| 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. (1) | During 2018 and 2019 we used Olmeca crude oil for processing in our refineries and did not export Olmeca crude oil. |
Source: PMI operating statistics as of January 27, 2017.7, 2020. | | | Year ended December 31, | | | Year ended December 31, | | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | | (U.S. dollars per barrel) | | | (U.S. dollars per barrel) | | Crude Oil Prices | | | | | | | | | | | | | | | | | | | | | Olmeca | | U.S.$ | 109.39 | | | U.S.$ | 107.92 | | | U.S.$ | 93.54 | | | U.S.$ | 51.46 | | | U.S.$ | 39.71 | | | U.S. $ | 51.46 | | | U.S. $ | 39.71 | | | U.S. $ | 51.79 | | | U.S. $ | — | | | U.S. $ | — | | Isthmus | | | 107.28 | | | | 104.69 | | | | 93.39 | | | | 49.28 | | | | 37.72 | | | | 49.28 | | | | 37.72 | | | | 50.75 | | | | 64.54 | | | | 60.43 | | Maya | | | 99.99 | | | | 96.89 | | | | 83.75 | | | | 41.12 | | | | 35.28 | | | | 41.12 | | | | 35.30 | | | | 46.48 | | | | 61.47 | | | | 55.83 | | Altamira | | | 96.40 | | | | 94.35 | | | | 81.30 | | | | 36.19 | | | | 30.35 | | | | 36.19 | | | | 30.35 | | | | 39.45 | | | | 57.81 | | | | 53.69 | | Talam | | | | | | | 36.74 | | | | 36.40 | | | | 28.26 | | | | 36.40 | | | | 28.44 | | | | — | | | | 59.47 | | | | 53.72 | | | | | | | | | | | | | | | | | | | Weighted average realized price | | U.S. $ | 101.96 | | | U.S. $ | 98.44 | | | U.S. $ | 85.48 | | | U.S. $ | 43.12 | | | U.S. $ | 35.63 | | | U.S. $ | 43.12 | | | U.S. $ | 35.65 | | | U.S. $ | 46.79 | | | U.S. $ | 61.41 | | | U.S. $ | 55.63 | | | | | | | | | | | | | | | | | | |
Source: PMI operating statistics as of January 27, 2017.7, 2020. Geographic Distribution of Export Sales As of December 31, 2016,2019, PMI had 3423 customers in 18eight countries. Among these countries, the largest proportionIn 2019, 55.2% of our exports has consistently beencrude oil export sales were to customers in the United States Spain, India,and Canada, South Korea and Japan. Since 2009, the percentage of our crude oil export sales to the United States compared to our total crude oil export sales has declined, while the proportion of crude oil export sales to countries in Europe and Asia, particularly Spain and India, has increased. In 2016, 47.8% of our crude oil exports were to customers located in the United States, which represents an 11%a 9.0% decrease as compared to 2015. The decrease in our crude oil exports to the United States can be attributed mainly to the steady increase of domestic production of light and extra-light crude oil in the United States,2018. Since 2014, primarily as a result of shale discoveries and advances in technology that have made extraction of oil from shale rock commercially viable. In response to the increased availability of light crude oil in the U.S. Gulf of MexicoUnited States and other developing trends in international demand for imported crude oil, we have expanded the scope of itsour geographic distribution and renewedadapted our strategy to diversify and strengthen the presenceposition of Mexican crude oil in the international market. In January 2014, PMI began exporting Olmeca crude oil to European countries other than Spain. As part of our initiative to increase export sales of crude oil to East Asia, PMI also began exporting Isthmus and Maya crude oil to South Korea in January 2015 and continued to do so in 2016. The following table sets forth our crude oil export sales by country for the five years ended December 31, 2016.
Crude Oil Exports byCountry
| | | | | | | | | | | | | | | | | | | | | | | Percentage of Exports | | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | United States | | | 76.2 | % | | | 72.1 | % | | | 69.4 | % | | | 58.8 | % | | | 47.8 | % | Spain | | | 13.2 | | | | 14.4 | | | | 14.2 | | | | 13.8 | | | | 14.9 | | India | | | 6.0 | | | | 8.2 | | | | 7.0 | | | | 9.1 | | | | 10.4 | | Canada | | | 1.8 | | | | 1.9 | | | | 1.8 | | | | 0.0 | | | | 0.0 | | China | | | 0.8 | | | | 1.6 | | | | 1.2 | | | | 1.3 | | | | 1.7 | | Others | | | 2.0 | | | | 1.8 | | | | 6.3 | | | | 16.9 | | | | 25.3 | | | | | | | | | | | | | | | | | | | | | | | Total | | | 100.0 | % | | | 100.0 | % | | | 100.0 | % | | | 100 | % | | | 100 | % | | | | | | | | | | | | | | | | | | | | | |
Note: Numbers may not total due to rounding.
Source: PMI operating statistics as of January 27, 2017.
The following table sets forth the geographic distribution of PMI’s sales of crude oil exports for the five years ended December 31, 2016.2019. 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, | | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | PMI Crude Oil Export Sales to: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | United States and Canada | | | 980 | | | | 78 | | | | 879 | | | | 74 | | | | 813 | | | | 71 | | | | 690 | | | | 59 | | | | 570 | | | | 48 | | Europe | | | 176 | | | | 14 | | | | 179 | | | | 15 | | | | 215 | | | | 18 | | | | 248 | | | | 21 | | | | 272 | | | | 23 | | Far East | | | 85 | | | | 7 | | | | 116 | | | | 10 | | | | 100 | | | | 9 | | | | 219 | | | | 19 | | | | 318 | | | | 26 | | Central and South America | | | 14 | | | | 1 | | | | 15 | | | | 1 | | | | 15 | | | | 1 | | | | 15 | | | | 1 | | | | 34 | | | | 3 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 1,256 | | | | 100 | | | | 1,189 | | | | 100 | | | | 1,142 | | | | 100 | | | | 1,172 | | | | 100 | | | | 1,194 | | | | 100 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Olmeca (API gravity of 38°-39°) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | United States and Canada | | | 184 | | | | 15 | | | | 90 | | | | 8 | | | | 35 | | | | 3 | | | | 40 | | | | 4 | | | | 4 | | | | 0.3 | | Others | | | 9 | | | | 1 | | | | 8 | | | | 1 | | | | 56 | | | | 5 | | | | 84 | | | | 7 | | | | 104 | | | | 9 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 194 | | | | 15 | | | | 99 | | | | 8 | | | | 91 | | | | 8 | | | | 124 | | | | 11 | | | | 108 | | | | 9 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Isthmus (API gravity of 32°-33°) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | United States and Canada | | | 58 | | | | 5 | | | | 62 | | | | 5 | | | | 89 | | | | 8 | | | | 78 | | | | 7 | | | | 3 | | | | 0.3 | | Others | | | 41 | | | | 3 | | | | 41 | | | | 3 | | | | 45 | | | | 4 | | | | 116 | | | | 10 | | | | 150 | | | | 13 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 99 | | | | 8 | | | | 103 | | | | 9 | | | | 134 | | | | 12 | | | | 194 | | | | 17 | | | | 153 | | | | 13 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Maya (API gravity of 21°-22°) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | United States and Canada | | | 719 | | | | 57 | | | | 707 | | | | 59 | | | | 662 | | | | 58 | | | | 513 | | | | 44 | | | | 540 | | | | 45 | | Others | | | 224 | | | | 18 | | | | 260 | | | | 22 | | | | 225 | | | | 20 | | | | 230 | | | | 20 | | | | 325 | | | | 27 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 944 | | | | 75 | | | | 968 | | | | 81 | | | | 887 | | | | 78 | | | | 743 | | | | 63 | | | | 865 | | | | 72 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year ended December 31, | | | Year ended December 31, | | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | PMI Crude Oil Export Sales to: | | | | | | | | | | | | | | | | | | | | | | United States and Canada | | | | 689.6 | | | | 58.8 | | | | 571.8 | | | | 47.7 | | | | 617.2 | | | | 52.6 | | | | 669.8 | | | | 56.6 | | | | 609.2 | | | | 55.2 | | Europe | | | | 257.4 | | | | 22.0 | | | | 294.1 | | | | 24.6 | | | | 219.1 | | | | 18.7 | | | | 199.1 | | | | 16.8 | | | | 181.8 | | | | 16.5 | | Asia | | | | 219.2 | | | | 18.7 | | | | 319.1 | | | | 26.6 | | | | 317.2 | | | | 27.0 | | | | 311.4 | | | | 26.3 | | | | 312.6 | | | | 28.3 | | Central and South America | | | | 6.2 | | | | 0.5 | | | | 12.5 | | | | 1.0 | | | | 20.4 | | | | 1.7 | | | | 3.8 | | | | 0.3 | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | 1,172.4 | | | | 100 | | | | 1,197.6 | | | | 100 | | | | 1,173.9 | | | | 100 | | | | 1,184.0 | | | | 100 | | | | 1,103.7 | | | | 100 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Olmeca (API gravity of38°-39°)(1) | | | | | | | | | | | | | | | | | | | | | | United States and Canada | | | | 39.8 | | | | 3.4 | | | | 4.1 | | | | 0.3 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Others | | | | 84.4 | | | | 7.2 | | | | 104.2 | | | | 8.7 | | | | 18.9 | | | | 1.6 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | 124.2 | | | | 10.6 | | | | 108.3 | | | | 9.0 | | | | 18.9 | | | | 1.6 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Isthmus (API gravity of32°-33°) | | | | | | | | | | | | | | | | | | | | | | United States and Canada | | | | 78.1 | | | | 6.7 | | | | 3.2 | | | | 0.3 | | | | 4.7 | | | | 0.4 | | | | — | | | | — | | | | 2.7 | | | | 0.3 | | Others | | | | 115.9 | | | | 9.9 | | | | 149.9 | | | | 12.5 | | | | 81.1 | | | | 6.9 | | | | 30.7 | | | | 2.6 | | | | 1.4 | | | | 0.1 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | 194.0 | | | | 16.5 | | | | 153.1 | | | | 12.8 | | | | 85.8 | | | | 7.3 | | | | 30.7 | | | | 2.6 | | | | 4.1 | | | | 0.4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Maya (API gravity of21°-22°) | | | | | | | | | | | | | | | | | | | | | | United States and Canada | | | | 513.2 | | | | 43.8 | | | | 541.3 | | | | 45.2 | | | | 597.2 | | | | 50.9 | | | | 623.9 | | | | 52.7 | | | | 506.1 | | | | 45.9 | | Others | | | | 230.2 | | | | 19.6 | | | | 325.9 | | | | 27.2 | | | | 456.7 | | | | 38.9 | | | | 466.1 | | | | 39.4 | | | | 478.9 | | | | 43.4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | 743.4 | | | | 63.4 | | | | 867.2 | | | | 72.4 | | | | 1,053.9 | | | | 89.8 | | | | 1,090.0 | | | | 92.1 | | | | 985.0 | | | | 89.3 | | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Altamira (API gravity of15.0°-16.5°) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | United States and Canada | | | 18 | | | | 1 | | | | 20 | | | | 2 | | | | 27 | | | | 2 | | | | 28 | | | | 2 | | | | 22 | | | | 2 | | | | 27.7 | | | | 2.4 | | | | 21.9 | | | | 1.8 | | | | 15.3 | | | | 1.3 | | | | 19.9 | | | | 1.7 | | | | 20.7 | | | | 1.9 | | Others | | | 1 | | | | 1 | | | | — | | | | — | | | | 0.4 | | | | 0.4 | | | | — | | | | — | | | | 2 | | | | 0.2 | | | | — | | | | — | | | | 1.8 | | | | 0.1 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 19 | | | | 2 | | | | 20 | | | | 2 | | | | 27 | | | | 2 | | | | 28 | | | | 2 | | | | 24 | | | | 2 | | | | 27.7 | | | | 2.4 | | | | 23.7 | | | | 2.0 | | | | 15.3 | | | | 1.3 | | | | 19.9 | | | | 1.7 | | | | 20.7 | | | | 1.9 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Talam (API gravity of 15.8°) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | United States and Canada | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 31 | | | | 3 | | | | 1 | | | | 0.1 | | | | 30.7 | | | | 2.6 | | | | 1.3 | | | | 0.1 | | | | — | | | | — | | | | 25.8 | | | | 2.2 | | | | 79.7 | | | | 7.2 | | Others | | | — | | | | — | | | | — | | | | — | | | | 3 | | | | 0.3 | | | | 52 | | | | 4 | | | | 44 | | | | 4 | | | | 52.4 | | | | 4.5 | | | | 44.0 | | | | 3.7 | | | | — | | | | — | | | | 17.6 | | | | 1.5 | | | | 14.2 | | | | 1.3 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | — | | | | — | | | | — | | | | — | | | | 3 | | | | 0.3 | | | | 83 | | | | 7 | | | | 45 | | | | 4 | | | | 83.1 | | | | 7.1 | | | | 45.3 | | | | 3.8 | | | | — | | | | — | | | | 43.5 | | | | 3.7 | | | | 93.9 | | | | 8.5 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Notes: | Numbers may not total due to rounding. |
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. (1) | During 2019 we used Olmeca crude oil for processing in our refineries and did not export Olmeca crude oil. |
Source: PMI operating statistics as of January 27, 2017.7, 2020. PMI sells a significant percentage of its crude oil under evergreen contracts, which can be terminated by either party pursuant to a three-monthphase-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.
In total, we exported 1.2 million1,103.7 thousand barrels of crude oil per day in 2016. In 2017,2019, and in 2020 we expect to export approximately 8691,086.0 thousand barrels of crude oil per day. We sell the crude oil produced by Pemex Exploration and Production under a variety of contractual arrangements. Of the 1,086.0 thousand barrels of crude oil per day we expect to export in 2020, we are contractually committed to deliver approximately 1,056.0 thousand barrels per day pursuant to existing supply commitments. We believe that our proved developed and proved undeveloped reserves will be sufficient to allow us to fulfill our supply commitments. 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, 2016.2019. Volume of Exports and Imports | | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | | 2016 vs. 2015 | | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | | | (in thousands of barrels per day, except as noted) | | | (%) | | Exports | | | | | | | | | Crude Oil: | | | | | | | | | | | | | | | | | | | | | | | | | Olmeca | | | 193.7 | | | | 98.6 | | | | 91.2 | | | | 124.2 | | | | 108.0 | | | | (13.0 | ) | Isthmus | | | 99.4 | | | | 102.7 | | | | 133.7 | | | | 194.0 | | | | 152.7 | | | | (21.3 | ) | Maya | | | 943.7 | | | | 967.6 | | | | 887.1 | | | | 743.4 | | | | 864.9 | | | | 16.3 | | Altamira | | | 18.8 | | | | 19.9 | | | | 27.2 | | | | 27.8 | | | | 23.6 | | | | (15.1 | ) | Talam | | | — | | | | — | | | | 3.0 | | | | 83.1 | | | | 45.2 | | | | (45.6 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | Total crude oil | | | 1,255.5 | | | | 1,188.8 | | | | 1,142.2 | | | | 1,172.4 | | | | 1,194.4 | | | | 1.9 | | Natural gas(1) | | | 0.9 | | | | 3.1 | | | | 4.1 | | | | 2.8 | | | | 2.2 | | | | (21.4 | ) | Gasoline | | | 69.4 | | | | 66.8 | | | | 66.0 | | | | 62.9 | | | | 52.7 | | | | (16.2 | ) | Other petroleum products | | | 83.5 | | | | 97.7 | | | | 135.3 | | | | 130.8 | | | | 132.8 | | | | 1.5 | | Petrochemical products(2)(3) | | | 1,344.7 | | | | 1,336.9 | | | | 488.0 | | | | 333.8 | | | | 124.7 | | | | (62.6 | ) | Imports | | | | | | | | | | | | | | | | | | | | | | | | | Natural gas(1) | | | 1,089.3 | | | | 1,175.4 | | | | 1,250.4 | | | | 1,415.8 | | | | 1,933.9 | | | | 36.6 | | Gasoline | | | 396.3 | | | | 375.2 | | | | 389.7 | | | | 440.1 | | | | 510.8 | | | | 16.1 | | Other petroleum products and LPG(1)(4) | | | 260.2 | | | | 220.5 | | | | 243.4 | | | | 299.8 | | | | 288.7 | | | | (3.7 | ) | Petrochemical products(2)(5) | | | 445.1 | | | | 287.8 | | | | 332.7 | | | | 107.3 | | | | 278.2 | | | | 159.3 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | | 2019 | | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | vs. 2018 | | | | (in thousands of barrels per day, except as noted) | | | (%) | | Exports | | | | | | | | | Crude Oil: | | | | | | | | | | | | | | | | | | | | | | | | | Olmeca | | | 124.2 | | | | 108.3 | | | | 18.9 | | | | — | | | | — | | | | — | | Isthmus | | | 194.0 | | | | 153.1 | | | | 85.8 | | | | 30.7 | | | | 4.1 | | | | (86.6 | ) | Maya | | | 743.4 | | | | 867.2 | | | | 1,053.9 | | | | 1,090.0 | | | | 985.0 | | | | (9.6 | ) | Altamira | | | 27.7 | | | | 23.7 | | | | 15.3 | | | | 19.9 | | | | 20.7 | | | | 4.0 | | Talam | | | 83.1 | | | | 45.3 | | | | — | | | | 43.5 | | | | 93.9 | | | | 115.9 | | | | | | | | | | | | | | | | | | | | | | | | | | | Total crude oil | | | 1,172.4 | | | | 1,197.6 | | | | 1,173.9 | | | | 1,184.0 | | | | 1,103.7 | | | | (6.8 | ) | Natural gas(1) | | | 2.7 | | | | 2.2 | | | | 1.7 | | | | 1.4 | | | | 1.3 | | | | (5.8 | ) | Gasoline | | | 62.9 | | | | 52.7 | | | | 45.0 | | | | 37.7 | | | | 33.6 | | | | (10.9 | ) | Other petroleum products | | | 130.8 | | | | 132.9 | | | | 113.1 | | | | 95.1 | | | | 82.3 | | | | (13.4 | ) | Petrochemical products(2) | | | 333.8 | | | | 124.7 | | | | 60.5 | | | | 57.8 | | | | 71.9 | | | | 24.5 | | Imports | | | | | | | | | | | | | | | | | | | | | | | | | Natural gas(1) | | | 1,415.8 | | | | 1,933.9 | | | | 1,766.0 | | | | 1,316.5 | | | | 965.9 | | | | (26.6 | ) | Gasoline | | | 440.1 | | | | 510.9 | | | | 583.7 | | | | 607.3 | | | | 544.3 | | | | (10.4 | ) | Other petroleum products and LPG(1) | | | 299.7 | | | | 289.6 | | | | 354.1 | | | | 378.7 | | | | 302.7 | | | | (20.1 | ) | Petrochemical products(2) | | | 107.3 | | | | 278.2 | | | | 332.8 | | | | 831.8 | | | | 877.3 | | | | 5.5 | |
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. |
(4) | In 2013, we began importing liquefied natural gas through Manzanillo. |
(5) | Includes isobutane, butane andN-butane. |
Source: PMI operating statistics as of January 27, 2017,7, 2020, and Pemex Industrial Transformation. Crude oil exports increaseddecreased by 1.9%6.8% in 2016,2019, from 1,172.41,184.0 thousand barrels per day in 20152018 to 1,194.41,103.7 thousand barrels per day in 2016,2019, mainly due to a 16.3% increase of exports of Mayaan 86.6% decrease in light crude oil Istmo exports and a 9.6% decrease in heavy crude oil Maya exports, which was partially offset by a 21.3% decrease115.9% increase in exports of IsthmusTalam crude oil exports and a 13.0% decrease4.0% increase in Altamira crude oil exports in 2019. We did not export Olmeca crude oil export during 2016.in 2018 and 2019 due to a lack of availability of Olmeca crude oil for export. NaturalWe import dry gas, imports increaseda variety of natural 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 36.6% in 2016,importing natural gas from 1,415.8the United States. Domestic sales of dry gas decreased by 22.3%, as compared to 2018, from 2,064.3 million cubic feet per day in 20152018 to 1,933.91,604.4 million cubic feet per day in 2016, which includes2019, mainly due to competition from third-party supply in the national market. Natural gas imports of liquefied natural gas through Manzanillo. The decreased availability of wet gas and natural gasby 26.6% in 2019, from our exploration and production segment’s fields made it necessary to increase natural gas imports. We exported 2.2 million cubic feet of natural gas per day in 2016, a decrease of 21.4% as compared to natural gas exports in 2015 of 2.81,316.5 million cubic feet per day primarily as a result of a decrease in the temporary surplus of natural gas that was originally designated for domestic consumption and subsequently used for export.
In 2016, exports of petroleum products decreased by 8.1%, from 193.8 thousand barrels2018 to 965.9 million cubic feet per day in 2015 to 185.5 thousand barrels per day in 2016, mainly due to a 16.2%2019. This decrease in the volume of exports of gasoline and an 8.6% decrease in the volume of sales of fuel oil. Imports of petroleum products increased by 8.1% in 2016, from 739.8 thousand barrels per day in 2015 to 799.5 thousand barrels per day in 2016,natural gas imports was primarily due to an 18.6% increasedecreased demand in the domestic demand for gasoline and a 29.3% increase in domestic demand for diesel.market due to competition from third party suppliers.
P.M.I. Trading Ltd.DAC sells refined and petrochemical products on anFOB,Delivered ExEx-ship-ship andCost and Freight basis and buys refined and petrochemical products on anFOB,Cost and Freight andDelivered Ex-ship, orDelivery at FrontierandDelivered at Place 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, 2016.2019. Value of Exports and Imports(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | | 2016 vs. 2015 | | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | | | (in millions of U.S. dollars) | | | (%) | | Exports | | | | | | | | | | | | | | | | | | | | | | | | | Olmeca | | U.S.$ | 7,753.7 | | | U.S.$ | 3,883.9 | | | U.S.$ | 3,114.7 | | | U.S.$ | 2,333.1 | | | U.S.$ | 1,569.4 | | | | (32.7 | ) | Isthmus | | | 3,904.4 | | | | 3,925.7 | | | | 4,557.1 | | | | 3,489.0 | | | | 2,107.6 | | | | (39.6 | ) | Altamira | | | 661.6 | | | | 683.7 | | | | 806.8 | | | | 366.8 | | | | 262.7 | | | | (28.4 | ) | Maya | | | 34,532.7 | | | | 34,217.9 | | | | 27,119.4 | | | | 11,158.8 | | | | 11,168.3 | | | | 0.1 | | Talam | | | — | | | | — | | | | 40.4 | | | | 1,103.6 | | | | 467.2 | | | | (57.7 | ) | Total crude oil(2) | | U.S.$ | 46,852.3 | | | U.S.$ | 42,711.3 | | | U.S.$ | 35,638.4 | | | U.S.$ | 18,451.2 | | | U.S.$ | 15,575.2 | | | | (15.6 | ) | Natural gas | | | 0.6 | | | | 2.8 | | | | 4.8 | | | | 1.6 | | | | 1.1 | | | | (31.3 | ) | Gasoline | | | 2,257.4 | | | | 2,162.5 | | | | 1,985.9 | | | | 1,007.4 | | | | 733.2 | | | | (27.2 | ) | Other petroleum products | | | 3,280.6 | | | | 3,654.7 | | | | 3,885.8 | | | | 1,984.8 | | | | 1,161.9 | | | | (41.4 | ) | Petrochemical products | | | 362.9 | | | | 234.0 | | | | 166.9 | | | | 63.5 | | | | 20.5 | | | | (67.7 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | Total natural gas, petroleum and petrochemical products | | U.S.$ | 5,901.5 | | | U.S.$ | 6,054.0 | | | U.S.$ | 6,040.3 | | | U.S.$ | 3,057.3 | | | U.S.$ | 1,916.7 | | | | (37.3 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | Total exports | | U.S.$ | 52,753.8 | | | U.S.$ | 48,765.3 | | | U.S.$ | 41,681.8 | | | U.S.$ | 21,508.5 | | | U.S.$ | 17,491.9 | | | | (18.7 | ) | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year ended December 31, | | 2016 vs. 2015 | | | Year ended December 31, 2019 | | 2019 | | | | 2012 | | 2013 | | 2014 | | 2015 | | 2016 | | | 2015 | | | 2016 | | 2017 | | 2018 | | 2019 | | vs. 2018 | | | | | (in millions of U.S. dollars) | | (%) | | Exports | | | | | | | | | | Olmeca | | | U.S. $ | 2,333.1 | | | U.S. $ | 1,569.3 | | | U.S. $ | 358.1 | | | U.S. $ | — | | | U.S. $ | — | | | | — | | Isthmus | | | | 3,489.0 | | | | 2,107.6 | | | | 1,588.7 | | | | 722.2 | | | | 90.1 | | | | (87.5 | ) | Altamira | | | | 366.6 | | | | 262.4 | | | | 219.8 | | | | 419.5 | | | | 405.5 | | | | (3.3 | ) | Maya | | | | 11,158.9 | | | | 11,172.6 | | | | 17,880.6 | | | | 24,455.6 | | | | 20,072.90 | | | | (17.9 | ) | Talam | | | | 1,103.6 | | | | 470.1 | | | | — | | | | 943.4 | | | | 1,840.80 | | | | 95.1 | | | | | | | | | | | | | | | | | | | | | | Total crude oil(2) | | | U.S. $ | 18,451.2 | | | U.S. $ | 15,582.0 | | | U.S $ | 20,047.2 | | | U.S. $ | 26,540.7 | | | U.S. $ | 22,409.3 | | | | (15.6 | ) | | | | | | | | | | | | | | | | | | | | | Natural gas | | | | 1.6 | | | | 1.1 | | | | 1.3 | | | | 1.0 | | | | 0.8 | | | | (20.0 | ) | Gasoline | | | | 1,007.4 | | | | 733.2 | | | | 746.9 | | | | 813.9 | | | | 626.6 | | | | (23.0 | ) | Other petroleum products | | | | 1,580.2 | | | | 1,161.9 | | | | 1,655.6 | | | | 1,938.1 | | | | 1,429.70 | | | | (26.2 | ) | Petrochemical products | | | | 63.5 | | | | 20.5 | | | | 37.8 | | | | 39.2 | | | | 39.6 | | | | 1.0 | | | | | | | | | | | | | | | | | | | | | | Total natural gas, petroleum and petrochemical products | | | U.S. $ | 2,652.7 | | | U.S. $ | 1,916.7 | | | U.S. $ | 2,441.5 | | | U.S. $ | 2,792.3 | | | U.S. $ | 2,096.7 | | | | (24.9 | ) | | | | | | | | | | | | | | | | | | | | | Total exports | | | U.S. $ | 21,103.9 | | | U.S. $ | 17,498.7 | | | U.S. $ | 22,488.8 | | | U.S. $ | 29,333.0 | | | U.S. $ | 24,506.0 | | | | (16.5 | ) | | | (in millions of U.S. dollars) | | (%) | | | | | | | | | | | | | | | | | | | | Imports | | | | | | | | | | | | | | | | | | | | | | | | | Natural gas | | U.S.$ | 1,216.2 | | | U.S.$ | 2,495.3 | | | U.S.$ | 2,819.3 | | | U.S.$ | 1,673.6 | | | U.S.$ | 2,097.9 | | | 25.4 | | | U.S. $ | 1,673.7 | | | U.S. $ | 2,097.9 | | | U.S. $ | 2,484.1 | | | U.S. $ | 2,043.2 | | | U.S. $ | 1,072.5 | | | | (47.5 | ) | Gasoline | | 19,144.0 | | | 17,485.9 | | | 16,691.2 | | | 12,805.2 | | | 11,994.8 | | | (6.3 | ) | | | 12,805.2 | | | | 11,994.8 | | | | 15,380.1 | | | | 18,867.5 | | | | 15,353.90 | | | | (18.6 | ) | Other petroleum products and LPG | | 10,486.9 | | | 8,220.3 | | | 8,775.8 | | | 6,178.6 | | | 5,689.5 | | | (7.9 | ) | | | 6,178.6 | | | | 5,699.9 | | | | 8,466.3 | | | | 11,103.3 | | | | 7,983.90 | | | | (28.1 | ) | Petrochemical products | | 526.9 | | | 322.3 | | | 373.3 | | | 196.3 | | | 85.5 | | | (56.4 | ) | | | 196.3 | | | | 85.5 | | | | 122.5 | | | | 588.8 | | | | 657.2 | | | | 11.6 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total imports | | U.S.$ | 31,374.0 | | | U.S.$ | 28,523.8 | | | U.S.$ | 28,659.6 | | | U.S.$ | 20,853.7 | | | U.S.$ | 19,867.7 | | | (4.7 | ) | | U.S. $ | 20,853.7 | | | U.S. $ | 19,878.1 | | | U.S. $ | 26,433.3 | | | U.S. $ | 32,602.8 | | | U.S. $ | 25,067.6 | | | | (23.1 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net exports (imports) | | U.S.$ | 21,379.8 | | | U.S.$ | 20,241.5 | | | U.S.$ | 13,022.2 | | | U.S.$ | 654.8 | | | U.S.$ | (2,375.8 | ) | | (2.6 | ) | | U.S. $ | 250.1 | | | U.S. $ | (2,379.4 | ) | | U.S. $ | (3,944.2 | ) | | U.S. $ | (3,269.8 | ) | | U.S. $ | (561.6 | ) | | | (82.8 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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.DAC, or P.M.I. Norteamérica, S.A. de C.V.PMI-NASA 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 27, 2017,7, 2020, which are based on information in bills of lading, and Pemex Industrial Transformation. ImportsIn 2019, imports of natural gas increaseddecreased in value by 25.4% during 2016,47.5% as compared to 2018, primarily as a result of an increasea decrease in domestic demand forthe volume of natural gas and an increase in natural gas prices.imports. Imports of gasoline decreased in value by 6.3%, despite a 16.1% increase in volume of domestic gasoline sales,18.6% over the same period due to a decrease in the average sales pricevolume of gasoline imported resulting from higher domestic production of gasoline.
The following table describes the composition of our exports and imports of selected refined products in 2014, 2015 and 2016.for the three years ended December 31, 2019. Exports and Imports of Selected Petroleum Products | | | Year ended December 31, | | | Year ended December 31, | | | | 2014 | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | Exports | | | | | | | | | | | | | | | | | | | | | | | | | Liquefied petroleum gas(2) | | | 1.3 | | | | 0.7 | | | | — | | | | — | | | | 4.5 | | | | 2.4 | | | Liquefied petroleum gas(1) | | | | 5.7 | | | | 3.6 | | | | 1.2 | | | | 0.9 | | | | 0.7 | | | | 0.6 | | Fuel oil | | | 123.6 | | | | 63.9 | | | | 123.9 | | | | 64.0 | | | | 113.3 | | | | 61.1 | | | | 103.5 | | | | 65.5 | | | | 89.8 | | | | 67.6 | | | | 69.3 | | | | 59.7 | | Gasoline | | | 66.0 | | | | 34.1 | | | | 62.9 | | | | 32.5 | | | | 52.7 | | | | 28.4 | | | | 45.0 | | | | 28.5 | | | | 37.7 | | | | 28.4 | | | | 33.6 | | | | 29.0 | | Others | | | 3.2 | | | | 1.3 | | | | 6.9 | | | | 3.6 | | | | 15.0 | | | | 8.1 | | | | 3.9 | | | | 2.5 | | | | 4.0 | | | | 3.0 | | | | 12.4 | | | | 10.7 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 193.5 | | | | 100.0 | % | | | 193.7 | | | | 100.0 | % | | | 185.5 | | | | 100.0 | % | | | 158.0 | | | | 100.0 | | | | 132.8 | | | | 100 | | | | 116.0 | | | | 100.0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Imports | | | | | | | | | | | | | | | | | | | | | | | | | Gasoline(3)(2) | | | 389.7 | | | | 57.8 | | | | 440.1 | | | | 59.5 | | | | 510.8 | | | | 63.9 | | | | 582.5 | | | | 62.2 | | | | 607.3 | | | | 61.6 | | | | 544.3 | | | | 64.3 | | Fuel oil | | | 13.0 | | | | 2.0 | | | | 17.0 | | | | 2.3 | | | | 10.7 | | | | 1.3 | | | | 24.4 | | | | 2.6 | | | | 16.5 | | | | 1.7 | | | | 11.8 | | | | 1.4 | | Liquefied petroleum gas(2) | | | 84.6 | | | | 13.2 | | | | 105.2 | | | | 14.2 | | | | 50.6 | | | | 6.3 | | | Liquefied petroleum gas | | | | 42.6 | | | | 4.5 | | | | 61.8 | | | | 6.3 | | | | 53.9 | | | | 6.4 | | Diesel | | | 132.9 | | | | 20.8 | | | | 145.3 | | | | 19.6 | | | | 187.8 | | | | 23.5 | | | | 237.5 | | | | 25.4 | | | | 240.6 | | | | 24.4 | | | | 178.4 | | | | 21.1 | | Others | | | 39.7 | | | | 6.2 | | | | 32.4 | | | | 4.4 | | | | 39.6 | | | | 5.0 | | | | 49.1 | | | | 5.2 | | | | 59.8 | | | | 6.1 | | | | 58.7 | | | | 6.9 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 633.1 | | | | 100.0 | % | | | 739.8 | | | | 100.0 | % | | | 799.5 | | | | 100.0 | % | | | 936.2 | | | | 100.0 | | | | 985.9 | | | | 100 | | | | 846.9 | | | | 100.0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Notes: | Numbers may not total due to rounding. |
tbpd | = thousand barrels per day. |
Notes: Numbers may not total due to rounding. tbpd = thousand barrels per day. (1) | Includes gasolinebutanes and blendstock.propane. |
(3) | Includes aviationpremium gasoline, vacuum as oil, isobutanes,regular gasoline, premium components and naphthas and jet fuel. |
Source: Pemex BDI. In 2019, exports of petroleum products decreased by 12.7%, from 132.8 thousand barrels per day in 2018 to 116.0 thousand barrels per day in 2019, mainly due to decreases in the export volumes of fuel oil and natural gas of 22.8% and 10.9%, respectively. Imports of petroleum products decreased by 14.1% in 2019, from 985.9 thousand barrels per day in 2018 to 846.9 thousand barrels per day in 2019, primarily due to an increase in domestic production of petroleum products. Exports of petroleum products decreased in value by 36.7%25.3% in 2016,2019, primarily due to a 33.4%16.8% decrease in salesthe average price of fuel oil and decreases in the average prices of other petroleum products. In 2016,2019, imports of petroleum products decreased in value, by 7.9%22.1%, despite an 8.1% increase in volume, primarily due to increaseda 12.8 % decrease in volume of imports caused by lower domestic demand for regular gasoline which decreasedsales and a decrease in the average price of gasoline as compared to prior years.the previous year. Our net imports of petroleum products for 20162019 totaled U.S. $3,794.4$561.6 million, which represents a 19.1% increasean 82.8% decrease from our net imports of petroleum products of U.S. $3,186.4$3,269.8 million in 2015. For the three years ended December 31, 2016, our exports and imports of selected petrochemicals were as follows:
Exports and Imports of Selected Petrochemicals
| | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | | | 2014 | | | 2015 | | | 2016 | | | | (tmt) | | | (%) | | | (tmt) | | | (%) | | | (tmt) | | | (%) | | Exports(1) | | | | | | | | | | | | | | | | | | | | | | | | | Sulfur | | | 335.6 | | | | 68.8 | | | | 270.6 | | | | 81.1 | | | | 86.5 | | | | 69.4 | | Butadien | | | 41.8 | | | | 8.6 | | | | 41.1 | | | | 12.3 | | | | 35.9 | | | | 28.8 | | Ethylene | | | 15.6 | | | | 3.2 | | | | 1.5 | | | | 0.4 | | | | — | | | | — | | Polyethylenes | | | 23.9 | | | | 4.9 | | | | 11.0 | | | | 3.3 | | | | 1.7 | | | | 1.3 | | Others | | | 71.1 | | | | 14.6 | | | | 9.6 | | | | 2.9 | | | | 0.6 | | | | 1.3 | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 488.0 | | | | 100.0 | % | | | 333.8 | | | | 100.0 | % | | | 124.7 | | | | 100.0 | % | | | | | | | | | | | | | | | | | | | | | | | | | | Imports(2) | | | | | | | | | | | | | | | | | | | | | | | | | Ammonia | | | — | | | | — | | | | 33.0 | | | | 30.7 | | | | 234.9 | | | | 84.4 | | Methanol | | | 50.1 | | | | 15.1 | | | | 30.0 | | | | 23.3 | | | | 43.3 | | | | 15.6 | | Isobutane-butane-hexane-1 | | | 228.7 | | | | 68.7 | | | | — | | | | — | | | | — | | | | — | | Xylenes | | | 3.0 | | | | 0.9 | | | | 3.0 | | | | 2.8 | | | | — | | | | — | | Toluene | | | 10.5 | | | | 3.2 | | | | 25.0 | | | | 23.3 | | | | — | | | | — | | Others | | | 40.4 | | | | 12.1 | | | | 21.3 | | | | 19.8 | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 332.7 | | | | 100.0 | % | | | 107.3 | | | | 100. | % | | | 278.2 | | | | 100.0 | % | | | | | | | | | | | | | | | | | | | | | | | | | |
Notes: | Numbers may not total due to rounding. |
tmt | = thousand metric tons. |
(1) | Exports include propylene. |
(2) | Imports include isobutane, butane andN-butane. |
Source: Pemex BDl.
In 2016, our exports of petrochemical products decreased by 209.9 thousand metric tons, from 333.8 thousand metric tons in 2015 to 124.7 thousand metric tons in 2016. Our imports of petrochemical products increased by 170.9 thousand metric tons, from 107.3 thousand metric tons in 2015 to 278.2 thousand metric tons in 2016. Petrochemical exports decreased in 2016, mainly due a 68.0% decrease in sales of sulfur and 9.4% decrease in sales of polyethylenes. Imports of petrochemical products increased in 2016, primarily due to higher demand for methanol.
Supply Commitments
We sell crude oil through a variety of contracts, some of which specify the delivery of a fixed and determinable quantity of crude oil. As of the date of this report, we are party to the following long-term crude oil supply agreements:
An agreement executed on May 1, 1999, among 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.
| 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 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 frequently, taking into account the refinery’s needs, as well as PMI’s available supply. In 2012 and 2013, PMI provided an additional 30 thousand barrels per day of Maya crude oil, increasing the total volume supplied during this period to 200 thousand barrels per day. For the period from January 2014 through December 31, 2017, the total volume to be supplied has been reduced to 170 thousand barrels per day.
|
An agreement executed on May 1, 2012, with Chevron Products Company, a division of Chevron U.S.A. Inc., to supply its refinery in Pascagoula, Mississippi with approximately 95 thousand barrels per day of Maya crude oil for a period of three years. On May 1, 2015, this agreement was extended for three additional years, however, our supply commitment was decreased to approximately 51 thousand barrels per day of Maya crude oil.
An agreement executed on January 1, 2014, with Valero Marketing and Supply Company Co., a subsidiary of Valero Energy Corp., to supply its refineries in the United States with approximately 80 thousand barrels per day of Maya crude oil for a period of four years, with an option to extend this agreement subject to the express agreement of both parties. Our supply commitment under this agreement increased in 2016 to 87 thousand barrels per day of Maya crude oil.
An agreement executed in January 2013 and extended on October 20, 2014 with Unipec America, Inc., acting on behalf of Unipec Asia Co., Ltd., a branch of China International United Petroleum & Chemicals Co. Ltd., which is a subsidiary of SINOPEC, to export crude oil to China. Under this agreement, we exported 500 thousand barrels of Maya crude oil each month until July 2016, for an aggregate amount of 22 million barrels of crude oil exports. In July 2016, this agreement was extended until June 2017. This agreement is limited to the specific purpose of establishing the terms for our crude oil exports to China.
Two agreements with Houston Refining LP, one executed on February 1, 2011 and amended on January 1, 2015, and the other executed on January 1, 2014 and amended on July 1, 2015. Under each agreement, PMI has agreed to export 36 thousand barrels per day of Maya crude oil over a period of two years.
The remainder of our supply agreements were entered into with four different customers and require that we deliver a total of 57 thousand barrels per day of crude oil during 2017.
We expect to fulfill the majority of these supply commitments with both proved developed and proved undeveloped reserves.
In addition to these agreements, PMI has automatic renewal contracts and occasional contracts with many other customers around the world, including the United States, Europe, India, China, South Korea and Japan. In total, we exported 1,194 thousand barrels per day of crude oil in 2016. During 2017, we expect to export approximately 869 thousand barrels per day of crude oil.2018.
The Secretary of Energy has entered into certain agreements to reduce or increase crude oil exports.exports and production. See “Item 4—Information on the Company—Trade Regulation, Export Agreement and ExportProduction Agreements” below in this Item 4. Hedging Operations P.M.I. Trading Ltd.DAC engages in hedging operations to cover its price exposure in the trading of petroleum products. The internal policies and procedures of P.M.I. Trading Ltd.DAC establish: (1) that DFIs are used exclusively to mitigate the volatility of oil and gas prices; (2) limits on the maximum amount of capital at risk and on the daily and accumulated annual losses for each business unit; and (3) the segregation ofrisk-taking and risk measurement. Capital at risk is calculated on a daily basis in order to compare the actual figures with the aforementioned limit. P.M.I. Trading, Ltd. has a risk management subcommittee that reviews risk and hedging operations and meets on a quarterly basis. See “Item 11—Quantitative and Qualitative Disclosures about Market Risk—Changes in Exposure to Main Risks—Hydrocarbon Price Risk.” Gas Stations in the United States On December 3, 2015, we announced our initiative to openIn 2019, additional Pemex brand gas stations in the United States by opening fiveopened, for a combined total of 13 locations in areas with different demographic characteristics (nine in Texas and four in California) as of December 31, 2019. The fuel supply at these gas stations that will be owned and operated by franchisees in Houston, Texas. This is part of our strategy to expand our operations to the United States in order to fulfill the energy reform mandate to generate economic value in international markets. Further, it will allow us to measure the impact of our brand against others and identify business opportunities abroad. The gas stations’ fuel supply is derived from the United States wholesale market and the selling prices are subject to the local market conditions. AsWe believe that all these Pemex brand gas stations will allow Pemex to evaluate in detail the market response to the Pemex brand and to establish a brand experience in accordance to the demand of the date of this report,subset market segments. Additionally, we expect that the information gathered from all five of theseour gas stations have commenced operations.in the United States will help to develop a market penetration strategy to maximize the value of the Pemex brand through major U.S. fuel marketers.
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 Our Corporate Office of Planning, Coordination and Performance is responsible for planning, conducting and coordinating programs to: foster a company culture of safety, environmental protection and environmental protection;efficient and rational use of energy; improve the safety of our workers and facilities; reduce risks to residents of the areas surrounding our facilities; and reduce greenhouse gas emissions and identify the risks associated with climate change in Mexico in order to develop strategies to minimize the impact of climate change on our operations. We intend to further develop industrial safety and environmental programs for each subsidiary entity. The environmental and safety division of each subsidiary entity coordinates closely with the Corporate Office of Planning, Coordination and Performance.Performance to promote sustainable performance focused on continuous improvement. Insurance We maintain a comprehensive property and general 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 risk of sudden and accidental physical loss, including as a consequence of purposeful terrorist acts. This insurance also provides coverage for the contents of pipelines and storage facilities, and any of our liabilities arising from such acts. Our insurance also covers extraordinary costs related to the operation of offshore wells, such as control andre-drilling costs, evacuation expenses and liability costs associated with spills. We also maintain protection and indemnity insurance for our full marine fleet, in addition to life insurance, aircraft, automobile and heavy equipment insurance, cargo and marine hull insurance, as well as insurance for deep water drilling activities and onshore and offshore minor construction risks.projects on operating facilities. 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. $1.8 billion for onshore property, U.S. $1.3$1.9 billion for offshore property, U.S. $0.3 billion for extraordinary costs related to the operation of offshore wells, U.S. $1.0 $1.0 billion for marine-related liabilities, U.S. $1.1 billion for onshore and offshore liabilities, U.S. $0.5 billion for offshore terrorist acts and U.S. $0.5 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 and must be in compliance with local regulations enacted following the energy reform. In addition, in compliance with the regulations enacted in June of 2016 by theAgencia Nacional de Seguridad Industrial y de Protección al Medio Ambiente del Sector Hidrocarburos (National Agency for Industrial Safety and Environmental Protection of the Hydrocarbons Sector or ASEA), we maintain insurance coverage with respect to third party liability, liability for environmental damage and control of well, works or drilling activities and extraction of hydrocarbons, the treatment and refining of crude oil and the processing of natural gas. We have also ensured that we maintain insurance coverage in connection with our strategic alliances and other joint arrangements.
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 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-à-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 purchasead-hoc 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 20162019 we continued to engage in deep water exploratory and drilling activities that were covered by our existing insurance program.program until December 31, 2019. In August 2012, we purchased a policy to increase the coverage available for potential property damage, third-partythird party liability and control of well risks related to these activities. Under this policy, we maintainmaintained coverage for each deep water well drilled, and the limits are determined based on the risk profile of the corresponding well. This policy hashad a limit of U.S. $3.3 billion, including U.S. $1.3 billion for control of well risks, U.S. $1.1 billion for casualtyliability and U.S. $0.9 billion for property damage. This policy also included contemplates additional coverage for environmental liabilities and remediation activities relating to deep water exploration and drilling. All of our 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 that was originally formed in 1993 under the laws of Bermuda as Kot Insurance Company, Ltd. and was subsequently organized under the laws of Switzerland in 2004. Kot AG 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 held through our local insurance carriers and to maintain control over the cost and quality of the insurance covering our risks. Kot AG reinsures over 95%80% of its reinsurance policies with unaffiliated third-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, 2016,2019, Kot AG’s net risk retention is capped atabout U.S. $180$425 million of which U.S. $150 million corresponds to property and liabilities, and is spread across different reinsurance coveragecoverages to mitigate potential aggregation factors. InvestmentCompliance at Pemex
Our new corporate compliance programPemex Cumplewas authorized by the Board of Directors of Petróleos Mexicanos in RepsolNovember 2019. This program amends and supplements our existing compliance program, which was approved by the Board of Directors of Petróleos Mexicanos in July 2017. As part of December 31, 2016,this new program, we ownedimplemented a totalcompliance hub with different lines of 22,221,893 shares of Repsol, S.A. (formerly known as Repsol YPF, S.A.,attention: ethics and which we referintegrity, anticorruption and due diligence, legal compliance, and data protection and transparency. The program is aimed to as Repsol), which represents approximately 1.5% of Repsol’s total shares. We recorded the 22,221,893 Repsol shares that we hold as“available-for-sale-non-current asset” investmentsstrengthen our compliance culture with respect to national anticorruption strategy and valued them, as of December 31, 2016, at Ps. 6,463.1 million. As of December 31, 2015, our investment in 20,724,331 shares of Repsol, approximately 1.5% of Repsol’s total shares, was valued at Ps. 3,944.7 million. As described in Note 10 to our consolidated financial statements, we recorded the effect of the valuation of the investment at fair value as a loss of Ps. 3,206.3 million and a profit of Ps. 207,816 in the consolidated statements of changes in equity (deficit)international laws, international treaties, specific regulations for the years ended December 31, 2015oil and 2016, respectively. See Note 10 to our consolidated financial statements included herein. On August 4, 2015, P.M.I. Holdings, B.V. obtained a loan for U.S. $250.0 million, which bears interest at a rate of 1.79%gas sector, economic competition and is collateralized by all of our Repsol shares. This loan is due to mature in 2018.internal policies.
Ethics Committee Our Ethics Committee consists of members from our management team, with the head of ourthe Institutional Internal Control Unit at Petróleos Mexicanos serving as its chairman. Among other duties, the Ethics Committee is responsible for regulating and promoting the enforcement of our code of ethics and our code of conduct, as well as promoting corporate strategies that are designed to foster a culture of ethics and integrity. See “Item 16B—Code of Ethics” for more information regarding our code of ethics. Our Ethics Committee is primarily responsible for: promoting awareness and use of our code of ethics and code of conduct, including through online training available for our employees, in order to improve our culture of ethics; establishing procedures that implement the principles found in our code of ethics in order to increase compliance and to detect behavior that adversely affects our activities; analyzing and giving instructions to the appropriate areas on possible violations to our code of ethics and code of conduct that are reported through the ethics tip line; and working with the Liabilities Unit ofat Petróleos Mexicanos and our Internal Auditing Area to exchange information regarding violations of our code of ethics and our code of conduct. See “Item 16B—Code of Ethics” for more information regarding our code of ethics. Collaboration and Other Agreements 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.
On September 25 and 26, 2014 at the World National Oil Companies Congress, Petróleos Mexicanos signed a memorandum of understanding with each of: (1) Petronas and YPF SA, (2) BHP Billiton and (3) Oil and Natural Gas Corporation Limited, through which the parties indicated their intent to analyze business opportunities in deep water, mature fields and heavy and extra-heavy crude oil, assess natural gas infrastructure and exchange best practices for sustainable development, environmental protection and exploration and production activities.
On October 2,27, 2014, Petróleos Mexicanos and Exxon Mobil signed theSecretaría memorandumde Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación(SAGARPA), now SADER, entered into a collaboration agreement to carry out concurrent actions to support the well-being of understanding with the aim of identifying business opportunitiescommunities in exploration, production and industrial transformation processes withwhich we operate under thePrograma de Apoyo a focus on sustainable development and environmental stewardship, as well as exchanging best practices for the development of human resources and industrial safety.
On October 17, 2014, Petróleos Mexicanos and Pacific Rubiales signed a memorandum of understandingla Comunidad y Medio Ambiente (Program to identify opportunities for collaboration in exploration and production activities, hydrocarbons transportation, electricity generationSupport Communities and the exchange of best practices for industrial safety training andhealth-at-work initiatives.
On October 26, 2014, Petróleos Mexicanos and Chevron signed a memorandum of understanding with the aim of establishing opportunities for cooperation in mutually beneficial projects relatedEnvironment, which we refer to deep water, heavy crude oil and the revitalization of mature fields, among other things. This memorandum of understanding also lays the foundation for collaboration in connection with natural gas production, refining and fuel distribution and carbon-dioxide emissions reduction.
On October 29, 2014, Petróleos Mexicanos, through PMI, and Kuwait Foreign Petroleum Exploration Company signed a memorandum of understanding to share technical and commercial information for the evaluation and development of joint business opportunities in oil and gas exploration and production, both in Mexico and abroad.as PACMA).
On October 30, 2014, Petróleos Mexicanos and Eni S.p.A., an Italian oil and gas company, signed a memorandum of understanding to identify opportunities for collaboration in exploration and refining activities, natural gas and petrochemical production, technological development, emissions reduction, as well as the exchange of best practices for the development of human capital.
On November 13, 2014, Petróleos Mexicanos and CNOOC, a Chinese state-owned oil and gas company, the China Development Bank and the Industrial and Commercial Bank of China signed memoranda of understanding which intend to, among other things, encourage cooperation among the parties with respect to technical, human resources and financial matters.
On December 4, 2014, Petróleos Mexicanos and Reliance Industries Limited, an Indian oil and gas company, signed a memorandum of understanding to collaborate in the development of new technologies and human resources. This memorandum of understanding also lays the foundation for collaboration and the possibility of joint business opportunities in exploration, production, refining and downstream activities.
On February 5, 2015, Petróleos Mexicanos and theInstituto Politécnico Nacional (National Polytechnic Institute) of Mexico entered into a collaboration agreement for the development of human resources, technology and research, with the aim of promoting and supporting joint research programs and the development of knowledge related to the hydrocarbons industry. On February 18, 2015, Petróleos Mexicanos and the Organisation for EconomicCo-operation and Development (OECD) signed a memorandum of understanding with the aim of benefiting from the OECD’s knowledge of and experiences with international best practices relating to the procurement of goods and services. On February 19, 2015, Petróleos Mexicanos signed a memorandum of understanding with the Infraestructura Energética Nova, S.A.B. de C.V. and Sempra LNG units of the U.S. energy company Sempra Energy for the potential joint development of a natural gas liquefaction project at the site of the Energía Costa Azul facility located in Ensenada, Mexico. On April 7, 2015, Petróleos Mexicanos and First Reserve signed a memorandum of understanding and cooperation to explore new opportunities for joint energy projects, which would provide access to financing, as well as the exchange of technical and operational experience. This agreement contemplates up to U.S. $1.0 billion of investments in potential projects relating to infrastructure, maritime transport and power cogeneration, among others. On May 12, 2015, Petróleos Mexicanos and Global Water Development Partners, a company founded by private equity funds operated by Blackstone, signed a memorandum of understanding with the aim of creating a partnership to invest in water and wastewater infrastructure for Petróleos Mexicanos’ upstream and downstream facilities. This partnership is intended to finance and carry out environmentally sustainable projects for water treatment in Petróleos Mexicanos’ operations. On May 12, 2015, PMX Cogeneración, S.A.P.I. de C.V., an affiliate of Petróleos Mexicanos, signed a memorandum of understanding with the consortium formed by Enel S.p.A., an Italian renewable energy company, and Abengoa, S.A., a Spanish renewable energy company, to develop a cogeneration power plant to generate and supply clean energy to the Antonio Dovali Jaime refinery in Salina Cruz, as well as the Mexican national grid. On June 1,29, 2015, Petróleos Mexicanos and the U.S. based global asset manager BlackRock Financial Management Inc. signed a memorandum of understanding with the aim of accelerating the development and financing ofenergy-related infrastructure projects that are of strategic importance to Petróleos Mexicanos.
On July 20, 2015, Petróleos Mexicanos, through its Corporate Office of Procurement and Supply, signed an agreement with the OECD with the aim of adopting and promoting best practices in procurement and fostering efficient management strategies and transparency in Petróleos Mexicanos’ processes. The agreement also contemplates the training of our personnel by the OECD on issues of transparency and ethics, the design of procurement procedures and mitigating risks of collusion. On July 22, 2015, Petróleos Mexicanos and theSecretaría de Desarrollo Agrario, Territorial y Urbano (Ministry of Agriculture, Land and Urban Development) signed a collaboration agreement with the aim of establishing consulting and training mechanisms for the development of hydrocarbon exploration, extraction and distribution projects in strict observance of the applicable legal framework and with full respect for agricultural landowners. On July 23, 2015, Petróleos Mexicanos and the Instituto Tecnológico y de Estudios Superiores de Monterrey, A.C. signed a collaboration agreement with the purpose of (1) fostering competitive development within the Mexican oil and gas industry; (2) carrying out specialized research and consulting services, including lectures, seminars, conferences and other events of common interest to the institutions; and (3) providing postgraduate studies for our employees and internships for college students at Petróleos Mexicanos. On July 28, 2015, Petróleos Mexicanos and Banco Santander, S.A. (Santander) signed a collaboration agreement with the purpose of providing our franchisees with access to Santander banking services such as bank card sales, deposits ande-banking services, payroll management and the transportation of money. On September 9, 2015, Petróleos Mexicanos and General Electric signed a memorandum of understanding with the aim of creating a partnership to invest in new technology and financing initiatives for gas compression, power generation and the production of hydrocarbons, both onshore and offshore, including in deepwater fields.
On October 7, 2015, Petróleos Mexicanos, through its subsidiary Pemex Cogeneration and Services, and Dominion Technologies signed a memorandum of understanding to form a company aimed at the joint implementation of cogeneration projects. On October 10, 2015, Petróleos Mexicanos and the United Nations Development Programme in Mexico reaffirmed their commitment to use best practices in terms of inclusion, equality andnon-discrimination in the workplace.
On November 30, 2015, Petróleos Mexicanos and Global Water Development Partners agreed to create a joint venture intended to invest approximately U.S. $800 million in water and wastewater treatment infrastructure for upstream and downstream facilities in Mexico. This partnership aims to (1) provide access to advanced technology to meet the supply and treatment requirements of wastewater at our facilities, in both onshore and offshore production areas, as well as in refineries and petrochemical plants; and (2) in the future, to potentially implement and finance environmentally sustainable solutions for water management.
