestic demand components in the fourth quarter.
Prices and Wages
Consumer inflation (as measured by the change in the national consumer price index, or the NCPI) for 2013 was 4.0%, 0.4 percentage points higher than during 2012. Annual inflation remained within the interval of plus/minus one percentage point around the 3 percent target in the fourth quarter of 2013. Despite this, annual inflation rebounded in November and December, mainly as a result of greater price increments of two fully identified factors: (1) unexpected increments in public transport fares in some cities in Mexico; and (2) higher prices for a reduced number of agricultural products caused by weather conditions that delayed their production over the positive impact of increased external demand on the manufacturing and services sectors. The agriculture, forestry, fishing and hunting sector grew by 2.8%; the mining sector grew by 1.1%; the utilities sector grew by 10.3%; the construction sector remained unchanged; the manufacturing sector grew by 9.7%; the wholesale and retail trade sector grew by 13.7%; the transportation and warehousing sector grew by 7.5%; the information sector grew by 1.6%; the finance and insurance sector grew by 12.3%; the real estate, rental and leasing sector grew by 1.9%; management of companies and enterprises grew by 5.5%; administrative and support and waste management and remediation services grew by 1.6%; education services grew by 0.1%; health care and social assistance grew by 0.8%; arts, entertainment and recreation grew by 6.0%; accommodation and food services grew by 3.2%; other services (except public administration) grew by 0.7%; and public administration grew by 2.6%, each in real terms as compared to 2009. However, professional, scientific and technical services decreased by 1.0% in real terms as compared to 2009.
According to preliminary figures, Mexico’s GDP grew by 3.9% in real terms during 2011, as compared with 2010. The utilities sector grew by 5.5%; the construction sector grew by 4.8%; the manufacturing sector grew by 5.1%; the wholesale and retail trade sector grew by 7.6%; the transportation and warehousing sector grew by 3.5%; the information sector grew by 6.6%; the finance and insurance sector grew by 4.8%; the real estate, rental and leasing sector grew by 2.1%; professional, scientific and technical services grew by 5.9%; management of companies and enterprises grew by 5.7%; administrative support, waste management and remediation services grew by 4.3%; education services grew by 1.5%; health care and social assistance grew by 1.6%; arts, entertainment and recreation grew by 6.4%; accommodation and food services grew by 2.6%; and other services (except public administration) grew by 4.0%, each in real terms as compared to 2010. The agriculture, forestry, fishing and hunting sector decreased by 0.6%; the mining sector decreased by 2.3%; and public administration decreased by 0.8%, each in real terms during 2011, as compared to 2010.
The following table sets forth the change in Mexico’s real GDP by sector for the periods indicated.
Real GDP Growth by Sector(1)
2006 | 2007 | 2008 | 2009 | 2010 | 2011(1) | |||||||||||||||||||
GDP (constant 2003 prices) | 5.2 | % | 3.3 | % | 1.2 | % | (6.1 | )% | 5.5 | % | 3.9 | % | ||||||||||||
Primary Activities: | ||||||||||||||||||||||||
Agriculture, forestry, fishing and hunting | 6.3 | 2.3 | 1.2 | (2.2 | ) | 2.8 | (0.6 | ) | ||||||||||||||||
Secondary Activities: | ||||||||||||||||||||||||
Mining | 1.4 | (0.2 | ) | (1.7 | ) | (2.9 | ) | 1.1 | (2.3 | ) | ||||||||||||||
Utilities | 12.2 | 3.7 | (2.3 | ) | 2.0 | 10.3 | 5.5 | |||||||||||||||||
Construction | 7.8 | 4.4 | 3.1 | (7.3 | ) | 0.0 | 4.8 | |||||||||||||||||
Manufacturing | 5.9 | 1.7 | (0.7 | ) | (9.8 | ) | 9.7 | 5.1 | ||||||||||||||||
Tertiary activities: | ||||||||||||||||||||||||
Wholesale and retail trade | 6.5 | 5.0 | 0.9 | (14.1 | ) | 13.7 | 7.6 | |||||||||||||||||
Transportation and warehousing | 5.8 | 3.7 | 0.0 | (6.5 | ) | 7.5 | 3.5 | |||||||||||||||||
Information | 10.7 | 11.6 | 8.0 | 0.8 | 1.6 | 6.6 | ||||||||||||||||||
Finance and insurance | 16.3 | 13.9 | 12.8 | (4.5 | ) | 12.3 | 4.8 | |||||||||||||||||
Real estate, rental and leasing | 4.1 | 3.1 | 3.0 | (1.6 | ) | 1.9 | 2.1 | |||||||||||||||||
Professional, scientific and technical services | 3.0 | 3.1 | 3.0 | (5.1 | ) | (1.0 | ) | 5.9 | ||||||||||||||||
Management of companies and enterprises | 20.1 | (3.0 | ) | 14.0 | (8.1 | ) | 5.5 | 5.7 | ||||||||||||||||
Administrative support, waste management and remediation services | 3.7 | 3.1 | 1.6 | (4.8 | ) | 1.6 | 4.3 | |||||||||||||||||
Education services | 0.1 | 1.9 | 0.8 | 0.5 | 0.1 | 1.5 | ||||||||||||||||||
Health care and social assistance | 7.8 | 2.5 | (1.5 | ) | 0.8 | 0.8 | 1.6 | |||||||||||||||||
Arts, entertainment and recreation | 2.3 | 3.1 | 1.5 | (4.6 | ) | 6.0 | 6.4 | |||||||||||||||||
Accommodation and food services | 1.6 | 2.6 | 0.9 | (7.7 | ) | 3.2 | 2.6 | |||||||||||||||||
Other services (except public administration) | 3.3 | 3.9 | 0.7 | (1.1 | ) | 0.7 | 4.0 | |||||||||||||||||
Public administration | 0.1 | 1.7 | 1.1 | 4.8 | 2.6 | (0.8 | ) |
Note: Numbers may not total due to rounding.
Source: Instituto Nacional de Estadística y Geografía (National Institute of Statistics and Geography.)
Prices and Wagesprevious months.
Consumer inflation (as measured by the change in the NCPI) during 2010for the two months ended February 28, 2014 was 4.4%1.1%, 1.10.2 percentage points higher than inflation as estimated in the budget for that year and 0.8 percentage points higher than during 2009. Inflation in 2010 was higher than the amount estimated in the budget for that year due to (1) the appreciation of the Mexican peso against the U.S. dollar; (2) a positive output gap (which occurs when the growth of aggregate demand exceeds the growth of aggregate supply); and (3) moderate wage increases, among other factors.
Consumer inflation for the year ended December 31, 2011 was 3.8%, 0.6 percentage points lower than during 2010.
Consumer inflation for the three months ended March 31, 2012 was 0.97%, 0.1 percentage points lower than during the same period of 2011.2013.
Unemployment RateEmployment and Labor
At December 31, 2011, theAccording to preliminary figures, Mexico’s unemployment rate was 4.5%, as compared to an unemployment4.6% during February 2014, a 0.2 percentage point decrease from the rate during the same period of 4.9% at December 31, 2010.
At March 31, 2012, the unemployment rate was 4.6%, as compared to an unemployment rate of 4.5% at December 31, 2011.
Interest Rates
During 2010,2013, interest rates on 28-dayCetes (Mexican Federal Treasury bills (Cetes)Certificates) averaged 4.4% and interest3.8%, as compared to 4.2% during 2012. Interest rates on 91-dayCetes averaged 4.6%3.8%, as compared to average rates on 28-dayCetes4.4% during 2012.
During the first three months of 5.4% and on 91-dayCetes of 5.5% during 2009.
During 2011,2014, interest rates on 28-dayCetes averaged 4.2% and interest3.15%, as compared to 4.11% during the same period of 2013. Interest rates on 91-dayCetes averaged 4.4%3.37%, as compared to average rates on 28-dayCetesof 4.4% and on 91-dayCetes of 4.6% during 2010.
During the first three months of 2012, interest rates on 28-dayCetes averaged 4.3% and interest rates on 91-dayCetes averaged 4.4%, as compared to average rates on 28-dayCetesof 4.2% and on 91-dayCetes of 4.4%4.17% during the same period of 2011. 2013.
On April 19, 2012,March 27, 2014, the 28-dayCetes rate was 4.3%3.19% and the 91-dayCetes rate was 4.3%3.30%.
Principal Sectors of the Economy Manufacturing The following table sets forth the change in industrial manufacturing output by sector for the periods indicated. Industrial Manufacturing Output Differential (% change against prior years)(2) Food Beverage and tobacco products Textile mills Textile product mills Apparel Leather and allied products Wood products Paper Printing and related support activities Petroleum and coal products Chemicals Plastics and rubber products Nonmetallic mineral products Primary metals Fabricated metal products Machinery Computers and electronic products Electrical equipment, appliances and components Transportation equipment Furniture and related products Miscellaneous Total expansion/contraction Source: INEGI. According to preliminary figures, the manufacturing sector expanded by 1.4% in real terms during 2013 as compared to 2012. In total, eight manufacturing sectors contracted and thirteen sectors grew in 2013, each as compared to 2012. Tourism Mexico’s tourism sector expanded in 2013. As compared to 2012, this sector experienced increases in the following areas: 2009 2010(1) 2011(1) 2012(1) 2013(1) (0.3 )% 1.7 % 2.1 % 1.6 % 0.4 % 0.3 0.6 4.5 2.3 1.0 (7.4 ) 10.9 (4.5 ) 3.1 (3.2 ) (7.8 ) 2.5 (2.9 ) (0.2 ) 2.9 (7.6 ) 4.6 0.1 (0.7 ) 3.1 (4.8 ) 7.7 (0.7 ) 2.6 0.8 (4.7 ) 5.5 5.0 14.2 (2.8 ) (0.6 ) 3.7 (0.9 ) 4.6 2.6 (6.5 ) 10.0 4.1 (4.0 ) (7.2 ) 0.5 (7.2 ) (3.7 ) 1.3 2.2 (3.1 ) (0.4 ) (0.2 ) (1.1 ) 0.6 (9.6 ) 13.5 7.2 10.1 (0.5 ) (9.4 ) 4.7 4.7 2.2 (2.7 ) (16.4 ) 12.4 4.7 1.2 0.0 (14.1 ) 8.8 6.9 5.8 0.6 (19.9 ) 47.2 13.4 6.1 (1.8 ) (10.2 ) 3.7 6.5 2.2 13.3 (10.7 ) 10.1 2.0 1.7 (2.2 ) (26.4 ) 42.2 16.4 13.2 5.3 (6.5 ) 7.1 1.1 3.3 (5.8 ) (4.5 ) 1.9 0.8 2.6 0.9 (8.4 ) 8.5 4.6 3.8 1.4 (1) Preliminary figures. (2) Percent change reflects constant 2008 pesos.
In total, the Mexican tourism sector recorded a U.S. $4.8 billion surplus in the balance of payments in 2013, an 11.1% increase from the U.S. $4.3 billion surplus recorded in 2012.
As compared to the first month of 2013, the tourism sector experienced increases or decreases in the following areas for the first month of 2014:
In total, the Mexican tourism sector recorded a U.S. $719.3 million surplus in the balance of payments during the first month of 2014, a 39.4% increase from the U.S. $516.0 million surplus recorded during the same period in 2013.
Financial System
20112013 and 20122014 Monetary Programs
Consistent withThe principal objective of Mexico’s 2013 monetary program for 2011, Mexico’s monetary program for 2012 has as its principal objective the achievement ofis to achieve an inflation rate not higher than itsat or below the permanent target of 3.0% (+/-1.0%)., which is intended to stabilize the purchasing power of the Mexican peso. Mexico’s monetary programsprogram for 2011 and 2012 have been2013 is comprised of the following elements:features:
the announcement of an explicit, multi-year plan to control inflation;
a systematican analysis of the economy and inflationary pressures;
• | a description of the |
a communication policy of communication that promotes transparency, credibility and effective monetary policy.
During 2011,
At December 31, 2013, the monetary base totaled Ps. 917.9 billion, an 8.5% nominal increase from the level of Ps. 846.0 billion at December 31, 2012, due to a higher demand for bills and coins held by the public. At March 26, 2014, the monetary base totaled Ps. 845.6 billion, a 7.9% nominal decrease from the level of Ps. 917.9 billion at December 31, 2013, due to a higher demand for bills and coins held by the public.
The M1 money supply (i.e.,of Mexico is the sum of bills and coins held by the public, plus checking accounts denominated in local currency and foreign currency, plus interest-bearing deposits denominated in pesos and
operated by debit cards, plus savings and loan deposits) increased by 9.4% in real terms, as compared with growth of 8.8% in real terms in 2010. This increase in growth was driven by a 7.0% increase in real terms in the amount of bills and coins held by the public and a 13.4% increase in real terms in checking account deposits denominated in pesos.
As of February 29, 2012, thedeposits. At January 31, 2014, Mexico’s M1 money supply was 8.2%8.1% greater in real terms than the level as of February 28, 2011.at January 31, 2013. The amount of bills and coins held by the public as of February 29, 2012 was 7.4%5.8% greater in real terms than as of February 28, 2011, whileat January 31, 2013. In addition, the aggregate amount of checking account deposits denominated in pesos as of February 29, 2012 was 8.9%8.2% greater in real terms than as of February 28, 2011.at the same date in 2013.
As of DecemberAt January 31, 2011,2014, financial savings in Mexico—defined as the difference between the monetary aggregate M4 and bills and coins held by the public, public—were 12.2%3.9% greater in real terms than financial savings as of Decemberat January 31, 2010. Savings generated by Mexican residents were 7.7% greater in real terms and savings generated by non-residents were 49.9% greater in real terms than their respective levels as of December 31, 2010.
As of February 29, 2012, financial savings were 12.8% greater in real terms than financial savings as of February 28, 2011.2013. Savings generated by Mexican residents increased by 7.5%4.6% and savings generated by non-residents increased by 55.8%0.9%, in each caseboth in real terms, and as compared to their respective levels asthe same period of February 28, 2011.
As of December 31, 2011, the monetary base totaled Ps. 763.5 billion, a 10.1% nominal increase from the level of Ps. 693.4 billion as of December 31, 2010. The net domestic credit ofBanco de México registered a negative balance of Ps. 1,318.1 billion as of December 31, 2011, as compared to a negative balance of Ps. 796.2 billion as of December 31, 2010. The 65.5% increase in the negative balance was primarily due to an increase in the net international assets ofBanco de México that exceeded the increase in the monetary base during the year.
As of April 17, 2012, the monetary base totaled Ps. 762.2 billion, a 0.2% nominal decrease from the level of Ps. 763.5 billion at December 31, 2011.
The minimum overnight funding rate, which isBanco de México’sprimary monetary policy instrument, was reduced from 8.25% to 7.75% on January 16, 2009, to 7.50% on February 20, 2009, to 6.75% on March 20, 2009, to 6.00% on April 17, 2009, to 5.25% on May 15, 2009, to 4.75% on June 19, 2009 and to 4.50% on July 17, 2009. As of April 20, 2012, the minimum overnight funding rate remained at 4.50%.
Banking Supervision and Support
As of December 31, 2011, the total amount of past-due loans of commercial banks was Ps. 60.9 billion, as compared to Ps. 49.7 billion as of December 31, 2010. As of December 31, 2011, the total loan portfolio of the banking system was 11.5% greater in real terms than the total loan portfolio as of December 31, 2010. The past-due loan ratio of commercial banks was 2.5% as of December 31, 2011, as compared to a ratio of 2.3% as of December 31, 2010. The amount of loan loss reserves held by commercial banks totaled Ps. 115.5 billion as of December 31, 2011, as compared to Ps. 99.4 billion as of December 31, 2010. At this level, commercial banks had reserves covering 189.6% of their past-due loans as of December 31, 2011, exceeding the minimum reserve level of 45%.
As of February 29, 2012, the total amount of past-due loans of commercial banks was Ps. 60.6 billion, as compared to Ps. 60.9 billion as of December 31, 2011. As of February 29, 2012, the total loan portfolio of the banking system was 1.3% less in real terms than the total loan portfolio as of December 31, 2011. The past-due loan ratio of commercial banks was 2.5% as of February 29, 2012, unchanged from the ratio as of December 31, 2011. The amount of loan loss reserves held by commercial banks totaled Ps. 115.8 billion as of February 29, 2012, as compared to Ps. 115.5 billion as of December 31, 2011. At this level, commercial banks had reserves covering 190.9% of their past-due loans as of February 29, 2012, exceeding the minimum reserve level of 45%.
The Securities MarketMarkets
The BMVMexican Stock Exchange is the only authorized stock exchange involved in the listing and trading of equity and debt securities in Mexico. Upon the consummation of the initial public offering of its shares on June 18, 2008, the BMVMexican Stock Exchange was transformed from asociedad anónima de capital variable (private company) to asociedad anónima bursátil de capital variable (public company). In connection with the initial public offering of shares, certain of the former stockholders of the BMVMexican Stock Exchange (banks and brokerage houses) created a control trust into which they deposited more than 50% of the issued and outstanding shares of the BMV,Mexican Stock Exchange, for purposes of voting such shares in the future as a single block. Both debt and equity securities are listed and traded on the BMV,Mexican Stock Exchange, including stocks and bonds of private sector corporations, equity certificates or shares issued by banks, commercial paper, bankers’ acceptances, certificates of deposit, Mexican Government debt and special hedging instruments linked to the dollar. Currently, institutional investors are the most active participants in the BMV,Mexican Stock Exchange, although retail investors also play a role in the market. The Mexican equity market is one of Latin America’s largest in terms of market capitalization, but it remains relatively small and illiquid compared to major world markets.
The Mexican Stock Exchange publishes theÍndice de Precios y Cotizaciones (Stock Market Index, or IPC)Index) based on a group of the 35 most actively traded shares. As of December 31, 2011,
At March 26, 2014, the IPCStock Market Index stood at 37,077.5239,761 points, representing a 3.8% nominal decrease from the level of 38,550.8 points as of December 31, 2010. As of April 20, 2012, the IPC stood at 39,354.86 points, representing a 6.1% nominal6.9% increase from the level at December 31, 2013.
Banking Supervision and Support
At December 31, 2013, the total loan portfolio of the banking system was 6.2% greater in real terms than the total loan portfolio at December 31, 2012.
According to preliminary figures, at December 31, 2013, the total amount of past-due commercial bank loans (excluding those banks undergoing government intervention and those in special situations) was Ps. 102.5 billion, as compared to Ps. 70.0 billion at December 31, 2012. Moreover, the past-due loan ratio of commercial banks was 3.4%, as compared to a ratio of 2.5% at December 30, 2011.31, 2012. The amount of loan loss reserves held by commercial banks at December 31, 2013 totaled Ps. 149.9 billion, as compared to Ps. 129.0 billion at December 31, 2012. As a result, commercial banks had reserves covering 146.3% of their past-due loans, well exceeding the minimum reserve level of 45%.
At January 31, 2014, the total loan portfolio of the banking system was 1.1% lower in real terms than the total loan portfolio at December 31, 2013.
According to preliminary figures, at January 31, 2014, the total amount of past-due commercial bank loans (excluding those banks undergoing government intervention and those in special situations) was Ps. 92.3 billion, as compared to Ps. 91.2 billion at December 31, 2013. Moreover, the past-due loan ratio of commercial banks was 3.1%, as compared to a ratio of 3.1% at December 31, 2013. The amount of loan loss reserves held by
commercial banks at January 31, 2014 totaled Ps. 127.6 billion, as compared to Ps. 127.3 billion at December 31, 2013. As a result, commercial banks had reserves covering 138.2% of their past-due loans, well exceeding the minimum reserve level of 45%.
External Sector of the Economy
Foreign Trade
According to preliminary figures, during 2011,2013, Mexico registered a trade deficit of U.S. $1.2$1.0 billion, as compared withto a trade deficit of U.S. $3.0 billion$45.8 million for 2010. Merchandisethe same period of 2012. In particular, exports increased or decreased as follows, each as compared to 2012:
According to preliminary figures, during 2011,2013, total imports increased by 16.4%2.8%, to U.S. $350.8$381.2 billion, as compared to U.S. $301.5$370.8 billion for 2010. During 2011, 2012. In particular, imports increased as follows, each compared to 2012:
According to preliminary figures, during the first two monthsmonth of 2012,2014, Mexico registered a trade surplusdeficit of U.S. $0.2$3.2 billion, as compared withto a trade surplusdeficit of U.S. $0.5$2.9 billion for the same period of 2011. Merchandise2013. In particular, exports increased or decreased as follows, each as compared to the first month of 2013:
According to preliminary figures, during the first two monthsmonth of 2012,2014, total imports increased by 14.1%0.3%, to U.S. $57.1$30.2 billion, as compared to U.S. $50.0$30.1 billion for the same period of 2011. During2013. In particular, imports increased or decreased as follows, each as compared to the first two monthsmonth of 2012, 2013:
Balance of International Payments
According to preliminary figures, during 2011,2013, Mexico’s current account registered a deficit of 0.8%1.8% of GDP, or U.S. $8.8$22.3 billion, as compared to a deficit of U.S. $3.1$14.8 billion or 0.3% of GDP, for 2010.2012. The capital account registered
a surplus of U.S. $52.7$58.6 billion in 2011,during 2013, as compared to a surplus of U.S. $41.0$54.2 billion in 2010.during 2012. Foreign investment in Mexico totaled U.S. $44.8$56.2 billion during 2011, as compared to U.S. $44.0 billion during 2010,2013 and was composed of direct foreign investment inflows totaling U.S. $19.4$35.2 billion and net foreign portfolio investment inflows (including securities placed abroad) totaling U.S. $25.4$21.0 billion.
At February 28, 2014,Foreign Direct Investment in Mexico
According to preliminary figures, during the year ended December 31, 2011, foreign direct investment in Mexico recorded with theRegistro NacionalBanco de Inversiones ExtranjerasMéxico (National Foreign Investments Registry)’s international reserves totaled approximately U.S. $19.4$180.9 billion, an increase of U.S. $1.2 billion as compared withto international reserves at February 21, 2014. At February 28, 2014,Banco de México’s net international assets totaled U.S. $20.2$183.8 billion, during 2010. Of the total foreign direct investment registered during 2011, excluding investment in securities, 44.1% was directed to manufacturing, 18.0% to financial services, 9.5% to commerce, 6.4% to construction, 5.7% to mass media, 4.3% to mining, 3.7% to real estate and rental services, 1.3% to transportation, 0.1% to agriculture, livestock, fishing and forestry, (1.1)% to electricity and water, and 8.0% to other services. By countryan increase of origin, during 2011, 55.0% cameU.S. $1.1 billion from the United States (not including Puerto Rico), 6.7% from the Netherlands, 15.0% from Spain, 3.4% from Canada, 0.2% from the United Kingdom, 1.2% from Germany, 0.5% from Luxembourg, 6.3% from Switzerland, 3.4% from Japan, 0.5% from Singapore and 7.8% from other countries.
Exchange Controls and Foreign Exchange Rates
Since December 22, 1994, the Mexican Government has maintained a floating exchange rate policy, withBanco de México intervening in the foreign exchange market from time to time to minimize volatility and ensure an orderly market, as described below. The Mexican Government has also promoted market-based mechanisms for stabilizing the exchange rate, such as over-the-counter forward and options contracts between banks and their clients in Mexico, and authorization of peso futures trading on the Chicago Mercantile Exchange. In addition, since October 1996,Banco de México has permitted foreign financial institutions to open peso-denominated accounts and to borrow and lend pesos (subject to general restrictions on conducting banking activities in Mexico).
During 2011,2013, the average peso/U.S. dollar exchange rate was Ps. 12.435412.7724 = U.S. $1.00. During the first three monthsmonth of 2012,2014, the average peso/U.S. dollar exchange rate was Ps. 12.985913.223 = U.S. $1.00. The peso/U.S. dollar exchange rate announced byBanco de México on April 20, 2012March 27, 2014 (which took effect on the second business day thereafter) was Ps. 13.117113.084 = U.S. $1.00.
On February 22, 2010, theComisión de Cambios(Foreign Exchange Commission) announced that it would conduct auctions of options, which would allow the holder of the option to sell dollars toBanco de México. This system is designed to allow Mexico to gradually accumulate international reserves without affecting the exchange rate.
Pursuant to the auction policy and commencing in February 2010,Banco de México began conducting an auction on the last business day of each month, in which participating financial institutions can purchase options to sell dollars toBanco de México. These options remained exercisable on any day of the month immediately following the auction. The holders of these options were able to sell dollars toBanco de México at thetipo de cambio interbancario de referencia(reference interbank exchange rate, “FIX”) as determined byBanco de México on the business day immediately prior to the exercise of the option, so long as the applicable rate did not exceed the observed average of the FIX over the 20 business days preceding the exercise date. The amount of options available for auction each month was U.S. $600 million. On November 29, 2011, the Foreign Exchange Commission announced that, effective immediately, it was suspending temporarily this auction mechanism. From February 26, 2010 to November 30, 2011,Banco de México auctioned an aggregate of U.S. $12.6 billion in options through this mechanism, and, as of November 30, 2011,Banco de México had purchased an aggregate of U.S. $9.1 billion from holders upon the exercise of these options.
On November 29, 2011, the Foreign Exchange Commission announced thatBanco de México will conduct an auction of U.S. $400 million each business day, at a peso/dollar exchange rate that is, at a minimum, 2% weaker than the peso/dollar exchange rate on the previous business day. The auction will result in a sale only when the exchange rate depreciates more than 2% as compared with the previous day’s exchange rate. This tool has been used in the past to promote liquidity in the foreign exchange market. From November 30, 2011 through April 20, 2012, there were no bids submitted in these daily auctions.
As of December 30, 2011, Mexico’s international reserves totaled U.S. $142.5 billion, an increase of U.S. $28.9 billion as compared to international reserves as of December 31, 2010. As of December 31, 2011, the net international assets ofBanco de México totaled U.S. $149.2 billion, an increase of U.S. $28.6 billion as compared to net international assets as of December 31, 2010.
As of April 13, 2012, Mexico’s international reserves totaled U.S. $151.5 billion, an increase of U.S. $9.0 billion as compared to international reserves as of December 30, 2011. As of April 13, 2012, the net international assets ofBanco de México totaled U.S. $157.3 billion, an increase of U.S. $8.1 billion as compared to net international assets as of December 31, 2011.
Public Finance
Fiscal Policy
A rational allocation of public expenditure and the augmentation of revenue have been important components of the Mexican Government’s economic stabilization strategy, which has two fundamental objectives: (1) to reduce the poverty rate and (2) to increase the rate of economic growth and employment.
The Mexican Government’s principal fiscal policy objectives in order to promote economic growth and employment opportunity are to:
reduce the costs and risks associated with investment in Mexico;
improve the ability of Mexican businesses to compete in global markets; and
reduce the costs of goods and services to the consumer.
To achieve these objectives, the Mexican Government plans to:
strengthen the rule of law and improve public security;
simplify the administration of the Mexican tax system and facilitate the consistent application of the various tax laws;
improve the efficiency of the public sector through enhanced coordination among government entities and increased transparency of public spending, in order to permit increased spending on social development and infrastructure;
further develop the Mexican equity and debt markets;
improve the pension system for public sector workers;
consolidate macroeconomic stability through fiscal discipline and the effective use of petroleum resources, as well as the utilization of transparent and efficient budgetary procedures;
improve the regulation (or pursue deregulation) of various sectors of the economy, as appropriate; and
continue trade liberalization policies.
ThePrograma Nacional de Financiamiento aldel Desarrollo 2008-2012 2013-2018 (National Program to Finance Development 2008-2012, “PRONAFIDE”)2013-2018, or PRONAFIDE), which was announced on May 27, 2008,December 16, 2013, establishes the Mexican GovernmentGovernment’s fiscal policy goals. These goals consistent with those described above, including increased spending oninclude securing sufficient fiscal resources to strengthen social infrastructure and economic development and greater investment in infrastructure, while maintaining a stable and responsible approach to public finances.productivity. To this end, the PRONAFIDE has outlined the following specific objectives:
to strengthen the framework of fiscal responsibility to ensure a responsible and efficient fiscal policy, including a balanced budget and a prudent management of debt, each of which are core components of Mexico’s development strategy, with the goals of reducing the historical balance of the public sector borrowing requirement and strengthening the mechanisms to carry out counter-cyclical policies;
1. | promote economic development and macroeconomic stability; |
to continue to simplify the Mexican taxation system, seeking additional mechanisms to facilitate compliance with tax obligations and reduce tax evasion, in order to improve tax collection;
2. | improve the financial system to generate additional resources and to transform it into a simpler and more progressive system; |
to ensure the proper implementation of public finance reforms, in particular the Flat Rate Business Tax, in order to increase non-oil tax revenues and reduce the volatility of total government revenues;
3. | increase spending efficiency to promote growth, development and productivity, while still maintaining accountability; |
4. | encourage the notion of “fiscal federalism,” so that states and municipalities can also reach and maintain balanced public financing; |
to improve the allocation and use of expenditures by evaluating their results, based on greater transparency and accountability, including the implementation of an evaluation system for expenditure programs, integrating the Mexican Government’s accounting systems at all three levels of government and giving priority in the allocation of expenditures to sectors and programs that produce better results; and
5. | foster inclusion, education, competition and transparency in the financial, insurance and pension systems, thereby increasing their access and coverage while retaining their effectiveness and reliability; and |
6. | extend credit to development banks that facilitate access to financial services in strategic sectors of the economy and that place particular emphasis on the private sector. |
to promote the development of local financial markets and achieve savings in the financial costs of the public sector through the active management of public debt, while maintaining a level of risk consistent with the natural evolution of public finances and the development of local financial markets.
20112013 Budget and Fiscal Results
On September 8, 2010,December 7, 2012, the President of Mexico submitted the proposedLey de Ingresos de la Federación para el Ejercicio Fiscal de 20112013 (Federal Revenue Law for 2011,2013, or 2011the 2013 Revenue Law) and the proposedPresupuesto de Egresos de la Federación para el Ejercicio Fiscal de 20112013 (Federal Expenditure Budget for 2011,2013, or 2011the 2013 Expenditure Budget) to the Mexican Congress for approval. The 2013 Revenue Law and the 2013 Expenditure Budget were approved on OctoberDecember 13, 2012 and December 20, 20102012, respectively, and November 15, 2010,were published in the Official Gazette of the Federation on December 17, 2012 and December 27, 2012, respectively (together, the 20112013 Budget).
The 2011 Budget, as approved by the Mexican Congress, provided for a public sector budget deficit, excluding physical investment by PEMEX, of Ps. 70.2 billion, or 0.5% of GDP. Including physical investment by PEMEX, the 2011 Budget provided for a public sector budget deficit of 2.5% of GDP.
AccordingIn nominal pesos and according to preliminary figures, during 2011, the public sector balance registered a deficit of Ps. 355.5375.3 billion in nominal pesos,(including physical investment expenditures by PEMEX) during 2013, or 2.5%2.3% of GDP, as compared to a GDP. This
deficit was Ps. 403.2 billion during the same period of Ps. 370.5 billion in nominal pesos, or 2.8% of GDP, registered during 2010. Excluding physical investments by PEMEX, the2012. The public sector balance registered a deficit of Ps. 88.346.7 billion or 0.6% of GDP, during 2011,(excluding physical investment expenditures by PEMEX), as compared to a Ps. 91.2 billion deficit registered for the same period of 2012.
In nominal pesos and according to preliminary figures, including physical investment expenditures by PEMEX, the total primary balance registered a deficit of Ps. 102.059.3 billion or 0.8% of GDP, during 2010.2013, 39.2% lower in nominal terms than 2012.
In 2011,According to preliminary figures, during 2013, public sector budgetary revenues totaledamounted to Ps. 3,269.63,803.7 billion in nominal pesos, a 6.8% increase4.3% more in real terms as compared to 2010. This increase is mainly explained by a 9.3% increase in oil2012. During 2013, revenues and a 5.7% increase in non-oil tax revenues,have increased or decreased as follows, each in real terms and as compared to 2010.2012:
According to preliminary figures, during 2011, crude oil revenues increased by 9.3% in real annual terms as compared to 2010, primarily as a result of a 39.3% increase in the price of crude oil exports, which was partially offset by a 1.0% decrease in crude oil production. Non-oil tax revenues increased by 5.7% in real terms, mainly due to various fiscal reforms that came into effect during 2010 and the overall economic recovery.
According to preliminary figures, during 2011,2013, net public sector budgetary expenditures increased by 5.3%2.8% in real terms as compared to 2010. During 2011,2012. Net public sector financing costsbudgetary programmable expenditures (excluding physical investment by PEMEX) increased by 3.6%3.3% in real terms as compared to 2010, mainly2012. During 2013, the financial cost of public sector debt decreased by 2.5% in real terms as a resultcompared to the same period of increased borrowings to finance the approved public deficit. Public sector financing costs as a percentage2012.
As of GDP declined from 2.0% of GDP in 2010 to 1.9% in 2011.
At December 31, 2011, 2013:
• | the Fondo de Estabilización de los Ingresos Petroleros (Oil Revenues Stabilization Fund) totaled Ps. 33.8 billion; |
• | theFondo de Estabilización de los Ingresos de las Entidades Federativas (Federal Entities Revenue Stabilization Fund) totaled Ps. 20.3 billion; |
• | theFondo de Estabilización para la Inversión en Infraestructura de Petróleos Mexicanos (Petróleos Mexicanos’ Infrastructure Investment Stabilization Fund) totaled Ps. 1.6 billion; and |
• | the
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2014 Budget
On September 8, 2013, the President of Mexico submitted the proposedLey de Ingresos de la Federación para el Ejercicio Fiscal de 2014 (Federal Revenue Law for 2014, or the 2014 Revenue Law) and the proposedPresupuesto de Egresos de la Federación para el Ejercicio Fiscal de 2014 (Federal Expenditure Budget for 2014, or the 2014 Expenditure Budget) to the Mexican Congress for its approval. The 2014 Revenue Law and the 2014 Expenditure Budget were approved on October 31, 2013 and November 14, 2013, and were published in the Official Gazette of the Federation on November 20, 2013 and December 3, 2013, respectively. We refer to these two bills together as Mexico’s 2014 budget (the 2014 Budget).
The 2014 Budget allows ministries and budget-controlled agencies to request additional expenditures to the extent that oil revenues earned by PEMEX exceed the projected oil revenues set forth in the 2014 Budget. In addition, the 2014 Budget provides that the executive branch, acting through the SHCP, is authorized to approve, if certain conditions are met, additional expenditures requested by certain ministries or budget-controlled agencies in the event that these entities realize revenues greater than those projected in the 2014 Budget.
The 2014 Budget, as adopted by the Mexican Congress, provides for a public sector budget deficit excluding physical investments by PEMEX of 1.5% of GDP. Including PEMEX’s investment program, the 2014
Budget provides for a public sector budget deficit of 3.5% of GDP. The 2014 Budget contemplates public sector budgetary revenues totaling Ps. 3,816.7 billion, a 2.1% increase in real terms as compared to public sector budgetary revenues estimated for Mexico’s 2013 budget (the 2013 Budget). This is based on an assumed weighted average Mexican crude oil export price of U.S. $85.00 per barrel and an estimated volume of oil exports of 1,170 thousand barrels per day. Oil revenues are estimated at Ps. 1,256.7 billion in nominal pesos, a 1.9% decrease in real terms as compared to the estimated amount for the 2013 Budget. In addition, approved non-oil revenues are Ps. 2,551.0 billion, a 4.2% increase as compared to the estimated amount for the 2013 Budget. Finally, projected non-oil tax revenue also increased by 3.7% in real terms as compared to the amount approved for the 2013 Budget.
Mexico’s 2014 Budget provides for a total of Ps. 4,079.6 billion in expenditures (excluding estimated physical investment expenditures by PEMEX totaling Ps. 357.5 billion), a 9.2% increase in real terms as compared to the amount approved in the 2013 Expenditure Budget.
The 2014 Budget also authorizes the Mexican Government to incur net domestic debt in the amount of Ps. 570 billion in nominal pesos, or 3.2% of GDP. The 2014 Budget also authorizes the Mexican Government to incur an additional U.S. $10 billion in external indebtedness, which includes financing from international financial organizations.
The table below sets forth the budgetary results for 2012, as well as for 2013. It also sets forth the assumptions and targets underlying Mexico’s 2013 Budget and 2014 Budget.
2012 and 2013 Results; 2013 Budget and 2014 Budget Assumptions and Targets
2012 Results | 2013 Budget(1) | 2013 Results(1) | 2014 Budget(6) | |||||||||||||
Real GDP growth (%) | 3.9 | % | 3.5 | % | 1.1 | % | 3.9 | % | ||||||||
Increase in the national consumer price index (%) | 3.6 | % | 3.0 | % | 4.0 | % | 3.0 | % | ||||||||
Average export price of Mexican oil mix (U.S. $/barrel) | $ | 101.96 | $ | 86.00 | (3) | $ | 98.46 | $ | 85.00 | (4) | ||||||
Current account deficit as % of GDP | (1.2 | )% | n.a. | (1.8 | )% | n.a. | ||||||||||
Average exchange rate (Ps./$1.00) | 13.2 | 12.9 | 12.8 | 12.9 | ||||||||||||
Average rate on 28-dayCetes (%) | 4.2 | % | 4.6 | % | 3.8 | % | 4.0 | % | ||||||||
Public sector balance as % of GDP(5) | (2.6 | )% | (2.0 | )% | (2.3 | )% | (3.5 | )% | ||||||||
Primary balance as % of GDP(5) | (0.6 | )% | 0.1 | % | (0.4 | )% | n.a. |
n.a. | = Not available. |
(1) | 2013 Budget figures represent budgetary estimates, based on the economic assumptions contained in the Criterios Generales de Política Económica (General Economic Policy Guidelines) for 2013 and in thePrograma Económico 2013(Economic Program for 2013). These figures do not reflect actual results for the year or updated estimates of Mexico’s 2013 economic results. |
(2) | Preliminary figures. |
(3) | The Mexican Government entered into hedging agreements to protect against the effects of a potential decline in oil prices with respect to the level that was assumed in the 2013 Revenue Law. Therefore, the approved expenditures level should not be affected if the weighted average price of crude oil exported by PEMEX for the year falls below the price assumed in the 2013 Budget. |
(4) | The Mexican Government entered into hedging agreements to protect against the effects of a potential decline in oil prices with respect to the level that was assumed in the 2014 Revenue Law. Therefore, the approved expenditures level should not be affected if the weighted average price of crude oil exported by PEMEX for the year falls below the price assumed in the 2014 Budget. |
(5) | Includes the effect of expenditures related to the issuance of bonds pursuant to reforms to theLey del Instituto de |
Pemex-Exploration and Production—Directors and Executive Officers
Name | Position with Pemex-Exploration and Production | Year Appointed | ||||
Exploration and Production; Manager of the Integral Ku-Maloob-Zaap Business Unit (Northeastern Marine region) of Pemex-Exploration and Production; and Manager of the Integral Abkatún-Pol-Chuc Business Unit (Southwestern Marine region) of Pemex-Exploration and Production. | ||||||
Mr. | Deputy Director of Maintenance and Logistics Born: 1958 Business experience: Associate Managing Director of Services for Projects (Southern region) of Pemex-Exploration and Production; Associate Managing Director of Engineering of Pemex-Exploration and Production; and Associate Managing Director of Engineering and Construction of Pemex-Exploration and Production. | 2013 | ||||
Mr. Moisés Ithuriel Orozco García | Deputy Director of Management and Finance Born: Business experience:
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Mr. Luis Sergio Guaso Montoya | Deputy Director of Business Development Born: 1963 Business experience: Deputy Director of New Models of
| 2003 | ||||
| Deputy Director of Technical Resources Administration Born: 1953 Business experience: Deputy Director (Southwestern Marine region) of Pemex-Exploration and Production; Deputy Director of Operations Coordination of Petróleos Mexicanos; and Executive Director of the | 2009 | ||||
Mr. | Deputy Director of Production, Northeastern Marine Region Born: Business experience: | |||||
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Pemex-Exploration and Production—Directors and Executive Officers
Name | Position with Pemex-Exploration and Production | Year Appointed | ||||
and Production; Manager of the Integral Abkatún Pol Chuc Business Unit of Pemex-Exploration and Production; and Manager of the Integral Cinco Presidentes Business Unit of Pemex-Exploration and Production. | ||||||
Mr. Plácido Gerardo Reyes Reza | Acting Deputy Director of Production, Northern Region Born: 1964 Business experience: Acting Manager of the Integral Aceite Terciario del Golfo Business Unit of Pemex-Exploration and Production; Manager of the Integral Burgos Business Unit of Pemex-Exploration and Production; and Deputy Manager of Engineering and Design of Pemex-Exploration and Production. | 2014 | ||||
Mr. José Antonio Escalera Alcocer | Deputy Director of Exploration Born: 1958 Business experience: Manager of the Integral Burgos Business Unit (Northern region) of Pemex-Exploration and Production; Manager of the Integral Poza Other board memberships: Compañía Mexicana de Exploraciones, S.A. de C.V. | 2007 | ||||
Mr. Baudelio Ernesto Prieto de la Rocha | Deputy Director of Drilling Business Unit Born: 1957 Business experience: Associate Managing Director of Engineering and Technology of Pemex-Exploration and Production; Associate Managing Director of Well Drilling and Maintenance |
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Pemex-Refining—Directors and Executive Officers
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Name | Position with Pemex-Refining | Year Appointed | ||||
Mr. | Chairman of the Board of Pemex-Refining (refer to Petróleos Mexicanos) | |||||
Mr. Carlos Rafael Murrieta Cummings |
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| Board Member of Pemex-Refining (refer to Petróleos Mexicanos) | 2010 | ||||
Mr. | Board Member of Pemex-Refining (refer to Petróleos Mexicanos) | 2013 | ||||
Ms. María de Lourdes Melgar Palacios | Board Member of Pemex-Refining (refer to | |||||
Mr. | Board Member of Pemex-Refining (refer to | |||||
Mr. Mario Alberto Beauregard Álvarez | Board Member of Pemex-Refining (refer to Petróleos Mexicanos) | 2013 | ||||
Mr. José Fortunato Álvarez Enríquez | Professional Member of the Board of Directors of Pemex-Refining (refer to Petróleos Mexicanos) | 2010 | ||||
Mr. Ricardo Samaniego Breach | Professional Member of the Board of Directors of Pemex-Refining Born: 1953 Business experience: Economics professor and researcher at the Instituto Tecnológico Autónomo de México; Chief of Staff of the Secretary of Energy; and Chief of the Energy | 2010 | ||||
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Mr. Miguel Tame Domínguez | Director General Born: 1946 Business experience: Director General of Pemex-Refining; Deputy Director of Production of Pemex-Refining; and Associate Managing Director of Other board memberships: | 2009 | ||||
Mr.
| Deputy Director of Trading Born: Business experience: Other board memberships: Mexicana de Lubricantes, S.A. de C.V. |
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Pemex-Refining—Directors and Executive Officers
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Mr. Francisco Fernández Lagos | Deputy Director of Distribution Born: 1955 Business experience: Deputy Director of Pipeline Transportation System Coordination of Petróleos | 2010 |
Pemex-Refining—Directors and Executive Officers
Name | Position with Pemex-Refining | Year Appointed | ||||
Mexicanos; Associate Managing Director of Pipelines and Facilities Maintenance Management of Pemex-Exploration and Production; and | ||||||
Mr. Jesús Lozano Peña | Deputy Director of Projects Born: 1955 Business experience: Coordinator of Modernization and Capacity Expansion Projects of Pemex-Refining; Associate Managing Director of Modernization of Pemex Refining; and Advisor of the Corporate Engineering and Projects Development Office of Petróleos Mexicanos. | |||||
Mr.
| Deputy Director of Born: Business experience: |
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Other board memberships: | |||||
Mr. Guillermo Ruiz Gutiérrez | Deputy Director of Planning, Coordination and Evaluation Born: 1959 Business experience: Deputy Director of Operations and Strategy Execution of Petróleos Mexicanos; Deputy Director of Strategy and Operative Planning of Petróleos Mexicanos; and Deputy Director of Operations Evaluation of | 2011 | ||||
Mr. | Deputy Director of Industrial Safety and Environmental Protection Auditing Born: Business experience: Executive Coordinator of the Director General of Pemex-Refining; Deputy Director of Industrial Safety and Environmental Protection Auditing of Pemex-Refining; and Associate Managing Director of Industrial Safety and Occupational Health of Pemex-Refining. | 2014 | ||||
Mr. Tomás Ávila González | Deputy Director of Production Born: 1960 Business experience: Associate Managing Director of |
Pemex-Refining—Directors and Executive Officers
Name | Position with Pemex-Refining | Year Appointed | ||||
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Mr. Francisco Javier Fuentes Saldaña | Deputy Director of Storage and Allotment Born: 1964 Business experience: General Coordinator of the Operative Performance Improvement of the National Refining System of Pemex-Refining; Associate Managing Director of Business Development and Marketing of Pemex-Refining; and Associate Managing Director of Human Resources of |
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Pemex-Gas and Basic Petrochemicals—Directors and Executive Officers
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Name | Position with Pemex-Gas and Basic Petrochemicals | Year Appointed | ||||
Mr. | Chairman of the Board of Pemex-Gas and Basic Petrochemicals (refer to Petróleos Mexicanos) | |||||
Mr. Carlos Rafael Murrieta Cummings |
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Mr. Francisco Leonardo Fabio Beltrán Rodríguez | Board Member of Pemex-Gas and Basic Petrochemicals (refer to Petróleos Mexicanos) | 2013 | ||||
Mr. Miguel Messmacher Linartas | Board Member of Pemex-Gas and Basic Petrochemicals (refer to Petróleos Mexicanos) | 2013 | ||||
Mr. Mario Alberto Beauregard Álvarez | Board Member of Pemex-Gas and Basic Petrochemicals (refer to Petróleos Mexicanos) | 2013 | ||||
Ms. María de Lourdes Melgar Palacios | Board Member of Pemex-Gas and Basic Petrochemicals (refer to Petróleos Mexicanos) | 2014 | ||||
Ms. María de Lourdes Dieck Assad | Professional Member of Pemex-Gas and Basic Petrochemicals Born: 1954 Business experience: Director of the Instituto Tecnológico y de Estudios Superiores de Monterrey, Santa Fe Campus; Director of the Government, Social Sciences and Humanities Departments of the Instituto Tecnológico y de Estudios Superiores de Monterrey, Monterrey Campus; and Ambassador of Mexico to Belgium and Luxembourg and Chief of Mission to the European Union. | 2010 | ||||
Mr. Mario Gabriel Budebo | Professional Board Member of Pemex-Gas and Basic Petrochemicals Born: 1963 Business experience: Undersecretary of Hydrocarbons of the Ministry of Energy; President of the Comisión Nacional del Sistema de Ahorro para el Retiro; and Chief of Staff of the Secretary of Finance and Public Credit. | 2012 | ||||
Mr. Alejandro Martínez Sibaja | Director General of Pemex-Gas and Basic Petrochemicals Born: 1956 Business experience: Commercial Deputy Director of Natural Gas of Pemex-Gas and Basic Petrochemicals; Deputy Director of Operation and Strategy Execution of Petróleos Mexicanos; and Commercial Associate Managing Director of Transportation of Pemex-Gas and Basic Petrochemicals. | 2011 |
Pemex-Gas and Basic Petrochemicals—Directors and Executive Officers
Name | Position with Pemex-Gas and Basic Petrochemicals | Year Appointed | ||||
Mr. Roberto Jorge de la Huerta Moreno | Deputy Director of Natural Gas Born: 1972 Business experience: Associate Managing Director of Control and Analysis of Pemex-Gas and Basic Petrochemicals; Deputy Manager of Business Development of Pemex-Gas and Basic Petrochemicals; and Coordinator of Natural Gas Regulation Area of Pemex-Gas and Basic Petrochemicals. Other board memberships: MGI Enterprises U.S. LLC; President of MGI Enterprises, Ltd.; President of MGI Supply, Ltd.; and Chairman and President of MGI Trading, Ltd. | 2012 |
Pemex-Gas and Basic Petrochemicals—Directors and Executive Officers
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Mr. Juan Marcelo Parizot Murillo | Deputy Director of Liquefied Gas and Basic Petrochemicals Born: 1966 Business experience: Associate Managing Director of Operations of Pemex-Gas and Basic Petrochemicals; Associate Managing Director of Trading Coordination of Pemex-Refining; and Associate Managing Director of Service Station Sales of Pemex-Refining. Other board memberships: Vice President of Pasco Internacional, Limited; Vice President of Pasco Terminals; Vice President of Pan American Sulphur Company, Limited; Gasoductos de Chihuahua, S. de R.L. de C.V.; Chairman of MGI Supply Internacional, Ltd.; President of MGI Trading, Ltd.; and President of MGI Enterprises, Ltd. | 2012 | ||||||||
Mr.
| Acting Deputy Director of Planning Born: Business experience: |
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Mr. José Antonio Gómez Urquiza de la Macorra | Deputy Director of Management and Finance Born: 1951 Business experience: Deputy Director of Finance and Management of Pemex-Refining; Director General of the Cámara de la Industria del Hierro y del Acero; and Deputy Director of Management of the Delegación Benito Juárez in Mexico City. |
| 2011 |
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Pemex-Gas and Basic Petrochemicals—Directors and Executive Officers
Name | Position with Pemex-Gas and Basic Petrochemicals | Year Appointed | ||||
Mr. Armando | Deputy Director of Production Born: 1948 Business experience: Associate Managing Director of Nuevo Pemex Other board memberships: President of MGI Enterprises, Ltd. | 1996 | ||||
Mr. | Deputy Director of Pipelines Born: Business experience: Associate Managing Director of Other board memberships: Gasoductos de Chihuahua, S. de R.L. de C.V.; | |||||
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Pemex-Petrochemicals—Directors and Executive Officers
2012
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Name | Position with Pemex-Petrochemicals | Year Appointed | ||||
Mr. | Chairman of the Board of Pemex-Petrochemicals (refer to Petróleos Mexicanos) | |||||
Mr. Carlos Rafael Murrieta Cummings |
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| Board Member of Pemex-Petrochemicals (refer to Petróleos Mexicanos) | 2010 | ||||
Mr. | Board Member of Pemex-Petrochemicals (refer to Petróleos Mexicanos) | 2013 | ||||
Mr. Miguel Messmacher Linartas | Board Member of Pemex-Petrochemicals (refer to | |||||
Mr. | Board Member of Pemex-Petrochemicals (refer to | |||||
Ms. María de Lourdes Melgar Palacios | Board Member of Pemex-Petrochemicals (refer to Petróleos Mexicanos) | 2014 | ||||
Ms. María de Lourdes Dieck Assad | Professional Member of Pemex-Petrochemicals (refer to Pemex-Gas and Basic Petrochemicals) | 2010 | ||||
Mr. Fluvio César Ruíz Alarcón | Professional Board Member of Pemex-Petrochemicals (refer to Petróleos Mexicanos) | 2010 | ||||
Mr. | Director General Born: Business experience: | |||||
| Deputy Director of Planning
Other board memberships: Petroquímica Mexicana de Vinilo, S.A. de C.V. | |||||
Mr. Jorge Collard de la Rocha | Deputy Director of Management and Finance Born: 1951 Business experience: Deputy Director of Management and Finance of Pemex-Exploration and Production; Acting Deputy Director of Supplies of Petróleos Mexicanos; and Chief Financial Officer of Banco Nacional de Obras y Servicios Públicos, S.N.C., Institución de Banca de Desarrollo. | 2011 |
Pemex-Petrochemicals—Directors and Executive Officers
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Mr. Francisco Arturo Arellano Urbina | Deputy Director of Operations Born: 1946 Business experience: Director of Petroquímica Cangrejera, S.A. de C.V.; Director General of Micosa División Construcciones, S.A. de C.V.; and Director General of RCR Ingenieros Asociados, S.A. de C.V. | 2005 |
Pemex-Petrochemicals—Directors and Executive Officers
2005
Name | Position with Pemex-Petrochemicals | Year Appointed | ||||
Mr. Carlos Xavier Pani Espinosa | Deputy Director of Trading Born: 1947 Business experience: Head of the Fénix Project Executive Unit of Pemex-Petrochemicals; Deputy Director of Trading of Pemex-Refining; and Deputy Director of Trading of Pemex-Petrochemicals. Other board memberships: Asociación Petroquímica | 2007 | ||||
Mr. Luis
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Born: Business experience: |
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Compensation of Directors and Officers
For the year ended December 31, 2011,2013, the aggregate compensation of executive officers of Petróleos Mexicanos and the subsidiary entities (73(79 persons) paid or accrued in that year for services in all capacities was approximately Ps. 154.4174.8 million. Except in the case of the professional members, members of the Boards of Directors of Petróleos Mexicanos and the subsidiary entities do not receive compensation for their services. The compensation paid or accrued during 20112013 to the professional members of the Boards of Directors of Petróleos Mexicanos and the subsidiary entities was approximately Ps. 13.713.6 million.