On January 19, 2016, Petróleos Mexicanos and Mubadala Petroleum signed a memorandum of understating agreeing to joint projects to explore the Mexican energy sector, including its upstream activities, primary midstream activities and infrastructure projects for a total investment of approximately U.S. $4.0 billion. Among these projects is a commercial logistic infrastructure system in the Salina Cruz, Oaxaca area, for an approximate investment in excess of U.S. $3.0 billion. On January 19, 2016, Petróleos Mexicanos and the Abu Dhabi National Oil Company signed a memorandum of understanding with the aim to share each company’s best practices with respect to different upstream activities, including exploration, development and production in oil fields; improved recovery, handling and processing of liquefied natural gas; as well as human resources training, sustainability, internal controls, transparency, process development andcyber-security. On January 19, 2016, Petróleos Mexicanos and Saudi Aramco signed a memorandum of understanding renewing and strengthening the relationship between both companies and establishing an exchange of ideas surrounding operational excellence, sustainability and energy efficiency, and innovation and technological development. On April 1, 2018, Petróleos Mexicanos, the SENER, the CNH and Natural Resources Canada subscribed to a memorandum of understanding and collaboration in order for Mexico and Canada to share demonstrations of technology and practices for the conservation of hydrocarbons and the measurement and reduction of emissions. On March 6, 2019, Petróleos Mexicanos and the JBIC signed a memorandum of understanding with the purpose of exchanging experiences and promoting development in the energy sector. On November 15, 2019, Petróleos Mexicanos and China Export & Credit Insurance Corporation (Sinosure) signed a memorandum of understanding with the purpose of strengthening the cooperative relationship between these two entities. Through these agreements, we seek to increase our technical and scientific knowledge in areas that include exploration and drilling. These broad agreements of technological and scientific collaboration are strictlynon-commercial,i.e., there is no transfer of resources among the parties. 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,” “—Drilling and Services,” “Industrial Transformation,” “—Ethylene,” “—Fertilizers,”Fertilizers” and “—Logistics” and “—Cogeneration and Services.”. The insurance program covering all of our properties is also described above. See “—Insurance.” Reserves Under Mexican law, all crude oil and other oil and gas reserves located in the subsoil of Mexico are owned by the Mexican nation and not by us. The Mexican Government has granted us the right to exploit the petroleum and other oil and gas reserves assigned to us in connection with the process that occurred in August 2014 and is commonly referred to as Round Zero, as well as the right to explore for and exploit petroleum and other oil and gas reserves in areas that have been granted to us in Round 1.4.various subsequent rounds. Productivestate-owned companies and other companies participating in the Mexican oil and gas industry may report assignments or contracts and the corresponding expected benefits for accounting and financial purposes. See “Information on the Company—History and Development—Energy Reform”Legal Regime” above in this Item 4. Our estimates of hydrocarbons reserves are described under “—Exploration and Production—Reserves” above. GENERAL REGULATORY FRAMEWORK Petróleos Mexicanos is regulated by the Mexican Constitution, the Petróleos Mexicanos Law and the Hydrocarbons Law, among other regulations. The purpose of the Petróleos Mexicanos Law is to regulate the organization, management, operation, monitoring, evaluation and accountability of Petróleos Mexicanos as aproductive-state owned company of the Mexican Government. On October 31, 2014, the Regulations to the Petróleos Mexicanos Law were published in the Official Gazette of the Federation. These regulations were modified on February 9, 2015. The purpose of these regulations is to regulate, among other things, the appointment and removal of the members of the Board of Directors of Petróleos Mexicanos, potential conflicts of interest for Board members, and the evaluation of Petróleos Mexicanos. The Mexican Government and its ministries regulate our operations in the oil and gas sector. The Ministry of EnergySENER monitors our operations, and the Secretary of Energy acts as the chairperson of the Board of Directors of Petróleos Mexicanos. In addition, theLey de los Órganos Reguladores Coordinados en Materia Energética (Coordinated Energy Regulatory Bodies Law related to the Energy Matters Law,Law), which was enacted as part of the Secondary Legislation and took effect on August 12, 2014)2014, establishes mechanisms for the coordination of these entities with the Ministry of EnergySENER and other ministries of the Mexican Government. The NHCCNH has the authority to award and execute contracts for exploration and production in connection with competitive bidding rounds. The Energy Regulatory CommissionCRE has the authority to grant permits for the storage, transportation and distribution of oil, gas, petroleum products and petrochemicals in Mexico, and to regulate thefirst-hand sale of these products. The regulatory powers of the NHCCNH and the Energy Regulatory CommissionCRE extend to all oil and gas companies operating in Mexico, including Petróleos Mexicanos and our subsidiary entities. On December 2, 2014, the Ministry of EnergySENER published in the Official Gazette of the Federation a statement declaring that the new Board of Directors of Petróleos Mexicanos was performing its duties and the mechanisms for our oversight, transparency and accountability had been implemented in accordance with the Petróleos Mexicanos Law. As a result, the special regime that governs Petróleos Mexicanos’ activities relating to productivestate-owned subsidiaries, affiliates, compensation, assets, administrative liabilities, budget, debt levels and the state dividend took effect. On June 10, 2015 the General Provisions for Contracting with Petróleos Mexicanos and its ProductiveState-Owned Subsidiaries were published in the Official Gazette of the Federation, and on June 11, 2015, the special regime for acquisitions, leases, services and public became effective. On May 18, 2018, new General Provisions for Contracting with Petróleos Mexicanos and its Productive State-Owned Subsidiaries were published in the Official Gazette of the Federation, repealing the previous general provisions published in June 2015 and their subsequent amendments. These General Provisions regulate the legal process for acquisitions, leases, works and services needed for our projects and require that our suppliers, contractors and other participants with whom we have or intend to have a commercial relationship recognize and adopt our Compliance Program (as defined below) and establish prevention and compliance systems in accordance with applicable law. New amendments to these General Provisions were published in the Official Gazette of the Federation on August 1, 2018. In accordance with the Petróleos Mexicanos Law, each year the Ministry of Finance and Public Credit provides us with estimated macroeconomic indicators for the following fiscal year, which we are to use to prepare the consolidated annual budget for Petróleos Mexicanos and the subsidiary entities, including our financing program. Upon approval by the Board of Directors of Petróleos Mexicanos, our consolidated budget and financing program is then submitted to the Ministry of Finance and Public Credit, which has the authority to adjust our financial balance goal and the ceiling on our wage and salary expenditures for the fiscal year. The consolidated annual budget and financing program of Petróleos Mexicanos and the subsidiary entities, including any adjustments made by the Ministry of Finance and Public Credit, is then incorporated into the federal budget for approval by the Chamber of Deputies. The Mexican Government is not, however, liable for the financial obligations that we incur. In approving the federal budget, the Chamber of Deputies authorizes our financial balance goal and the ceiling on our wage and salary expenditures for the fiscal year, which it may subsequently adjust at any time by modifying the applicable law. We are also subject to various domestic and international laws and regulations related toanti-corruption,anti-bribery andanti-money laundering, such as theCódigo Penal Federal (Federal Criminal Code), which criminalizes certain corrupt practices, including bribery, embezzlement and abuse of authority; theLey General del Sistema Nacional Anticorrupción (General Law of the National Anti-Corruption System); theLey de Fiscalización y Rendición de Cuentas de la Federación (Federal Audit and Accountability Law) and theLey General de Responsabilidades Administrativas (General Law of Administrative Liabilities), among others. These laws establish a national anti-corruption system designed to coordinate efforts among the Mexican Government, federal entities, states and municipalities to prevent, investigate and punish corrupt activities and oversee public resources, as well as determine administrative liabilities of public officials and the applicable penalties. We also employ internal control procedures and guidelines designed to monitor the activities of our employees, including senior management, and to ensure compliance with applicableanti-corruption,anti-bribery andanti-money laundering laws and regulations. TheLineamientos que regulan el sistema de control interno en Petróleos Mexicanos, sus empresas productivas subsidiarias y empresas filiales (Guidelines governing the internal control system of Petróleos Mexicanos, its productive subsidiary entities and affiliates) set forth the principles underlying our internal controls system and the procedures necessary for its implementation and monitoring. In addition, theLineamientos para regular a los Testigos Sociales en Petróleos Mexicanos y sus empresas productivas subsidiarias (Guidelines to regulate public witnesses in Petróleos Mexicanos and its productive subsidiary entities), delineates the ways in which public witnesses may act asthird-party observers in connection with our procurement procedures. These internal controls and guidelines are applicable to Petróleos Mexicanos and the subsidiary entities. For a description of the risks relating toanti-corruption,anti-bribery andanti-money laundering laws and regulations, see “Item 3—Key Information—Risk Factors—Risk Factors Related to our Operations—We are subject to Mexican and internationalanti-corruption,anti-bribery andanti-money laundering laws. Our failure to comply with these laws could result in penalties, which could harm our reputation, prevent us from obtaining governmental authorizations needed to carry out our operations and have an adverse effect on our business, results of operations and financial condition.” On July 14, 2017, the Board of Directors of Petróleos Mexicanos approved our compliance program, which is a series of procedures intended to aid our compliance with legal, accounting and financial provisions in order to prevent corruption and to promote ethical values. These procedures include a focus on internal controls, risk management, ethical principles and corporate integrity, as well as policies promoting transparency and accountability. This compliance program was superseded by our new corporate compliance program,Pemex Cumple,which was authorized by the Board of Directors of Petróleos Mexicanos in November 2019. As part of this new program, we have implemented a compliance hub with different lines of attention: ethics and integrity, anticorruption and due diligence, legal compliance, and data protection and transparency. The Superior Audit Officeprogram is aimed to strengthen our compliance culture, with respect to national anticorruption strategy and international laws, international treaties, specific regulations for the oil and gas sector, economic competition and internal policies. On November 11, 2019,Código de Conducta de Petróleos Mexicanos, sus empresas productivas subsidiarias y, en su caso, empresasfiliales (Code of Conduct of Petróleos Mexicanos, its productive subsidiary entities and, where applicable, affiliated companies, or the Code of Conduct), was published in the Official Gazette of the Federation, orreplacing the ASF, reviews annuallycode of conduct issued on August 28, 2017. This Code of Conduct delineates behaviors expected of and banned for our employees, in accordance with theCuenta Pública(Public Account) values established in our Code of Mexican Government entities, includingEthics, and includes data protection and transparency related matters. Our newCódigo de Ética para Petróleos Mexicanos, sus empresas productivas subsidiarias y empresas filiales (Code of Ethics for Petróleos Mexicanos, its productive subsidiary entities and affiliates, or the Code of Ethics) was also published in the Official Gazette of the Federation on December 24, 2019. This new Code of Ethics was approved by the Board of the Directors of Petróleos Mexicanos on November 26, 2019. Our new Code of Ethics includes respect,non-discrimination, honesty, loyalty, responsibility, legality, impartiality and integrity, human rights protection and inclusion practices, among others. On September 11, 2017, thePolíticas y Lineamientos Anticorrupción para Petróleos Mexicanos, sus empresas productivas subsidiarias y, en su caso, Empresas Filiales(Anti-corruption Policies and Guidelines for Petróleos Mexicanos, its productive subsidiary entities and, where applicable, affiliated companies) and thePolíticas y Lineamientos para el desarrollo de la Debida Diligencia en Petróleos Mexicanos, sus empresas productivas subsidiarias y, en su caso, Empresas Filiales, en Materia de Ética e Integridad Corporativa (Policies and Guidelines to carry out Due Diligence in Petróleos Mexicanos, its productive subsidiary entities and, where applicable, affiliated companies, in Ethics and Corporate Integrity Matters) became effective. The purpose of these regulations is to set up actions to prevent acts of corruption as well as provide means to confront and fight them and mitigate our subsidiary entities. This review focuses mainly onown risks as well asthird-party risks that may affect the entities’ compliance with budgetary benchmarks and budget and accounting laws. The ASF prepares reportsactivities of its observations based on this review. The reports are subject toPEMEX for acts of corruption, lack of ethics or corporate integrity or our analysis and, if necessary, our clarification and explanationinvolvement in illicit acts 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.kind. As an issuer of debt securities that are registered under the Securities Act and in connection with certain representations and covenants included in our financing agreements, we must comply with the U.S. Foreign Corrupt Practices Act, or the FCPA. The FCPA generally prohibits companies and anyone acting on their behalf from offering or making improper payments or providing benefits to government officials for the purpose of obtaining or keeping business. In addition, we are subject to other international laws and regulations related toanti-corruption,anti-bribery andanti-money laundering, including the U.K. Bribery Act 2010, which prohibits the solicitation of, the agreement to receive and the acceptance of bribes. We are also subject to various domestic and international laws and regulations related to anti-corruption, anti-bribery and anti-money laundering. TheCódigo Penal Federal (Federal Criminal Code) criminalizes certain corrupt practices, including bribery, embezzlement and abuse of authority. TheLey Federal Anticorrupción en Contrataciones Públicas (Federal Law of Anti-Corruption in Public Contracting) sanctions companies and individuals that violate this law while participating in federal government contracting in Mexico, as well as Mexican companies and individuals engaged in international commercial transactions. This law is analogous in many respects to the FCPA. In addition, the Federal Law of Administrative Responsibilities of Public Officials prohibits the bribery of federal public officials in Mexico, including members of the Mexican Congress and the federal judiciary.
We also employ internal control procedures and guidelines designed to monitor the activities of our employees, including senior management, and to ensure compliance with applicable anti-corruption, anti-bribery and anti-money laundering laws and regulations. TheLineamientos que regulan el sistema de control interno en Petróleos Mexicanos, sus empresas productivas subsidiarias y empresas filiales (Guidelines governing the internal control system of Petróleos Mexicanos, its productive subsidiary entities and affiliates) set forth the principles underlying our internal controls system and the procedures necessary for its implementation and monitoring. In addition, theLineamientos para la participación de testigos sociales durante actividades de procura y abastecimiento y procedimiento de contratación de Petróleos Mexicanos y sus empresas productivas subsidiarias (Guidelines for the participation of public witnesses in the procurement and supply activities and contracting procedures of Petróleos Mexicanos, its productive subsidiary entities and affiliates), delineates the ways in which public witnesses may act as third-party observers in connection with our procurement procedures. These internal controls and guidelines are applicable to Petróleos Mexicanos and the subsidiary entities. For a description of the risks relating to anti-corruption, anti-bribery and anti-money laundering laws and regulations, see “Item 3—Key Information—Risk Factors—Risk Factors Related to our Operations—We are subject to Mexican and international anti-corruption, anti-bribery and anti-money laundering laws. Our failure to comply with these laws could result in penalties, which could harm our reputation, prevent us from obtaining governmental authorizations needed to carry out our operations and have an adverse effect on our business, results of operations and financial condition.”
On May 27, 2015 theDecreto mediante el cual se reformaron, adicionaron y derogaron diversas disposiciones de la Constitución Política de los Estados Unidos Mexicanos, en materia de combate a la corrupción (Decree that reformed, added to and repealed various provisions of the Mexican Constitution, related to combating corruption matters) was published in the Official Gazette of the Federation. Pursuant to this decree, theLey General del Sistema Nacional Anticorrupción (General Law of the National Anti-corruption System); theLey de Fiscalización y Rendición de Cuentas de la Federación (Federal Audit and Accountability Law); and theLey General de Responsabilidades Administrativas (General Law of Administrative Liabilities), among others, which were published in the Official Gazette of the Federation on July 18, 2016. Among other things, these laws establish a national anti-corruption system to coordinate efforts among the Mexican Government, federal entities, states and municipalities to prevent, investigate and punish corrupt activities and oversee public resources, as well as determine administrative liabilities of public officials and the applicable penalties. The Mexican Senate is to appoint the head of the Special Anti-Corruption Prosecutor’s Office, which was created to investigate and prosecute actions considered crimes of corruption.
ENVIRONMENTAL REGULATION Legal Framework We are subject to the environmental laws and regulations issued by the local and state governments where our facilities are located, including those associated with atmospheric emissions, water usage and wastewater discharge, as well as thewaste management of hazardous andnon-hazardous waste. care for affected sites. In particular, we 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) and related regulations, theLey General de Cambio Climático (General Law on Climate Change) and other technical environmental standards issued by the Secretaría del Medio Ambiente y Recursos Naturales (Secretariat of the Environment and Natural Resources or 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), theLey para el AprovechamientoGeneral de Energías RenovablesCambio Climático (General Law on Climate Change) and other technical environmental standards issued by theSecretaría del Medio Ambiente y el Financiamiento de la Transición EnergéticaRecursos Naturales (Law of Use of Renewable Energy and Financing(Ministry of the Energy Transition), as well as theLey para el Aprovechamiento Sustentable de la Energía (Sustainable Use of Energy Law). Before we carry out any activity that may have an adverse impact on the environment, we are required to obtain certain authorizations from the Hydrocarbons Industrial SafetyEnvironment and Environmental Protection Agency, the SEMARNAT, the Ministry of Energy, the National Water CommissionNatural Resources, or SEMARNAT) and the Mexican Navy, as applicable. In particular, specific environmental regulations apply to petrochemical, crude oil refining and extraction activities, as well as to the construction of crude oil and natural gas pipelines. Before authorizing a new project, the Hydrocarbons Industrial Safety and Environmental Protection Agency requires the submission of an environmental impact analysis and any other information that it may request.
The Hydrocarbons Industrial Safety and Environmental Protection Agency is an administrative body of the SEMARNAT that operates with technical and administrative autonomy and has the authority to regulate and supervise companies participating in the oil and gas sector through its issuance of rules establishing safety standards, limits on greenhouse gas emissions and guidelines for the dismantling and abandonment of facilities, among other things. The Hydrocarbons Industrial Safety and Environmental Protection Agency provides that until the general administrative provisions and Official Mexican Standards proposed by the Hydrocarbons Industrial Safety and Environmental Protection Agency are in effect, obligations will continue under the guidelines, technical and administrative arrangements, agreements and Official Mexican Standards promulgated by the SEMARNAT, CNH and CRE.
The environmental regulations specify, among other matters, the maximum permissible levels of emissions and water discharge. These regulations also establish procedures for measuring pollution levels.ASEA.
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 through 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. Our facilities Before we carry out any activity that existed priormay have an adverse impact on the environment, we are required to obtain certain authorizations from ASEA, the SEMARNAT, the SENER, theComisión Nacional del Agua (National Water Commission, or CONAGUA) and the SEMAR, as applicable. In particular, specific environmental regulations apply to petrochemical, crude oil refining and extraction activities, as well as to the effectivenessconstruction of these regulationscrude oil and natural gas pipelines. Before authorizing a new project, ASEA requires the submission of an environmental impact and risk analysis. ASEA is an administrative body of the SEMARNAT that operates with technical and administrative autonomy and has the authority to regulate and supervise companies participating in the hydrocarbon sector through its issuance of rules establishing safety standards and guidelines for the dismantling and abandonment of facilities, among other things. TheLey de la Agencia Nacional de Seguridad Industrial y de Protección al Medio Ambiente del Sector Hidrocarburos(Law of the Hydrocarbons Industrial Safety and Environmental Protection Agency of the Hydrocarbon Sector) provides that until the general administrative provisions and Official Mexican Standards proposed by the ASEA are not subject to this requirement.in effect, obligations will continue under the guidelines, technical and administrative arrangements, agreements and Official Mexican Standards promulgated by the SEMARNAT, CNH and CRE. We are also subject to theNOM-001-SEMARNAT-1996 issued by CONAGUA in conjunction with theProcuraduría Federal de Protección al Ambiente(PROFEPA), which sets forth the maximum permissible levels of pollutants in wastewater that can be discharged into national bodies of water. In addition, we are subject to theNOM-052-SEMARNAT-2006 and theNOM-001-ASEA-2019, which regulate hazardous waste and its special handling, respectively, as well as theNOM-138-SEMARNAT/SSA1-2012, which establishes the maximum permissible levels of hydrocarbons in the soil and sets forth guidelines with respect to soil testing and the treatment of sites affected by hydrocarbon production. We are also subject to theNOM-006-ASEA-2017, which provides technical guidelines and criteria for industrial safety, operational safety and environmental protection for each of the phases of the design, construction,pre-start, operation, maintenance, closing and, finally, the dismantling of land installations for the storage of petroleum and petroleum products, except liquefied petroleum gas. Federal and state authorities are authorized to inspect any facility to determine its compliance with the Environmental Law, localstate environmental laws, regulations and technical environmental regulations. Violations ornon-compliance with environmental standards and regulations may result in 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 soil and water, cancellation of a concession or revocation of an authorization to carry out certain activities and, in certain cases, criminal proceedings. See “Item 3—Key Information—Risk Factors—Risk Factors Related to Our Operations—Our compliance with environmental regulations in Mexico could result in material adverse effects on our results of operations.” The Mexican Government regularly participates in multilateral negotiations on climate change to promote a sustainable andlow-carbon economy. In September 2016, the Mexican Government ratified the Paris Agreement and endorsed its Nationally Determined Contribution (NDC) by unconditionally committing Mexico to the reduction of 22% of its greenhouse gas emissions and 51% of its black carbon emissions by 2030. This commitment adopts 2013 metrics as a baseline. This commitment may also be increased by an additional reduction of up to 36% of Mexico’s greenhouse gas emissions and 70% of its black carbon emissions, on a conditional basis and subject to the adoption of a global market agreement, which would promote international carbon pricing, as well as financial and technical cooperation. In order to satisfy this comment, the Mexican Government has indicated that it intends to strengthen the adaptation capacities of at least 50% of the most vulnerable municipalities in the national territory, to establish early warning systems and risk management at all levels of its government, and to promote ecosystem-based adaptation intended to achieve a deforestation rate of zero by 2030. Mexico’s NDC commitment envisions participation of all social and economic segments of the country, especially the energy and industrial sectors. As a result, in July 2018, the second transitory article of the General Law on Climate Change was amended to include the commitments made by the government. Pursuant to the General Law on Climate Change, greenhouse gas emissions from the oil and gas sector are required to decrease by 14% by the year 2030, as compared to the sector’s baseline. Additionally, Article 94 of the General Law on Climate Change was supplemented to indicate that the SEMARNAT must gradually and progressively establish a national emissions trading system, designed to promote emission reduction actions at the lowest possible cost. Pursuant to this law, emissions reductions must be measurable, reportable and verifiable. In order to ease the transition for the system participants, thePrograma de Prueba del Sistema de Comercio de Emisiones (Pilot Program for the Emissions Trading System) is to operate from 2020 to 2022. Between 2020 and 2022, we are required to participate actively and increase the evaluation of initiatives and projects that could reduce our emissions, taking into consideration the additional cost that such initiatives will have once emissions caps are defined for each participant. Mexico generally reviews and updates its environmental regulatory framework every five years, and we work with the Mexican Government to develop new environmental regulations of activities related to the oil and gashydrocarbon industry. In August 2016, theNOM-016-CRE-2016 was published in the Official Gazette of the Federation, which establishes the petroleum products quality requirements, including a maximum sulfur content for diesel fuel of 15 Mg/kg, to be applicable throughout Mexico by December 31, 2018.
In November 2016, theNOM-014-CRE-2016 was published in the Official Gazette of the Federation, which establishes the ethane and propane quality requirements for ethylene production, as well as the grade mixture for propellant butanes, whether domestically produced or imported.
During 2016, the CNH updated the technical provisions for the use of natural gas in exploration and extraction activities and issued regulations for drilling, exploration and development. Also in 2016, theAgencia de Seguridad Energía y Ambiente (National Agency for Industrial Safety and Environmental Protection of the Hydrocarbons Sector, better known as the Agency for Safety, Energy and Environment, or ASEA) required that CONAGUA monitor water tables before we began drilling shale gas exploratory wells in the northern part of Veracruz and the southern part of Tamaulipas.
Climate Change On June 6, 2012,Our 2019-2023 Business Plan includes goals such as the General Law on Climate Change was publishedreduction of the environmental impact of our industrial activities and the improvement of our energy management systems. The implementation of these goals requires a set of projects and initiatives to be developed in the Official Gazette ofcoming years. We are likewise working to develop projects and initiatives related to our emissions intensity goals for our main productive activities. Furthermore, the Federation, with the objectives of regulatingmethodologies used for calculating Mexico’s greenhouse gas emissions were updated in 2019 in order to increase the certainty levels of the values being reported and reducing the vulnerability of Mexico’s infrastructure, population and ecosystemsto adjust to the adverse effects of climate change. The General Law on Climate Change establishes a series of financial, regulatory and technical rules and regulations, as well as tools for strategy formation, evaluation and monitoring that formrecent legal requirements in the framework for a comprehensive public policy on climate change.
Our Special Climate Change Program 2014-2018 aims to reduce greenhouse gas emissions, improve energy and operational efficiency, reduce gas flaring and promote the efficient use of gas, among other things. Pursuant to this program, in 2016, we began upgrading the Ing. Antonio Dovalí Jaime Refinery in Salina Cruz, Oaxaca to operate on cleaner natural gas. We also began the test period for a cogeneration project to increase energy efficiency at the Antonio M. Amor Refinery in Salamanca, Guanajuato.country. In addition, we launched our PEMEX Environmental Strategy 2016-2020, which incorporates our formerPlan de Acción Climática(Climate Action Plan), to identify action items, projects and best practices to mitigate the impact of2019, our operations on climate change. These actions include the construction of infrastructure for transportation and gas management.
We also work with several national and international entities to develop and promote initiatives that mitigate the effects of climate change. For instance, we participate in the Climate and Clean Air Coalition (CCAC), which aims to substantially reduce emissions of climate pollutants. In compliance with CCAC criteria, we carried out inspections in our Dos Bocas, Cactus and Atasta facilities, and are working to mitigate the emissions identified in those inspections.
In accordance with the actions carried out by the Mexican Government to mitigate global climate change, we are implementing carbon capture, use and storage (CCUS) techniques. In 2014, the “Technology Route Map of CCUS in Mexico” was developed in conjunction with SENER, SEMARNAT and CFE. This led to the
execution of integrated carbon capture projects at PEMEX and CFE facilities and enhanced oil recovery (EOR) initiatives. In 2016, several tools were developed to evaluate the firstCCUS-EOR project in Mexico. This project included a plan to inject carbon dioxide produced at our Cosoleacaque Petrochemical Complex into the Brillante producing field at the Cinco Presidentes business unit.
During 2016, we recorded greenhouse gas emissions of approximately 57.9generated 48 million tons of carbon dioxide, equivalent, which represented an 11.1%a 3.3% increase, as compared to 2015,our total carbon dioxide emissions in 2018. This increase was mainly due to the expansion of our exploration and drilling activities, as well as the operational failures of some compressors, which led to a higher usage of the flaring systems.
In 2019, given Pemex’s commitment to mitigating climate change, we carried out the following actions and investments, many of which are still ongoing. We expect these actions and investments to have an increaseimpact on our emissions inventories beginning in 2020, once installation is concluded and the dispatchoperation of bitterthese initiatives begin: We continue with the execution of our integral strategic gas into our burnersexploitation plan in Kumaza, AbkatúnPol-Chuc and Litoral Tabasco, increase in dispatch of acid gas into our burners for maintenance activities in the sulfur plants at the Poza Rica, Ciudad Pemex and Nuevo Pemex Complexes and an increase in the volume of gas into our burners for maintenance issues in the sulfur plants in the Minatitlán and Salina Cruz refineries. Ourshallow waters. This plan has led to a higher gas usage levelindex and reduced our methane emissions. In 2019, our main investment under this plan was 91.2% during 2016, as compared to 93.2% in 2015, due to field performance, volume of waste gas used in artificial pumping systems and variations and adjustments to the allocated budget. In 2016, we continued to develop several conservation and reforestation projects designedCa-Ku-Al compression platform, which is expected to increase carbon captureoperational flexibility and preserveto increase usage of natural gas with either high or low nitrogen content.
We continue with the ecosystemsrefurbishment of failing compressors in which we operate. Our biodiversity conservation efforts and indirect mitigation measures have been carried out through the following projects:our gas processing centers in order to achieve a higher productive usage of natural gas. | • | | Proyecto de Conservación, Manejo y Restauración de los Ecosistemas Naturales de la Cuenca Media del Río Usumacinta (Conservation, Management and Restoration Project of the Natural Ecosystems of the Rio Usumacinta Basin) in Chiapas; |
| • | | Operación y manejo del corredor ecológico JATUSA (Operation and Management of the JATUSA Ecological Corridor) in the Jaguaroundi and Tuzandépetl ecologic parks, and the Santa Alejandrina swamp; |
| • | | Educación Ambiental y Operación de la Casa del Agua, en los Pantanos de Centla (Environmental Education and Operation of the Casa del Agua in Pantanos de Centla) in Tabasco; |
| • | | Educación Ambiental y Restauración Forestal en Áreas Naturales Protegidas del Golfo de México, Subregión Planicie Costera (Environmental Education and Reforestation in Protected Natural Areas of the Gulf of MexicoSub-region Coastal Plain); |
| • | | Sistematización e integración de datos de registros de aves de la Reserva de la Biosfera de Calakmul (Systematization and Integration of Data from the Biosphere Reserves of Calakmul Bird Registry) Campeche, México; |
| • | | Producción de hortalizas para autoabastecimiento familiar, agroindustria, nutrición y manejo secundario al cultivo del banano (Produce Production for Self-Sufficiency, Agribusiness, Nutrition and Secondary Management of the Cultivation of the Banana Tree) in communities located in the region known as “La Isla”, in Tabasco; |
| • | | Proyectos productivos sostenibles en los Municipios de Frontera, Paraíso y Cárdenas (Sustainable Productive Projects in the Municipalities of Frontera, Paraíso and Cárdenas) in Tabasco; and |
| • | | Monitoreo Adaptativo: Mitigación y adaptación ante el Cambio Climático Calakmul (Adapted Monitoring: Mitigation and Adaptation before Calakmul’s Climat Change) in Campeche. |
We also begancontinue to develop the JATUSA Ecological Corridor project. This project is one of our most important conservation initiatives and its purpose is to merge natural or modified spaces, ecosystems and habitats to facilitate the conservation of biodiversity. It includesmonitor the implementation of a new scheme that allowsthe actions outlined in our 2019-2023 Business Plan every quarter in order to ensure the fulfillment of objectives related to the use of associated gas in the extraction of hydrocarbons, our methane emission reduction program for vents and other escapeways and the update of our emissions inventory and vulnerability map regarding the effects of climate change. We concluded the third party participation to maximize profits and facilitate the preservationphase of the ecosystem. Clean Development Mechanism Projects
In 2000, Mexico ratifiedverification inventory of greenhouse gas emission levels for all the Kyoto Protocolsites that recorded emissions between 25,000 and 100,000 tons of carbon dioxide equivalent per year.
We carried out the external cogeneration project between CFE and our Salamanca refinery, which is operating on a stable basis. Our personnel have been participating in the Leak Detection and Repair protocol, which is based on general administrative provisions that establish the guidelines for the prevention and comprehensive control of methane emissions from the hydrocarbon sector and in our emissions trading system trainings. We participated in workshops on the Pilot Program for the Emissions Trading System. The implementation of this Pilot Program is mandatory due to our activities related to the exploration and production of crude oil, transport of hydrocarbons and production of petroleum products, oil and petrochemicals and the consequent cost emissions of such activities. We believe that this Pilot Program should strengthen our implementation of our mitigation projects. For more information regarding the Pilot Program for the Emissions Trading System, see “Item 4—United Nations Framework Convention on Climate ChangeMexican States—Legal and Political Reforms—Environment”. Biodiversity During 2019, we continued operating the Jaguaroundi Ecological Park, located in Coatzacoalcos, Veracruz. This park is certified as an Área Destinada Voluntariamente a la Conservación (Voluntary Area for Conversation). This park is the first Voluntary Area for Conservation and has an extension of 960 hectares of rain forest, natural grassland, tropical oak and 57 hectares of water bodies that was registered before theComisión Nacional de Áreas Naturales Protegidas (National Commission for Protected Natural Areas). The park is open to the public and environmental education activities are carried out for nearby communities, schools and industries. We also maintain the Tuzandépetl Ecological Park, located in the Municipality of Ixhuatlán del Sureste, Veracruz. With an area of 1,104 hectares, the Tuzandépetl Ecological Park is also certified as anon-Annex B country. Accordingly, Mexico Voluntary Area for Conservation. Interesting and rich extensions of mangrove, popal and tular live here. This wetland of about 600 hectares is not subject to emission capsimportant for its role as a flood regulator in the area and as a receiver of migratory birds in the winter. The property also has important extensions of groves of corozo palms, yucatecan palms and evergreen rainforest. Troops of howler monkeys and spider monkeys live in the park, which are the only two Mexican primates considered as fauna in protected status under the Kyoto Protocol, but Mexican companies,NOM 059 SEMARNAT-2018. The conservation value of Tuzandépetl Ecological Park lies in the fact that is located in one of the states with the greatest change in land use that preserves only 3% of its native vegetation. By keeping these wet land and rain forest remnants in a good state of conservation, it allows the community and Pemex to enjoy the environmental services that nature provides, such as PEMEX, are allowed to develop Clean Development Mechanism (CDM) projects. These CDM projects generatea favorable habitat for pollinators or the capture of water and carbon dioxide emission reduction certificates or credits that can be traded in international markets. We have registered two CDM projects with the United Nations Framework Convention on Climate Change: Waste Energy Recovery at the Dos Bocas Marine Terminal and Tres Hermanos Oil Field Gas Recovery and Utilization Project. The execution of these projects is subject to market conditions, including an increasedioxide.
Until August 2019, we continued supportingLa Casa del Agua (the Water House), in the pricePantanos de Centla biosphere reserve, which is the only environmental interpretation center of certified emission reductions. In addition, we began working onwetlands in the EliminationGulf of Nitrous Oxide in Lazaro Cardenas CDM project following our acquisition of Fertinal. As of the date of this annual report, that CDM project is in its final stages of development and will be registered with the United Nations once finalized.Mexico. HEALTH, SAFTEYSAFETY AND ENVIRONMENTAL PERFORMANCE We believe that we are in substantial compliance with all current federal and state environmental laws as those laws have been historically interpreted and enforced and that we maintain an organizational structure designed to identify and solve environmental risks. We engage external consultants to perform operational audits at our processing plants. In addition, our subsidiary entities have specialized departments that implement their own internal environmental programs, audits and facilities inspections. When these internal audits reveal problems or deficiencies, the subsidiary entities take the necessary measures to eliminate them. In addition to our internal monitoring structure, Petróleos Mexicanos and its subsidiary entities’ environmental audit program is subject to review by ASEA, which is in charge of reviewing compliance with environmental regulations for the oil and gas sector and establishes environmental remediation standards.
Since 1993, we have participated in the National Environmental Audit Program (NEAP), a voluntary alternative to the traditional system of inspections and penalties, with PROFEPA and now with ASEA.ASEA (for the hydrocarbons sector). This program was created by PROFEPA in 1992 as a regulatory incentive for companies to voluntarily correct any environmental irregularities in their operations. In general terms, voluntary environmental auditing consists of three stages: (i) an audit and compliance diagnosis; (ii) development of an action plan to correct irregularities; and (iii) the implementation of the action plan. If a company satisfactorily completes these three stages, ASEA or PROFEPA grants the audited company a clean industry certificate, which means that it complies with the applicable environmental legislation of their industry. As of December 31, 2016,2019, we were in the processhave registered 11 of auditing 660our facilities with NEAP with the objective of obtaining a “clean industry” certificate for each facility. In 2015, we certified 73During 2019, five of our facilities while the 2016 audits resulted in the certification of 445 facilities, of which 270 werere-certificationsre-certified and 175an additional six facilities were certified for the first time. The audits As part of our accident prevention strategy, we conduct root cause investigations of all incidents that occur during our operations. These investigations allow us to identify the remaining 215 facilities have begun, but are still under review. We will continue including new facilities under this program as we expand our activities incauses and establish corrective measures to avoid the areasrecurrence of exploration, exploitation, refining and distributionsuch type of hydrocarbons.incident. During 2016,2019, we did not experience any major incident that had significant environmental consequences. We did, however, experience the following ten material blasts or hazardous events at our facilities, during 2016, none of which had significant environmental consequences: On January 23, 2016,5, 2019, an employee lost his life due to inhaling hydrogen sulfide without respiratory protection equipment while opening a fire occurred during rig installation ofdrain from theZaap-ETH-903 platform, locatedexhaust tank in the Gulf of Mexico. The fire was caused by a lack of supervision and poor risk assessment. No personnel were injured.burner area at the Tula refinery. On February 7, 2016,January 22, 2019, a contractor lost his life due to a fire and explosion occurredthat began when operators reignited an extinguished candle burner at theAbkatun-A-Compression processing platform in the Gulf of Mexico, which activated the safety systems, procedures and protocols and the platform was evacuated. As a result of this accident, three offshore workers (two PEMEX employees and one contractor) lost their lives. The explosion was caused when the welding of anFA-4210 cap failed. Ayocote 7 oil well. On February 17, 2016,March 1, 2019, a contractor lost his life due to an accident that occurred while transportingPM-5550 equipment cargo at the Furbero 1190 oil well. On May 24, 2019, a contractor lost his life due to an accident that occurred while interconnecting electric cables of a welding machine at the Fénix crane ship. On August 15, 2019, a contractor lost his life due to a fall into the sea while working on repairs at theChac-A platform. On August 25, 2019, a contractor lost his life and two others were injured due to an accident during the installation of guardrails for drilling equipment when a helical screw fell at theIxachi-2 oil well. On August 29, 2019, an employee lost his life due to impact from a water jet while manipulating a fire and explosion occurred at well 864truck intake quick opening valve at the Samaria oil field. As a result of this explosion, two contractors were injured. The accident occurred while personnel were cleaning an oil rig, a process that employs the use of hydrogen peroxide steam generators. The fire was caused by a failure to apply preventative industrial safety measures and environmental protections.Minatitlan refinery. On May 13, 2016,October 4, 2019, a contractor lost his life due to the explosion of a pressurized hopper at the Dos Bocas Maritime Terminal. On October 9, 2019, an accident occurred during electrical maintenanceemployee lost his life due to inhaling hydrogen sulfide without respiratory protection equipment while taking measurements within theTV-56 dome at Cangrejera Petrochemical Complex, producingthe Salina Cruz refinery. On October 31, 2019, an electrical discharge that killed one worker. The accident was causedemployee lost his life due to being crushed by the absencemechanisms of personal safety equipment, inadequate risk assessment and poor supervision. On June 24, 2016, a fire occurred during a poly pig launch at Pera 10, in the state of Tabasco. As a result of this fire, one worker was injured and another lost his life. The fire was caused when the tramp oil remover was opened without having previously been drained, due to by poor planning, failure to update operating procedures and a lack of personal safety equipment.
On September 5, 2016, a fire occurred during maintenance activitiesfan at the Madero Refinery when a plug valve was disassembled. As a result of this accident, three workers were injured. The accident was primarily caused by a lack of blanketing, pipe blinding and explosive gas detectors, as well as poor planning and supervision.
machine tools workshop in Catalina, Puebla. On September 10, 2016, during pipe gasket removal at Cactus GPC, a sour gas leak occurred, killing one worker and injuring three others. Maintenance staff were intoxicated by hydrogen sulfide acid. The leak and subsequent injuries and death were principally caused by a lack of pressure surveillance at the air station and inadequate education regarding operating safety limits of air supply equipment.
On September 24, 2016, a fire and explosion occurred at the oil tanker B/T Burgos, near the Port of Veracruz. As a result of this fire and explosion, the port tank 2 was completely destroyed and the vessel seriously damaged. The 31 workers aboard the vessel were safely evacuated without injury. The accident did not involve a gasoline spill or any impact to the marine environment. The oil tanker vessel was towed to Pajaritos Maritime Terminal for inspection. As of the date of this annual report, the cause of the fire and explosion is under assessment by Lloyd’s Register.
In 2016,2019, our lost time injury rate decreased 23.4%4.0% from 0.470.25 in 20152018 to 0.360.24 in 2016.2019. The segmentline of business that contributed most to this decrease was the industrial transformation segment.our drilling business. Our lost days indicator due to injuries decreased 25.8%increased 13.3% from 3115 to 2317 lost days per million man hoursman-hours worked with risk exposure from 20152018 to 2016.2019. Lost days are those missed as a result of incapacitating injuries suffered at work or those on which compensation is paid for partial, total or permanent incapacity or death. From 20152018 to 2016,2019, our contractors’ lost time injury rate decreased 40.9% from 0.44 to 0.26remained the same, registering 0.14 injuries per million man hoursman-hours worked with risk exposure.exposure in both 2018 and 2019. In order to decrease our number of accidents, we have established the “Binomio” (Audit-Advisory Plan) project. This new program seeks to align our strategies, increases accountability and includes 12zero-tolerance EH&S guidelines. We have also run EH&S campaigns to decrease moderate and minor accidents. These campaigns focus on promoting a culture of safety and reducing accidents by better identifying risks, preventing slips and falls, providing additional lessons on how to handle objects and instructing on better planning and job scheduling. We have also used theBinomio program with our contractors to identify companies that have had fatal and/or serious accidents in the previous year to avoid entering into contracts with companies that perform poorly on the EH&S guidelines. In 2016,2019, our primary initiatives in industrial safety, health and environmental protection (or EH&S) included the following:
weekly visitsDesigned a program focused on the critical elements of process safety as to subsidiary facilities to supervise the implementation of the PEMEX-SSPA System;prevent industrial accidents; SSPA campaigns launchedDesigned a program to raise worker awareness of workplace risks and decrease accidentsimplement critical standards related to improper use of personal safety equipment;and health in the workplace; Implemented a PEP campaign aimed at ensuring that all platform workers are in optimal health;roadmap for attention to type A1 critical risks; in a joint effort with ASEA, executing a strategy to comply with new requirements from ASEA applicable to the PEMEX-SSPA System; andCommunicated best practices standards through safety alerts; technical support to guideImplemented a risk management campaign for our employees and contractors, with emphasis on our strategic projects; Monitored compliance with the implementationZero Tolerance Guidelines and New Mandate Guidelines for our EH&S professionals; Monitored the performance of the PEMEX-SSPA Systemour “Layers of Protection,” “Order and Cleaning” and “Planning and Safe Work Execution” campaigns, which we implemented in facilities belonging to2018; and Continued our corporate administrationemphasis on accountability for EH&S leadership teams in our productive subsidiary entities and service areas.other businesses. Environmental Liabilities As of December 31, 2016,2019, our estimated and accrued environmental liabilities totaled Ps. 8,230.59,087.0 million. Of this total, Ps. 1,014.93,150.1 million belongpertain to Pemex Exploration and Production, Ps. 2,690.73,592.7 million to Pemex Industrial Transformation and Ps. 4,524.92,344.2 million to Pemex Logistics. The following tables detail our environmental liabilities by productive subsidiary entity and operating region at December 31, 2016. Pemex Exploration and Production(1)2019.
| | | | | | | | | | | Estimated Affected Area | | | Estimated Liability | | | | (in hectares) | | | (in millions of pesos) | | Northern region | | | 131.39 | | | Ps. | 596.1 | | Southern region | | | 89.89 | | | | 149.7 | | | | | | | | | | | Total(2) | | | 221.28 | | | Ps. | 745.9 | | | | | | | | | | |
| Note: | Numbers may not total due to rounding. |
| (1) | Includes all liabilities of Pemex Exploration and Production that were assumed pursuant to our corporate reorganization. |
| (2) | During 2016, environmental remediation was completed on 75.16 hectares. There were 107.68 hectares of additional affected areas in 2016, as a result of spills from pipelines mainly. |
| Pemex Exploration and Production | | | Estimated Affected Area | | | Estimated Liability | | | | Holding Ponds Drainage | | | (in hectares) | | | (in millions of pesos) | | | | Number of Holding Ponds Reported as Liabilities(1) | | | Estimated Liability | | | | | | | | (in millions of pesos) | | | Northern region | | | | 431.2 | | | Ps. | 1,627.8 | | Southern region | | | 11 | | | P | s.20.8 | | | | 376.4 | | | | 1,287.0 | | Northern region | | | 69 | | | | 248.2 | | | | | | | | | | | | | | | | Total | | | 80 | | | | 269.0 | | | | 807.6 | | | Ps. | 2,914.8 | | | | | | | | | | | | | | | Total estimated environmental liabilities of Pemex Exploration and Production | | | | Ps. | 1,014.9 | | | | | | | | | |
Note: Numbers may not total due to rounding. (1) | In 2016, no new ponds were added, while 6 holding ponds were restored. As a result, at December 31, 2016, 80 ponds remained to be reported. |
Source: Pemex Exploration and Production. Pemex Industrial Transformation(1)
| | | | | | | | | | | Estimated Affected Area | | | Estimated Liability | | | | (in hectares) | | | (in millions of pesos) | | Refineries | | | 273.43 | | | Ps. | 2,665.3 | | Reynosa Gas complex processor | | | 11.52 | | | | 25.4 | | Total estimated environmental liabilities of Pemex Industrial Transformation | | | 284.95 | | | Ps. | 2,690.7 | | | | | | | | | | |
| | | | | | | | | | | Holding Ponds Drainage | | | | Number of Holding Ponds Reported as Liabilities | | | Estimated Liability | | | | | | | (in millions of pesos) | | Southern region | | | 10 | | | Ps. | 58.6 | | Northern region | | | 62 | | | | 176.6 | | | | | | | | | | | Total | | | 72 | | | Ps. | 235.2 | | | | | | | | | | | Total estimated environmental liabilities of Pemex Exploration and Production | | | | | | Ps | 3,150.1 | | | | | | | | | | |
Note: Numbers may not total due to rounding. (1) | Includes liabilities of Pemex-Refining,Pemex-Gas and Basic Petrochemicals and Pemex-Petrochemicals, which were assumed by Pemex Industrial Transformation as part of our corporate reorganization. |
Source: Pemex Exploration and Production. | | | | | | | | | Pemex Industrial Transformation | | Estimated Affected Area | | | Estimated Liability | | | | (in hectares) | | | (in millions of pesos) | | Refineries | | | 285.5 | | | Ps. | 3,479.0 | | Complex gas processors | | | 6.1 | | | | 113.7 | | | | | | | | | | | Total estimated environmental liabilities of Pemex Industrial Transformation | | | 291.6 | | | Ps. | 3,592.7 | | | | | | | | | | |
Note: Numbers may not total due to rounding Source: Pemex Industrial Transformation. Pemex Logistics
| | | Estimated Affected Area | | | Estimated Liability | | | Pemex Logistics | | | Estimated Affected Area | | | Estimated Liability | | | | (in hectares) | | | (in millions of pesos) | | | (in hectares) | | | (in millions of pesos) | | Storage and Distribution Terminals | | | 69.58 | | | Ps. | 343.1 | | | | 67.6 | | | Ps. | 1,109.1 | | Pipelines | | | 21.88 | | | | 4,181.8 | | | | 64.6 | | | | 1,209.8 | | Treatment and Logistics | | | | 1.3 | | | | 25.3 | | | | | | | | | | Total estimated environmental liabilities of Pemex Logistics | | | 91.46 | | | Ps. | 4,524.9 | | | | 133.5 | | | Ps. | 2,344.2 | | | | | | | | | | | | | | |
Note: Numbers may not total due to rounding. Source: Pemex Logistics. Our estimates of environmental liabilities include cost estimates for site-specific evaluation studies, which draw upon aspects of previous evaluations for sites with comparablebased on characteristics and the corresponding remediation. The remediation sites consist of facilities 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 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 may be reasonably estimated, 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 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)3-J and Note 20 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 2016,2019, 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. See “—History and Development—Energy Reform” above in this Item 4 for more information regarding the participation of other companies in the Mexican energy sector. 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 approved by the Mexican Congress. On August 1, 2017, we were granted a favorable judgment by the Supreme Court of Justice of the Nation, which determined that we are not liable for material and environmental damages caused by hydrocarbons spills related to illegal tapping of pipelines, since the environmental damage was caused by third party criminal behavior. As of the date of this annual report, there has been no definitive resolution with respect to our liability for such damages. Environmental Projects and Expenditures In 2016,2019, we spent approximately Ps. 11,424.41,846.4 million on environmental projects and related expenditures, as compared to Ps. 9,917.13,219.1 million in 2015.2018. For 2017,2020, we have budgeted Ps. 5,707.6612.5 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 oil and gas spills, the expansion of water effluent systems, restoration and reforestation of affected areas, studies for environmental investigation and environmental audits. In addition, we continue to conduct 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)NAFTA and the USMCA 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. Social Responsibility We haveDuring 2019, we implemented and continued various corporate social responsibility initiatives, primarily with respectintended to the protectionmaintain and preservation of the environment, relationsstrengthen our relationships with communities where we operate ethical work practices, respect for labor rights and the general promotion ofto promote quality of life for communities and employees.these communities.
Our corporate and social responsibility goals are carried out through the following mechanisms: mutually beneficial public works and investment projects;
cash donations;
product donations of fuels and asphalt; environmental protection projects;mutually beneficial public works or projects, which we carry out in collaboration with local authorities and communities to improve infrastructure that is beneficial both to us and to the community; | • | | thePrograma de apoyo a la comunidad y medio ambiente (Program to support communities and the environment, which we refer to as PACMA), which supports and implements social programs, actions and public works designed to promote the economic and social development of the communities in which we operate and to protect their environment; and |
the PACMA, which supports and implements and supports social programs, actions and public works designed to promote the economic and social development of the communities in which we operate and to protect their environment; and other instruments that provide a positive impact our community, including ouron communities such as Integrated E&P contracts, FPWCs and the sustainable development annexes to our contracts inContracts, through which we and our contractors commit to improving the quality of life in communities where we operate.operate, directly or indirectly. In 2016,2019, the total value of our social responsibility donations and contributions amounted to Ps. 1,649.22,321.3 million. Our cash donations amounted to approximately Ps. 63.5 million, our asphalt and fuel donations amounted to approximately Ps. 1,218.4 million and our movable and immovable property donations1,438.2 million. PACMA contributions amounted to approximately 28.3 million. ContributionsPs. 824.9 million, contributions made through provisions of our Integrated E&P Contracts FPWCs, SD Annexes and RS KMZ sustainable development clause amounted to Ps. 129.051.3 million and PACMA and mutual benefit project contributions amounted to Ps. 186.8 million and Ps. 23.2 million, respectively. 6.9 million. Approximately 68.5%92.5% of our donations and contributions were assigned to twelve states with greater activity in the oil and gas industry (Campeche, Chiapas, Coahuila, Guanajuato, Hidalgo, Nuevo León, Oaxaca, Puebla, San Luis Potosí, Tabasco, Tamaulipas and Veracruz); 22.0% to the states with medium activity in the oil and gas industry (Coahuila, Guanajuato, Hidalgo, Nuevo Leon, Oaxaca, Puebla and San Luis Potosí); and the remaining 9.5%7.5% to the remaining states. Most importantly, Notably, we took the following specific actions in 2016:2019: contributed approximately Ps. 463.8950.5 million to the construction, improvement or pavement of roadsin asphalt and highway infrastructure in 17 states; contributed approximately Ps. 9.8 million for the installation of 8,072 roofsfuel donations. Of our 2019 asphalt and 471 floors in community householdsfuel donations, 66.1% was concentrated in the states of Puebla,Tabasco, Campeche, Veracruz and Tamaulipas;
contributed a total of Ps. 6.9 million via our mutual benefit projects, Ps. 3.3 million of which was directed towards the state of Tabasco and Veracruz;Ps. 3.6 million towards the state of Chiapas. These projects were mainly in infrastructure, such as the pavement of roads; and contributed approximately Ps. 149.6 million toward education and sports programs in oil and gas communities in 11 states;
contributed approximately Ps. 56.9 million towards improving infrastructure for fishing communitiescarried out 29 projects related to Integrated E&P Contracts in the states of Campeche, OaxacaVeracruz, Tamaulipas and Veracruz;
Puebla for a total amount of Ps. 51.3 million. In Veracruz, we contributed approximately Ps. 34.622.0 million; in Puebla we contributed Ps. 17.3 million in equipment, training and development of renewable energy in communitiesTamaulipas we contributed Ps. 12.0 million. These projects were mainly in the statesareas of Chiapas,infrastructure, education and sports. In addition, in 2019 we made several donations under our PACMA program, approximately 39.6% of which were allocated to Tabasco, approximately 29.3% to Veracruz and 14.2% to Campeche. The remainder, or approximately 16.9% was allocated to Tamaulipas, Oaxaca, Tabasco, TamaulipasHidalgo, Guanajuato, Puebla, Nuevo León and Veracruz;Coahuila, among others. In sum, we contributed approximately Ps. 12.61,189.8 million for the construction of community kitchens in 11 municipalities in the states of Campeche, Tamaulipasto public safety and Veracruz; contributed approximately Ps. 28.0 million for environmental education, restoration and conservation of protected natural areas through programs implemented in the states of Campeche, Chiapas, Tabasco and Veracruz;
contributed approximately Ps. 7.4 million in turbosine for the operation of state aircrafts in the states of Campeche, Chiapas, Hidalgo and Veracruz;
contributed approximately Ps. 758.8 million in fuel for the operation of vehicles and machinery for various state and municipal governments, principally to provide assistance for emergencies, civil protection, programs, services and public safety; and
contributed approximately Ps. 28.6817.6 million to various communities in the municipality of Carmen in the state of Campeche towards improving schools,infrastructure, Ps. 152.5 million to community health, care centersPs. 99.5 million to productive projects, Ps. 29.6 million to environmental protection, Ps. 22.4 million to community equity and safety programs, as well as environmentalPs. 9.9 million to education and fishing projects. sports.TRADE REGULATION, EXPORT AGREEMENTS AND EXPORTPRODUCTION AGREEMENTS Though Mexico is not a member of Organization of the Petroleum Exporting Countries (which we refer to as OPEC),OPEC, it has periodically announced increases and decreases in our crude oil exports reflecting production revisions made by other oil producing countries and entered into agreements with OPEC andnon-OPEC members to reduce its oil exports, in order to contribute to crude oil prices stabilization. However, we have not changed our export goals because of announcements made On April 12, 2020, Mexico entered into an agreement with OPEC andnon-OPEC countries to reduce world crude oil production. Pursuant to this agreement, the OPEC+ countries agreed to reduce their overall crude oil production by OPEC since 2004,9.7 million barrels per day from May 1, 2020 through June 30, 2020, by 7.7 million barrels per day from July 1, 2020 through December 31, 2020 and we believe thatby 5.8 million barrels per day from January 1, 2021 through April 30, 2022. In particular, Mexico has no current plansagreed to changereduce its, and in turn our, current level of crude oil exports.production by 100,000 barrels per day for a period of two months beginning on May 1, 2020. This agreement is intended to help mitigate the decrease in oil prices and demand that has taken place as a result of theCOVID-19 pandemic. NAFTA has not affected Mexico’s rights, through us or other companies, to explore and exploit crude oil and natural gas in Mexico, to refine and process crude oil and natural gas and to produce petrochemicals in Mexico. Since 2003, 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 petrochemicals from the United States and Canada could have increased competition in the 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. On November 30, 2018, the presidents of Mexico, the United States and Canada signed the USMCA. As of March 13, 2020, the USMCA has been ratified by the legislatures of the three countries. Therefore, pending notification by all three countries that all internal procedures have been completed and a three month waiting period, the USMCA is expected to effectively replace NAFTA. See “Item 3—Key Information—Risk Factors—Risk Factors Related to Mexico—Economic and political developments in Mexico and the United States may adversely affect Mexican economic policy and, in turn, PEMEX’s operations.” TAXES, DUTIES AND OTHER PAYMENTS TO THE MEXICAN GOVERNMENT General Taxes and duties applicable to us are a significant source of revenues to the Mexican Government. We contributed approximately 21%10.5% of the Mexican Government’s revenues in 20152018 and 8.6%7.7% in 2016.2019. In 2016,2019, we paid a number of special oil and gas taxes and duties, in addition to the other taxes and duties paid by some of the subsidiary companies, as described below under “—Other Taxes.” The fiscal regime in effect for Petróleos Mexicanos and the subsidiary entities for 20162019 (which we refer to as the 2016 fiscal regime) became effective in 20172015 and can be subsequently modified from time to time. The Secondary Legislationimplementing legislation published in August 2014 set forth a fiscal regime applicable to the new contractual arrangements that governs exploration and production activities conducted in Mexico beginning on January 1, 2015, as well as a new state dividend to be paid by Petróleos Mexicanos and the subsidiary entities beginning on January 1, 2016. See “—Fiscal Regime” and “—Other Payments to the Mexican Government” below. Fiscal Regime for PEMEX Fiscal Regime The Hydrocarbons Revenue Law that was adopted as part of the Secondary Legislation sets forth, among other things, the following duties applicable to us in connection with our assignments granted by the Mexican Government: | • | | Derecho por la Utilidad Compartida(Profit-Sharing Duty): As of January 1, 2015, this duty iswas equivalent to 70%70.0% of the value of oil and gas produced in the relevant area, less certain permitted deductions. Pursuant to the Hydrocarbons Revenue Law, this duty is to decreasedecreases on an annual basis untilbasis. As of January 1, 2019, at which point it will bethis duty was set at 65%65.0%. During 2016,2019, we paidaccrued Ps. 304,299343,242 million in connection with this duty, a 19.2%22.57% decrease from Ps. 376,683443,294 million paid in 2015.2018, primarily resulting from a reduction in oil and gas prices and the application of a new decree published in the Official Gazette of the Federation on May 24, 2019, which increased the amount we can deduct for investments. On AprilAugust 18, 2016,2017, a decree was published in the Official Gazette of the Federation that increased the amount we can deduct for investments, costs and expenses made pursuant to this duty,duty. In total, both the May 24, 2019 decree and the August 18, 2017 decree resulted in a benefit to us of Ps. 40.2 billion. See “Item 5—Critical Accounting Policies—Exploration and Production Taxes and Duties” below. In addition, on November 16, 2016, we were granted an additional deduction of Ps. 28.4 billion in order to mitigate against the effects of continued low oil and gas prices.25,788 million. |
| • | | Derecho de Extracción de Hidrocarburos(Hydrocarbons (Hydrocarbons Extraction Duty):This duty is to be determined based on a rate linked to the type of hydrocarbons (e.g.(e.g., crude oil, associated natural gas,non-associated natural gas or condensates), the volume of production and the relevant market price. During 2016,2019, we paid Ps. 43.5 billion61,371 million under this duty, a 10.9%26.1% decrease from Ps. 48,85883,027 million in 2015.2018, mainly due to a reduction in oil and gas prices. |
| • | | Derecho de Exploración de Hidrocarburos(Exploration (Exploration Hydrocarbons Duty): The Mexican Government is entitled to collect a monthly payment of Ps. 1,1751,355.82 per square kilometer ofnon-producing areas. After 60 months, this duty increases to Ps. 2,8113,242.17 per square kilometer for each additional month that the area is not producing. These amounts will be updated on an annual basis in accordance with the national consumer price index (NCPI). During 2016,2019, we paid Ps.963Ps. 1,050 million under this duty, a 2.6% decrease2.2% increase from Ps. 9891,027 million in 2015.2018. |
| • | | In 2016, Mexican companies paid a corporate income tax at a rate of 30% applied to revenues, less certain deductions. Beginning in 2015, Petróleos Mexicanos and the subsidiary entities became subject to theLey del Impuesto sobre la Renta, or Mexican Income Tax Law. During 2016, we paid Ps. 1,333 million under this tax, a 82.0% decrease from Ps. 7,426 million in 2015. |
In 2019, Mexican companies paid a corporate income tax at a rate of 30.0% applied to revenues, less certain deductions. Beginning in 2015, Petróleos Mexicanos and the subsidiary entities became subject to the Ley del Impuesto sobre la Renta, or Mexican Income Tax Law. During 2019, 2018 and 2017, we did not pay any tax under this law. Under the 20162019 fiscal regime, some of our products are subject to the following IEPS Taxes,taxes, which we withhold from our customers and pay to the tax authorities. The IEPS tax is no longernot included in our sales or expenses. of gasoline and diesel before the of eac | • | | IEPS sobreSobre la ventaVenta de los combustibles automotricesCombustibles Automotrices (IEPS Tax on the Sale of Automotive Fuels): This tax is a fee on domestic sales of automotive fuels, gasoline and diesel, that Pemex Industrial Transformation collects on behalf of the Mexican Government. The applicable fees for this tax are Ps. 4.164.81 per liter of Magna gasoline; Ps. 3.524.06 per liter of Premium gasoline and Ps. 4.585.28 per liter of diesel. The amount of the fee will depend on the class of fuel, and is fixed monthlyyearly and adjusted on a weekly basis by the Ministry of Finance and Public Credit. The fees apply to sales in Mexico and imports. |
| • | | IEPSa beneficio Beneficio de entidades federativas, municipiosEntidades Federativas, Municipios y demarcaciones territorialesDemarcaciones Territoriales (IEPS Tax in Favor of States, Municipalities and Territories): This tax is a fee on domestic sales of automotive fuels, gasoline and diesel, that Pemex Industrial Transformation collects on behalf of the Mexican Government. The applicable fees for this tax are 36.6842.43 cents per liter of Magna gasoline, 44.7551.77 cents per liter of Premium gasoline and 30.4435.21 cents per liter of diesel. This fee changes yearly in accordance with inflation. Funds gathered by this fee are allocated to Mexican states and municipalities as provided for in theLey de Coordinación Fiscal (Tax Coordination Law). The fees only apply to sales in Mexico and are not subject to VAT. |
IEPS Tax on Fossil Fuels: This tax is a fee on domestic sales of fossil fuels that Pemex Industrial Transformation collects on behalf of the Mexican Government. The applicable fees for this tax are 6.29 cents per liter for propane, 8.15 cents per liter for butane, 11.05 cents per liter for gasoline and aviation gasoline, 13.20 cents per liter for jet fuel and other kerosene, 13.40 cents per liter for diesel, 14.31 cents per liter for fuel oil and Ps. 16.60 per ton for petroleum coke. This fee changes yearly in accordance with inflation.
| • | | IEPS a los Combustibles Fósiles (IEPS Tax on Fossil Fuels): This tax is a fee on domestic sales of fossil fuels that Pemex Industrial Transformation collects on behalf of the Mexican Government. The applicable fees for this tax are 7.26 cents per liter for propane, 9.40 cents per liter for butane, 12.74 cents per liter for gasoline and aviation gasoline, 15.22 cents per liter for jet fuel and other kerosene, 15.46 cents per liter for diesel, 16.50 cents per liter for fuel oil, Ps. 19.15 per ton for petroleum coke, Ps. 44.90 per ton for coal coke, Ps. 33.81 per ton for mineral carbon and Ps. 48.87 per ton for carbon from other fossil fuels. This fee changes yearly in accordance with inflation and applies to imports to Mexico. |
The Hydrocarbons Revenue Law also establishes the fiscal terms to be applied to the contracts for exploration and production granted by the Mexican Government to us or to other companies in connection with potential future competitive bidding rounds. Specifically, these fiscal terms contemplate the following taxes, duties, royalties and other payments to the Mexican Government (in addition to any taxes owed pursuant to theLey de Ingresos de la Federación (Federal Revenue Law) for the applicable year and other applicable tax laws): | • | | Cuota Contractual para la Fase Exploratoria(Exploration (Exploration Phase Contractual Fee): During the exploration phase of a project governed by a license,production-sharing contract orprofit-sharing contract, the Mexican Government is entitled to collect a monthly payment of Ps. 1,1501,355.82 per square kilometer ofnon-producing areas. After 60 months, this fee increases to Ps. 2,7503,242.17 per square kilometer for each additional month that the area is not producing. The fee amount will be updated on an annual basis in accordance with the NCPI. |
| • | | Regalías (Royalties): Royalty payments to the Mexican Government are determined based on the “contractual value” of the relevant hydrocarbons, which is based on a variety of factors, including the type of underlying hydrocarbons (e.g.(e.g., crude oil, associated natural gas,non-associated natural gas or condensates), the volume of production and the market price. Royalties are payable in connection with licenses,production-sharing contracts andprofit-sharing contracts. |
| • | | Pago del Valor Contractual (Contractual Value Payment): Licenses require a payment calculated as a percentage of the “contractual value” of the hydrocarbons produced, as determined by the Ministry of Finance and Public Credit on acontract-by-contract basis. |
| • | | Porcentaje a la Utilidad Operativa(Operating (Operating Profit Payment):Production-sharing contracts andprofit-sharing contracts require a payment equivalent to a specified percentage of operating profits. In the case ofproduction-sharing contracts, this payment is to be madein-kind through delivery of the hydrocarbons produced. In the case ofprofit-sharing contracts, this payment is to be made in cash. |
| • | | Bono a la Firma(Signing (Signing Bonus): Upon execution of a license or migration of an assignment, a signing bonus is to be paid to the Mexican Government in an amount specified by the Ministry of Finance and Public Credit. |
| • | | Impuesto por la actividad de Exploración y Extracción de Hidrocarburos (Hydrocarbons Exploration and Extraction Activities Tax): Contracts for exploration and extraction and assignments granted by the Mexican Government will include a specified tax on the exploration and extraction activities carried out in the relevant area. A monthly tax of Ps. 1,5331,768.45 per square kilometer is payable during the exploration phase until the extraction phase begins. During the extraction phase of a project, a monthly tax of Ps. 6,1337,073.83 per square kilometer is payable until the relevant contract for exploration and extraction or assignment is terminated. |
Under the Hydrocarbons Revenue Law, exploration and production activities associated with contracts for exploration and production are not subject to a value added tax. 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—We pay significant taxes and duties to the Mexican Government, and, if certain conditions are met, to pay a state dividend, which may limit our capacity to expand our investment program or negatively impact our financial condition generally.” Other Payments to the Mexican Government Pursuant to the Petróleos Mexicanos Law, as of January 1, 2016, Petróleos Mexicanos and the subsidiary entities are required to pay a state dividend to the Mexican Government on an annual basis. In July of each year, Petróleos Mexicanos and the subsidiary entities are required to provide the Ministry of Finance and Public Credit a report disclosing their financial results for the previous fiscal year and their investment and financing plans for the following five years, together with an analysis of the profitability of these investments and the relevant projections of their financial positions. The Ministry of Finance and Public Credit will rely on this report and a favorable opinion issued by a technical committee of the Mexican Petroleum Fund for Stabilization and Development to determine the amount of the state dividend to be paid by Petróleos Mexicanos and each of the subsidiary entities. The Petróleos Mexicanos Law provides that the aggregate amount of the state dividend to be paid in 2016 iswas to be equal to, at minimum, 30%30.0% of the total revenues of Petróleos Mexicanos and the subsidiary entities, after taxes, from the previous fiscal year. It further provides that that percentage will decrease in subsequent years, until reaching 15% in 2021 and 0% in 2026. In accordance with the Federal Revenue Law for 2016, the Federal Revenue Law for 2017, the Federal Revenue Law for 2018 and the Federal Revenue Law for 2017,2019, Petróleos Mexicanos was not required to pay a state dividend in 20162017, 2018 and 2019 and will not be required to pay a state dividend in 2017.2020. The following table sets forth the taxes and duties that we recorded for each of the past three years. | | | Year ended December 31, | | | Year ended December 31, | | | | 2014 | | 2015 | | 2016 | | | 2017 | | 2018 | | 2019 | | | | (in millions of pesos)(1) | | | (in millions of pesos)(1) | | Hydrocarbon extraction duties and others | | Ps. | 760,912 | | | Ps. | 377,087 | | | Ps. | 304,813 | | | Ps. | 338,044 | | | Ps. | 469,934 | | | Ps. | 372,812 | | Hydrocarbons income tax | | | (18,735 | ) | | | — | | | | — | | | Income tax | | | 3,898 | | | (45,587 | ) | | (40,292 | ) | | | (5,064 | ) | | (8,355 | ) | | (28,989 | ) | | | | | | | | | | | | | | | | | | | | Total | | Ps. | 746,075 | | | Ps. | 331,500 | | | Ps. | 264,521 | | | Ps. | 332,980 | | | Ps. | 461,579 | | | Ps. | 343,823 | | | | | | | | | | | | | | | | | | | | |
Note: For a description of these taxes and duties, see “Item 4—Information on the Company—Taxes, Duties and Other Payments to the Mexican Government.”Numbers may not total due to rounding. (1) | Figures are stated in nominal pesos. |
Source: PEMEX’s audited financial statements, prepared in accordance with IFRS. 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. In addition, we have a number ofnon-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. 4,058.52,536.3 million in 2014,2017, Ps. 6,833.4 millionin 20151,616.7 million in 2018 and Ps. 7,200.93,090.2 million in 2016.2019. No assurance can be given that our tax regime will not change in the future. See “Item 3—Key Information—Risk Factors—Risk Factors Related to our Relationship with the Mexican Government—We pay significant taxes and duties to the Mexican Government, and, if certain conditions are met, to pay a state dividend, which may limit our capacity to expand our investment program or negatively impact our financial condition generally.” UNITED MEXICAN STATES The information in this section with regard to Mexico has been derived from publicly available information published by, or on the websites of, the Comisión Nacional Bancaria y de Valores (NationalNational Banking and Securities Commission),Commission, Banco de México Banco (the Mexican central bank)(Mexican Central Bank), the Ministry of Finance and Public Credit and the Instituto Nacional de Estadística y Geografía (INEGI)(National Institute of Statistics and Geography, or INEGI). Form of Government Mexico is a nation consistingof thirty-two states, including Mexico City. The Mexican Constitution, effective May 1, 1917, establishes Mexico’s current form of government as a federal republic, consisting of both the Mexican Government and state governments. The President of Mexico (or 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 onesix-year term;term. Anyone who has held the office of the President, is not allowed to run for reelection. In accordance with Mexico’s electoral law, on August 31, 2012, theTribunal Electoral del Poder Judicial de la Federación (Federal Electoral Court) officially validated the results of the presidential electionby popular vote or in an interim, substitute or provisional capacity, may never hold such office again. General elections were last held in Mexico on July 1, 2012, and declared2018. Mr. Andrés Manuel López Obrador, the candidate from the MORENA party, won the presidential election. President López Obrador took office on December 1, 2018, replacing President Enrique Peña Nieto, a member of the Institutional Revolutionary Party. On December 20, 2019, the Mexican Government established a regulatory framework that will allow thePartido Revolucionario InstitucionalInstituto Nacional Electoral (Institutional Revolutionary Party,(National Electoral Institute, or PRI), President-elect. Mr. Enrique PeñINE) to convene a Nieto took office on December 1, 2012 and his term will expire on November 30, 2018. From 1929 to 1994, the PRI won all presidential elections, and, from 1929 until July 1997, the PRI held a majorityrecall referendum of the seats in both chamberspresidency at the request of citizens equivalent to at least three percent of those registered on the nominal list of voters. The recall referendum can only be requested once per presidential term and must be during the three months after the third year of the Mexican Congress. From 1929 until 1989,President’s term. For the PRI also won allrecall referendum to be valid, at least forty percent of the state gubernatorial elections. In July 2000,people registered on the candidate from theAlianza por el Cambio (Alliance for Change), a coalitionnominal list of voters must participate, and it must be approved by an absolute majority.