Board Practices
Except in the case of the professional members, neither the members of the Boards of Directors nor the executive officers of Petróleos Mexicanos or the subsidiary entities are appointed for a specific term. Except for those selected by the Petroleum Workers’ Union and the professional members, the members of the Boards of Directors of Petróleos Mexicanos and each of the subsidiary entities, and the Directors General of Petróleos Mexicanos and each of the subsidiary entities, serve subject to the discretion of the President of Mexico. Except in the case of the professional members first appointed under the Petróleos Mexicanos Law, the four professional members will be appointed for six-year terms, and may be appointed for an additional term of the same length.
On June 17, 2009, the Board of Directors of Petróleos Mexicanos, for the first time, appointed members to and convened the seven committees established in the Petróleos Mexicanos Law to support its work. The memberships of these committees consist of the Mexican Government representatives who act as Board members of Petróleos Mexicanos and the professional board members of Petróleos Mexicanos. See “Item 6—Directors, Senior Management and Employees.”
Audit and Performance Evaluation Committee
The Audit and Performance Evaluation Committee of the Board of Directors of Petróleos Mexicanos (which we refer to as the Audit and Performance Evaluation Committee) is required, among other duties, to oversee our management and evaluate our financial and operational performance, as well as to appoint and evaluate our external auditors, set their compensation and make determinations as to whether to select other auditors. See “Item 16C—Principal Accountant Fees and Services.”
Each member of the Audit and Performance Evaluation Committee is “independent” of Petróleos Mexicanos within the meaning of Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the Exchange Act).
The Audit and Performance Evaluation Committee of Petróleos Mexicanos consists of the following members:
Mr. Jorge José Fortunato Álvarez Enríquez,Borja Navarrete, professional member of the Board of Directors of Petróleos Mexicanos and Chairman of the Audit and Performance Evaluation Committee;
Mr. Héctor Moreira Rodríguez, professional member of the Board of Directors of Petróleos Mexicanos; and
Mr. Fluvio César Ruíz Alarcón, professional member of the Board of Directors of Petróleos Mexicanos.
A permanent representative of the SFP attends and may speak at the committee’s sessions, but has no voting power.
Compensation Committee
The Compensation Committee is chaired by a professional member of the Board of Directors of Petróleos Mexicanos and, among other duties, proposes the compensation of the Director General and other members of senior management of Petróleos Mexicanos, up to three levels below the Director General, based on their performance and measurable results.
The Compensation Committee of Petróleos Mexicanos consists of the following members:
Mr. Héctor Moreira Rodríguez, professionalLuis Videgaray Caso, member of the Board of Directors of Petróleos Mexicanos and Chairman of the Compensation Committee;
Mr. José Fortunato Álvarez Enríquez, professionalMs. María de Lourdes Melgar Palacios, member of the Board of Directors of Petróleos Mexicanos;
Mr. José Antonio González Anaya,Miguel Messmacher Linartas, member of the Board of Directors of Petróleos Mexicanos; and
Mr. Mario Gabriel Budebo,Francisco Leonardo Fabio Beltrán Rodríguez, member of the Board of Directors of Petróleos Mexicanos.
Strategy and Investment Committee
The Strategy and Investment Committee is chaired by a professional member of the Board of Directors of Petróleos Mexicanos and, among other duties, analyzes the business plan and investment portfolio of Petróleos Mexicanos and its subsidiary entities. This committee also supervises and evaluates investments made by Petróleos Mexicanos.
The Strategy and Investment Committee of Petróleos Mexicanos consists of the following members:
Mr. Héctor Moreira Rodríguez,José Fortunato Álvarez Enríquez, professional member of the Board of Directors of Petróleos Mexicanos and Chairman of the Strategy and Investment Committee;
Mr. José Fortunato Álvarez Enríquez, professionalLuis Videgaray Caso, member of the Board of Directors of Petróleos Mexicanos;
Mr. Rogelio Gasca Neri, professionalFrancisco Leonardo Fabio Beltrán Rodríguez, member of the Board of Directors of Petróleos Mexicanos;
Mr. Mario Gabriel Budebo, member of the Board of Directors of Petróleos Mexicanos;
Mr. José Antonio Meade Kuribreña,Miguel Messmacher Linartas, member of the Board of Directors of Petróleos Mexicanos; and
Mr. José Antonio González Anaya,Ms. María de Lourdes Melgar Palacios, member of the Board of Directors of Petróleos Mexicanos.
Transparency and Accountability Committee
This committee, among other duties, proposes to the Board of Directors of Petróleos Mexicanos criteria for the disclosure of information. The Transparency and Accountability Committee of Petróleos Mexicanos consists of the following members:
Mr. Rogelio Gasca Neri,José Fortunato Álvarez Enríquez, professional member of the Board of Directors of Petróleos Mexicanos and Chairman of the Transparency and Accountability Committee;
Mr. Fluvio César Ruíz AlarcóLuis Videgaray Caso, member of the Board of Directors of Petróleos Mexicanos;
Mr. Mario Gabriel Budebo,Miguel Messmacher Linartas, member of the Board of Directors of Petróleos Mexicanos.
Development and Technological Research Committee
This committee, among other duties, proposes to the Board of Directors of Petróleos Mexicanos technological research and development plans related to the petroleum industry. The Development and Technological Research Committee of Petróleos Mexicanos consists of the following members:
Mr. Fluvio César Ruíz Alarcón, professional member of the Board of Directors of Petróleos Mexicanos and Chairman of the Development and Technological Research Committee;
Mr. Rogelio Gasca Neri, professionalIldefonso Guajardo Villareal, member of the Board of Directors of Petróleos Mexicanos;
Mr. Mario Gabriel Budebo,Miguel Messmacher Linartas, member of the Board of Directors of Petróleos Mexicanos.
Environmental and Sustainability Committee
This committee, among other duties, is responsible for promoting the development by PEMEX of environmental protection policies and the achievement of sustainable development. The Environmental and Sustainability Committee of Petróleos Mexicanos consists of the following members:
Mr. Rogelio Gasca Neri,Fluvio César Ruíz Alarcón, professional member of the Board of Directors of Petróleos Mexicanos and Chairman of the Environmental and Sustainability Committee;
Mr. Héctor Moreira Rodríguez, professional member of the Board of Directors of Petróleos Mexicanos; and
Mr. José Fortunato Álvarez Enríquez, professional member of the Board of Directors of Petróleos Mexicanos.
A permanent representative of the Ministry of the Environment and Natural Resources attends and may speak at the committee’s sessions, but has no voting power.
Acquisitions, Leasing, Works and Services Committee
This committee, among other duties, reviews, evaluates, monitors and develops recommendations regarding the annual programs of Petróleos Mexicanos for acquisition, construction and services contracts, and determines
whether an exception to the public bidding process is applicable in specific cases. The Acquisitions, Leasing, Works and Services Committee consists of the following members:
Mr. Jorge José Fortunato Álvarez Enríquez,Borja Navarrete, professional member of the Board of Directors of Petróleos Mexicanos and Chairman of the Acquisitions, Leasing, Works and Services Committee;
Mr. Fluvio César Ruíz Alarcón, professionalIldefonso Guajardo Villareal, member of the Board of Directors of Petróleos Mexicanos;
Mr. José Antonio González Anaya,Ms. María de Lourdes Melgar Palacios, member of the Board of Directors of Petróleos Mexicanos;
Mr. Mario Gabriel Budebo,Miguel Messmacher Linartas, member of the Board of Directors of Petróleos Mexicanos; and
Mr. José Antonio Meade Kuribreña,Francisco Leonardo Fabio Beltrán Rodríguez, member of the Board of Directors of Petróleos Mexicanos.
A permanent representative of the SFP attends and may speak at the committee’s sessions, but has no voting power.
Employees
Excluding employees of the PMI Group and including those employed by us on a temporary basis, at December 31, 2011,2013, Petróleos Mexicanos and the subsidiary entities had 150,561154,774 employees, as compared to 147,368150,697 at December 31, 2010.2012. During 2011,2013, Petróleos Mexicanos and the subsidiary entities employed an average of 17,16918,417 temporary employees. The following table sets forth the number of employees of Petróleos Mexicanos, the subsidiary entities and the PMI Group at year-end for the past five years.
At December 31, | 2011 % of Total | At December 31, | 2013 % of Total | |||||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2009 | 2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||||||||||||||
Pemex-Exploration and Production | 49,045 | 50,273 | 50,544 | 49,802 | 51,713 | 34.3 | % | 50,544 | 49,802 | 51,713 | 51,998 | 53,404 | 34.4 | % | ||||||||||||||||||||||||||||||||||
Pemex-Refining | 44,811 | 45,510 | 43,706 | 45,306 | 46,909 | 31.1 | 43,706 | 45,306 | 46,909 | 46,236 | 47,980 | 30.9 | ||||||||||||||||||||||||||||||||||||
Pemex-Petrochemicals | 13,823 | 14,028 | 13,447 | 13,542 | 13,541 | 9.0 | 13,447 | 13,542 | 13,541 | 13,487 | 13,758 | 8.9 | ||||||||||||||||||||||||||||||||||||
Pemex-Gas and Basic Petrochemicals | 12,397 | 12,976 | 12,550 | 12,327 | 11,918 | 7.9 | 12,550 | 12,327 | 11,918 | 12,191 | 12,905 | 8.3 | ||||||||||||||||||||||||||||||||||||
Petróleos Mexicanos | 21,070 | 20,634 | 24,899 | 26,391 | 26,480 | 17.5 | 24,899 | 26,391 | 26,480 | 26,785 | 26,727 | 17.2 | ||||||||||||||||||||||||||||||||||||
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Subtotal | 141,146 | 143,421 | 145,146 | 147,368 | 150,561 | 99.8 | 145,146 | 147,368 | 150,561 | 150,697 | 154,774 | 99.8 | ||||||||||||||||||||||||||||||||||||
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PMI Group | 320 | 322 | 315 | 324 | 323 | 0.2 | 315 | 324 | 323 | 325 | 332 | 0.2 | ||||||||||||||||||||||||||||||||||||
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Total | 141,466 | 143,743 | 145,461 | 147,692 | 150,884 | 100.0 | % | 145,461 | 147,692 | 150,884 | 151,022 | 155,106 | 100.0 | % | ||||||||||||||||||||||||||||||||||
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Source: Petróleos Mexicanos and the PMI Group.
The Petroleum Workers’ Union represents approximately 72%71.4% of the work force of Petróleos Mexicanos and the subsidiary entities. The members of the Petroleum Workers’ Union members are ourPEMEX employees and they elect their own leadership from among their ranks. Since the Petroleum Workers’ Union’s official establishment in 1938, we have experienced no labor strikes, and although we have experienced work stoppages for short periods of time, none of these stoppages has had a significant material adverse effect on our operations.
Our relationship with our employees is regulated by theLey Federal del Trabajo(Federal Labor Law)Law and a collective bargaining agreement between Petróleos Mexicanos and the Petroleum Workers’ Union. The collective bargaining agreement regulates extensively all aspects of the relationship of Petróleos Mexicanos and the subsidiary entities with their employees. The collective bargaining agreement is subject to renegotiation every two years, although salaries are reviewed annually. Since the Petroleum Workers’ Union’s was officially established in 1938, we have not experienced labor strikes; we have experienced work stoppages for short periods of time, but none of these stoppages had a material adverse effect on our operations.
On July 27, 2011,29, 2013, Petróleos Mexicanos and the Petroleum Workers’ Union entered into a new collective bargaining agreement, which became effective on August 1, 2011.2013. The new agreement provides for a 4.75%3.99% increase in wages and a 1.15%1.98% increase in benefits. By its terms, the new collective bargaining agreement is scheduled to expire on July 31, 2013.2015.
In accordance with the collective bargaining agreement and the Federal Labor Law, Petróleos Mexicanos and the subsidiary entities are under an obligation to pay seniority premiums to retiring employees and pensions to retired employees, as well as death benefits and pensions to the survivors of retired employees. Retirees are entitled to receive increases in their pensions whenever salary increases are granted to current employees. We also provide health and medical benefits to employees, retired employees and their families and, subject to our overall budgetary constraints, we provide an interest-rate subsidy on employees’ mortgage loans.
On November 5, 1997, the SHCP and the Board of Directors of Petróleos Mexicanos authorized the formation of a trust called the Pemex Labor Fund. This fund is a vehicle to fund labor liabilities, current pension payments and seniority premiums. We have designed a contribution plan to increase the funds held in this trust and to continue to make payments on outstanding labor and pension liabilities. Our contributions to the plan assets for theour retirement benefits of PEMEX totaled Ps. 24,76030,796 million in 20102012 and Ps. 28,86833,210 million in 2011.2013.
Item 7. | Major Shareholders and Related Party Transactions |
Major Shareholders
Petróleos Mexicanos and the subsidiary entities have no shareholders because they are decentralized public entities of the Mexican Government. The Mexican Government closely regulates and supervises our operations; it incorporates the annual budget and financing programs of Petróleos Mexicanos and the subsidiary entities into its consolidated annual budget, which it submits to the Chamber of Deputies for approval.
Mexican Government officials hold six of the 15 seats on the Board of Directors of Petróleos Mexicanos, and the Secretary of Energy is the Chairperson of the Board of Directors of Petróleos Mexicanos. An additional four seats on the Board of Directors are held by professional members appointed by the President of Mexico and ratified by the Senate. The various committees of the Board of Directors are comprised only of Mexican Government representatives,i.e., a combination of Mexican Government officials and professional members of the Board of Directors. The Director General of Petróleos Mexicanos is a member of the President of Mexico’s cabinet. See also “Item 3—Key Information—Risk Factors—Risk Factors Related to theOur Relationship between PEMEX andwith the Mexican Government.”
Related Party Transactions
Under Article 8, Section XI of theLey Federal de Responsabilidades Administrativas de los Servidores Públicos (Federal Law of Administrative Responsibilities of Public Officials), which applies to our directors and all of our employees, our directors and employees are obligated to “recuse themselves from intervening in any way in the attention to, processing or resolution of matters in which they might have personal, family or business interest, including those where some benefit can result for themselves, their spouse, blood or affinity relatives up to the fourth degree, or civil relatives, or for third parties with which they have professional, labor or business relations, or for partners or partnerships where the public officials or the persons referred above are or have been members thereof.”
Additionally, in accordance with the Petróleos Mexicanos Law, a member of the Board of Directors of Petróleos Mexicanos or of the board of directors of a subsidiary entity may be removed from his or her position for, among other causes: (1) utilizing for personal benefit or for the benefit of any third party the information made available to him or her in connection with the exercise of his or her duties as a board member; (2) disclosing such information in violation of applicable law; or (3) not recusing him or herself from discussion
of and voting on matters in respect of which he or she has a conflict of interest. A member of the Board of Directors of Petróleos Mexicanos or of the board of directors of a subsidiary entity who acts in contravention of the Petróleos Mexicanos Law may be held liable for any damages thereby caused to Petróleos Mexicanos or a subsidiary entity.
As an employee benefit, we offer salary advances to all of our eligible Petroleum Workers’ Union and non-union workers, including our executive officers, pursuant to the programs set forth in the collective bargaining agreement and in theReglamento de Trabajo del Personal de Confianza de Petróleos Mexicanos y Organismos
Subsidiarios (Employment Regulation of White Collar Employees of Petróleos Mexicanos and Subsidiary Entities)SubsidiaryEntities), respectively. Therespectively.The salary advances, which are non-interest bearing, are offered to each eligible employee in an amount up to a maximum of four months’ salary and are repaid through salary deductions in equal installments over a period of either one or two years, as elected by the employee. Most of our employees take advantage of this benefit. The largest amount of salary advances outstanding to executive officers at any one time during 20112013 was Ps. 21.026.9 million. As of March 31, 2012,2014, the aggregate amount of salary advances outstanding to our executive officers was Ps. 18.7 million.21.6 million.
Prior to his appointment as Secretary of Energy, Mr. Pedro Joaquín Coldwell, Chairman of the Board of Directors of Petróleos Mexicanos since December 2012, as well as certain members of his family, held ownership interests in companies that have entered into agreements with Pemex-Refining for the sale and purchase of gasoline and other products by certain retail service stations and a wholesale distributor, as well as the performance of other related activities. As of the date of this report, their ownership interests are as follows:
Company | Name | Ownership Share | ||||
Servicio Cozumel, S.A. de C.V. (which operates a retail service station) | Mr. Pedro Joaquín Coldwell Mr. Pedro Oscar Joaquín Delbouis (son of Mr. Joaquín Coldwell) Mr. Nassim Joaquín Delbouis (son of Mr. Joaquín Coldwell) | 60 20 20 | % % % | |||
Planta de Combustible Cozumel, S.A. de C.V. (which operates as a wholesale distributor) | Mr. Pedro Joaquín Coldwell Mr. Fausto Nassim Joaquín Ibarra (father of Mr. Joaquín Coldwell) | 40 60 | % % | |||
Gasolinera y Servicios Juárez, S.A. de C.V. (which operates a retail service station) | Mr. Pedro Joaquín Coldwell Mr. Fausto Nassim Joaquín Ibarra Mr. Ignacio Nassim Ruiz Joaquín (nephew of Mr. Joaquín Coldwell) | 40 40 20 | % % % | |||
Combustibles Caleta, S.A. de C.V. (which operates a retail service station) | Mr. Pedro Joaquín Coldwell Mr. Pedro Oscar Joaquín Delbouis Mr. Nassim Joaquín Delbouis Mr. Fausto Nassim Joaquín Ibarra Mr. Ignacio Nassim Ruiz Joaquín | 20 20 20 20 20 | % % % % % | |||
Combustibles San Miguel, S.A. de C.V. (which operates a retail service station) | Mr. Pedro Joaquín Coldwell Mr. Pedro Oscar Joaquín Delbouis Mr. Nassim Joaquín Delbouis Mr. Ignacio Nassim Ruiz Joaquín | 25 25 25 25 | % % % % |
The rights of these companies to operate retail service stations and distribute gasoline and other products on a wholesale basis in Mexico are dependent on these agreements, the expiration or non-renewal of which may adversely affect their business. These agreements are based on our standard forms of agreements and contain the standard terms and conditions applicable to all of Pemex-Refining’s retail service stations and wholesale distributors.
Item 8. | Financial Information |
Legal Proceedings
Labor-Related Proceedings
We are a party to various legal actions involving labor claims of former and present employees. These labor disputes relate to severance payments, life insurance benefits, extensions of labor contracts, level of wages, improper termination and employee housing. We do not expect these lawsuits to have a material adverse effect on our financial condition or future results of operations.
For information on our negotiations with the Petroleum Workers’ Union and collective bargaining agreements, see “Item 6—Directors, Senior Management and Employees—Employees.”
Mexican Government Audits and Other Investigations
Certain rules have been enacted in order to promote a culture of ethics and prevent corruption in our daily operations. On July 31, 2002, aCódigo de Ética de los Servidores Públicos de la Administración Pública Federal (Code of Ethics for Public Servants of the Federal Public Administration) was published in the Official Gazette of the Federation, containing rules to promote legality, honesty, integrity, loyalty, impartiality and efficiency in the performance of public work by public sector officials and employees, including PEMEX’sour directors, officers and employees. On October 3, 2003, we announced a corporate code of conduct for Petróleos Mexicanos and the subsidiary entities, theCódigo de Conducta de Petróleos Mexicanos y Organismos Subsidiarios(Code of Conduct of Petróleos Mexicanos and the Subsidiary Entities) that defines the code of conduct expected from all employees of Petróleos Mexicanos and its subsidiary entities in the daily performance of their duties, and which is designed to promote transparency and prevent abuses. In addition, on May 12, 2004, the Board of Directors of Petróleos Mexicanos adopted a Code of Ethics for our chief executive officer, chief financial officer, chief accounting officer and all other employees performing similar functions in Petróleos Mexicanos, the subsidiary entities and the subsidiary companies. For more information on this Code of Ethics, see “Item 16B—Code of Ethics.” We expect that these efforts will result in a more effective system of internal controls. More recently, onOn June 3, 2011, the Board of Directors of Petróleos Mexicanos approved theCódigo de Conducta de los Miembros del Consejo de Administración de Petróleos Mexicanos (Code of Conduct of the Members of the Board of Directors of Petróleos Mexicanos). OnIn addition, on March 6, 2012, general guidelines to establish permanent measures to ensure the integrity and ethical behavior of public officers in performing their jobs, positions or commission work were published in the Official Gazette of the Federation. These guidelines provide that an ethics committee, consisting of our employees and officers, will be formed and given the following responsibilities: evaluate the Code of Conduct of Petróleos Mexicanos and the Subsidiary Entities; issue,
implement and enforce a new or updated code of conduct applicable to all of our employees; and verify compliance with the Code of Ethics for Public Servants of the Federal Public Administration.
In MarchMay 2005, the SFP announced that it had fined several former officers of Petróleos Mexicanos, alleging that these officers had illegally diverted Petróleos Mexicanos’ funds to members of the Petroleum Workers’ Union. In December 2009, the SFP announced it had fined Mr. Montemayor, former Director General of Petróleos Mexicanos, for Ps. 1,421.1 million.million and banned him from holding public sector positions for 20 years. In April 2010, Mr. Montemayor filed an appeal against this penalty before theTribunal Federal de Justicia Fiscal y Administrativa (Federal Court of Fiscal and Administrative Justice). AOn January 24, 2013, a judgment was issued confirming Mr. Montemayor’s ban from holding public sector positions but declaring the economic penalty null and void due to the inadequacy of the process by which this penalty was calculated. As of the date of this report, a final resolution of this appeal is still pending.
In July 2007, the SFP announced that it had fined, among others, Mr. Raúl Muñoz Leos, former Director General of Petróleos Mexicanos, and Mr. Juan Carlos Soriano Rosas, former General Counsel of Petróleos Mexicanos, each for an amount of Ps. 862.2 million and banned each of themhim from holding public sector positions for ten years for allegedly breaking budgetary laws and regulations in connection with a side agreement (No. 10275/04) dated August 1, 2004, between Petróleos Mexicanos and the Petroleum Workers’ Union. On August 25, 2005, Petróleos Mexicanos and the Petroleum Workers’ Union amended this side agreement in order
to make certain adjustments required by applicable regulations. These penalties have beenwere appealed by the former officers.officer. On August 4, 2010, the Federal Court of Fiscal and Administrative Justice issued a resolution confirming Mr. Muñoz Leos’ liability for executing this side agreement, but declared the economic penalty null and void. The former officers filedvoid due to the fact that no economic damages were caused as a motion to review thisresult of the side agreement. On September 6, 2012, the SFP issued a new resolution and anamparo.A final resolution foragainst Mr. Muñoz Leos’ claim is still pending. On September 21, 2011, a judgment was issuedLeos confirming that the resolution against Mr. Soriano Rosas was null and void. Therefore, Mr. Soriano Rosas’ claim has concluded.
In December 2007, the SFP announced that it had fined Mr. Jaime Mario Willars Andrade, former Director General of Pemex-Refining, and Mr. Luis Ricardo Bouchot Guerrero, former Head of the Legal Department of Pemex-Refining, each for an amount of Ps. 1,390.3 million for administrative negligence relateddecision to the early termination of a long-term supply and services contract for the construction of a methyl tert-butyl ether plant, and that it had banned these officersban him from holding public sector positions infor ten years. Mr. Muñoz Leos filed a motion against this resolution before the future. In April 2009, these former officers appealed these penalties beforeTercera Sala Regional Metropolitana(Third Regional Metropolitan Court) of the Federal Court of Fiscal and Administrative Justice. On September 27, 2011, the court issued a judgment that confirmed the administrative penalty banning these former officers from holding public sector positions in the future. In addition, the Court declared the economic penalty null and void, requesting the SFP to provide sufficient arguments to support it. The SFP filed a motion to appeal this resolution, a final resolution ofJustice, which is still pending.pending as of the date of this report.