Mexico’s federal judicial branch (the Federal Judiciary) consists of thePartido AccióSuprema Corte de Justicia de la Nación Nacional (National Action Party, or PAN)(Supreme Court), the oldest opposition party inTribunales Colegiados de Circuito(Circuit Courts), the country,Juzgados de Distrito(DistrictCourts) and thePartido Verde EcologistaConsejo de Méxicola Judicatura Federal (Ecological Green Party), won(Council of the presidential election. Federal Judiciary). The Supreme Court iscomposed of eleven justices who serve fifteen-year staggered terms. Each Supreme Court justice is appointed byatwo-thirds majority vote of Mexico’s 31 statesthe Senate from a pool of three candidates nominated by the President. Every fouryears, the members of the Supreme Court elect a Chief Justice from among themselves, who cannot be reelected forthe immediately following term. The Council of the Federal Judiciary is headedin charge of administration, oversight anddiscipline of the Federal Judiciary’s personnel. It is composed of seven members. It is presided over by a state governor. Mexico’s Federal District, Mexico City, is headed by an elected mayor.one of itsmembers, the Chief Justice of the Supreme Court. Legislative authority is vested in the Mexican Congress, which is composed of the SenateSenado de la República(Senate) and the Chamber of Deputies. Under the Mexican Constitution, the President of Mexico may veto bills and Congress may override such vetoes with atwo-thirds majority vote of each chamber. 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. The Senate is composed of 128 members, 96 of whom are elected directly, while the other 32 are electedolder or through a proportional representation system. Under that system, a political party will nominate candidates to serve as federal deputies or senators on ordered nomination lists. Legislative seats are allocated to a political party, in the order specified in its nomination lists, based on the proportion of proportional representation.the votes cast for that political party during the relevant election, so long as that party receives at least three percent of the national vote, among other requirements. The Chamber of Deputies is composed of 500 members, 300 of whom 300 are elected directly by voters in national electoralcongressional districts whileand the other 200 are elected through a system of proportional representation. Under thisthe proportional representation system, seatssystem. The Senate is composed of 128 members, of whomninety-six are allocated to political party representatives based onelected directly and the proportion ofotherthirty-two are elected through the votes cast for those parties that receive at least 3.0% of the national vote, among other requirements. The Mexican Constitution provides that the President may veto bills and that the Mexican Congress may override such vetoes with atwo-thirds majority vote of each chamber.
Senatorsproportional representation system. Once elected, senators serve asix-year term and deputies serve a three-year term. Federal deputies are eligible for immediate reelection for up to fourone additionalsix-year term. Federal deputies serve a three-year term periods and senators are eligible for immediate reelection for up to two term periods.three additional terms. Congressional elections for all 128 Senate seats and all 500 Chamber of Deputies seats inwere last held on July 1, 2018. The next election for the Chamber of Deputies were lastwill be held on June 7, 2015. 6, 2021. The next election for the Senate, which will coincide with an election for the Chamber of Deputies, will be held on June 2, 2024.
The following table provides the distribution, as of December 31, 2015January 3, 2020, of Congressional seats reflecting certainpost-election changes in the party affiliations of certainMexico’s senators and deputies. | | | | | | | | | | | | | | | | | Party Representation in the Mexican Congress(1) | | | | | | | Senate | | | Chamber of Deputies | | | | Seats | | | % of Total | | | Seats | | | % of Total | | MORENA Party | | | 60 | | | | 46.9 | % | | | 257 | | | | 51.4 | % | National Action Party | | | 24 | | | | 18.8 | | | | 78 | | | | 15.6 | | Institutional Revolutionary Party | | | 14 | | | | 10.9 | | | | 46 | | | | 9.2 | | Citizen Movement Party | | | 9 | | | | 7.0 | | | | 27 | | | | 5.4 | | Labor Party | | | 6 | | | | 4.7 | | | | 36 | | | | 7.2 | | Ecological Green Party of Mexico | | | 7 | | | | 5.5 | | | | 13 | | | | 2.6 | | Social Encounter Party | | | 4 | | | | 3.1 | | | | 27 | | | | 5.4 | | Democratic Revolution Party | | | 3 | | | | 2.3 | | | | 11 | | | | 2.2 | | Unaffiliated | | | 1 | | | | 0.8 | | | | 5 | | | | 1.0 | | | | | | | | | | | | | | | | | | | Total | | | 128 | | | | 100.0 | % | | | 500 | | | | 100.0 | % | | | | | | | | | | | | | | | | | |
Note: Numbers may not total due to rounding. (1) | As of April 21, 2020. Individual members of Congress may change party affiliations. |
Party RepresentationSource: Senate and Chamber of Deputies.
On July 12, 2019, the Mexican Government published the Plan Nacional de Desarrollo 2019-2024 (National Development Plan, or Plan) in the Mexican CongressOfficial Gazette of the Federation, a five-year plan that establishes the main goals and objectives of President López Obrador during his term. The National Development Plan includes, among other goals, the eradication of corruption in public administration, the promotion of economic welfare for the population with attention to the poorest and most vulnerable groups, the reduction of insecurity, delinquency and violence through a prevention-focused strategy, the promotion of participatory democracy and the establishment of foreign policy basedon non-intervention, self-determination, cooperation for development, peaceful resolution of conflicts through dialogue and rejection of violence and war and respect for human rights. Overall, the Plan prioritizes a policy of “republican” austerity with strict compliance with the legal order and the separation of powers. | | | | | | | | | | | | | | | | | | | Senate | | | Chamber of Deputies | | | | Seats | | | % of Total | | | Seats | | | % of Total | | | | | | | Institutional Revolutionary Party | | | 55 | | | | 43.0 | % | | | 208 | | | | 41.6 | % | National Action Party | | | 38 | | | | 29.7 | | | | 109 | | | | 21.8 | | Democratic Revolution Party | | | 18 | | | | 14.1 | | | | 60 | | | | 12.0 | | Ecological Green Party of Mexico | | | 7 | | | | 5.5 | | | | 42 | | | | 8.4 | | Social Encounter Party | | | 0 | | | | 0 | | | | 9 | | | | 1.8 | | Labor Party | | | 7 | | | | 5.5 | | | | 0 | | | | 0 | | Citizen Movement Party | | | 0 | | | | 0.0 | | | | 24 | | | | 4.8 | | New Alliance Party | | | 0 | | | | 0.0 | | | | 11 | | | | 2.2 | | Unaffiliated National Regeneration Movement (New) | |
| 2
0 |
| |
| 1.6
0 |
| |
| 1
36 |
| |
| 0.2
7.2 |
| | | | | | | | | | | | | | | | | | Total | | | 127 | | | | 99.4 | % | | | 500 | | | | 100.0 | % | | | | | | | | | | | | | | | | | |
Note: | Numbers may not total due to rounding. According to official sources, there is one vacant seat in the Senate. |
Source: | Senate and Chamber of Deputies. |
The Economy General
According to World Bank data, the Mexican economy, as measured by 2015 gross domestic product (GDP) (at current prices in U.S. dollars), is the 15th largest in the world. The Mexican economy had a real GDP of Ps. 14,110.1 billion in 2015 and an increase in GDP of Ps. 1,335.9 billion between 2011 and 2015.
Gross Domestic Product The following table setstables set forth the percentage change in Mexico’s real GDP by economic sector, in pesos and in percentage terms, for the periods indicated. Real GDP Growth by Sector (% change against prior years)Percent Change Against Prior Year)(1) | | | 2011 | | 2012 | | 2013 | | 2014 | | 2015 | | 2016(2) | | | 2015 | | 2016 | | 2017 | | 2018(2) | | 2019(2) | | GDP (constant 2008 prices) | | | 4.0 | % | | 4.0 | % | | 1.4 | % | | 2.2 | % | | 2.6 | % | | 2.4 | % | | Primary activities: | | | | | | | | | | | | | | GDP (constant 2013 prices) | | | | 3.3 | % | | 2.9 | % | | 2.1 | % | | 2.1 | % | | (0.2 | )% | Primary Activities: | | | | | | | | | | | | Agriculture, forestry, fishing, hunting and livestock(3) | | | (2.3 | ) | | 7.4 | | | 0.9 | | | 4.2 | | | 1.5 | | | 4.1 | | | | 2.1 | | | 3.5 | | | 3.4 | | | 2.4 | | | 1.9 | | Secondary Activities: | | | | | | | | | | | | | | | | | | | | | | | Mining | | | (0.4 | ) | | 0.9 | | | (0.1 | ) | | (1.5 | ) | | (4.6 | ) | | (6.4 | ) | | | (4.4 | ) | | (4.3 | ) | | (8.3 | ) | | (5.7 | ) | | (5.1 | ) | Utilities | | | 6.9 | | | 2.1 | | | 0.5 | | | 8.2 | | | 2.3 | | | 3.3 | | | | 1.7 | | | 0.1 | | | (0.4 | ) | | 7.5 | | | 2.3 | | Construction | | | 4.1 | | | 2.5 | | | (4.8 | ) | | 2.0 | | | 2.5 | | | 1.8 | | | | 2.4 | | | 1.9 | | | (0.9 | ) | | 0.5 | | | (5.0 | ) | Manufacturing | | | 4.6 | | | 4.1 | | | 1.2 | | | 4.1 | | | 2.5 | | | 1.3 | | | | 3.0 | | | 1.6 | | | 3.0 | | | 1.8 | | | 0.2 | | Tertiary Activities: | | | | | | | | | | | | | | | | | | | | | | | Wholesale and retail trade | | | 9.7 | | | 4.8 | | | 2.2 | | | 3.1 | | | 4.7 | | | 2.4 | | | | 4.4 | | | 2.9 | | | 3.6 | | | 3.0 | | | (0.2 | ) | Transportation and warehousing | | | 4.0 | | | 4.1 | | | 2.4 | | | 3.2 | | | 4.3 | | | 2.8 | | | | 4.2 | | | 2.9 | | | 4.1 | | | 3.2 | | | 0.8 | | Information | | | 4.4 | | | 16.3 | | | 5.0 | | | 0.2 | | | 7.8 | | | 10.1 | | | | 16.9 | | | 19.5 | | | 8.4 | | | 5.4 | | | 1.4 | | Finance and insurance | | | 7.1 | | | 7.7 | | | 10.4 | | | (0.9 | ) | | 4.3 | | | 7.7 | | | | 14.8 | | | 12.2 | | | 5.8 | | | 5.0 | | | (0.2 | ) | Real estate, rental and leasing | | | 2.9 | | | 2.5 | | | 1.0 | | | 2.0 | | | 2.5 | | | 1.9 | | | | 2.5 | | | 2.0 | | | 1.6 | | | 1.7 | | | 1.2 | | Professional, scientific and technical services | | | 5.1 | | | 1.1 | | | 1.2 | | | 1.7 | | | 4.2 | | | 7.0 | | | | 4.2 | | | 7.5 | | | (0.4 | ) | | 1.9 | | | 1.3 | | Management of companies and enterprises | | | 3.6 | | | 8.6 | | | (1.8 | ) | | 7.2 | | | 3.5 | | | 4.7 | | | | 4.3 | | | (0.2 | ) | | 1.5 | | | 6.1 | | | (3.7 | ) | Administrative support, waste management and remediation services | | | 6.0 | | | 4.4 | | | 4.3 | | | (0.2 | ) | | 1.2 | | | 4.1 | | | | 1.3 | | | 4.3 | | | 5.9 | | | 4.5 | | | 4.9 | | Education services | | | 1.6 | | | 2.2 | | | 0.8 | | | 0.1 | | | 0.0 | | | 1.0 | | | | (0.1 | ) | | 1.0 | | | 1.2 | | | 0.5 | | | (1.1 | ) | Health care and social assistance | | | 2.1 | | | 2.2 | | | 0.6 | | | (0.6 | ) | | (2.3 | ) | | 1.3 | | | | (1.8 | ) | | 2.8 | | | 1.4 | | | 3.0 | | | 0.3 | | Arts, entertainment and recreation | | | (0.7 | ) | | 2.9 | | | 3.4 | | | (1.5 | ) | | 3.8 | | | 5.7 | | | | 4.1 | | | 3.9 | | | 2.0 | | | 3.2 | | | (1.0 | ) | Accommodation and food services | | | 1.5 | | | 5.4 | | | 1.8 | | | 2.9 | | | 5.8 | | | 3.8 | | | | 7.5 | | | 3.6 | | | 4.2 | | | 2.1 | | | 1.0 | | Other services (except public administration) | | | 1.9 | | | 3.3 | | | 2.1 | | | 1.6 | | | 2.7 | | | 5.8 | | | | 2.5 | | | 2.4 | | | (0.2 | ) | | 1.3 | | | 1.1 | | Public administration | | | (1.4 | ) | | 3.7 | | | (0.5 | ) | | 1.9 | | | 2.7 | | | 0.0 | | | | 2.2 | | | 0.1 | | | 0.2 | | | 3.3 | | | (2.4 | ) |
Note: | Numbers may not total due to rounding. |
Note: Numbers may not total due to rounding. (1) | Based on GDP calculated in constant 2008 pesos.pesos with purchasing power as of December 31, 2013. |
(3) | GDP figures relating to agricultural production set forth in this table and elsewhere herein are based on figures for “agricultural years,” with the definition of the relevant “agricultural year” varying from crop to crop based on the season during which it is grown. Calendar year figures are used for the other components of GDP. |
Source: INEGI. According to preliminary figures, Mexico’s GDP increaseddecreased by 2.4%0.2% in real terms during 2016 as compared2019. This reflects the moderate persistent downward trajectory that economic activity in Mexico has been showing for several quarters. In particular, the economic performance during the last quarter of 2019 was the result of the unfavorable development of gross fixed investment, the quarterly decline exhibited in manufacturing exports and some loss of dynamism of private consumption. Projections for Mexico’s economic growth in 2020 and beyond will likely be further adjusted downwards to 2015. This increase was due to an increase of 4.1% in the primary activities sector as well as important increases in some tertiary activities such as 10.1% in information, 7.7% in finance and insurance, 7.0% in professional, scientific and technical services and 5.8% in other services (except public administration). Such increases compensatedaccount for the 6.4% decrease indisruptive economic impact of the mining sector, the only sector that contracted in 2016.COVID-19 outbreak. Employment and Labor According to preliminaryTasa de Desocupación Abierta (open unemployment rate) (Open Unemployment Rate)figures, Mexico’s unemployment rate was 3.5%3.6% as of December 31, 2016,February 29, 2020, a 0.7% decrease0.2 percentage point increase from the rate registered on December 31, 2015.2018. As of December 31, 2016,2019, the economically active population in Mexico 15fifteen years of age orand older consisted of 54.057.6 million individuals. As of April 21, 2020, the minimum wage was Ps. 185.56 per day for the Northern Border Free Trade Zone (which includes municipalities located on the border with the United States) and Ps. 123.22 per day for the rest of Mexico, which has been in effect since January 1, 2020. On January 6, 2020, in compliance with the February 24, 2017 constitutional reform relating to labor matters, theLey Orgánica del Centro Federal de Conciliación y Registro Laboral (Organic Law of the Federal Center for Labor Conciliation and Registration) was published. The law is intended to outline the organization and responsibilities of theCentro Federal de Conciliación y Registro Laboral (Federal Center for Labor Conciliation and Registration), which responsibilities include incorporating gender and human rights perspectives into management, promotion, and compensation mechanisms in the public sector. TheCOVID-19 pandemic will likely have adverse effects on employment in Mexico. Under Article 427 of Mexico’sLey Federal del Trabajo (Federal Labor Law), in the event that work is suspended, the employment relationship is suspended and employers are required to pay employees the minimum wage for each day of the suspension for up to one month. Principal Sectors of the Economy Beginning in March 2020, the economic slowdown attributable to theCOVID-19 outbreak has affected various sectors and the overall performance of Mexico’s economy. The economic impact will likely be felt across all sectors, but it is too early to determine the magnitude of its impact. Manufacturing The following table sets forthshows the change invalue of industrial manufacturing output by sector forin billions of constant 2013 pesos and the periods indicated.percentage change in total output against the prior year. Industrial Manufacturing Output Differential by Sector (% change against prior years)(1)
| | | 2011 | | 2012(2) | | 2013 | | 2014 | | 2015(2) | | 2016(2) | | | 2015 | | 2016(2) | | 2017(2) | | 2018(2) | | 2019(2) | | Food | | | 2.2 | % | | 2.6 | % | | 0.9 | % | | 0.6 | % | | 2.0 | % | | 4.7 | % | | | 2.2 | % | | 3.2 | % | | 2.0 | % | | 3.0 | % | | 1.7 | % | Beverage and tobacco products | | | 4.6 | | | 2.6 | | | (0.5 | ) | | 3.1 | | | 9.8 | | | 4.1 | | | | 5.3 | | | 7.5 | | | 1.8 | | | 5.5 | | | 2.4 | | Textile mills | | | (4.4 | ) | | 3.1 | | | (2.7 | ) | | (1.7 | ) | | 3.0 | | | (3.1 | ) | | | 5.0 | | | (0.4 | ) | | (1.5 | ) | | 1.7 | | | (4.0 | ) | Textile product mills | | | (2.9 | ) | | (0.1 | ) | | 3.5 | | | 7.0 | | | 2.3 | | | 7.7 | | | | 6.9 | | | 3.0 | | | (10.6 | ) | | 6.4 | | | (4.0 | ) | Apparel | | | 0.2 | | | (0.5 | ) | | 3.3 | | | (2.8 | ) | | 19.2 | | | (8.4 | ) | | | 4.1 | | | (1.5 | ) | | 0.6 | | | 1.2 | | | (4.7 | ) | Leather and allied products | | | (0.7 | ) | | 3.5 | | | (0.6 | ) | | (1.7 | ) | | 4.0 | | | 0.5 | | | | 1.9 | | | (1.0 | ) | | (1.2 | ) | | (1.4 | ) | | (2.1 | ) | Wood products | | | 5.1 | | | 13.0 | | | (2.2 | ) | | 1.0 | | | 0.6 | | | 0.1 | | | | 3.8 | | | (4.5 | ) | | 5.6 | | | (1.9 | ) | | 0.3 | | Paper | | | (0.8 | ) | | 4.8 | | | 2.1 | | | 3.1 | | | 3.3 | | | 2.2 | | | | 3.5 | | | 4.1 | | | 2.1 | | | 1.5 | | | (0.5 | ) | Printing and related support activities | | | 4.2 | | | (4.1 | ) | | (6.9 | ) | | (2.7 | ) | | 6.2 | | | (2.7 | ) | | | 4.1 | | | 0.0 | | | (2.1 | ) | | 8.3 | | | (10.7 | ) | Petroleum and coal products | | | (3.6 | ) | | 1.1 | | | 3.3 | | | (4.5 | ) | | 1.7 | | | (25.6 | ) | | | (7.1 | ) | | (13.1 | ) | | (18.3 | ) | | (16.9 | ) | | (2.7 | ) | Chemicals | | | (0.1 | ) | | (0.3 | ) | | 0.8 | | | (1.3 | ) | | (1.7 | ) | | (5.8 | ) | | | (3.6 | ) | | (3.0 | ) | | (1.4 | ) | | (2.7 | ) | | (1.5 | ) | Plastics and rubber products | | | 6.7 | | | 9.0 | | | (1.9 | ) | | 6.5 | | | 4.5 | | | 1.6 | | | | 5.8 | | | (0.8 | ) | | 2.9 | | | 2.6 | | | (2.1 | ) | Nonmetallic mineral products | | | 3.7 | | | 2.3 | | | (3.1 | ) | | 2.7 | | | 3.3 | | | 4.9 | | | | 6.6 | | | 0.2 | | | 2.5 | | | (1.9 | ) | | (2.5 | ) | Primary metals | | | 4.3 | | | 3.8 | | | 2.3 | | | 8.4 | | | (7.6 | ) | | 7.8 | | | | (3.6 | ) | | 1.9 | | | 1.1 | | | (1.9 | ) | | (1.7 | ) | Fabricated metal products | | | 7.0 | | | 3.9 | | | (3.3 | ) | | 7.8 | | | 2.7 | | | 8.6 | | | | 4.6 | | | 1.0 | | | 0.7 | | | 1.0 | | | (5.6 | ) | Machinery | | | 13.3 | | | 5.5 | | | 0.2 | | | 1.6 | | | (2.0 | ) | | 9.4 | | | | 1.0 | | | 0.2 | | | 8.8 | | | 1.9 | | | (1.3 | ) | Computers and electronic products | | | 6.7 | | | 0.5 | | | 3.6 | | | 11.1 | | | 9.8 | | | 5.8 | | | | 8.2 | | | 6.6 | | | 6.3 | | | 2.2 | | | 4.8 | | Electrical equipment, appliances and components | | | (1.1 | ) | | 1.7 | | | (2.0 | ) | | 8.8 | | | 7.1 | | | 4.7 | | | | 5.8 | | | 4.0 | | | 1.0 | | | 1.5 | | | (0.9 | ) | Transportation equipment | | | 16.6 | | | 13.9 | | | 5.8 | | | 12.4 | | | 8.9 | | | 3.6 | | | | 7.3 | | | 0.5 | | | 9.3 | | | 4.5 | | | 1.3 | | Furniture and related products | | | 1.2 | | | 2.8 | | | (5.8 | ) | | (1.8 | ) | | (20.6 | ) | | (9.4 | ) | | | 7.2 | | | (3.7 | ) | | (4.8 | ) | | 6.4 | | | (3.6 | ) | Miscellaneous | | | 5.1 | | | 0.4 | | | 0.0 | | | 6.4 | | | 6.0 | | | (9.4 | ) | | | 3.3 | | | 11.0 | | | 6.1 | | | 2.3 | | | 0.2 | | | | | | | | | | | | | | | | | | | Total expansion/contraction | | | 4.6 | | | 4.1 | | | 1.2 | | | 4.1 | | | 3.1 | | | 1.8 | | | | 3.0 | | | 1.6 | | | 3.0 | | | 1.8 | % | | 0.2 | % | | | | | | | | | | | | | | | | | |
(1) | Percent change against the corresponding period of the prior year. Percent change reflects differential in constant 20082013 pesos. |
Source: INEGI. Petroleum and Petrochemicals In March 2020, the price of crude oil experienced its deepest monthly drop since the global financial crisis in 2008. The Organization of the Petroleum Exporting Countries (OPEC) Reference Basket (ORB) dropped by U.S. $22, or 38.9% month-over-month, to U.S. $34 per barrel, its lowest monthly value since September 2003. The spread ofCOVID-19 infections worldwide led numerous governments to isolate cities affected by the epidemic and implement travel restrictions. The cancellation of commercial flights, the full or partial closing of many borders for travel and the constraints on the supply of goods and services resulted in a sharp reduction in the consumption of oil products. The ramifications of theCOVID-19 pandemic resulted in unprecedented worldwide oil demand shock and massive sell-offs in the global markets, amid a significant crude surplus. OPEC published a report on April 16, 2020 in which it downwardly revised its outlook for global oil demand growth to 6.8 million barrels per day in 2020, a reduction of 6.9 million barrels per day from the previous month’s estimate, reflecting both the negative impact on transportation and fossil fuels and slow global economic growth associated with the wider spread ofCOVID-19 beyond China. In addition,non-OPEC oil supply is forecast to decline by 1.5 million barrels per day, a downward revision of 3.3 million barrels per day from the previous projection. Tourism On April 2, 2020, theSecretaría de Salud (Ministry of Health) officials instructed hotels to stop making new reservations, reschedule existing ones and close fornon-essential business. Financial System Monetary Policy, Inflation and Interest Rates The Mexican Central Bank’s M1 money supply of Mexico is the summonetary aggregate consists of bills and coins held by the public, plusplus: (1) checking accounts denominated in local currency and foreign currency, pluscurrency;(2) interest-bearing deposits denominated in pesos and operated by debit cards, pluscards; and (3) savings and loan deposits. M2 consists of M1, plus: (1) bank deposits; (2) Mexican Government-issued securities; (3) securities issued by firmsand non-bank financial intermediaries; and (4) Mexican Government and INFONAVIT liabilities related to the Retirement Savings System. M3 consists of M2, plus financial assets issued in Mexico and held bynon-residents. M4 consists of M3, plus deposits abroad at foreign branches and agencies of Mexican banks. The following table shows Mexico’s M1 and M4 money supply aggregates at each of the dates indicated. The data in this table was calculated in accordance with the methodology for calculating money supply aggregates adopted on January 31, 2018 to reflect the Monetary and Financial Statistics Manual and Compilation Guide published by the International Monetary Fund (IMF) in 2016 and applied to all historical figures from December 31, 2000. Money Supply | | | December 31, | | | | | | | | | | | | | | 2012 | | 2013 | | 2014 | | 2015 | | 2016(1) | | | 2015 | | | 2016 | | | December 31, 2017 | | | 2018(1) | | | 2019(1) | | | | (in millions of nominal pesos) | | | (in millions of nominal pesos) | | M1: | | | | | | | | | | | | | | | | | | | | | Bills and coins | | Ps.734,034 | | | Ps.792,928 | | | Ps.928,777 | | | Ps.1,088,016 | | | Ps.1,263,001 | | | Ps. | 1,087,271 | | | Ps. | 1,261,697 | | | Ps. | 1,372,884 | | | Ps. | 1,494,949 | | | Ps. | 1,548,852 | | Checking deposits | | | | | | | | | | | | | | | | | | | | | In domestic currency | | 979,413 | | | 1,082,702 | | | 1,170,381 | | | 1,301,904 | | | 1,475,985 | | | | 1,299,508 | | | | 1,472,683 | | | | 1,630,910 | | | | 1,710,671 | | | | 1,734,707 | | In foreign currency | | 163,611 | | | 189,020 | | | 232,467 | | | 333,094 | | | 469,185 | | | | 333,094 | | | | 469,185 | | | | 537,826 | | | | 505,663 | | | | 468,212 | | Interest-bearing peso deposits | | 393,231 | | | 438,012 | | | 534,973 | | | 614,312 | | | 648,032 | | | | 614,312 | | | | 647,414 | | | | 702,744 | | | | 757,136 | | | | 925,791 | | Savings and loan deposits | | 9,760 | | | 11,097 | | | 12,598 | | | 14,560 | | | 16,614 | | | | 14,560 | | | | 17,332 | | | | 19,635 | | | | 23,797 | | | | 24,473 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total M1 | | Ps.2,280,049 | | | Ps.2,513,758 | | | Ps.2,879,196 | | | Ps.3,351,975 | | | Ps. 3,872,817 | | | Ps. | 3,348,743 | | | Ps. | 3,868,311 | | | Ps. | 4,264,018 | | | Ps. | 4,492,216 | | | Ps. | 4,702,035 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | M4 | | Ps.10,684,898 | | | Ps.11,658,729 | | | Ps.13,107,550 | | | Ps.13,858,271 | | | Ps.14,969,884 | | | Ps. | 10,127,696 | | | Ps. | 10,818,147 | | | Ps. | 11,705,820 | | | Ps. | 12,262,977 | | | Ps. | 13,190,039 | |
Note: | Numbers may not total due to rounding. |
Note: Numbers may not total due to rounding. Source: | Banco de México.figures. |
Source: Banco de México. Inflation During 2016,2019, consumer inflation was 3.4%2.8%, which was abovebelow Mexican Central Bank’s 3.0%(+/- 1.0%) target inflation for the 3.0%year, 2.0 percentage points lower than the 4.8% consumer inflation for 2018 and 3.9 percentage points lower than the 6.8% consumer inflation for 2017. This trend was mainly due to the reduction ofnon-core inflation due to lower annual growth rates of agriculture and livestock and energy product prices. The average annual level ofnon-core inflation in the fourth quarter of 2019 was the lowest for a quarter on record since 1969, the year theÍndice Nacional de Precios al Consumidor (National Consumer Price Index, or INPC) began reporting data. In contrast, annual core inflation, which better reflects medium-term price pressures on the economy, remained higher than target inflation for the year and 1.3was 3.6%, 0.1 percentage points higherpoint lower than the 2.1% consumer3.7% core inflation for 2015. According toBanco de México, inflation was in the higher range of the expected deviation(+/-1.0%) from the 3.0% target due mostly to a depreciation in the Mexican peso given the complicated external environment after the presidential election in the United States and inflation associated with the price increases in some agricultural products as well as in certain energy products, as was the case with gasoline in the northern border.2018. The following table shows, in percentage terms, the changes in price indices and annual increases in the minimum wage for the periods indicated. ChangesRates of Change in Price Indices
| | | | | | | | | | | | | | | National Producer Price Index(1)(2) | | | National Consumer Price Index(1) | | | Increase in Minimum Wage | | 2011 | | | 6.9 | | | | 3.8 | | | | 4.1 | | 2012 | | | 1.8 | | | | 3.6 | | | | 4.6 | | 2013 | | | 1.6 | | | | 4.0 | | | | 3.9 | | 2014 | | | 3.3 | | | | 4.1 | | | | 3.9 | | 2015 | | | 2.8 | | | | 2.1 | | | | 6.9 | | 2016 | | | 8.5 | | | | 3.4 | | | | 4.2 | |
| | | | | | | | | | | National Consumer Price Index(1)(2) | | | National Producer Price Index(1)(3)(4)(5) | | 2015 | | | 2.1 | | | | 2.8 | | 2016 | | | 3.4 | | | | 8.5 | | 2017 | | | 6.8 | | | | 4.7 | | 2018 | | | 4.8 | | | | 6.4 | | 2019 | | | 2.8 | | | | 0.8 | | 2020: | | | | | | | | | January | | | 3.2 | | | | 1.1 | | February | | | 3.7 | | | | 1.5 | | March | | | 3.3 | | | | 3.7 | |
(1) | For annual figures, changes in price indices are calculated each December. |
(2) | National Consumer Price Index takes the second half of July 2018 as a base date. |
(3) | National Producer Price Index figures represent the changes in the prices for basic merchandise and services (excluding oil prices). The index is based on a methodology implemented in June 2012. |
(4) | Preliminary figures for 2019 and 2020. |
(5) | National Producer Price Index takes July 2019 as a base date. |
Sources: INEGI; Ministry of Labor. Interest Rates During 2016,2019, interest rates on28-dayCetes averaged 4.2%7.8%, as compared to 3.0% during 2015.7.6% in 2018. Interest rates on91-dayCetes averaged 4.4%,7.9% in 2019, as compared to 3.1% during 2015.7.8% in 2018. On March 9, 2017,April 16, 2020, the28-dayCetes rate was 6.3%6.0% and the91-dayCetes rate was 6.5%6.0%. On February 13, 2020, the Mexican Central Bank held its first monetary policy meeting of 2020 and reduced theTasa de Fondeo Bancario (overnight interbank funding rate) by twenty-five basis points, bringing the rate to 7.00%. This decision considered external risks, such asCOVID-19, that could affect the performance of Mexico’s financial and energy markets and the generally stagnant economic activity in Mexico over the past few quarters, with the goal of strengthening Mexico’s future long-term growth. On March 20, 2020, the Mexican Central Bankadvanced its monetary policy decision scheduled for March 26, 2020 and reduced the overnight interbank funding rate by fifty basis points to 6.50%. It also reduced the monetary regulation deposit required for private banks by U.S. $2.1 billion and lowered the rate on its additional ordinary liquidity facility. These decisions took into account the complex global economic situation and the rapid spread ofCOVID-19, which has severely affected the growth prospects of the world economy and has led to a significant deterioration in global financial conditions. The Mexican Central Bankalso pointed to a marked decrease in the prices of raw materials, especially crude oil. Exchange Controls and Foreign Exchange Rates On March 15, 2017,19, 2020, the Mexican Central Bank and the U.S. Federal Reserve established a temporary U.S. dollar liquidity swap line arrangement in an amount up to U.S. $60 billion as a liquidity backstop to mitigate strains in the global funding markets. The peso appreciated against the dollar during 2019. Factors contributing to this appreciation included: (i) the greater risk appetite among investors as a result of a more accommodative monetary policy stance in the United States in October 2019; (ii) the signing of “Phase 1” of the trade agreement between the United States and China; and (iii) the ratification of the United States-Mexico-Canada Agreement (USMCA) by the United States. On April 20, 2020, the peso/dollar exchange rate closed at Ps. 19.580324.0077 = U.S. $1.00, a 5.2% appreciation27.3% depreciation in dollar terms as compared to the rate on December 31, 2016.2019. The peso/U.S. dollar exchange rate announcedpublished by Banco de México the Mexican Central Bank on March 14, 2017April 20, 2020 (which took effect on the second business day thereafter) was Ps. 19.688023.9250 = U.S. $1.00. Securities Markets The BMVBolsa Mexicana de Valores (Mexican Stock Exchange, or BMV) is the onlylargest 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, theThe BMV was transformed from asociedad anónima de capital variable (private company) tois asociedad anónima bursátil de capital variable (public company)(Public Company). In connection with the initial public offering of shares, certain of the former stockholders of the BMV (banks and brokerage houses) created a control trust into which they deposited more than 50% of the issued and outstanding shares of the BMV, 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, 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 linkedinstruments. On August 29, 2017, as part of its program to develop the dollar. Currently, institutional investors areMexican securities market, the most active participantsMinistry of Finance and Public Credit published a concession for a new stock exchange. The newBolsa Institucional de Valores (Institutional Stock Exchange, or BIVA) began operations on July 25, 2018. The Institutional Stock Exchange is asociedad anónima de capital variable(private company). As of December 2018, the Institutional Stock Exchange reported 7.8% market participation and Ps. 24,004.3 million in the BMV, 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.listed securities. The BMV publishesOn April 20, 2020, theÍndice de Precios y Cotizaciones (Stock Market Index, or the IPC), which is calculated based on a group of the thirty-five most actively traded shares.
At March 14, 2017, the IPCshares, stood at 47,088.034,477 points, representing a 3.2% increase20.8% decrease from the level at December 30, 2016.31, 2019.
Foreign Trade and Balance of Payments Foreign Trade The following table provides information about the value of Mexico’s merchandise exports and imports (excluding tourism) for the periods indicated. Exports and Imports | | | 2012 | | | 2013 | | 2014 | | 2015 | | 2016(1) | | | 2015 | | 2016 | | 2017 | | 2018(1) | | 2019(1) | | | | (in millions of dollars, except average price of the Mexican crude oil mix) | | | (in millions of U.S. dollars, except average price of the Mexican crude oil mix) | | Merchandise exports (f.o.b.) | | | | | | | | | | | | | | | | | | | | | Oil and oil products | | $ | 52,956 | | | $ | 49,482 | | | $ | 42,586 | | | $ | 23,173 | | | $ | 18,743 | | | U.S. $ | 23,100 | | | U.S. $ | 18,825 | | | U.S. $ | 23,725 | | | U.S. $ | 30,601 | | | U.S. $ | 25,985 | | Crude oil | | | 46,852 | | | | 42,712 | | | 35,855 | | | 18,524 | | | 15,500 | | | | 18,451 | | | 15,582 | | | 20,047 | | | 26,512 | | | 22,552 | | Other | | | 6,103 | | | | 6,770 | | | 6,731 | | | 4,648 | | | 3,243 | | | | 4,648 | | | 3,243 | | | 3,678 | | | 4,089 | | | 3,433 | | Non-oil products | | | 317,814 | | | | 330,534 | | | 354,542 | | | 357,450 | | | 355,187 | | | | 357,451 | | | 355,123 | | | 385,707 | | | 420,083 | | | 435,131 | | Agricultural | | | 10,914 | | | | 11,246 | | | 12,181 | | | 12,971 | | | 14,743 | | | | 13,126 | | | 14,845 | | | 16,000 | | | 16,508 | | | 18,106 | | Mining | | | 4,906 | | | | 4,714 | | | 5,064 | | | 4,505 | | | 4,368 | | | | 4,505 | | | 4,368 | | | 5,427 | | | 6,232 | | | 6,189 | | Manufactured goods(2) | | | 301,993 | | | | 314,573 | | | 337,297 | | | 339,975 | | | 336,076 | | | | 339,821 | | | 335,911 | | | 364,280 | | | 397,344 | | | 410,836 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total merchandise exports | | | 370,770 | | | | 380,015 | | | 397,129 | | | 380,623 | | | 373,930 | | | | 380,550 | | | 373,948 | | | 409,433 | | | 450,685 | | | 461,116 | | Merchandise imports (f.o.b.) | | | | | | | | | | | | | | | | | | | | | Consumer goods | | | 54,272 | | | | 57,329 | | | 58,299 | | | 56,279 | | | 51,950 | | | | 56,280 | | | 51,951 | | | 57,338 | | | 63,118 | | | 61,168 | | Intermediate goods(2) | | | 277,911 | | | | 284,823 | | | 302,031 | | | 297,253 | | | 294,994 | | | | 297,714 | | | 295,400 | | | 322,039 | | | 355,297 | | | 352,340 | | Capital goods | | | 38,568 | | | | 39,057 | | | 39,647 | | | 41,700 | | | 40,120 | | | | 41,240 | | | 39,719 | | | 41,017 | | | 45,887 | | | 41,787 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total merchandise imports | | | 370,752 | | | | 381,210 | | | 399,977 | | | 395,232 | | | 387,065 | | | | 395,234 | | | 387,070 | | | 420,395 | | | 464,302 | | | 455,295 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trade balance | | $ | 18 | | | $ | (1,195 | ) | | $ | (2,849 | ) | | $ | (14,609 | ) | | $ | (13,135 | ) | | U.S. $ | (14,684 | ) | | U.S. $ | (13,122 | ) | | U.S. $ | (10,962 | ) | | U.S. $ | (13,618 | ) | | U.S. $ | 5,820 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Average price of Mexican oil mix(3) | | $ | 102.0 | | | $ | 98.4 | | | $ | 86.0 | | | $ | 43.1 | | | $ | 35.6 | | | U.S. $ | 43.12 | | | U.S. $ | 35.65 | | | U.S. $ | 46.79 | | | U.S. $ | 61.52 | | | U.S. $ | 55.55 | |
Note: | Numbers may not total due to rounding. |
Note: Numbers may not total due to rounding. (2) | Includes thein-bond industry. |
(3) | In U.S. dollars per barrel. |
Source: | Banco de México / PEMEX. |
During 2016, total merchandise exports decreasedSource: Banco de México/PEMEX.
The global economic slowdown and disruptions in global supply chains, especially with respect to manufactured goods, attributable to theCOVID-19 outbreak are likely to have an adverse effect on Mexico’s foreign trade performance. Foreign Trade Relations and Agreements On December 10, 2019, representatives of Mexico, the United States and Canada signed the Protocolo Modificatorio del Tratado entre México, Estados Unidos y Canadá (Protocol Modifying the Treaty between Mexico, the United States and Canada,or T-MEC). The Modifying Protocol includes changes to provisions in the USMCA related to labor, the environment and dispute resolution. The USMCA, as modified by 1.8% as compared to 2015 while total merchandise imports decreasedthe Modifying Protocol, has now been ratified by 2.1%. The trade balance for 2016 registeredthe legislatures of the three countries. NAFTA remains in effect pending notification by all three countries that all internal procedures have been completed and a deficit of U.S. $13.1 billion as compared tothree month waiting period. On January 16, 2020, the U.S. $14.6 billion deficit registered in 2015. This deficit was a resultSenate ratified the USMCA. On March 13, 2020 Canada’s House of Commons and Senate unanimously approved ratification of the combinationUSMCA and the Governor General of a decrease in both merchandise exports (especially oilCanada signed the Royal Consent, thereby concluding the Canadian approval process. As of March 20, 2020, the U.S. and oil products, which decreased by 19.1% in nominal terms) and merchandise imports (especially consumer goods, which decreased by 7.7% in nominal terms).Mexico agreed to temporarily close the border tonon-essential travel to curb the spread of the coronavirus. Balance of Payments and International PaymentsReserves During 2016,In 2019, Mexico’s current account registered a deficit of 0.2% of GDP, or U.S. $27.9$2.4 billion, a decrease from the current account deficit in 2018 of 1.9% of GDP, or U.S. $23.0 billion. The decrease in the current account deficit, as compared to a deficit of U.S. $33.3 billion in 2015, which2018, was the result of a combination of a deficit in the balance of goods and services and a surplus in the balance of transfers. The capital account registered a surplus of U.S. $35.3 billion in 2016, as comparedprincipally due to a surplussignificant expansion of U.S. $36.8 billion in 2015. Foreign direct investment in Mexico totaled U.S. $26.7 billion in 2016,income from goods other than oil, as compared to U.S. $33.2 billion in 2015. This decrease was mainly due to loanswell as higher income from travel and debt reduction between subsidiaries and their parent companies.
The Mexican Government has announced that it will gradually remove price controls on gasoline and diesel over the course of 2017 and 2018 as part of the liberalization of fuel prices in Mexico. On December 27, 2016, the Ministry of Finance and Public Credit announced an increase, effective January 1, 2017, in the maximum
gasoline and diesel prices to be applied in certain regions of Mexico, which caused an increase of gasoline prices of up to 20% in those areas. The removal of price controls and the resulting price increases have led to widespread protests across Mexico. Mexico cannot predict the effect of changes in gasoline and diesel prices, and any related political and social unrest, on the Mexican economy or whether the Mexican Government may alter its strategy for price liberalization in the future.remittances.
The following table sets forthBanco de México’s the Mexican Central Bank’s international reserves and net international assets at the end of each period indicated. International Reserves and Net International Assets(3)(1) | | | | | | | | | Year | | End-of-Period International Reserves(1)(2) | | | End-of-Period Net International Assets | | | | (in millions of dollars) | | 2012 | | $ | 163,515 | | | $ | 167,082 | | 2013 | | | 176,522 | | | | 180,232 | | 2014 | | | 193,239 | | | | 195,714 | | 2015 | | | 176,735 | | | | 177,629 | | 2015 | | | 176,735 | | | | 177,629 | | 2016(4) | | | 176,542 | | | | 178,057 | |
| | | | | | | | | | | End-of-Period International Reserves(2)(3) | | | End-of-Period Net International Assets | | | | (in millions of U.S dollars) | | 2015 | | U.S. $ | 176,735 | | | U.S. $ | 177,629 | | 2016 | | | 176,542 | | | | 178,057 | | 2017 | | | 172,802 | | | | 175,479 | | 2018 | | | 174,609 | | | | 176,096 | | 2019(4) | | | 180,750 | | | | 184,212 | | 2020(4) | | | | | | | | | January | | | 182,796 | | | | 189,186 | | February | | | 184,250 | | | | 188,438 | | March | | | 185,509 | | | | 189,347 | |
(1) | Includes gold, Special Drawing Rights (international reserve assets created by the IMF) and foreign exchange holdings. |
(2) | “International reserves” are equivalent to: (a) gross international reserves, minus (b) international liabilities ofBanco de México with maturities of less than six months. |
(3) | “Net international assets” are defined as: (a) gross international reserves, plus (b) assets with maturities greater than six months derived from credit agreements with central banks, less (x) liabilities outstanding to the IMF and (y) liabilities with maturities of less than six months derived from credit agreements with central banks. |
(2) | Includes gold, Special Drawing Rights (international reserve assets created by the IMF) and foreign exchange holdings. |
(3) | “International reserves” are equivalent to: (a) gross international reserves, minus (b) international liabilities of the Mexican Central Bankwith maturities of less than six months. |
Source: Banco de México. Public Finance Fiscal Policy2020 United Mexican States Budget
ThePrograma Nacional de Financiamiento del Desarrollo 2013-2018 (National Program to Finance Development 2013-2018, or PRONAFIDE), which was announced on December 16, 2013, establishes the Mexican Government’s fiscal policy goals. These goals include securing sufficient fiscal resources to strengthen social infrastructure and productivity. To this end, PRONAFIDE has outlined several specific objectives, including the promotion of economic development and macroeconomic stability on a federal and state level, as well as the improvement of the financial system to generate additional resources and to transform it into a simpler, more progressive and transparent system through spending efficiency and the facilitation of access to financial services. 2016 UMS Budget and Fiscal Results
On September 8, 2015, the President of Mexico submitted the proposed 2016 2020 Revenue Law andwas approved by the proposed 2016 Expenditure Budget to Congress for its approval. The 2016 Revenue Law and the 2016 Expenditure Budget were approvedChamber of Deputies on October 29, 201518, 2019, and November 13, 2015,by the Senate on October 25, 2019 and werewas published in the Official Gazette of the Federation on November 25, 2019. The 2020 Expenditure Budget was approved by the Chamber of Deputies on November 21, 2019 and was published in the Official Gazette on December 11, 2019.
2019 United Mexican States Budget On December 15, 2018, the Ministry of Finance and Public Credit submitted to Congress (i) the proposed Federal Revenue Law for 2019 and (ii) the proposedFederal Expenditure Budget for 2019 (and together with the Federal Revenue Law for 2019, the 2019 Budget). The Federal Revenue Law for 2019 was approved by the Chamber of Deputies on December 18, 20152018, and November 27, 2015, respectively. We refer to these two bills together as Mexico’s 2016 budget (the 2016 UMS Budget).by the Senate on December 20, 2018 and was published in the Official Gazette on December 28, 2018. The Federal Expenditure Budget for 2019 was approved by the Chamber of Deputies on December 23, 2018 and was published in the Official Gazette on December 28, 2018. The following table illustratespresents the composition of public sector budgetary revenues for the fiscal years 2015 and 2016periods indicated in constant 2008billions of pesos. 2016 Public Sector Budgetary Revenues
| | | First six months of 2015(1) | | | First six months of 2016(1) | | | 2016 Budget(2) | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019(2) | | | 2019 Budget(3) | | | 2020 Budget(3) | | | | (in billions of constant pesos)(3) | | | (in billions of pesos)(1) | | Budgetary revenues | | | 2,046.3 | | | | 2,339.2 | | | | 4,154.6 | | | | 4,267.0 | | | | 4,845.5 | | | | 4,947.6 | | | | 5,115.1 | | | | 5,384.3 | | | | 5,298.2 | | | | 5,523.3 | | Federal government | | | 1,582.5 | | | | 1,868.5 | | | | 3,102.4 | | | Federal Government | | | | 3,180.1 | | | | 3,571.3 | | | | 3,838.1 | | | | 3,871.6 | | | | 4,006.1 | | | | 3,952.4 | | | | 4,084.1 | | Taxes | | | 1,225.7 | | | | 1,393.2 | | | | 2,407.7 | | | | 2,366.5 | | | | 2,716.2 | | | | 2,849.5 | | | | 3,062.3 | | | | 3,202.7 | | | | 3,311.4 | | | | 3,505.8 | | Income tax | | | 659.2 | | | | 763.5 | | | | 1,244.2 | | | | 1,222.5 | | | | 1,420.7 | | | | 1,565.9 | | | | 1,664.2 | | | | 1,686.6 | | | | 1,751.8 | | | | 1,852.6 | | Value-added tax | | | 346.3 | | | | 373.8 | | | | 742.0 | | | | 707.2 | | | | 791.7 | | | | 816.0 | | | | 922.2 | | | | 933.3 | | | | 995.2 | | | | 1,007.5 | | Excise taxes | | | 180.5 | | | | 211.8 | | | | 348.9 | | | | 354.3 | | | | 411.4 | | | | 367.8 | | | | 347.4 | | | | 460.5 | | | | 437.9 | | | | 515.7 | | Import duties | | | 19.7 | | | | 23.5 | | | | 36.3 | | | | 44.1 | | | | 50.6 | | | | 52.3 | | | | 65.5 | | | | 64.7 | | | | 70.3 | | | | 71.0 | | Tax on the exploration and exploitation of hydrocarbons | | | | — | | | | — | | | | — | | | | 5.5 | | | | 5.8 | | | | 4.5 | | | | 6.9 | | Export duties | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | — | | | | — | | Luxury goods and services | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | Other | | | 18.3 | | | | 18.3 | | | | 36.3 | | | | 34.6 | | | | 41.9 | | | | 43.1 | | | | 57.4 | | | | 51.6 | | | | 51.7 | | | | 52.1 | | Non-tax revenue | | | 356.9 | | | | 475.3 | | | | 694.7 | | | | 813.6 | | | | 855.1 | | | | 988.5 | | | | 809.3 | | | | 803.4 | | | | 641.0 | | | | 578.3 | | Fees and tolls | | | 246.8 | | | | 176.5 | | | | 47.4 | | | | 58.6 | | | | 55.6 | | | | 61.3 | | | | 64.3 | | | | 83.0 | | | | 46.3 | | | | 51.7 | | Transfers from the Mexican Petroleum Fund for Stabilization and Development | | | 0.0 | | | | 0.0 | | | | 485.5 | | | Rents, interest and proceeds of assets sales | | | 0.0 | | | | 0.0 | | | | 0.0 | | | Transfers from the Mexican Petroleum Fund for Stabilization and Development(4) | | | | 398.8 | | | | 307.9 | | | | 442.9 | | | | 541.7 | | | | 431.9 | | | | 520.7 | | | | 412.8 | | Fines and surcharges | | | 107.3 | | | | 294.2 | | | | 161.7 | | | | 350.7 | | | | 483.8 | | | | 476.5 | | | | 193.4 | | | | 278.1 | | | | 67.2 | | | | 103.7 | | Other | | | 2.8 | | | | 4.6 | | | | 0.0 | | | | 5.5 | | | | 7.8 | | | | 7.9 | | | | 9.9 | | | | 10.5 | | | | 6.8 | | | | 10.1 | | Public enterprises and agencies | | | 463.7 | | | | 470.7 | | | | 1,052.2 | | | | 1,086.9 | | | | 1,274.2 | | | | 1,109.5 | | | | 1,243.5 | | | | 1,378.2 | | | | 1,345.8 | | | | 1.439.2 | | PEMEX | | | 165.4 | | | | 172.8 | | | | 398.4 | | | | 429.0 | | | | 481.0 | | | | 389.8 | | | | 436.6 | | | | 523.1 | | | | 524.3 | | | | 574.5 | | Others | | | 298.4 | | | | 297.9 | | | | 653.8 | | | | 657.9 | | | | 793.2 | | | | 719.7 | | | | 806.9 | | | | 855.1 | | | | 821.5 | | | | 864.6 | |
Note: Numbers may not total due to rounding. (1) | Preliminary figures.Current pesos. |
(2) | Budgetary estimates as of December 2015. Budgetary estimates for 2016 were converted into constant pesos using the GDP deflator for 2016, estimated as of December 2015.Preliminary figures. |
(3) | Constant pesos with purchasing power as2019 and 2020 Budget figures represent budgetary estimates, based on the economic assumptions contained in theGeneral Economic Policy Guidelines and in the Economic Program for 2019 and 2020. These figures do not reflect actual results for the year or updated estimates of December 31, 2008.Mexico’s 2019 and 2020 economic results. |
Source: Ministry of Finance and Public Credit. 2017 UMS BudgetTaxation and Tax Revenues
On September 8, 2016, the President of Mexico submitted the proposedLey de Ingresos de la Federación para el Ejercicio Fiscal de 2017 (Federal Revenue Law for 2017, or the 2017 Revenue Law) and the proposedPresupuesto de Egresos de la Federación para el Ejercicio Fiscal de 2017 (Federal Expenditure Budget for 2017, or the 2017 Expenditure Budget) to the Mexican Congress for its approval. The 2017 Revenue LawDecember 9, 2019, a fiscal reform decree was approved by the Senate on October 26, 2016, and the 2017 Expenditure Budget was approved by the Chamber of Deputies on November 11, 2016. They were published in the Official Gazette, amending and supplementing certain Mexican tax laws. On December 9, 2019, certain amendments were made to the Hydrocarbons Revenue Law to introduce an incremental reduction of the FederationProfit-Sharing Duty to 58% beginning on November 15, 2016, and November 30, 2016, respectively. We referJanuary 1, 2020, prior to these two bills together as Mexico’s 2017 budget (the 2017 UMS Budget). The 2017 UMS Budget provides for a public sector budget surplus excluding investment in projectsits reduction to 54% by the end of high economic and social impact of 0.1% of GDP. The 2017 UMS Budget provides for a public sector budget deficit of 2.4% of GDP, including investment in projects of high economic and social impact, specifically investments by public entities and other Mexican Government projects. The 2017 UMS Budget contemplates public sector budgetary revenues totaling Ps. 4,309.5 billion, a 0.4% increase in real terms as compared to public sector2021.
budgetary revenues estimated for the 2016 UMS Budget. The 2017 UMS Budget estimates are based on an estimated volume of oil exports of 775,000 barrels per day. Oil revenues are estimated at Ps. 769.9 billion in nominal pesos, a 15.7% decrease in real terms as compared to the estimated amount for the 2016 UMS Budget. In addition, approvednon-oil revenues are Ps. 3,539.6 billion, a 4.8% increase as compared to the estimated amount for the 2016 UMS Budget. Finally, projectednon-oil tax revenues also increased by 9.7% in real terms as compared to the amount approved for the 2016 UMS Budget.
The 2017 Expenditure Budget provides for a total of Ps. 3,105.8 billion in expenditures (excluding estimated physical investment expenditures by PEMEX totaling Ps. 391.9 billion), a 3.9% decrease in real terms as compared to the amount approved in the 2016 Expenditure Budget.
The 2017 UMS Budget authorizes the Mexican Government to incur net domestic debt in the amount of Ps. 495 billion in nominal pesos, or 2.4% of GDP. The 2017 UMS Budget also authorizes the Mexican Government to incur an additional U.S. $6.0 billion in external indebtedness, which includes financing from international financial organizations.
Public Debt Internal Public Debt The Mexican Government’s net internal debt represents the internal debt directly incurred by the Mexican Government, including the Mexican Central Bank’s General Account Balance and the assets of theFondo del Sistema de Ahorro Para el Retiro(Retirement Savings System Fund). It does not include the debt of budget-controlled and administratively-controlled agencies or any debt guaranteed by the Mexican Government. In addition, “net internal debt” is comprised of Cetes and other securities sold to the public in auctions for new issuances (primary auctions), but does not include any debt allocated to the Mexican Central Bank for its use in the Regulación Monetaria(Monetary Regulation). This is because the Mexican Central Bank’s sales of debt pursuant to the Monetary Regulation do not increase the Mexican Government’s overall level of internal debt. The Mexican Central Bank must reimburse the Mexican Government for any allocated debt that the Mexican Central Bank sells in the secondary market and that is presented to the Mexican Government for payment. However, if the Mexican Central Bank carries out a high volume of sales of allocated debt in the secondary market, this can result in the Mexican Government’s outstanding internal debt being higher than its outstanding net internal debt. As of April 21, 2020, no debt issued by states and municipalities has been guaranteed by the Mexican Government. The following table summarizes the gross and net internal debt of the Mexican Government at each of the dates indicated. Gross and Net Internal Debt of the Mexican Government(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At December 31 | | | | 2015 | | | 2016 | | | 2017 | | | 2018(2) | | | 2019(2) | | | | (in billions of pesos, except percentages) | | Gross Debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mexican Government Securities | | | Ps.4,701.2 | | | | 92.7 | % | | | Ps. 4,915.3 | | | | 87.5 | % | | | Ps. 5,326.0 | | | | 90 | % | | | Ps. 5,837.0 | | | | 90.8 | % | | | Ps. 6,399.6 | | | | 92.0 | % | Cetes | | | 655.8 | | | | 12.9 | | | | 634.7 | | | | 11.3 | | | | 701.6 | | | | 11.9 | | | | 734.5 | | | | 11.4 | | | | 802.6 | | | | 11.5 | | Floating Rate Bonds | | | 296.5 | | | | 5.8 | | | | 397.9 | | | | 7.1 | | | | 471.3 | | | | 8.0 | | | | 548.2 | | | | 8.5 | | | | 642.1 | | | | 9.2 | | Inflation-Linked Bonds | | | 1,196.6 | | | | 23.6 | | | | 1,223.5 | | | | 21.8 | | | | 1,397.7 | | | | 23.6 | | | | 1,656.0 | | | | 25.8 | | | | 1,737.8 | | | | 25.0 | | Fixed Rate Bonds | | | 2,546.2 | | | | 50.2 | | | | 2,652.1 | | | | 47.2 | | | | 2,747.9 | | | | 46.4 | | | | 2,890.3 | | | | 45.0 | | | | 3,209.1 | | | | 46.1 | | STRIPS of Udibonos | | | 6.1 | | | | 0.1 | | | | 7.2 | | | | 0.1 | | | | 7.6 | | | | 0.1 | | | | 7.9 | | | | 0.1 | | | | 8.0 | | | | 0.1 | | Other(3) | | | 372.8 | | | | 7.3 | | | | 705.0 | | | | 12.5 | | | | 594.1 | | | | 10.0 | | | | 592.4 | | | | 9.2 | | | | 555.8 | | | | 8.0 | | Total Gross Debt | | | Ps.5,074.0 | | | | 100.0 | % | | | Ps.5,620.3 | | | | 100.0 | % | | | Ps.5,920.2 | | | | 100.0 | % | | | Ps.6,429.3 | | | | 100.0 | % | | | Ps.6,955.4 | | | | 100.0 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net Debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Financial Assets(4) | | | (259.9 | ) | | | | | | | (224.0 | ) | | | | | | | (205.9 | ) | | | | | | | (225.7 | ) | | | | | | | (292.6 | ) | | | | | Total Net Debt | | | Ps.4,814.1 | | | | | | | | Ps.5,396.3 | | | | | | | | Ps.5,714.3 | | | | | | | | Ps.6,203.6 | | | | | | | | Ps.6,662.8 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross Internal Debt/GDP | | | 30.4 | % | | | | | | | 30.7 | % | | | | | | | 29.4 | % | | | | | | | 27.4 | % | | | | | | | 28.7 | % | | | | | Net Internal Debt/GDP | | | 29.0 | % | | | | | | | 29.9 | % | | | | | | | 28.7 | % | | | | | | | 26.4 | % | | | | | | | 27.5 | % | | | | |
Note: Numbers may not total due to rounding. (1) | Internal debt figures do not include securities sold by the Mexican Central Bank inopen-market operations to manage liquidity levels pursuant to the Monetary Regulation. This is because this does not increase the Mexican Government’s overall level of internal debt. The Mexican Central Bank must reimburse the Mexican Government for any allocated debt that the Mexican Central Bank sells into the secondary market and that is presented to the Mexican Government for payment. If the Mexican Central Bank undertakes extensive sales of allocated debt in the secondary market, however, this can result in an elevated level of outstanding internal debt as compared to the Mexican Government’s figure for net internal debt. |
(3) | Includes Ps. 141.8 billion at December 31, 2018 and Ps. 134.3 billion at December 31, 2019 in liabilities associated with social security under the ISSSTE Law. |
(4) | Includes the net balance (denominated in pesos) of theCuenta General de la Tesorería de la Federación(Federal Treasury’s General Account) in the Mexican Central Bank. |
Source: Ministry of Finance and Public Credit. External Public Debt Mexico’s external public debt goals are intended to provide the Mexican Government with flexibility to finance its stated needs, while also accounting for market volatility and unforeseen developments. The policy also seeks to maintain costs and keep risks at stable levels. Mexico primarily seeks debt financing through local markets, supplemented by external financing from the U.S., Europe and Japan. Mexico’s principal objectives in connection with its external financing include improving the terms and conditions of Mexico’s external liabilities, as well as strengthening and diversifying Mexico’s investor base, with specific consideration to Mexico’s continued presence in the most influential international markets. Objectives also include strengthening Mexico’s benchmark bonds and maintaining a constant relationship with international investors in order to ensure transparency and to promote investment in Mexico. Internal Public Debt
The Mexican Government’s “net internal debt” includes only the internal portion of indebtedness incurred directly by the Mexican Government and the assets of theFondo del Sistema de Ahorro Para el Retiro(Retirement Savings System Fund). In addition, “net internal debt” is comprised ofCetesand other securities sold to the public in auctions for new issuances (primary auctions) but does not include any debt allocated toBanco de Méxicofor its use inRegulación Monetaria (regulating the money supply). It also does not include debt by theInstituto para la Protección al Ahorro Bancario (Bank Savings Protection Institute, or IPAB) or the debt of budget-controlled or administratively-controlled agencies. At December 31, 2015, all of the Mexican Government’s internal debt was denominated in pesos or UDIs and was payable in pesos.
Over the last two decades, the Mexican Government has actively sought to increase its average debt maturity date. Accordingly, the Mexican Government has issued new debt instruments bearing longer maturities than those previously issued. In doing so, the Mexican Government hopes to mitigate any risk associated with the refinancing of its internal public debt. This has had the effect of establishing a long-dated benchmark yield curve (the line that plots interest rates across different contract lengths for bonds having equal credit quality). These issuances have also encouraged long-term investments in the following areas: (1) fixed-rate contracts; (2) peso-denominated securities by Mexican companies; (3) Mexican financial hedging products; and (4) the use of long-term savings in financing long-term investment projects.
As a result of this policy, the average maturity of the Government’s internal debt increased from 7.2 years at December 31, 2010 to 8 years at December 31, 2015.
The following table summarizes the gross and net internal debt of the Mexican Government at each of the dates indicated.
Gross and Net Internal Debt of the Mexican Government(1)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At December 31, | | | | 2011 | | | 2012 | | | 2013 | | | 2014 | | | 2014 | | | 2016(2) | | | | (in billions of pesos, except percentages) | | Gross Debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Government Securities | | Ps. | 2,882.8 | | | | 90.2 | % | | Ps. | 3,257.8 | | | | 91.1 | % | | Ps. | 3,734.1 | | | | 91.9 | % | | Ps. | 4,223.3 | | | | 92.9 | % | | Ps. | 4,701.2 | | | | 92.7 | % | | Ps. | 4,915.3 | | | | 87.5 | % | Cetes | | | 456.6 | | | | 14.3 | | | | 531.3 | | | | 14.9 | | | | 635.6 | | | | 15.6 | | | | 678.7 | | | | 14.9 | | | | 655.8 | | | | 12.9 | | | | 634.7 | | | | 11.3 | | Floating Rate Bonds | | | 202.5 | | | | 6.3 | | | | 200.4 | | | | 5.6 | | | | 216.6 | | | | 5.3 | | | | 232.6 | | | | 5.1 | | | | 296.5 | | | | 5.8 | | | | 397.9 | | | | 7.1 | | Inflation-Linked Bonds | | | 642.1 | | | | 20.1 | | | | 747.2 | | | | 20.9 | | | | 888.7 | | | | 21.9 | | | | 1,011.1 | | | | 22.2 | | | | 1,196.6 | | | | 23.6 | | | | 1,223.5 | | | | 21.8 | | Fixed Rate Bonds | | | 1,581.6 | | | | 49.5 | | | | 1,777.9 | | | | 49.7 | | | | 1,989.6 | | | | 49.0 | | | | 2,295.8 | | | | 50.5 | | | | 2,546.2 | | | | 50.2 | | | | 2,652.1 | | | | 47.2 | | STRIPS of Udibonos | | | — | | | | — | | | | 1.0 | | | | 0.0 | | | | 3.6 | | | | 0.1 | | | | 5.1 | | | | 0.1 | | | | 6.1 | | | | 0.1 | | | | 7.2 | | | | 0.1 | | Other(3) | | | 314.9 | | | | 9.8 | | | | 317.6 | | | | 8.9 | | | | 329.1 | | | | 8.1 | | | | 323.3 | | | | 7.1 | | | | 372.8 | | | | 7.1 | | | | 705.0 | | | | 12.5 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Gross Debt | | Ps. | 3,197.7 | | | | 100.0 | % | | Ps. | 3,575.3 | | | | 100.0 | % | | Ps. | 4,063.2 | | | | 100.0 | % | | Ps. | 4,546.6 | | | | 100.0 | % | | Ps. | 5,074.0 | | | | 100.0 | % | | Ps. | 5,620.3 | | | | 100.0 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net Debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Financial Assets(4) | | | (85.6 | ) | | | | | | | (74.2 | ) | | | | | | | (169.3 | ) | | | | | | | (222.5 | ) | | | | | | | (259.9 | ) | | | | | | | (224.0 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Net Debt | | Ps. | 3,112.1 | | | | | | | Ps. | 3,501.1 | | | | | | | Ps. | 3,893.9 | | | | | | | Ps. | 4,324.1 | | | | | | | Ps. | 4,814.1 | | | | | | | Ps. | 5,396.3.1 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross Internal Debt/GDP | | | 20.5 | % | | | | | | | 22.1 | % | | | | | | | 24.2 | % | | | | | | | 25.4 | % | | | | | | | 26.6 | % | | | | | | | 27.8 | % | | | | | Net Internal Debt/GDP | | | 19.9 | % | | | | | | | 21.6 | % | | | | | | | 23.2 | % | | | | | | | 24.1 | % | | | | | | | 25.2 | % | | | | | | | 26.7 | % | | | | |
Note: | Numbers may not total due to rounding. |
(1) | Internal debt figures do not include securities sold byBanco de México in open-market operations to manage liquidity levels pursuant toRegulación Monetaria. This is because the securities do not increase the Mexican Government’s overall level of internal debt.Banco de México must reimburse the Mexican Government for any allocated debt thatBanco de México sells into the secondary market and that is presented to the Mexican Government for payment. IfBanco de México undertakes extensive sales of allocated debt in the secondary market, however, this can result in an elevated level of outstanding internal debt as compared to the Mexican Government’s figure for net internal debt. |
(3) | Includes Ps. 171.9 billion for 2011, Ps. 169.0 billion for 2012, Ps. 165.5 billion for 2013, Ps. 161.5 billion for 2014, Ps. 153.8 billion for 2015 and Ps. 147.5 billion at December 31, 2016 in liabilities associated with social security under the ISSSTE Law.. |
(4) | Includes the net balance (denominated in pesos) of the Federal Treasury’s General Account inBanco de México. |
Source: | Ministry of Finance and Public Credit |
External Public Debt
“External public sector debt” consists of the external portion of the long-term indebtedness incurred directly by the Mexican Government, the external long-term indebtedness incurred by budget-controlled agencies, the external long-term indebtedness incurred directly by productive state-owned companies, the external long-term indebtedness incurred directly or guaranteed by administratively-controlled agencies (including but not limited to national development banks) and the short-term external debt of the public sector. Private sector debt guaranteed by the Mexican Government is not included, unless and until the Mexican Government is called upon to make payment under the applicable guaranty. “External public debt” does not include, among other things, repurchase obligations ofBanco de México with the IMF.
According to preliminary figures, atas of December 31, 2016,2019, outstanding gross external public sector external debt totaled U.S. $181.0$204.7 billion, an approximate U.S. $18.8$2.3 billion increase from the U.S. $162.2$202.4 billion outstanding at December 31, 2015.on December31, 2018. Of this amount, U.S. $177.9$201.0 billion representedlong-term debt and U.S. $3.1$3.7 billion representedshort-term debt. Net external indebtedness also increased by U.S. $16.1$2.4 billion during 2016, mainly due to an increase in Mexican Government and State Productive Enterprise external debt. Overall, at December 31, 2016, total public debt (gross external debt plus net internal public sector debt) represented approximately 48.2% of nominal GDP, an increase of 5.4 percentage points from December 31, 2015.2019. The following tables set forth a summary of Mexico’s external public sector debt, including a breakdown of such debt by type, a breakdown of such debt by currency and net external public sector debt at the Mexican Government’s gross external debt, the Mexican Government’s net external debt and the Mexican Government’s net debt.dates indicated. Summary of External Public Sector Debt by Type(1) By Type
| | | | | | | | | | | | | | | | | | | | | | | At December 31, | | | | 2015 | | | 2016 | | | 2017 | | | 2018(3) | | | 2019(3) | | | | (in millions of U.S. dollars) | | Long-Term Direct Debt of the Mexican Government | | | U.S. $ 82,493 | | | | U.S. $ 88,083 | | | | U.S. $ 91,072 | | | | U.S. $ 95,846 | | | | U.S. $ 99,574 | | Long-Term Debt of Budget Controlled Agencies | | | 69,621 | | | | 82,688 | | | | 91,780 | | | | 94,391 | | | | 93,036 | | OtherLong-Term Public Debt(2) | | | 6,943 | | | | 7,122 | | | | 7,877 | | | | 7,968 | | | | 8,361 | | | | | | | | | | | | | | | | | | | | | | | TotalLong-Term Debt | | | U.S. $159,057 | | | | U.S. $177,893 | | | | U.S. $190,729 | | | | U.S. $198,205 | | | | U.S. $200,970 | | | | | | | | | | | | | | | | | | | | | | | TotalShort-Term Debt | | | 3,152 | | | | 3,093 | | | | 3,253 | | | | 4,151 | | | | 3,714 | | | | | | | | | | | | | | | | | | | | | | | TotalLong- andShort-Term Debt | | | U.S. $162,209 | | | | U.S. $180,986 | | | | U.S.$193,981 | | | | U.S.$202,355 | | | | U.S.$204,684 | | | | | | | | | | | | | | | | | | | | | | |
Summary of External Public Sector Debt by Currency | | | | | | | | | | | | | | | | | | | | | | | | | | | Long-Term Direct Debt of the Mexican Government | | | Long-Term Debt of Budget- Controlled Agencies | | | Other Long-Term Public Debt(2) | | | Total Long- Term Debt | | | Total Short- Term Debt | | | Total Long- and Short- Term Debt | | | | (in millions of U.S. dollars) | | At December 31, | | | | | | | | | | | | | | | | | | | | | | | | | 2011 | | U.S.$ | 60,590 | | | U.S.$ | 47,436 | | | U.S.$ | 5,625 | | | U.S.$ | 113,651 | | | U.S.$ | 2,769 | | | U.S.$ | 116,420 | | 2012 | | | 66,912 | | | | 50,063 | | | | 5,626 | | | | 122,601 | | | | 3,125 | | | | 125,726 | | 2013 | | | 71,817 | | | | 53,358 | | | | 5,734 | | | | 130,909 | | | | 3,527 | | | | 134,436 | | 2014 | | | 78,379 | | | | 58,863 | | | | 5,627 | | | | 142,869 | | | | 4,797 | | | | 147,666 | | 2015 | | | 82,493 | | | | 69,621 | | | | 6,943 | | | | 159,057 | | | | 3,152 | | | | 162,209 | | 2016(3) | | | 88,083 | | | | 82,688 | | | | 7,122 | | | | 177,893 | | | | 3,093 | | | | 180,986 | |
By Currency(4)
| | | At December 31, | | | At December 31 | | | | 2011 | | 2012 | | 2013 | | 2014 | | 2015 | | 2016(3) | | | 2015 | | 2016 | | 2017 | | 2018(3) | | 2019(3) | | | | (in millions of U.S. dollars, except for percentages) | | | (in millions of U.S. dollars, except for percentages) | | U.S. Dollars | | U.S.$ | 97,048 | | | | 83.4 | % | | U.S.$ | 105,836 | | | | 84.2 | % | | U.S.$ | 111,647 | | | | 83.0 | % | | U.S.$ | 121,927 | | | | 82.6 | % | | U.S.$ | 131,702 | | | | 81.2 | % | | U.S.$ | 144,185 | | | 79.7 | % | | | U.S. $131,702 | | | | 81.2 | % | | | U.S. $144,185 | | | | 79.7 | % | | | U.S. $148,694 | | | | 76.7 | % | | | U.S. $152,597 | | | | 75.4 | % | | | U.S. $147,115 | | | | 71.9 | % | Japanese Yen | | 6,793 | | | 5.8 | | | 6,847 | | | 5.4 | | | 5,519 | | | 4.1 | | | 5,058 | | | 3.4 | | | 4,857 | | | 3.0 | | | 6,410 | | | 3.5 | | | | 4,857 | | | | 3.0 | | | | 6,410 | | | | 3.5 | | | | 6,810 | | | | 3.5 | | | | 8,064 | | | | 4.0 | | | | 9,737 | | | | 4.8 | | Swiss Francs | | 910 | | | 0.8 | | | 961 | | | 0.8 | | | 969 | | | 0.7 | | | 401 | | | 0.3 | | | 1,011 | | | 0.6 | | | 1,331 | | | 0.7 | | | | 1,011 | | | | 0.6 | | | | 1,331 | | | | 0.7 | | | | 1,354 | | | | 0.7 | | | | 1,453 | | | | 0.7 | | | | 3,101 | | | | 1.5 | | Pounds Sterling | | 1,906 | | | 1.6 | | | 1,993 | | | 1.6 | | | 1,369 | | | 1.0 | | | 2,848 | | | 1.9 | | | 2,694 | | | 1.7 | | | 2,257 | | | 1.3 | | | | 2,694 | | | | 1.7 | | | | 2,257 | | | | 1.3 | | | | 3,080 | | | | 1.6 | | | | 2,902 | | | | 1.4 | | | | 3,015 | | | | 1.5 | | Euro | | 9,377 | | | 8.1 | | | 9,530 | | | 7.6 | | | 11,489 | | | 8.5 | | | 13,986 | | | 9.5 | | | 18,834 | | | 11.6 | | | 24,409 | | | 13.5 | | | Euros | | | | 18,834 | | | | 11.6 | | | | 24,409 | | | | 13.5 | | | | 31,542 | | | | 16.3 | | | | 34,841 | | | | 17.2 | | | | 39,249 | | | | 19.2 | | Others | | 385 | | | 0.3 | | | 558 | | | 0.4 | | | 3,443 | | | 2.6 | | | 3,445 | | | 2.3 | | | 3,113 | | | 1.9 | | | 2,393 | | | 1.3 | | | | 3,113 | | | | 1.9 | | | | 2,393 | | | | 1.3 | | | | 2,501 | | | | 1.3 | | | | 2,499 | | | | 1.2 | | | | 2,467 | | | | 1.2 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | U.S.$ | 116,420 | | | | 100.0 | % | | U.S.$ | 125,726 | | | | 100.0 | % | | U.S.$ | 134,436 | | | | 100.0 | % | | U.S.$ | 147,666 | | | | 100.0 | % | | U.S.$ | 162,209 | | | | 100.0 | % | | U.S.$ | 180,986 | | | 100.0 | % | | | U.S. $162,209 | | | | 100.0 | % | | | U.S. $180,986 | | | | 100.0 | % | | | U.S. $193,981 | | | | 100.0 | % | | | U.S. $202,355 | | | | 100.0 | % | | | U.S. $204,684 | | | | 100.0 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net External Debt of the Public Sector | | | | | | | | | | | | | | | | | | | | | | | | | | | At December 31, | | | | 2011 | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016(3) | | | | (in millions of U.S. dollars, except for percentages) | | | | | | | | | Total Net Debt | | U.S.$ | 113,631.6 | | | U.S.$ | 121,659.0 | | | U.S.$ | 130,949.7 | | | U.S.$ | 145,617.4 | | | U.S.$ | 161,609.5 | | | U.S.$ | 177,693 | | Gross External Debt/GDP | | | 10.4 | % | | | 10.1 | % | | | 10.5 | % | | | 12.1 | % | | | 14.8 | % | | | 18.5 | % | Net External Debt/GDP | | | 10.12 | % | | | 9.8 | % | | | 10.2 | % | | | 12.0 | % | | | 14.7 | % | | | 18.2 | % |
Gross External Debt of the Mexican Government
| | | | | | | | | | | | | | | | | | | | | | | At December 31, | | | | 2015 | | | 2016 | | | 2017 | | | 2018(3) | | | 2019(3) | | | | (in millions of U.S. dollars, except for percentages) | | Total Net Debt | | | U.S. $ 161,609.5 | | | | U.S. $ 177,692.5 | | | | U.S. $ 192,344.0 | | | | U.S. $ 201,307.3 | | | | U.S. $ 203,708.2 | | Gross External Debt/GDP | | | 15.0 | % | | | 18.7 | % | | | 17.5 | % | | | 17.0 | % | | | 15.9 | % | Net External Debt/GDP | | | 15.0 | % | | | 18.3 | % | | | 17.4 | % | | | 16.9 | % | | | 15.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At December 31, | | | | 2011 | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016(3) | | | | (in millions of U.S. dollars, except for percentages) | | U.S. dollars | | U.S.$ | 51,704 | | | | 84.3 | % | | U.S.$ | 57,465 | | | | 85.2 | % | | U.S. $ | 62,285 | | | | 86.3 | % | | U.S. $ | 65,127 | | | | 82.9 | % | | U.S.$ | 66,298 | | | | 80.3 | % | | U.S.$ | 67,533 | | | | 76.6 | % | Japanese yen | | | 3,933 | | | | 6.4 | | | | 4,433 | | | | 6.6 | | | | 3,643 | | | | 5.0 | | | | 3,686 | | | | 4.7 | | | | 3,672 | | | | 4.4 | | | | 4,525 | | | | 5.1 | | Swiss francs | | | 267 | | | | 0.4 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Pounds sterling | | | 741 | | | | 1.2 | | | | 774 | | | | 1.1 | | | | 789 | | | | 1.1 | | | | 2,302 | | | | 2.9 | | | | 2,177 | | | | 2.6 | | | | 1,825 | | | | 2.1 | | Euros | | | 4,694 | | | | 7.7 | | | | 4,771 | | | | 7.1 | | | | 5,447 | | | | 7.6 | | | | 7,437 | | | | 9.5 | | | | 10,422 | | | | 12.6 | | | | 14,256 | | | | 16.2 | | Others | | | 14 | | | | 0.0 | | | | 18 | | | | 0.0 | | | | 16 | | | | 0.0 | | | | 20 | | | | 0.0 | | | | 19 | | | | 0.0 | | | | 18 | | | | 0.0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | U.S.$ | 61,352 | | | | 100.0 | % | | U.S.$ | 67,461 | | | | 100.0 | % | | U.S. $ | 72,180 | | | | 100.0 | % | | U.S. $ | 78,573 | | | | 100.0 | % | | U.S.$ | 82,588 | | | | 100.0 | % | | U.S. $ | 88,157 | | | | 100.0 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net External Debt of the Mexican GovernmentNote: Numbers may not total due to rounding.
| | | | | | | | | | | | | | | | | | | | | | | | | | | At December 31, | | | | 2011 | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016(3) | | | | (in millions of U.S. dollars, except for percentages) | | | | | | | | | Total Net Debt | | U.S.$ | 59,642.5 | | | U.S.$ | 66,016.5 | | | U.S.$ | 69,910.4 | | | U.S.$ | 77,352.4 | | | U.S.$ | 82,320.3 | | | U.S. $ | 86,666 | | Gross External Debt/GDP | | | 5.5 | % | | | 5.4 | % | | | 5.6 | % | | | 6.4 | % | | | 7.5 | % | | | 9.0 | % | Net External Debt/GDP | | | 5.4 | % | | | 5.3 | % | | | 5.5 | % | | | 6.3 | % | | | 7.5 | % | | | 8.9 | % |
Net Debt of the Mexican Government
| | | | | | | | | | | | | | | | | | | | | | | | | | | At December 31, | | | | 2010 | | | 2011 | | | 2012 | | | 2013 | | | 2014 | | | 2015(3) | | External Debt | | | 21.1 | % | | | 19.7 | % | | | 19.0 | % | | | 20.8 | % | | | 22.7 | % | | | 25.0 | % | Internal Debt | | | 78.9 | % | | | 80.3 | % | | | 81.0 | % | | | 79.2 | % | | | 77.3 | % | | | 75.0 | % |
Note: | Numbers may not total due to rounding. |
(1) | External debt denominated in foreign currencies other than U.S. dollars has been translated into dollars at exchange rates as of each of the dates indicated. External public debt does not include (a) repurchase obligations ofBanco de México the Mexican Central Bank with the IMF (none of which werewas outstanding as of December 31, 2016)2019) or (b) loans from the Commodity Credit Corporation to public sector Mexican banks. External debt is presented herein on a “gross” basis and includes external obligations of the public sector at their full outstanding face or principal amount. For certain informational and statistical purposes, Mexico sometimes reports its external public sector debt on a “net” basis, which is calculated as the gross debt net of certain financial assets held abroad. These financial assets include Mexican public sector external debt that is held by public sector entities but that has not been cancelled.Banco de México’s reserves are not subtracted from gross debt. |
(2) | Includes development banks’ debt and the debt of development banks and otheradministratively-controlled agencies whose finances are consolidated with those of the Mexican Government. |
(4) | Adjusted to reflect the effect of currency swaps. |
Source: | Ministry of Finance and Public Credit. |
RecentSource: Ministry of Finance and Public Credit.
The following tables set forth a summary of Mexico’s external Mexican Government debt, including the gross external Mexican Government debt, net external Mexican Government debt and net Mexican Government debt at the dates indicated. Gross External Debt of the Mexican Government by Currency | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At December 31, | | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | | (in millions of U.S. dollars, except for percentages) | | U.S. Dollars | | | U.S. $66,298 | | | | 80.3 | % | | | U.S. $67,533 | | | | 76.6 | % | | | U.S. $68,045 | | | | 74.7 | % | | | U.S. $70,829 | | | | 73.9 | % | | | U.S. $65,080 | | | | 65.4 | % | Japanese Yen | | | 3,672 | | | | 4.4 | | | | 4,525 | | | | 5.1 | | | | 4,680 | | | | 5.1 | | | | 5,894 | | | | 6.1 | | | | 7,559 | | | | 7.6 | | Swiss Francs | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,948 | | | | 2.0 | | Pounds Sterling | | | 2,177 | | | | 2.6 | | | | 1,825 | | | | 2.1 | | | | 1,998 | | | | 2.2 | | | | 1,882 | | | | 2.0 | | | | 1,956 | | | | 2.0 | | Euros | | | 10,422 | | | | 12.6 | | | | 14,256 | | | | 16.2 | | | | 16,331 | | | | 17.9 | | | | 17,221 | | | | 18.0 | | | | 23,015 | | | | 23.1 | | Others | | | 19 | | | | 0.0 | | | | 18 | | | | 0.0 | | | | 19 | | | | 0.0 | | | | 20 | | | | 0.0 | | | | 17 | | | | 0.0 | | Total | | | U.S. $82,588 | | | | 100.0 | % | | | U.S. $88,157 | | | | 100.0 | % | | | U.S. $91,072 | | | | 100.0 | % | | | U.S. $95,846 | | | | 100.0 | % | | | U.S. $99,574 | | | | 100.0 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net External Debt of the Mexican Government | | | | | | | | | | | | | | | | | | | | | | | At December 31, | | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | | (in millions of U.S. dollars, except for percentages) | | Total Net Debt | | | U.S. $ 82,320.3 | | | | U.S. $ 86,666.0 | | | | U.S. $ 90,625.2 | | | | U.S. $ 95,698.5 | | | | U.S. $ 99,369.9 | | Gross External Debt/GDP | | | 7.7 | % | | | 9.1 | % | | | 8.2 | % | | | 8.0 | % | | | 7.7 | % | Net External Debt/GDP | | | 7.6 | % | | | 8.9 | % | | | 8.2 | % | | | 8.0 | % | | | 7.7 | % |
Net Debt of the Mexican Government | | | | | | | | | | | | | | | | | | | | | | | At December 31, | | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | Internal Debt | | | 77.3 | % | | | 75.0 | % | | | 76.1 | % | | | 76.7 | % | | | 78.1 | % | External Debt(1) | | | 22.7 | % | | | 25.0 | % | | | 23.9 | % | | | 23.3 | % | | | 21.9 | % |
Note: Numbers may not total due to rounding. (1) | External debt denominated in foreign currencies other than U.S. dollars has been translated into dollars at exchange rates as of each of the dates indicated. External public debt does not include (a) repurchase obligations of the Mexican Central Bank with the IMF (none of which was outstanding as of December 31, 2019) or (b) loans from the Commodity Credit Corporation to public sector Mexican banks. External debt is presented herein on a “gross” basis and includes external obligations of the public sector at their full outstanding face or principal amount. For certain informational and statistical purposes, Mexico sometimes reports its external public sector debt on a “net” basis, which is calculated as the gross debt net of certain financial assets held abroad. These financial assets include Mexican public sector external debt that is held by public sector entities but that has not been cancelled. |
Source: Ministry of Finance and Public Credit. IMF Credit Lines On November 22, 2019 the IMF completed its review of Mexico’s qualification for its contingent credit line program, the Flexible Credit Line (FCL). The IMF reaffirmed Mexico’s continued eligibility to access FCL resources in the amount of U.S. $61 billion, a reduction from the approximately U.S. $74 billion FCL access granted in 2018. Consistent with the reduction in FCL access in 2018, this reduced amount was granted by the IMF upon Mexico’s request, due to improved outlook with respect to some of the risks facing Mexico, improved stability in Mexico’s trade relations and strong buffers against external shocks to Mexico’s economy. In the future, if the external risks affecting Mexico’s economy continue to decline, Mexico intends to continue to request further reductions, including at itsmid-term review, and gradually decrease Mexico’s use of this resource. External Securities Offerings and Liability Management Transactions During 2019 and 2020 Mexico offers additional debt securities from time to time and, in order to manage the composition of its outstanding liabilities, Mexico engages from time to time in a variety of transactions, including tender offers, open market purchases and early redemptions. For the past twenty years, Mexico has conducted periodic ordinary course liability management transactions for the reduction of its total outstanding debt. On January 21, 2016,22, 2019, Mexico issued U.S. $2.25 billion$2,000,000,000 of its 4.125%4.500% Global Notes due 2026. The notes were issued under Mexico’s U.S. $110 billion Global Medium-Term Notes Program.2029. On February 23, 2016,April 8, 2019, Mexico issued € 1.5 billion€1,500,000,000 of its 1.875% Global Notes due 2022 and € 1.0 billion of its 3.375% Global Notes due 2031. On June 16, 2016, Mexico issued ¥45.9 billion of notes due 2019, ¥50.9 billion of notes due 2021, ¥16.3 billion of notes due 2026 and ¥21.9 billion of notes due 2036. These notes were placed in the Japanese public market and bear interest at 0.40%, 0.70%, 1.09% and 2.40%, respectively.
On August 11, 2016, Mexico issued U.S. $0.76 billion of its 4.125%1.625% Global Notes due 2026 and U.S. $2.0 billion€1,000,000,000 of its 4.350%2.875% Global Notes due 2047.2039.
On November 1, 2016,July 31, 2019, Mexico issued U.S. € 1.2 billion$1,455,664,000 of its 1.375%4.500% Global Notes due 20252029 and € 0.7 billionU.S. $2,103,527,000 of its 3.375%4.500% Global Notes due 2031.2050. Concurrently, the Mexican Government conducted a tender offer pursuant to which Mexico offered to purchase for cash its outstanding notes of the series set forth in the offer to purchase dated July 23, 2019. On January 16, 2020, Mexico issued U.S. $3,069,068,000 of its 3.250% Global Notes due 2030 and U.S. $800,000,000 of its 4.500% Global Notes due 2050. Concurrently, the Mexican Government conducted a tender offer pursuant to which Mexico offered to purchase for cash its outstanding notes of the series set forth in the offer to purchase dated January 6, 2020, pursuant to which Mexico purchased the notes listed in the table below. A summary of the tender offer results follows: | | | | | | | | | Old Notes | �� | Outstanding Amount Repurchased in Tender Offer | | | Outstanding Amount After Tender Offer | | 3.625% Global Bonds due 2022 | | U.S. $ | 141,050,000.00 | | | U.S. $ | 1,762,486,000.00 | | 4.000% Global Bonds due 2023 | | U.S. $ | 144,448,000.00 | | | U.S. $ | 2,973,230,000.00 | | 3.600% Global Bonds due 2025 | | U.S. $ | 206,716,000.00 | | | U.S. $ | 1,946,974,000.00 | | 4.125% Global Bonds due 2026 | | U.S. $ | 62,361,000.00 | | | U.S. $ | 2,167,698,000.00 | | 4.150% Global Bonds due 2027 | | U.S. $ | 425,475,000.00 | | | U.S. $ | 2,724,940,000.00 | | 3.750% Global Bonds due 2028 | | U.S. $ | 491,323,000.00 | | | U.S. $ | 2,063,873,000.00 | |
On January 17, 2020, Mexico issued €1,250,000,000 of its 1.125% Global Notes due 2030 and €500,000,000 of its 2.875% Global Notes due 2039. Mexico used a portion of the proceeds from this offering to redeem in full €1,000,000,000 of its outstanding 4.250%2.375% Global Notes due 2017.2021. On March 28, 2017, Mexico issued U.S. $3.2 billion of its 4.150% Global Notes due 2027. Mexico used a portion of the proceeds from this offering to redeem its outstanding 5.950% Global Notes due 2019.
In 2017, Mexico has repurchased approximately $500 million in aggregate principal amount of outstanding debt securities in open market transactions.
Legal and Political Reforms Anti-CorruptionCriminal Justice
On July 18, 2016,November 8, 2019, reforms to the Ley Federal Contra la Delincuencia Organizada (Federal Law Against Organized Crime), the Ley de Seguridad Nacional (National Security Law), the Código Nacional de Procedimientos Penales (National Criminal Procedure Code), the Código Fiscal de la Federación (Federal Fiscal Code) and the Federal Criminal Code were published in the Official Gazette. As a result of these reforms, under certain conditions, specific tax offenses: (i) equate to organized crime; (ii) merit pretrial detention ex officio; (iii) are no longer eligible for conditional suspension; and (iv) are no longer eligible for reparatory agreements. These reforms are intended to prevent, prosecute and more severely punish tax evasion and money laundering. Judicial Review In its first ever general declaration of unconstitutionality, on February 14, 2019, theSuprema Corte de Justicia de la Nación (Supreme Court) struck down as excessive a provision of theLey Federal de Telecomunicaciones y Radiodifusión (Federal Telecommunications and Broadcasting Law) that provided for a minimum fine of 1% of a radio and television concessionaires’ and licensees’ taxable income for any violation of the regulatory framework not specifically provided for in the law. On November 6, 2018, the Ley Federal de Remuneraciones de los Servidores Públicos (Federal Public Servants Salary Law) was enacted with the purpose of regulating the salaries, defined broadly, of federal public officials, which subject to certain limitations shall not exceed (i) the salary received by the President of Mexico, or (ii) the salary received by such public official’s hierarchical superior. After its enactment, several constitutional claims were filed before the Supreme Court challenging the Federal Public Servants Salary Law, including on the basis that it created uncertainty about how the salaries of public officials of certain autonomous constitutional agencies should be regulated. On May 20, 2019, the Supreme Court invalidated certain provisions of the Federal Public Servants Salary Law and two related articles of the Federal Criminal Code and ordered Congress to revisit the invalidated provisions during the next ordinary legislative period. Anti-Money Laundering On March 1, 2019, the Unidad de Inteligencia Financiera (Financial Intelligence Unit, or FIU) of the Ministry of Finance and Public Credit and the mayor of Mexico City signed an agreement to exchange information to combat money laundering and the financing of terrorism. This agreement will allow for greater coordination to prevent and detect assistance of any kind given to aid crime with resources of illegal origin. Anti-Corruption The reform to Articles 22 and 73 of the Mexican Constitution and theLey Nacional de Extinción de Dominio(National Seizure of Ownership Law), published in the Official Gazette on March 14, 2019 and August 9, 2019, respectively, are intended, among other things, toextend the scope of Mexican Governmentextinciones de dominio(seizures), which will now be permittedover assets related to a broader list of offenses now including acts of corruption, crimes committed by publicofficials, organized crime, kidnapping, extortion, human trafficking and crimes related to hydrocarbons, amongothers, and for which there is no proof that they were obtained legally. On April 26, 2019, the Ministry of Public Administration banned for three years Constructora Norberto Odebrecht, S.A. and Odebrecht Ingeniería y Construcción Internacional de México, S.A. de C.V., subsidiaries of Odebrecht S.A., from participating in any procurement process or entering into any contract with agencies and entities of theAdministración Pública Federal (Federal Public Administration) and theFiscalía General de la República (Office of the Federal Attorney General), as well as any agencies or entities of the states where federal resources are used. The April 26, 2019 action on Constructora Norberto Odebrecht, S.A. was in addition to previous actions taken by the Ministry of Public Administration in 2018 banning it from participating in any procurement process or entering into any contract with agencies and entities of the Federal Public Administration and the Office of the Federal Attorney General, as well as any agencies or entities of the states where federal resources are used. On August 30, 2019, thePrograma Nacional de Combate a la Corrupción y a la Impunidad, y de Mejora de la Gestión Pública 2019-2024 (National Program to Combat Corruption and Impunity, and Improvement of Public Management 2019-2024, or the Program) was published in the Official Gazette. The Program sets out five priority objectives, specific actions for compliance and goals and measurement parameters. The Program is mandatory for all government agencies, units and entities of the Federal Public Administration. On November 14, 2019, the INEGI approved the creation of aComité Técnico Especializado de Información Sobre la Corrupción (Specialized Technical Committee on Information About Corruption). This committee is intended to generate accurate and reliable information regarding Mexico’s institutional capacities to: (i) understand and combat corruption; (ii) make decisions based on effective, concrete and verifiable evidence; (iii) promote the use and knowledge of information produced by INEGI; and (iv) coordinate the generation, integration and dissemination of indicators to monitor and evaluate public policies. On December 9, 2019, the Mexican Government announced Mexico’s intended adherence to thePrincipios de Transparencia para la Divulgación del Beneficiario Final (Principles of Transparency for the Disclosure of Final Beneficiaries). Mexico will become one of seven countries that comprise theGrupo de Liderazgo Sobre Transparencia de Beneficiario Final(Beneficial Ownership Leadership Group, or BOLG). By adhering to these principles, the members of BOLG are committed to promoting the publication of data on final beneficiaries, which will (i) help prevent the use of companies or certain legal and financial instruments to further acts of corruption; (ii) expedite investigations of corruption; and (iii) prevent and combat money laundering and terrorist financing. The Mexican Government announced that Mexico intends to have a public registry of final beneficiaries by no later than 2023. On January 29, 2020, the Coordinating Committee of theSistema Nacional Anticorrupción (National Anti-Corruption System, or NAS) went into force. The NAS is an institutional frameworkSNA) approved thePolítica Nacional Anticorrupción (National Anticorruption Policy, or PNA) that seeks to combatestablishes the Mexican Government’s strategy for fighting corruption and briberyarticulates around forty public policy priorities that guide the actions of all public institutions related to anti-corruption. Foreign Affairs, International Organizations and International Economic Cooperation In response to the May 30, 2019 announcement by the U.S. president of a series of proposed measures, including tariffs on Mexican exports to the United States, Mexican and U.S. officials agreed in public administrationJune 2019 to implement a series of actions to reduce the amount of trafficking and governmental accounting.human smuggling across their shared border. The parties also agreed that asylum seekers will remain in Mexico pending the resolution of their cases in the United States and be provided with protection, employment opportunities, healthcare and education. The National Guard has been deployed to Mexico’s southern border. AccessRepresentatives of Mexico and the United States met on July 21, 2019 and September 10, 2019 to Informationanalyze the progress of the June 2019 agreement on immigration.
In connection with the commitments undertaken by signing the USMCA and the ratification of the International Labor Organization Convention 98, on May 1, 2019, the Mexican Government Transparencyreformed the Ley Federal del Trabajo (Federal Labor Law) with the aim to end discrimination and workplace harassment, ensure workers’ rights to vote for union representation and contracts, promote more representative and transparent procedures for the negotiation of collective bargaining agreements and provide effective judicial protections for workers. On November 7, 2019, the Mexican Government published the International Labor Organization Convention 98 in the Official Gazette; the decree took effect on November 23, 2019. On May 9, 2016August 8, 2019, the Mexican Minister of Foreign Affairs and the Foreign Secretary of the United Kingdom signed an agreement aimed to boost sustainable and inclusive economic growth in the United Kingdom and in Mexico. The agreement promotes investment in areas such as advanced manufacturing, energy efficiency and renewable energy, agri-tech, health, education, financial services and green finance and technology with the aim of addressing climate change and economic and social inequality. On January 16, 2020, Mexico, represented by theLey FederalSecretaría de TransparenciaRelaciones Exteriores (Ministry of Foreign Affairs) and the Secretaría de Seguridad y AccesoProtección Ciudadana (Ministry of Citizen Security and Protection), and the United States agreed to a la Información Públicabilateral program to reduce trafficking in arms, drugs and financial resources by transnational crime networks, to reduce drug consumption and combat addiction, and to treat fentanyl as a common problem. Environment In connection with the international commitments undertaken with respect to the Paris Agreement, the Mexican Government published the preliminary bases of the Programa de Prueba del Sistema de Comercio de Emisiones (Federal Law(Pilot Program for Transparency and Access to Public Information) was publishedthe Emissions Trading System) in the Official Gazette on October 1, 2019. The Pilot Program will begin on January 1, 2020 and continue for three years. It will regulate companies in the energy and industrial sectors, including, among others, electricity generation; cement, iron and steel production; and refinement. On February 7, 2020, the Mexican Government updated theEstrategia de Transición para Promover el Uso de Tecnologías y Combustibles más Limpios (Transition Strategy to Promote the Use of the Federation, abrogating the former law of the same name. This law continues to ensure the right to access to information held by governmental entitiesCleaner Technologies and additionally, was expanded to include transparency obligationsFuels). The strategy contains three main objectives based on a medium-term planning component for the armed forces, theAgencia Nacional de Seguridad Industrial y de Protección al Medio Ambiente del Sector Hidrocarburos (National Agency for Industrial Safety and Environmental Protection on Hydrocarbons Sector), the NHC, the Energy Regulatory Commission, theFondo Mexicano del Petróleo para la Estabilización y el Desarrollo (Mexican Petroleum Fund for Stabilization and Development) and the productive state-owned companies. The new law sets forth the authority of theInstituto Nacional de Transparencia, Acceso a la Información y Protección de Datos Personales(National Institute of Transparency, Information Access and Protection of Private Data or INAI) to impose sanctions. Criminal Justice
In June 2008, theConstitución Política de los Estados Unidos Mexicanos (the Political Constitution of Mexico, or the Constitution) was amended to reform the criminal justice system. The reforms were implemented over a period of eightfifteen years and went into forcea long-term planning component for a period of thirty years: (i) to establish set goals and a roadmap to implementing a cleaner and more sustainable energy sector in Mexico; (ii) to promote the reduction of pollutant emissions from the electrical industry; and (iii) to reduce, under conditions of economic viability, Mexico’s dependence on June 18, 2016. Underfossil fuels as a primary source of energy.
Geography and Population COVID-19 Crisis Since December 2019, a novel strain of coronavirus (SARS-CoV2, commonly referred to asCOVID-19) has spread rapidly around the reforms,world, with at least 150 countries and territories with confirmed cases, and, on March 11, 2020, the outbreak ofCOVID-19 was characterized as a pandemic by the World Health Organization (WHO). On February 28, 2020, Mexico transitionedconfirmed its first case of coronavirus. The coronavirus pandemic has negatively influenced Mexico’s growth projections due to, an accusatory systemamong other reasons, its potential impact on the circulation of criminal justice,people and products worldwide. A continued rise in the number ofCOVID-19 infections or a prolongation of the outbreak, could increase the adverse economic effects. As of March 20, 2020, Mexico and the U.S. agreed to temporarily close the border tonon-essential travel to curb the spread of the coronavirus. The WHO declared on March 23, 2020 that Mexico had entered phase two, referred to as community contagion, of the pandemic. Also on March 24, 2020, the Mexican Government imposed restrictions onnon-essential activities in the public, private, and social sectors, which defendants are presumed innocent until proven guilty. Closed-door proceedings, previously conducted almost exclusively through written briefs, will be replaced with oral trials openwere extended to May 30 as of April 16, including suspending gatherings of more than 100 people, closing all schools and encouraging the public. A specific judge will be namedprivate sector to each criminal proceedingallow employees to work remotely. Essential activities include medical services and will follow that proceeding throughsupplies, public safety, fundamental economic functions, government social programs and critical infrastructure. On March 30, 2020, the sentencing phase and will be required to be present at every hearing. The victims of criminal activity are more directly involved in criminal proceedings and benefit from increased protection of their personal data, as well as access to legal, medical and psychological assistance. LocalMexican Government Financedeclared a national health emergency.
On April 27, 2016,5, 2020, the President presented theLey de Disciplina Financiera de las Entidades FederativasPrograma Emergente para el Bienestar y los Municipiosel Empleo(Law (Emerging Program for Well-Being and Employment) to reinforce the Financial Discipline of the States and the Municipalities) was publishedmeasures provided for in the Official Gazette of the Federation. Pursuant to the law, states and municipalities will need the authorization of the local congress to incur additional indebtedness if their outstanding indebtedness is higher than six percent of the revenues approved by the Legislative branch for the applicable fiscal year. The law also imposes a new set of requirements that must be met prior to having the Mexican Government guarantee debt issued by states and municipalities. This legislation follows a May 2015 decree amending various provisions of the Constitution, creating a new legal framework to control the borrowing practices of the states and municipalities.
Economic Development
On June 1, 2016, theLey de Zonas Económicas Especiales(Law of Special Economic Zones) was published in the Official Gazette of the Federation. This law is part of the National Development Plan and its purpose is to regulate the establishment and operationPlan. Some of the Special Economic Zonesrelevant actions, which will be supported by savings in theFondo de Estabilización de Ingresos Presupuestarios(Budgetary Revenue Stabilization Fund),resources held in certain public trusts that will be transferred to theTesorería de la Federación (Treasury of the Federation) and promote sustainable economic growthdeployment of funds by national development banks, include: (i) utilizing resources from theInstituto de Seguridad y Servicios Sociales de los Trabajadores del Estado(Institute for Social Security and Social Services of Government Workers, or ISSSTE), theFondo de la Vivienda del Instituto de Seguridad y ServiciosSociales de los Trabajadores del Estado(Housing Fund for Social Security and Social Services of Government Workers, or FOVISSSTE) and theInstituto del Fondo Nacional de la Vivienda para los Trabajadores(National Workers’ Housing Fund Institute, or INFONAVIT) to grant personal and housing loans to workers, with the additional aim of generating 970,000 new jobs; (ii) allowing for anticipated access to Ps. 42 billion in pension payments for eight million adults aged sixty-five or older who qualify for the Mexican Government’s pension plan; (iii) providing resources to hire 45,000 doctors and nurses in the undeveloped regionsupcoming nine months; (iv) reducing the tax burden on PEMEX to provide it with additional resources of up to Ps. 65 billion; and (v) announcing an upcoming program that will provide Ps. 339 billion to the country, particularlyenergy sector.
The Mexican Government is monitoring the southern regionspread of Mexico.COVID-19 and is likely to continue issuing updated guidance and regulations. The Special Economic Zonesimpact of theCOVID-19 outbreak on Mexico’s economic performance is highly uncertain. There are designated geographic areas subjectlikely to special incentives to promote business, attract newbe adverse impacts on economic activity (including a decrease in GDP), employment, foreign investment and generate employment opportunities through infrastructure development projects. Consistent withinternational trade, among other areas, and these could adversely affect the National Development Plan, on January 9, 2017,balance of payments, international reserves and public finance. While the Mexican Government announced that it signedduration of these effects remains highly uncertain, theAcuerdo para el Fortalecimiento Económico y la Protección de la Economía Familiar(Agreement for Economic Strengthening nature and Protectionmagnitude of the Economy of the Family). This agreement aimsthese effects are likely to strengthen the domestic market in Mexico with a focus on protecting the economic well-being of Mexican families, increasing investment and maintaining job creation, economic growth and competitiveness.be material.
Item 4A. | Unresolved Staff Comments |
Not applicable. Item 5. | Operating and Financial Review and Prospects |
General We earn income from: export sales, which consist of sales of crude oil and condensates, petroleum products and petrochemical products; domestic sales, which consist of sales of natural gas, petroleum products (such as gasoline, diesel fuel and LPG) and petrochemical products; and other sources, including financial and investment income and insurance revenue. Our operating expenses include: cost of sales, including the cost of purchases of imported petroleum and other products, depreciation and amortization, salaries, wages and benefits, a portion of the net cost of employee benefits for the period, the variation of inventories, maintenance, and exploration and unsuccessful drilling expenses; transportation and distribution expenses (including a portion of the net cost of employee benefits for the period); and administrative expenses (including a portion of the net cost of employee benefits for the period). Our income is affected by a number of factors, including: changes in international prices of crude oil, petroleum products and petrochemical products, which are denominated in U.S. dollars, and domestic prices of petroleum products, which are denominated in pesos; the type and volume of crude oil produced and exported; the type and volume of natural gas produced, processed and sold domestically and internationally; the results of development and exploration activities; the amount of taxes, duties and other payments that we are required to make to the Mexican Government; fluctuations in thepeso-U.S. dollar exchange rate; and Mexican and global economic conditions, including the levels of international interest rates. Overview In 20162019, we focusedexperienced significant operational challenges as a result of the continued decline in our proved hydrocarbon reserves and production. We continued to focus on recoveringstabilizing our operations and our financial stability, taking concrete steps towards implementing the opportunities presented to us by the energy reformposition, however, prices remain significantly below 2014 levels and strengthening the relationship with our stakeholders. These actions took place against a macroeconomic landscape that continues to be challenging for us. Crude oil prices continued the decline that commencedfluctuated greatly in late 2014, albeit less sharply than before. In 2016, the2019. The weighted average price of the Mexican crude oil export price decreased from U.S. $43.12$61.34 per barrel in 20152018 to U.S. $35.63$55.63 per barrel in 2019 and our total crude oil and condensates production in 2019 amounted to 1,703 thousand barrels per day, below our target of 1,707 thousand barrels per day. During 2019 we also began to take certain actions to increase our efficiency and competitiveness. Towards that end, we have initiated our implementation of our 2019-2023 Business Plan, see “Item 5—Operating and Financial Review and Prospects—2019-2023 Business Plan and Recent Initiatives.” However, beginning in early 2020, we experienced a rapid decline in oil prices. This decline occurred as a result of the substantial decline in demand for oil due to the economic impacts of theCOVID-19 pandemic, as well as a disagreement between Russia and OPEC, particularly Saudi Arabia, regarding production cuts in response to theCOVID-19 pandemic. This reduced demand lead to an oversupply and in turn insufficient global storage capacity. The decreased demand for oil that began in the first quarter of 2020 is expected to continue. As a result of these factors, the weighted average Mexican crude oil export price averaged U.S. $40.91 per barrel for the three month period ended March 31, 2020 and reached negative U.S. $7.33 per barrel on April 28, 2020. As of May 6, 2020, the weighted average Mexican crude oil export price was U.S. $21.10 per barrel. In addition, the continued depreciation of theMexican peso againsthas depreciated in relation to the U.S. dollar from Ps. 18.8452 per dollar as of December 31, 2019 to Ps. 24.3812 per dollar as of May 6, 2020. Our business, results of operation and financial condition have already been negatively affected by this drop in 2016 also hadoil prices, and we anticipate that these negative effects will continue. In response to this situation, the Mexican Government announced that it would reduce our 2020 tax burden by Ps. 65.0 billion in order to provide us with additional resources to support our operations. See Note 28 to our consolidated financial statements included herein. Additionally, on April 12, 2020, the OPEC+ countries, which include Mexico, reached an agreement to reduce their overall crude oil production in an attempt to stabilize oil prices. Pursuant to this agreement, Mexico has agreed to reduce its, and in turn our, crude oil production by 100,000 barrels per day for a significant negative impactperiod of two months beginning on May 1, 2020. For more information regarding this OPEC+ production agreement, see “Item 4—Trade Regulation, Export Agreements and Production Agreements.” As a result of this agreement, we are revising our income statement due to the conversioncrude oil production goal for 2020 of 1,866.5 thousand barrels per day taking into consideration our financial debt, which is primarily denominated in U.S. dollars, to pesos.ongoing budget revision. Going Concern Our consolidated financial statements as of December 31, 20162019 and 20152018 have been prepared on a going concern basis, which assumes that we can meet our payment obligations.obligations and our operating continuity. As we describe in Note 222-f to our consolidated financial statements, we have experienced certain conditions that have generated important uncertainty andthere exists significant doubts concerningdoubt about our ability to continue operating, including recurring net losses, negative working capital, negative equity and negative cash flows from operating activities.as a going concern. We discuss below, and inNote 222-f to our consolidated financial statements, the circumstances that have caused these negative trends and the concrete actions we are taking to improve our results, strengthen our ability to continue operating and achieve revenue maximization and efficiencies in an economic environment which is showing recovery and some stability.efficiencies. We continue operating as a going concern, and our consolidated financial statements do not includecontain any adjustments that might result from the outcome of this uncertainty. RedefinitionWe have recognized continuous net losses during 2019, 2018 and 2017 of Petróleos MexicanosPs. 347,911.1 million, Ps. 180,419.8 million, and Ps. 280,850.6 million, respectively. In addition, we had a negative equity of Ps. 1,997,208.4 and Ps. 1,459,405.4 million as of December 31, 2019 and 2018, respectively, mainly due to continuous net losses. We had a negative working capital of Ps. 211,651 million and Ps. 54,666.3 million, as of December 31, 2019 and 2018, respectively.
We also have significant debt. This debt was incurred mainly to finance necessary operational investments. Due to our heavy fiscal burden resulting from the payment of hydrocarbons extraction duties and other taxes that we are required to pay to the Mexican Government, in recent years the cash flow derived from our operations has not been sufficient to fund our operating and investment costs and other expenses. In turn, our indebtedness has increased significantly. Our working capital has also decreased in part as a State-Owned Productive Companyresult of the drop in oil prices that began at the end of 2014 and the subsequent ongoing oil price fluctuations. Despite the OPEC+ agreement entered into by Mexico on April 12, 2020 to reduce world crude oil production intended to mitigate the drop in oil prices and demand, crude oil prices have remained volatile. See “—Risk Factors Related to our Operations—The outbreak ofCOVID-19 has had and may continue to have an adverse effect on our business, results of operations and financial condition.” In addition, in 2019 and in the beginning of 2020, certain rating agencies downgraded our credit rating, which could have an impact on the cost and terms of our new debt, as well as our contract renegotiations during 2020. See “Item 5—Liquidity and Capital Resources—Overview” below. We believe we have the capacity to comply with our payment obligations and our operating continuity, however, our future cash flows are continuinguncertain due to implement a business strategy that redefinescircumstances outside of our control. Any adverse impact from sustained decrease in crude oil prices below the budgeted average price for 2020 and from the slow-down of the economy would have an adverse impact in our results of operation, cash flows and may require us to consider additional actions to address these shortfalls. The combined effect of the above-mentioned events indicates the existence of significant doubt about our ability to continue as a state-owned productive company, enables usgoing concern. For more information on the circumstances that have caused these negative trends and the concrete actions we are taking to operate competitivelyimprove our results, strengthen our ability to continue operating and efficientlyachieve revenue maximization and takes advantageefficiencies, see Note22-f to our consolidated financial statements included herein. 2019-2023 Business Plan and Related Initiatives On July 16, 2019, our Board of Directors unanimously approved our Business Plan for the opportunities made availablefive-year period from 2019 through 2023 (which we refer to usas the 2019-2023 Business Plan). The 2019-2023 Business Plan describes, among other things, the proposed foundations for our modernization, which are intended to increase our competitiveness and improve our long-term financial viability, while addressing structural issues related to our fiscal burden and level of indebtedness. The 2019-2023 Business Plan sets forth certain objectives we hope to achieve with respect to our operations. We intend to accelerate and increase the development of oil and gas reserves and to increase hydrocarbons production both in newly discovered reservoirs and fields currently in operation. For newly discovered reservoirs, we plan to increase production by focusing oneasy-to-access shallow waters and terrestrial areas, as well as working to reduce the energy reform. As a productive state-owned company, our business model contemplates maximizing value for Mexicotime between discovery and accordingly,first production. For fields currently in operation, we intend to focusincrease production by developing new wells and undertaking major repairs. The 2019-2023 Business Plan also contemplates the gradual expansion of our refining capacity for fuel and petrochemical production through, among other things, increased investment in the rehabilitation of the National Refining System and the construction of a new refinery in Dos Bocas, Tabasco. We believe that this increase in investment supports the gradual recovery of domestic crude oil processing in the coming years. Furthermore, we plan to develop our transportation, storage and distribution infrastructure with the aim of accommodating our planned production growth, to update measuring, monitoring and quality control systems relating to pipeline transport and storage terminals and to continue our work to reduce product loss and infrastructure damages relating to fuel theft. Finally, the 2019-2023 Business Plan proposes to encourage the participation of the private sector in our operations through long-term service contracts for oil production or CSIEEs, which will be incentive-based and have terms between 15 and 25 years. CSIEE contracts are expected to replace farm-outs as a vehicle for private sector involvement, although existingfarm-out arrangements will be maintained for the duration of their respective terms. The 2019-2023 Business Plan also sets forth certain objectives relating to our financial position. It describes our intent not to increase our net indebtedness over the period covered by the plan by relying on high-yield projects with growth potential. Every action taken underrevenues generated from increased production throughout the value chain and reducing our reliance on external sources of financing. We continuously monitor and update our 2019-2023 Business Plan. We are currently reviewing this plan to assess the impact that the March 2020 drop in crude oil prices and theCOVID-19 pandemic will have on our business planplan. For more information on our financial balance goal, see “Item 4—Information on the Company— Capital Expenditures Budget.” The Mexican Government has announced it plans to support the objectives set forth in the 2019-2023 Business Plan by reducing our tax burden and providing capital contributions. In order to help relieve our tax burden, the Mexican Government modified the Hydrocarbons Revenue Law to gradually reduce the Profit-Sharing Duty from 65% to 58% by 2020. We anticipate that our savings from this reduction in the rate of the Profit-Sharing Duty will, be directed towards the efficient allocation of resources, developing profitable businesses and considering the development of new businesses with third parties. These opportunities include expanding the scope of activities in which we participate, enhancing our abilityturn, allow us to acquire technology and knowledge along the entire hydrocarbons value chain through strategic alliances and continuing the migration of certain assignments intofinance investments in exploration and production contracts.extraction, and, in turn, to increase our future hydrocarbon production. In addition, the Mexican Government has announced it plans to make capital contributions to us, and, on April 5, 2020, announced its intention to reduce our tax burden by an additional Ps. 65.0 billion in reaction to the impact of theCOVID-19 pandemic on us. See “Item 5—Liquidity and Capital Resources—Overview” and “Item 5—Overview—Impact of theCOVID-19 Pandemic” below. We began taking certain
The following sets forth a summary of these actions in 2016 and will continue in 2017 as further described below:some of our key objectives based on our 2019-2023 Business Plan: | • | | 2016 Budget Adjustment PlanExploration and Production: For 2017,We intend to increase hydrocarbon production levels in order to support the sustainability of the company. While pursuant to the OPEC+ agreement to reduce crude oil production entered into by Mexico on April 12, 2020, we continuedo not plan to develop actions from thePlan de Ajuste Presupuestal 2016 (2016 Budget Adjustment Plan), which were also includedincrease our crude oil production levels in 2020, it remains our 2017-2021 Business Plan, as this plan contributedgoal to increasing our efficiency to enable us to be more competitiveincrease production levels in the hydrocarbons sector in Mexico; focused investments onfuture when market conditions are favorable to us. The main actions we plan to take to achieve this objective are: (1) accelerate the most profitable projects; established partnerships with the private sector for strategic projectsincorporation of reserves, (2) accelerate development of recently discovered fields and promoted further development in sectors where private investment may provide economic growth in Mexico.(3) develop new methods to attract external investment.
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| • | | Pension ReformIndustrial Transformation:As Our goal is to increase the profitability of January 1, 2016, new employees received a defined contribution plan, pursuant to which both we and our employees contribute to each employee’s individual account, in contrast to the existing defined benefit pension plan, pursuant to which only we contribute.industrial transformation segment. We expect that the defined contribution plan will limit increases in our pension liabilities because, among other things, employees will now also contribute to such plan. In addition, we will provide employees the option to transfer from their existing defined benefit pension plan to a defined contribution plan.implement the following strategies to work towards this goal: (1) rehabilitate our processing facilities in order to increase our refining capacity and accommodate the production of higher value products, (2) combat raw material shortages by expanding the availability and diversifying our sources of raw materials used to produce ethylene, ethylene derivatives and the aromatics chain, (3) improve production and marketing for our fertilizer products and (4) supply our customers with petroleum products in an efficient and timely manner, while also offering quality services.
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| • | | Assets SalesStrengthen Our Financial Position:We will continueplan to evaluate the saleimprove our financial position by (1) maintaining our current level ofnon-essential assets net indebtedness, (2) implementing enhanced monitoring and control procedures for our revenues and expenditures, (3) consolidating coordination among Petróleos Mexicanos and its subsidiary entities and subsidiary companies in order to obtain working capital, such as the sale of Gasoductos de Chihuahuaachieve annual financial balance targets, (4) maintaining financial discipline via austerity and efficiency in 2016.our operating and investment budgets and (5) designing and implementing plans to attract private sector investment.
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| • | | 2017-2021 Business Plan2020 Budget:On November 3, 2016, we announced our business plan forJuly 15, 2019, the five-year period from 2017 through 2021 (which we refer to as the 2017-2021 Business Plan), which is designed to improve cash flows, reduce net indebtedness, strengthen our financial balance (which we define as sales after deducting costs and expenses, investment expenses, taxes and duties, and financial debt service), reduce financial losses in our National Refining System and plans for continued cost-cutting and administrative discipline, as well as the establishmentBoard of additional alliances, including an intensivefarm-out program. The business plan was formulated with what management believes are realistic and conservative assumptions, which does not include additional income from any disposalDirectors of assets.