In March and April 2010, the SFP filed 157 criminal complaints against officers and employees ofPemex-Refining, in connection with a pipeline rupture in Nanchital, Veracruz,Veracruz. In August 2013, the Federal Attorney General’s Office notified the SFP that it was closing the investigation ofrelated to the criminal complaints against the officers and employees. The SFP has filed a motion against this resolution, which is still pending.pending as of the date of this report. In addition,a concurrent proceeding, the SFP imposed administrative penalties against these officers and employees, as well as against contractors. The officers employees and contractorsemployees filed appeals to the 2528 administrative penalties, six15 of which have concluded with the following results: threeten penalties were confirmed twoand five penalties were declared null and void and one penalty was granted anamparo, which now requires a new resolution to be issued.void. As of the date of this report, final resolutions forof the 13 other 19 administrative penalties appealed by these officers and employees are still pending. The contractors filed appeals to nine administrative penalties, four of which have concluded with the following results: one penalty was confirmed and three penalties were declared null and void. As of the date of this report, final resolutions of the five other administrative penalties appealed by these contractors are still pending.
In May 2010, the SFP filed two criminal complaints and initiated several administrative proceedings against María Karen Miyazaki Hara, who served as PMI’s Deputy Director of Trading of Intermediate Distillates, for allegedly committing acts of corruption pursuant to which PMI lost revenues of approximately U.S. $13 million. The alleged acts involved the unauthorized sale of ultra low sulfur diesel for the economic benefit of foreign companies, including Blue Oil Trading Ltd. During November 2010, the administrative proceedings concluded, resulting in Ms. Miyazaki Hara being fined Ps. 164.2 million and receiving a 20 year ban from public sector employment. Ms. Miyazaki Hara filed a claim before the Federal Court of Fiscal and Administrative Justice seeking that this resolution be declared null and void. As of the date of this report, the trial is in the evidentiary stage. Once this stage concludes, the Superior Court of the Federal Court of Fiscal and Administrative Justice will review Ms. Miyazaki Hara’s claim. In addition, on June 25, 2013, the SFP fined Ms. Miyazaki Hara for Ps. 59.3 million and banned her from holding public sector positions for 20 years. On September 23, 2013, Ms. Miyazaki Hara filed a finalmotion against this resolution is still pending. Thebefore the Federal Court of Fiscal and Administrative Justice seeking that this additional resolution also be declared null and void. As of the date of this report, an order for Ms. Miyazaki Hara’s arrest has been issued in connection with one criminal complaint, and the investigation of the other criminal complaintscomplaint is still underway.
In December 2010, the SFP announced that it had fined 1415 officers and employees of Pemex-Refining and banned them from holding public sector positions for ten years for their alleged involvement in an illegal bidding process for the leasing of four tankers. These officers and employees have appealed these penalties,resolutions. On appeal, ten of the resolutions were confirmed. The other five resolutions are still pending as of the date of this report—four are subject to motions by the SFP, while one is being reviewed by the Superior Court of the Federal Court of Fiscal and a final resolution is pending.Administrative Justice.
On October 11, 2011, the SFP announced that it had fined three former officers of PMI an aggregate amount of Ps. 267.8 million and had dismissed and fined the Director General of PMI, Ms. María del Rocío Cárdenas Zubieta, an amount offor Ps. 238.9 million, for allegedly committing acts of corruption during the period from January 2008 to January 2009. The alleged acts involved the use of improper contracting practices in the purchase and/or sale of petroleum products, which allegedly benefited certain of PMI’s commercial counterparties and resulted in financial harm to PMI in the amount of U.S. $25.7 million. Ms. Cárdenas Zubieta and the implicated ex-officers of PMI were also barred from public sector employment for a period of 10ten years and mightmay face criminal charges.
These former officers have appealed these penaltiesthe penalties. On November 7, 2013, a judgment was issued confirming the resolution against Ms. Cárdenas Zubieta. As of the date of this report, Ms. Cárdenas Zubieta has yet to file a motion against this resolution, and a final resolution isthe resolutions against the other former officers are still pending.
In July 2011, a criminal complaint was filed against Mario Blenda Ahumada, former Deputy Director of Trade and Refined Products of PMI, after a Ps. 11 million increase in his personal assets was detected. As of the date of this report, the investigation of the criminal complaint is still underway.
On February 10, 2014, the SFP announced in the Official Gazette of the Federation that it had fined Oceanografía, S.A. de C.V. (or Oceanografía), a Mexican oil-services firm, and banned it from bidding for and entering into government contracts, including contracts with us, for approximately one year and nine months. The fine and related ban resulted from the failure of Oceanografía to issue performance guarantees in connection with certain contracts between Oceanografía and Pemex-Exploration and Production. As of the date of this report, the SFP is conducting several investigations into the conduct of certain of Pemex-Exploration and Production’s current and former officers or employees in connection with its contracts with Oceanografía.
On April 9, 2014, the SEC issued an order imposing sanctions against Hewlett-Packard Company (or HP) based on its findings that HP’s subsidiaries in Mexico, Russia and Poland made improper payments to certain public officials in order to obtain public contracts in violation of the U.S. Foreign Corrupt Practices Act. In the case related to Mexico, the sanctions related in part to allegations that Hewlett-Packard México, S. de R.L. de C.V., an HP subsidiary in Mexico, paid a Mexican information-technology and consulting company more than U.S. $1 million to win a software and licensing contract with Petróleos Mexicanos worth approximately U.S. $6 million. The SEC’s order alleged that a former officer of Petróleos Mexicanos received a portion of the HP subsidiary’s unlawful payment to the consulting company. As of the date of this report, we are conducting an internal investigation into the tendering of this software and licensing contract by Petróleos Mexicanos to HP’s Mexican subsidiary.
Actions Against the Illicit Market in Fuels
The main characteristics of the illicit market in fuels are:
illegal tapping of our pipelines, which threatens the integrity of our pipeline system, thereby increasing the associated risks to personnel, facilities, the general population and the environment;
tampering with product quality, which negatively impacts consumers and our reputation; and
theft and illegal trade in fuels, which reduce our revenues by the amount that would have been generated from the sale of the stolen products, and reduce our net income, because the production cost of stolen product is included in our cost of sales.
In conjunction with the SHCP and the Ministry of Energy, we have implemented several actions to combat the illicit market in fuels, with the objective of eliminating the associated risks described above to personnel, facilities, the general population and the environment, as well as minimizing losses of our refined products, crude oil and condensates. We seek to prevent orand deter theft in the workplace by analyzing information provided by certain measurement systems, field surveillance and control instruments. These include mobile laboratories, volumetric control at service stations, terminal operations measurement, satellite tracking, integrated control systems, closed circuit television and online measurement systems.
In particular, during 2011,2013, we implemented the following strategic measures in order to decrease incidents of theft in our facilities:
Increased pipeline surveillance by 18.0% as compared to 2012. Inspected 1,075rights-of-way and facilities at an average of 33,041 kilometers of pipelines, of which 392 kilometers were located in the Northern region, 183 kilometers were located in the Central region, 305 kilometers were located in the Southeastern regionper day by vehicles and 195 kilometers were located in the Western region, through the use of in-line devices known as go-devils, which led to the identification of 41 incidents of illegal tapping.
As of Together, these activities led to the recovery of
During the first three months of coordination with the Ministry of National Defense, the Secretary of the Navy and the Federal Attorney General’s Office On June 7, 2010, Pemex-Exploration and Production filed a civil claim (4:10-cv-01997) before the United States District Court for the Southern District of Texas against The purpose of As of the date of this report, a final resolution is pending with respect to a number of these proceedings. The results of these proceedings are uncertain until their final resolutions are issued by the
Civil Actions In the ordinary course of our business, we are Dividends In March 1990, as a result of the implementation of the 1989-92 Financing Package for Mexico, our commercial bank creditors exchanged U.S. $7.58 billion of Petróleos Mexicanos’ external indebtedness for Brady Bonds issued by the Mexican Government. At the same time, Petróleos Mexicanos’ indebtedness to the Mexican Government was increased by the same amount; the new indebtedness was denominated in currencies other than pesos. In December 1990, the Mexican Government and Petróleos Mexicanos agreed to capitalize this indebtedness, converting it into Certificates of Contribution “A.” As a condition of this capitalization, Petróleos Mexicanos agreed to pay a minimum guaranteed dividend to the Mexican Government equal to the debt service on the capitalized debt. The Board of Directors of Petróleos Mexicanos approved the total dividend on the Certificates of Contribution “A” after the end of each fiscal year, although until January 2007 Petróleos Mexicanos paid an amount equal to the minimum guaranteed dividend to the Mexican Government in monthly advance payments during the year. During 2006 and 2007, Petróleos Mexicanos made advance payments to the Mexican Government in aggregate annual amounts of Ps. 269 million and Ps. 4,260 million, respectively, toward the minimum guaranteed dividends for those years. On January 2, 2007, Petróleos Mexicanos made its final advance payment of minimum guaranteed dividends. We do not have a dividend policy; the Mexican Government may require that we make dividend payments at any time. On August 20, 2008, the Board of Directors of Petróleos Mexicanos approved the payment of a Ps. 4,270 million dividend to the Mexican Government. No dividends were declared or paid in the years 2009
Trading in the debt securities issued by Petróleos Mexicanos takes place primarily in the over-the-counter market. All the debt securities issued by Petróleos Mexicanos that are registered pursuant to the U.S. Securities Act of 1933 (which we refer to as the Securities Act) are also listed on the Luxembourg Stock Exchange and traded on the Euro MTF market of the Luxembourg Stock Exchange.
Memorandum and Articles of Association The Mexican Congress established Petróleos Mexicanos by a decree dated June 7, 1938, effective July 20, 1938. None of Petróleos Mexicanos or the subsidiary entities has bylaws or articles of association. On July 17, 1992, the Mexican Congress created the subsidiary entities out of operations that had previously been directly managed by Petróleos Mexicanos. Petróleos Mexicanos and its four subsidiary entities, Pemex-Exploration and Production, Pemex-Refining, Pemex-Gas and Basic Petrochemicals and Pemex-Petrochemicals, are decentralized public entities of the Mexican Government, and each is a legal entity empowered to own property and carry on business in its own name. The activities of Petróleos Mexicanos and the subsidiary entities are regulated by the Committee, Strategy and Investment Committee, Compensation Committee, Acquisitions, Leasing, Works and Services Committee, Environmental and Sustainability Committee and Development and Technological Research Committee. See “Item 6—Directors, Senior Management and Employees.” Under the Petróleos Mexicanos Law and the Regulations to the Petróleos Mexicanos Law, our directors are obligated to abstain from voting on a proposal, arrangement or contract in which they have a personal, family or business interest. Our directors do not have the power to vote compensation to themselves or any other member of the board. Except in the case of the professional board members, our directors do not receive compensation for their services as members of the Boards of Directors of Petróleos Mexicanos and the subsidiary entities. Under the Federal Law of Administrative Responsibilities of Public Officials, our directors must perform their duties without obtaining or attempting to obtain any benefits greater than those granted by law. Therefore, our directors do not have borrowing powers exercisable by themselves. There is no requirement for early retirement for our directors. Material Contracts On November 10, 1998, Petróleos Mexicanos, The Bank of New York Mellon (formerly The Bank of New York) and The Bank of New York (Delaware) entered into a Trust Agreement, which created the Master Trust and designated The Bank of New York Mellon as Managing Trustee and The Bank of New York (Delaware) as Delaware Trustee. On the same date, Petróleos Mexicanos, the subsidiary entities (except forPemex-Petrochemicals) and the Master Trust, acting through The Bank of New York Mellon, entered into an Assignment and Indemnity Agreement. This agreement provided for the assignment by such subsidiary entities to the Master Trust of certain payment obligations relating to PIDIREGAS, the arrangement by Petróleos Mexicanos of financing on behalf of the Master Trust to meet such payment obligations, the payment by Petróleos Mexicanos and such subsidiary entities to the Master Trust of the amounts necessary to meet the Master Trust’s obligations under such financings and the indemnification of the Master Trust by Petróleos Mexicanos and such subsidiary entities.
On December 30, 2004, the Master Trust and Petróleos Mexicanos entered into an indenture with Deutsche Bank Trust Company Americas (Deutsche Bank), as Trustee. This agreement provided for the issuance by the Master Trust from time to time of unsecured debt securities. All issuances of debt securities under this indenture were unconditionally guaranteed by Petróleos Mexicanos. Pursuant to a guaranty agreement, dated as of July 29, 1996, Petróleos Mexicanos’ obligations are jointly and severally guaranteed by Pemex-Exploration and Production, Pemex-Refining and Pemex-Gas and Basic Petrochemicals. Under the indenture, Petróleos Mexicanos was permitted, without the consent of the holders of the outstanding debt securities, to assume as primary obligor all of the Master Trust’s obligations under such debt securities in substitution of the Master Trust and, upon such assumption, the Master Trust would be released from its obligations under such debt securities. Effective September 30, 2009, Petróleos Mexicanos assumed all of the Master Trust’s obligations under the 2004 indenture and the debt securities issued under the 2004 indenture, and all of the Master Trust’s obligations under an indenture dated as of July 31, 2000, among the Master Trust, Petróleos Mexicanos and Deutsche Bank, as well as the debt securities issued under the 2000 indenture. On each of February 11, 2005, February 23, 2007, October 11, 2007 and July 18, 2008, the Master Trust further increased the aggregate amount of debt securities issuable under its Medium-Term Notes program to U.S. $20,000,000,000, U.S. $30,000,000,000, U.S. $40,000,000,000 and U.S. $60,000,000,000, respectively. Following these increases and pursuant to the 2004 indenture referred to above, the Master Trust issued various new series of securities. See “Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Financing Activities.” All of the Master Trust’s obligations under these securities were assumed by Petróleos Mexicanos effective as of September 30, 2009. As of December 31, On January 27, 2009, Petróleos Mexicanos entered into an indenture with Deutsche Bank Trust Company Americas, as Trustee. This agreement provides for the issuance by Petróleos Mexicanos from time to time of unsecured debt securities. On the same date, Petróleos Mexicanos entered into a distribution agreement with Calyon Securities (USA) Inc. (now known as Credit Agricole Securities (USA) Inc.), Citigroup Global Markets Inc., Citigroup Global Markets Limited, HSBC Securities (USA) Inc. and Santander Investment Securities Inc. pursuant to which Petróleos Mexicanos established a U.S. $7 billion medium-term note, Series C, program. Pursuant to the 1996 guaranty agreement referred to above, Petróleos Mexicanos’ obligations under all notes issued under this program are jointly and severally guaranteed by Pemex-Exploration and Production, Pemex-Refining and Pemex-Gas and Basic Petrochemicals. Exchange Controls Mexico has had a free market for foreign exchange since 1991, and the Mexican Government has allowed the peso to float freely against the U.S. dollar since December 1994. Taxation The 1997 Securities, the 1998 Securities, the 1999 Securities, the 2003 Securities, the 2004 Securities, the 2006 Securities, the 2008 Securities, the 2009 Securities, the 2010 Securities, the 2011 Securities, the 2012 Securities and the Pursuant to a registration statement on Form F-4 (File No. 333-7796), which was declared effective by the SEC on October 17, 1997, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining and Pemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $400,000,000 of 9.50% Global Guaranteed Bonds due 2027, which we refer to as the 1997 Securities. In December 2004 and February 2006, an aggregate amount of U.S. $376,250,000 of the 1997 Securities were exchanged for bonds issued by the Master Trust. Pursuant to a registration statement on Form F-4 (File No. 333-9310), which was declared effective by the SEC on August 24, 1998, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining and Pemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $350,000,000 of 9 1 Pursuant to a registration statement on FormF-4 (File No. 333-10706), which was declared effective by the SEC on October 1, 1999, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining and Pemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $500,000,000 of 9.50% Puttable or Mandatorily Exchangeable Securities (POMES Pursuant to a registration statement on Form F-4 (File No. 333-103197), which was declared effective by the SEC on February 24, 2003, the Master Trust, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining and Pemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $500,000,000 of 8.625% Bonds due 2022 and up to U.S. $1,000,000,000 of 7.375% Notes due 2014. Pursuant to a registration statement on Form F-4 (File No. 333-107905), which was declared effective by the SEC on August 21, 2003, the Master Trust, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining and Pemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $510,154,000 of 8.625% Bonds due 2022 and up to U.S. $757,265,000 of 7.375% Notes due 2014. We refer to the securities registered in 2003 under these registration statements as the 2003 Securities. Pursuant to a registration statement on Form F-4 (File No. 333-118373), which was declared effective by the SEC on August 31, 2004, the Master Trust, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining and Pemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $18,095,000 of 7.375% Notes due 2014 and up to U.S. $47,085,000 of 8.625% Bonds due 2022. We refer to the securities registered in 2004 as the 2004 Securities. Pursuant to a registration statement on Form F-4 (File No. 333-126941), which was declared effective by the SEC on January 13, 2006, the Master Trust, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining and Pemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $324,220,000 of 9 1 Pursuant to a registration statement on Form F-4 (File No. 333-152486), which was declared effective by the SEC on December 18, 2008, the Master Trust, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining and Pemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $2,500,000,000 of 5.75% Guaranteed Notes due 2018, up to U.S. $501,000,000 of 6.625% Guaranteed Bonds due 2035 and up to U.S. $500,000,000 of 6.625% Guaranteed Bonds due 2038. We refer to the securities registered in 2008 as the 2008 Securities. Pursuant to a registration statement on Form F-4 (File No. 333-160799), which was declared effective by the SEC on August 25, 2009, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining and Pemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $2,000,000,000 of 8.00% Notes due 2019. We refer to the securities registered in 2009 as the 2009 Securities. Effective as of September 30, 2009, Petróleos Mexicanos assumed, as primary obligor, all of the Master Trust’s obligations as issuer of the 2001 Securities, the 2003 Securities, the 2004 Securities, the 2006 Securities and the 2008 Securities. As a result, effective as of September 30, 2009, Petróleos Mexicanos is the issuer of all Registered Securities (as defined below). Pursuant to a registration statement on Form F-4 (File No. 333-168326), which was declared effective by the SEC on August 31, 2010, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining and Pemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $63,314,000 of 8.00% Notes due 2019, up to U.S. $1,500,000,000 of 4.875% Notes due 2015, up to U.S. $1,000,000,000 of 6.000% Notes due 2020, up to U.S. $2,000,000,000 of 5.50% Notes due 2021 and up to U.S. $1,000,000,000 of 6.625% Bonds due 2035. We refer to the securities registered in 2010 as the 2010 Securities. Pursuant to a registration statement on Form F-4 (File No. 333-175821), which was declared effective by the SEC on August 31, 2011, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining and Pemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $1,000,000,000 of 5.50% Notes due 2021 and up to U.S. $1,250,000,000 of 6.500% Bonds due 2041. We refer to the securities registered in 2011 as the 2011 Securities. Pursuant to a registration statement on Form F-4 (File No. 333-182553), which was declared effective by the SEC on July 23, 2012, Petróleos Mexicanos,Pemex-Exploration and Production,Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $2,100,000,000 of 4.875% Notes due 2022 and up to U.S. $1,750,000,000 of 5.500% Bonds due 2044. We refer to the securities registered in 2012 as the 2012 Securities. Pursuant to a registration statement on Form F-4/A (File No. 333-189852), which was declared effective by the SEC on July 25, 2013, Petróleos Mexicanos,Pemex-Exploration and Production,Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $1,000,000,000 of 3.500% Notes due 2018, up to U.S. $500,000,000 of Floating Rate Notes due 2018, up to U.S. $2,100,000,000 of 3.500% Notes due 2023, up to U.S. $1,000,000,000 of 4.875% Notes due 2024, up to U.S. $500,000,000 of 6.500% Bonds due 2041 and up to U.S. $1,000,000,000 of 5.50% Bonds due 2044. We refer to the securities registered in 2013 as the 2013 Securities, and together with the 1997 Securities, the 1998 Securities, the 2003 Securities, the 2004 Securities, the 2006 Securities, the 2008 Securities, the 2009 Securities, the 2010 Securities, the 2011 Securities and the Taxation Generally The following summary contains a description of the principal Mexican and U.S. federal income tax consequences of the ownership and disposition of the Registered Securities, but it does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to invest in, or dispose of, the Registered Securities. This summary is based on the federal tax laws of Mexico and the United States in force on the date of this Form 20-F, including the provisions of the income tax treaty between the United States and Mexico together with related protocols (which are subject to change), and does not describe any tax consequences arising under the laws of any state or municipality in Mexico, the United States or any other jurisdiction, or the laws of any taxing jurisdiction other than the federal laws of Mexico and the United States. Mexico has also entered into, or is negotiating, tax treaties with various countries that may have effects on holders of Registered Securities. This report does not discuss the consequences (if any) of such treaties. Each holder or beneficial owner of Registered Securities should consult its tax advisor as to the Mexican, United States or other tax consequences of the ownership and disposition of those securities, including the effect of any foreign, state or municipal tax laws, and the consequences of the application of any tax treaty to which Mexico is a party. Mexican Taxation This summary of certain Mexican federal tax considerations refers only to holders of Registered Securities that are not residents of Mexico for Mexican tax purposes and that will not hold the Registered Securities or a beneficial interest therein through a permanent establishment for tax purposes (we refer to any such non-resident holder as a Foreign Holder). For purposes of Mexican taxation, an individual is a resident of Mexico if he/she has established his/her domicile in Mexico. When an individual also has a place of residence in another country, that individual will be considered a resident of Mexico for tax purposes, if such individual has his/her center of vital interest in Mexico. An individual would be deemed to have his/her center of vital interest in Mexico if, among other things: (a) more than 50% of his/her total income for the year were derived from Mexican sources, or (b) his/her principal center of professional activities were located in Mexico. A legal entity is a resident of Mexico if:
it maintains the principal administration of its business in Mexico; or
it has established its effective management in Mexico. A Mexican national is presumed to be a resident of Mexico unless such person can demonstrate the contrary. If a legal entity or individual has a permanent establishment in Mexico, such permanent establishment shall be required to pay taxes in Mexico on income attributable to such permanent establishment in accordance with Mexican federal tax law. Taxation of Interest. Under the Mexican Income Tax Law and rules issued by the SHCP applicable to PEMEX, payments of interest (which
notice relating to the offering of such notes or bonds is given to the CNBV as required under the Securities Market Law and evidence of such notice is timely filed with the SHCP;
such notes or bonds are placed outside of Mexico through banks or brokerage houses in a country that
the issuer duly complies with the information requirements established in the general rules issued by the SHCP for such purposes. If the effective beneficiaries, directly or indirectly, individually or jointly with related parties, receive more than 5% of the interest paid on such notes or bonds and are holders, directly or indirectly, individually or jointly, with related parties of more than 10% of the voting stock of the issuer or entities 20% or more of whose stock is owned directly or indirectly, individually or jointly, by parties related to the issuer, the withholding tax rate applicable to payment of interest on such notes or bonds may be significantly higher. Payments of interest made by Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining or Pemex-Gas and Basic Petrochemicals in respect of the Registered Securities to non-Mexican pension or retirement funds will be exempt from Mexican withholding taxes, provided that:
such fund is duly organized pursuant to the laws of its country of origin and is the effective beneficiary of the interest payment; the income from such interest payment is exempt from income tax in
such fund Additional Amounts. Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining and Pemex-Gas and Basic Petrochemicals have agreed, subject to specified exceptions and limitations, to:
pay Additional Amounts (as defined in the indenture dated as of September 18, 1997, between Petróleos Mexicanos and Deutsche Bank) to the holders of the 1997 Securities in respect of the Mexican withholding taxes mentioned above;
pay Additional Amounts (as defined in the indenture dated as of August 7, 1998, between Petróleos Mexicanos and Deutsche Bank) to the holders of the 1998 Securities in respect of the Mexican withholding taxes mentioned above;
pay Additional Amounts (as defined in the indenture dated as of July 31, 2000, as supplemented, between Petróleos Mexicanos and Deutsche Bank) to the holders of the 2003 Securities and the 2004 Securities in respect of the Mexican withholding taxes described above;
pay Additional Amounts (as defined in the indenture dated as of December 30, 2004, as supplemented, between Petróleos Mexicanos and Deutsche Bank) to the holders of the 2006 Securities and the 2008 Securities in respect of the Mexican withholding taxes described above; and