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| • | | 2017 Plans:Our 2017 plans also sets out certain objectives we expect to achieve with respect to our subsidiary entities as follows: |
Pemex Exploration and Production’s investments will focus on the most profitable assignments, as well as farm-outs and other partnerships aimed at increasing hydrocarbon production. For 2017, Pemex Exploration and Production is planning to develop farm-outs and other partnerships, including the partnership entered with Chevron and Inpex Corporation in bidding round 1.4 for the rights to block 3 which is north of the Plegado Perdido Belt in the Gulf of Mexico and the migration of an assignment through the strategic alliance with BHP Billiton for the Trion project.
With respect to Pemex Industrial Transformation, we are seeking partnerships for auxiliary services and the reconfiguration of certain refineries for projects for 2017, such as the auxiliary services contract with the French company Air Liquide México. S.A. de R.L. de C.V. for the hydrogen supply in the Miguel Hidalgo Refinery in Tula.
Pemex Logistics is being transformed from a company designed to ensure that Petróleos Mexicanos and its subsidiaries are properly supplied to one intended to provide profitable and competitive services to multiple customers. For 2017, Pemex Logistics will hold an open season for parties to contract for transportation and storage of products.
The business plan also describes our goal to increase the profitability of Pemex Fertilizers, Pemex Ethylene, Pemex Cogeneration and Services and Pemex Drilling and Services through services contracts and partnerships for the modernization of their facilities.
| • | | Decreased Debt Financing:We intend to decrease our debt financing during 2017 from the Ps. 240.4 billion of net indebtedness approved for 2016 to the net indebtedness approved for 2017 of Ps. 150 billion. In addition, we will assess opportunities for liability management, such as the transaction completed on October 3, 2016 that exchangednear-to-maturity securities for longer-term maturity securities with better terms, in accordance with market conditions. |
| • | | New Budget:On July 8, 2016, Petróleos Mexicanos’ Board of Directors approved a proposal for the consolidated annual budget of Petróleos Mexicanos and the subsidiary entities for 2017,2020, which was subsequently approved by the Mexican CongressChamber of Deputies on November 10, 201622, 2019 and published in the Official Gazette of the Federation on November 30, 2016.December 11, 2019. The consolidated annual budget of Petróleos Mexicanos and the subsidiary entities for 20172020 approved by the Mexican Chamber of Deputies is Ps. 523.4 billion, representing an increase of approximately Ps. 391.9 billion,12.6% as compared to the Ps. 378.0464.6 billion consolidated annual budget for 2016 adjusted2019. This 2020 budget includes the following financial assistance from the government: (1) Ps. 41.0 billion designated for the construction of the new Dos Bocas refinery in Tabasco and (2) Ps. 25.0 billion to improve our financial balance. However, as a result of March 31, 2016.the decrease in crude oil prices and the global economic conditions arising from theCOVID-19 pandemic, we revised our budget, see “Item 5––Overview––Reduction in our budget” for more information. |
Impact and Response to theCOVID-19 Pandemic Since December 2019, a novel strain ofCOVID-19 has spread throughout the world. The resulting pandemic has had an adverse effect on our business, results of operations and financial condition. Decline in international crude oil prices: Governments across the world have instituted measures to address theCOVID-19 outbreak—which the World Health Organization declared a pandemic on March 11, 2020—including mandatory quarantines, social distancing guidelines, travel restrictions and declaration of health emergencies. The effects of theCOVID-19 virus have led to a worldwide economic slowdown, and as a result there has been a decrease in global demand for crude oil and derivatives. On March 6, 2020, OPEC, led by Saudi Arabia, and another group of petroleum producing nations, led by Russia, did not reach an agreement to reduce crude oil production in order to support crude oil prices, which resulted in a significant drop in global crude oil prices. On April 12, 2020, the OPEC+ countries, including Mexico, reached an agreement to reduce their overall crude oil production. This agreement is expected to help mitigate the decrease in oil prices and demand that has taken place as a result of theCOVID-19 pandemic. For more information regarding this OPEC+ production agreement, see “Item 4—Trade Regulation, Export Agreements and Production Agreements.” However, prices continue to display significant volatility. On April 20, 2020, Mexican crude oil experienced an unprecedented drop below U.S. $0.00 to negative U.S. $7.33. This drastic drop in price was due to low oil demand as a result ofCOVID-19 and the lack of oil storage. As of May 6, 2020, the price of Mexican crude oil was at U.S. $21.10 per barrel. For more information regarding the impact of the decline in international crude oil prices on us, see Note 28 to our consolidated financial statements included herein. Decrease in the demand for petroleum products: As a result of theCOVID-19 pandemic, on March 24, 2020 the Mexican Government, through the Mexican Ministry of Health, implemented actions to protect againstCOVID-19. Some of these actions consist of, among others, issuing directives to avoid places of work, crowded public areas, public buildings or unnecessary social activities during this time. These preventative measures have caused a decrease in demand of certain goods and services, including petroleum products. As of the date of this annual report, we cannot predict what effect these measures will have on our operations or financial position. As a result of the worldwide economic slowdown and, in particular, the decrease in fuel demand, we have experienced a decrease in its domestic sales of petroleum products. The impact on our sales of our petroleum products (gasoline, diesel, jet fuel and others) was a 34% reduction in the period from January 1 to May 6, 2020, in comparison with the same period in 2019. Mexican Government support: On April 21, 2020, the Mexican Government, through a Presidential decree, granted us a reduction in our tax burden equal to Ps. 65.0 million for 2020, which consists of a fiscal credit applicable to the profit sharing duty up to such amount. This decrease in the profit sharing duty is incremental to the one resulting from the decrease of the rate from 65% to 58% in 2020 in accordance with amendments to the 2020 Revenue Law. Reduction in our budget:As a result of the decrease in crude oil prices and the global economic conditions arising from theCOVID-19 pandemic, our management will propose to our Board of Directors an amendment to our budget which will reflect the impacts in our cash flows of the following assumptions: a decrease in crude oil prices and derivatives and production volumes, Mexican Government´s supports through contributions and tax benefits to us, increase of U.S. dollar exchange rate and adjustments to operating expenses by Ps. 5.0 billion and in exploration and production capital expenditures, includingnon-capitalizable maintenance for Ps. 40.5 billion, which combined, will determine a new budget financial balance to be approved by the Ministry of Finance. PEMEX’s response: Our operations are generally considered strategic within the meaning of Articles 27 and 28 of the Mexican Constitution. Certain of our operations therefore remain active as of the date of this annual report – however, in accordance with our business continuity plan, we have reduced our workforce, implemented alternating shifts and allowed a portion of our workforce to work remotely. In addition, we foreseehave implemented sanitizing measures to disinfect our facilities and the use of thermal cameras and other special equipment to monitor infection risks. We prepared our budget for 2020 based on a more stable scenarioMexican crude oil basket price of U.S. $49.00 per barrel and contracted derivative financial instruments to hedge our risk exposure to declines in the price of Mexican crude oil price. Such derivative financial instruments are intended to partially hedge the price of Mexican crude oil when it falls below the average price of U.S. $49.00 per barrel, up to a floor of U.S. $44.00 per barrel. Taking into consideration conditions described above, our budget deficit for the hydrocarbons market, whichyear 2020 may enable an improvement inincrease by Ps. 30.0 billion. We are taking certain actions to face this deficit, such as reducing our revenues. For example, a stabilizationcapital expenditures by Ps. 40.5 billion, decreasing operating expenses that do not hazard our operating capabilities by Ps. 5.0 billion, decreasingnon-strategic projects and focusing instead on more profitable ones, as well as the implementation and development of prices in the hydrocarbons market contributed to the net reversal of impairment experienced in 2016, which resulted in an improvement in our financial position of Ps. 331.3 billion, as compared to the impairment of Ps.477.9 billion in 2015.alternative financing mechanisms that do not constitute public debt. Results of operations and financial condition in 20162019 For the year ended December 31, 2016, we reduced2019, our net loss by 73.2%,income decreased, from a net loss of Ps. 712.6180.4 billion (U.S. $34.5$9.2 billion) in 20152018 to a net loss of Ps. 191.1347.9 billion (U.S. $9.3$18.5 billion) in 2016.2019. This decreaseincrease in net loss was primarily due to: a Ps. 809.2 billion decrease in the impairment of fixed assets; a Ps. 67.0 billion decrease in taxes and other duties, mainly due to the decrease in the weighted average price of the Mexican crude oil export price; and
a Ps. 21.4 billion increase in other revenues, net.
This decrease was partially offset by:
a Ps. 172.3 billion increase in the net periodic cost of employee benefits, mainly due to theone-time Ps. 196.0 billion decrease in pension liabilities recorded in 2015 as a result of modifications made to our pension regime;
a Ps. 99.2 billion increase in exchange loss, net;
a Ps. 86.8279.2 billion decrease in total sales, mainly due to thea decrease in the average sales pricesprice of our petroleum productscrude oil and thenatural gas;
a Ps. 118.5 billion increase in impairment of wells, pipelines, properties, plant and equipment; a Ps. 15.3 billion decrease in volume of sales of liquefied natural gas in Mexico; andother revenues, net; a Ps. 24.915.5 billion increase in financing costs, net.cost, net; and a Ps. 2.7 billion decrease in profit sharing in joint ventures, associates and other. These effects were partially offset by: a Ps. 76.6 billion decrease in cost of sales, mainly due to a decrease in purchases of products; a Ps. 6.0 billion decrease in general expenses; a Ps. 63.2 billion increase in exchange gain, net; and a Ps. 117.7 billion decrease in taxes and other duties. For more information on our results of operations, see “—Results of Operations of Petróleos Mexicanos, the Subsidiary Entities and the Subsidiary Companies—For the Year Ended December 31, 20162019 Compared to the Year Ended December 31, 2015”2018” below. In 2016,2019, our total equity (deficit) equity increaseddecreased by Ps. 98.7537.8 billion from negative Ps. 1,331.71,459.4 billion as of December 31, 20152018 to negative Ps. 1,233.01,997.2 billion as of December 31, 2016.2019. For more information on the decrease of our (deficit)total equity increase,(deficit) see “—Liquidity and Capital Resources—Equity Structure and Mexican Government Contributions” below. This increasedecrease was mainly due to (1) the equity contributions in the total amount of Ps. 161.9 billion made by the Mexican Government to Petróleos Mexicanos in 2016 in the form of Certificates of Contribution “A”; (2) a Ps. 108.2 billion increase in actuarial gains on employee benefits, resulting from the increase in the discount rate used in the actuarial computation method from 7.4% in 2015 to 8.2% in 2016 and an increase in the expected returns for fixed assets; and (3) Ps. 21.4 billion in accumulated gains from the foreign currency translation effect. This increase was partially offset by our net loss for the year of Ps. 191.1 billion.347.9 billion; a Ps. 309.3 billion increase in actuarial losses on employee benefits and a Ps. 2.7 billion accumulated income from the foreign currency translation effect. While we continue to depend heavily on net cash flows from financing activities,Our accounts receivable increased 8.0% in 2016 we were able to strengthen our liquidity. During 2016, our cash and cash equivalents increased by Ps. 54.2 billion, or 49.5%,2019, from Ps. 109.4167.1 billion as of December 31, 20152018 to Ps. 163.5180.1 billion as of December 31, 2016,2019, mainly due to an increase in net cash flows from financing activities. Ourour accounts receivable net, increased 68.2%, in 2016, from sundry debtors (mainly IEPS tax) from larger gasoline imports at the end of the year.
As of December 31, 2019, we owed our suppliers Ps. 79.2208.0 billion as compared to Ps. 149.8 billion as of December 31, 2015 to Ps. 133.2 billion as of December 31, 2016, mainly due to the following: an increase in accounts receivable from sales to our international customers;
customer services reimbursements;
the current portion of the promissory notes issued by the Mexican Government in relation to our pension liabilities;
higher accounts receivable from gasoline distributors; and
an increase in tax credits associated with hydrocarbon extraction duties.
In addition to increasing our assets, during 2016 we sought to address one of the most critical problems we faced in 2015—our accounts payable to suppliers.2018. As of December 31, 2016, we owed our suppliers approximately Ps. 151.6 billion as compared to Ps. 167.3 billion as of December 31, 2015. As of December 31, 2016,2019, we have paid the total outstanding balance due to suppliers and contractors as of December 31, 20152018 and, as part of our effortMarch 31, 2020, we have paid approximately 79.1% of the total outstanding balance due to repay such balances.suppliers and contractors as of December 31, 2019.
Operating Challenges Notwithstanding our exploration and development efforts in shallow and deep waters thatIn 2019, we carried out in 2016 and the new techniques and strategies we appliedcontinued to improve the timeline for the completion and drilling of new wells, during 2016 ourexperience significant operating challenges. Our crude oil and condensates production totaled 2,153.51,703.5 thousand barrels per day, which was below our crude oil and condensates production target of 1,707 thousand barrels per day and represented a decrease of 113143 thousand barrels per day, or 5.0%7.7%, as compared to 2015.our 2018 production of 1,842.7 thousand barrels per day. This declinedecrease was primarily a result ofdue to the natural decline of some of ourcertain mature fields particularly productionand an increase in fractional water flow wells at thecertain fields located in the Litoral de Tabasco, AbkatúnPol-ChucSouthern region, Northern region and Cantarell business units.the Southwestern Marine region. We describe the reasons for thisthe natural decline of our fields under “Item 4—Information on
the Company—Business Overview—Exploration and Production—Crude Oil and Natural Gas Production.” Our exploration and production segment is working to successfully stabilize production and replace our reserves. In 2016, the totalAt December 2019, we set an initial crude oil we processed decreased by 12.3% to 933and condensates production target for 2020 of 1,866 thousand barrels per day and a natural gas production target, excluding nitrogen, of 4,512.6 million cubic feet per day. AlthoughHowever, we hadare revising these targets due to our planned budget revision.
In 2019, we processed a decrease intotal of 592 thousand barrels of crude oil processing andper day, a 3.2% decrease as compared to 2018, mainly as a result of production interference caused by our petroleum products output,refineries rehabilitation program, which we expect to conclude during 2020. As a result, we used 36.1% of our primary distillation capacity in 2019, a 1.5% decrease as compared to 2018. In 2019, our variable refining margin increaseddecreased by 33.7% dueU.S. $ 0.16 per barrel to U.S. $0.80 per barrel, a 16.7% decrease as compared to 2018. This decrease was primarily a result of a decrease in prices and weak refining margins in the U.S. Gulf Coast region, which were caused by decreased demand for gasoline and heightened levels of refinery production, partially offset by an increase in the unit contribution margin of U.S. $1.10 per barrel, primarily as a result of the increase in average sales prices for refined products. We are working to reverse our economic and operating losses and to increase processing of crude oil.distillates yield. Critical Accounting Policies Some of our accounting policies require the application of estimates, judgments and assumptions by management which affect the reported amounts of assets and liabilities as of the date of our financial statements, as well as the reported amounts of revenues and expenses during the periods presented in this report. By their nature, these estimates, judgments and assumptions are subject to a degree of uncertainty and are based on: our historical experience; terms of existing contracts; management’s view of trends in the oil and gas industry, both internationally and within Mexico; economic factors in Mexico; and information from outside sources. We believe that the following critical accounting policies, among others, affect management’s judgments and estimates used in the preparation of our consolidated financial statements according to IFRS, and could potentially impact our financial results and future financial performance. There can be no assurance that actual results do not differ from these estimates. These policies are more fully described in Note 3 to our consolidated financial statements included herein. Successful Efforts Method of Oil and Gas Accounting We apply 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 such reserves are commercially viable. Otherwise, the costs of drilling an exploratory well are charged to exploration expense. Other expenditures on exploration are charged to exploration expense, as incurred. Depreciation and amortization of capitalized costs associated with wells are based on the estimated commercial life of the field to which the well corresponds, taking into account the relationship between the field’s production levels for the period and proved developed reserves, as of the beginning of the year and as updated on a quarterly basis for new development investments. Reserves estimates are determined in accordance with earth science and petroleum engineering principles and practices pursuant to Rule4-10(a) and, where necessary, in accordance with the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the SPE as of February 19, 2007.2007, as amended. These procedures are consistent with international reserves reporting practices. The estimation of these reserves depends on assumptions made and the interpretation of the data available, and can vary as a result of changes in such factors as forecasted oil and gas prices, reservoir performance and developments in oil field technology. The results of drilling activities, test wells and production after the date of estimation are utilized in future revisions of reserves estimates. Downward revision of reserves estimates can result in: higher depreciation and depletion expense per barrel in future periods; an immediatewrite-down of an asset’s book value in accordance with accounting rules for the impairment of properties; or changes in our accrual of the asset retirement obligation. An impairment of oil and gas producing fixed assets will result if the downward revisions are so significant that the estimated future cash flows from the remaining reserves in the field are insufficient to recover the unamortized capitalized costs. Conversely, if the oil and gas reserves quantities are revised upward, our per barrel depreciation and depletion expense will be lower. The application of successful efforts accounting can also cause material fluctuations between periods in exploration expenses if drilling results are different than expected or if we change our exploration and development plans. The determination that exploratory drilling was unsuccessful in finding economically producible reserves requires the immediate expensing of previously capitalized drilling costs. We make periodic assessments of the amounts included within intangible assets to determine whether capitalization is initially appropriate and should continue. Exploration wells capitalized beyond 12 months are subject to additional evaluation as to whether the facts and circumstances have changed, and therefore whether the conditions described below no longer apply. Exploration wells more than 12 months old are expensed unless: they are in an area requiring major capital expenditures before production can begin, commercially productive quantities of reserves have been found, and they are subject to further exploration or appraisal activity, in that either drilling of additional exploratory wells is underway or firmly planned for the near future; or proved reserves are identified within 12 months following the completion of exploratory drilling. Environmental Remediation and Asset Retirement Obligations We are required to make judgments and estimates in recording liabilities for environmental cleanup and asset retirement obligations. In accordance with applicable legal requirements and accounting practices, we recognize an environmental liability when the cash outflows are probable and the amount is reasonably estimable. We account for disbursements related to the conservation of the environment that are linked to revenue from current or future operations as costs or assets, depending on the circumstances of each disbursement. Moreover, we account for disbursements related to past operations, which no longer contribute to current or future revenues, as current period costs. We accrue a liability for a future disbursement when an obligation related to environmental remediation is identified and the amount thereof can be reasonably estimated. Estimated liabilities for environmental remediation and asset retirement obligations are subject to change as a result of: changes in laws, regulations and their interpretation; the review of additional information on the extent and nature of site contamination; the determination of additional works that need to be undertaken; improvements in technology; the nature and timing of expenditure; foreign currency exchange rates to the extent that some of these costs are incurred in U.S. dollars; and changes in discount rates. We do not recognize the obligations related to the costs of future retirement of assets associated with the principal refining processes for gas and petrochemicals. These assets are considered to have an indefinite useful life due to the potential for maintenance and repairs, and, accordingly, we lack sufficient information to reasonably determine the date on which they will be decommissioned. Financial Instruments We face market risk caused by the volatility of hydrocarbon prices, exchange rates and interest rates. In order to monitor and manage this risk, Petróleos Mexicanos and the subsidiary entities have developed policies and guidelines that promote an integrated scheme for market risk management, regulate the use of DFIs, guide the development of hedging strategies and provide strategies for the formulation of risk limits. We enter into derivatives transactions with the sole purpose of hedging financial risks related to our operations. Nonetheless, some of these transactions do not qualify for hedge accounting treatment because they do not meet the strict requirements of IAS 39, “Financial Instruments Recognition and Measurement” for designation as hedges. They are therefore recorded in the financial statements asnon-hedge instruments or as instruments entered into for trading purposes, despite the fact that their cash flows are offset by the cash flows of the positions to which they relate. As a result, the changes in their fair value are recognized in the financing cost. See Note 163, Note 8 and Note 18 to our consolidated financial statements included herein. Impairment ofNon-Financial Assets At each reporting date, we evaluate whether there is objective evidence thatnon-financial assets, other than inventory or deferred taxes, are impaired. Significant judgment is required to appropriately assess the recoverable amount, represented by the higher of the value in use and the fair value, less costs to sell or otherwise dispose of our reporting units. Our future net cash flow projections are based on the best available estimates of thecash-generating unit income and expenses using forecasts, prior results and the outlook for the business’s performance and the market’s development. Our annual budget and business plan set macroeconomic forecasts for each of thecash-generating units, which are calculated based on different assumptions regarding projected commodity sales prices, volume of production and overhead costs, foreign currency exchange rates and inflation, among other items, that are used to quantify income and expense estimates. Any change in the assumptions upon which the forecasts for eachcash-generating unit are based can materially affect the anticipated cash flows to be generated bynon-financial assets. These estimated future net cash flows are discounted at present value usingcash-generating unit specific discount rates determined as a function of the currency in which their respective cash flows are denominated and the risks associated with these cash flows. The discount rates are intended to reflect current market assessments of the time value of money and the risks specific to the asset. Accordingly, the various discount rates used take into consideration country risk. To ensure that the calculations are consistent and avoid double counting, the cash flow projections do not factor in risks that have already been built into the discount rates used. The discount rates used reflect current market conditions and specific risks related to those fixed assets. SeeNote 3(j)3-H and Note 13 to our consolidated financial statements included herein. As of December 31, 2016,2019, we have carried out an impairment test to assess the carrying amount ofnon-financial assets, other than inventories and deferred taxes. The impairment test has resulted in a net impairment of Ps. 97.1 billion, primarily resulting from a Ps. 169.8 billion impairment for Pemex Exploration and Production, mainly due to a decrease in production profiles volume in the barrel of crude oil equivalent, a decrease in crude oil and gas prices and a decrease in exchange rate from Ps. 19.6829 per U.S. $1.00 as of December 31, 2018 to Ps. 18.8452 per U.S. $1.00 of December 31, 2019, which was partially offset by a decrease in the discount rate and a benefit from income taxes due to lower income production profiles. The impairment of Pemex Exploration and Production was offset by a reversal of impairment of Pemex Industrial Transformation of Ps. 42.2 billion due to significant maintenance to recover assets use levels and a greater supply of light crude oil from Pemex Exploration and Production used to generate the quality of refined products. Pemex Logistics also contributed to the offset, with a reversal of impairment of Ps. 331.3 billion,34.1, primarily resulting from (1) a Ps. 350.7 billion reversal mainly due to the reallocation of resources to the most highly profitable fields, particularly fields with lower production costs, (2) the 20.1% appreciation of the U.S. dollar relative to the peso, (3) the change in the period used to estimate the long-term recoverable value of fixed assets from 20 to 25 years, (4) reclassification of proved reserves and (5) a decrease in the discount rate. This net reversal was partially offset by anprojections of costs of losses derived from fuels subtraction. For more information on the impairment of fixedournon-financial assets, of Ps. 19.4 billion, mainly duesee Note13-E to the fact that cash flows were insufficient to match the recovery value of our exploration and production segment’s Lakach project and a decrease in production at the Cangrejera and Independencia petrochemical centers.consolidated financial statements included herein. Income Taxes As described under “Item 4—Information on the Company—Taxes, Duties and Other Payments to the Mexican Government” above and in Note 203-M and Note 21 to our consolidated financial statements included herein, the fiscal regime applicable to Petróleos Mexicanos and the subsidiary entities and certain subsidiary companies as of December 31, 20162019 became effective on January 1, 2015. Effective as of this date, the Hydrocarbons Revenue Law and the Federal Revenue Law of the applicable year comprise the fiscal regime applicable to us. As of December 31, 2016,2019, Petróleos Mexicanos and the subsidiary entities are required to estimate taxable income according to IAS 12, “Income Taxes.” This process involves an estimation of our actual current tax and an assessment of temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred assets and liabilities, which are included within our consolidated balance sheet. We must then assess the likelihood that our deferred assets will be recovered from future taxable income. Management judgment is required in determining our provision for income taxes. In the event that actual results differ from our estimates, any adjustments recorded will affect our net income during the corresponding period. Exploration and Production Taxes and Duties The fiscal regime applicable to the exploration and production assignments granted to us by the Mexican Government includes the following taxes and duties: | • | | Profit-Sharing Duty.The Profit-Sharing Duty is calculated based on the value of hydrocarbons produced in the relevant area minus certain permitted deductions. As of January 1, 2016, the applicable rate of this duty was 68.75%. Pursuant to the Hydrocarbons Revenue Law, the Profit-Sharing Duty decreases on an annual basis and as of January 1, 2019, it is expected to be set at 65%. |
Profit-Sharing Duty. TheProfit-Sharing Duty is calculated based on the value of hydrocarbons produced in the relevant area minus certain permitted deductions. As of January 1, 2019, the applicable rate of this duty was 65.0%. Pursuant to the Hydrocarbons Revenue Law, theProfit-Sharing Duty decreases on an annual basis. As of January 1, 2020, this duty was set at 58.0%. | • | | Hydrocarbons Extraction Duty.The Hydrocarbons Extraction Duty is calculated based on a rate that varies according to (i) the type of hydrocarbon (e.g., crude oil, associated natural gas,non-associated natural gas or condensates), (ii) the volume of production and (iii) the relevant market price. |
Hydrocarbons Extraction Duty. The Hydrocarbons Extraction Duty is calculated based on a rate that varies according to (i) the type of hydrocarbon (e.g., crude oil, associated natural gas,non-associated natural gas or condensates), (ii) the volume of production and (iii) the relevant market price. | • | | Exploration Hydrocarbons Duty.The Exploration Hydrocarbons Duty is calculated by applying a quote per square kilometer for each assigned phase of production and extraction phase. Pemex Exploration and Production must make monthly payments of this duty. The Mexican Government is entitled to collect a monthly payment of Ps. 1,150 per square kilometer ofnon-producing areas. After 60 months, this tax increases to Ps. 2,750 per square kilometer for each additional month that the area is not producing. These amounts will be updated on an annual basis in accordance with the national price index. |
Exploration Hydrocarbons Duty. The Exploration Hydrocarbons Duty is calculated by applying a quote per square kilometer for each assigned phase of production and extraction phase. Pemex Exploration and Production must make monthly payments of this duty. For 2019, the Mexican Government was entitled to collect a monthly payment of 1,355.82 pesos per square kilometer ofnon-producing areas. After 60 months, this tax increases to 3,242.17 pesos per square kilometer for each additional month that the area is not producing. These amounts will be updated on an annual basis in accordance with the NCPI. During 2019, we paid Ps. 1,050 million under this duty, a 2.2% increase from Ps. 1,027 million in 2018. For more information on the taxes and duties applicable to and paid by Pemex Exploration and Production, see Note 21 to our consolidated financial statements included herein. Contingencies In the ordinary course of business, we are named in a number of lawsuits of various types. We evaluate the merit of each claim and assess the likely outcome. Liabilities for loss contingencies are recorded when it is probable that a liability has been incurred and the amount thereof can be reasonably estimated. We do not recognize contingent revenues, earnings or assets until their realization is assured. We have not recorded provisions related to ongoing legal proceedings whenever we do not expect an unfavorable resolution in such proceedings, except as disclosed in “Item 8—Financial Information—Legal Proceedings—Civil Actions” and Notes 620 and 2527 to our consolidated financial statements included herein. Employee Benefits As described under “Item 6—Directors, Senior Management and Employees—Employees” below and in Note 2(m)3-K and Note 19 to our consolidated financial statements included herein, as of January 1, 2016, we are operating both a defined contribution plan and defined benefit pension plan. Until December 31, 2015, we only operated a defined benefit pension plan. Contribution Plan Under the defined contribution plan, both we and our employees contribute to each employee’s individual account, in contrast to the existing defined benefit plan, pursuant to which only we contribute. We account for our contributions as costs, expenses or assets. Contributions to the defined contribution plan that are not expected to be fully settled within 12 months after the end of the annual reporting period in which the employee rendered related services will be discounted using the defined benefits plan discount rate. Benefit Pension Plan Under the defined benefit pension plan, we are the only contributor to a trust, which is managed separately. We recognize the cost for the defined benefit pension plan based on independent actuarial computations applying the projected unit credit method. Actuarial gains and losses are recognized within other comprehensive results for the period in which they occur. The costs of prior services are recognized within profit or loss for the period in which they are incurred. Our net obligation with respect to the defined benefit pension plan equals the present value of the defined benefit obligation less the fair value of plan assets for which obligations have yet to be settled. The value of any asset is limited to the present value of the economic benefit represented by the plan reimbursements and reductions in future contributions to the plan. In addition, otherlong-term employee benefits include seniority premiums payable for disability, death and survivors’ benefits, medical services, gas and basic food baskets for beneficiaries. Termination benefits are recognized in profit or loss for the year in which they are incurred. Benefits to employees were approximately 34.3%37.2% and 41.2%30.6% of our total liabilities as of December 31, 20162019 and 2015,2018, respectively, and any adjustments recorded will affect our net income and/or comprehensive net income during the corresponding period. Recently IssuedNew Accounting Standards
Note 3(u) to our consolidated financial statements discussesIFRS 16
On January 1, 2019, we adopted the new accounting interpretationsstandard IFRS 16 “Leases”, issued by the International Accounting Standards Board. The standard sets out the principles for the recognition, measurement, presentation and revisionsdisclosure of leases and requires lessees to recognize most leases on the balance sheet. We applied IFRS 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under IAS 17 and IFRIC 4. The details of accounting policies under IAS 17 and IFRIC 4 are disclosed separately. For more information on the requirements and impacts of IFRS that apply16, see Notes4-A and 17 to annual periods beginning on or after January 1, 2016. There are no additional standards, amendments or interpretations that, even though not yet effective, could have a material impact on our consolidated financial statements included herein. Recently Issued Accounting Standards Some of the new accounting standards went into effect for annual periods beginning January 1, 2019 and earlier application is permitted. However, we have not early adopted the new or amended standards in preparing these consolidated financial statements (see Note 29 to our consolidated financial statements included herein). The following amended standards and interpretations are not expected to have a significant impact on our consolidated financial statements. Amendments to References to Conceptual Framework in IFRS Standards. Definition of a Business (Amendments to IFRS 3). Definition of Material (Amendments to IAS 1 and IAS 8). Sales Volumes and Prices The profitability of our operations in any particular accounting period is directly related to the sales volume of, and average realized prices for, the crude oil and natural gas that we sell. These average realized prices for crude oil and natural gas fluctuate from one period to another due to world market conditions and other factors. Export Volumes and Prices Pemex Exploration and Production sells crude oil to PMI, which then sells it to international clients. The volume of crude oil that we export is the volume delivered to international clients as adjusted for water content according to the bill of lading and standard market practice. PMI bases crude oil export price formulas on a basket of international reference prices and a constant set according to specific market conditions. We determine export prices of refined products, petrochemicals and natural gas by reference to market conditions and direct negotiations with our clients. Significant changes in international crude oil prices directly affect our financial results. The impact of changes in crude oil prices on our refining activities and petrochemicals business depends on: the magnitude of the change in crude oil prices; how quickly petroleum and petrochemical product prices in international markets adjust to reflect changes in crude oil prices; and the extent to which prices in Mexico, where we sell most of our petroleum products and petrochemicals, reflect international prices for those products. The following table sets forth the weighted average market price per barrel of crude oil that PMI received from exports and the average price of itsthe United States benchmark, West Texas Intermediate (or WTI) crude oil, for the years indicated. Between 2012The average price differential between WTI and 2013, the average prices of crude oil that we exported were higher thanin the average prices of WTI crude oil. As of December 31, 2014,last five years fluctuated between U.S. $5.60 in 2015 and 2016 however,U.S. $1.40 in 2019, which is mainly the average priceresult of crude oil that we exported fell below the average price of WTI crude oil, primarily due to the strengthening of the WTI crude oil against the prices of certain benchmark crudes, such as West Texas Sour, Light Louisiana Sweet and Brent Dated, and againstfluctuations in the price of high sulfur fuel oil, uponother benchmarks on which theour pricing formulas for our crude oil are based. See “Item 4—Information on the Company—Business Overview—International Trading.”
| | | Year ended December 31, | | | Year ended December 31, | | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | | (in dollars per barrel) | | | (in dollars per barrel) | | West Texas Intermediate crude oil average price | | U.S. $ | 94.13 | | | U.S. $ | 97.90 | | | U.S. $ | 93.28 | | | U.S. $ | 48.71 | | | U.S. $ | 43.34 | | | | U.S. $48.71 | | | | U.S. $43.34 | | | | U.S. $50.79 | | | | U.S. $65.20 | | | | U.S. $57.03 | | PEMEX crude oil weighted average export price | | | 101.82 | | | | 98.46 | | | | 86.00 | | | | 43.39 | | | | 35.63 | | | | 43.12 | | | | 35.65 | | | | 46.73 | | | | 61.41 | | | | 55.63 | |
Note: | The numbers in this table are daily average prices for the full year, which differ from spot prices at year end. On April 26, 2017,May 6, 2020, the spot price for West Texas Intermediate crude oil was U.S. $49.62$23.99 per barrel and the spot price for the PEMEX crude oil basket was an estimated U.S. $42.86$21.10 per barrel. |
Sources: PMI operating statistics and Platt’s U.S. Marketscan (McGraw-Hill Company)
Sources: | PEMEX’s oil statistics and Platt’s U.S. Marketscan (S&P Global Inc.). |
Domestic Prices UntilAs of December 31, 2016, the formulas used to determine prices for petroleum products and petrochemical products sold in the Mexican market were determined by the Ministry of Finance and Public Credit and the Energy Regulatory Commission, in accordance with the Federal Public Administration Organic Law, as amended, theLey de Planeación(Planning Law), theReglamento Interior (Internal Regulations) of the Ministry of Finance and Public Credit and theLey de la Comisión Reguladora de Energía (Energy Regulatory Commission Law). The Ministry of Finance and Public Credit and the Energy Regulatory Commission received input from us and other governmental ministries through committees composed of officers of Petróleos Mexicanos, the subsidiary entities, some of the subsidiary companies, and representatives of various government ministries, including, among others, the Ministry of Finance and Public Credit, the Ministry of Energy, theSecretaría de la Función Pública (Ministry of Public Function, or the SFP) and theSecretaría de Economía (Ministry of Economy). The Ministry of Finance and Public Credit and the Energy Regulatory Commission determined wholesale and first-hand sale prices based on opportunity cost, which considers international prices, and makes adjustments to reflect transportation expenses and differences in the quality of our products relative to international benchmarks. The retail price was determined based on the wholesale price plus the value added tax, the retailer’s margin and freight costs. The Ministry of Finance and Public Credit adjusted prices for petroleum and petrochemical products sold in the Mexican market, so that they are consistent with the Mexican Government’s macroeconomic targets.
As a part of the energy reform,2017, domestic fuel prices are to befully liberalized and to beare determined according to market forces by 2018. During 2017 and 2018, domestic fuel prices may vary within awithout regard to any specific range determined by the Mexican Government based on the references points set in 2016 and taking into account international benchmarks.Government. For further information on domestic prices, see “Item 4—Business Overview—Industrial Transformation—Refining—Pricing Decrees” and “Item 4—Business Overview—IndustrialOverview —Industrial Transformation—Gas and Aromatics—Pricing Decrees” above.
The following table compares the average prices in nominal terms of selected petroleum and petrochemical products in Mexico and in the United States for the years indicated: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | | Mexico | | | U.S. | | | Mexico | | | U.S. | | | Mexico | | | U.S. | | | Mexico | | | U.S. | | | Mexico | | | U.S. | | Petroleum Products | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Unleaded regular gasoline(1) | | U.S. $ | 131.36 | | | U.S. $ | 145.42 | | | U.S. $ | 143.36 | | | U.S. $ | 139.70 | | | U.S. $ | 153.16 | | | U.S. $ | 132.21 | | | U.S. $ | 135.94 | | | U.S. $ | 91.18 | | | U.S. $ | 115.11 | | | U.S. $ | 77.28 | | Premium gasoline(1) | | | 139.82 | | | | 159.03 | | | | 150.46 | | | | 156.82 | | | | 161.52 | | | | 152.23 | | | | 144.15 | | | | 114.42 | | | | 122.21 | | | | 102.51 | | Diesel(1) | | | 135.95 | | | | 159.89 | | | | 147.85 | | | | 158.62 | | | | 159.37 | | | | 152.72 | | | | 144.25 | | | | 114.11 | | | | 119.69 | | | | 89.16 | | Jet fuel(2) | | | 137.29 | | | | 129.08 | | | | 124.55 | | | | 123.11 | | | | 115.54 | | | | 113.94 | | | | 70.08 | | | | 64.67 | | | | 56.19 | | | | 53.19 | | Kerosene(3) | | | 135.96 | | | | 128.37 | | | | 147.85 | | | | 122.78 | | | | 159.37 | | | | 113.25 | | | | 142.25 | | | | 64.07 | | | | 119.69 | | | | 52.47 | | Natural Gas(4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Industrial | | | 3.65 | | | | 3.88 | | | | 5.27 | | | | 4.64 | | | | 5.70 | | | | 5.62 | | | | 3.38 | | | | 3.91 | | | | 3.56 | | | | 3.51 | | Residential | | | 12.73 | | | | 10.65 | | | | 15.22 | | | | 10.32 | | | | 15.71 | | | | 10.97 | | | | 12.14 | | | | 10.38 | | | | 11.18 | | | | 10.06 | | Selected Petrochemicals | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ammonia(5) | | | 530.77 | | | | 562.83 | | | | 453.92 | | | | 505.16 | | | | 451.93 | | | | 494.33 | | | | 397.69 | | | | 361.48 | | | | 297.29 | | | | 244.81 | | Polyethylene L.D.(6) | | | 1,667.72 | | | | 1,447.47 | | | | 1,701.00 | | | | 1,493.94 | | | | 1,928.41 | | | | 1,632.48 | | | | 1,531.95 | | | | 1,235.44 | | | | 1,509.55 | | | | 1,203.71 | | Polyethylene H.D.(7) | | | 1,576.48 | | | | 1,359.29 | | | | 1,660.18 | | | | 1,438.83 | | | | 1,855.88 | | | | 1,570.89 | | | | 1,485.01 | | | | 1,189.62 | | | | 1,314.45 | | | | 1,071.58 | | Styrene(8) | | | 1,825.91 | | | | 1,559.16 | | | | 1,991.57 | | | | 1,706.27 | | | | 1,839.24 | | | | 1,678.04 | | | | 1,170.08 | | | | 1,144.37 | | | | 1,117.09 | | | | 1,089.60 | |
| | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | Petroleum Products | | | | | | | | | | | | | | | | | | | | | Unleaded regular gasoline(1) | | | Ps. 1,463.02 | | | | Ps. 1,460.19 | | | | Ps. 1,413.27 | | | | Ps. 1,813.33 | | | | Ps. 1,671.92 | | Premium gasoline(1) | | | 1,127.40 | | | | 931.81 | | | | 1,277.53 | | | | 1,948.66 | | | | 1,821.32 | | Diesel(1) | | | 1,482.90 | | | | 1,457.27 | | | | 1,543.52 | | | | 1,935.54 | | | | 1,813.10 | | Jet fuel(1) | | | 1,370.67 | | | | 1,268.38 | | | | 1,187.40 | | | | 1,815.91 | | | | 1,824.23 | | Natural Gas(2) | | | 6.18 | | | | 5.81 | | | | 6.99 | | | | 5.57 | | | | 5.01 | | Liquified Petroleum(2) | | | 22.18 | | | | 30.43 | | | | 36.13 | | | | 39.24 | | | | 18.60 | | Selected Petrochemicals | | | | | | | | | | | | | | | | | | | | | Ammonia(3) | | | 6,275.83 | | | | 6,083.33 | | | | 6,433.61 | | | | 7,905.97 | | | | 7,556.74 | | Polyethylene(3) | | | 19,798.58 | | | | 23,402.82 | | | | 22,300.62 | | | | 22,945.27 | | | | 18,207.28 | |
1)(1) | In U.S. dollarsPesos per barrel. Prices to final consumers including taxes. U.S. prices in Houston, Texas. |
| Sources for data accompanying note (1): Ministry of Finance and Lundberg Retail Price Survey (Lundberg Survey Inc.). As of January 1, 2016, prices for two new designations established by the Mexican Government are included in the calculation of unleaded regular gasoline prices: (i) lower than 92 octane gasoline (previously designated as Pemex Magna) and (ii) greater than or equal to 92 octane gasoline (previously designated as Pemex Premium). |
(2) | In U.S. dollarsPesos per barrel. Mexican prices at the gate of the refineries. U.S. spot prices in Houston, Texas (Jet Fuel Gulf Coast Waterborne). |
| Sources for data accompanying note (2): Retail Prices Management of Pemex Industrial Transformation and Platt’s U.S. Marketscan (McGraw-Hill Company).hundred cubic feet. |
(3) | In U.S. dollarsPesos per barrel. In both countries, prices to final consumers. Mexico prices include taxes, while U.S. prices exclude taxes.ton. |
| Sources for data accompanying note (3): Retail Prices Management of Pemex Industrial Transformation and Petroleum Marketing Monthly, published by the Energy Information Administration (Kerosene Type Jet Fuel, end users). |
(4) | In U.S. dollars per thousand cubic feet. Including taxes. Industrial natural gas prices for Mexico are estimated national average first-hand sales prices for the industrial sector. Industrial natural gas prices for the United States are national average prices for industrial users. Residential natural gas prices for Mexico are estimated national average prices forend-users. Residential natural gas prices for the United States are national average prices forend-users. |
| Sources for data accompanying note (4): Retail Prices Management of Pemex Industrial Transformation, Energy Regulatory Commission and Natural Gas Navigator, published by the Energy Information Administration. |
(5) | In U.S. dollars per ton. Prices exclude taxes. Mexican basis prices at Cosoleacaque until 2015. As of January 1, 2016 wholesale customer prices at Petrochemical Plant. Spot prices for the Caribbean. |
| Sources for data accompanying note (5): Pemex Industrial Transformation, Fertecon Ammonia Report and Argus FMB Ammonia. |
(6) | In U.S. dollars per ton. PX 20020 P quality. Prices exclude taxes. Mexico prices to end consumers. U.S. prices are for exports. |
| Sources for data accompanying note (6): Retail Prices Management of Pemex Industrial Transformation and ICIS-Pricing. |
(7) | In U.S. dollars per ton. PADMEX 65050 quality. Prices exclude taxes. Mexico prices to end consumers. U.S. prices are for exports. |
| Sources for data accompanying note (7): Retail Prices Management of Pemex Industrial Transformation and ICIS-Pricing. |
(8) | In U.S. dollars per ton. Prices exclude taxes. Mexico prices to end consumers. U.S. reference prices are an average of contract and spot prices. |
| Sources for data accompanying note (8): Retail Prices Management of Pemex Industrial Transformation and ICIS-Pricing. |
Source: Petróleos Mexicanos. IEPS Tax, Hydrocarbon Duties and Other Taxes The following table sets forth the taxes and duties that we recorded for each of the past three years. | | | Year ended December 31, | | | Year ended December 31, | | | | 2014 | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | | (in millions of pesos)(1) | | | (in millions of pesos)(1) | | Hydrocarbon extraction duties and others | | | Ps. 760,912 | | | | Ps. 377,087 | | | | Ps. 304,813 | | | | Ps. 338,044 | | | | Ps. 469,934 | | | | Ps. 372,812 | | Hydrocarbons income tax | | | (18,735 | ) | | | — | | | | — | | | Income tax | | | 3,898 | | | | (45,587 | ) | | | (12,640 | ) | | | (5,064 | ) | | | (8,355 | ) | | | (28,989 | ) | IEPS tax(2) | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | Total | | | Ps. 746,075 | | | | Ps. 331,500 | | | | Ps. 292,173 | | | | Ps. 332,980 | | | | Ps. 461,579 | | | | Ps. 343,823 | | | | | | | | | | | | | | | | | | | | |
| Note: | For a description of these taxes and duties, see “Item 4—Information on the Company—Taxes, Duties and Other Payments to the Mexican Government.”Numbers may not total due to rounding. | |
| (1) | Figures are stated in nominal pesos. |
Source: | (2) | During 2014, 2015 and 2016 no IEPS tax was generated.PEMEX’s audited financial statements, prepared in accordance with IFRS. |
Source: PEMEX’s audited financial statements, prepared in accordance with IFRS.
Relation to the Mexican Government Petróleos Mexicanos and the subsidiary entities are public entities of the Mexican Government, rather than Mexican corporations. Therefore, we do not have the power to issue shares of equity securities evidencing ownership interests and are not required, unlike Mexican corporations, to have multiple shareholders. However, our financing obligations do not constitute obligations of and are not guaranteed by the Mexican Government. The President of Mexico appoints five of the ten members of the Board of Directors of Petróleos Mexicanos as representatives of the Mexican Government, including the Secretary of Energy, who serves as the Chairperson of the Board of Directors of Petróleos Mexicanos, and the Secretary of Finance and Public Credit. The President of Mexico also appoints five independent members to the Board of Directors of Petróleos Mexicanos, whose appointments are ratified by the Senate. Pursuant to the Petróleos Mexicanos Law, the consolidated annual budget of Petróleos Mexicanos and the subsidiary entities, including our financing program, must be submitted to the Ministry of Finance and Public Credit, which has the authority to adjust our financial balance goal and the ceiling on our wage and salary expenditures for the fiscal year. The Mexican Government incorporates our consolidated annual budget and financing program into its budget, which the Chamber of Deputies must approve each year. The Mexican Congress has the authority to adjust our annual financial balance goal at any time by amending the applicable law. In addition, any adjustment proposed by the Board of Directors of Petróleos Mexicanos to change our annual financial balance goal or increase the limit on our wage and salary expenditures or our financing program must be approved by the Chamber of Deputies. Inflation Mexico experienced high inflation during the 1980s. The annual rate of inflation (as measured by the change in the NCPI) decreased from a high of 159.2% in 1987 to 11.9% in 1992, 8.0% in 1993 and 7.1% in 1994. However, the economic events that followed the devaluation of the peso against the U.S. dollar in late 1994 and 1995, along with turbulence in international financial markets, caused inflation to increase to 52.0% in 1995. After 1995, inflation decreased to 27.7% in 1996 and 15.7% in 1997. The annual inflation rate was 3.6% in 2012, 4.0% in 2013, 4.1% in 2014, 2.1% in 2015, and 3.4% in 2016.2016, 6.8% in 2017, 4.8% in 2018 and 2.8% in 2019. We do not use inflation accounting, unless the economic environment in which we operate qualifies as “hyperinflationary,” as defined by IFRS. In accordance with IFRS, the threshold for considering an economy hyperinflationary, and consequently, adjusting certain line items in the financial statements for inflation, is reached when the cumulativethree-year inflation rate is 100% or more. Because the economic environment in thethree-year periods ended December 31, 2014, 20152017, 2018 and 20162019 did not qualify as hyperinflationary, we did not use inflation accounting to prepare our consolidated financial statements as of December 31, 2014, 20152017, 2018 and 20162019 included herein. Consolidation Our financial statements consolidate the results of Petróleos Mexicanos, the subsidiary entities and the subsidiary companies. For further information aboutCertainnon-material subsidiary companies are not consolidated and are accounted for under either the basis for our consolidation see Note 3(a).cost method or the equity method. For a list of ourthe consolidated subsidiary companies, seeNote 43-A and Note 5 to our consolidated financial statements included herein. Export Agreements and Production Agreements Though Mexico is not a member of OPEC, it has periodically announced increases and decreases in our crude oil exports reflecting production revisions made by other oil producing countries and entered into agreements with OPEC andnon-OPEC members to reduce its oil exports, in order to contribute to crude oil prices stabilization. However, we have not changed our export goals because of announcements made On April 12, 2020, the OPEC+ countries, including Mexico, agreed to reduce their overall crude oil production by OPEC since 2004,9.7 million barrels per day from May 1, 2020 through June 30, 2020, by 7.7 million barrels per day from July 1, 2020 through December 31, 2020 and we believe thatby 5.8 million barrels per day from January 1, 2021 through April 30, 2022. Pursuant to this agreement, Mexico has no plansagreed to change our current level ofreduce its crude oil exports.production by 100,000 barrels per day for a period of two months beginning on May 1, 2020. Results of Operations of Petróleos Mexicanos, the Subsidiary Entities and the Subsidiary Companies—For the Year Ended December 31, 20162019 Compared to the Year Ended December 31, 20152018 Total Sales Total sales decreased by 7.4%,16.6% or Ps. 86.9279.2 billion in 2016,2019, from Ps. 1,166.41,681.1 billion in 20152018 to Ps. 1,079.51,402.0 billion in 2015,2019, primarily due to a decreasedecreases in our domestic sales following the decrease in average sales prices of our petroleum products and the decrease in volumeweighted average price of sales of liquefied natural gas in Mexico, in each case, for the reasons explained in further detail below. This decrease in total sales was partially offset by a 12.7% increase in services income.Mexican crude oil. Domestic Sales Domestic sales decreased by 10.2%17.7% in 2016,2019, from Ps. 746.2980.6 billion in 20152018 to Ps. 670.0807.0 billion in 2016, primarily2019, mainly due to a decreasedecreases in the averagesales prices of gasoline, diesel, fuel oil diesel, gasoline and liquefied natural gas.LPG. Domestic sales of petroleum products decreased by 9.5%15.2% in 2016,2019, from Ps. 585.0847.5 billion in 20152018 to Ps. 529.3718.7 billion in 2016, primarily2019, mainly due to a 5.5%7.1% decrease in the average price of gasoline, a 15.9%6.9% decrease in the average price of diesel and a 36.5%10.8% decrease in the average price of fuel oil. The sales volume of gasoline, diesel and fuel oil decreased 5.8%, 11.5% and 26.3%, respectively, in 2019 as compared to 2018, as a result of decreased demand, fromwhich in turn was primarily the CFE. These price decreases were partially offset by a 4.3% increase in the volumeresult of sales of gasolinemarket share loss due to an increase in demand from retail service stations and an 8.1% increase in the volumeentry of sales of jet fuel.new competitors. Domestic sales of natural gas increaseddecreased by 9.2%44.1% in 2016,2019, from Ps. 54.550.9 billion in 20152018 to Ps. 59.528.5 billion in 2016,2019, primarily due to a 6.4% increase10.0% decrease in the average sales price and 37.9% decrease in the volume of sales of natural gas, and a 2.9% increase in the average sales price of natural gas.mainly due to market competition. Domestic sales of liquefied natural gasLPG decreased by 34.9%38.2% in 2016,2019, from Ps. 78.252.1 billion in 20152018 to Ps. 50.932.2 billion in 2016, primarily2019, mainly as a result of a 27.1%52.6% decrease in the volume of sales of liquefied natural gas due to the market share loss that resulted from increased competition due to the liberalization of imports in 2016 and a 10.8% decrease in theits average sales price of liquefied natural gas. Domestic petrochemical sales (including sales of certainby-products of the petrochemical production process) increased by 6.0%, from Ps. 28.5 billion in 2015 to Ps. 30.2 billion, primarily as a result of Ps. 2.6 billion in petrochemical sales by Grupo Fertinal.price. Export Sales Export sales decreased by 3.0%15.3% in peso terms in 20162019 (with U.S. dollar-denominated export revenues translated to pesos at the exchange rate on the date of the corresponding export sale), from Ps. 407.2691.9 billion in 20152018 to Ps. 395.1585.8 billion in 2016.2019. This decrease was primarilymainly due to a 7.4% decrease in the volume of petroleum product exports, a 17.4%10.7% decrease in the weighted average Mexican crude oil export price an 18.5%in 2019, from U.S. $62.29 per barrel in 2018 to U.S. $55.60 per barrel in 2019. Excluding the trading activities of the Trading Companies (in order to show only the amount of export sales related to the subsidiary entities), export sales by the subsidiary entities to third parties decreased by 17.1% in peso terms, from Ps. 571.8 billion in 2018 to Ps. 474.0 billion in 2019. In U.S. dollar terms, excluding the trading activities of the Trading Companies, total export sales (which are U.S. dollar denominated) decreased by 17.2% in 2019, from U.S. $29.7 billion in 2018 to U.S. $24.6 billion in 2019. This was primarily due to the 10.7% decrease in the weighted average Mexican crude oil export price. The trading and export activities of the Trading Companies generated additional marginal revenues of Ps. 111.8 billion in 2019, 6.8% lower in peso terms than the Ps. 120.0 billion of additional revenues generated in 2018, mainly due to a decrease in the average prices of diesel and gasoline. Export sales ofPMI-NASA, one of our principal Trading Companies, decreased by 16.7% in 2019, from Ps. 89.2 billion in 2018 to Ps. 74.3 billion in 2019. Crude oil and condensate export sales accounted for 90.8% of fueltotal export sales (excluding the trading activities of the Trading Companies) in 2019, as compared to 89.7% in 2018. These crude oil mainlyand condensate sales decreased in peso terms by 16.1% in 2019, from Ps. 513.2 billion in 2018 to Ps. 430.4 billion in 2019, and in U.S. dollar terms by 16.2%, from U.S. $26.6 billion in 2018 to U.S. $22.3 billion in 2019. The weighted average Mexican crude oil export price in 2019 was U.S. $55.60 per barrel, 10.7% lower than the weighted average price of U.S. $62.29 per barrel in 2018. Export sales of petroleum products, including natural gas and natural gas liquids, by our industrial transformation segment decreased from 9.2% of total export sales (excluding the trading activities of the Trading Companies) in 2018 to 8.2% of those export sales in 2019. Export sales of petroleum products, including products derived from natural gas and natural gas liquids, decreased by 15.2%, from Ps. 53.0 billion in 2018 to Ps. 38.9 billion in 2019, primarily due to a decrease in the average sales price of fuel oil and volumenaphthas. Export sales of petrochemical products (including certain byproducts of the petrochemical process) decreased by Ps. 963.4 million in 2019, from Ps. 5,668.7 million in 2018 to Ps. 4,705.3 million in 2019, primarily due to a decrease in export sales by Fertinal in 2019. Services Income Services income increased by 5.0% in 2019, from Ps. 8.7 billion in 2018 to Ps. 9.1 billion in 2019, primarily as a result of an increase in transportation services provided by Pemex Industrial Transformation in 2019 and Pemex Logistics in 2018 to third parties. Cost of Sales Cost of sales decreased by 6.4%, from Ps. 1,199.5 billion in 2018 to Ps. 1,122.9 billion in 2019. This decrease was mainly due to: (1) a decrease of Ps. 146.2 billion in purchases of import products, primarily those related to Magna gasoline, Premium gasoline diesel and natural gas, mainly due to a decrease in the price of imports, (2) a Ps. 21.0 billion decrease in hydrocarbon exploration and extraction duties and taxes due to lower average sales prices in 2019, (3) a Ps. 34.7 billion decrease in fuels subtraction resulting from our actions against the illicit market in fuels and (4) a Ps. 18.7 decrease in amortization of other assets. This decrease was partially offset by (1) a Ps. 65.3 billion increase in the cost of unsuccessful wells and exploration expenses, (2) a Ps. 16.8 increase in maintenance and (3) a Ps. 63.2 increase resulting from a decrease in the cost valuation of the inventory. Impairment of Wells, Pipelines, Properties, Plant and Equipment Impairment of wells, pipelines, properties, plant and equipment decreased by Ps. 118.5 billion in 2019, from a net reversal of impairment of Ps. 21.4 billion in 2018 to a net impairment of Ps. (97.1) billion in 2019. This net impairment was primarily due to an impairment of Ps. (169.8) billion in the cash generating units of Pemex Exploration and Production mainly, due to a decrease in volumes of production of crude oil, offset by a (1) net reversal of impairment of Ps. 42.2 in the cash generating unit of Pemex Industrial Transformation, mainly due to an increase in the process of crude oil in the refineries and (2) net reversal of impairment of Ps. 34.1 in the cash generating unit of Pemex Logistics mainly due to a decrease in fuel subtraction. General Expenses General expenses decreased by Ps. 6.0 billion in 2019, from Ps. 158.7 billion in 2018 to Ps. 152.7 billion in 2019, mainly due to a decrease in operating expenses related to personnel services. Other Revenues / Expenses, Net Other revenues, net, decreased by Ps. 15.3 billion in 2019, from net revenues of Ps. 23.0 billion in 2018 to net revenues of Ps. 7.7 billion in 2019. This decrease was mainly due to the recognition in 2018 of income from contracts for participation rights in the Cárdenas-Mora, Misión, Santuario and Ogarrio blocks that was not present in the same period in 2019. Financing Income Financing income decreased by Ps. 7.1 billion in 2019, from Ps. 31.6 billion in 2018 to Ps. 24.5 billion in 2019. This decrease was mainly due to: (1) the recognition of the premium from notes exchanged in February 2018 and (2) lower interest income on the promissory notes issued by the Mexican Government in relation to our pension liabilities in 2019. Financing Costs Financing costs increased by Ps. 12.1 billion in 2019, from Ps. 120.7 billion in 2018 to Ps. 132.9 billion in 2019, mainly due to an increase in interest expenses, premium paid and amortized cost in 2019 as a result of the effects from the liability management transactions conducted in September 2019 and the recognition of interest on leases in 2019. Derivative Financial Instruments (Cost), Net Derivative financial instruments (cost), net, decreased by Ps. 3.8 billion, from a derivative financial instruments cost of Ps. 22.3 billion in 2018 to a derivative financial instruments cost of Ps. 18.5 billion in 2019, mainly as a result of the lower appreciation of the U.S. dollar relative to other foreign currencies we hedge, such as euros, Japanese yen and pounds sterling. Exchange Gain, Net A substantial portion of our indebtedness, 86.8% as of December 31, 2019, is denominated in foreign currencies. Our exchange gain, net, increased by Ps. 63.2 billion in 2019, from an exchange gain of Ps. 23.7 billion in 2018 to an exchange gain of Ps. 86.9 billion in 2019, primarily as a result of a 4.3% appreciation of the peso relative to the U.S. dollar in 2019. Due to the fact that 100.0% of our revenues from exports and domestic sales are referenced to prices denominated in U.S. dollars, and only 71% of our expenses, including financing costs, are linked to U.S. dollar prices, the appreciation of the peso relative to the U.S. dollar had a favorable effect on our ability to meet peso-denominated obligations. The value of the peso in U.S. dollar terms appreciated by 4.3% in 2019, from Ps. 19.6829 per U.S. $1.00 on December 31, 2018 to Ps. 18.8452 per U.S. $1.00 on December 31, 2019, as compared to a 0.5% appreciation of the peso in U.S. dollar terms in 2018. Taxes, Duties and Other The Profit-Sharing Duty and other duties and taxes paid decreased by 25.5% in 2019, from Ps. 461.6 billion in 2018 to Ps. 343.8 billion in 2019, mainly due to the 10.7% decrease in the weighted average export price of Mexican crude oil, from U.S. $ 62.29 per barrel in 2018 to U.S. $55.60 per barrel in 2019. Duties and taxes represented 24.5% and 27.5% of total sales in 2019 and 2018, respectively. Net Income/Loss In 2019, we had a net loss of Ps. 347.9 billion from Ps. 1,402.0 billion in total sales revenues, as compared to a net loss of Ps. 180.4 billion from Ps. 1,681.1 billion in total sales revenues in 2018. This increase in net loss relative to 2018 was primarily explained by: a Ps. 279.2 billion decrease in total sales, mainly due to a decrease in the average price of gasoline, diesel, fuel oil, liquefied petroleum gas and crude oil; a Ps. 118.5 billion increase in impairment of wells, pipelines, properties, plant and equipment; a Ps. 15.3 billion decrease in other revenues, net; a Ps. 12.1 billion increase in financing cost; a Ps. 7.1 billion decrease in financing income; and a Ps. 2.7 billion decrease in profit sharing in joint ventures, associates and other. These effects were partially offset by: a Ps. 76.6 billion decrease in cost of sales, mainly due to a decrease in purchases of import products; a Ps. 6.0 billion decrease in general expenses; a Ps. 3.7 billion decrease in derivative financial instruments cost, net; a Ps. 63.2 billion increase in exchange gain, net; and a Ps. 117.8 billion decrease in taxes and other duties. Other Comprehensive Results In 2019, we had a net loss of Ps. 312.0 billion in other comprehensive results, as compared to a net gain of Ps. 223.4 billion in 2018, primarily due to an increase in the reserve for employee benefits that resulted from the decrease in the discount rate and expected rate of return on plan assets used in the actuarial computation method from 9.3% in 2018 to 7.5% in 2019. Changes in Statement of Financial Position of Petróleos Mexicanos, the Subsidiary Entities and the Subsidiary Companies—from December 31, 2018 to December 31, 2019 Assets Cash and cash equivalents decreased by Ps. 21.3 billion, or 26.0%, in 2019, from Ps. 81.9 billion as of December 31, 2018 to Ps. 60.6 billion as of December 31, 2019. This decrease was mainly due to an increase in payments to suppliers and contractors and payments on our debt instruments and taxes. Accounts receivable, net, increased by Ps. 13.4 billion, or 8.0%, in 2019, from Ps. 167.1 billion as of December 31, 2018 to Ps. 180.5 billion as of December 31, 2019, mainly due to a Ps. 13.4 billion increase in others receivables from taxes to be recovered at the end of the year. The current portion of our promissory notes decreased by Ps. 33.3 billion, or 87.4% in 2019, from, Ps. 38.2 billion as of December 31, 2018 to Ps. 4.9 billion as of December 31, 2019, mainly due to payment of the current portion of seven promissory notes (one maturing in 2019 and six in advance) with original maturities ranging from 2037 to 2042. Derivative financial instruments decreased by Ps. 10.9 billion, or 48.7% in 2019, from Ps. 22.4 billion as of December 31, 2018 to Ps. 11.5 billion as of December 31, 2019, mainly due to the decrease in the value of favorable cross-currency swaps by the appreciation of the U.S. dollar against most of the currencies for which we are covered, as well as a decrease in the value of crude oil options and currency options. Wells, pipelines, properties, plant and equipment, net, decreased by Ps. 190.8 billion, or 13.6%, in 2019, from Ps. 1,402.5 billion as of December 31, 2018 to Ps. 1,211.7 billion as of December 31, 2019. This decrease was mainly due to (1) Ps. 137.2 billion in depreciation and amortization, (2) Ps. 2.5 billion of disposals of wells, pipelines, properties, plant and equipment, (3) the recognition of impairment of Ps. 97.1 billion and (4) the recognition ofright-of-use assets in the amount of Ps. 6.1 billion pursuant to the implementation of the new accounting standard IFRS 16 and (5) the recognition of unsuccessful wells of Ps. 77.2 billion. This decrease was partially offset by Ps. 129.3 billion of acquisitions of wells, pipelines, properties, plant and equipment. See Note 13 to our consolidated financial statements included herein. As of January 1, 2019, we applied IFRS 16. As a result of the initial adoption of this standard, we recognized Ps. 70.8 billion ofright-of-use assets as of December 31, 2019. See Note 17 to our consolidated financial statements included herein. Deferred taxes increased by Ps. 13.4 billion, or 10.9%, in 2019, from Ps. 122.8 billion as of December 31, 2018 to Ps. 136.2 billion as of December 31, 2019, mainly due to an increase in the employee benefits provision and tax loss carry-forwards. Liabilities Total debt, including accrued interest, decreased by Ps. 99.1 billion, or 4.8%, from Ps. 2,082.3 billion as of December 31, 2018 to Ps. 1,983.2 billion as of December 31, 2019, mainly due to the impact of the 4.3% appreciation of the peso against the U.S. dollar in 2019 and the effects from the liability management transactions. Liabilities to suppliers and contractors increased by Ps. 58.2 billion, or 38.8%, in 2019, from Ps. 149.8 billion as of December 31, 2018 to Ps. 208.0 billion as of December 31, 2019, mainly due to an increase in our operations towards the end of 2019. Taxes and duties payable decreased by Ps. 14.6 billion, or 22.4%, in 2019, from Ps. 65.3 billion as of December 31, 2018 to Ps. 50.7 billion as of December 31, 2019, mainly due to a Ps. 10.2 billion decrease in the hydrocarbon exploration and extraction duties and taxes and a Ps. 6.1 billion decrease in theImpuesto Especial sobre Producción y Servicios (Special Tax on Production and Services, or IEPS Tax) on the sale of automotive fuels due to a decrease in automotive fuel sales. Derivative financial instruments liabilities increased by Ps. 0.7 billion, or 4.7%, in 2019, from Ps. 15.9 billion as of December 31, 2018 to Ps. 16.6 billion as of December 31, 2019. This increase was mainly due to the negative fair value of crude oil options. Employee benefits liabilities increased by Ps. 376.3 billion, or 34.8%, in 2019, from Ps. 1,080.5 billion as of December 31, 2018 to Ps. 1,456.8 billion as of December 31, 2019. This increase was mainly due to the decrease in the discount rate and expected rate of return on plan assets used in the actuarial computation method from 9.3% in 2018 to 7.5% in 2019. As of January 1, 2019, we applied IFRS 16 and recognized leases in the amount of Ps. 68.1 billion as of December 31, 2019. See Notes 4 and 17 to our consolidated financial statements included herein. Equity (Deficit), Net Our equity (deficit), net, increased by Ps. 537.8 billion, or 36.9%, in 2019, from a deficit of Ps. 1,459.4 billion as of December 31, 2018 to a deficit of Ps. 1,997.2 billion as of December 31, 2019. This increase in deficit was mainly due to our net loss of Ps. 347.9 billion and Ps. 312.0 billion in other comprehensive loss, including employee benefits actuarial losses of Ps. 309.3 billion and currency translation effect loss of Ps. 2.7 billion, partially offset by a Ps. 122.1 billion increase in Certificates of Contribution “A” from the Mexican Government as of December 31, 2019. Results of Operations of Petróleos Mexicanos, the Subsidiary Entities and the Subsidiary Companies—For the Year Ended December 31, 2018 Compared to the Year Ended December 31, 2017 Total Sales Total sales increased by 20.3%, or Ps. 284.1 billion, in 2018, from Ps. 1,397.0 billion in 2017 to Ps. 1,681.1 billion in 2018, primarily due to increases in the average sales prices of our petroleum products and the weighted average price of Mexican crude oil. Domestic Sales Domestic sales increased by 11.8%, from Ps. 877.4 billion in 2017 to Ps. 980.6 billion in 2018, primarily due to an increase in the average prices of gasoline, diesel, fuel oil and jet fuel. Domestic sales of petroleum products increased by 14.7% in 2018, from Ps. 738.9 billion in 2017 to Ps. 847.5 billion in 2018, primarily due to a 19.7% increase in the average price of gasoline, a 20.1% increase in the average price of diesel, a 46.0% increase in the average price of fuel oil and a 13.7% decrease38.8% increase in the export salesaverage price of naphthas. This decrease in export sales wasjet fuel. These price increases were partially offset by a 2.1%14.0% decrease in the volume of sales of premium gasoline, primarily due to a decrease in demand from retail service stations. Domestic sales of natural gas decreased by 28.2% in 2018, from Ps. 70.9 billion in 2017 to Ps. 50.9 billion in 2018, primarily due to a 23.1% decrease in the average sales price of natural gas and a 6.6% decrease in the volume of sales of natural gas, mainly due to competition. Domestic petrochemical sales (including sales of certainby-products of the petrochemical production process) increased by 43.0%, from Ps. 16.0 billion in 2017 to Ps. 22.9 billion in 2018, primarily as a result of an increase in the volume of sales of crude oil andpolyethylene. Export Sales Export sales increased by 36.1% in peso terms in 2018 (with U.S.dollar-denominated export revenues translated to pesos at the exchange rate on the date of the corresponding export sale), from Ps. 508.5 billion in 2017 to Ps. 691.9 billion in 2018. This increase was primarily due to a Ps. 2,920.7 million31.8% increase in the volume of sales of petrochemical products.weighted average Mexican crude oil export price in 2018, from U.S. $47.26 per barrel in 2017 to U.S. $62.29 per barrel in 2018. Excluding the trading activities of the Trading Companies (in order to show only the amount of export sales related to the subsidiary entities), export sales by the subsidiary entities to the Trading Companies and third parties decreasedincreased by 0.5%32.8% in peso terms, from Ps. 329.6430.6 billion in 20152017 to Ps. 327.8571.8 billion in 2016.2018. In U.S. dollar terms, excluding the trading activities of the Trading Companies, total export sales (which are U.S.dollar-denominated) decreased increased by 16.2%30.1% in 2016,2018, from U.S. $20.9$22.7 billion in 20152017 to U.S. $17.5$29.7 billion in 2016.2018. This was primarily due to the 17.4% decrease31.8% increase in the weighted average Mexican crude oil export price and a 2.1% increase in the volume of crude oil exports.price. The trading and export activities of the Trading Companies generated additional marginal revenues of Ps. 67.4120.0 billion in 2016, 13.2% lower2018, 54.5% higher in peso terms than the Ps. 77.577.9 billion of additional revenues generated in 2015,2017, mainly due to a decreasean increase in the average prices of diesel and gasoline. The weighted average price per barrelExport sales of crude oil that PMI soldPMI-NASA, one of our principal Trading Companies, increased by 35.6% in 2018, from Ps. 65.8 billion in 2017 to third partiesPs. 89.2 billion in 2016 was U.S. $35.63, or 17.4%, lower than the weighted average price of U.S. $43.12 in 2015.2018. Crude oil and condensate export sales to PMI accounted for 88.1%89.7% of total export sales (excluding the trading activities of the Trading Companies) in 2016,2018, as compared to 87.4%88.4% in 2015.2017. These crude oil and condensate sales increased in peso terms by 0.2%34.9% in 2016,2018, from Ps. 288.2380.5 billion in 20152017 to Ps. 288.6513.2 billion in 2016,2018, and decreased in U.S. dollar terms by 14.9% in 2016,32.3%, from U.S. $18.2$20.1 billion in 20152017 to U.S. $15.5$26.6 billion in 2016.2018. The weighted average Mexican crude oil export price in 2018 was U.S. $62.29 per barrel, of crude oil that Pemex Exploration and Production sold to PMI for export in 2016 was U.S. $35.17, 17.6% lower31.8% higher than the weighted average price of U.S. $42.70$47.26 per barrel in 2015.2017. Export sales of petroleum products, including natural gas and natural gas liquids, by our industrial transformation segment to the Trading Companies and third parties decreased from 12.4%10.7% of total export sales (excluding the trading activities of the Trading Companies) in 20152017 to 10.9%9.2% of those export sales in 2016.2018. Export sales of petroleum products, including products derived from natural gas and natural gas liquids, decreasedincreased by 13.0%15.2%, from Ps. 40.946.0 billion in 20152017 to Ps. 35.653.0 billion in 2016,2018, primarily due to a 5.5% decrease in the volume of exports of fuel oil and a 16.8% decrease in the volume of exports of naphtha, as well as a decreasean increase in the average sales price for both products. In U.S. dollar terms, export sales of petroleum products, including products derived from natural gasfuel oil and natural gas liquids, decreased by 26.1%, from U.S. $2.6 billion in 2015 to U.S. $1.9 billion in 2016. Export sales of natural gas decreased by 23.1%, from Ps. 27.3 million in 2015 to Ps. 21.0 million in 2016. This was primarily due to a decrease in the production ofnatural gas.naphthas. Petrochemical products accounted for the remainder of export sales in 2015 and 2016. Export sales of petrochemical products (including certainby-products of the petrochemical process) increased by Ps. 2,920.71,043.4 million in 2016,2018, from Ps. 616.84,625.3 million in 20152017 to Ps. 3,537.55,668.7 million in 2016,2018, primarily due to inclusion ofan increase in export sales of Grupoby Fertinal during 2016. In U.S. dollar terms, export sales of petrochemical products (including certainby-products of the petrochemical process) increased by Ps. 6,208.8 million in 2016, from Ps. 39.2 million in 2015 to Ps. 6,248.0 million in 2016.2018.