pay Additional Amounts (as defined in the indenture dated as of January 27, 2009, between Petróleos Mexicanos and Deutsche Bank) to the holders of the 2009 Securities, the 2010 Securities, the 2011 Securities, the 2012 Securities and the If Petróleos Mexicanos pays Additional Amounts in respect of such Mexican withholding taxes, any refunds received with respect to such Additional Amounts will be for the account of Petróleos Mexicanos. Holders or beneficial owners of the Registered Securities may be Taxation of Dispositions. Capital gains resulting from the sale or other disposition of the Registered Securities by a Foreign Holder will not be subject to Mexican income or withholding taxes. Other Mexican Tax Considerations. Under the Income Tax Law, any discount received by a non-resident upon purchase of the notes or bonds from a Mexican resident or a non-resident with a permanent establishment in Mexico is deemed interest income, and therefore, subject to taxes in Mexico. Such interest income results from the difference between the face value (plus accrued interest not subject to withholding) and the purchase price of such notes or bonds. Transfer and Other Taxes. There are no Mexican stamp, registration or similar taxes payable by a Foreign Holder in connection with the purchase, ownership or disposition of the Registered Securities. A Foreign Holder of the Registered Securities will not be liable for Mexican estate, succession, gift, inheritance or similar tax with respect to such securities. United States Taxation This summary of certain U.S. federal income tax considerations deals principally with persons that hold the Registered Securities as capital assets and whose functional currency is the U.S. dollar. As used in this section “Taxation,” the term “United States Holder” means an individual who is a citizen or resident of the United States, a U.S. domestic corporation or any other person that is subject to U.S. federal income taxation on a net income basis in respect of its investment in the Registered Securities. This summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to any particular investor, including tax considerations that arise from rules of general application or that are assumed to be known to investors. This summary generally does not address the tax treatment of holders that may be subject to special tax rules, such as banks, insurance companies, tax-exempt organizations, dealers in securities or currencies, certain short-term holders of Registered Securities, traders in securities electing to mark-to-market, or persons that hedge their exposure in the Registered Securities or hold the Registered Securities as a position in a “straddle” for tax purposes or as part of a “synthetic security” or a Taxation of Interest and Additional Amounts. A United States Holder will treat the gross amount of interest and Additional Amounts The calculation and availability of foreign tax credits or deductions involves the application of rules that depend on a United States Holder’s particular circumstances. United States Holders should consult their own tax advisors regarding the availability of foreign tax credits and the treatment of Additional Amounts. Foreign tax credits may not be allowed for withholding taxes imposed in respect of certain short-term or hedged positions in securities or in respect of arrangements in which a United States Holder’s expected economic profits is insubstantial. United States Holders should consult their own advisors concerning the implications of these rules in light of their particular circumstances. Taxation of Dispositions. Upon the sale, exchange or retirement of a Registered Security, a United States Holder will generally recognize a gain or loss equal to the difference between the amount realized (less any amounts attributable to accrued and unpaid interest not previously includible in gross income, which will be taxable as ordinary income) and the holder’s tax basis in such security. Gain or loss recognized by a United States Holder on the sale, redemption or other disposition of the Registered Securities generally will be long-term capital gain or loss if, at the time of disposition, the securities have been held for more than one year. Long-term capital gain realized by an individual United States Holder is generally taxed at lower rates than short-term capital gains or ordinary income. Non-United States Holders. Holders of the Registered Securities that are, with respect to the United States, non-resident aliens or foreign corporations (which we refer to as Non-United States Holders) will not be subject to U.S. federal income taxes, including withholding taxes, on payments of interest on the securities so long as the requirements described under “Backup Withholding and Information Reporting” are satisfied, unless such income is effectively connected with the conduct by the Non-United States Holder of a trade or business in the United States. The gain realized on any sale or exchange of the Registered Securities by a Non-United States Holder will not be subject to U.S. federal income tax, including withholding tax, unless (1) such gain is effectively connected with the conduct by the holder of a trade or business in the United States or (2) in the case of gain realized by an individual holder, the holder is present in the United States for 183 days or more in the taxable year of the sale and either (A) such gain or income is attributable to an office or other fixed place of business maintained in the United States by such holder or (B) such holder has a tax home in the United States. A Registered Security held by an individual holder who at the time of death is a non-resident alien will not be subject to U.S. federal estate tax. Backup Withholding and Information Reporting. The principal paying agent for each of the Registered Securities will be required to file information returns with the Internal Revenue Service with respect to payments made to certain United States Holders of those securities. In addition, certain United States Holders may be subject to a backup withholding tax in respect of such payments, unless they (1) provide their accurate taxpayer identification numbers to the principal paying agent and certify that they are not subject to backup withholding or (2) otherwise establish an exemption from the backup withholding tax. Non-United States Holders may be required to comply with applicable certification procedures to establish that they are not United States Holders in order to avoid the application of such information reporting requirements and backup withholding tax. Documents on Display We are subject to the information requirements of the Exchange Act. In accordance with these requirements, we file reports, including annual reports on Form 20-F, and other information with the SEC. These materials, including this
Risk Management and Financial Instruments
One of Petróleos Mexicanos and the subsidiary
Exchange Rate Risk A significant amount of our revenues is derived from exports of crude oil and petroleum products, which are priced and payable in U.S. dollars. Moreover, our revenues from domestic sales of gasoline and diesel net of the IEPS tax,
Cross-Currency Swaps Most of our debt is denominated in U.S. dollars or pesos. Although Since 1991, for non-U.S. dollar
During 2013, we entered into cross-currency swaps to hedge currency risk arising from debt obligations denominated in euros and inflation risk arising from debt denominated in UDIs, for an aggregate notional amount of U.S. $2,028.7 million. During 2012, we entered into various cross-currency swaps to hedge currency risk arising from debt obligations denominated in
Most of our cross-currency swaps are We recorded a total net foreign exchange The PMI Group also faces market risks generated by fluctuations in foreign exchange rates. In order to mitigate these risks, the board of directors of several of the companies that form the PMI Group have authorized a policy which PMI HBV has outstanding euro-dollar exchange rate forwards which were executed in order to hedge its financing operations denominated in euros. As of December 31, 2013, the outstanding notional amount of these contracts was €266.4 million. Finally, a significant amount of PMI Trading’s income and expenses, including the cost of sales and related sales costs, is derived from the trade of refined products, petrochemicals and gas liquids to our subsidiaries and third parties, whose prices are determined and are payable in U.S. PMI Trading believes it can adequately manage the risk created by the payment of taxes in domestic currency without the need to enter into hedging instruments because the exposure to this risk is marginal relative to the total flows of U.S. dollar. In addition, in the event that a potential foreign exchange risk arises in connection with a commercial transaction, PMI Trading may implement risk mitigation measures by entering into DFIs. Interest Rate Risk We are exposed to fluctuations in floating interest The investments made through our portfolios are exposed to domestic and international interest rate risk and credit spread risk derived from government and corporate securities, and inflation risk arising from the relationship between UDIs and pesos. However, these risks are mitigated by established limits on exposure to market risk Interest Rate Swaps Occasionally, for strategic reasons or in order to offset the expected inflows and outflows, we have entered into interest rate
swaps. Under As of December 31, Similarly, in order to eliminate the volatility associated with variable interest rates of long-term financing operations, PMI NASA has executed interest rate swap agreements denominated in U.S. dollars for an outstanding notional amount of U.S. $127.9 million, at a weighted average fixed interest rate of Hydrocarbon Price Risk
We continuously evaluate the implementation of risk mitigation strategies, including those involving the use of DFIs, while taking into account operational and economic constraints. We did not hedge the price risk associated with any of our crude oil production for the period from 2007 to 2013. In addition to supplying natural gas, Pemex-Gas and Basic Petrochemicals offers DFIs to its domestic customers in order to provide them with support to mitigate the risk associated with the volatility of natural gas prices. Pemex-Gas and Basic Petrochemicals enters into DFIs with MGI Supply, Ltd. under the opposite position to those DFIs offered to its customers in order to mitigate the market risk it bears under such offered DFIs. MGI Supply, Ltd. then transfers the related price risk derived from the DFI position held with Pemex-Gas and Basic Petrochemicals to international financial counterparties by entering into these opposite position DFIs with such parties. Through the above mechanism, Pemex-Gas and Basic Petrochemicals is able to maintain its natural risk profile with negligible exposure to market risk. Pemex-Gas and Basic Petrochemicals’ domestic sales of LPG have been subject to a price control mechanism imposed by the Mexican Government. This PMI Trading faces market risk generated by the terms of the purchase and sale of refined products and natural gas liquids, as well as the volatility of oil prices. Accordingly, it frequently enters into DFIs in order to Risks Relating to
These DFIs will mature between March and October of 2014. As of December 31, 2013 and 2012, the market value of Repsol shares was €18.320 and €15.335 per share, respectively. Between July and September 2011, we acquired 57,204,240 shares of Repsol
When the fair value of DFIs is favorable to us, we face the risk that counterparties will not be able to meet their obligations. To reduce this risk, we monitor our counterparties’ creditworthiness and Moreover, we have entered into various long-term cross-currency swaps agreements with “recouponing” provisions (pursuant to which the payments on the swaps are adjusted when the mark-to-market value exceeds the relevant threshold specified in the swap), thereby limiting our exposure with our counterparties to a specific threshold amount. The specified thresholds were reached in seven cross-currency swaps during 2012 and four cross-currency swaps during 2013. These swaps were used to hedge the exchange rate exposure to the euro and pound. This resulted in the cash settlement of such swaps and the resetting of swap terms to return their mark-to-market value to zero. According to IFRS 13, “Fair Value Measurement,” the fair value or mark-to-market value of DFIs must reflect the creditworthiness of the parties. Consequently, the fair value of a DFI takes into account the risk that either party may default on its PMI Trading’s credit risk associated with PMI HBV’s credit risk associated with DFI transactions is related to the financing that it obtains from the same DFI counterparties. PMI HBV’s debt balance with such counterparties is greater than the DFIs’ mark-to-market value. Liquidity Risk Through In addition, we have acquired three committed revolving credit lines in order to Finally, the The PMI Group mitigates the The companies in the PMI Group monitor their cash flow on a daily basis and Instruments Entered into for The following tables
for debt obligations, for interest rate and currency swaps,
for natural gas DFIs, volumes are presented in millions of British thermal units (MMBtu), and average fixed and strike prices are presented in U.S. dollars per MMBtu;
weighted average variable rates are based on implied forward rates
for natural gas DFIs, volumes are presented in MMBtu, and fixed average and strike prices are presented in U.S. dollars per MMBtu; a DFI’s fair
fair value is calculated internally, by discounting
for all instruments, the tables
Quantitative Disclosure of
Source: Petróleos Mexicanos. Quantitative Disclosure of
n.a. = not applicable.
Source: Quantitative Disclosure of
n.a. = not applicable.
Source: Pemex-Gas and Basic Quantitative Disclosure of
Source: P.M.I. Trading, Ltd.
Not applicable. PART II
We carried out an evaluation under the supervision and with the participation of our management, including our Director General and our chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of December 31, Based upon our evaluation, our Director General and our chief financial officer concluded that our disclosure controls and procedures as of December 31,
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of Sponsoring Organizations of the Treadway Commission Management relied on Auditing Standards No. 2 and 5 of the Public Company Accounting Oversight Board Based on our assessment and those criteria, management concluded that
Not applicable.
There has been no change in our internal control over financial reporting during
We have adopted a code of ethics, as defined in Item 16B of Form 20-F under the Exchange Act. Our Code of Ethics applies to our Director General (chief executive officer), our chief financial officer, our chief accounting officer and all other employees performing similar functions in Petróleos Mexicanos, the subsidiary entities and the subsidiary companies. Our Code of Ethics is available on our website at http://www.pemex.com. If we amend the provisions of our Code of Ethics that apply to our chief executive officer, our chief financial officer, our chief accounting officer and persons performing similar functions, or if we grant any waiver of such provisions, we will disclose such amendment or waiver on our website at the same address. In addition, all of our employees are currently also subject to the Code of Ethics for Public Servants of the Federal Public Administration, which was issued by the SFP in July 2002 pursuant to the requirements of the Federal Law of Administrative Responsibilities of Public Officials in order to establish clear rules to promote and enforce legal and ethical standards of conduct and to prevent corruption and corporate abuses by Mexican public officials. See “Item 8—Financial Information—Legal Proceedings—Mexican Government Audits and Other Investigations” for more information.
In accordance with the Petróleos Mexicanos Law, the Audit and Performance Evaluation Committee, Normas de Información Financiera Gubernamental para el Sector Paraestatal (Mexican Standards for Governmental
Audit and Non-Audit Fees The following table sets forth the aggregate fees
Audit fees for the year ended December 31, 2013 in the table above are the aggregate fees billable by BDO Mexico for services provided in connection with the audits of our annual financial statements in 2013, statutory filings and statutory audits, as well as filings with financial regulators and services provided in accordance with the instructions of the Audit and Performance Evaluation Committee. Audit fees for the year ended December 31, 2012 shown in the table above are the aggregate fees billed and billable by KPMG Cárdenas Dosal, S.C. for services provided in connection with the audits of our annual financial statements in Audit-related fees in the table above Tax fees in the table above Other fees in the table above are fees billed by KPMG Cárdenas Dosal, S.C. in 2012 related to an agreed-upon procedures report in order to comply with a contract entered into by a subsidiary company. Audit Committee Approval Policies and Procedures In accordance with the Petróleos Mexicanos Law, the Audit and Performance Evaluation Committee On December 8, 2009, the Audit and Performance Evaluation Committee
Not applicable.
Not applicable.
KPMG Cárdenas Dosal, S.C. previously served as our principal accountant. On October 8, 2013, KPMG Cárdenas Dosal, S.C. was notified that the Audit and Performance Evaluation Committee engaged BDO Mexico as our principal accountant (i) to audit Petróleos Mexicanos’ financial statements and the consolidated financial statements of Petróleos Mexicanos and its subsidiary entities for the fiscal years ending December 31, 2013 and December 31, 2014, prepared in accordance with the Mexican Standards for Governmental Financial Information for Public Sector Entities; (ii) to audit our consolidated financial statements for the fiscal years ending December 31, 2013 and 2014, prepared in accordance with IFRS; and (iii) to perform other services associated with the auditing of our financial statements. The auditor-client relationship with KPMG Cárdenas Dosal, S.C. formally ceased on November 15, 2013 upon KPMG Cárdenas Dosal, S.C.’s completion of the limited review of our unaudited interim consolidated financial statements as of and for the three-month and nine-month periods ended September 30, 2013. The change of auditor was due to KPMG Cárdenas Dosal, S.C.’s completion of the maximum time period for an external auditor to render services to us, as set forth in the criteria issued by the Audit and Performance Evaluation Committee for the performance of services by the external auditor in accordance with Article 23 of the Petróleos Mexicanos Law. See “Item 16C—Principal Accountant Fees and Services—Audit Committee Approval Policies and Procedures.” During the two most recent fiscal years and the subsequent interim period through November 15, 2013, there were no: (i) disagreements with KPMG Cárdenas Dosal, S.C. on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures that if not resolved to their satisfaction would have caused them to make references in connection with their opinion to the subject matter of the disagreements or (ii) “reportable events” as that term is defined in Item 16F(a)(1)(v) of Form 20-F. KPMG Cárdenas Dosal, S.C.’s report with respect to our consolidated financial statements as of December 31, 2012 and 2011 and January 1, 2011 and for the fiscal years ended December 31, 2012 and 2011 did not contain any adverse opinion or disclaimer of opinion, or qualification or modification as to uncertainty, audit scope or accounting principles. During the two most recent fiscal years and the subsequent interim period through November 15, 2013, we did not consult BDO Mexico regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our consolidated financial statements; or (ii) any matter that was either the subject of a disagreement or a “reportable event” as that term is defined in Item 16F(a)(1)(v) of Form 20-F. Further, during the two most recent fiscal years and the subsequent interim period through November 15, 2013, no written report or oral advice was provided that BDO Mexico concluded was an important factor considered by us in reaching a decision as to the accounting, auditing or financial reporting issue. We have provided KPMG Cárdenas Dosal, S.C. with a copy of the foregoing disclosure and have requested that it furnish a letter addressed to the SEC stating whether or not it agrees with such disclosure. A copy of KPMG Cárdenas Dosal, S.C.’s letter, dated May 15, 2014, is filed as Exhibit 15.1 to this report.
Not applicable.
Not applicable. PART III
Not applicable.
See pages F-1 through
The registrant agrees to furnish to the U.S. Securities and Exchange Commission, upon request, copies of any instruments that define the rights of holders of long-term debt of the registrant that are not filed as exhibits to this
SIGNATURE Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, as amended, the registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and has duly caused and authorized the undersigned to sign this
Date: PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2011
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31,
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the General Comptroller’s Office and the Board of Directors of Petróleos Mexicanos: We have audited the accompanying consolidated We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. As discussed in Note 1 In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Petróleos Mexicanos, Subsidiary Entities and Subsidiary Companies as of December 31, 2013, and the results of their operations and cash flows for the year ended December 31, 2013, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. CASTILLO MIRANDA Y COMPAÑÍA, S. C.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the General Comptroller’s Office and the Board of Directors of Petróleos Mexicanos: We have audited the accompanying consolidated statement of financial position of Petróleos Mexicanos, Subsidiary Entities and Subsidiary Companies (“PEMEX”) as of December 31, 2012, and the related consolidated statements of operations, We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States) In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Petróleos Mexicanos, Subsidiary Entities and Subsidiary Companies as of December 31,
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, (Figures stated in thousands, except as noted)
The accompanying notes are an integral part of these consolidated financial statements. PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
The accompanying notes are an integral part of these consolidated financial statements. PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT) FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
The accompanying notes are an integral part of these consolidated financial statements. PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
The accompanying notes are an integral part of these consolidated financial statements. PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted) NOTE 1— Petróleos Mexicanos was created on June 7, 1938, and began operations on July 20, 1938 in accordance with a decree of the Mexican Congress stating that all foreign-owned oil companies in operation at that time in the United Mexican States (“Mexico”) were thereby nationalized. Petróleos Mexicanos and its four Subsidiary Entities (as defined below) are decentralized entities of the Federal Government of Mexico (the “Mexican Government”) and together comprise the Mexican oil and gas industry. The operations of Petróleos Mexicanos and its Subsidiary Entities (as defined below) are regulated mainly by theConstitución Política de los Estados Unidos Mexicanos (Political Constitution of the United Mexican States, or the “Mexican Constitution”), theLey Reglamentaria del Artículo 27 Constitucional en el Ramo del Petróleo (Regulatory Law to Article 27 of the Political Constitution of the United Mexican States concerning Petroleum Affairs, or the “Regulatory Law”), theLey de Petróleos Mexicanos(Petróleos Mexicanos Law) and theReglamento de la Ley de Petróleos Mexicanos(Regulations to the Petróleos Mexicanos Law), which establish the state will be exclusively entrusted with the activities in the strategic areas of petroleum, hydrocarbons and basic petrochemicals through Petróleos Mexicanos and its Subsidiary Entities (as defined below). The Petróleos Mexicanos Law, which was published in theDiario Oficial de la Federación(Official Gazette of the Federation) on November 28, 2008, establishes that the four Subsidiary Entities (as defined below) will continue carrying out their activities in accordance with their objectives, fulfilling the commitments they have already assumed in Mexico and abroad. On March Under the Subsidiary Entities Decree: Petróleos Mexicanos continues to have the authority to direct the central planning and strategic management of the Subsidiary Entities (as defined below) in accordance with the Petróleos Mexicanos Law, and to provide general corporate services of an administrative and technical nature, as requested by the the Subsidiary Entities (as defined below) will continue to undertake all activities related to technical and industrial operations that are strictly productive and commercial in nature, in accordance with their purpose; the organization continues to allocate the duties to each Subsidiary Entity (as defined below) in accordance with the rationale of the activities related to petrochemical products, as opposed to basic petrochemicals, must be undertaken by the Subsidiary Entities (as defined below), and PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) In addition, on September 4, 2009, the Board of Directors of Petróleos Mexicanos (the “Board”) approved theEstatuto Orgánico (Organic Statute) of Petróleos Mexicanos, which became effective on September 25, 2009 and has since been modified on August 9, 2010, August 2, 2011, February 23, 2012, March 27, 2013 and September 30, 2013. On March 28, 2013, the Organic Statutes of each Subsidiary Entity (as defined below) was published in the Official Gazette of the Federation. These Organic Statutes establish the structure, organizational basis and functions of the administrative units of each of the Subsidiary Entities (as defined below), and also delineate the duties and internal regulations of their respective Boards of Directors. The Subsidiary Entities are decentralized entities of a technical, industrial and commercial nature with their own corporate identity and equity and with the legal authority to own property and conduct business in their own names and are grouped in accordance with the areas delineated by the Secretary of Energy. The Subsidiary Entities are controlled by and have the characteristics of subsidiaries of Petróleos Mexicanos. The Subsidiary Entities, of which Petróleos Mexicanos owns 100% of the equity, are: The principal objectives of the Subsidiary Entities are as follows: For purposes of these consolidated financial statements, any capitalized name or term that is not defined herein will have the meaning attributed to it in the Regulatory Law or in the Petróleos Mexicanos Law. On December 12, 2013, the Permanent Commission of the Mexican Congress approved amendments to Articles 25, 27 and 28 of the Mexican Constitution, which were subsequently approved by a majority of Mexico’s state legislatures and signed into law by President Peña Nieto. On December 20, 2013, these PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) amendments were published as theDecreto por el que se reforman y adicionan diversas disposiciones de la Constitución Política de los Estados Unidos Mexicanos, en Materia de Energía (Decree that amends and supplements various provisions of the Mexican Constitution relating to energy matters, or the “Energy Reform Decree”) in the Official Gazette of the Federation and took effect on December 21, 2013. The Energy Reform Decree includes transitional articles that set forth the general framework for the secondary legislation or implementing laws, which have not been enacted as of the date of these consolidated financial statements. The key features of the Energy Reform Decree with respect to the hydrocarbons sector in Mexico and PEMEX’s operations are the following:
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted)
As of the date of these consolidated financial statements, PEMEX does not know what the scope of the secondary legislation will be. Accordingly, it cannot currently predict what specific effects these developments may have, although they will likely result in significant changes to PEMEX’s structure and have a material effect on its results of operations and financial position. The principal distinction between the Subsidiary Entities and the Subsidiary Companies (as defined below) is that the Subsidiary Entities are decentralized public entities created by the predecessor statute to theLey Orgánica de Petróleos Mexicanos y Organismos Subsidiarios(Organic Law of Petróleos Mexicanos and the Subsidiary Entities), whereas the Subsidiary Companies are companies that were formed in accordance with the applicable laws of each of the respective jurisdictions in which they were incorporated. In addition, unlike the Subsidiary Entities, the Subsidiary Companies are not decentralized entities and are managed as private corporations. The “Subsidiary Companies” are defined as those companies which are controlled by PEMEX (see Note 3(a)). “Associates”, as used herein, means those companies in which Petróleos Mexicanos does not have effective control (see Note 3(a)). Petróleos Mexicanos, the Subsidiary Entities and the Subsidiary Companies are referred to collectively herein as “PEMEX”. PEMEX’s address and its principal place of business is: Av. Marina Nacional No. 329 Col. Petróleos Mexicanos Delegación Miguel Hidalgo México, D.F. 11311 México NOTE 2—BASIS OF PREPARATION:
PEMEX prepared its consolidated financial statements as of December 31, 2013 and 2012, and for the years ended December 31, 2013, 2012 and 2011, in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The consolidated financial statements and the notes thereto as of December 31, 2013 were approved by the Board on May 14, 2014 pursuant to the terms of Article 104 Fraction III, paragraph a, of the MexicanLey del Mercado de Valores (Securities Market Law), and of Article 33 Fraction I, paragraph a, section 3 and Article 78 of the general provisions applicable to Mexican securities issuers and other participants in the Mexican securities market.
These consolidated financial statements
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
Mexico’s monetary policy regulator, theBanco de México, requires that Government entities other than financial entities sell their foreign currency to the Translation of financial statements of foreign operations The financial statements of foreign subsidiaries and associates are translated into the reporting currency by identifying if the functional currency is different from the currency for recording the foreign operations. If the currencies for a foreign transaction are different, then the currency for recording the foreign transaction is first translated into the functional currency and then translated into the reporting currency using the year-end exchange rate for assets and liabilities
References in these consolidated financial statements and the related notes to “pesos” or “Ps.” refers to Mexican pesos, “U.S. dollars” or “U.S. $” refers to dollars of the United States of America, “yen” or “¥” PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) These consolidated financial statements are presented in Mexican pesos (reporting currency), which is the same as the recording currency and the functional currency of PEMEX. The U.S. dollar amounts shown in the consolidated
The preparation of the consolidated financial statements in accordance with Significant estimates and underlying assumptions are reviewed on In particular, information about assumptions, estimation uncertainties and critical accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are described in the following notes: Note 3(d) Financial instruments Note 3(h) Wells, pipelines, properties, plant and equipment; Successful efforts method of accounting Note 3(j) Impairment of non-financial assets Note 3(l) Provisions Note 3(m) Employee benefits Note 3(n) Taxes and Federal Duties; Deferred Taxes Note 3(p) Contingencies Actual results could differ from those estimates and assumptions. Below is a summary of the principal accounting policies followed by PEMEX in the preparation of its consolidated financial statements:
The consolidated financial statements include those of Petróleos Mexicanos, the Subsidiary Entities and the Subsidiary Companies. PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) Investment in subsidiaries The Subsidiary Entities and Subsidiary Companies are those controlled by Petróleos Mexicanos. Control requires exposure or rights to variable returns and the ability to affect those returns through power over a company. The Subsidiary Entities and Subsidiary Companies are consolidated from the date that control commences until the date that control ceases. The consolidated Subsidiary Entities are Pemex-Exploration and Production, Pemex-Refining, Pemex-Gas and Basic Petrochemicals and Pemex-Petrochemicals. The consolidated Subsidiary Companies are companies that are 100% owned by Petróleos Mexicanos (with the exception of Pemex Finance, Ltd. (“FIN”) and P.M.I. Comercio Internacional, S.A. de C.V. (“PMI CIM”)), and are as follows: PMI CIM(i); P.M.I. Trading, Ltd. (“PMI Trading”)(i); P.M.I. Holdings North America, Inc. (“PMI HNA”)(i); P.M.I. Holdings Petróleos España, S.L. (“PMI HPE”)(i); P.M.I. Holdings, B.V. (“PMI HBV”)(i); P.M.I. Norteamérica, S.A. de C.V. (“PMI NASA”)(i); Kot Insurance Company, AG (“KOT”); Pemex Procurement International, Inc. (“PPI”)(ii); P.M.I. Marine, Ltd. (“PMI Mar”)(i); P.M.I. Services, B.V. (“PMI SHO”)(i); Pemex Internacional España, S.A. (“PMI SES”)(i); Pemex Services Europe, Ltd. (“PMI SUK”)(i)(iii); P.M.I. Services North America, Inc. (“PMI SUS”)(i); P.M.I. Field Management Resources, S.L. (“FMR”)(i)(iv); P.M.I. Campos Maduros, S. de R.L. de C.V. (“SANMA”)(iv); Mex Gas International, Ltd. (“MGAS”); FIN; Instalaciones Inmobiliarias para Industrias, S. A. de C. V. (“III”)(iv); III Servicios, S. A. de C. V. (“III Services”)(iv); PPQ Cadena Productiva, S.L. (“PPQCP”)(iv) and Hijos de J. Barreras, S. A. (“HJ BARRERAS”)(iv).
The financial information of the Subsidiary Entities and Subsidiary Companies has been prepared based on the same period of Petróleos Mexicanos’ financial statements applying the same accounting policies. Investments in associates and joint ventures Investments in associates are those in which PEMEX has significant influence but not the power to control financial and operational decisions. There is significant influence when PEMEX owns directly or indirectly between 20% and 50% of voting rights in another entity. Joint ventures are those arrangements whereby two or more parties undertake an economic activity that is subject to joint control. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Investments in associates and joint ventures are recognized based on the equity method and recorded initially at cost, including The consolidated financial statements include the proportion of gains, losses and other comprehensive income corresponding to PEMEX’s share in each investee, once these items are adjusted to align with the accounting policies of PEMEX, from the date that significant influence and joint control begins to the date that such influence or joint control ceases. PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) When the value of the share of losses exceeds the value of PEMEX’s investment in an associate or joint venture, the carrying value of the investment, including any long-term investment, is reduced to zero and PEMEX ceases to recognize additional losses, except in cases where PEMEX is jointly liable for obligations incurred by those associates and joint ventures. Eliminated transactions in consolidation All Unrealized gains arising from transactions with entities whose investment is accounted for using the equity method are eliminated against the investment to the extent of participation in such entities. Unrealized losses are eliminated in the same way as unrealized gains but only to the extent that there is no evidence of impairment. Non-controlling interests The interests of third parties who do not have a controlling interest in the equity or comprehensive result of subsidiaries of PEMEX are presented in the consolidated statements of financial position, the consolidated statements of changes in equity (deficit) as “non-controlling interests”, and as net income and comprehensive income for the period, attributable to non-controlling interests, in the consolidated statements of comprehensive income. Dividends paid in cash and assets other than cash A liability for distributions of dividends in cash and non-cash assets to third parties is recognized when the distribution is authorized by the Board. The corresponding amount is recognized directly in equity. Distributions of non-cash assets are measured at the fair value of the assets to be distributed. Changes relating to re-measurements of the fair value between the date on which the distribution is declared and the When distributing non-cash assets, any difference between the dividend paid and the carrying amount of the assets distributed is recognized in the consolidated statements of comprehensive income.
In accordance with IAS 21, “The Effects of Changes in Foreign Exchange Rates” (“IAS 21”), transactions in foreign currencies are translated to the functional currency at exchange rates at the dates of the transactions. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements are recognized in profit or loss in the period in which they arise. When a gain or loss on anon-monetary item is recognized in other comprehensive results, any exchange component of that gain or loss is recognized in other comprehensive results. Conversely, when a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss shall be recognized in profit or loss for the PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
PEMEX measures certain financial instruments such as derivative financial instruments at fair value as of the closing date of the relevant reporting period, and the fair value of such instruments is disclosed in Note 13. The financial instruments valued at amortized cost are disclosed in Note 12. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A measurement at fair value assumes that the sale of the asset or transfer of a liability occurs:
The The fair value of
PEMEX’s financial instruments include cash and short-term deposits, equity investments, accounts receivable, other receivables, loans, accounts payable to suppliers, other accounts payable, borrowings and debts, as well as derivatives. Financial instruments measured at fair value through profit or loss A financial instrument is measured at fair value through profit or loss if it is classified as held for trading or designated as such upon initial recognition. Financial assets are designated at fair value through profit or loss if PEMEX manages such investments and makes purchase and sale decisions based on their fair value in accordance with PEMEX’s documented risk management or investment strategy. In addition, directly attributable transaction costs are recognized in the consolidated statements of comprehensive income for the period. These financial instruments are recognized at fair value and corresponding changes relating to dividend income are recognized in the consolidated statements of comprehensive income. Held-to-maturity financial instruments Financial instruments that are intended to be and are capable of being held to maturity are classified as held-to-maturity. Held-to-maturity financial instruments are recognized initially at fair value in addition to any directly attributable transaction costs. Subsequent to their initial recognition, held-to-maturity financial instruments are measured at amortized cost using the effective interest rate method (“EIR method”), less any impairment losses. PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial instruments that are designated as available-for-sale or are not classified in any of the previous categories. PEMEX’s investments in certain equity securities and debt securities are classified as available-for-sale financial assets. Available-for-sale financial assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, available-for-sale financial assets are measured at fair value. In addition, any gains or losses associated with such instruments, as well as foreign exchange differences are recognized in other comprehensive result and presented in the fair value reserve in equity. When an investment is derecognized, any gains or losses accumulated in the equity are reclassified to profit or loss. Sales and purchases of financial assets that require the delivery of such assets within a period of time established by market practice are recognized as of the negotiation date (the date on which PEMEX commits to purchase or sell the asset). Investments in equity instruments Certain investments in equity instruments are designated irrevocably as investments in equity instruments upon initial recognition, as required under IFRS 9, “Financial Instruments” (“IFRS 9”). These investments are valued at fair value and changes in their fair value are recognized in other comprehensive results. Dividends arising from these investments are recognized in results of the period when the shareholder’s right to receive payment of the dividend is established. Loans held to maturity After initial recognition, loans and debt securities that bear interest are measured at amortized cost using the EIR method, less impairment losses. The amortized cost is calculated based on any discount or premium on acquisition and fees and costs that are an integral part of the EIR method. Amortization of costs is included under the heading of financing cost—net in the statement of comprehensive income. Derivative financial instruments Derivative financial instruments (“DFIs”) presented in the consolidated statement of financial position are carried at fair value. In the case of DFIs held for trading, changes in fair value are recorded in profit or loss; in the case of DFIs formally designated as and that qualify for hedging, changes in fair value are recorded in the statement of comprehensive income using cash flow or fair value hedge accounting, with gains or losses classified in accordance with the earnings treatment of the hedge transaction. Embedded derivatives PEMEX evaluates the potential existence of embedded derivatives, which may be found in the terms of its contracts, or combined with other host contracts, which could be structured financial instruments (debt or equity instruments with embedded derivatives). Embedded derivatives have terms that implicitly or explicitly meet the characteristics of a DFI. In some instances, these embedded derivatives must be segregated from the PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) Impairment of financial assets measured at amortized cost At each reporting date, PEMEX evaluates whether there is objective evidence that a financial asset or group of financial assets is impaired in which case the value of the recoverable amount of the asset is calculated. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of the financial
Cash and cash equivalents With respect to the consolidated statement of cash flows, the cash and cash equivalents Cash subject to restrictions or that
Accounts, notes receivable
PEMEX’s inventories are valued at the lower of cost or net realizable value. Cost is determined based on the cost of production or acquisition of inventory and other costs incurred in transporting such inventory to its present location and in its present condition, using the average cost Cost of sales represents the cost of production or acquisition of inventories at the time of sale, increased, where appropriate, by declines in net realizable value of inventories during the year.
Advances to suppliers are recognized as part of inventory when the risks and benefits of the ownership of the inventory have been transferred to PEMEX.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) PEMEX uses the successful efforts method for the exploration and production of crude oil and gas activities, considering the criteria mentioned in IFRS 6, “Exploration for and Evaluation of Mineral Resources” in relation to the recognition of exploration and drilling assets. Costs of development wells and related plant, property and equipment involved in the exploitation of oil and gas are recorded as part of the cost of assets. The costs of exploratory wells in areas that have not yet been designated as containing proved reserves are recorded as intangible assets until it is determined whether they are commercially viable. Otherwise, the costs of drilling the exploratory well are charged to exploration expense. Other expenditures on exploration are recognized as exploration expenses as they are incurred. Wells, pipelines, properties, plant and equipment are initially recorded at cost, which includes their original purchase price or construction cost, any costs attributable to bringing the assets to a working condition for their intended use and the costs of dismantling and removing the items and restoring the site on which they are located, including the estimated cost of plugging and abandoning wells, in accordance with IAS 16, “Property, Plant and Equipment” (“IAS 16”). The cost of financing projects that require large investments or financing incurred for projects, net of interest revenues from the temporary investment of these funds, is recognized as part of wells, pipelines, properties, plant and equipment when the cost is directly attributable to the construction or acquisition of a qualifying asset. The capitalization of these costs is suspended during periods in which the development of construction is interrupted, and its capitalization ends when the activities necessary for the use of the qualifying asset are substantially completed. All other financing costs are recognized in the consolidated statements of comprehensive income in the period in which they are incurred. The cost of self-constructed assets includes the cost of materials and direct labor, any other costs directly attributable to the commissioning and interest on financing. In some cases the cost also includes the cost of dismantling and removal. Expenditures related to the construction of wells, pipelines, properties, plant and equipment during the stage prior to commissioning are stated at cost as intangible assets or construction in progress, in accordance with the characteristics of the asset. Once the assets are ready for use, the costs are transferred to the respective component of wells, pipelines, properties, plant and equipment and depreciation or amortization begins. The costs of major maintenance or replacement of a component of an item of wells, pipelines, properties, plant and equipment are
Depreciation
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
Pipelines, properties, and equipment received from customers are initially recognized at fair value as The capitalized value of finance leases is also included in the line item of wells, pipelines, properties, plant and equipment. Properties, plant and equipment acquired through financial leases are depreciated over the shorter of the lease term or the useful life of the asset. Advance payments for the acquisition of pipelines, properties, plant and equipment are also recognized in the line item of wells, pipelines, properties, plant and equipment when the risks and benefits of the ownership have been transferred to PEMEX.
Under the Mexican Constitution and the Regulatory Law, all oil and other hydrocarbon reserves within Mexico are owned by the Mexican nation and not by PEMEX. As of the date of these consolidated financial statements, under the Petróleos Mexicanos Law, Pemex-Exploration and Production has the right to extract these reserves and to sell the resulting production, but the reserves are not registered for accounting purposes since they are not owned by PEMEX. Pemex-Exploration and Production estimates total proved oil and natural gas reserve volumes in accordance with Rule 4-10(a) of Regulation S-X of the SEC, as amended (“Rule 4-10(a)”), and where necessary, in accordance with theStandards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers (the “SPE”) as of February 19, 2007. These procedures are consistent with international reserves reporting practice. The estimation of these reserves depends on assumptions made and the interpretation of the data available, and may vary among analysts. The results of drilling activities, test wells and production after the date of estimation are utilized in future revisions of reserves estimates. Although PEMEX does not own the oil and other hydrocarbon reserves within Mexico, these accounting procedures allow PEMEX to record the effects that such oil and other hydrocarbon reserves have on its consolidated financial statements, including, for example, in the depreciation and amortization line item.
The carrying amounts of PEMEX’s non-financial assets, other than inventories and deferred taxes, are assessed for indicators of impairment at the end of each reporting period. If the net carrying value of A cash-generating unit is the smallest identifiable group of assets which can generate cash inflows independently from other assets or groups of assets. The recoverable amount is PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) applied is the pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the asset. Fair value is calculated using discounted cash flows determined by the assumptions that market participants would apply in order to estimate the price of an asset or cash generating unit if such participants were acting in their best economic interest. In the case of cash-generating assets or items dedicated to the exploration and evaluation of hydrocarbons reserves, the recoverable amount is determined by adjusting the fair value, which is based on the proved and probable reserves, for the risk factor associated with such reserves. Impairment losses are recognized in the statement of comprehensive income. If an impairment
The determination of whether an agreement is or contains a lease is based on the content of the agreement at the date of execution. An agreement contains a lease if performance under the agreement depends upon the use of a specific asset or assets, or if the agreement grants the right to use the asset. Finance leases, which transfer to PEMEX substantially all the inherent benefits and risks of the leased property, are capitalized at the date the lease commences, and the value is recorded as the lower of the fair value of the leased property and the present value of the minimum lease payments. Payments on the lease are divided between the financial costs and the amortization of the remaining debt principal in order to achieve a constant interest rate for the outstanding liability. The financing costs are recognized in the statement of comprehensive income. Operating lease payments that do not transfer to PEMEX substantially all the risks and benefits of ownership of the leased asset are recognized as expenses in the statement of comprehensive income on a straight line basis over the term of the lease. Operating lease payments that do transfer to PEMEX substantially all the risks and benefits of ownership are instead capitalized and treated as under the paragraph above (see
PEMEX Environmental liabilities In accordance with applicable legal requirements and accounting practices, an environmental liability is recognized when the
The accrual of a liability for a future disbursement occurs when an obligation related to environmental remediation, for which PEMEX has the information necessary to determine PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as
The obligations associated with the future retirement of assets, including those related to the retirement of well, pipelines, properties, plant and equipment and their components, but excluding those related to the retirement of wells, are recognized at the date that the retirement obligation is incurred, based on the discounted cash flow The
The abandonment costs related to wells currently in production and wells temporarily closed are recorded in the statement of comprehensive income based on the units of production method. Total cost of abandonment and
The costs of prior services are recognized within profit or loss for the period in which they are incurred. PEMEX’s net obligation with In addition, seniority premiums payable for disability are recognized within other long-term employee benefits. Termination benefits are recognized in
Petróleos Mexicanos and the Subsidiary Entities are primarily subject to the following special tax Petróleos Mexicanos PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) Deferred taxes Deferred taxes are recorded based on the assets and liabilities method,
The IEPS Tax charged to customers is a tax on domestic sales of gasoline and diesel. The applicable rates depend on, among other factors, the product, producer’s price, freight costs, commissions and the region in which the respective product is
Liabilities for loss contingencies are recorded when it is probable that a liability has been incurred and the amount thereof can be reasonably estimated. When a reasonable estimation cannot be made, qualitative disclosure is provided in the notes to the consolidated financial statements. Contingent revenues, earnings or assets are not recognized until realization is
in accordance with contractual terms; the the moment at which PEMEX delivers the product to the delivery point. PEMEX recognizes revenues for services at the time the collection right on such services arises.
The costs and expenses shown in PEMEX’s consolidated statements of comprehensive income are presented based on their function, which allows for a better understanding of the components of PEMEX’s operating income. This classification allows for a comparison to the industry to which PEMEX Cost of sales Cost of sales represents the cost of inventories at the time of Transportation, distribution and administrative expenses Transportation, distribution and administrative expenses are costs in PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted)
Other revenues consists primarily of income received due to the “negative” IEPS Tax rate (see Notes 17(j) and 19). Financing income and cost Financing income and cost are comprised of interest income and
Exchange rate variations relating to assets or
Operating segments are identifiable components of PEMEX that pursue business activities from which PEMEX earns revenues and incurs expenses, including those revenues and expenses from transactions with other segments of PEMEX, and for which information is available to management on a segmented basis and is assessed by
The IASB issued the following new IFRS 10, Consolidated Financial Statements (“IFRS 10”) IFRS 10 defines the
The IAS 27 (Revised), Separate Financial Statements (“IAS 27 Revised”) IAS 27 Revised supersedes IAS 27, and is now limited to only setting the standards to be The adoption of IAS 27 did not have any accounting impact on PEMEX’s financial statements. IFRS 11, Joint Arrangements (“IFRS 11”) IFRS 11, which supersedes IAS 31, “Joint Ventures”, outlines the accounting practices for entities that agree to jointly control an arrangement. Arrangements subject to joint control are classified as either a joint operation or a joint venture. IFRS 11 sets forth that investments in joint ventures should be recognized using the equity method and PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
The adoption of
IFRS 12 establishes the disclosure requirements relating to
The adoption of IFRS 13, Fair Value Measurement (“IFRS 13”) IFRS 13 defines fair value, establishes a framework for measurement and requires disclosure about fair value measurements. However, it does not set forth additional requirements or prohibitions on the The adoption of IFRS 13 did not have any accounting impact on PEMEX’s
IAS 19 Revised eliminates the “corridor” approach previously used to recognize actuarial gains and losses related to employee benefits. Under IAS 19 Revised, actuarial gains and losses related to employee benefits are recognized in other comprehensive results upon their determination. Any such gains and losses that are recognized in the consolidated statements of
The IASB issued the new IFRS mentioned below, which are effective for annual periods described therein. PEMEX is in the process of evaluating the impact that these standards will have on its financial statements. IFRS 9, Financial Instruments (2010) (“IFRS 9 (2010)”) and IFRS 9, Financial Instruments (2009) (“IFRS 9 (2009)”) IFRS 9 (2009) introduces new requirements for classifying and measuring financial assets. Under IFRS 9 (2009), financial assets are classified and measured based on the entity’s business model for the financial asset and the characteristics of the contractual cash flows associated with the financial asset. IFRS 9 (2010) introduces additional changes relating to financial liabilities. Currently, the IASB intends to make limited modifications to the classification and measurement requirements of IFRS 9 (2009) and IFRS 9 (2010) and to add new requirements to address the impairment of financial
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted) IFRS 9 (2010) and IFRS 9 (2009) are effective for annual periods beginning on or after January 1, 2018, and early adoption is permitted. It is anticipated that the adoption of these standards will have an impact on PEMEX’s financial assets but not its financial liabilities. In November 2013, the IASB announced the completion of a package of amendments to the accounting requirements for financial instruments. The amendments:
IFRS 14, Regulatory Deferral Accounts (“IFRS 14”) The objective of this standard is to specify the reporting requirements for rate-regulated activities that arise when an entity is subject to rate regulation. In many countries, industry sectors are subject to rate regulation, whereby governments regulate the supply and prices of certain types of activities undertaken by private entities. IFRS 14 allows first-time adopters of IFRS to continue recognizing amounts related to rate regulation, in accordance with their respective previous local generally accepted accounting principles requirements. However, to facilitate comparison of financial statements among entities that have already adopted IFRS, the standard requires separate presentation of regulatory rate effects. Entities that already present financial statements in accordance with IFRS, such as PEMEX, are not eligible to apply IFRS 14. IFRS 14 is effective for annual periods beginning on or after January 1, 2016; however, early adoption is permitted. As stated above, this standard will not have an impact on PEMEX’s financial statements because entities that have already adopted IFRS are not eligible to apply IFRS 14. NOTE 4—SEGMENT FINANCIAL INFORMATION: PEMEX’s primary business is the exploration and production of crude oil and natural gas and the refining and marketing of petroleum products, conducted through six business segments: Pemex-Exploration and Production, Pemex-Refining, Pemex-Gas and Basic Petrochemicals, Pemex-Petrochemicals, the Trading Companies (as defined below) and Corporate and Other Subsidiary Companies. Management makes decisions related to the operations of the consolidated business along these six strategic lines. Due to PEMEX’s structure, there are significant quantities of inter-segment sales among the reporting segments, which are made at internal transfer prices established by PEMEX reflecting international market prices. The primary sources of revenue for the segments are as described below:
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
Pemex-Petrochemicals is engaged in the sale of petrochemical products to the domestic market. Pemex-Petrochemicals offers a wide range of products. The
The
The
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
Year ended December 31, 2013: Sales: Trade Intersegment Services income Cost of sales Gross income (loss) Other revenues and expenses—net Transportation and distribution expenses Administrative expenses Operating income (loss) Financing cost Financing income Exchange gain (loss) Profit (loss) sharing in associates Total taxes, duties and other Net (loss) income Total current assets Permanent investments in associates Wells, pipelines, properties, plant and equipment—net Total assets Total current liabilities Long-term debt Employee benefits Total liabilities Equity (Deficit) Depreciation and amortization Net periodic cost of employee benefits Acquisition of wells, pipelines, properties, plant and equipment PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
Year ended December 31, 2012: Sales: Trade Intersegment Services income Cost of sales Gross income (loss) Other revenues and expenses—net Transportation and distribution expenses Administrative expenses Operating income (loss) Financing cost Financing income Exchange gain (loss) Profit (loss) sharing in associates Total taxes, duties and other Net income (loss) Total current assets Permanent investments in associates Wells, pipelines, properties, plant and equipment—net Total assets Total current liabilities Long—term debt Employee benefits Total liabilities Equity (Deficit) Depreciation and amortization Net periodic cost of employee benefits Acquisition of wells, pipelines, properties, plant and equipment
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted)
PEMEX’s management measures the performance of the entities based on operating income and net segment income before elimination of unrealized intersegment gain (loss), as well as by analyzing the impact of the results of each segment in the consolidated financial statements. For certain of the items in these consolidated financial statements to agree with the individual financial statements of the operating segments, they must be reconciled. The tables below present the financial information of PEMEX’s operating segments, before intersegment eliminations:
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted)
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted)
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) Supplemental geographic information:
PEMEX does not have significant long-lived assets outside of Mexico. The following table shows income by product:
NOTE 5—CASH, CASH EQUIVALENTS AND As of December 31,
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) At December 31, 2013, and 2012, restricted cash was as follows: Restricted cash Restricted cash in 2013 primarily increased due to the following: In December 2004, Corporación Mexicana de Mantenimiento Integral, S. de R.L. de C.V. (“COMMISA”) filed an arbitration claim before the International Court of Arbitration of the International Chamber of Commerce (the “ICA”) against Pemex-Exploration and Production for, among other things, the breach of a construction agreement in connection with two platforms in the Cantarell project. Since the initiation of such claim, COMMISA and Pemex-Exploration and Production have filed several additional claims against one another. As a result of one of these additional claims, on September 25, 2013, the U.S. District Court ordered Pemex-Exploration and Production to deposit with COMMISA Ps. 6,081,706. Pemex-Exploration and Production subsequently deposited the judgment amount in a bank account in New York as a condition to filing a motion to appeal the resolution before the Second Circuit Court of Appeals (See Note 23(b)). NOTE 6—ACCOUNTS, NOTES RECEIVABLE AND OTHER: As of December 31,
The following table shows a breakdown of accounts receivable based on their credit history at December 31, 2013 and 2012:
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
NOTE 7—INVENTORIES: As of December 31,
NOTE 8— In 2011, PMI HBV acquired 57,204,240 shares of Repsol, S.A. (formerly known as Repsol YPF, S.A. On June 19, 2012, Repsol approved a dividend program under which Repsol shareholders had the option to receive their pro rata portion of the dividend declared at the annual meeting in the form of either (i) new shares of Repsol or (ii) cash. On June 29, 2012, Petróleos Mexicanos opted to receive its dividend in cash, which it received on July 13, 2012, while on July 9, 2012, PMI HBV received its dividend in the form of 2,600,191 new Repsol shares. As part of the same program, on January 21 and July 16, 2013, PMI HBV opted to receive dividends in the form of 1,683,322 and 1,506,130 new Repsol shares, respectively. On August 9, 2013, PEMEX divested its direct interest in 9,289,968 shares of Repsol, which resulted in a net profit of Ps. 278,842. On the same date, PEMEX entered into an equity swap for the same number of shares with a notional amount of Ps. 2,869,882, pursuant to which PEMEX retains economic and voting rights in such shares (see Note 13(a)(iv)). As of December 31, 2013 and 2012, the investments in 53,703,915 and 59,804,431 shares of Repsol were valued at Ps. 17,728,490 and Ps. 15,771,202, respectively. The effect of the valuation of the investment at fair value was recorded in other comprehensive result in the statement of changes in equity (deficit) as a gain of Ps. 4,453,495 at December 31, 2013 and a loss of Ps. 10,125,912 at December 31, 2012. In addition, PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) At December 31, 2013 and 2012, PEMEX At December 31, 2013 and 2012, PEMEX’s direct holdings of Repsol shares, together with the economic and voting rights acquired through the equity swaps mentioned above,
NOTE 9—PERMANENT INVESTMENTS IN The permanent investments in
Profit (loss) sharing in associates:
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
The following tables show condensed financial information of major investments recognized under the equity method: Condensed Statements of Financial Position
Condensed Statements of Comprehensive Income
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) NOTE 10—WELLS, PIPELINES, PROPERTIES, PLANT AND EQUIPMENT: As of December 31,
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
As a result of the sale of certain properties and plants of the Pajaritos petrochemical complex by Pemex-Petrochemicals to Petroquímica Mexicana de Vinilo, S.A. de C.V., value in use for the complex was favorable, reducing the impairment charge for previous years by Ps. 1,650,664. This reduction in impairment charges was offset by additional impairment charges totaling Ps. (894,782) due to the identification of additional impaired assets.