Services Income Services income increaseddecreased by 11.7%21.6% in 2016,2018, from Ps. 12.911.1 billion in 20152017 to Ps. 14.48.7 billion in 2016,2018, primarily as a result of an increase inthe recognition of transportation services supplied by Pemex Logistics to CENAGAS and an increaseas part of sales in freight services provided by Pemex Industrial Transformation to third parties.2018. Cost of Sales Cost of sales decreasedincreased by 3.1%19.4%, from Ps. 895.11,004.2 billion in 20152017 to Ps. 867.61,199.5 billion in 2016.2018. This decreaseincrease was mainly due to: (1) an increase of Ps. 175.0 billion in product purchases, mainly a Ps. 23.4 billion decrease in operating expenses, primarily due to cost saving measures; (2) a Ps. 25.0 billion decrease in cost of employee benefits, mainly due to the ongoing benefits resulting from the modifications made to our pension regime in 2015; (3) a Ps. 16.9 billion decrease in the amortization of wells as a result of the net effect of the impairment recorded in 2015 of new investments made in 2016; and (4) a Ps. 5.5 billion decrease in hydrocarbon extraction and exploration duties and taxes due to decreased production and lower average sales prices in 2016 as compared to 2015. This decrease was partially offset by (1) a Ps. 46.9123.0 billion increase in the purchasesvalue of imports, primarily Magna gasoline, diesel and diesel,jet fuel, mainly due to an increase in the price of imports, owing to the 20.1% appreciation of the U.S. dollar relative to the peso in 2016 and a 9.3% increase in the volume of imports; and (2) a Ps. 5.924.2 billion increase in hydrocarbon exploration and extraction duties and taxes due to higher average sales prices in 2018, (3) a Ps. 16.5 billion increase in fuels subtraction resulting from the illicit market in fuels and (4) a Ps. 15.8 billion increase in the cost of unsuccessful wells.wells and exploration expenses. This increase was partially offset by a Ps. 3.3 billion decrease in depreciation of fixed assets and amortization of wells, primarily due to the decreased value of assets to be depreciated as a result of the impairment recorded in 2017. Impairment of Wells, Pipelines, Properties, Plant and Equipment Impairment of wells, pipelines, properties, plant and equipment decreased by Ps. 809.3172.8 billion in 2016,2018, from ana net impairment of Ps. 477.9151.4 billion in 20152017 to a net reversal of impairment of Ps. 331.321.4 billion in 2016,2018, mainly due to the changea decrease in the perioddiscount rate used to estimate long-term prices of proved reserves andcalculate the recoverable amount of fixed assets from 20 to 25 yearsvalue in accordance with changes to official guidelines; the appreciation of the U.S. dollar relative to the peso; the reallocation of resources to the most highly profitable fields, particularly fields with lower production costs; and an increase in the average price of crude oil. Net Periodic Cost of Employee Benefits
During 2015, we had a Ps. 196.1 billion increase in employee benefits in connection with the negotiationuse of our pension regimeCantarell business unit from 14.40% in 20152017 to 7.03% in 2018, as describedwell lower discount rates used to calculate the value in “Item 6—Directors, Senior Management and Employees—Employees.” Ps. 92.2 billionuse of this benefit was recognized under net periodic cost of employee benefits, and Ps. 103.9 billion was recognized under general expenses. We do not have a similar benefit to record under net periodic cost of employee benefits for 2016.certain other business units, including Aceite Terciario del Golfo.
General Expenses General expenses increased by Ps. 100.416.9 billion, from Ps. 37.5141.8 billion in 20152017 to Ps. 137.9158.7 billion in 2016. This increase was primarily2018, mainly due to aone-time Ps. 103.9 billionan increase in administrative expenses relating to the contributions to the defined contribution pension plan and incentives to encourage employees to migrate from the defined benefit recognized in ourpension plan to the defined contribution plan and the net periodic cost of employee benefits in connection with the negotiation of our pension regime in 2015 as described in “Item 6—Directors, Senior Management and Employees—Employees.” Excluding thisone-time benefit to cost of employee benefits, general expenses decreased by Ps. 3.5 billion, from Ps. 141.4 billion in 2015 to Ps. 137.9 billion in 2016, primarily due to the effects of our 2016 Budget Adjustment Plan.benefits. Other Revenues/Expenses, Net Other revenues, net, increased by Ps. 21.417.9 billion in 2016,2018, from other expenses,revenues, net, of Ps. 2.45.2 billion in 20152017 to other revenues, net, of Ps. 19.023.1 billion in 2016.2018. This increase was primarily due to acontracts signed for participation rights in theCardenas-Mora, Misión, Santuario and Ogarrio blocks in the amount of Ps. 28.414.2 billion, fiscal support from the Ministry of Finance and Public Credit in connection with the Profit-Sharing Duty, due to the decrease in average prices and production of crude oil, and a Ps. 15.2 billion profit from the sale of our 50% interest in Gasoductos de Chihuahua. This increase in other revenues, net was partially offset by an expensethe recognition of a Ps. 27.712.5 billion that was recognized following our transferloss in the disposal of wells, pipelines, property, plant and other assets to CENAGAS, due to the difference between the book value of these assets and the amount paid by CENAGAS for these assets.equipment. Financing Income Financing income decreasedincreased by Ps. 1.215.4 billion in 2016,2018, from Ps. 15.016.2 billion in 20152017 to Ps. 13.831.6 billion in 2016,2018, primarily due to a decreaseto: (1) the recognition of the premium from notes exchanged in the amount we were able to invest during the year, which was partially offset by yield derived fromFebruary 2018, (2) interest income on the promissory notes issued by the Mexican Government in connection withrelation to our pension liabilities.liabilities, (3) increased interest income on other financial products and securities as a result of higher interest rates and (4) gains on the plugging of wells as a result of a lower discount rate. Financing Cost Financing cost increased by 45.7%2.6% in 2016,2018, from Ps. 67.8117.6 billion in 20152017 to Ps. 98.8120.7 billion in 2016,2018, primarily due to an increase in interest expense in 20162018 following higher levels of indebtedness and a 20.1% depreciation of the peso against the U.S. dollar in 2016 as compared to 2015.indebtedness. Derivative Financial Instruments Income (Cost) Derivative financial instruments income, (cost), net, decreased by Ps. 7.447.6 billion, from a net costincome of Ps. 21.425.3 billion in 20152017 to a net cost of Ps. 14.022.3 billion in 2016,2018, primarily due to a decrease in the appreciation of the U.S. dollar relative to other foreign currencies we hedge, the restructuring of certain of our derivative financial instrumentssuch as euros, Japanese yen and favorable changes in market variables involved in our calculation of fair value of these instruments, including exchange rates, foreign currency interest rates and our counterparties’ credit spread.pounds sterling. Exchange Loss,Gain, Net A substantial portion of our indebtedness, 83.2%86.9% as of December 31, 2016,2018, is denominated in foreign currencies. Our exchange lossgain, net, increased by Ps. 99.20.5 billion in 2018, from an exchange lossgain of Ps. 154.823.2 billion in 20152017 to an exchange lossgain of Ps. 254.023.7 billion in 2016,2018, primarily as a result of the 5.3% increase in our indebtedness that is denominated in other currencies and the higher rate of depreciationa 0.5% appreciation of the peso againstrelative to the U.S. dollar which depreciated by 20.1% in 2016 as compared to 16.9% in 2015. However, due2018. Due to the fact that over 95.7%100.0% of our revenues from exports and domestic sales are referenced to prices denominated in U.S. dollars, and only 71.0 %75.0% of our expenses, including financing costs, are linked to U.S. dollar prices, the depreciationappreciation of the peso relative to the U.S. dollar did havehad a significantfavorable effect on our ability to meet U.S. dollar-denominated financial obligations and improved our ability to meet peso-denominated financial obligations in 2016. obligations. The value of the peso in U.S. dollar terms depreciatedappreciated by 20.1%0.5% in 2016,2018, from Ps. 17.2065 =19.7867 per U.S. $1.00 on December 31, 20152017 to Ps. 20.6640 =19.6829 per U.S. $1.00 on December 31, 2016,2018, as compared to a 16.9% depreciation4.3% appreciation of the peso in U.S. dollar terms in 2015.2017. Taxes, Duties and Other Hydrocarbon extraction duties and other duties and taxes paid decreasedincreased by 20.2%38.6% in 2015,2018, from Ps. 331.5333.0 billion in 20152017 to Ps. 264.5461.6 billion in 2016,2018, primarily due to the 17.4% decrease38.6% increase in the weighted average price of the Mexican crude oil export price, from U.S. $43.12$47.26 per barrel in 20152017 to U.S. $35.63$62.29 per barrel in 2016.2018. Income related duties and taxes represented 24.9%27.5% of total sales in 2016,2018, as compared to 24.9%23.8 % of total sales in 2015.2017. Net Income/Loss In 2016,2018, we had a net loss of Ps. 191.1180.4 billion from Ps. 1,079.51,681.1 billion in total sales revenues, as compared to a net loss of Ps. 712.6280.9 billion from Ps. 1,166.41,397.0 billion in total sales revenues in 2015.2017. This decrease in net loss relative to 2017 was primarily explained by: a Ps. 809.2284.1 billion decrease in the impairment of fixed assets; a Ps. 67.0 billion decrease in taxes and other duties, mainly due to the decrease in the weighted average price of the Mexican crude oil export price; and
a Ps. 21.4 billion increase in other revenues, net.
This decrease was partially offset by
a Ps. 172.3 billion increase in the net periodic cost of employee benefits, mainly due to theone-time Ps. 196.0 billion decrease in pension liabilities recorded in 2015 as a result of modifications made to our pension regime;
a Ps. 99.2 billion increase in exchange loss, net;
a Ps. 86.8 billion decrease in total sales, mainly due to an increase in the average price of crude oil and natural gas;
a Ps. 172.9 billion decrease in average sales pricesimpairment of our petroleum productswells, pipelines, properties, plant and the decreaseequipment; a Ps. 17.9 billion increase in volumeother revenues, net; a Ps. 1.2 billion increase in profit sharing in joint ventures, associates and other; and a Ps. 0.5 billion increase in exchange gain, net. These effects were partially offset by: a Ps. 195.3 billion increase in cost of sales, of liquefied natural gasmainly due to an increase in Mexico; andtotal sales; a Ps. 24.9128.6 billion increase in taxes and other duties; a Ps. 35.3 billion increase in financing costs, net.cost, net; and a Ps. 16.8 billion increase in general expenses. Other Comprehensive Results In 2016,2018, we had a net gain of Ps. 127.9223.4 billion in other comprehensive results, as compared to a net gain of Ps. 88.611.5 billion in 2015,2017, primarily due to a decrease in the reserve for employee benefits that resulted from the increase in the discount rate and expected rate of return on plan assets used in the actuarial computation method from 7.4%7.9% in 20152017 to 8.2%9.3% in 2016 and Ps. 21.4 in accumulated gains from the foreign currency translation effect. Results of Operations of Petróleos Mexicanos, the Subsidiary Entities and the Subsidiary Companies—For the Year Ended December 31, 2015 Compared to the Year Ended December 31, 2014
Total Sales
Total sales decreased by 26.5%, or Ps. 420.3 billion, in 2015, from Ps. 1,586.7 billion in 2014 to Ps. 1,166.4 billion in 2015, primarily due to the decrease in average sales prices of Mexican crude oil, petroleum products and natural gas in the international markets. During 2015, the weighted average Mexican crude oil export price decreased by 50.3%, from U.S. $86.00 per barrel in 2014 to U.S. $42.70 per barrel in 2015. Crude oil export volumes increased by 2.3% in 2015 as compared to 2014. The impact of price decreases on both domestic and export sales is explained in further detail below.
Domestic Sales
Domestic sales decreased by 21.0% in 2015, from Ps. 945.0 billion in 2014 to Ps. 746.2 billion in 2015, primarily due to a decrease in the average prices of gasoline, diesel, fuel oil and jet fuel. Domestic sales of petroleum products decreased by 20.3% in 2015, from Ps. 830.5 billion in 2014 to Ps. 662.3 billion in 2015, primarily due to decreases in the average prices of gasoline, diesel, turbosine and fuel oil. Domestic sales of natural gas and liquefied natural gas decreased by 30.0% in 2015, from Ps. 77.8 billion in 2014 to Ps. 54.5 billion in 2015, primarily as a result of lower prices for these products. Domestic petrochemical sales (including sales of certainby-products of the petrochemical production process) decreased by 19.4%, from Ps. 36.6 billion in 2014 to Ps. 29.5 billion in 2015, primarily as a result of lower prices for these products.
Export Sales
Export sales decreased by 35.4% in peso terms in 2015 (with U.S. dollar-denominated export revenues translated to pesos at the exchange rate on the date of the corresponding export sale), from Ps. 630.3 billion in 2014 to Ps. 407.2 billion in 2015. This decrease was primarily due to a 50.3% decrease in the weighted average Mexican crude oil export price. The decrease in export sales was partially offset by a 2.3% increase in the volume of crude oil exports in 2015.
Excluding the trading activities of the Trading Companies (in order to show only the amount of export sales related to the subsidiary entities), export sales by the subsidiary entities to the Trading Companies and third parties decreased by 39.8% in peso terms, from Ps. 546.6 billion in 2014 to Ps. 329.0 billion in 2015. In U.S. dollar terms, excluding the trading activities of the Trading Companies, total export sales (which are U.S. dollar-denominated) decreased by 49.4% in 2015, from U.S. $41.2 billion in 2014 to U.S. $20.9 billion in 2015. This was primarily due to the 50.5% decrease in the weighted average Mexican crude oil export price and a 2.3% increase in the volume of crude oil exports. The trading and export activities of the Trading Companies generated additional marginal revenues of Ps. 78.2 billion in 2015, 6.8% higher in peso terms than the Ps. 83.9 billion of additional revenues generated in 2014, mainly due to higher international prices of gasoline traded by the Trading Companies. The weighted average price per barrel of crude oil that the Trading Companies sold to third parties in 2015 was U.S. $43.29, or 49.6%, lower than the weighted average price of U.S. $86.00 in 2014.
Crude oil export sales to PMI accounted for 87.6% of total export sales (excluding the trading activities of the Trading Companies) in 2015, as compared to 87.0% in 2014. These crude oil sales decreased in peso terms by 39.3% in 2015, from Ps. 475.1 billion in 2014 to Ps. 288.2 billion in 2015, and decreased in U.S. dollar terms by 48.9% in 2015, from U.S. $35.8 billion in 2014 to U.S. $18.3 billion in 2015. The weighted average price per barrel of crude oil that Pemex Exploration and Production sold to PMI for export in 2015 was U.S. $42.70, 50.3% lower than the weighted average price of U.S. $86.0 in 2014.
Export sales of petroleum products, including natural gas and natural gas liquids, by our refining and gas and petrochemicals segments to the Trading Companies and third parties decreased from 12.7% of total export
sales (excluding the trading activities of the Trading Companies) in 2014 to 12.1% of those export sales in 2015. Export sales of petroleum products, including products derived from natural gas and natural gas liquids, decreased by 42.6%, from Ps. 69.5 billion in 2014 to Ps. 39.9 billion in 2015, primarily due to a decrease in prices and in the volume of fuel oil sold. In U.S. dollar terms, export sales of petroleum products, including products derived from natural gas and natural gas liquids, decreased by 52.8%, from U.S. $5.3 billion in 2014 to U.S. $2.5 billion in 2015. Export sales of natural gas decreased by 50.0%, from Ps. 0.06 billion in 2014 to Ps. 0.03 billion in 2015. This was primarily due to a decrease in the price and volume of sales of natural gas sold as a result of lower demand in the international market.
Petrochemical products accounted for the remainder of export sales in 2014 and 2015. Export sales of petrochemical products (including certainby-products of the petrochemical process) decreased by 47.0% in 2015, from Ps. 1.7 billion in 2014 to Ps. 0.9 billion in 2015, primarily as a result of decreases in the prices and volumes of sales of styrene, sulfur and ethylene. In U.S. dollar terms, export sales of petrochemical products (including certainby-products of the petrochemical process) decreased by 57.5% in 2015, from U.S. $131.2 million in 2014 to U.S. $55.8 million in 2015.
Services Income
Services income increased by 13.2% in 2015, from Ps. 11.4 billion in 2014 to Ps. 12.9 billion in 2015, primarily as a result of a Ps. 1.0 billion increase in services provided by Pemex Logistics to third parties, a Ps. 0.7 billion increase in revenues from freight and managerial services provided by Pemex Industrial Transformation and a Ps. 0.2 billion increase in insurance revenues from Kot Insurance Company, AG.
Cost of Sales, Impairment of Wells, Pipelines, Properties, Plant and Equipment, Cost of Employee Benefits and General Expenses
Cost of sales increased by 6.2%, from Ps. 842.6 billion in 2014 to Ps. 895.1 billion in 2015. This increase was mainly due to: (1) the recognition of Ps. 53.9 billion in new hydrocarbon extraction and exploration duties and taxes in connection with the new fiscal regime that took effect on January 1, 2015; (2) a Ps. 20.4 billion increase in the amortization of wells; and (3) an increase of Ps. 11.1 billion in the cost of unsuccessful wells. This increase was partially offset by a Ps. 54.5 billion decrease in the purchases of imports, primarily gasoline and diesel.
Impairment of wells, pipelines, properties, plant and equipment increased by Ps. 455.3 billion, from Ps. 22.6 billion in 2014 to Ps. 477.9 billion in 2015, mainly due to the decrease in future cash flows as a result of lower hydrocarbon prices, adjustments in the discount rates and changes in the criteria for identifying the cash-generating units of the refineries.
During 2015 we had a Ps. 103.9 billion decrease in net periodic cost of employee benefits recognized as a separate line item due to modifications to our pension regime.
General expenses decreased by 1.5%, from Ps. 143.5 billion in 2014 to Ps. 141.4 billion in 2015. This decrease was primarily due to a Ps. 2.5 billion decrease in the net periodic cost of employee benefits recognized under general expenses due to modifications to our pension regime.
Other Revenues/Expenses, Net
Other revenues, net, decreased by 106.4% in 2015, from other revenues, net, of Ps. 37.6 billion in 2014 to other expenses, net, of Ps. 2.4 billion in 2015. This decrease was primarily due to a Ps. 40.0 billion decrease in the credit attributable to the negative IEPS tax rate in 2015 as compared to 2014. The credit attributable to the negative IEPS tax rate is generated when the prices at which we sell gasoline and diesel in the domestic market are lower than the international market prices for such products. We recognized revenues from IEPS tax credits of Ps. 2.5 billion in 2015, as compared to Ps. 43.1 billion in 2014.
Financing Income
Financing income increased by Ps. 12.0 billion in 2015, from Ps. 3.0 billion in 2014 to Ps. 15.0 billion in 2015, primarily due to the effect of changes to the discount rate used in the computation of the provision for the plugging of wells.
Financing Cost
Financing cost increased by 31.4% in 2015, from Ps. 51.6 billion in 2014 to Ps. 67.8 billion in 2015, primarily due to an increase in interest expense in 2015 following higher levels of indebtedness and the depreciation of the peso against the U.S. dollar in 2015 as compared to 2014.
Derivative Financial Instruments Income (Cost)
Derivative financial instruments income (cost), net, increased by Ps. 12.0 billion, from a net cost of Ps. 9.4 billion in 2014 to a net cost of Ps. 21.4 billion in 2015, primarily due to an increase in costs associated with certain derivative financial instruments as a result of the appreciation of the U.S. dollar relative to other foreign currencies that we hedge.
Exchange Loss, Net
A substantial portion of our indebtedness, 77.9% as of December 31, 2015, is denominated in foreign currencies. Our exchange loss increased by Ps. 77.8 billion, from an exchange loss of Ps. 77.0 billion in 2014 to an exchange loss of Ps. 154.8 billion in 2015, primarily as a result of the higher rate of depreciation of the peso against the U.S. dollar, which depreciated by 16.9% in 2015 as compared to 12.6% in 2014. However, due to the fact that over 93.7% of our revenues from exports and domestic sales are referenced to prices denominated in U.S. dollars, and only 68.2 % of our expenses, including financing costs, are linked to U.S. dollar prices, the depreciation of the peso relative to the U.S. dollar did have a significant effect on our ability to meet U.S. dollar-denominated financial obligations and improved our ability to meet peso-denominated financial obligations in 2015. The value of the peso in U.S. dollar terms depreciated by 16.9% in 2015, from Ps. 14.7180 = U.S. $1.00 on December 31, 2014 to Ps. 17.2065 = U.S. $1.00 on December 31, 2015, as compared to a 12.6% depreciation of the peso in U.S. dollar terms in 2014.
Taxes, Duties and Other
Hydrocarbon extraction duties and other duties and taxes paid decreased by 55.6% in 2015, from Ps. 746.1 billion in 2014 to Ps. 331.5 billion in 2015, primarily due to the 50.3% decrease in the weighted average price of the Mexican crude oil basket, from U.S. $86.00 per barrel in 2014 to U.S. $42.70 per barrel in 2015. Income related duties and taxes represented 28.4% of total sales in 2015, as compared to 47.0% of total sales in 2014, partly because certain hydrocarbon extraction and exploration duties and taxes under the new tax regime are recognized under cost of sales, as described above. Prior to January 1, 2015, all of our duties and taxes were income-based taxes and were therefore recognized under the “taxes, duties and other” line item.
Net Income/Loss
In 2015, we had a net loss of Ps. 712.6 billion (U.S. $41.4 billion) from Ps. 1,166.4 billion in total sales revenues, as compared to a net loss of Ps. 265.5 billion (U.S. $15.4 billion) from Ps. 1,586.7 billion in total sales revenues in 2014. This increase in net loss was primarily explained by: (1) a Ps. 455.3 billion increase in impairment of fixed assets, which was mainly due to the decrease in future cash flows as a result of lower hydrocarbon prices; (2) a Ps. 420.4 billion decrease in sales mainly due to a decrease in the Mexican crude oil export price and decrease in our crude oil production and domestic sales prices; (3) a Ps. 77.8 billion increase in foreign exchange loss; (4) a Ps. 39.9 billion decrease in other revenues, net; and (5) a Ps. 16.2 billion increase in
financing costs, net. This increase was partially offset by a Ps. 414.6 billion decrease in taxes and duties and a Ps. 184.3 billion decrease in the net periodic cost of employee benefits following modifications to our pension regime.
Other Comprehensive Results
In 2015, we had a net gain of Ps. 88.6 billion in other comprehensive results, as compared to a net loss of Ps. 265.3 billion in 2014, primarily due to a decrease in the reserve for employee benefits that resulted from the increase in the discount rate and expected rate of return on plan assets used in the actuarial computation method from 6.98% in 2014 to 7.41% in 2015.2018.
Changes in Statement of Financial Position of Petróleos Mexicanos, the Subsidiary Entities and the Subsidiary Companies—from December 31, 20152017 to December 31, 20162018 Assets Cash and cash equivalents increaseddecreased by Ps. 54.216.0 billion, or 49.5%16.3%, in 2016,2018, from Ps. 109.497.9 billion as of December 31, 20152017 to Ps. 163.581.9 billion as of December 31, 2016.2018. This increasedecrease was mainly due to an increase in net cash flows from financing activities,payments to suppliers and was partially offset by taxcontractors, payments on our debt instruments and debt payments and operating and investment commitments.taxes. Accounts receivable, net, increaseddecreased by Ps. 54.01.0 billion, or 68.1%0.6%, in 2016,2018, from Ps. 79.2168.1 billion as of December 31, 20152017 to Ps. 133.2167.1 billion as of December 31, 2016, primarily explained by: (1)2018. This was mainly due to a Ps. 18.7 billion increasedecrease in our accounts receivable from tax credits associated with hydrocarbon extraction duties; (2)customers caused by a Ps. 17.7 billiondecrease in sales in the month of December 2018, which was partially offset by an increase in our accounts receivable from salessundry debtors (mainly IEPS tax) from larger gasoline imports at the end of the year. The current portion of our promissory notes increased by Ps. 35.7 billion in 2018, mainly due to our international customers,recognition of the current portion of six promissory notes with original maturities for those paid in advance ranging from 2032 to 2047. Inventories increased by Ps. 18.1 billion, or 28.3%, in 2018, from Ps. 63.9 billion as of December 31, 2017, to Ps. 82.0 billion as of December 31, 2018, mainly due to an increase in the value of imports of refined products. Derivative financial instruments decreased by Ps. 7.7 billion in 2018, from Ps. 30.1 billion as of December 31, 2017 to Ps. 22.4 billion as of December 31, 2018. This decrease was mainly due to the 20.1%decrease in the fair value ofcross-currency swaps as a result of the appreciation of the U.S. dollar relative to the peso during 2016 and the 56.1% increase in the weighted average market price per barrel of crude oil during 2016, from U.S. $28.69 per barrel in December 2015 to U.S. $44.79 per barrel in December 2016; (3) a Ps. 12.6 billion increase in accounts receivable from sales to domestic customers, mainly due to higher accounts receivable from gasoline distributors; and (4) a Ps. 7.9 billion increase in accounts receivable from sundry debtors, mainly due to Ps. 6.6 billion in customer services reimbursements and Ps. 3.7 billion as the current portionmost of the promissory notes issued by the Mexican Government in relation to our pension liabilities. Held-for-salenon-financial assets decreased by Ps. 25.8 billion, or 77.5%, in 2016, from Ps. 33.2 billion as of December 31, 2015 to Ps. 7.5 billion as of December 31, 2016. This decrease was mainly due to the transfer of assets to CENAGAS for Ps. 33.2 billion and was partially offset by the reclassification of Ps. 7.5 billion from fixed assets toheld-for-sale currentnon-financial assets in connection with the delivery to third parties of 22 blocks of titles that were temporarily assigned to us in Round Zero pursuant to Round 1.3 on May 10, 2016. On June 29, 2016, we submitted an application for compensation for the fixed assets located in these blocks to the Ministry of Energy. For more information, see Note 9 to our consolidated financial statements included herein.
Derivative financial instruments increased by Ps. 3.3 billion in 2016, from Ps. 1.6 billion as of December 31, 2015 to Ps. 4.9 billion as of December 31, 2016. This increase was mainly due to the restructuring of certain derivative financial instruments and changes in market variables involved in the calculation of the fair value of derivative financial instruments, such as exchange rates, foreign currency interest rates and our counterparties’ credit spread.other relevant currencies.
Wells, pipelines, properties, plant and equipment increaseddecreased by Ps. 323.334.0 billion in 2016,2018, from Ps. 1,436.5 billion as of December 31, 2017 to Ps. 1,402.5 billion as of December 31, 2018. This decrease was primarily due to depreciation of Ps. 153.4 billion and disposals of wells, pipelines, property, plant and equipment of Ps. 16.8 billion, which were partially offset by acquisitions of wells, pipelines, properties, plant and equipment of Ps. 114.8 billion and a net reversal of impairment in the amount of Ps. 331.321.4 billion. See “—Results of Operations of Petróleos Mexicanos, the Subsidiary Entities and the Subsidiary Companies—For the Year Ended December 31, 2016 Compared to the Year Ended December 31, 2015—Impairment of Wells, Pipelines, Properties, Plant and Equipment” above in this Item 5 for more information. Long-term notes receivable increasedDeferred taxes decreased by Ps. 98.623.4 billion, or 197.2%16.0%, in 2016,2018, from Ps. 50.0146.2 billion as of December 31, 20152017 to Ps. 148.6122.8 billion as of December 31, 2016,2018, mainly due to an increase in the Ps. 184.2 billion in promissory notes issued by the Mexican Government, which replaced the Ps. 50.0 billion promissory note issued to us in 2015 in connection withvaluation reserve for our pension liabilities.deferredProfit-Sharing Duty assets.
Intangible assets decreased by Ps. 5.7 billion, or 39.6%, in 2016, from Ps. 14.3 billion as of December 31, 2015 to Ps. 8.6 billion as of December 31, 2016, mainly due to a decrease in wells under construction but not allocated to a reserve.
Liabilities Total debt, including accrued interest, increased by Ps. 489.844.4 billion, or 32.8%2.2%, in 2016,2018, from Ps. 1,493.42,037.9 billion as of December 31, 20152017 to Ps. 1,983.22,082.3 billion as of December 31, 2016,2018, mainly due to higher levels of indebtedness and a 20.1% depreciation of the peso against the U.S. dollar in 2016 as compared to 2015.indebtedness. Line items related to suppliers and contractors decreasedincreased by Ps. 15.79.8 billion, or 9.4%7.0%, in 2016,2018, from Ps. 167.3140.0 billion as of December 31, 20152017 to Ps. 151.6149.8 billion as of December 31, 2016,2018, primarily due to an increase in our operations towards the payment programs established during 2016 to address the total outstanding balanceend of payments due to suppliers and contractors at year end.2018. Taxes and duties payable increased by Ps. 5.814.3 billion, or 13.5%28.0%, in 2016,2018, from Ps. 43.051.0 billion as of December 31, 20152017 to Ps. 48.865.3 billion as of December 31, 2016,2018, primarily due to (1) a Ps. 8.99.6 billion increase in the value addedIEPS tax payable and the Profit-Sharing Duty and (2) a Ps. 2.04.6 billion decreaseincrease in the provision for income tax.Profit-Sharing Duty. Derivative financial instruments liabilities increaseddecreased by Ps. 3.61.8 billion, or 13.1%10.2%, in 2016,2018, from Ps. 27.317.7 billion as of December 31, 20152017 to Ps. 30.915.9 billion as of December 31, 2016.2018. This increasedecrease was mainly due to the negotiation of new derivative financial instrumentsa decrease in 2016, the restructuring of certain existing derivative financial instruments and changes in market variables involved in the calculation of the fair value of derivative financial instruments, such as exchange rates, foreignour crude oil options and the termination of our currency interest rates andforwards, which was partially offset by the decrease in the fair value of our counterparties’ credit spread.cross-currency swaps. Employee benefits liabilities decreased by Ps. 59.0177.9 billion, or 4.6%14.1%, in 2016,2018, from Ps. 1,279.41,258.4 billion as of December 31, 20152017 to Ps. 1,220.41,080.5 billion as of December 31, 2016.2018. This decrease was primarily due to (1) the effect of changes to the discount ratean increase in actuarial gains and expected rate of return on plan assets used in the actuarial computation method from 7.4% in 2015 to 8.2% in 2016; (2) contributions made to theFondo Laboral Pemex(Pemex Labor Fund) trust; and (3) payments made for medical and hospital services and post-mortem benefits provided to retired employees and certain of their beneficiaries. This decrease was partially offset by the recognition of net cost of the period of employee benefits.trust. Total Equity (Deficit), Net EquityOur total equity (deficit), net, increased improved by Ps. 104.143.0 billion, or 7.8 %,2.9%, in 2016,2018, from negative Ps. 1,331.71,502.4 billion as of December 31, 20152017 to negative Ps. 1,233.01,459.4 billion as of December 31, 2016.2018. This increaseimprovement was mainly due to (1) the equity contributions made by the Mexican Government to Petróleos Mexicanos in 2016 in the form of Certificates of Contribution “A” in the total amount of Ps. 161.9 billion; (2) a Ps. 108.2222.5 billion increase in actuarial gains on employee benefits resulting from the increase in the discount rate used in the actuarial computation method from 7.4% in 2015 to 8.2% in 2016 and an increase in the expected returns for fixed assets; and (3)a Ps. 21.41.3 billion in accumulated gainsgain from the foreign currency translation effect. This increase waseffect, partially offset by our net loss for the year of Ps. 191.1180.4 billion.
Liquidity and Capital Resources Overview During 2016, we were able to strengthen2019, our liquidity position despite a 7.5% decreasewas adversely affected mainly due to an increase in total sales, from Ps. 1,166.4 billionour short-term liabilities, as well as an increase in 2015 to Ps. 1,079.5 billion in 2016, and a Ps. 100 billion budget reduction, by increasing our cash and cash equivalents and accounts receivable, decreasing ourthe balance of accounts payable to supplierssuppliers. This negative impact to our liquidity position was partially offset by an increase in the balance of our accounts receivable, the capital contributions and increasingtax reductions we have received from the Mexican Government and our borrowing base under linescompletion of credit.a liability management transaction in September and October 2019. Our principal usesuse of funds in 2016 were primarily2019 was the repayment of debt, strengthening our cash flow through the actions listed below, and, to a lesser extent, the acquisition of wells, pipelines, properties, plant and equipment, sale ofnon-essential assets and business acquisitions, which collectively amounted to Ps. 134.5 billion. We met this requirement primarily with cash provided by cash flows from borrowings, which amounted to Ps. 842.01,167.8 billion. During 2016,2019, our net cash flow from operating activities, together with our funds from financing activities, was less than the resources neededsufficient to fund our capital expenditures and other expenses. See “—Overview—Redefinition of Petróleos Mexicanos as a State-Owned Productive Company”2019-2023 Business Plan and Recent Initiatives” above for more information and a discussion of actions being taken in response to thisthe imbalance of our resources. For 2016,2019, our capital expenditures decreasedincreased by approximately 22.9%15.6% from 2015, primarily due to the expected price levels of our products in 2016 and our expected borrowing capacity. Additionally, one of the most critical problems we faced and sought to address in 2016 was our accounts payable to suppliers.2018. As of December 31, 2016,2019, we owed our suppliers approximately Ps. 151.6208.0 billion as compared to Ps. 167.3149.8 billion as of December 31, 2015.2018 and, as of March 31, 2020, we have paid approximately 79.1% of the total outstanding balance due to suppliers and contractors as of December 31, 2019. As of December 31, 2016,2019, we have paid the total outstanding balance due to suppliers and contractors as of December 31, 2015 as part of our effort to repay such balances.2018. The average number of days outstanding of our accounts payable decreasedincreased from 9053 days as of December 31, 20152018 to 8161 days as of December 31, 2016.2019. Despite these obligations, we believe net cash flows from our operating and financing activities, together with available cash and cash equivalents, will be sufficient to meet our working capital, debt service and capital expenditure requirements in 20172020 because, since early 2015, we andin collaboration with the Mexican Government, we have adjusted investment, taxationbegun to implement initiatives intended to help us meet our working capital needs, continue to service our debt as it comes due and financing plans to address declining oil pricesimprove our capital expenditure programs and maintainwe are in the process of developing and refining our financial strength and flexibilitynewlong-term business plan, as described above under “Redefinition of Petróleos Mexicanos as a State-Owned Productive Company”“—Overview—2019-2023 Business Plan and Recent Initiatives” and as further described below: Our 2019-2023 Business Plan.On July 16, 2019, we announced our 2019-2023 Business Plan, which is intended to increase our competitiveness and improve our financial position. See Note22-f to our consolidated financial statements included herein for more information about our 2019-2023 Business Plan. | • | | ChangesGovernment Support. The Mexican Government has announced that, as part of itsPrograma de Fortalecimiento de Petróleos Mexicanos (Strengthening Program for Petróleos Mexicanos), it would provide a support program to Our Business Plan.We have implemented certain measures intended tohelp improve our financial situation, including the reduction ofposition and increase our budget in February 2015production and, in February 2016, the implementation of a plan to reduce costs and the establishment of lines of credit with Mexican development banks.turn, our profitability.
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| • | | Modifying Our Funding Strategy.Modified Financing Strategy. We have adjustedintend to continue our strategy of decreased reliance on debt financing strategyand we expect further liability management transactions in 2020 will allow us to diversify our sources of funding. Specifically, we have undertakenimprove the following transactions, based on this strategy, as of the date of this annual report:
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On June 17, 2016, Pemex Exploration and Production obtained approximately U.S. $1.1 billion from the sale and leaseback of certain infrastructure assets used for oil and gas activities. On July 8, 2016, Pemex Industrial Transformation obtained approximately U.S. $600.0 million in connection with the sale and leaseback of a plant located in the Madero Refinery. See Notes 12(f) and 15(l) and 15(m) to our consolidated financial statements included herein for more information.
On October 3, 2016, Petróleos Mexicanos completed a liability management transaction wherein we used part of the proceeds from U.S. $4.0 billion in debt securities issued on September 21, 2016 to finance the purchase of U.S. $1.3 billion in outstanding securities. We subsequently exchanged U.S. $1.7 billion in securities for U.S. $1.6 billion in new securities. See “—Financing Activities” below for more details regarding this transaction.
| • | | Changes to Employee Benefits Plans.For more information, see “—Critical Accounting Policies—Employee Benefits” above. |
| • | | Asset Sales.We have sold certainterms of ournon-essential assets to obtain working capital, including the sale outstanding debt, in line with our objective of reducing our stake in Gasoductos de Chihuahua.net debt. |
| • | | ReductionCrude Oil Hedge Program. We continue to carry out our crude oil hedge program in Taxes.As described below, we expect thatorder to partially protect our cash flows from decreases in the price of Mexican Government’s modification to the fiscal regime applicable to us enabled us to deduct more of our exploration and production costs.crude oil.
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| • | | Reduction in Outstanding Accounts Payable.As described above, as of December 31, 2016, we have paid the total outstanding balance due to suppliers and contractors as of December 31, 2015 as part of our effort to repay such balances. |
| • | | No Payment of Dividend.Dividend. The Mexican Government announced that Petróleos Mexicanos was not required to pay a state dividend in 2016, 2017, 2018 and 2019 and will not be required to pay one in 2017.2020. See “Item 4—Taxes, Duties and Other Payments to the Mexican Government—Fiscal Regime for PEMEX—Other Payments to the Mexican Government” above for more information. |
Moreover, on April 21, 2016, we received a capital contribution of Ps. 26.5 billion from the Ministry of Finance and Public Credit and, on August 3, 2016, the Ministry of Finance and Public Credit informed us that the Mexican Government will assume Ps. 184.2 billion in payment liabilities related to our pensions and retirement plans, following the review performed by an independent expert. See “—Equity Structure and Mexican Government Contributions” below.
Furthermore, the Mexican Government modified the fiscal regimeThe Federal Revenue Law applicable to us to enable us to deduct moreas of our exploration and production costs. Under the current low oil price environment, the amount of the hydrocarbon extraction duty we paid for the year ended December 31, 2016 was reduced by approximately Ps. 40.2 billion, as compared to the amount we would have had to pay for this duty if this change in the fiscal regime had not been implemented.
As noted above, successful completion of financings is an integral part of our plan to satisfy our working capital, capital expenditure, debt maturities and other requirements for the foreseeable future. Our financing program for 2017, included in theLey de Ingresos de la Federación para el Ejercicio Fiscal 2017 (Federal Revenues Law for the Fiscal Year 2017),January 1, 2020, provides for the incurrence of up to U.S. $15.7Ps. 34.9 billion in net indebtedness (i.e., U.S. $21.0 billion of new financings minus U.S. $5.3 billion of debt payments) through a combination of domestic and international capital markets offerings and borrowings from domestic and international financial institutions.
We have a substantial amount of debt, which we have incurred primarily to finance the capital expenditures needed to carry out our capital investment projects.debt. Due to our heavy tax burden, our cash flow from operations in recent years has not been sufficient to fund our capital expenditures and other expenses and, accordingly, our debt has significantly increased. The sharp decline inincreased and our working capital has deteriorated. Relatively low oil prices that began in late 2014 hasand declining production have also had a negative impact on our ability to generate positive cash flows, which, together with our continued heavy tax burden, has further exacerbated our ability to fund our capital expenditures and other expenses fromexpenses. Despite the relatively low and fluctuating oil prices and our heavy tax burden, our cash flow from operations. Therefore,operations in order2019, together with our funds from financing activities, was sufficient to developfund our hydrocarbon reservescapital expenditures and amortize scheduledother expenses. We expect that net cash flows from our operations and financing activities will also be sufficient to meet our working capital requirements, debt maturities, we will need to raise significant amounts of financing from a broad range of funding sources, in addition to the efficiencyservice and cost-cutting initiatives described in this annual report.capital expenditures for 2020. As of December 31, 2016,2019, our total indebtedness, including accrued interest, was approximately Ps. 1,983.2 billion (U.S. $96.0$105.2 billion), in nominal terms, which represents a 32.8% increase4.8% decrease compared to our total indebtedness, including accrued interest, of approximately Ps. 1,493.42,082.3 billion (U.S. $86.8$105.8 billion) as of December 31, 2015. Approximately 23.5%2018. 24.3% of our existing debt as of December 31, 2016,2019, or Ps. 465.7481.0 billion (U.S. $22.5$25.0 billion), is scheduled to mature in the next three years. Our working capital increaseddecreased from a negative working capital of Ps. 176.254.7 billion (U.S. $10.2$2.8 billion) as of December 31, 20152018 to a negative working capital of Ps. 70.8 million211.7 billion (U.S. $3.4 million)$11.2 billion) as of December 31, 2016.2019. Our level of debt may increase further in the short or medium term, as a result of new financing activities or future depreciation of the peso as compared to the U.S. dollar, and may have an adverse effect on our financial condition, results of operations and liquidity position. To service our debt, we have relied and may continue to rely on a combination of cash flow from operations, drawdowns under our available credit facilities and the incurrence of additional indebtedness (including refinancings ofrefinancing our existing indebtedness).indebtedness. In addition, we are taking actions to improve our financial position, such as those discussed above, particularly through our 2017-2021 Business Plan.above. Certain rating agencies have expressed concerns regarding: (1) our heavy tax burden; (2) the total amount of our debt; (2)debt and the ratio of our debt to our proven reserves; (3) the significant increase in our indebtedness over the last several years; (3)(4) our negative free cash flow during 2015, primarily resulting fromflow; (5) the natural decline of certain of our significant capital investment projectsoil fields and the declining pricelower quality of crude oil; (4)(6) our substantial unfunded reserve for retirement pensions and seniority premiums, which was equal to Ps. 1,220.41,456.8 billion (U.S. $59.1$77.3 billion) as of December 31, 2016, and (5)2019; (7) the resiliencepersistence of our operating expenses notwithstanding the sharp declinedeclines in oil pricesprices; (8) our rising per barrel lifting costs; (9) the possibility that beganour budget for capital expenditures will be insufficient to maintain and exploit reserves, particularly given our high investment needs to maintain production and replenish reserves; (10) the possibility that the Mexican Government will not be able to continue providing the support it has provided in late 2014. recent years; and (11) the involvement of the Mexican Government in our strategy, financing and management. In particular, in light of the recent downturn seen in the oil and gas industry beginning in the first quarter of 2020, certain ratings agencies have expressed concern that we lack flexibility to navigate the downturn and to finance our capital investment needs in the face of low cash flow generation and adverse financing conditions. Ratings address our creditworthiness and the likelihood of timely payment of our long-term debt securities. Ratings are not a recommendation to purchase, hold or sell securities and may be changed, suspended or withdrawn at any time. Our current ratings and the rating outlooks depend, in part, on economic conditions and other factors that affect credit risk and are outside our control, as well as assessments of the creditworthiness of Mexico. Certain ratings agencies have recently lowered Mexico’s credit ratings and their assessment of Mexico’s creditworthiness has and may further affect our credit ratings. Ratings actions related to us that occurred in 2019 and 2020 include the following: On January 29, 2016, Standard & Poor’s announced the downgrade of2019, Fitch Ratings lowered our credit rating from BBB+ tostand-aloneBBB- credit profile from “BB+” to “BB,”in both global local and affirmed its global foreign currency and affirmed the outlook for our credit ratings as negative. On June 6, 2019, Fitch Ratings lowered our credit rating of “BBB+.” fromBBB- to BB+ in both global local and global foreign currency and affirmed the outlook for our credit ratings as negative. On March 31, 2016,June 6, 2019, Moody’s Investors Service announced the revision of the outlook for our credit ratings from stable to negative and revised our long term national scale ratings as Aa3 and our global scale ratings as Baa3. Moody’s also affirmed our short-term national scale asMX-1 rating. On March 26, 2020, Standard & Poor’s lowered our credit ratings for foreign currency long term issues and for local currency long term issues from BBB+ andA- to BBB and BBB+, respectively, maintaining a negative credit outlook on a global scale. On April 1, 2020, HR Ratings affirmed our local credit rating at HR AAA with a stable outlook and lowered our global credit ratings to HR BBB+(G) with a negative outlook. On April 3, 2020, Fitch Ratings lowered our credit rating from BB+ to BB in both global local and global foreign currency with a negative outlook. On April 17, 2020, Fitch Ratings lowered our international foreign and local currency long-term ratings from BB toBB-. Fitch Ratings also revised the outlook from negative to stable. On April 17, 2020, Moody’s lowered our credit ratings from “Baa1”Baa3 to “Baa3” and changed the outlook for itsBa2, maintaining a negative credit outlook. On April 21, 2020, Moody’s lowered our credit ratings to negative. On July 26, 2016, Fitch Ratings announced the downgrade of our global local currencyoutstanding notes, as well as credit ratings based on our guarantee to A2.mx/Ba2 from Aa3.mx/Baa3. Moody’s also downgraded our short-term local scale rating toMX-2from“A-“MX-1. to “BBB+”, citing its recent downgrade of Mexico’s sovereign global local currency rating as its key factor. On August 23, 2016, Standard & Poor’s announced that it had revised the outlook of our corporate credit rating for our foreign currency and for our local currency from stable to negative. Any further loweringThese downgrades of our credit ratings, particularly those below investment grade, may have material 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 or at all,In turn, this could hamper our ability to obtain further financing on favorable terms as well as investment in projects financed through debt and impairsignificantly harm our ability to meet our principal and interest paymentexisting obligations, with our creditors. As a result, we may be exposed to liquidity constraints and may not be able to service our debt or make the capital expenditures needed to maintain our current production levels and to maintain, and increase, our proved hydrocarbon reserves, which may adversely affect our financial condition and results of operations.
If such constraints occur at a time when our cash flow from operations is less than the resources needed to fund our capital expenditures ornecessary to meet our debt service obligations, in order to provide additional liquidity to our operations, we could be forced to further reduce our planned capital expenditures, implement further austerity measures and/or sell additionalnon-strategic assets in order to raise funds.utilize alternative financing mechanisms that do not constitute public debt. A reduction in our capital expenditure program could adversely affect our financial condition and results of operations. SuchAdditionally, such measures may not be sufficient to permit us to meet our obligations. Going Concern Our consolidated financial statements have been prepared under the assumptionon a going concern basis, which assumes that we willcan meet our payment obligations. As we describe in Note22-f to our consolidated financial statements, there exists significant doubt about our ability to continue as a going concern. As we describe in Note 2 to our consolidated financial statements, we have experienced certain conditions that have generated important uncertainty and significant doubts concerning our ability to continue operating, including recurring net losses, negative working capital, negative equity and negative cash flows from operating activities. We discuss the circumstances that have caused these negative trends, as well our plans in regard to these matters in “Operating and Financial Review and Prospects—Overview” above in this Item 5 and Note 222-f to our consolidated financial statements included herein. We are currently evaluating our new business plan in light of the recent announcements by the Mexican Government in connection with the energy sector in Mexico, and we intend to continue taking actions to improve our results of operation, capital expenditures plans and financial condition. We continue operating as a going concern, and our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Equity Structure and Mexican Government Contributions Our total equity (deficit) as of December 31, 20162019 was negative Ps. 1,233.01,997.2 billion, and our total capitalization (long-term(long-term debt plus equity) totaled Ps. 574.0259.0 billion. During 2016,2019, our total equity (deficit) increased by Ps. 98.7 billion from negative Ps. 1,331.71,459.4 billion as of December 31, 2015,2018 to negative Ps. 1,997.2 billion as of December 31, 2019, primarily due to (1) the equity contributions in the total amount of Ps. 161.9 billion made by the Mexican Government to Petróleos Mexicanos in 2016 in the form of Certificates of Contribution “A” described in greater detail above; (2) a Ps. 108.2 billion increase in actuarial gains on employee benefits, resulting from the increase in the discount rate and expected rate of return on plan assets used in the actuarial computation method from 7.4% in 2015 to 8.2% in 2016 and an increase in the expected returns for fixed assets; and (3) Ps. 21.4 billion in accumulated gains from the foreign currency translation effect. This increase was partially offset by our net loss for the year of Ps. 191.1 billion.347.9 billion, a Ps. 309.3 billion increase in actuarial losses on employee benefits and a Ps. 2.7 billion accumulated gain from foreign currency translation effects. Under theLey deConcursos Mercantiles (Commercial Bankruptcy Law of Mexico), Petróleos Mexicanos and the subsidiary entities cannot be subject to a bankruptcy proceeding. In addition, our current financing agreements do not include financial covenants or events of default that would be triggered as a result of our having negative equity.
On April 21, 2016,September 11, 2019, Petróleos Mexicanos received Ps. 122.1 billion from the Mexican Government to help improve our financial position. In 2018 we received adid not receive any capital contribution of Ps. 26.5 billion from the Mexican Government. On December 24, 2015, the Ministry of Finance and Public Credit and, on August 3, 2016,published in the MinistryOfficial Gazette of Finance and Public Credit informed us that the Mexican Government would assume Ps. 184.2 billion in payment liabilities related to our pensions and retirement plans, following the review performed by an independent expert. In accordance withFederation theDisposiciones de carácter general relativas a la asunción por parte del Gobierno Federal de obligaciones de pago de pensiones y jubilaciones a cargo de Petróleos Mexicanos y sus empresas productivas subsidiarias (General provisions regarding the assumption by the FederalMexican Government of the payment obligations related to pensions and retirement plans of Petróleos Mexicanos and its productivestate-owned subsidiaries) published in. On August 3, 2016, the Official GazetteMinistry of Finance and Public Credit informed us that the Federation on December 24, 2015, we receivedMexican Government would assume Ps. 184.2 billion in promissory notes issued by the Mexican Government, whichpayment liabilities related to our pensions and retirement plans, and accordingly replaced the Ps. 50.0 billion promissory note issued to us on December 24, 2015 and was recognized as an increase in equity in the amount of Ps. 135.4 billion in the form of Certificates of Contribution “A.” The Ps. 135.4 billion increase in equity was the result of thewith Ps. 184.2 billion value of thein promissory notes as of June 29, 2016, minus the Ps. 50.0 billion promissory note we received on December 24, 2015, plus a Ps. 1.2 billion increase in the value of the promissory notes from June 29, 2016 to August 15, 2016, which is the date on which we received the promissory notes. On August 15, 2016, we exchanged Ps. 47.0 billion of these promissory notes for short-term floating rate Mexican Government debt securities known asBonos de Desarrollo del Gobierno Federal (Development Bonds of the Federal Government, or BONDES D). We then sold the BONDES D to Mexican development banks for the same price at which we received them from the Mexican Government. On January 19, 2015, the Mexican Government made an equity contribution of Ps. 10.0 billion to Petróleos Mexicanos in accordance with the Federal Law of Budget and Fiscal Accountability, as amended. This payment was recognized as a Ps. 10.0 billion increase in Mexican Government contributions to Petróleos Mexicanos.