As of December 31, 2013 and 2012, assets acquired through these capital leases were as follows:
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) The liabilities relating to the assets listed above are payable in the years following December 31, 2013 as presented below:
The capitalized interest expense from financial leases for the years ended December 31, 2013, 2012 and 2011 was Ps. 159,380, Ps. 214,041 and Ps. 212,497, respectively. The discount rates applied to the calculation of capitalized leases were as follows:
NOTE 11—OTHER ASSETS: At December 31, 2013 and 2012, the balance of other assets was as follows:
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) NOTE 12—DEBT: The Board During 2013, the significant financing activities of PEMEX were as follows:
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted)
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted)
During 2012, the significant financing activities of PEMEX were as follows:
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted)
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted)
As of December 31, 2012, Petróleos Mexicanos had U.S. $3,268,634 in available lines of credit in order to ensure liquidity. Various financial transactions (including credit facilities and bond issuances) require compliance with various covenants that, among other things, place restrictions on the following types of transactions by PEMEX, subject to certain exceptions:
the sale of substantial assets essential for the continued operations of its business;
the incurrence of liens against its assets; and
transfers, sales or assignments of rights to payment not yet earned under contracts for the sale of crude oil or natural gas, accounts receivable or other negotiable instruments. As of December 31, PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
As of December 31,
Rate of Interest(1) U.S. dollars: Bonds Purchasing loans Project financing Direct loans Syndicated loans Bank loans Financial leases (Note 10(e)) Total financing in U.S. dollars Euros: Bonds Secured loan Project financing Total financing in Euros Japanese yen: Direct loans Bonds Project financing Total financing in yen Pesos: Certificados bursátiles Direct loans Total financing in pesos Unidades de Inversión Certificados Bursátiles Other currencies: Bonds Total principal in pesos(2) Plus: Accrued interest Notes payable to contractors(3) Total principal and interest Less: Short-term maturities Current portion of notes payable to contractors(3) Accrued interest Total short-term debt Long-term debt (Note 13(c)) PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
As of December 31, 2012, long-term debt was as follows:
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) As of December 31, 2013 and 2012, PEMEX used the following exchange rates to translate the outstanding balances in foreign currencies to pesos in the statement of financial position: U.S. dollar Japanese yen Pounds sterling Euro Swiss francs Canadian dollar Australian dollar NOTE
financial derivatives, as well as liquidity risk. In order to monitor and manage these
PEMEX is exposed to fluctuations in floating interest rate liabilities. PEMEX is exposed to U.S. dollar LIBOR and to Mexican peso TIIE. As of PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
As of December 31, 2013, PEMEX was a party to an interest rate swap agreement denominated in U.S. dollars for a notional amount of U.S. $750,000 at a fixed interest rate of 2.38% and a term of 10.13 years. Similarly, in order to eliminate the volatility associated with variable interest rates of long-term Moreover, PEMEX makes investments in pesos and U.S. dollars in compliance with applicable internal regulations, through portfolios that have different purposes that seek an adequate return subject to risk parameters that reduce the probability of capital losses. The objective of the investments made through these portfolios is to meet PEMEX’s obligations payable in pesos and U.S. dollars. The investments made through PEMEX’s portfolios are exposed to domestic and international interest rate risk and credit spread risk derived from government and corporate securities, and inflation risk arising from the relationship between UDIs and pesos. However, these risks are mitigated by established limits on
A significant amount of PEMEX’s revenues is derived from exports of crude oil and petroleum products, which are priced and payable in U.S. dollars. Moreover, PEMEX’s revenues from domestic sales of gasoline and diesel net of the IEPS tax, petrochemicals and natural gas and its byproducts are related to international U.S. dollar-denominated prices, except for domestic sales of LPG, which are priced in pesos and represent less than 5% of PEMEX’s revenues. PEMEX’s expenses related to hydrocarbon duties are indexed to international U.S. dollar-denominated prices, and the cost of hydrocarbon imports that PEMEX acquires for resale in Mexico or use in its facilities is determined in U.S. dollars. By contrast, PEMEX’s capital expenditure and operating expenses are determined in pesos. As a Most of PEMEX’s debt is denominated in U.S. dollars or pesos. Although PEMEX seeks to issue debt either in U.S. dollars or pesos, this is not always achievable. As a consequence of the cash flow structure described above, fluctuations in non-U.S. dollar currencies (other than pesos) may increase PEMEX’s cost of funding due to the exposure to foreign exchange risk. PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) Since 1991, for non-U.S. dollar or peso issuances, PEMEX has, as a risk mitigation strategy, used DFIs to swap this debt into U.S. dollars. In order to hedge inflation risk associated with debt denominated in UDIs, PEMEX swaps this debt into pesos. As a result of this strategy, PEMEX holds a debt portfolio with negligible sensitivity to currency risk other than pesos and U.S. dollars. The currencies underlying these DFIs are the euro, Swiss franc, Japanese yen, Pound sterling and During 2013, PEMEX entered into cross-currency swaps to hedge currency risk arising from debt obligations denominated in euros and inflation risk arising from debt denominated in UDIs, for an aggregate notional amount of U.S. $2,028,701. In 2012, PEMEX entered into various cross-currency swaps to hedge currency risk arising from debt obligations denominated in Swiss francs and Australian dollars for an aggregate notional amount of U.S. $484,018. Most of PEMEX’s cross-currency swaps are plain vanilla, except for two swaps entered into in 2002 and 2004 to hedge its exposure to Japanese yen and euros, with termination dates in 2023 and 2016, respectively. These swaps are referred to as “extinguishing swaps” and were obtained in order to hedge long-term obligations. The main characteristic of extinguishing swaps is that these DFIs terminate upon the occurrence of any of the credit default events specified in the DFI contract confirmation, without any payment obligation by either party. These swaps have a notional amount of U.S. $241,352 and U.S. $1,028,500, respectively. PEMEX recorded a total net foreign exchange loss of Ps.3,951,492 in 2013, as compared to a total net foreign exchange gain of Ps. 44,845,661 in 2012 and to a total net foreign exchange loss of Ps. 60,143,252 in 2011. PEMEX’s foreign exchange loss in 2013 was due to the depreciation of the peso, from Ps. 13.0101 = U.S. $1.00 on December 31, 2012 to Ps. 13.0765 = U.S. $1.00 on December 31, 2013. The depreciation of the peso caused a total net foreign exchange loss because a significant part of PEMEX’s debt (75.0% as of December 31, 2013) is denominated in foreign currency. PEMEX’s foreign exchange gain in 2012 was due to the effect of a 7.5% appreciation of the peso (from Ps. 13.9904 = U.S. $1.00 on December 31, 2011 to Ps. 13.0101 = U.S. $1.00 on December 31, 2012). PEMEX’s foreign exchange loss in 2011 was due to the depreciation of the peso, from Ps. 12.3571 = U.S. $1.00 on January 1, 2011 to Ps. 13.9904 = U.S. $1.00 on December 31, 2011. The PMI Group also faces market risks generated by fluctuations in foreign exchange rates. In order to mitigate these risks, the board of directors of several of the companies that form the PMI Group have authorized a policy which stipulates that no more than 5% of a company’s total financial assets may be denominated in a currency other than its functional currency, unless the company owes a duty or expected payment in a currency other than its functional one. This policy further states that the exchange rate risk generated by financing contracts denominated in currencies other than the functional one is to be fully covered immediately upon the execution of the contract. Accordingly, the companies in the PMI Group will from time to time enter into DFIs in order to mitigate the risk associated with financing operations denominated in currencies other than a company’s functional currency. PMI HBV has outstanding euro-dollar exchange rate forwards which were Finally, a significant amount of PMI Trading’s income and PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) and third parties, whose prices are determined and are payable in U.S. dollars. PMI Trading’s exposure to foreign currency risk results primarily from the need to fund tax payments denominated in domestic currency and secondarily from the need to purchase products in domestic currency for sale in U.S. dollars in the international market, as well as certain related sales costs denominated in domestic currency. PMI Trading believes it can adequately manage the risk created by the payment of taxes in domestic currency without the need to enter into hedging instruments because the exposure to this risk is marginal relative to the total flows of U.S. dollar. In addition, in the event that a potential foreign exchange risk arises in connection with a commercial transaction, PMI Trading may implement risk mitigation measures by entering into DFIs.
PEMEX periodically assesses its revenues and expenditures structure in order to identify the main market risk factors that PEMEX’s cash flows are exposed to in connection with international hydrocarbon prices. Based on this assessment, PEMEX monitors its exposure to the most significant risk factors and quantifies their impact on PEMEX’s financial balance. PEMEX continuously evaluates the implementation of risk mitigation strategies, including those involving the use of In addition to supplying natural gas, Pemex-Gas and Basic Petrochemicals
PMI Trading
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) pays variable amounts and receives total return on the Repsol These DFIs will mature between March and October of Between July and September 2011, PEMEX acquired 57,204,240 shares of Repsol through its affiliate PMI HBV. In order to protect that investment, PMI HBV entered into a structured product consisting of long put, short call and long call options maturing in 2012, 2013 and 2014. The exchange rate exposure associated with its financing of the shares was hedged with euro-dollar exchange rate forwards maturing in 2012, 2013 and 2014. The exchange rate forwards that matured in 2012 and 2013 correspond to 38,136,160 shares; hence, DFIs related to 19,068,080 shares remain outstanding. Notwithstanding their execution for hedging purposes, these DFIs were not recorded as hedges for accounting purposes.
The quantification of market risk exposure in PEMEX’s financial instruments is presented below, in accordance with the applicable international risk management practices. Interest rate risk quantification The quantification of interest rate risk of investment portfolios is carried out by using the one-day horizon historical VaR, with a confidence level of 95%, over a period of one year. The VaR incorporates interest rate and spread risks. In addition, for portfolios in domestic currency, the VaR includes the inflation risk embedded in securities denominated in UDI. For portfolio management purposes, interest rate risk is mitigated by VaR limits. As of December 31, 2013, the VaR of PEMEX’s investment portfolios were Ps. (35.6) for the Peso Treasury Portfolio, Ps. (215.5) for theFondo Laboral PemexPortfolio (“FOLAPE”), Ps. (53.1) for theFideicomiso de Cobertura Laboral y de ViviendaPortfolio (“FICOLAVI”) and U.S. $0 for the U.S. Dollar Treasury Portfolio. In addition to the exposure to interest rate fluctuations of the DFIs in which PEMEX is obligated to pay floating rates, PEMEX’s DFIs are exposed to mark-to-market volatility as a result of changes in the interest rate curves used in their valuation. Interest rate risk quantification was calculated for DFIs in conjunction with the interest rate risk quantification for the debt portfolio. The following table shows the sensitivity of PEMEX’s DFIs and debt portfolio to a parallel shift of one basis point (bp) over the zero coupon rate curves. For the debt portfolio, interest rate risk sensitivity was calculated taking into account both the DFI interbank market yield curves and the PEMEX curves (which were also used to estimate the debt portfolios’ fair value). These metrics were calculated solely for informational purposes and are not used for portfolio management purposes because PEMEX does not intend to prepay its debt or terminate its DFIs early. Therefore, there is no interest rate risk arising from fixed rate obligations. PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted) Interest Rate and Currency DFIs
In addition, PEMEX performed a retrospective sensitivity analysis of the impact on its financial statements for the years ended December 31, 2013, 2012 and 2011, in which it assumed either an increase or decrease of 25 basis points in the floating interest rates of its debt and corresponding hedges. At December 31, 2013, 2012 and 2011, had market interest rates been 25 basis points higher, with all other variables remaining constant, net income for the period would have been Ps. 4,993,915, Ps. 5,319,309 and Ps. 6,040,635 lower for December 31, 2013, 2012 and 2011, respectively, mainly as a result of an increase in interest expense. Conversely, had market interest rates been 25 basis points lower, net income for the period would have been Ps. 4,993,915, Ps. 5,319,309 and Ps. 6,040,635 greater at December 31, 2013, 2012 and 2011, respectively, as a result of a decrease in interest expense. Exchange rate risk quantification The investments of PEMEX’s portfolios do not face foreign exchange risk because the funds of such portfolios are used to meet obligations in pesos and U.S. dollars. Currency DFIs are entered into in order to hedge exchange rate risk arising from debt flows in currencies other than pesos and U.S. dollars or inflation risk arising from debt flows in UDIs. However, due to the accounting treatment of currency DFIs, net income is exposed to mark-to-market volatility as a result of changes in the exchange rates used in their valuation. Exchange rate risk quantification was calculated for DFIs in conjunction with the exchange rate risk quantification for the debt portfolio. The following table shows the sensitivity of PEMEX’s DFIs and debt portfolio to an increase of 1% to the exchange rates of currencies against the U.S. dollar. For the debt portfolio, exchange rate risk sensitivity was calculated taking into account both, interbank market yield curves and the PEMEX curves. In addition, the table shows the one-day horizon historical VaR of the remaining open position, with a confidence level of 95%, over a period of one year. These metrics were calculated solely for informational purposes. Nevertheless, in order to carry out management activities related to the debt portfolio, PEMEX periodically conducts quantitative analyses in order to estimate the exchange rate risk exposure generated by its debt issuances. Based on these analyses, PEMEX has elected to enter into DFIs as an exchange rate risk mitigation strategy. PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) Interest Rate and Currency DFIs
As shown in the table above, DFIs mitigate 100% of the exchange rate risk derived from debt. In addition, PEMEX performed a retrospective sensitivity analysis of the impact on its financial statements of the years ended December 31, 2013, 2012 and 2011, in which it assumed either an increase or decrease of 10% in the exchange rate between the U.S. dollar and peso in order to determine the impact on net income and equity as a result of applying these new rates to the monthly balances of assets and liabilities denominated in U.S. dollars. At December 31, 2013, 2012 and 2011, had the peso depreciated against the U.S. dollar by 10% with other variables remaining constant, net income would have been Ps. 55,137,410, Ps. 59,026,725 and Ps. 50,298,520 lower, respectively, primarily as a result of an increase in the exchange rate losses. However, had the peso appreciated against the U.S. dollar by 10%, net income for the period would have increased by Ps. 55,137,410, Ps. 59,026,725 and Ps. 50,298,520, respectively, as a result of the decrease in exchange rate losses. Quantification of risks related to third-party shares Equity DFIs do not generate additional risk exposure to that arising from the shares. These shares are exposed to price risk and euro/U.S. dollar exchange rate risk. The quantification of these risks was carried out using the one-day horizon historical VaR, with a confidence level of 95%, over a period of one year, of Repsol’s share price in euros converted to U.S. dollars. In addition, the mark-to-market sensitivity to an increase of 1% in the euro/U.S. dollar exchange rate is provided for informational purposes. These metrics are not considered for portfolio management purposes because the investment in shares of Repsol has a strategic,non-financial purpose.
Hydrocarbon price risk quantification Pemex-Gas and Basic Petrochemicals occasionally faces market risk due to open positions arising from the mismatch between the DFI portfolio offered to domestic customers and hedges with international counterparties. As of December 31, 2013, Pemex-Gas and Basic Petrochemicals natural gas DFI portfolio had no market risk exposure. PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) Market risk exposure is measured using the 20-day Delta-Gamma VaR methodology, with a confidence level of 95%, based on 500 daily observations; VaR and Capital at Risk (CaR) are monitored and mitigated by pre-established limits. It should be noted that sensitivity analyses were not carried out for other financial instruments, such as accounts receivable and payable (as defined in the financial reporting standards). Such accounts are cleared in the short term, and therefore market risk is considered to be nonexistent. Most of these accounts are related to hydrocarbon prices. In accordance with the risk management regulatory framework that PMI Trading has implemented, VaR and the change in profit and loss by portfolio are calculated daily and compared to the maximum applicable limits in order to implement risk-mitigation mechanisms as necessary. PMI Trading’s global VaR associated with commodities market risk was Ps. 248.7 as of December 31, 2013. This VaR was calculated using the historical method with a 99% confidence level, two-year history and a one-day horizon. Similarly, PMI NASA is exposed to market risk associated with inventories of feedstocks and refined products, as well as with the purchase of crude oil for processing at the Deer Park refinery in a proportion equal to its shares in the refinery. This VaR was Ps. 154.2 as of December 31, 2013. These values were calculated with a 99% confidence level and a one-day horizon. Credit Risk When the fair value of DFIs is favorable to PEMEX, PEMEX faces the risk that counterparties will not be able to meet their obligations. To reduce this risk, PEMEX monitors the creditworthiness of its counterparties and calculates the credit risk exposure for its DFIs. In addition, PEMEX enters into DFIs mostly with major financial institutions with a minimum credit rating of BBB-. These ratings are issued and revised periodically by risk rating agencies. Furthermore, PEMEX maintains a diversified portfolio of counterparties. Moreover, PEMEX has entered into various long-term cross-currency swaps agreements with “recouponing” provisions (pursuant to which the payments on the swaps are adjusted when the mark-to-market exceeds the relevant threshold specified in the swap), thereby limiting the exposure with its counterparties to a specific threshold amount. The specified thresholds were reached in seven cross-currency swaps during 2012 and four cross-currency swaps during 2013. These swaps were used to hedge the exchange rate exposure to the euro and the Pound sterling. This resulted in the cash settlement of such swaps and the resetting of swap terms to return their mark-to-market value to zero. According to IFRS 13, the fair value or mark-to-market value of a DFI must reflect the creditworthiness of the parties. Consequently, the fair value of a DFI takes into account the risk that either party may default on its obligation. In accordance with market best practices, PEMEX applies the credit value adjustment (CVA) method to calculate the fair value of its DFIs. In addition, in order to estimate the credit exposure to each financial counterparty, the potential future exposure was calculated by projecting the risk factors used in the valuation of each DFI in order to calculate the mark-to-market for different periods, taking into account any credit risk mitigation provisions. PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) The current and potential exposures, aggregated by credit rating, are as follows:
Moreover, PEMEX
The table above does not include domestic currency Mexican Government bonds because these issuances are considered not to carry default risk in this As of December 31, Furthermore, by means of its credit guidelines for DFI operations, Pemex-Gas and Basic Petrochemicals has significantly reduced its credit risk exposure related to the DFIs offered to its customers to assist them in mitigating the risk associated with the volatility of natural gas prices. In order to qualify for these DFIs, Pemex-Gas and Basic Petrochemicals’ customers must be party to a current natural gas supply contract and sign a domestic master derivative agreement. Since October 2, 2009, DFIs with these customers must be initially secured by cash deposits, letters of credit or other collateral provisions, as required. In accordance with these guidelines, in the event that a client does not meet its payment obligations, DFIs related to this client are terminated, rights to collateral are exercised and, if the collateral is insufficient to cover the fair value, natural gas supply is suspended until the payment is made. As of December 31, 2013, Pemex-Gas and Basic Petrochemicals had a number of outstanding DFIs contracted before October 2, 2009 in which customers are not required to post collateral, the last of which matures in March 2014. The Board of Directors of Pemex-Gas and Basic Petrochemicals approves the credit requirements related to entering into DFIs with Pemex-Gas and Basic Petrochemicals. PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) As of December 31, 2013, the overdue accounts of natural gas customers in the industrial and distribution sectors accounted for less than 1.00% of the total sales of Pemex-Gas and Basic Petrochemicals. As of December 31, 2013, Pemex-Gas and Basic Petrochemicals had open DFIs with 33 customers, of which 26 are industrial customers (79%), 6 are distributors (18%) and one customer is both an industrial customer and a distributor (3%). Of the total volume (in millions of British thermal units or MMBtu) of DFIs traded in 2013, industrial customers represented 50.4%, while distributors represented 46.4%. The customer belonging to both categories represented 3.2%. As of December 31, 2013 and 2012, Pemex-Gas and Basic Petrochemicals, through its subsidiary MGI Supply, Ltd., had not provided any collateral for DFIs entered into to hedge its DFIs with customers. This was due to the following: (i) natural gas prices maintained levels below the strike price, The potential future exposure of MGI Supply, Ltd.’s DFI portfolio was calculated in a manner analogous to the analysis of Petróleos Mexicanos’ DFI positions. The current and potential exposure, aggregated by credit rating, is as follows:
PMI Trading’s credit risk associated with DFI transactions is mitigated through the use of futures and standardized instruments that are cleared through CME-Clearport. PMI HBV’s credit risk associated with DFI transactions is related Liquidity Risk Through its debt planning and U.S. In addition, PEMEX has acquired three committed revolving credit lines in order to mitigate liquidity risk, one of which provides access to Ps. 10,000,000 with an expiration date of December 2015, and two others that each provides access to U.S. $1,250,000 with expiration dates in December 2016 and October 2017, respectively. Finally, the investment strategies of PEMEX’s portfolios are structured by selecting horizons that consider each currency’s cash flow requirements in order to preserve liquidity. The PMI Group mitigates the liquidity risk within its companies through several mechanisms, the most important of which is the centralized treasury or “in-house bank,” which provides access to a syndicated credit PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) line for up to U.S. $700,000, as well as to the additional cash in custody. In addition, the companies in the PMI Group have access to bilateral credit lines from financial institutions for up to U.S. $250,000. The companies in the PMI Group monitor their cash flow on a daily basis and protect their creditworthiness in the financial markets. Liquidity risk is mitigated by monitoring the maximum/minimum permissible financial ratios as set forth in the policies approved by each company’s Board of Directors. The following tables show the cash flow maturities as well as the fair value of PEMEX’s debt and DFI portfolios as of December 31, 2013 and 2012. It should be noted that: For debt obligations, these tables present principal cash flows and related weighted average interest rates for fixed rate debt. For interest rate and currency swaps, these tables present notional amounts and weighted average interest rates by expected (contractual) maturity dates. Weighted average variable rates are based on implied forward rates obtained from the interbank market yield curve at the reporting date. For natural gas DFIs, volumes are presented in MMBtu, and fixed average and strike prices are presented in U.S. dollars per MMBtu. A DFI’s fair value includes CVA and is calculated based on market quotes obtained from market sources such as Reuters and Bloomberg. Forward curves for natural gas are supplied by the Kiodex Risk Workbench platform. For PMI Trading, prices used in commercial transactions and DFIs are published by reputable sources that are widely used in international markets, such as CME-NYMEX, Platts and Argus, among others. Fair value is calculated internally, by discounting cash flows with the corresponding zero-coupon yield curve, in the original currency. For all instruments, the tables are based on the contract terms in order to determine future cash flows categorized by expected maturity dates. This information is presented in thousands of pesos (except as noted). PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) Quantitative Disclosure of Debt Cash Flows’ Maturities as of December 31, 2013(1)(2)
Source: PEMEX PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) Quantitative Disclosure of Cash Flows’ Maturities from Derivative Financial Instruments Held or Issued for Purposes Other than Trading as of December 31, 2013(1)(2)
Source: PEMEX PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) Quantitative Disclosure of Debt Cash Flows’ Maturities as of December 31, 2012(1)
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) Quantitative Disclosure of Cash Flows’ Maturities from Derivative Financial Instruments Held or Issued for Purposes Other than Trading as of December 31, 2012(1)(2)
Source: PEMEX PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted)
PEMEX monitors the fair value of its DFI portfolio on a periodic basis. PEMEX’s DFI portfolio is composed primarily of swaps, The options contained in
Accounting treatment PEMEX enters into derivatives transactions with the sole purpose of hedging financial risks related to its operations, firm commitments, planned transactions and assets and liabilities recorded on its statement of financial position. Nonetheless, As of December 31,
The following table shows the fair values and A DFI’s fair value
Fair value is calculated internally, by discounting cash The information is presented in thousands of
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
Note: Numbers may not total due to rounding.
The exchange For the years ended December 31, In addition, for the year ended December 31, 2011, PEMEX recognized a loss of Ps. 277,042, recorded in
The following table presents the location on the statement of financial position and the fair value of PEMEX’s DFIs (including both DFIs that have not reached maturity and those that have reached maturity but have not been settled), as of December 31,
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
The following table presents the gain (loss) recognized in income
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted)
When available, PEMEX measures fair value using Level 1 inputs, because they generally provide the most reliable evidence of fair value. PEMEX periodically evaluates its exposure to international hydrocarbon prices, interest rates and foreign currencies and uses derivative instruments as a mitigation mechanism when potential sources of market risk are identified. The following tables present information about PEMEX’s assets and liabilities measured at fair value, and indicates the fair value hierarchy of the inputs utilized to determine the fair values as of December 31,
Where directly comparable market quotes are not available to measure the fair value of PEMEX’s financial instruments, PEMEX uses Level 2 valuation to calculate fair value based on quotes from major market sources. These market quotes are then adjusted internally using standard market pricing models for interest rate, currency, equity and commodities derivatives. PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
The estimated fair value of the remaining financial assets and liabilities, as of December 31,
The fair values of current financial assets and short-term liabilities are equal to their nominal values because, due to their short-term maturities, their nominal values are very close to their corresponding fair values. The fair value of long-term debt is estimated using quotes from major market sources which are then adjusted internally using standard market pricing models. As a result of relevant assumptions, estimated fair values do not necessarily represent the actual terms at which existing transactions could be liquidated or unwound.
Note 5, Cash, Cash Equivalents and Restricted Cash; Note 6, Accounts, Notes Receivable and Other; Note 8, Investments in Equity Instruments; Note 9, Permanent Investments in Associates; and Note 12, Debt. NOTE 14—EMPLOYEE BENEFITS: PEMEX has established defined benefit plans for the
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted) PEMEX funds its employees benefits through Mexican trusts, the resources of which come from the seniority premium item of PEMEX’s annual budget (programmable expense), or any other item that substitutes or relates to this item, or that is associated to the same item and the interests, dividends or capital gains obtained from the investments of the trusts. During 2013 there were no changes to the benefits of the plans, nor was any reduction events and early extinguishment of employee benefit obligations. The following table show the amounts associated with PEMEX’s labor obligations:
The following tables contain detailed information regarding PEMEX’s retirement and post-employment benefits: Changes in the Liability for Defined Benefits
In 2013 and 2012, the net actuarial gains of Ps. (247,535,549) and losses of Ps. 365,146,073, respectively, were primarily due to the following modifications to the actuarial assumptions:
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) Changes in Plan Assets
Changes in Defined Benefit Obligations
The asset ceiling test was not applied because there was a deficit of labor liabilities at the beginning and end of the year. The effect of an increase or decrease of one percentage point in the assumed variation rate is a 13.17% decrease or a 16.73% increase in defined benefit obligations, respectively. The effect of an increase or decrease of one percentage point in the assumed variation rate with respect to the cost and obligations related to medical services point is a 23.29% increase or a 17.76% decrease in defined benefit obligations, respectively. Assumptions regarding future mortality are based on EMSSA2009 to Circular S 22.2 of theComisión Nacional de Seguros y Fianzas (National Commission of Insurance and Bonds). The SHCP also provides recommendations concerning actuarial valuations to entities of the Federal Public Administration. The effects discussed above were determined using the projected unit credit method, which is the applied method in prior years. The expected contribution to the fund for next year amounts to Ps. 38,029,665. The average length of a defined benefit obligation is 18.4 years. PEMEX’s plan assets are held in two trusts, the FOLAPE and the FICOLAVI, which are managed by BBVA Bancomer, S.A. and a technical committee for each trust that is comprised of personnel from Petróleos Mexicanos and the trusts. PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) As
The following tables present additional fair value disclosure about plan assets as of December 31, 2013 and 2012:
As of December 31, 2013 and 2012, the principal actuarial assumptions used in
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) The discount rate was determined based on the performance of government bonds at the reporting date and considering the average duration of the defined benefit obligation. Other long-term benefits PEMEX has established other long-term benefit plans for its employees, to which employees do not contribute, which correspond to the same seniority premiums payable for disability. Benefits under these plans are based on an employee’s salary and years of service completed at separation. Obligations and costs of such plans are recorded in accordance with actuarial valuations performed by independent actuaries. The regulatory framework does not set forth any minimum funding requirements. During the year under review there were no changes to plan benefits, nor was any reduction events and early extinguishment of employee benefit obligations. The amounts recognized for these obligations in the statements of comprehensive income for the years ended December 31, 2013 and 2012 are as follows: Changes in the Liability for Defined Benefits
The principal actuarial assumptions used in determining the defined benefit obligation for the plans are as follows:
The discount rate was determined based on the performance of government bonds at the reporting date and considering the average duration of the defined benefit obligation. NOTE 15—PROVISIONS FOR SUNDRY CREDITORS: At December 31, 2013 and 2012, the provisions for sundry creditors and others is as follows:
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) The following tables show the allowance account for plugging of wells, trials in progress and environmental costs:
Provision for plugging of wells PEMEX records a provision at present value for the future plugging cost of an oil production facility or pipeline at the time that it is built. The plugging provision represents the present value of plugging costs related to oil and gas properties. These provisions have been created based on internal estimates of PEMEX. PEMEX has made certain assumptions based on the current economic environment that PEMEX believes provide a reasonable basis on which to estimate the future liability. These estimates are reviewed regularly to take into account any material changes in the assumptions. However, actual plugging costs in the long run will depend on future market prices for the necessary plugging work, which reflect market conditions at the time the work is being performed. Moreover, the time of plugging depends on when the fields cease to have economically viable production rates, which, in turn, depends on the inherently uncertain future prices of oil and gas. PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) NOTE 16—DISCLOSURES OF CASH FLOW: The following items represent non-cash transactions and are presented for disclosure purposes:
NOTE 17—INCOME TAXES AND FEDERAL DUTIES: On December 21, 2005, the Mexican Congress approved a new fiscal regime for Petróleos Mexicanos and the Subsidiary Entities, which was This regime was modified in each of 2007, 2008, 2009, 2010, 2011 and 2012. In addition, new modifications entered into effect on January 1, 2013, including the following:
The fiscal regime for PEMEX for 2013 contemplates the following duties:
During both 2013 and 2012, the applicable rate of this duty was 71.5%. The computation of this duty is based on the value of the extracted total production of crude oil and natural gas during the year, minus certain permitted deductions established in the Federal Duties Law (including certain investments, costs, expenses and duties). During 2013, Pemex-Exploration and Production made daily, weekly and monthly advance payments in the amounts of Ps. 231,601,625, Ps. 231,601,760 and Ps. 254,070,440, respectively, and a pending payment of Ps. 69,927, totaling Ps. 717,343,752, which was credited to the annual payment of the DOSH. During 2012, Pemex-Exploration and Production made daily, weekly and monthly advance payments in the amounts of Ps. 233,925,606, Ps. 233,925,517 and Ps. 278,417,852, respectively, totaling Ps. 747,623,002, which was credited towards the annual payment of the DOSH. In computing this duty, deductions derived from the residual value of investments made before the current fiscal regime took effect may be applied as a deferred deduction, referred to as a “temporary difference”, in accordance with IAS 12, “Income Taxes” (“IAS 12”). These deductions may be made in a maximum remaining PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) period of ten years, the effect of which, if applied, can have a favorable effect in an amount up to approximately Ps. 302,763,680, depending on certain conditions established in the Federal Duties Law. To date, PEMEX has not recognized such effect from these deferred deductions because they are considered unlikely to materialize. These deductions will expire in 2017.
Pemex-Exploration and Production must pay this duty when, during the applicable year, the weighted average Mexican crude oil export price exceeds U.S. $22.00. The applicable rate varies between 1% and 10%, depending on the weighted average price of crude oil exports, with the maximum rate of 10% applying when the price exceeds U.S. $31.00 per barrel. Collections of this duty are deposited in theFondo de Estabilización de Ingresos Petroleros (Oil Revenues Stabilization Fund).
This duty is calculated by applying a rate of 13.1% to the value resulting from multiplication of (i) the difference between the annual weighted average Mexican crude oil export price and the budgeted crude oil price as provided for in the Federal Revenue Law (U.S. $86.00 during 2013 and U.S. $85.00 during 2012), by (ii) the annual export volume. The duty actually paid may be credited against the Hydrocarbons Duty for the Stabilization Fund. Collections of this duty are directed to the Federative Entities through the Stabilization Fund for the Income of Federative Entities.
During both 2013 and 2012, this duty was applied at a rate of 0.65% to the value of the extracted production of crude oil and natural gas for the year. The proceeds of this tax are allocated to the following funds:
CONACYT Sector Fund of the Ministry of Energy.
This duty was applied at a rate of 0.003% to the value of extracted production of crude oil and natural gas for the year. The revenues from this tax are earmarked for theAuditoria Superior de la Federación (Supreme Federal Audit Office). PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted)
In 2013 this duty was applied at a 15% rate to the value of the crude oil and natural gas extracted from the following fields:
Since October 2011, the NHC segregated 29 of the fields in Chicontepec, pursuant to the authorization of the SHCP. Effective January 1, 2012, the Remolino field was classified as a marginal field, and is therefore no longer a segregated field in Chicontepec.
In each case, certain deductions are subtracted from the amount owed. Collections of this duty are deposited in the Oil Revenues Stabilization Fund.
During 2013, this duty was applied at a rate of 30% to the difference between the annual value of the crude oil and natural gas extracted from the fields covered in Note 17(f) above, and certain permitted deductions (including specific investments, certain expenses and costs, among others). Production above a threshold of 240 million barrels of crude oil equivalent is taxed at a rate of 36% of the value that The permitted deductions for certain costs, expenses and investments may not exceed 60% of the value of the crude oil and natural gas extracted annually from these fields or U.S. $32.50. This amount is updated annually using the U.S. producer price index. At December 31, 2013 and 2012 the updated amounts were U.S. $36.77 and U.S. $36.46, respectively. Fields referred to this law are those set forth in Sections (i), (ii), (iii) and (iv) of subsection (f) of this Note.
This duty is applied when the accumulated annual average value of barrels of oil equivalent extracted is greater than U.S. $60.00. The accumulated annual average value of barrels of oil equivalent extracted in 2013 and 2012, respectively, were U.S. $67.88 and U.S. $67.31. Each year, the threshold price at which the duty takes effect is adjusted to take account of inflation, as measured by the change in the U.S. producer price index. This duty shall be calculated by applying a rate of 52% to the value resulting from multiplication of (i) the difference between the accumulated annual average value of barrels of oil equivalent extracted in the field in question and U.S. $60.00, by (ii) the volume of oil equivalent extracted in the field in question for the year. PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) Fields referred to this law are those set forth in Sections (i), (ii), (iii) and (iv) of subsection (f) of this Note.
This duty applies a fee of 0.03% on the annual value of crude oil and natural gas extracted during the year. The fee is assessed on an annual basis, but is to be paid in advance monthly installments within seven business days following the end of each month. Collections of this duty are directed to the budget of the NHC. The Hydrocarbons Exploration Tax for 2013 will be declared through a tax return filed with the Federal Treasury no later than the last business day of March 2014, and the monthly advance payments made during the fiscal year will be credited to that amount.
In accordance with current regulations, PEMEX is subject to the IEPS Tax, which applies to the domestic sales of gasoline and diesel. The IEPS Tax is paid to the SHCP monthly, after deducting daily advance payments made in accordance with applicable rules. The effective rate of this tax depends on factors such as the type of product, reference price, the region where the product is sold, additional freight costs and applicable commissions. Effective January 1, 2006, the Federal Revenues Law was amended, allowing PEMEX to credit the negative IEPS Tax, which is generated when the prices at which PEMEX is required to sell gasoline and diesel in the domestic market are lower than international market prices, against other taxes and payments to which PEMEX is also subject. In 2013 and 2012, increases in international prices of hydrocarbons and petroleum products caused the rate of the IEPS Tax to be negative. As a result of this credit, in 2013, 2012 and 2011 PEMEX recognized revenues of approximately Ps. 94,466,039, Ps. 214,102,498 and Ps. 178,869,172, respectively.
This tax is applicable to Petróleos Mexicanos and For the years ended December 31, 2013, 2012 and 2011, PEMEX generated an IRP as follows:
During 2013 Petróleos Mexicanos and PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) The 2013 IRP will be declared through a tax return filed with the Federal Treasury no later than the last business day of March 2014, and the daily and weekly advance payments made during the fiscal year will be credited against that amount. Petróleos Mexicanos must comply for its own account, and for the account of the Subsidiary Entities, with all obligations under the Federal Income Law and other fiscal laws, except as explicitly provided for in relation to the making of daily and weekly payments. As such, Petróleos Mexicanos is solely responsible for the payment of contributions and duties owed by the Subsidiary Entities to the Mexican Government. The principal factors generating the deferred IRP are the following:
The expense (benefit) attributable to the profit (loss) from continuing operations before IRP was different from what would result from applying the rate of 30% to profit, as a result of the items listed below:
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted)
For VAT purposes, final monthly payments are determined based on PEMEX’s cash flow, in accordance with the provisions of the Value Added Tax Law, which is applicable to payers of this tax.
Certain of the Subsidiary Companies are subject to the Income Tax Law and to the IETU, and are therefore required to pay the greater of their IETU or income tax liability. Accounting income differs from taxable income primarily due to the effects of inflation and differences between depreciation and other non-deductible expenses. For the years ended December 31, 2013, 2012 and 2011, the Subsidiary Companies incurred the following income tax expense (benefit):
The principal factors generating the deferred income
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) Expense (benefit) attributable to the profit (loss) from continuing operations before income taxes
NOTE 18—EQUITY (DEFICIT):
On December 31, 1990, certain debt owed by Petróleos Mexicanos to the The capitalization agreement between PEMEX and Permanent equity is as follows:
On December 16, 2013, the Mexican Government withdrew Ps. 65,000,000 from PEMEX’s equity. On December 19, 2013, the Board acknowledged the equity withdrawal made by the Mexican Government. This equity withdrawal was recognized as a decrease in the Mexican Government contributions to Petróleos Mexicanos line item in PEMEX’s consolidated statements of changes in equity (deficit). PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) In December 2013, the Mexican Government contributed Ps. 1,583,100 to theFondo de Estabilización para la Inversión en Infraestructura de Petróleos Mexicanos (PEMEX Infrastructure Investment Stabilization Fund, or “FEIIP”). This contribution was recorded in the Mexican Government contributions to Petróleos Mexicanos line item in PEMEX’s consolidated statements of changes in equity (deficit) for the year ended December 31, 2013. In 2013, the Mexican Government authorized a contribution of Ps. 2,000,000 to theFondo de Estabilización de los Ingresos Petroleros (Oil Revenues Stabilization Fund, or “FEIPEMEX”). This amount was not paid to FEIPEMEX until January 27, 2014, and was therefore recognized as uncalled capital in PEMEX’s consolidated statements of changes in equity (deficit) for the year ended December 31, 2013.
Under Mexican law, each of the Subsidiary Companies is required to allocate a certain percentage of its net income to a legal reserve fund until the fund reaches an amount equal to a certain percentage of each Subsidiary Company’s capital stock. In 2013, the legal reserve fund increased by Ps. 24,370 due to the consolidation of new companies.
PEMEX has recorded negative earnings in the past several years. However, under theLey de Concursos Mercantiles (Commercial Bankruptcy Law of Mexico) decentralized public entities such as Petróleos Mexicanos and the Subsidiary Entities cannot be subject to a bankruptcy proceeding. Furthermore, the financing agreements to which PEMEX is a party do not provide for financial covenants that would be breached or events of default that would be triggered as a consequence of negative equity. The Mexican Government has focused its recent efforts on consolidating PEMEX’s institutional strategy, including the approval of amendments to the Mexican Constitution published as the Energy Reform Decree on December 20, 2013, which permit it greater autonomy in decision making and enhanced operational viability (see Note 1).
Effective July 1, 2005, PEMEX entered into an option agreement with BNP Paribas Private Bank and Trust Cayman Limited to acquire 100% of the shares of Pemex Finance, Ltd. As of
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
At December 31, 2013, 2012 and 2011, other revenues and expenses—net was as follows:
NOTE 20—FINANCING INCOME AND COST: At December 31, 2013, 2012 and 2011, the financing income and cost were as follows:
All significant intercompany balances and
Under theLey Federal de Responsabilidades Administrativas de los Servidores Públicos (Federal Law of Administrative Responsibilities of Public Officials), which applies to PEMEX’s directors and
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
Related parties include individuals and companies that do not form part of PEMEX, Prior to his appointment as Secretary of Energy, Mr. Pedro Joaquín Coldwell, Chairman of the Board of Directors of Petróleos Mexicanos since December 2012, as well as certain members of his family, held ownership interests in companies that have entered into agreements with Pemex-Refining for the sale and
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
The compensation paid or accrued during 2013, 2012 and 2011 to the professional members of the Boards of Directors of Petróleos Mexicanos and the Subsidiary Entities was approximately Ps. 13,600, Ps. 13,600 and Ps. 13,700, respectively.
As an employee NOTE 22—COMMITMENTS:
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
Estimated future payments under this contract for upcoming fiscal years are as follows:
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
NOTE 23—CONTINGENCIES: In the ordinary course of business, PEMEX is named in a number of lawsuits of various types. PEMEX evaluates the merit of each claim and
In September 2001, Conproca, S.A. de C.V. (“CONPROCA”), the construction company performing construction and maintenance services for Pemex-Refining’s Cadereyta refinery, filed a claim for arbitration before the ICA against Pemex-Refining and Petróleos Mexicanos (No. 11760/KGA) related to expenses incurred by CONPROCA for, among other things, additional work performed and value added. On April 30, 2012, the ICA ordered Pemex-Refining and Petróleos Mexicanos to pay U.S. $311,178 and CONPROCA to pay U.S. $29,038. On July 27, 2012, Petróleos Mexicanos and PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
In February 2010, the Tax Management Service notified Pemex-Refining of the results of its review of Pemex-Refining’s financial statements for the fiscal year ended December 31, 2006 with respect to federal taxes, the value added tax and
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
PEMEX does not disclose amounts accrued for each individual claim because such disclosure could adversely affect PEMEX’s legal strategy, as well as the outcome of the related litigation. NOTE 24—SUBSEQUENT EVENTS: During the period from January 1 to May 14, 2014, PEMEX participated in the On January 23, 2014, Petróleos Mexicanos issued U.S. $4,000,000 of On January 23, 2014, the SHCP authorized the increase of
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
On March 10, 2014, Pemex-Exploration and Production obtained a letter of credit for Ps. 513,810 that matures on May 9, 2014. On March 20, 2014, Petróleos Mexicanos borrowed U.S. $1,000,000 from its revolving credit line, which bears interest at a floating rate linked to LIBOR and matures on May 22, 2014. On March 21, 2014, Petróleos Mexicanos obtained a loan for U.S. $300,000 from an export credit agency, which bears interest at a rate of 2.351% and matures in March 2018. On April 16, 2014, Petróleos Mexicanos issued €1,000,000 of its 3.75% Notes due 2026. These notes were issued under Petróleos Mexicanos’ U.S. $42,000,000 Medium-Term Notes Program, Series C. All debt securities issued under this program are guaranteed by Pemex-Exploration and Production, Pemex-Refining and Pemex-Gas and Basic Petrochemicals. Between January 1 and May 14, 2014, PMI HBV obtained U.S. $530,000 from its revolving credit line and repaid U.S. $1,080,000. On May 14, 2014, the Mexican peso-U.S. dollar exchange rate was Ps. 12.9534 per U.S. dollar, which represents a 0.95% appreciation of the value of the peso in U.S. dollar terms as compared to the exchange rate as of December 31, 2013, which was Ps. 13.0765 per U.S. dollar. On May 14, 2014, the weighted average price of the crude oil exported by PEMEX was U.S. $97.64 per barrel; this price increased by approximately 5.55% as compared to the average price as of December 31, 2013, which was U.S. $92.51 per barrel. On February 4 and 7, 2014, the Organic Statute of Petróleos Mexicanos was amended. These amendments set forth or revised the responsibilities and functions of several of PEMEX’s offices and departments. As of December 31, 2013, PEMEX has valued and recorded the 53,703,915 Repsol shares acquired through PMI HBV as an investment in equity instruments. The market value of Repsol shares has increased approximately 9.99% from €18.32 per share as of December 31, 2013 to €20.15 per share as of May 14, 2014. On March 21, 2014, as part of Round Zero, Petróleos Mexicanos submitted to the Ministry of Energy a request that PEMEX be assigned the right to continue to explore and develop areas that together contain 96% of Mexico’s estimated proved reserves of crude oil and natural gas as of December 31, 2013. The transitional articles of the Energy Reform Decree provide that the Ministry of Energy will take the following
with respect to areas that PEMEX was actively exploring in which it had made commercial discoveries or investments as of December 21, 2013, its investment capacity and evidence of a detailed plan for exploration; and with respect to areas that PEMEX already had under production as of December 21, 2013, a development plan for producing fields, including evidence of proper development of such fields and the ability to efficiently and competitively carry out production activities. The Ministry of Energy has a deadline of September 17, 2014 to respond to the request. PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
energy sector. As
The following consolidating information These condensed consolidating statements are prepared in conformity with
The Master Trust PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
The following table sets forth, as of the date of Table 1: Registered Debt Securities originally issued by the Master Trust and Assumed by Petróleos Mexicanos
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
The following table sets forth, as of the date of Table 2: Registered Debt Securities originally issued by Petróleos Mexicanos
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted)
Petróleos Mexicanos is the only PEMEX entity that had debt securities registered with the SEC outstanding as of December 31, PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION STATEMENT OF FINANCIAL POSITION As of December 31,
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION STATEMENT OF As of December 31,
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION STATEMENT OF For the year ended December 31,
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION STATEMENT OF For the year ended December 31,
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION STATEMENT OF COMPRENSIVE INCOME For the year ended December 31, 2011
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
For the year ended December 31,
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION STATEMENT OF For the year ended December 31,
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
For the year ended December 31,
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
Effective January 1, 2010, certain of the SEC’s rules were revised in order to modernize the reporting requirements applicable to oil and gas companies such as PEMEX in respect of oil and other hydrocarbon reserves. The most significant of these revisions include the following:
There has been no material change in Mexico’s proved reserves as a result of the application of these revised SEC rules. The following tables provide supplementary information on the oil and gas exploration, development and production activities of Pemex-Exploration and Production in compliance with the U.S. Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic932-10-5 “Extractive Activities—Oil and Gas” (“ASC Topic All exploration and production activities of Pemex-Exploration and Production are conducted in Mexico. The supplemental data presented herein reflect information for all of Pemex-Exploration and Production’s oil and gas producing activities.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
There are no property acquisition costs, because PEMEX exploits oil reserves owned by the Mexican nation. Exploration costs include costs of geological and geophysical studies of fields amounting to Ps. Development costs include those costs incurred in obtaining access to proved reserves and providing facilities for extracting, treating, gathering and storing oil and gas.
The following table summarizes average sales prices in U.S. dollars as of December 31 (excluding production taxes):
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
Under the Proved oil and natural gas reserves are those estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be economically Proved reserves estimates as of December 31, Pemex-Exploration and Production estimates Mexico’s reserves based on generally accepted petroleum engineering and evaluation methods and
experience in the area;
stage of development;
quality and completeness of basic data; and
production and pressure histories. Reserves data set forth herein represent only estimates. Reserves valuation is a subjective process of estimating underground accumulations of crude oil and natural gas that cannot be measured in an exact manner. The accuracy of any reserves estimate depends on the quality of available data, engineering and geological interpretation and professional judgment. As a result, estimates of different engineers may vary. In addition, the results of drilling, testing and producing subsequent to the date of an estimate may lead to the revision of an estimate. During In order to ensure the reliability of PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) Pemex-Exploration and Production’s exploration and exploitation business units (with each of these units covering several projects) prepare the reserves estimates, using distinct estimation processes for valuations relating to new discoveries and developed fields, respectively. Subsequently, the regional reserves offices collect these reserves estimates from the units and request the review and certification of such valuations and the booking of the related
reserves from theGerencia de Recursos y Reservas In addition to the above internal review process, Pemex-Exploration and Production’s final reserves estimates are audited by independent engineering firms. Three independent engineering firms auditedPemex-Exploration and Production’s estimates of Mexico’s proved reserves as of December 31, Since reserves estimates are, by definition, only estimates, they cannot be reviewed for the purpose of verifying exactness. Instead, the Independent Engineering Firms conducted a detailed review of Pemex-Exploration and Production’s reserves estimates so that they could express an opinion as to whether, in the aggregate, the reserves estimates that All questions, including any suggested modifications to proved reserves estimates, that arose during the Independent Engineering Firms’ review process were resolved by Pemex-Exploration and Production to the satisfaction of the Independent Engineering Firms. The Independent Engineering Firms have concluded that Mexico’s total proved developed and undeveloped reserves of crude oil, condensates and liquefiable hydrocarbons recoverable from field processing plants decreased by PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
Mexico’s total proved developed and undeveloped dry gas reserves
The following three tables Summary of Oil and Gas(1) Proved Reserves as of December 31, 2013 Based on Average Fiscal Year Prices
Note: Numbers may not total due to rounding.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted)
Crude Oil and Condensate Reserves (including natural gas liquids)
Dry Gas Reserves
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL FOR THE YEARS ENDED DECEMBER 31, (Figures stated in thousands, except as noted) project as well as the decrease in the number of exploratory activities carried out in the deep waters of the Gulf of Mexico, where the lack of infrastructure precluded PEMEX from booking proved reserves, contributed to the decrease in RRR in 2013. PEMEX’s goal is to increase its RRR during 2014, in part by increasing Mexico’s proved reserves over the coming years. PEMEX aims to accomplish this primarily through development of the Ku-Maloob-Zaap, Crudo Ligero Marino and ATG projects, as well as through the performance of delineation activities. PEMEX has developed these objectives based on reserves estimates, which are subject to the uncertainty and risks associated with hydrocarbon exploration and production activities. Additionally, future decisions regarding authorized exploration and exploitation investment levels may lead to related changes. PEMEX’s reserves production ratio, which is presented in terms of years, is calculated by dividing the estimated remaining reserves at the end of the relevant year by the total production of hydrocarbons for that year. As of December 31, 2013, this ratio was equal to 10.1 years for proved reserves, which represents a decrease of 1.0% as compared to the 2012 reserves production ratio of 10.2 years for proved reserves.
The standardized measure tables presented below relate to proved oil and gas reserves excluding proved reserves scheduled to be produced after the year Estimated future cash inflows from production are computed by applying average prices of oil and gas of the first day Future tax expenses are computed by applying the appropriate year-end statutory tax rates with consideration of the tax rates of the new fiscal regime for Pemex-Exploration and Production already legislated for The estimated future payment of taxes was calculated based on The standardized measure provided below represents a comparative benchmark value rather than an estimate of expected future cash flows or fair market value of PEMEX’s production rights. There are numerous uncertainties inherent in estimating quantities of proved reserves and in projecting future rates of production and timing of development expenditures, including many factors beyond the control of the producer. Accordingly, reserve estimates may be materially different from the quantities of crude oil and natural gas that are ultimately recovered. PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011 (Figures stated in thousands, except as noted) Standardized measure of discounted future net cash flows as of December 31
To comply with ASC Topic 932, the following table presents the aggregate standardized measure changes for each Changes in standardized measure of discounted future net cash flows
Note: Table amounts may not total due to rounding. In computing the amounts under each factor of change, the effects of variances in prices and costs are computed before the effects of changes in quantities. Consequently, changes in reserves are calculated at December 31 prices and costs. The change in computed taxes includes taxes effectively incurred during the year and the change in future tax expense.
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