As of December 31, 20152018 and 2016,2019, the balance of Mexican Government contributions to Petróleos Mexicanos was Ps. 140.643.8 billion. As of December 31, 20152018 and 2016,2019, the total amount of contributions in the form of Certificates of Contribution “A” was Ps. 194.6356.5 billion and Ps. 356.5478.7 billion, respectively. On January 31, 2019, the Mexican Government notified the Board of Directors of Petróleos Mexicanos that the Mexican Government would make payments to us through the SENER in a total amount of Ps. 25.0 billion. On March 8, 2019, we received a payment for Ps. 10.0 billion and on April 11, 2019, we received a payment for Ps. 5.0 billion. These payments are part of the Mexican Government’s Strengthening Program for Petróleos Mexicanos. Cash Flows from Operating, Financing and Investing Activities During 2016,2019, net funds provided by operating activities totaled negative Ps. 41.585.2 billion, as compared to Ps. 102.3141.8 billion in 2015. Net loss was2018, mainly due to a decrease in sales and the net effect of impairment of wells, pipelines, properties, plant and equipment in 2019. During 2019, our net cash flows used in investing activities totaled Ps. 191.1111.3 billion, in 2016, as compared to net losscash flows used in investing activities of Ps. 712.6101.1 billion in 2015.2018. Our net cash flows from financing activities totaled Ps. 213.45.0 billion in 2016,2019, as compared to Ps. 134.9 billion in 2015. During 2016, we applied net cash flows used in financing activities of Ps. 134.5 billion for net investments at cost in fixed assets, including exploration expenses, as compared to our application of cash flows of Ps. 254.856.6 billion in 2015 for net investments at cost in fixed assets, including exploration expenses.2018. At December 31, 2016,2019, our cash and cash equivalents totaled Ps. 163.560.6 billion, as compared to Ps. 109.481.9 billion at December 31, 2015.2018. See Note 9 to our consolidated financial statements included herein for more information about our cash and cash equivalents. Liquidity Position We define liquidity as funds available under our lines of credit as well as cash and cash equivalents. The following table summarizes our liquidity position as of December 31, 20152018 and 2016.2019. | | | As of December 31, | | | As of December 31, | | | | 2016 | | | 2015 | | | 2018 | | | 2019 | | | | (millions of pesos) | | | (millions of pesos) | | Borrowing base under lines of credit | | | Ps. 99,174 | | | | Ps 11,337 | | | | Ps. 152,170 | | | | Ps. 177,397 | | Cash and cash equivalents | | | 163,533 | | | | 109,369 | | | | 81,912 | | | | 60,622 | | | | | | | | | | | | | | | Liquidity | | | Ps. 262,707 | | | | Ps 120,706 | | | | Ps. 234,082 | | | | Ps. 238,019 | | | | | | | | | | | | | | |
The following table summarizes our sources and uses of cash for the years ended December 31, 20152018 and 2016:2019. | | | For the years ended December 31, | | | For the years ended December 31, | | | | 2016 | | | 2015 | | | 2018 | | | 2019 | | | | (millions of pesos) | | | (millions of pesos) | | Net cash flows (used in) from operating activities | | | Ps. (41,485) | | | | Ps. 102,337 | | | | Ps. 141,787 | | | | Ps. 85,220 | | Net cash flows used in investing activities | | | (134,536) | | | | (254,832) | | | | (101,084 | ) | | | (111,299 | ) | Net cash flows from financing activities | | | 213,360 | | | | 134,915 | | | Net cash flows (used in) financing activities | | | | (56,554 | ) | | | 4,974 | | Effect of change in cash value | | | 16,804 | | | | 8,960 | | | | (88 | ) | | | (186 | ) | | | | | | | | | | | | | | Net increase (decrease) in cash and cash equivalents | | | Ps. 54,143 | | | | Ps. (8,620) | | | | Ps. (15,939 | ) | | | Ps. (21,290 | ) | | | | | | | | | | | | | |
Note: Numbers may not total due to rounding. Investment Policies Our Finance and Treasury Department maintains financial resources sufficient to meet our payment commitments and those of the subsidiary entities, as well as a comprehensive, consolidated cash position and related projections in anticipation of such commitments. Our investment policies attempt to take advantage of favorable market conditions by accessing the most favorable terms offered to us by financial institutions. Investments of financial resources by our Finance and Treasury Department are made in accordance with the following policies: Investments of Mexican Pesos In connection with investments in Mexican pesos, we are obligated, during the structuring and development phase of our financial transactions, to observe and comply with the investment guidelines for resources in pesos that were approved by our Financial Resources Committee on December 21, 2006, as modified from time to time. We may only invest in the following:
| (a) | In connection with investments in Mexican pesos, we are obligated, during the structuring and development phase of our financial transactions, to observe and comply with the investment guidelines for resources in pesos that were approved by our Financial Resources Committee on July 24, 2017, as modified from time to time. We may only invest in the following: securities issued or guaranteed by the Mexican Government; |
securities issued or guaranteed by the Mexican Government;
| (b) | securities issued bySociedades Nacionales de Crédito (National Credit Societies), the balance of which may not exceed 50% of our cash and cash equivalents; |
repurchase agreements that use securities issued or guaranteed by the Mexican Government;
| (c) | repurchase agreements that use securities issued or guaranteed by the Mexican Government; |
time deposits with major financial institutions, the balance of which may not exceed 30% of our cash and cash equivalents; and
| (d) | time deposits with major financial institutions, the balance of which may not exceed 30% of our cash and cash equivalents; and |
shares of mutual funds whose investments are limited to securities issued or guaranteed by the Mexican Government.
| (e) | shares of mutual funds whose investments are limited to securities issued or guaranteed by the Mexican Government. |
In addition to the above limits, time depositsdemand deposit accounts must be traded with financial institutions that maintain, at a minimum, the following credit ratings as issued by the applicable rating agency: | | | | | | | Domestic scale | | Fitch Ratings | | S&P | | Moody’s | | | | | | | | Long term | | AA(mex) | | mxAA | | Aa2.mx | Short term | | F1(mex) | | A-1 | | Mx-1 |
Investments of Financial Resources in Dollars Investments of financial resources in dollars must meet our operational and strategic requirements and must be previously approved byBanco de México on acase-by-case basis. Currently, our investments in dollars are limited to operational accounts,short-term money market funds and time deposits. Our dollar investments are managed byBanco de México. Operational Currencies The main currencies for investing cash and cash equivalents are pesos and dollars. Similarly, we generate revenues from the domestic and international sales of our products in those two currencies and our expenses, including those relating to our debt service, are payable in these two currencies. Commitments for Capital Expenditures and Sources of Funding Our current aggregate commitments for capital expenditures for 2017 total approximately2020 were Ps. 109.0 billion.197.2 billion, however, given the recent developments as a result of theCOVID-19 pandemic, we expect to reduce our investment budget for 2020 by up to Ps. 45,500 million, which may include both capital expenditures andnon-capitalizable maintenance. For a general descriptionmore information regarding the impact of theCOVID-19 pandemic to our current commitments for capital expenditures,investment budget, see “Item 4—Information on the Company—History and Development—Capital Expenditures.” The amount of our aggregate capital expenditures commitments for 20172020 remains subject to adjustment by the Mexican Government. See “Item 3—Key Information—Risk Factors—Risk Factors Related to our Relationship with the Mexican Government—The Mexican Government controls us and it could limit our ability to satisfy our external debt obligations or could reorganize or transfer us or our assets.” The following table sets forth our total capital expenditures, excludingnon-capitalizable maintenance, by segment for the year ended December 31, 2016,2019, and the budget for these expenditures for 2017.2020. Capital expenditure amounts are derived from our budgetary records, which are prepared 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 IFRS. For more information, see “Item 4—History and Development—Capital Expenditures.” | | | Year ended December 31, 2016 | | | Budget 2017(1) | | | Budget Year ended December 31, | | | | | 2019 | | | 2020(1) | | | | (millions of pesos) | | | (millions of pesos) | | Exploration and Production | | | Ps. 137,242 | | | | Ps. 73,927 | | | | Ps. 98,763 | | | | Ps. 175,743 | | Industrial Transformation(2) | | | 33,947 | | | | 21,369 | | | | 8,953 | | | | 16,952 | | Drilling and Services | | | 2,688 | | | | 1,580 | | | | 738 | | | | — | | Logistics | | | 7,015 | | | | 4,449 | | | | 2,118 | | | | 3,135 | | Ethylene | | | | 164 | | | | — | | Fertilizers | | | 379 | | | | 444 | | | | 203 | | | | 1,069 | | Ethylene | | | 746 | | | | 1,786 | | | Cogeneration and Services | | | — | | | | — | | | Corporate and other Subsidiaries | | | 1,004 | | | | 5,422 | | | | 189 | | | | 332 | | | | | | | | | | | | | | | Total | | | Ps. 183,021 | | | | Ps. 108,977 | | | | Ps. 111,127 | | | | Ps. 197,232 | | | | | | | | | | | | | | |
Note: Numbers may not total due to rounding. | (1) | Budget authorizedOriginal budget published in the Official Gazette of the Federation on December 14, 2016 and presented to the Board of Directors of Petróleos Mexicanos on April 7, 2017.11, 2019. |
| (2) | Figures for the refining, gas and basic petrochemicals and petrochemicals segments for the year ended December 31, 2016 are allocated to the capital expenditures for the industrial transformation segment. |
Source: Petróleos Mexicanos. Our current commitments for capital expenditures have fluctuated in recent years as compared to previous years. Based on past experience, we expect to generate sufficient funds for our working capital, capital expenditures and investments through: cash flow generated by operations; | • | | the issuance ofcertificados bursátiles (peso-denominated(peso-denominated publicly traded notes) in the Mexican market; |
the issuance of debt securities in the international capital markets; the renewal of existing lines of credit and the entering into of new lines of credit from international and local commercial banks; and other financing activities. The securities that we issue may vary in tenor, amount, currency and type of interest rate. We may issue debt securities in U.S. dollars, Japanese yen, euros, pounds sterling, pesos or Swiss francs, among others; these securities may be issued with fixed or floating rates and with maturities of one or more years, including perpetual debt securities, depending on market conditions and funding requirements. We may issue securities in the international capital markets or in the Mexican domestic market, or in both markets. Commercial bank syndicated loans may be established with single or multiple tranches with varying maturities. Bilateral loans may vary in tenor and range, which may be of one year or more. See also “—Financing Activities” below. In order to be able to carry out our planned capital expenditures program, we will need to seek financing from a variety of sources, and we cannot guarantee that we will be able to obtain financing on terms that would be acceptable to us. Our inability to obtain additional financing could have an adverse effect on our planned capital expenditures program and result in our being required to limit or defer this program.
Financing Activities 20172020 Financing Activity.Activities.During the period from January 1 to April 25, 2017,May 6, 2020, we participated in the following activity:activities:
On February 4, 2017,January 21, 2020 Petróleos Mexicanos increased its Medium-Term Notes Program, Series C, from U.S. $102,000,000,000 to U.S. $112,000,000,000. On January 28, 2020, Petróleos Mexicanos issued € 4,250,000,000U.S. $5,000,000,000 of debt securities under its U.S. $72,000,000,000$112,000,000,000 Medium-Term Notes Program, Series C, in two tranches: (1) U.S. $2,500,000,000 5.95% Notes due 2031 and (2) U.S. $2,500,000,000 6.95% Notes due 2060. All debt securities under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, and Pemex Logistics and their respective successors and assignees. On January 30, 2020, Petróleos Mexicanos consummated a tender offer pursuant to which it purchased (1) U.S. $17,065,000 aggregate principal amount of its outstanding 6.000% Notes due 2020 and (2) U.S. $44,927,000 aggregate principal amount of its outstanding 3.500% Notes due 2020. On February 6, 2020, Petróleos Mexicanos consummated an exchange offer pursuant to which it exchanged (1) U.S. $264,752,000 aggregate principal amount of its outstanding 5.500% Notes due 2021 for U.S. $273,335,000 aggregate principal amount of its new 5.950% Notes due 2031, (2) U.S. $171,662,000 aggregate principal amount of its outstanding 6.375% Notes due 2021 for U.S. $178,908,000 aggregate principal amount of its new 5.950% Notes due 2031, (3) U.S. $148,535,000 aggregate principal amount of its outstanding 4.875% Notes due 2022 for U.S. $155,125,000 aggregate principal amount of its new 5.950% Notes due 2031, (4) U.S. $63,854,000 aggregate principal amount of its floating rate Notes due 2022 for U.S. $67,012,000 aggregate principal amount of its new 5.950% Notes due 2031, (5) U.S. $157,487,000 aggregate principal amount of its outstanding 5.375% Notes due 2022 for U.S. $166,335,000 aggregate principal amount of its new 5.950% Notes due 2031, (6) U.S. $216,727,000 aggregate principal amount of its outstanding 3.500% Notes due 2023 for U.S. $220,999,000 aggregate principal amount of its new 5.950% Notes due 2031, (7) U.S. $117,333,000 aggregate principal amount of its outstanding 4.625% Notes due 2023 for U.S. $124,116,000 aggregate principal amount of its new 5.950% Notes due 2031 and (8) U.S. $111,953,000 aggregate principal amount of its outstanding 4.500% Notes due 2026 for U.S. $114,170,000 aggregate principal amount of its new 5.950% Notes due 2031. The 5.950% Notes due 2031 are jointly and severally guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics and their respective successors and assignees and represent a reopening of the 5.950% Notes due 2031 originally issued on January 28, 2020. On February 6, 2020, Petróleos Mexicanos consummated an exchange offer pursuant to which it exchanged (1) U.S. $179,332,000 aggregate principal amount of its outstanding 5.500% Notes due 2044 for U.S. $165,830,000 aggregate principal amount of its new 6.950% Bonds due 2060, (2) U.S. $750,969,000 aggregated principal amount of its outstanding 5.625% Notes due 2046 for U.S. $695,799,000 aggregate principal amount of its new 6.950% Bonds due 2060 and (3) U.S. $444,125,000 aggregated principal amount of its outstanding 6.350% Notes due 2048 for U.S. $438,371,000 aggregate principal amount of its new 6.950% Bonds due 2060. The 6.950% Bonds due 2060 are jointly and severally guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics and their respective successors and assignees and represent a reopening of the 6.950% Bonds due 2060 originally issued on January 28, 2020. As of May 6, 2020, Petróleos Mexicanos had U.S. $7,450 million and Ps. 37,000 million in available revolving credit lines in order to ensure liquidity, with U.S. $5,800 million and Ps. 0 remaining available. 2019 Financing Activities.During 2019, we participated in the following activities: On June 28, 2019, Petróleos Mexicanos entered into a U.S. $5,500,000,000 revolving credit facility due 2024 and a U.S. $2,500,000,000 term loan facility due 2024. On July 29, 2019, Petróleos Mexicanos entered into a credit line in the amount of U.S. $206,900,910 due 2028. On September 23, 2019, Petróleos Mexicanos consummated a tender offer pursuant to which it purchased (1) U.S. $491,803,000 aggregate principal amount of its outstanding 6.000% Bonds due 2020, (2) U.S. $242,511,000 aggregate principal amount of its outstanding 3.500% Notes due 2020, (3) U.S. $1,897,615,000 aggregate principal amount of its outstanding 5.500% Notes due 2021, (4) U.S. $883,977,000 aggregate principal amount of its outstanding 6.375% Notes due 2021, (5) U.S. $17,316,000 aggregate principal amount of its outstanding 8.625% Bonds due 2022, (6) U.S. $96,970,000 aggregate principal amount of its outstanding Floating Rate Notes due 2022, (7) U.S. $235,177,000 aggregate principal amount of its outstanding 5.375% Notes due 2022, (8) U.S. $361,601,000 aggregate principal amount of its outstanding 4.875% Notes due 2022, (9) U.S. $344,853,000 aggregate principal amount of its outstanding 3.500% Notes due 2023, and (10) U.S. $433,946,000 aggregate principal amount of its outstanding 4.625% Notes due 2023. On September 23, 2019, Petróleos Mexicanos issued $7,500,000,000 of debt securities under its U.S. $102,000,000,000 Medium-Term Notes Program, Series C, in three tranches: (1) € 1,750,000,000U.S. $1,250,000,000 6.490% Notes due 2027, (2) U.S. $3,250,000,000 6.840% Notes due 2030 and (3) U.S. $3,000,000,000 7.690% Bonds due 2050. All debt securities under this program are jointly and severally guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics and their respective successors and assignees. On September 27, 2019, Petróleos Mexicanos consummated an exchange offer pursuant to which it exchanged (1) U.S. $429,159,000 aggregate principal amount of its 2.5%outstanding 4.875% Notes due 2021; (2) € 1,250,000,0002022 for U.S. $445,153,000 aggregate principal amount of its 3.75%new 6.490% Notes due 2024; and (3) € 1,250,000,0002027, (2) U.S. $40,380,000 aggregate principal amount of its 4.875 %outstanding 8.625% Bonds due 2022 for U.S. $44,819,000 aggregate principal amount of its new 6.490% Notes due 2028.2027, (3) U.S. $142,303,000 aggregate principal amount of its floating rate Notes due 2022 for U.S. $147,436,000 aggregate principal amount of its new 6.490% Notes due 2027 and (4) U.S. $443,288,000 aggregate principal amount of its outstanding 5.375% Notes due 2022 for U.S. $464,824,000 aggregate principal amount of the new 6.490% Notes due 2027. The 6.490% Notes due 2027 are jointly and severally guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics and their respective successors and assignees and represent a reopening of the 6.490% Notes due 2027 originally issued on September 23, 2019. On September 27, 2019, Petróleos Mexicanos consummated an exchange offer pursuant to which it exchanged (1) U.S. $255,577,000 aggregate principal amount of its outstanding 3.500% Notes due 2023 for U.S. $254,527,000 aggregate principal amount of its new 6.840% Notes due 2030, (2) U.S. $373,662,000 aggregate principal amount of its outstanding 4.625% Notes due 2023 for U.S. $383,416,000 aggregate principal amount of its new 6.840% Notes due 2030, (3) U.S. $35,385,000 aggregate principal amount of its outstanding 8.625% Guaranteed Bonds due 2023 for U.S. $39,359,000 aggregate principal amount of its new 6.840% Notes due 2030, (4) U.S. $373,509,000 aggregate principal amount of its outstanding 4.875% Notes due 2024 for U.S. $382,245,000 aggregate principal amount of its new 6.840% Notes due 2030 and (5) U.S. $106,913,000 aggregate principal amount of its outstanding 4.250% Notes due 2025 for U.S. $104,039,000 aggregate principal amount of its new 6.840% Notes due 2030. The 6.840% Notes due 2030 are jointly and severally guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics and their respective successors and assignees and represent a reopening of the 6.840% Notes due 2030 originally issued on September 23, 2019. On September 27, 2019, Petróleos Mexicanos consummated an exchange offer pursuant to which it exchanged (1) U.S. $511,459,000 aggregate principal amount of its outstanding 4.875% Notes due 2022 for U.S. $530,604,000 aggregate principal amount of its new 7.690% Bonds due 2050, (2) U.S. $12,930,000 aggregate principal amount of its outstanding 8.625% Guaranteed Bonds due 2022 for U.S. $14,351,000 aggregate principal amount of its new 7.690% Bonds due 2050, (3) U.S. $192,139,000 aggregate principal amount of its floating rate Notes due 2022 for U.S. $199,089,000 aggregated principal amount of its new 7.690% Bonds due 2050, (4) U.S. $211,380,000 aggregate principal amount of its outstanding 5.375% Notes due 2022 for U.S. $221,661,000 aggregate principal amount of its new 7.690% Bonds due 2050, (5) U.S. $134,408,000 aggregated principal amount of its outstanding 3.500% Notes due 2023 for U.S. $133,881,000 aggregate principal amount of its new 7.690% Bonds due 2050, (6) U.S. $239,073,000 aggregate principal amount of its outstanding 4.625% Notes due 2023 for U.S. $245,321,000 aggregate principal amount of its new 7.690% Bonds due 2050, (7) U.S. $23,597,000 aggregate principal amount of its outstanding 8.625% Guaranteed Bonds due 2023 for U.S. $26,246,000 aggregate principal amount of its new 7.690% Bonds due 2050, (8) U.S. $93,278,000 aggregate principal amount of its outstanding 4.875% Notes due 2024 for U.S. $95,472,000 aggregate principal amount of its new 7.690% Bonds due 2050, (9) U.S. $101,856,000 aggregate principal amount of its outstanding 4.250% Notes due 2025 for U.S. $99,163,000 aggregate principal amount of its new 7.690% Bonds due 2050, (10) U.S. $1,439,479,000 aggregate principal amount of its outstanding 6.500% Bonds due 2041 for U.S. $1,338,540,000 aggregate principal amount of its new 7.690% Bonds due 2050, (11) U.S. $730,486,000 aggregate principal amount of its outstanding 5.500% Bonds due 2044 for U.S. $618,908,000 aggregate principal amount of its new 7.690% Bonds due 2050, (12) U.S. $1,439,519,000 aggregate principal amount of its outstanding 6.375% Bonds due 2045 for U.S. $1,307,786,000 aggregate principal amount of its new 7.690% Bonds due 2050 and (13) U.S. $277,215,000 aggregate principal amount of its outstanding 5.625% Notes due 2046 for U.S. $234,766,000 aggregate principal amount of the new 7.690% Bonds due 2050. The 7.690% Bonds due 2050 are jointly and severally guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics and their respective successors and assignees and represent a reopening of the 7.690% Bonds due 2050 originally issued on September 23, 2019. On October 11, 2019, Petróleos Mexicanos consummated an exchange offer pursuant to which it exchanged (1) U.S. $7,674,000 aggregate principal amount of its outstanding 4.875% Notes due 2022 for U.S. $7,574,000 aggregate principal amount of its new 6.490% Notes due 2027, (2) U.S. $10,000 aggregate principal amount of its outstanding 8.625% Bonds due 2022 for U.S. $10,000 aggregate principal amount of its new 6.490% Notes due 2027, (3) U.S. $120,000 aggregate principal amount of its floating rate Notes due 2022 for U.S. $118,000 aggregate principal amount of its new 6.490% Notes due 2027 and (4) U.S. $500,000 aggregate principal amount of its outstanding 5.375% Notes due 2022 for U.S. $496,000 aggregate principal amount of its new 6.490% Notes due 2027. The 6.490% Notes due 2027 are jointly and severally guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics and their respective successors and assignees and represent a reopening of the 6.490% Notes due 2027 originally issued on September 23, 2019. On October 11, 2019, Petróleos Mexicanos consummated an exchange offer pursuant to which it exchanged (1) U.S. $4,247,000 aggregate principal amount of its outstanding 3.500% Notes due 2023 for U.S. $4,015,000 aggregate principal amount of its new 6.840% Notes due 2030, (2) U.S. $3,030,000 aggregate principal amount of its outstanding 4.625% Notes due 2023 for U.S. $2,957,000 aggregate principal amount of its new 6.840% Notes due 2030, (3) U.S. $25,000 aggregate principal amount of its outstanding 4.875% Notes due 2024 for U.S. $24,000 aggregate principal amount of its new 6.840% Notes due 2030 and (4) U.S. $273,000 aggregate principal amount of its outstanding 4.250% Notes due 2025 for U.S. $249,000 aggregated principal amount of its new 6.840% Notes due 2030. The 6.840% Notes due 2030 are jointly and severally guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics and their respective successors and assignees and represent a reopening of the 6.840% Notes due 2030 originally issued on September 23, 2019. On October 11, 2019, Petróleos Mexicanos consummated an exchange offer pursuant to which it exchanged (1) U.S. $24,000 aggregate principal amount of its outstanding 4.875% Notes due 2022 for U.S. $23,000 aggregate principal amount of its new 7.690% Bonds due 2050, (2) U.S. $20,000 aggregate principal amount of its outstanding 4.625% Notes due 2023 for U.S. $19,000 aggregate principal amount of its new 7.690% Bonds due 2050, (3) U.S. $20,000 aggregate principal amount of its outstanding 8.625% Bonds due 2023 for U.S. $21,000 aggregate principal amount of its new 7.690% Bonds due 2050 and (4) U.S. $570,000 aggregate principal amount of its outstanding 4.875% Notes due 2024 for U.S. $554,000 aggregate principal amount of its new 7.690% Bonds due 2050. The 7.690% Bonds due 2050 are jointly and severally guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics and their respective successors and assignees and represent a reopening of the 7.690% Bonds due 2050 originally issued on September 23, 2019. On November 14, 2019, Petróleos Mexicanos entered into a revolving credit facility for the amount of Ps. 28,000,000,000 due in 2022. | • | | On December 23, 2019, Petróleos Mexicanos issued Ps. 5,100,368,000 itsCertificados Bursátiles due 2024 at a rate linked to the28-day TIIE plus 100 basis points under its Ps. 100,000,000,000 or Unidades de Inversión (or UDI) equivalent Certificados Bursátiles program. All debt securities under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics and their respective successors and assignees. |
As of December 31, 2019, Petróleos Mexicanos had U.S. $7,450,000,000 and Ps. 37,000,000,000 in available revolving credit lines in order to ensure liquidity, with U.S. $6,780,000,000 and Ps. 16,000,000,000 remaining available. 2018 Financing Activities.During 2018, we participated in the following activities: On February 12, 2018, Petróleos Mexicanos issued U.S. $4,000,000,000 of debt securities under its U.S. $92,000,000,000Medium-Term Notes Program, Series C, in two tranches: (1) U.S. $2,500,000,000 5.35% Notes due 2028 and (2) U.S. $1,500,000,000 6.35% Bonds due 2048. All debt securities under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services and Pemex Logistics and their respective successors and assignees. On February 12, 2018, Petróleos Mexicanos consummated an exchange offer pursuant to which it exchanged (1) U.S. $952,454,000 aggregate principal amount of its outstanding 5.500% Bonds due 2044 for U.S. $881,899,000 aggregate principal amount of its new 6.350% Bonds due 2048 and (2) U.S. $1,021,065,000 aggregate principal amount of its outstanding 5.625% Bonds due 2046 for U.S. $946,764,000 aggregate principal amount of its new 6.350% Bonds due 2048. On February 12, 2018, Petróleos Mexicanos consummated a tender offer pursuant to which it purchased U.S. $2,052,000 aggregate principal amount of its outstanding 5.500% Bonds due 2044 and U.S. $2,488,000 aggregate principal amount of its outstanding 5.625% Bonds due 2046. On March 5, 2018, Petróleos Mexicanos consummated a tender offer pursuant to which it purchased U.S. $138,598,000 aggregate principal amount of its outstanding 3.125% Notes due 2019, U.S. $558,644,000 aggregate principal amount of its outstanding 5.500% Notes due 2019, U.S. $91,843,000 aggregate principal amount of its outstanding 8.000% Notes due 2019, U.S. $183,017,000 aggregate principal amount of its outstanding 6.000% Notes due 2020 and U.S. $817,303,000 aggregate principal amount of its outstanding 3.500% Notes due 2020. On March 27, 2018, Petróleos Mexicanos entered into a loan agreement in the amount of U.S. $181,101,291, which bears interest at a floating rate linked to LIBOR and matures in 2025. On April 16, 2018, Petróleos Mexicanos increased itsMedium-Term Notes Program from U.S. $92,000,000,000 to U.S. $102,000,000,000. On May 24, 2018, Petróleos Mexicanos issued €3,150,000,000 of debt securities under its U.S. $102,000,000,000 Medium Term Notes Program, Series C in four tranches: (1) €600,000,000 of its 2.500% Notes due 2022, (2) €650,000,000 of its Floating Rate Notes due 2023, (3) €650,000,000 of its 3.625% Notes due 2025 and (4) €1,250,000,000 of its 4.750% Notes due 2029. All debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services and Pemex Logistics and Pemex Cogenerationtheir respective successors and Services as of the date of this annual report. 2016 Financing Activities.During 2016 we participated in the following activities:assignees.
On January 25, 2016, Petróleos Mexicanos increased its Medium-Term Notes Program from U.S. $52,000,000,000 to U.S. $62,000,000,000 pursuant to an authorization by the Board of Directors of Petróleos Mexicanos on August 18, 2015.
On January 28, 2016, subsidiaries of Pemex Fertilizers obtained loans for an aggregate amount of U.S. $635,000,000 in connection with the acquisition of Grupo Fertinal, S.A. On FebruaryJune 4, 2016,2018, Petróleos Mexicanos issued U.S. $5,000,000,000CHF365,000,000 of debt securitiesits 1.750% Notes due 2023 under its U.S. $62,000,000,000 Medium-Term$102,000,000,000 Medium Term Notes Program, Series C, in three tranches: (1) U.S. $750,000,000 of its 5.500% Notes due 2019; (2) U.S. $1,250,000,000 of its 6.375% Notes due 2021; and (3) U.S. $3,000,000,000 of its 6.875% Notes due 2026.C. All debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services and Pemex Logistics and Pemex Cogenerationtheir respective successors and Services asassignees.
On June 26, 2018, one of our subsidiary companies,Pro-Agroindustria, refinanced a credit line for U.S. $250,000,000 by entering into a new credit line for the date of this annual report. On February 5, 2016, Petróleos Mexicanos obtained a loan from a line of credit for Ps. 7,000,000,000 bearingsame amount, which bears interest at a floating rate linked to LIBOR and matures in 2025. This credit agreement is guaranteed by Petróleos Mexicanos.
On August 23, 2018, Petróleos Mexicanos entered into a loan agreement in the TIIE, plus 0.55%,amount of U.S. $200,000,000, which was repaidbears interest at a floating rate linked to LIBOR and matures in full on January 27, 2017.2023. On March 15, 2016,October 23, 2018, Petróleos Mexicanos issued € 2,250,000,000U.S. $2,000,000,000 of debt securitiesits 6.500% Notes due 2029 under its U.S. $62,000,000,000 Medium-Term$102,000,000,000 Medium Term Notes Program, Series C in two tranches: (1) € 1,350,000,000 of its 3.750% Notes due 2019 and (2) € 900,000,000 of its 5.125% Notes due 2023.C. All debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services and Pemex Logistics and Pemex Cogenerationtheir respective successors and Services.assignees. On March 17, 2016,November 9, 2018, Petróleos Mexicanos receivedentered into a disbursementrevolving credit facility in the amount of Ps. 2,000,000,000 from its revolving credit lines at a floating rate linked to the TIIE,9,000,000,000, which was repaidmatures in full on March 17, 2017.2023. On March 17, 2016, Petróleos Mexicanos received a disbursement of Ps. 3,300,000,000 from its revolving credit lines at a floating rate linked to the TIIE, which was repaid in full on March 17, 2017. | • | | On March 23, 2016, Petróleos Mexicanos issued in the Mexican market Ps. 5,000,000,000 ofCertificados Bursátiles under its Ps. 200,000,000,000Unidades de Inversión(or UDI) equivalentCertificados Bursátiles Program, at a floating rate linked to the TIIE due 2019. All debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services as of the date of this annual report. |
On March 28, 2016, Petróleos Mexicanos borrowed Ps. 9,700,000,000 from a credit line at a floating rate linked to the TIIE, which was repaid in full on March 28, 2017.
On April 19, 2016, Petróleos Mexicanos borrowed € 500,000,000 from a credit line at a fixed rate of 5.11%, which matures on March 15, 2023.
On May 31, 2016,November 30, 2018, Petróleos Mexicanos borrowed U.S. $300,000,000$250,000,000 from a bilateral credit line, which bears interest at a floating rate linked to the LIBOR whichand matures on May 31, 2021.
On June 14, 2016, Petróleos Mexicanos issued CFH 375,000,000 aggregate principal amount of Notes under its U.S. $62,000,000,000 Medium-Term Notes Program, Series C, in two tranches: (1) CFH 225,000,000 of its 1.500% Notes due 2018 and (2) CFH 150,000,000 of its 2.375% Notes due 2021. All debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services as of the date of this annual report.
2028. On June 17, 2016, Pemex Exploration and Production obtained approximately U.S. $1.1 billion in connection with the sale and leaseback of certain infrastructure assets used for oil and gas activities. As part of this transaction, Pemex Exploration and Production entered into a15-year financial lease agreement pursuant to which Pemex Exploration and Production will retain the operation of these assets and the title and ownership of such assets will revert to Pemex Exploration and Production at the end of this period following payment of an agreed price.
On July 8, 2016, Pemex Industrial Transformation obtained approximately U.S. $600,000,000 in connection with the sale and leaseback of a plant located in the Madero Refinery. As part of this transaction, Pemex Industrial Transformation entered into a20-year financial lease agreement pursuant to which Pemex Industrial Transformation will retain the operation of this plant and the title and ownership will revert to Pemex Industrial Transformation at the end of this period following payment of an agreed price. This transaction was recognized as a financing activity due to the fact that we retained all of the risks and benefits associated with ownership of the asset and substantially all of the operating rights of the asset.
On July 26, 2016, Petróleos Mexicanos issued ¥80,000,000,000 of its 0.54% Bonds due 2026. The Bonds are guaranteed by the Japan Bank for International Cooperation.
On September 21, 2016, Petróleos Mexicanos issued U.S. $4,000,000,000 of its debt securities under its U.S. $62,000,000,000 Medium-Term Notes Program, Series C, in two tranches: (i) U.S. $2,000,000,000 of its 4.625% Notes due 2023 and (ii) U.S. $2,000,000,000 of its 6.750%
| Bonds due 2047. All debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services as of the date of this annual report.
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On October 3, 2016, Petróleos Mexicanos consummated a tender and exchange offer pursuant to which it (i) purchased U.S. $687,725,000 aggregate principal amount of its outstanding 8.000% Notes due 2019 and U.S. $657,050,000 aggregate principal amount of its outstanding 5.750% Notes due 2018 and (ii) exchanged (a) U.S. $73,288,000 aggregate principal amount of its outstanding 5.750% Notes due 2018 for U.S. $69,302,000 aggregate principal amount of its 4.625% Notes due 2023 and U.S. $8,059,000 aggregate principal amount of its 6.750% Bonds due 2047 and (b) U.S. $1,591,961,000 aggregate principal amount of its outstanding 5.500% Bonds due 2044 for U.S. $1,491,941,000 aggregate principal amount of its 6.750% Bonds due 2047. The 4.625% Notes due 2023 and 6.750% Bonds due 2047 are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services and represent reopenings of the 4.625% Notes due 2023 and 6.750% Bonds due 2047, respectively, originally issued on September 21, 2016.
On December 6, 2016, Petróleos Mexicanos increased its Medium-Term Notes Program, Series C, from U.S. $62,000,000,000 to U.S. $72,000,000,000.
On December 13, 2016, Petróleos Mexicanos issued U.S. $5,500,000,000 of its debt securities under its U.S. $72,000,000,000 Medium-Term Notes Program, Series C in three tranches: (1) U.S. $3,000,000,000 at a fixed rate of 6.50% due 2027, (2) U.S. $1,500,000,000 at a fixed rate of 5.375% due 2022, and (3) U.S. $1,000,000,000 at a floating rate linked to LIBOR plus 365 basis points, due 2022. All debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services as of the date of this annual report.
On December 14, 2016, Petróleos Mexicanos entered into a term loan credit facility in the amount of U.S. $300,000,000 at a floating rate linked to LIBOR plus 165 basis points, which matures on December 6, 2019.
Between January 1 and December 31, 2016, P.M.I. Holdings B.V. obtained U.S. $11,369,800 in financing from its revolving credit lines, which was repaid in full. As of December 31, 2016, there was no outstanding amount under this revolving credit line.
As of December 31, 2016,2018, Petróleos Mexicanos had U.S. $4,750,000,000$6,700,000,000 and Ps. 23,500,000,00032,500,000,000 in available revolving credit lines in order to ensure liquidity, with U.S. $4,630,000,000$6,400,000,000 and Ps. 3,500,000,00026,200,000,000 remaining available. 2015 Financing Activities.During 2015 we participated in the following activities:
On January 16, 2015, Petróleos Mexicanos obtained a direct loan for Ps. 7,000,000,000 bearing interest at a floating rate linked to the TIIE, which matured on January 16, 2016.
On January 22, 2015, Petróleos Mexicanos increased its Medium-Term Notes Program from U.S. $42,000,000,000 to U.S. $52,000,000,000 pursuant to an authorization by the Board of Directors of Petróleos Mexicanos on December 19, 2014.
On January 23, 2015, Petróleos Mexicanos issued U.S. $6,000,000,000 of its debt securities under its U.S. $52,000,000,000 Medium-Term Notes Program, Series C in three tranches: (1) U.S. $1,500,000,000 of its 3.500% Notes due 2020; (2) U.S. $1,500,000,000 of its 4.500% Notes due 2026; and (3) U.S. $3,000,000,000 of its 5.625% Bonds due 2046. All debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services as of the date of this annual report.
On January 30, 2015, Petróleos Mexicanos amended the terms of its revolving credit facility in order to increase the amount available thereunder from U.S. $1,250,000,000 to U.S. $3,250,000,000 and to extend the maturity date to February 5, 2020. On February 5, 2015, Petróleos Mexicanos borrowed U.S. $1,950,000,000 under this facility to prepay in full its U.S. $700,000,000 credit facility dated as of December 17, 2014.
| • | | On February 11, 2015, Petróleos Mexicanos issued Ps. 24,287,901,544 aggregate principal amount ofCertificados Bursátiles in three tranches. The first tranche was issued at a fixed rate of 7.47% due 2026 in an aggregate principal amount of Ps. 17,000,000,000, consisting of (1) an international offering outside of Mexico of Ps. 9,000,000,000 of “EuroclearableCertificados Bursátiles,” which are eligible for clearance through Euroclear Clearance System plc and Indeval, and (2) a concurrent offering to the public in Mexico of Ps. 8,000,000,000. This issuance was a reopening of the same series ofCertificados Bursátiles due 2026 that was originally issued on November 27, 2014. The second tranche was issued at a floating rate due 2020 in an aggregate principal amount of Ps. 4,300,000,000. This issuance was a reopening of the same series ofCertificados Bursátiles due 2020 that was originally issued on November 27, 2014. The third tranche was issued at a fixed rate of 3.94% due 2026 in an aggregate principal amount of 565,886,800 UDI, equivalent to Ps. 2,987,901,544. This issuance represented the fourth reopening of the same series originally issued on January 30, 2014 and subsequently reopened on July 2, 2014, September 11, 2014 and November 27, 2014. Thesecertificados bursátiles were issued under Petróleos Mexicanos’ Ps. 200,000,000,000 or UDI equivalentCertificados Bursátiles Program. All debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services as of the date of this annual report. |
On February 11, 2015, Petróleos Mexicanos entered into a term loan credit facility in the amount of U.S. $2,000,000,000. On February 17, 2015, Petróleos Mexicanos borrowed U.S. $2,000,000,000 under this facility to prepay in full its credit agreement dated as of November 18, 2010.
| • | | On March 24, 2015, the CNBV authorized Petróleos Mexicanos’ Short-TermCertificados Bursátiles Program for an aggregate revolving amount of Ps. 100,000,000,000. As of the date of this annual report, there are no outstanding amounts under this program. All debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services as of the date of this annual report. |
On April 21, 2015, Petróleos Mexicanos issued € 2,250,000,000 of its debt securities under its U.S. $52,000,000,000 Medium-Term Notes Program, Series C in two tranches: (1) € 1,000,000,000 of its 1.875% Notes due 2022 and (2) € 1,250,000,000 of its 2.750% Notes due 2027. All debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services as of the date of this annual report.
On June 26, 2015, Petróleos Mexicanos received a disbursement of U.S. $500,000,000 from its revolving credit lines entered into with international financial institutions.
On July 7, 2015, Petróleos Mexicanos obtained a loan for Ps. 18,000,000,000 bearing interest at a floating rate linked to the TIIE plus 0.95%, which matures on July 7, 2025.
| • | | On July 16, 2015, Petróleos Mexicanos issued in the Mexican market Ps. 7,721,582,153 aggregate principal amount ofCertificados Bursátiles under its Ps. 200,000,000,000 or UDI equivalentCertificados Bursátiles Program, in three tranches: (1) aggregate principal amount of Ps. 650,000,000 at a floating rate linked to the TIIE plus 0.15% due 2020, this issuance was the second reopening of the same series ofCertificados Bursátiles originally issued on November 27, 2014 and reopened on February 11, 2015; (2) aggregate principal amount of Ps. 6,100,000,000 at a fixed rate of 7.47% due 2026, this issuance was the second reopening of the same series of
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| Certificados Bursátiles originally issued on November 27, 2014 and reopened on February 11, 2015; and (3) aggregate principal amount of 183,941,400 UDIs, equivalent to approximately Ps. 971,582,153, at a fixed rate of 3.94% due 2026, this issuance was the fifth reopening of the same series ofCertificados Bursátiles originally issued on January 30, 2014 and reopened on July 2, 2014, September 11, 2014, November 27, 2014 and February 11, 2015. As of the date of this annual report, all debt securities issued under the aforementioned program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services as of the date of this annual report.
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On July 31, 2015, Petróleos Mexicanos issued U.S. $525,000,000 of notes due 2025, which bear interest at a fixed rate of 2.46%. The notes are guaranteed by the Export-Import Bank of the United States.
2018. On August 4, 2015, P.M.I. Holdings, B.V. obtained a loan for U.S. $250,000,000, which bears interest at a rate of 1.79% and is due in 2018. The loan is collateralized by 20,724,331 Repsol shares.
On August 28, 2015, Petróleos Mexicanos borrowed U.S. $120,000,000 from a U.S. $3,250,000,000 revolving credit line, which bears interest at a floating rate linked to the LIBOR and was repaid in full in February 2016.
On September 15, 2015, Petróleos Mexicanos borrowed U.S. $800,000,000 from its revolving credit lines entered into with international financial institutions.
On September 30, 2015, Petróleos Mexicanos entered into a credit facility in the amount of Ps. 5,000,000,000, which bears interest at a floating rate linked to the TIIE and matures in September 2023. This credit facility was fully disbursed on October 7, 2015.
On September 30, 2015, Petróleos Mexicanos borrowed U.S. $500,000,000 from its revolving credit line, which bears interest at a rate linked to LIBOR and matures in December 2025. The credit facility is guaranteed by the Export-Import Bank of the United States.
On September 30, 2015, Petróleos Mexicanos borrowed U.S. $475,000,000 from a revolving credit facility guaranteed by the Export-Import Bank of the United States, which bears interest at a rate linked to LIBOR and matures in December 2025.
| • | | On September 30, 2015, Petróleos Mexicanos issued in the Mexican market Ps. 7,400,493,076 aggregate principal amount ofCertificados Bursátiles under its Ps. 200,000,000,000 or UDI equivalentCertificados Bursátiles Program, in two tranches: (1) aggregate principal amount of Ps. 1,357,736,800 at a floating rate linked to the TIIE plus 0.35 basis points due 2018; and (2) aggregate principal amount of 1,138,056,400 UDIs, equivalent to approximately Ps. 6,042,756,276, at a fixed rate of 5.23% due 2035. As of the date of this annual report, all debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services as of the date of this annual report. |
On October 7, 2015, Petróleos Mexicanos obtained a loan from a line of credit for Ps. 5,000,000,000 bearing interest at a floating rate linked to the TIIE, which matures on September 30, 2023.
On October 22, 2015, Petróleos Mexicanos obtained a loan from a line of credit for Ps. 5,000,000,000 bearing interest at a floating rate linked to the TIIE, which matures on October 16, 2022.
On November 6, 2015, Petróleos Mexicanos issued € 100,000,000 of notes due 2030, which bear interest at a fixed rate of 4.625%. The notes are guaranteed by Pemex Exploration and Production,
| Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services.
|
On December 8, 2015, Petróleos Mexicanos issued CHF 600,000,000 of its 1.5% Notes due 2020 under its U.S. $52,000,000,000 Medium-Term Notes Program, Series C. The notes are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services.
On December 15, 2015, Petróleos Mexicanos received a disbursement for Ps. 10,000,000,000 from a revolving credit line bearing interest at a floating rate linked to the TIIE, and was paid in full on March 15, 2016.
On December 29, 2015, Petróleos Mexicanos received a disbursement for Ps. 4,400,000,000 bearing interest at a floating rate linked to the TIIE, and was paid in full on March 29, 2016.
| • | | From January 1, 2015 to December 31, 2015, Petróleos Mexicanos issued and repaid a total of Ps. 40,000,000,000 ofshort-term Certificados Bursátiles at fixed and floating rates under its Short-Term Certificados Bursátiles Program. |
From January 1, 2015 to December 31, 2015, P.M.I. Holdings B.V. obtained U.S. $1,540,000,000 in financing from its revolving credit lines and repaid U.S. $2,040,000,000.
Indebtedness During 2016,2019, our total debt increaseddecreased by 32.8%4.8%, from Ps. 1,493.42,082.3 billion at December 31, 20152018 to Ps. 1,983.2 billion at December 31, 2016,2019, primarily due to the financing activities undertaken during this period, as described in Note 1516 to our consolidated financial statements included herein and to the 20.1% appreciation of the U.S. dollar relative to the peso in 2016.herein. As of December 31, 20162019 and as of the date of this annual report, we were not in default on any of our financing agreements. The following table sets forth the analysis of our total indebtedness (not including accrued interest) as of December 31, 20162019 based onshort- andlong-term debt and fixed or floating rates: | | | | | | | In millions of U.S. dollars | | Short-term debt | | | | | Short-term bonds with floating interest rates | | U.S. $ | 1,2601,241 | | Lines of credit with variable interest rates established under committed credit facilities with various international commercial banks | | | 3,7654,309 | | Lines of credit with fixed interest rates | | | 2,1545,688 | | | | | | | Totalshort-term debt(1) | | U.S. $ | 7,17911,238 | | | | | | | Long-term debt | | | | | Fixed rate instruments | | | | | Instruments with fixed annual interest rates ranging from 1.5%0.54% to 9.5% and maturities ranging from 20182021 to 20472050 and perpetual bonds with no maturity date | | U.S. $ | 74,95983,148 | | Variable rate instruments | | | | | Drawings under lines of credit based on LIBOR and other variable rates with maturities ranging from 20182021 to 20302031 | | | 8,1097,059 | | Floating rate notes with maturities ranging from 20182021 to 2025 | | | 4,3792,031 | | | | | | | Total variable rate instruments | | | 12,4889,090 | | | | | | | Totallong-term debt | | | 87,44792,238 | | | | | | | Total indebtedness(1) | | U.S. $ | 94,626103,476 | | | | | | |
Note: | Note: Numbers may not total due to rounding.
|
(1) | Excludes U.S. $1,346.1$1,758.9 million of accrued interest and includes notes payable to contractors. |
The table below sets forth our total indebtedness as of December 31 for each of the three years from 20142017 to 2016.2019. Total Indebtedness of PEMEX | | | As of December 31,(1) | | | As of December 31,(1) | | | | 2014 | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | | (in millions of U.S. dollars)(2) | | | (in millions of U.S. dollars)(2) | | Domestic debt in various currencies | | U.S. $ | 19,856 | | | U.S. $ | 19,415 | | | U.S. $ | 16,651 | | | U.S. $ | 13,595 | | | U.S. $ | 13,669 | | | U.S. $ | 13,724 | | External debt in various currencies(3) | | | | | | | | | | | | | Bonds(4) | | | 44,445 | | | | 52,981 | | | | 67,523 | | | | 76,007 | | | | 80,134 | | | | 78,758 | | Direct loans | | | 6,473 | | | | 7,486 | | | | 3,808 | | | | 6,244 | | | | 5,609 | | | | 7,209 | | Project financing(5)(4) | | | 4,916 | | | | 4,816 | | | | 4,125 | | | | 3,284 | | | | 2,650 | | | | 2,184 | | Financial leases | | | 263 | | | | 536 | | | | 2,181 | | | Capital lease and Financing of infrastructure assets(5) | | | | 2,036 | | | | 1,878 | | | | 1,493 | | Notes payable to contractors | | | 795 | | | | 483 | | | | 338 | | | | 205 | | | | 153 | | | | 108 | | | | | | | | | | | | | | | | | | | | | Total external debt | | U.S. $ | 56,892 | | | U.S. $ | 66,302 | | | U.S. $ | 77,975 | | | U.S. $ | 87,776 | | | U.S. $ | 90,424 | | | U.S. $ | 89,752 | | | | | | | | | | | | | | | | | | | | | Total indebtedness | | U.S. $ | 76,748 | | | U.S. $ | 85,717 | | | U.S. $ | 94,626 | | | U.S. $ | 101,371 | | | U.S. $ | 104,093 | | | U.S. $ | 103,476 | | | | | | | | | | | | | | | | | | | | |
Note: Numbers may not total due to rounding. (1) | Figures do not include accrued interest. Accrued interest was U.S. $928.9$1,602.5 million, U.S. $1,074.5$1,698.7 million and U.S. $1,346.1$1,758.9 million at December 31, 2014, 20152017, 2018 and 2016,2019, respectively. |
(2) | Indebtedness payable in currencies other than U.S. dollars was first converted into pesos for accounting purposes at the exchange rates set byBanco de México and then converted from pesos to U.S. dollars at the following exchange rates: Ps. 14.718019.7867 = U.S. $1.00 for 2014,2017, Ps. 17.206519.6829 = U.S. $1.00 for 20152018 and Ps.20.664Ps. 18.8452 = U.S. $1.00 for 2016.2019. See Notes 3 and 15Note 16 to our consolidated financial statements included herein. |
(3) | Indebtedness payable other than in pesos and owed to persons or institutions having their head offices or chief places of business outside of Mexico and payable outside the territory of Mexico. |
(4) | Includes, as of December 31, 2014, 2015 and 2016, U.S. $0.39 billion, U.S. $0.275 billion and U.S. $0.16 billion, respectively, of bonds issued by Pemex Finance, Ltd. See “—Financing Activities of Pemex Finance, Ltd.” below. |
(5) | All credits included in this line are insured or guaranteed by export credit agencies. |
(5) | Beginning in 2019, this only includes Financing of infrastructure assets and does not include financial leases due to the adoption of IFRS. Financial leases were reclassified to lease liabilities. |
Source: PEMEX’s consolidated financial statements, prepared in accordance with IFRS. Financing Activities of Pemex Finance, Ltd.
Commencing on December 1, 1998, Petróleos Mexicanos, Pemex-Exploration and Production, PMI and P.M.I. Services, B.V. have entered into several agreements with Pemex Finance, Ltd. Under these contracts, Pemex Finance, Ltd. purchases certain existing PMI accounts receivable for crude oil as well as certain accounts receivable to be generated in the future by PMI related to crude oil. The receivables sold are those generated by the sale of Maya and Altamira crude oil to designated customers in the United States, Canada and Aruba. The net proceeds obtained by Pemex Exploration and Production, which assumed all of the rights and obligations ofPemex-ExplorationOff-Balance and Production under these agreements, from the sale of such receivables under the agreements are utilized for capital expenditures. Pemex Finance, Ltd. obtains resources for the acquisition of such accounts receivable through the placement of debt instruments in the international markets.
On July 1, 2005, we entered into an option agreement with BNP Paribas Private Bank and Trust Cayman Limited giving us an option to acquire 100% of the shares of Pemex Finance, Ltd. As a result, the financial results of Pemex Finance, Ltd. under IFRS are consolidated into our financial statements, and PMI’s sales of accounts receivable to Pemex Finance, Ltd. have been reclassified as debt. Our option to purchase the shares of Pemex Finance, Ltd. can only be exercised once its remaining debt, approximately U.S. $162.5 million in aggregate principal amount as of December 31, 2016, has been redeemed.Sheet Arrangements
As of December 31, 2016, the outstanding debt of Pemex Finance, Ltd. was composed of U.S. $162.5 million aggregate principal amount of fixed rate notes with maturities ranging from 2017 to 2018 and interest rates between 9.15% and 10.61% and accrued interest of U.S. $0.7 million. 2017 Financing Activities.During the first four months of 2017, Pemex Finance, Ltd. made payments of U.S. $28.1 million in principal of its notes. Pemex Finance, Ltd.2019, we did not incurhave any additional indebtedness duringoff-balance sheet arrangements of the first four monthstype that we are required to disclose under Item 5.E of 2017.Form 20-F.See “Item 11—Quantitative and Qualitative Disclosures about Market Risk.”
2016 Financing Activities.During 2016, Pemex Finance, Ltd. made payments of U.S. $28.1 million in principal of its notes. Pemex Finance, Ltd. did not incur any additional indebtedness during 2016.
2015 Financing Activities.During 2015, Pemex Finance, Ltd. made payments of U.S. $112.5 million in principal of its notes. Pemex Finance, Ltd. did not incur any additional indebtedness during 2015.
Contractual Obligations andOff-Balance Sheet Arrangements Information about ourlong-term contractual obligations andoff-balance sheet arrangements outstanding as of December 31, 20162019 is set forth below. This information is important in understanding our financial position. In considering the economic viability of investment opportunities we view any source of financing, for example, operating leases or sales of future accounts receivable, as being economically equivalent to consolidated debt. Contractual Obligations as of December 31, 20162019(1) | | | | | Payments due by period | | | | | | Payments due by period | | | | Total | | Less than 1 year | | 1-3 years | | 4-5 years | | After 5 years | | | Total | | | Less than 1 year | | | 1 – 3 years | | | 4 – 5 years | | | After 5 years | | | | (in millions of U.S. dollars) | | | (in millions of U.S. dollars) | | Contractual obligations recognized in balance sheet: | | | | | | | | | Debt(2) | | U.S.$ | 93,453 | | | U.S.$ | 8,174 | | | U.S.$ | 13,666 | | | U.S.$ | 16,485 | | | U.S.$ | 55,128 | | | U.S. $ | 105,127 | | | U.S. $ | 12,930 | | | U.S. $ | 12,485 | | | U.S. $ | 15,775 | | | U.S. $ | 63,937 | | Notes payable to contractors(3) | | | 338 | | | | 202 | | | | 68 | | | | 51 | | | | 17 | | | | 108 | | | | 66 | | | | 42 | | | | — | | | | — | | Capital lease obligations(4) | | | 2,181 | | | | 149 | | | | 279 | | | | 273 | | | | 1,480 | | | Leases | | | | 3,616 | | | | 310 | | | | 807 | | | | 617 | | | | 1,882 | | Other long-term liabilities: | | | | | | | | | | | | | | | | | | | | | Dismantlement and abandonment costs obligations(5)(4) | | | 3,144 | | | | 13 | | | | 478 | | | | 543 | | | | 2,110 | | | | 4,290 | | | | 165 | | | | 557 | | | | 516 | | | | 3,052 | | Employee benefits plan(6)(5) | | | 59,060 | | | | 2,945 | | | | 6,061 | | | | 6,776 | | | | 43,278 | | | | 77,304 | | | | 3,860 | | | | 8,072 | | | | 9,014 | | | | 56,358 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total contractual obligations recognized in balance sheet | | | 158,226 | | | | 11,483 | | | | 20,552 | | | | 24,128 | | | | 102,013 | | | | 190,445 | | | | 17,331 | | | | 21,963 | | | | 25,922 | | | | 125,229 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other contractual obligations not recognized in liabilities: | | | | | | | | | | | | | | | | | | | | | Infrastructure works contracts(7)(6) | | | 39,585 | | | | 16,822 | | | | 13,626 | | | | 3,365 | | | | 5,572 | | | | 32,992 | | | | 5,550 | | | | 17,282 | | | | 2,334 | | | | 7,826 | | Financed Public Works Contracts (FPWC)(8)(7) | | | 799 | | | | 356 | | | | 122 | | | | 120 | | | | 201 | | | | 175 | | | | 67 | | | | 85 | | | | 23 | | | | — | | Nitrogen supply contracts(9)(8) | | | 419 | | | | 39 | | | | 79 | | | | 80 | | | | 221 | | | | 1,895 | | | | 237 | | | | 507 | | | | 512 | | | | 639 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total contractual obligations not recognized in liabilities(10) | | | 40,803 | | | | 17,217 | | | | 13,827 | | | | 3,565 | | | | 5,994 | | | | 35,062 | | | | 5,854 | | | | 17,874 | | | | 2,869 | | | | 8,465 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total contractual obligations | | U.S. $ | 199,029 | | | U.S. $ | 28,700 | | | U.S. $ | 34,379 | | | U.S. $ | 27,693 | | | U.S. $ | 108,007 | | | U.S. $ | 225,507 | | | U.S. $ | 23,185 | | | U.S. $ | 39,837 | | | U.S. $ | 28,791 | | | U.S. $ | 133,694 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note: Numbers may not total due to rounding. (1) | All amounts calculated in accordance with IFRS. |
(2) | See Note 15to16to our consolidated financial statements included herein. Figures in this line item do not include notes payable to contractors and capital lease obligations, which are presented in separate line items, but do include accrued interest as of December 31, 2016.2019. |
(3) | See Note 1516to our consolidated financial statements included herein. |
(4) | See Notes3-L and13-C to our consolidated financial statements included herein. |
(4)(5) | See Note 1519 to our consolidated financial statements included herein. |
(5)(6) | See Notes 3(l) and 12(c)Note26-D to our consolidated financial statements included herein. |
(6) | See Note 17 to our consolidated financial statements included herein. |
(7) | See Note 24(e) to our consolidated financial statements included herein. |
(8) | The amounts presented for Financed Public Works ContractsFPWC in this table correspond to works the performance and delivery of which by the relevant contractors are pending. For more information on the FPWC program, see “Item 4—Information on the Company—Business Overview—Pemex Exploration and Production—Integrated Exploration and Production Contracts and Financed Public Works Contracts” and Note 24(c)26-c to our consolidated financial statements included herein. |
(9)(8) | See Notes 24(b)Note26-B to our consolidated financial statements included herein. |
(10)(9) | No amounts have been included for Integrated E&P Contracts in this table, since payments for these contracts will be made on aper-barrel basis and performance and delivery by the relevant contractors is pending. For more information on the Integrated E&P Contracts program, see “Item 4—Information on the Company—Business Overview—Pemex Exploration and Production—Integrated Exploration and Production Contracts and Financed Public Works Contracts” and Note 24(d)26-d to our consolidated financial statements included herein. |
Source: PEMEX’s consolidated financial statements, prepared in accordance with IFRS. As of December 31, 2016, we did not have anyoff-balance sheet arrangements of the type that we are required to disclose under Item 5.E of Form20-F.
See “Item 11—Quantitative and Qualitative Disclosures about Market Risk.”
Results of Operations by Business Segment This section presents the results of our operations by business segment, including our central corporate operations and the operations of the consolidated subsidiary companies. As further described under “Item 4—Information on the Company—History and Development—Energy Reform—Corporate Reorganization” and in Note 1 and Note 5 to our consolidated financial statements included herein, as a result of the energy reform, we have undergone a corporate reorganization that created new business segments and redistributed the operation of certain business units to different business segments. Accordingly, the results for the business segments presented as of and for the years ended December 31, 2016 reflect different business segments from those presented as of and for the year ended December 31, 2015 and 2014. Further, as of 2016, the results for refining, gas and basic petrochemicals and petrochemicals, which were previously presented separately, are presented as part of the industrial transformation segment. For comparison purposes, we have consolidated 2015 results for these prior segments under “Total industrial transformation.”
Revenue by Business Segment The following table sets forth our trade and intersegment net sales revenues by business segment for the fiscal years ended December 31, 2014, 20152017, 2018 and 20162019 as well as the percentage change in sales revenues for those years. | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, | | | 2015 | | | 2016 | | | | 2014 | | | 2015 | | | 2016 | | | vs. 2014 | | | vs. 2015 | | | | (in millions of pesos)(1) | | | (%) | | | (%) | | Exploration and Production(4) | | | | | | | | | | | | | | | | | | | | | Trade sales(2) | | | — | | | | — | | | | — | | | | — | | | | — | | Intersegment sales | | | Ps.1,134,520 | | | | Ps.690,642 | | | | Ps.616,381 | | | | (39.1 | ) | | | (10.8 | ) | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | 1,134,520 | | | | 690,642 | | | | 616,381 | | | | (39.1 | ) | | | (10.8 | ) | Industrial Transformation(5) | | | | | | | | | | | | | | | | | | | | | Refining(6) | | | | | | | | | | | | | | | | | | | | | Trade sales(2)(3) | | | 763,005 | | | | 589,548 | | | | n.a. | | | | (22.7 | ) | | | n.a. | | Intersegment sales | | | 78,453 | | | | 54,876 | | | | n.a. | | | | (30.0 | ) | | | n.a. | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | 841,458 | | | | 644,424 | | | | n.a. | | | | (23.4 | ) | | | n.a. | | Gas and Basic Petrochemicals(7) | | | | | | | | | | | | | | | | | | | | | Trade sales(2)(3) | | | 159,754 | | | | 137,456 | | | | n.a. | | | | (14.0 | ) | | | n.a. | | Intersegment sales | | | 84,198 | | | | 55,594 | | | | n.a. | | | | (34.0 | ) | | | n.a. | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | 243,952 | | | | 193,050 | | | | n.a. | | | | (20.9 | ) | | | n.a. | | Petrochemicals(8) | | | | | | | | | | | | | | | | | | | | | Trade sales(2) | | | 29,074 | | | | 20,735 | | | | n.a. | | | | (28.7 | ) | | | n.a. | | Intersegment sales | | | 15,182 | | | | 15,824 | | | | n.a. | | | | 4.2 | | | | n.a. | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | 44,256 | | | | 36,559 | | | | n.a. | | | | (17.4 | ) | | | n.a. | | Total Industrial Transformation | | | | | | | | | | | | | | | | | | | | | Total trade sales | | | n.a. | | | | 747,739 | | | | 653,654 | | | | n.a. | | | | (12.6 | ) | Total intersegment sales | | | n.a. | | | | 126,264 | | | | 117,096 | | | | n.a. | | | | (7.3 | ) | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | n.a. | | | | 874,033 | | | | 770,750 | | | | n.a. | | | | (11.8 | ) |
| | | Year Ended December 31, | | 2015 | | 2016 | | | Year Ended December 31, | | | | | | | | 2014 | | 2015 | | 2016 | | vs. 2014 | | vs. 2015 | | | 2017 | | 2018 | | 2019 | | 2018 vs. 2017 | | 2019 vs. 2018 | | | | (in millions of pesos)(1) | | (%) | | (%) | | | (in millions of pesos)(1) | | (%) | | (%) | | Drilling and Services(9) | | | | | | | | | | | | Exploration and Production | | | | | | | | | | | | Trade sales(2) | | | n.a | | | n.a | | | 70 | | | n.a | | | 100.0 | | | Ps. | — | | | Ps. | 482,286 | | | Ps. | 409,512 | | | 100 | | | (15.1 | ) | Intersegment sales | | | n.a | | | 1,512 | | | 1,982 | | | 100.0 | | | 31.1 | | | | 762,637 | | | 397,200 | | | 330,977 | | | (47.9 | ) | | (16.7 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | | 1,512 | | | 2,052 | | | 100.0 | | | 35.7 | | | | 762,637 | | | 879,486 | | | 740,489 | | | 15.3 | | | (15.8 | ) | Logistics(10) | | | | | | | | | | | | Industrial Transformation | | | | | | | | | | | | Total trade sales | | | | 863,573 | | | 961,104 | | | 793,998 | | | 11.3 | | | (17.4 | ) | Total intersegment sales | | | | 150,360 | | | 141,997 | | | 127,165 | | | (5.6 | ) | | (10.4 | ) | | | | | | | | | | | | | | | | | | Total net sales | | | | 1,013,933 | | | 1,103,101 | | | 921,163 | | | 8.8 | | | (16.5 | ) | Drilling and Services(3) | | | | | | | | | | | | Trade sales(2) | | | n.a | | | 10,356 | | | 2,814 | | | 100.0 | | | (72.8 | ) | | | 42 | | | 199 | | | 21 | | | 373.8 | | | (89.4 | ) | Intersegment sales | | | n.a | | | 599 | | | 68,317 | | | 100.0 | | | 11,305.2 | | | | 3,400 | | | 3,414 | | | 2,758 | | | 0.4 | | | (19.2 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | | 10,955 | | | 71,131 | | | 100.0 | | | 549.3 | | | | 3,442 | | | 3,613 | | | 2,779 | | | 5.0 | | | (23.1 | ) | Cogeneration and Services(11) | | | | | | | | | | | | Logistics | | | | | | | | | | | | Trade sales(2) | | | n.a | | | 0 | | | 133 | | | n.a | | | 100.0 | | | | 3,715 | | | 4,708 | | | 4,664 | | | 26.7 | | | (0.9 | ) | Intersegment sales | | | n.a | | | 0 | | | 52 | | | n.a | | | 100.0 | | | | 70,672 | | | 63,673 | | | 88,605 | | | (9.9 | ) | | 39.2 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | | 0 | | | 184 | | | n.a | | | 100.0 | | | | 74,387 | | | 68,381 | | | 93,269 | | | (8.1 | ) | | 36.4 | | Fertilizers(12) | | | | | | | | | | | | Trade sales(2) | | | n.a | | | 1,496 | | | 3,875 | | | 100.0 | | | 159.0 | | | Cogeneration and Services(4) | | | | | | | | | | | | Trade sales(2) | | | | 335 | | | | — | | | | — | | | n.a. | | | n.a. | | Intersegment sales | | | n.a | | | 209 | | | 900 | | | 100.0 | | | 330.8 | | | | 114 | | | | — | | | | — | | | n.a. | | | n.a. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | | 1,705 | | | 4,776 | | | 100.0 | | | 180.1 | | | | 449 | | | | — | | | | — | | | n.a. | | | n.a. | | Ethylene(13) | | | | | | | | | | | | Fertilizers | | | | | | | | | | | | Trade sales(2) | | | | 4,125 | | | 2,938 | | | 1,635 | | | (28.8 | ) | | (44.3 | ) | Intersegment sales | | | | 643 | | | 66 | | | 561 | | | (89.7 | ) | | 750.0 | | | | | | | | | | | | | | | | | | | Total net sales | | | | 4,768 | | | 3,004 | | | 2,196 | | | (37.0 | ) | | (26.9 | ) | Ethylene(5) | | | | | | | | | | | | Trade sales(2) | | | n.a | | | 4,569 | | | 15,453 | | | 100.0 | | | 238.2 | | | | 12,648 | | | 12,822 | | | 5,258 | | | 1.4 | | | (59.0 | ) | Intersegment sales | | | n.a | | | 474 | | | 1,764 | | | 100.0 | | | 272.2 | | | | 1,566 | | | 1,635 | | | 723 | | | 4.4 | | | (55.8 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | | 5,043 | | | 17,217 | | | 100.0 | | | 241.4 | | | | 14,214 | | | 14,457 | | | 5,981 | | | 1.7 | | | (58.6 | ) | Trading Companies | | | | | | | | | | | | | | | | | | | | | Trade sales(2)(3) | | | 631,069 | | | 407,876 | | | 395,354 | | | (35.4 | ) | | (3.1 | ) | | Trade sales(2) | | | | 508,606 | | | 204,168 | | | 175,577 | | | (59.9 | ) | | (14.0 | ) | Intersegment sales | | | 433,732 | | | 353,137 | | | 405,293 | | | (18.6 | ) | | 14.8 | | | | 539,193 | | | 640,382 | | | 484,139 | | | 18.8 | | | (24.4 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | 1,064,801 | | | 761,013 | | | 800,648 | | | (28.5 | ) | | 5.2 | | | | 1,047,799 | | | 844,550 | | | 659,716 | | | (19.4 | ) | | (21.9 | ) | Corporate and other subsidiary companies | | | | | | | | | | | | | | | | | | | | | Trade sales(2)(3) | | | 3,826 | | | (5,673 | ) | | 8,193 | | | (248.3 | ) | | (244.4 | ) | | Trade sales(2) | | | | 3,985 | | | 12,893 | | | 11,306 | | | 223.5 | | | (12.3 | ) | Intersegment sales and eliminations | | | (1,746,085 | ) | | (1,172,868 | ) | | (1,211,786 | ) | | (32.8 | ) | | 3.3 | | | | (1,528,585 | ) | | (1,248,367 | ) | | (1,034,928 | ) | | (18.3 | ) | | (17.1 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | (1,742,259 | ) | | | (1,178,541 | ) | | | (1,203,593 | ) | | | (32.4 | ) | | | 2.1 | | | | (1,524,600 | ) | | (1,235,474 | ) | | (1,023,622 | ) | | (19.0 | ) | | (17.1 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | Ps. 1,586,728 | | | | Ps. 1,166,362 | | | | Ps.1,079,546 | | | | (26.5 | ) | | | (7.4 | ) | | Ps. | 1,397,029 | | | Ps. | 1,681,118 | | | Ps. | 1,401,971 | | | 20.3 | | | (16.6 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note: Numbers may not total due to rounding. (1) | Figures for 2014, 20152017, 2018 and 20162019 are stated in nominal pesos. |
(2) | Trade sales represent sales to external customers. See “Item 3—Key Information—Selected Financial Data.” |
(3) | Includes services income. |
(4) | Figures for the exploration and production segment for the year ended December 31, 2015 include net sales revenue relatedPrior to the drilling and services segment until the formation ofJuly 1, 2019, Pemex Drilling and Services on Augustoperated as an additional productive state-owned subsidiary. As of July 1, 2015 and to the logistics segment until the formation of Pemex Logistics on October 1, 2015. |
(5) | Figures for the industrial transformation segment for the year ended December 31, 2015 include net sales revenue related to refining, gas and basic petrochemicals and petrochemicals. |
(6) | Net sales revenue for refining for the year ended December 31, 2016 has been included under the industrial transformation segment. |
(7) | Net sales revenue for gas and basic petrochemicals for the year ended December 31, 2016 has been included under the industrial transformation segment. |
(8) | Figures for petrochemicals for the year ended December 31, 2015 include net sales revenue related to the ethylene segment until the formation of Pemex Ethylene on October 1, 2015 and to the fertilizers segment until the formation of Pemex Fertilizers on October 1, 2015. Net sales revenue for petrochemicals for the year ended December 31, 2016 has been included under the industrial transformation segment. |
(9) | Figures for the drilling and services segment for the year ended December 31, 2015 refer to net sales revenue since August 1, 2015 when2019, Pemex Drilling and Services was formed. |
(10) | Figures formerged into Pemex Exploration and Production. See “Item 4—Information on the logistics segment for the year ended December 31, 2015 refer to net sales revenue since October 1, 2015 when Pemex Logistics was formed.Company—History and Development”. |
(11)(4) | Figures forThis company was liquidated in 2018. See “Item 4—Information on the cogenerationCompany—History and services segment year ended December 31, 2015 refer to net sales revenue since June 1, 2015 when Pemex Cogeneration and Services was formed.Development”. |
(12)(5) | Figures for the fertilizers segment for the year ended December 31, 2015 referPrior to net sales revenue since OctoberJuly 1, 2015 when2019, Pemex Fertilizers was formed. |
(13) | Figures for the ethylene segment for the year ended December 31, 2015 refer to net sales revenue since OctoberEthylene operated as an additional productive state-owned subsidiary. As of July 1, 2015 when2019, Pemex Ethylene was formed.merged into Pemex Industrial Transformation. See “Item 4—Information on the Company—History and Development”. |
Source: PEMEX’s consolidated financial statements, prepared in accordance with IFRS. Income by Business Segment The following table sets forth our net income (loss) by business segment for each year in thethree-year period ended December 31, 2016,2019, as well as the percentage change in income for the years 20142017 to 2016.2019. | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, | | | 2015 vs. 2014 | | | 2016 vs. 2015 | | | | 2014 | | | 2015 | | | 2016 | | | (%) | | | (%) | | | | (in millions of pesos)(1) | | | | | | | | Business Segment | | | | | | | | | | | | | | | | | | | | | Exploration and Production(2) | | | Ps. (153,377 | ) | | | Ps. (667,394 | ) | | | Ps. (45,879 | ) | | | (335.1 | ) | | | (93.1 | ) | Industrial Transformation(3) | | | | | | | | | | | | | | | | | | | | | Refining(4) | | | (113,826 | ) | | | (113,147 | ) | | | n.a | | | | (0.6 | ) | | | n.a. | | Gas and Basic Petrochemicals(5) | | | 15,584 | | | | 18,126 | | | | n.a. | | | | 16.3 | | | | n.a. | | Petrochemicals(6) | | | (18,895 | ) | | | 7,812 | | | | n.a. | | | | 141.3 | | | | n.a. | | | | | | | | | | | | | | | | | | | | | | | Total Industrial Transformation | | | n.a. | | | | (87,209 | ) | | | (69,865 | ) | | | n.a. | | | | (19.9 | ) | Drilling and Services(7) | | | n.a | | | | 455 | | | | (142 | ) | | | 100 | | | | (131.3 | ) | Logistics(8) | | | n.a | | | | (3,685 | ) | | | (10,018 | ) | | | 100 | | | | 171.9 | | Cogeneration and Services(9) | | | n.a | | | | (57 | ) | | | (35 | ) | | | 100 | | | | (39.1 | ) | Fertilizers(10) | | | n.a | | | | (145 | ) | | | (1,659 | ) | | | 100 | | | | 1,044.5 | | Ethylene(11) | | | n.a | | | | (1,755 | ) | | | 2,097 | | | | 100 | | | | (219.5 | ) | Trading Companies | | | 4,085 | | | | 8,697 | | | | 11,167 | | | | 112.9 | | | | 28.4 | | Corporate and other subsidiary companies(12) | | | 886 | | | | 38,526 | | | | (76,809 | ) | | | 4,245.3 | | | | (299.4 | ) | | | | | | | | | | | | | | | | | | | | | | Total net income (loss) | | | Ps. (265,543 | ) | | | Ps. (712,567 | ) | | | Ps. (191,144 | ) | | | (168.3 | ) | | | (73.2 | ) | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, | | | 2018 vs. 2017 | | | 2019 vs. 2018 | | | | 2017 | | | 2018 | | | 2019 | | | | (in millions of pesos)(1) | | | (%) | | | (%) | | Business Segment | | | | | | | | | | | | | | | | | | | | | Exploration and Production | | | Ps.(151,037 | ) | | | Ps.(8,147 | ) | | | Ps.(309,502 | ) | | | 94.6 | | | | 3,699.0 | | Industrial Transformation | | | (55,787 | ) | | | (57,049 | ) | | | (71,037 | ) | | | (2.3 | ) | | | 24.5 | | Drilling and Services(2) | | | 1,266 | | | | 217 | | | | 2,860 | | | | 82.9 | | | | 1,218.0 | | Logistics | | | (834 | ) | | | (62,576 | ) | | | 87,815 | | | | (7,403.1 | ) | | | (240.3 | ) | Cogeneration and Services(3) | | | (92 | ) | | | — | | | | n.a. | | | | n.a. | | | | n.a. | | Fertilizers | | | (4,270 | ) | | | (5,330 | ) | | | (7,344 | ) | | | (24.8 | ) | | | 37.8 | | Ethylene(4) | | | (1,442 | ) | | | (4,986 | ) | | | (1,391 | ) | | | (245.8 | ) | | | (72.1 | ) | Trading Companies | | | 12,045 | | | | 4,778 | | | | 5,186 | | | | 60.3 | | | | 8.5 | | Corporate and other subsidiary companies(5) | | | (80,699 | ) | | | (47,330 | ) | | | (54,498 | ) | | | 41.3 | | | | 15.1 | | | | | | | | | | | | | | | | | | | | | | | Total net income (loss) | | | Ps.(280,851 | ) | | | Ps.(180,422 | ) | | | Ps.(347,911 | ) | | | 164.2 | | | | 92.8 | | | | | | | | | | | | | | | | | | | | | | |
Note: Numbers may not total due to rounding. (1) | Figures are stated in nominal pesos. See “Item 3—Key Information—Selected Financial Data.” |
(2) | Figures for the exploration and production segment for the year ended December 31, 2015 include net income (loss) relatedPrior to the drilling and services segment until the formation ofJuly 1, 2019, Pemex Drilling and Services on Augustoperated as an additional productive state-owned subsidiary. As of July 1, 2015 and to the logistics segment until the formation of Pemex Logistics on October 1, 2015. |
(3) | Figures for the industrial transformation segment for the year ended December 31, 2015 include net income (loss) related to refining, gas and basic petrochemicals and petrochemicals. |
(4) | Net income (loss) for refining for the year ended December 31, 2016 has been included under the industrial transformation segment. |
(5) | Net income (loss) for gas and basic petrochemicals for the year ended December 31, 2016 has been included under the industrial transformation segment. |
(6) | Figures for petrochemicals for the year ended December 31, 2015 include net income (loss) related to the ethylene segment until the formation of Pemex Ethylene on October 1, 2015 and to the fertilizers segment until the formation of Pemex Fertilizers on October 1, 2015. Net income (loss) for petrochemicals for the year ended December 31, 2016 has been included under the industrial transformation segment. |
(7) | Figures for the drilling and services segment for the year ended December 31, 2015 refer to net income (loss) since August 1, 2015 when2019, Pemex Drilling and Services was formed.merged into Pemex Exploration and Production. See “Item 4—Information on the Company—History and Development”. |
(8)(3) | Figures forThis company was liquidated in 2018. See “Item 4—Information on the logistics segment for the year ended December 31, 2015 refer to net income (loss) since October 1, 2015 when Pemex Logistics was formed.Company—History and Development”. |
(9)(4) | Figures forPrior to July 1, 2019, Pemex Ethylene operated as an additional productive state-owned subsidiary. As of July 1, 2019, Pemex Ethylene was merged into Pemex Industrial Transformation. See “Item 4—Information on the cogenerationCompany—History and services segment year ended December 31, 2015 refer to net income (loss) since June 1, 2015 when Pemex Cogeneration and Services was formed.Development”. |
(10)(5) | Figures for the fertilizers segment for the year ended December 31, 2015 refer to net income (loss) since October 1, 2015 when Pemex Fertilizers was formed. |
(11) | Figures for the ethylene segment for the year ended December 31, 2015 refer to net income (loss) since October 1, 2015 when Pemex Ethylene was formed. |
(12) | Includes intersegment eliminations. |
Source: PEMEX’s consolidated financial statements, prepared in accordance with IFRS. 2016 Compared2019 compared to 20152018
Certain business units and assets that were operated byWe present below the refining, gas and basic petrochemicals and petrochemicals segments were transferred to our industrial transformation segment as a part of Pemex Industrial Transformation, on November 1, 2015. In order to provide investors with comparative information, we have consolidated 2015 results for these prior segments. Accordingly, in the case of our industrial transformation segment below, we present consolidated results for 2015 for the refining, gas and basic petrochemicals and petrochemicals segments under the heading “Industrial Transformation.”operations by business segment. For more information on our corporate restructuring and our operating segments, see “Item 4—Information on the Company—History and Development—Energy Reform—Corporate Reorganization”Structure” and Note 1 to our consolidated financial statements included herein. For a detailed description of the financial results of each segment, see Note 51 and Note 6 to our consolidated financial statements included herein.
Exploration and Production In 2016,2019, total intersegment sales which include sales to our industrial transformation segment and the Trading Companies, decreased by 10.8%15.8%, primarily due to the decrease in crude oil export prices. As compared to 2015, our exploration and production segment’s sales of crude oil to the Trading Companies in 2016 decreased by 0.5% in peso terms and decreased by 16.2% in U.S. dollar terms, primarily due to a decrease in crude oil export prices. The weighted average price of crude oil sold by our exploration and production segment to the Trading Companies for export was U.S. $35.17$55.60 in 2016,2019, as compared to U.S. $42.70$62.29 in 2015.2018. Net loss related to exploration and production activities decreasedincreased by 91.3%, or Ps. 621,515301,335 million, from a Ps. 667,3948,147 million loss in 20152018 to a Ps. 45,879309,502 million loss in 2016,2019, primarily due to a net reversal of impairment of our fixed assets in this segment. Industrial Transformation In 2016,2019, trade sales related to industrial transformation activities decreased by 12.6%17.4%, from Ps. 747,739961,104 million in 20152018 to Ps. 653,654793,988 million in 2016,2019, primarily due to a decrease in the average sales prices of petroleum products. Intersegment sales decreased by 7.3%10.4%, from Ps. 126,264141,997 million in 20152018 to Ps. 117,096127,165 million in 2016,2019, primarily due to a decrease in the pricessales of petroleum products sold.natural gas. In 2016,2019, our net loss related to industrial transformation activities was Ps. 69,86571,037 million, 19.9% lowera 24.5% greater loss than the loss of Ps. 87,20957,049 million in 2015.2018. The decreaseincrease in loss was primarily due to a net reversal of impairment of our fixed assets in this segment and a decrease in cost and operating expenses, which was partially offset by an increase in crude oil purchases and an increase in material acquisitions.lower sales. Drilling and Services In 2016,2019, total sales related to the drilling and services segment increaseddecreased by 35.7%23.1%, from Ps. 1,5123,613 million resulting from 12 months of operations in 20152018 to Ps. 2,0522,779 million resulting from six months of operations in 2016.2019. This increasedecrease was primarily due to an increase in services provided to Pemex Explorationthe merger of this segment at the end of the second quarter of 2019 into our exploration and Production.production segment. Net lossincome related to drilling and services increased by Ps. 5972,643 million, from ana net income of Ps. 455217 million resulting from 12 months of operations in 20152018 to a net lossincome of Ps. 1422,860 million resulting from six months of operations in 2016,2019, primarily due to an increasea decrease in the expenses related to our intersegment services, an increase in the depreciation and maintenance required for our fixed assets, and a foreign exchange loss.other expenses. Logistics In 2016,2019, total sales related to the logistics segment increased by Ps. 60,176 million,36.4%, from Ps. 10,95568,381 million in 20152018 to Ps. 71,13193,269 million in 2016,2019, primarily due to an increase in the services provided to Pemex Industrial Transformation. In 2016,2019, our net lossincome related to logistics activities was Ps. 10,01887,815 million, 171.9% higher than thea variation of Ps. 150,391 million in comparison to our net loss of Ps. 3,68562,576 million in 2015. The increase in2018. This net lossincome was primarily due to the transfernet reversal of certainimpairment of our fixed assets to CENAGAS, higher operating expenses, an increase in financing cost, and a foreign exchange loss.this segment. Fertilizers In 2016,2019, total sales related to the fertilizers segment increaseddecreased by Ps. 3,071 million,26.9%, from Ps. 1,7053,004 million in 20152018 to Ps. 4,7762,196 million in 2016.2019. This increasedecrease was primarily due to an increasea decrease in the trade sales of ammonia. In 2016,2019 our net loss related to our fertilizersfertilizer activities increased by 37.8%, from a net loss of Ps. 1,5145,330 million in 2018 to a net loss of Ps. 7,344 million in 2019, primarily due to a decrease in profit sharing in joint ventures and associates. Ethylene In 2019, total sales related to our ethylene business decreased by 58.6%, from Ps. 14,457 million resulting from 12 months of operations in 2018 to Ps. 5,981 million resulting from six months of operations in 2019, primarily due to the merger of this segment at the end of the second quarter of 2019 into our industrial transformation segment. In 2019, our net loss related to our ethylene activities decreased by Ps. 3,595 million, from a net loss of Ps. 1454,986 million resulting from 12 months of operations in 20152018 to a net loss of Ps. 1,6591,391 million resulting from six months of operations in 2016,2019. This decrease in loss was primarily due to costs relatedbecause the segment was only operating for a portion of the year in 2019 as compared to the acquisitionfull year of Fertinal and an increase in the cost of services received from Pemex Logistics and from maritime freights. Ethylene
In 2016, total sales related to our ethylene segment increased by Ps. 12,174 million, from Ps. 5,043 million in 2015 to Ps. 17,217 million in 2016, primarily due to an increase in the sales of polyethylene, ethylene oxides and monoethylenglecol products. In 2016, our net income related to our ethylene activities increased by Ps. 3,852 million, from a net loss of Ps. 1,755 million in 2015 to a net income of Ps. 2,097 million in 2016. This increase in income was primarily due to a net reversal of impairment of our plants and an increase in sales..2018.
Trading Companies In 2016,2019, total sales relating to the Trading Companies’ exports of crude oil and petroleum products to third parties (including services income) decreased in peso terms, from Ps. 407,876204,168 million in 20152018 to Ps. 395,354175,577 million in 2016,2019, primarily as a result of a decrease in the prices of crude oil exports.export prices. In 2016,2019, net income related to the Trading Companies increased by 28.4%8.5%, from Ps. 8,6974,778 million in 20152018 to Ps. 11,1675,186 million in 2019, primarily due to an increase in the permanent investment in associates that was recognized at fair value.as a result of lower costs of operation. Corporate and Other Subsidiary Companies In 2016,2019, the total sales relating to corporate and other subsidiary companies afterinter-company eliminations decreased from Ps. 1,235,474 million in 2018 to Ps. 1,023,622 million in 2019, primarily due to a decrease in total intercompany sales. Net loss related to corporate and other subsidiary companies afterinter-company eliminations increased 15.1%, from a net loss of Ps. 47,330 million in 2018 to a net loss of Ps. 54,496 million in 2019, primarily due to unfavorable results from subsidiary companies. 2018 compared to 2017 We present below the results of our operations by business segment. For more information on our operating segments, see “Item 4— Information on the Company—History and Development—Corporate Structure” and Note 1 to our consolidated financial statements included herein. For a detailed description of the financial results of each segment, see Note 1 and Note 6 to our consolidated financial statements included herein. Exploration and Production In 2018, total sales increased by 15.3%, primarily due to the increase in crude oil export prices. In 2017, sales of crude oil to the Trading Companies were presented as intersegment sales but, as a result of our implementation of accounting standard IFRS 15 in 2018 and the determination that PMI is considered an agent of Pemex Exploration and Production, all of Pemex Exploration and Production’s crude oil export sales are recognized as sales to third parties in 2018. The weighted average price of crude oil sold by our exploration and production segment for export was U.S. $62.29 in 2018, as compared to U.S. $47.26 in 2017. Net loss related to exploration and production activities decreased by Ps. 142,890 million, from a Ps. 151,037 million loss in 2017 to a Ps. 8,147 million loss in 2018, primarily due to net reversal of impairment of our fixed assets in this segment. Industrial Transformation In 2018, trade sales related to industrial transformation activities increased by 11.3%, from Ps. 1,178,541863,573 million in 20152017 to Ps. 1,203,593961,104 million in 2016,2018, primarily due to an increase in the average sales prices of petroleum products. Intersegment sales decreased by 5.6%, from Ps. 150,360 million in 2017 to Ps. 141,997 million in 2018, primarily due to a decrease in sales of natural gas. In 2018, our net loss related to industrial transformation activities was Ps. 57,049 million, 2.3% higher than the loss of Ps. 55,787 million in 2017. The increase in loss was primarily due to an increase in operating expenses. Drilling and Services In 2018, total sales related to the drilling and services segment increased by 5.0%, from Ps. 3,442 million in 2017 to Ps. 3,613 million in 2018. This increase was primarily due to an increase in services provided to Pemex Exploration and Production. Net income related to drilling and services decreased by Ps. 1,048 million, from a net income of Ps. 1,266 million in 2017 to net income of Ps. 217 million in 2018, primarily due to an increase in operating expenses. Logistics In 2018, total sales related to the logistics segment decreased by 8.1%, from Ps. 74,387 million in 2017 to Ps. 68,381 million in 2018, primarily due to a decrease in the services provided to Pemex Industrial Transformation. In 2018, our net loss related to logistics activities was Ps. 62,576 million, which was Ps. 61,742 million more than our net loss of Ps. 834 million in 2017. The increase in net loss was primarily due to net impairment of our fixed assets in this segment. Cogeneration and Services In 2018 our cogeneration and services segment did not have operations, as all of the assets, liabilities, rights and obligations of Pemex Cogeneration and Services were assumed by, and transferred to, Pemex Industrial Transformation and Pemex Cogeneration and Services was subsequently dissolved. For further information on the dissolution of Pemex Cogeneration and Services, see “Item 4— Information on the Company—History and Development—Corporate Structure” and Notes 1 and 6 to our consolidated financial statements included herein. Fertilizers In 2018, total sales related to the fertilizers segment decreased by 37.0%, from Ps. 4,768 million in 2017 to Ps. 3,004 million in 2018. This decrease was primarily due to a decrease in the trade sales of ammonia. In 2018, our net loss related to our fertilizers activities increased by 24.8%, from a net loss of Ps. 4,270 million in 2017 to a net loss of Ps. 5,330 million in 2018, primarily due to a decrease in profit sharing in joint ventures and associates. Ethylene In 2018, total sales related to our ethylene business increased by 1.7%, from Ps. 14,214 million in 2017 to Ps. 14,457 million in 2018, primarily due to an increase in sales of monoethylenglecol. In 2018, our net loss related to our ethylene activities increased by Ps. 3,544 million, from a net loss of Ps. 1,442 million in 2017 to a net loss of Ps. 4,986 million in 2018. This increase in loss was primarily due an increase in cost of sales and taxes. Trading Companies In 2018, total sales relating to the Trading Companies’ exports of crude oil and petroleum products to third parties (including services income) decreased in peso terms, from Ps. 508,606 million in 2017 to Ps. 204,168 million in 2018, primarily as a result of the derecognition of revenue from sales by Pemex Exploration and Production to the Trading Companies as a result of our implementation of IFRS 15 in 2018. In 2018, net income related to the Trading Companies decreased by 60.3%, from Ps. 12,045 million in 2017 to Ps. 4,778 million in 2018, primarily as a result of our implementation of IFRS 15. Corporate and Other Subsidiary Companies In 2018, the total sales relating to corporate and other subsidiary companies afterinter-company eliminations decreased from Ps. 1,524,600 million in 2017 to Ps. 1,235,474 million in 2018, primarily due to a decrease in total intercompany sales as a result of an increase in the import of products. Net loss related to corporate and other subsidiary companies afterinter-company eliminations increased by Ps. 115,335 million,decreased 41.3%, from a net incomeloss of Ps. 38,52680,699 million in 20152017 to a net loss of Ps. 76,80947,330 million in 2016, primarily due to unfavorable results from subsidiary companies, an increase in foreign exchange loss and an increase in financing costs. 2015 Compared to 2014
Certain business units and assets that were operated by our exploration and production segment were transferred to our drilling and services segment upon the formation of Pemex Drilling and Services on August 1, 2015, and certain business units and assets that were operated by our exploration and production, refining and gas and basic petrochemicals segments were transferred to our logistics segment upon the formation of Pemex Logistics on October 1, 2015. Similarly, certain business units and assets that were operated by our petrochemicals segment were transferred to our ethylene and fertilizers segments upon the formation of Pemex Ethylene and Pemex Fertilizers on August 1, 2015 and certain business units and assets that were operated by the gas and basic petrochemicals segment were transferred to the cogeneration and services segment upon the formation of Pemex Cogeneration and Services on June 1, 2015. As detailed in the table above, we have started reporting financial information for these new segments from and after their formation in 2015.
However, in order to provide investors with comparative information, we have consolidated these new segments into the segments that previously included the business units and assets of these new segments here and in Note 5 to our consolidated financial statements included herein. Accordingly, in the case of our exploration and production segment below, we present consolidated results for 2015 of the exploration and production segment, the drilling and services segment and the logistics segment under the heading “Exploration and Production”; in the case of our refining segment, we present consolidated results for 2015 of the refining segment and part of the logistics segment under the heading “Refining”; in the case of our petrochemicals segment below, we present consolidated results for 2015 of the petrochemicals segment, the ethylene segment and the fertilizers segment under the heading “Petrochemicals”; and in the case of our gas and basic petrochemicals segment below, we present consolidated results for 2015 of the gas and basic petrochemicals segment, part of the logistics segment and the cogeneration and services segment under the heading “Gas and Basic Petrochemicals.” For more information on our corporate restructuring and our new operating segments, see “Item 4—Information on the Company—History and Development—Energy Reform—Corporate Reorganization” and Note 1 to our consolidated financial statements included herein. For a detailed description of the financial results of each segment, see Note 5 to our consolidated financial statements included herein. The following sections compare results of operations for our main segments prior to our recent corporate reorganization for 2015 as compared to 2014.
Exploration and Production
As compared to 2014, our exploration and production segment’s sales of crude oil to the Trading Companies in 2015 decreased by 39.1% in peso terms and decreased by 49.4% in U.S. dollar terms, primarily due to a decrease in crude oil export prices. The weighted average price of crude oil sold by our exploration and production segment to the Trading Companies for export was U.S. $42.70 in 2015, as compared to U.S. $86.00 in 2014. Total intersegment sales, which include sales to our refining segment, our gas and basic petrochemicals segment and the Trading Companies, decreased by 39.1%, primarily due to the decrease in crude oil export prices. Net loss related to exploration and production activities increased by 335.1%, or Ps. 514,017 million, from a Ps. 153,377 million loss in 2014 to a Ps. 667,394 million loss in 2015, primarily due to a decrease in the average price of crude oil.
Refining
In 2015, trade sales related to refining activities (including services income) decreased by 22.7%, from Ps. 763,005 million in 2014 to Ps. 589,548 million in 2015, primarily due to a decrease in the average sales prices of petroleum products. Intersegment sales decreased by Ps. 23,577 million, or 30.0%, from Ps. 78,453 million in 2014 to Ps. 54,876 million in 2015, primarily due to a decrease in the prices of petroleum products sold. In 2015, our total loss related to refining activities was Ps. 113,148 million, 0.6% lower than the loss of Ps. 113,826 million in 2014. The decrease in loss was primarily due to higher prices of petroleum products during 2015, which was partially offset by a decrease in other income due to the negative IEPS tax.
Gas and Basic Petrochemicals
In 2015, trade sales related to the natural gas and basic petrochemical segment (including services income) decreased by 14.0%, from Ps. 159,754 million in 2014 to Ps. 137,456 million in 2015. LPG sales increased by 0.1%, from Ps. 78,084 million in 2014 to Ps. 78,194 million in 2015, primarily due to an increase in LPG prices. Natural gas sales decreased by 30.0%, from Ps. 77,813 million in 2014 to Ps. 54,498 million in 2015, primarily due to a decrease in the volume and prices of natural gas. Net income related to natural gas and basic petrochemicals increased by 16.3%, from Ps. 15,584 million in 2014 to Ps. 18,126 million in 2015, primarily due to a decrease in purchases of imported LPG and cost of employee benefits.
Petrochemicals
In 2015, trade sales related to the petrochemicals segment decreased by 28.7%, from Ps. 29,074 million in 2014 to Ps. 20,735 million in 2015. Prices for petrochemicals sold domestically decreased for a majority of our
petrochemical products. In 2015, the volume of petrochemical exports decreased by 40.4%, from 527.1 thousand tons in 2014 to 313.9 thousand tons in 2015. Losses related to petrochemical activities decreased by 141.3%, from Ps. 18,895 million in 2014 to profit Ps. 7,812 million in 2015, primarily due to: (1) a 24.9% decrease in the cost of sales in 2015; (2) a decrease in the prices of raw materials; and (3) a decrease in the cost of employee benefits.
Trading Companies
In 2015, trade sales relating to the Trading Companies’ exports of crude oil and petroleum products to third parties (including services income) decreased in peso terms, from Ps. 631,069 million in 2014 to Ps. 407,876 million in 2015, primarily as a result of a decrease in the prices of crude oil exports. In 2015, net income related to the Trading Companies increased by 112.9%, from Ps. 4,085 million in 2014 to Ps. 8,697 million, primarily due to lower taxes and sale.
Corporate and Other Subsidiary Companies
In 2015, the trade sales relating to corporate and other subsidiary companies after inter-company eliminations decreased, from Ps. 1,742,259 million in 2014 to Ps. 1,178,541 million in 2015, primarily due to lower revenues from services. Net income related to corporate and other subsidiary companies after inter-company eliminations increased, from Ps. 886 million in 2014 to Ps. 38,526 million in 2015,2018, primarily due to favorable results from subsidiary companies.
Research and Development Our research and development activities are focused on developing the Mexican energy sector through advancing products and solutions that are intended to be high quality, high performance and technologically efficient. The Mexican Petroleum Institute is a public research organization under the SENER. The objective of the IMP is to develop the Mexican petroleum, petrochemical and chemical industries and assist us in the development of the Mexican energy sector. We work closely with the IMP on many of our research and development initiatives. For example, we collaborate with the IMP through theirCentro de Tecnología para AguasProfundas (Deep-Water Technology Center or CTAP). The CTAP is equipped with various laboratories to research drilling of wells, characterization of natural and operational risks and qualification and design of production tools, equipment and systems for use by the petroleum sector in deep water. The center is located in Boca del Río, Veracruz. We also coordinate with other entities outside of Mexico. On March 6, 2019, we signed a memorandum of understanding with the JBIC with the purpose of exchanging experiences and promoting development in the energy sector. Item 6. | Directors, Senior Management and Employees |
Under the Petróleos Mexicanos Law, Petróleos Mexicanos is governed by aten-member Board of Directors composed as follows: the Secretary of Energy, who serves as the Chairperson and has the right to cast atie-breaking vote; the Secretary of Finance and Public Credit; three Mexican Government representatives, who are appointed by the President of Mexico; and | • | | five independent members, who are appointed by the President of Mexico, subject to ratification by the Senate. Independent members perform their duties on a part-time basis, are not public officials (i.e., individuals holding federal, state or municipal government positions in Mexico) and have not been employed by Petróleos Mexicanos or any of the subsidiary entities during the two years prior to their appointment. |
five independent members, who are appointed by the President of Mexico, subject to ratification by the Senate. Independent members perform their duties on apart-time basis, are not public officials (i.e., individuals holding federal, state or municipal government positions in Mexico) and have not been employed by Petróleos Mexicanos or any of the subsidiary entities during the two years prior to their appointment. The Petróleos Mexicanos Law authorizes only the Secretary of Energy and the Secretary of Finance and Public Credit to designate an alternate to serve in his or her place, provided that the alternate is a public official at the undersecretary level, at minimum. This alternate may attend meetings of the Board of Directors of Petróleos Mexicanos and otherwise assume the duties of the director, except that the Chairperson’s designated alternate may not cast atie-breaking vote. In addition, anyministry-level secretary serving as a member of the Board of Directors of Petróleos Mexicanos may designate an alternate to attend meetings on his or her behalf, provided that such alternate is a public official at the undersecretary level, at minimum. Under the Petróleos Mexicanos Law, all public officials serving as members of the Board of Directors of Petróleos Mexicanos are required to act impartially and for the benefit and in the best interests of Petróleos Mexicanos, separating at all times the interests of the ministry or governmental entity for which they work from their duties as members of the Board of Directors. Except in the case of the independent members first appointed under the Petróleos Mexicanos Law, theThe five independent members will beare appointed to staggeredfive-year terms, and may be appointed for an additional term of the same length. The remaining members of the Board of Directors of Petróleos Mexicanos are not appointed for a specific term.
In 2014, the following individuals were appointed to serve as independent members of the Board of Directors of Petróleos Mexicanos for the initial terms set forth below:
Mr. Alberto Tiburcio Celorio, for two years;
Mr. Octavio Francisco Pastrana Pastrana, for three years;
Mr. Jorge José Borja Navarrete, for four years;
Mr. Jaime Lomelín Guillén, for five years; and
Mr. Carlos Elizondo Mayer-Serra, for six years.
On February 17, 2015, Mr. Jaime Lomelín Guillén resigned from his position as independent member of the Board of Directors of Petróleos Mexicanos. On April 29, 2016, the Senate ratified the appointment of Mr. Felipe Duarte Olvera as an independent member to serve for the remainder of Mr. Lomelín Guillén’s term. Following the expiration of Mr. Alberto Tiburcio Celorio’s initial term as an independent director, Ms. María Teresa Fernández Labardini was appointed to an additional five-year term.
Under the Petróleos Mexicanos Law, each of the boards of directors of the subsidiary entities will consist of not less than five and no more than seven members. The majority of the members of each of the board of directors shall be appointed by and represent the Board of Directors of Petróleos Mexicanos. The Ministry of Energy and the Ministry of Finance and Public Credit may also appoint members to each board of directors of the subsidiary entities, subject to approval by the Board of Directors of Petróleos Mexicanos. TheEstatuto Orgánico(Organic Statute) of Petróleos Mexicanos was published in the Official Gazette of the Federation on April 28, 2015. This Organic Statute establishes the structure, organizational basis and functions of the administrative units of Petróleos Mexicanos and also delineateseach of the duties and internal regulations of its Board of Directors. During 2016 and throughsubsidiary entities are established in the first quarter of 2017,Estatuto Orgánico (Organic Statute) approved by the Board of Directors of Petróleos Mexicanos approved several amendments to our organic structure. The management of Petróleos Mexicanos will task applicable areas with carrying out all of the necessary actions to implement these changes until a new Organic Statute is authorized and becomes effective.each entity. The following tables set forth certain information with respect to directors and executive officers of Petróleos Mexicanos and each of the subsidiary entities as of April 3, 2017. Petróleos Mexicanos—Directors and Executive OfficersMarch 30,2020.
| | | | | Petróleos Mexicanos—Directors and Executive Officers | Name | | Position with Petróleos Mexicanos | | Year Appointed | | | | Mr. Pedro Joaquín Coldwell Ms. Norma Rocío Nahle García | | ChairmanChairperson of the Board of Directors of Petróleos Mexicanos and Secretary of Energy Born: 1950
Born: 1964 Business experience: Chairman of the National Executive Committee of the PRI;experience: Senator of the LXth and LXIst Legislatures; and ChairmanLXIV Legislature; Federal Deputy of the National ExecutiveLXIII Legislature; and Advisor to the Energy Commission of Internal Proceduresthe Chamber of Deputies of the PRI.LIX Legislature and of the Senate of the LXII Legislature. Other board memberships: Chairman of CFE;Chairman of thememberships: CFE (Chairperson); Centro Nacional de Control de Energía (Chairperson); CENAGAS (Chairperson); Instituto Nacional de Investigaciones Nucleares (Chairperson); IMP (Chairperson); and Fondo Mexicano del Petróleo. | | 2018 | | | | Mr. Miguel Ángel Maciel Torres | | Alternate Board Member of Petróleos Mexicanos and Undersecretary of Hydrocarbons of the Ministry of Energy Born: 1960 Business experience: Deputy Director of Businesses Development for Exploration and Production of Petróleos Mexicanos; Deputy Director of Alliances Management of Pemex Exploration and Production; and Deputy Director of Field Development of Pemex Exploration and Production. Other board memberships: CENAGAS; Centro Nacional de Metrología; ChairmanComisión Nacional de Inversiones Extranjeras; Fondo Sectorial del Consejo Nacional de Ciencia y Tecnología (CONACYT); and Comisión Nacional de Vivienda (CONAVI). | | 2019 | | | | Mr. Arturo Herrera Gutiérrez | | Board Member of CENAGAS;Petróleos Mexicanos and Secretary of Finance and Public Credit Born: 1966 Business experience: Undersecretary of Finance and Public Credit of the Ministry of Finance and Public Credit; Member of Transition Team for the Ministry of Finance and Public Credit; Practice Manager for East Asia at the World Bank; and Practice Manager for Latin America and the Caribbean at the World Bank. Other board memberships: Centro de Investigación y Seguridad Nacional; Casa de Moneda de México (Chairperson); Comisión Nacional para la Protección y Defensa de los Usuarios de Servicios Financieros (CONDUSEF) (Chairperson); Financiera Nacional de Desarrollo Agropecuario, Rural, Forestal y Pesquero (Chairperson); Instituto para la Protección al Ahorro Bancario (Chairperson); Lotería Nacional para la Asistencia Pública (Chairperson); Pronósticos para la Asistencia Pública (Chairperson); Servicio de | | 2019 |
| | | | | Petróleos Mexicanos—Directors and Executive Officers | Name | | Position with Petróleos Mexicanos | | Year Appointed | | | Administración y Enajenación de Bienes (SAE) (Chairperson); Agroasemex, S.A. (Chairperson); Banco del Bienestar, S.N.C. (Chairperson); Banco Nacional de Comercio Exterior, S.N.C., Institución (BANCOMEXT) (Chairperson); Banco Nacional de Banca de Desarrollo;Obras y Servicios Públicos, S.N.C. (BANOBRAS) (Chairperson); Banco Nacional del Ejército, Fuerza Aérea y Armada, S.N.C. (BANJERCITO) (Chairperson); Nacional Financiera, S.N.C., Institució (NAFIN) (Chairperson); Seguros de Crédito a la Vivienda SHF, S.A. de C.V. (SCV) (Chairperson); Sociedad Hipotecaria Federal, S.N.C. (SHF) (Chairperson); Fondo de Operación de Banca de Desarrollo;y Financiamiento Bancario a la Vivienda; CNBV; Comisión Nacional de Vivienda;Seguros y Fianzas (CNSF); Comisión Nacional del Sistema de Ahorro para el Retiro (CONSAR) (Chairperson); Servicio de Administración Tributaria (Tax Administration Service, or the SAT) (Chairperson); Instituto Nacional de las Personas Adultas Mayores; Consejo Nacional para el Desarrollo y la Inclusión de las Personas con Discapacidad; Coordinación Nacional de PROSPERA, Programa de Inclusión Social; Comisión Nacional Forestal; Instituto Mexicano de Tecnología del Agua; Instituto Nacional de Ecología y Cambio Climático. | | 2012 | | | | Mr. Ildefonso Guajardo Villarreal
| | Board member of Petróleos Mexicanos and Secretary of Economy
Born: 1957
Business experience: Deputy Coordinator of Political Economy for the President Elect’s Transition Team; Transition Coordinator to the PRI Candidate’s Presidential Campaign; Federal Deputy of the LXIst Legislature.
Other board memberships:tico (INECC); CONAGUA; ASEA; Aeropuertos y Servicios Auxiliares; Banco del Ahorro Nacional y Servicios Financieros, S.N.C., Institución de Banca de Desarrollo; Banco Nacional de Comercio Exterior, S.N.C.; Caminos y Puentes Federales de Ingresos y Servicios Conexos; CentroConexos (CAPUFE); Servicio Postal Mexicano (SEPOMEX); Telecomunicaciones de InvestigacióMéxico (TELECOMM); Consejo Nacional de Fomento Educativo; Fondo de Cultura Económica; Instituto Mexicano de la Radio; Instituto Nacional para la Educación de los Adultos; Fideicomiso de los Sistemas Normalizado de Competencia Laboral y de Certificación de Competencia Laboral; Instituto del Fondo Nacional para el Consumo de los Trabajadores (INFONACOT); Instituto Nacional de Ciencias Penales; Comisión Nacional para el Desarrollo de los Pueblos Indígenas; Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado (ISSSTE); Instituto del Fondo Nacional de la Vivienda para los Trabajadores (INFONAVIT); Instituto Mexicano del Seguro Social (IMSS); Instituto Nacional de las Mujeres (INMUJERES); CFE; Comisión de Política Gubernamental en materia de Derechos Humanos; Comisión Intersecretarial de Cambio Climático; Comisión Intersecretarial para el Desarrollo del Gobierno Electrónico; Comisión Intersecretarial de Gasto Público, Financiamiento y Desincorporación; Comisión Intersecretarial para el Conocimiento y Uso de la Biodiversidad; Comisión Intersecretarial para el Otorgamiento de Concesiones y Permisos previstos en la Ley de Aeropuertos; Comisión Intersecretarial para la Instrumentación del Programa de Integración del Registro Nacional de Población; Comisión Intersecretarial para la Prevención y Docencia Económicas, A.C.; CentroCombate a la Economía Ilegal; Consejo Nacional de Metrología; CentroEducación para la Vida y el Trabajo; Consejo Nacional de Gas Natural;para las Comunidades Mexicanas en el Exterior; Comisión Coordinadora para la Negociación de Precios de Medicamentos y otrosOtros Insumos para la Salud; CFE; Chairman of the Comisión Federal de Mejora Regulatoria; Comisión Intersecretarial de Bioseguridad de los Organismos Genéticamente Modificados; Comisión Intersecretarial de Cambio Climático; Chairman of the Comisión Intersecretarial de Compras y Obras de la Administración Pública Federal a la Micro, Pequeña y Mediana Empresa;
| | 2013 |
Petróleos Mexicanos—Directors and Executive Officers
| | | | | Name
| | Position with Petróleos Mexicanos
| | Year
Appointed | | | Comisión Intersecretarial de Bioseguridad y Organismos Genéticamente Modificados; Comisión Intersecretarial de Desarrollo Social; Comisión Intersecretarial de Gasto Público Financiamiento y Desincorporación; Comisión Intersecretarial de Precios y Tarifas de los Bienes y Servicios de la Administración Pública Federal; Comisión Intersecretarial de Vivienda; Comisión Intersecretarial para Asuntos de la Frontera Norte; Comisión Intersecretarial para el Desarrollo de los Bioenergéticos; Comisión Intersecretarial para el Desarrollo del Gobierno Electrónico; Comisión Intersecretarial para el Desarrollo Rural Sustentable; Comisión Intersecretarial para el Manejo Sustentable de Mares y Costas; Comisión Intersecretarial para la Coordinación Operativa en los Puntos de Internación al Territorio Nacional; Comisión Intersecretarial paraIntersecretarialpara la Atención de SequiasdeSequías e Inundaciones; Comisión Intersecretarial para la Instrumentación de la Cruzada contra el Hambre; Comisión Intersecretarial para la Prevención y Combate a la Economía Ilegal; Comisión Intersecretarial para la Prevención y Erradicación del Trabajo Infantil y la Protección de Adolescentes Trabajadores en Edad Permitida en México; Comisión Intersecretarial para la Transición Digital; Comisión Intersecretarial para la Prevención Social de la Violencia y la Delincuencia; Comisión Intersecretarial de Zonas Económicas Especiales; Chairman of theCambios (Chairperson); Comisión Nacional de Inversiones Extranjeras; Comisión Nacional de Vivienda; CONAGUA;Inversiones Extranjeras; Comisión Nacional Forestal; Comisión Nacional para el Conocimiento y UsoAmbiental Metropolitana; Consejo de la Biodiversidad; Comisión Nacional para el DesarrolloEstabilidad del Sistema Financiero; Consejo de los Pueblos Indígenas; ChairmanSeguridad Nacional; Technical Committee of the Comité de Control y Desempeño Institucional; Chairman of the Comité IntersectorialFondo Mexicano del Petróleo para la Innovación; Comité Nacional de Productividad; Comité Nacional para el Desarrollo Sustentable de la Caña de Azúcar; Consejo Consultivo Empresarial para el Crecimiento Económico de México; Chairman of the Consejo Consultivo para el Fomento a la Industria Eléctrica Nacional; Consejo Consultivo de Turismo; Comisión Intersecretarial para el Sector Turístico; Consejo Nacional de NormalizacióEstabilización y Certificación de Competencias Laborales; Consejo Mexicano para el Desarrollo Rural Sustentable; Consejo Nacional contra las Adicciones; Consejo | | |
Petróleos Mexicanos—Directors and Executive Officers
| | | | | Name
| | Position with Petróleos Mexicanos
| | Year
Appointed | | | Nacional de Ciencia y Tecnología; Consejo General de Investigación Científica, Desarrollo Tecnológico e Innovación; Consejo Nacional de Fomento Educativo; Consejo Nacional de Infraestructura; Consejo Nacional de Protección Civil; Consejo de Salubridad General; Consejo Nacional de Vivienda; Chairman of theDesarrollo; Consejo Nacional para la Competitividad de la Micro, Pequeña y Mediana Empresa; Consejo Nacional para la Prevención y Control de las Enfermedades Crónicas noNo Transmisibles; CoordinacióComité Técnico Especializado en Información sobre Discapacidad del Sistema Nacional de Prospera, ProgramaInformación Estadística y Geográfica; Comité Nacional de Inclusión Social;Productividad; Comité Nacional de Seguridad Aeroportuaria; and Consejo Nacional para las Comunidades Mexicanas en el Exterior; El Colegio de la Frontera Norte, A.C.; Chairman of the Fideicomiso de Fomento Minero; Fideicomiso del Fondo Institucional para el Fomento de la Ciencia, el Fomento de la Tecnología y el Fomento, Desarrollo y ConsolidacióProtección de Científicos y Tecnólogos; Fideicomisoe-México; Chairman of the Fideicomiso para Promover el Acceso al Financiamiento de MIPYMES y Emprendedores (México Emprende); Chairman of the Fondo de Innovación TecnológicaSE-CONACYT; Gabinete Especializado de México Próspero; Gabinete Especializado de México con Responsabilidad Global; Gabinete Especializado Incluyente; Instituto del Fondo Nacional de la Vivienda de los Trabajadores; Instituto del Fondo Nacional para el Consumo de los Trabajadores; Instituto Mexicano de la Juventud; Chairman of the Instituto Mexicano de la Propiedad Industrial; Instituto Nacional de la Infraestructura Física Educativa; Instituto Nacional de las Mujeres; Chairman of the Instituto Nacional del Emprendedor; Nacional Financiera, S.N.C.; Chairman of the Fideicomiso Público ProMéxico; Chairman of the Servicio Geológico Mexicano; Servicio Nacional de Capacitación y Asistencia Técnica Rural; Servicio Postal Mexicano; Sistema de Investigación Alfonso Reyes; Sistema de Investigación Benito Juárez; Sistema de Investigación Francisco Villa; Sistema de Investigación Golfo de México; Sistema de Investigación Ignacio Zaragoza; Sistema de Investigación José María Morelos; Sistema de Investigación Justo Sierra; Sistema de Investigación Mar de Cortés; Sistema de Investigación Miguel Hidalgo; and Telecomunicaciones de México.Civil. | | | | | |
| | | | | Petróleos Mexicanos—Directors and Executive Officers | | | | | Name | | Position with Petróleos Mexicanos | | Year Appointed | | | | Mr. Aldo Ricardo Flores Quiroga Gabriel Yorio González | | Alternate Board Member of Petróleos Mexicanos and Undersecretary of HydrocarbonsFinance and Public Credit of the Ministry of Energy Born: 1967
Business experience: Secretary-General of the International Energy Forum; Director General of International Affairs of the Ministry of Energy; and Director General of Bilateral Economic Relations of the Ministry of Foreign Affairs.
Other board memberships: Centro Nacional de Control del Gas Natural; Consejo de Coordinación del Sector Energético; Fondo Mexicano del Petróleo para la Estabilización y el Desarrollo (Alternate)
| | 2016 | | | | Mr. José Antonio Meade Kuribreña
| | Board Member of Petróleos Mexicanos and Secretary of Finance and Public Credit
Born: 1969Born: 1976
Business experience: Secretaryexperience: Head of Social Development; Secretarythe Public Credit Unit of Foreign Affairs;the Ministry of Finance and Secretary of Energy.Public Credit; Public Sector Specialist at the World Bank; and Financial Management Specialist at the World Bank. Other board memberships: Aeropuertos y Servicios Auxiliares; Chairman ofmemberships: Agencia Mexicana de Cooperación Internacional para el Desarrollo; Casa de Moneda de México; Centro Nacional de Control de Energía; Centro Nacional de Control de Gas; Agencia de Noticias del Estado Mexicano; Agencia Espacial Mexicana; Caminos y Puentes Federales de Ingresos y Servicios Conexos; Chairman ofCONDUSEF (Alternate); Financiera Nacional de Desarrollo Agropecuario, Rural, Forestal y Pesquero; Fondo de Cultura Económica; Instituto del Fondo Nacional de la Vivienda para los Trabajadores; Instituto del Fondo Nacional para el Consumo de los Trabajadores; Instituto Mexicano de la Radio; Chairman of the Instituto para la Protección al Ahorro Bancario; Chairman of Lotería Nacional para la Asistencia Pública; Chairman of Pronósticos para la Asistencia Pública; Servicio Postal Mexicano; Talleres Gráficos de México; Telecomunicaciones de México; Chairman of Servicio de Administración y Enajenación de Bienes; Aeropuerto Internacional de la Ciudad de México, S.A. de C.V.; Chairman of Agroasemex, S.A., Institución Nacional de Seguros; Chairman of Banco del Ahorro Nacional y Servicios Financieros, S.N.C., Institución de Banca de Desarrollo; Chairman of Banco Nacional de | | 2016 |
Petróleos Mexicanos—Directors and Executive Officers
| | | | | Name
| | Position with Petróleos Mexicanos
| | Year
Appointed | | | Comercio Exterior, S.N.C., Institución de Banca de Desarrollo; Chairman of Banco Nacional de Obras y Servicios Públicos, S.N.C., Institución de Banca de Desarrollo; Chairman of Banco Nacional del Ejército, Fuerza Aérea y Armada, S.N.C., Institución de Banca de Desarrollo; Exportadora de la Sal, S.A. de C.V.; Ferrocarril del Istmo de Tehuantepec, S.A. de C.V.; Impresora y Encuadernadora Progreso, S.A. de C.V.; FONATUR Constructora, S.A. de C.V.; FONATUR Operadora Portuaria, S.A. de C.V.; FONATUR Mantenimiento Turístico, S.A. de C.V.; FONATUR Prestadora de Servicios, S.A. de C.V.; Grupo Aeroportuario de la Ciudad de México, S.A. de C.V.; Chairman of Nacional Financiera, S.N.C., Institución de Banca de Desarrollo; Chairman of Seguros de Crédito a la Vivienda SHF, S.A. de C.V.; Chairman of Sociedad Hipotecaria Federal, S.N.C., Institución de Banca de Desarrollo; Servicios Aeroportuarios de la Ciudad de México, S.A. de C.V.; CFE; Chairman of the Fondo de Capitalización e Inversión del Sector Rural; Fondo Nacional de Fomento al Turismo; Fideicomiso de Fomento Minero; Fondo de Operación y Financiamiento Bancario a la Vivienda; CNBV; Comisión Nacional de Seguros y Fianzas; Chairman of the Comisión de Cambios; Comisión Nacional de Inversiones Extranjeras; Banco Interamericano de Desarrollo y Corporación Interamericana de Inversiones; Banco Internacional de Reconstrucción y Fomento del Banco Mundial; Organismo Multilateral de Garantía de Inversiones del Banco Mundial; and Banco de Desarrollo del Caribe. | | | | | | Mr. Rafael Pacchiano Alamán
| | Board Member of Petróleos Mexicanos and Secretary of the Environmental and Natural Resources
Born: 1975
Business experience: Undersecretary of Environmental Protection Management of the Ministry of Environment and Natural Resources; Youth Program Coordinator of the Transition Team for the President-Elect of Mexico; and Federal Deputy in the LXI Legislature.
Other board memberships: CFE.
| | 2015 |
Petróleos Mexicanos—Directors and Executive Officers
| | | | | Name
| | Position with Petróleos Mexicanos
| | Year
Appointed | | | | Mr. Carlos Elizondo Mayer-Serra
| | Independent Board Member of Petróleos Mexicanos
Born: 1962
Business experience: Professor at the Instituto Tecnológico y de Estudios Superiores de Monterrey, A.C.; Professor and Researcher at the Centro de Investigación y Docencia Económicas, A.C.; and Ambassador of Mexico to the Organización para la Cooperación y Desarrollo Económicos.
Other board memberships: Corporación Interamericana de Entretenimiento, S.A.B. de C.V. (Independent) and Consejo Nacional de Ciencia y Tecnología.
| | 2014 | | | | Mr. Octavio Francisco Pastrana Pastrana
| | Independent Board Member of Petróleos Mexicanos
Born: 1952
Business experience: Partner of Administradora Ictineo Infraestructura, S.A.P.I. de C.V.; President and Chief Executive Officer of Isolux Mexico of Isolux Corsán, S.A.; and Director of Strategy and Business Development of ARB Arendal.
Other board memberships: COREMAR Empresa de Servicios Portuarios, S.A. and Grupo Aeroportuario de la Ciudad de México, S.A. de C.V. (Independent).
| | 2014 | | | | Mr. Jorge José Borja Navarrete
| | Independent Board Member of Petróleos Mexicanos
Born: 1943
Business experience: Professional Member of the Board of Directors of Petróleos Mexicanos; Member of the Directive Board of the Universidad Nacional Autónoma de México; and Advisor of Grupo Xignux.
Other board memberships: Chairman of the Club Universidad Nacional, A.C.
| | 2014 | | | | Ms. María Teresa Fernández Labardini
| | Independent Board Member of Petróleos Mexicanos
Born: 1967
Business experience: Partner of White & Case, S.C.; Executive Secretary-General Director of the Instituto para la Protección al Ahorro Bancario; General Technical Director of the CNBV; and Vice President of Regulation of the CNBV.
| | 2017 |
Petróleos Mexicanos—Directors and Executive Officers
| | | | | Name
| | Position with Petróleos Mexicanos
| | Year
Appointed | | | | Mr. Felipe Duarte Olvera
| | Independent Board Member of Petróleos Mexicanos
Born: 1974
Business experience: Assistant Director General of Infrastructure and Energy of Grupo Financiero Banorte, S.A.B. de C.V.; Assistant Director General of Client Experience of Grupo Financiero Banorte, S.A.B. de C.V.; and Undersecretary of Transportation of the Ministry of Communications and Transportation.
Other board memberships: Grupo Aeroportuario del Centro Norte, S.A.B. de C.V.
| | 2016 | | | | Mr. José Antonio González Anaya
| | Chief Executive Officer/Director General
Born: 1967
Business experience: Chief Executive Officer of the Instituto Mexicano del Seguro Social; Undersecretary of Income of the Ministry of Finance and Public Credit; and Chief of Staff of the Secretary of Finance and Public Credit.
| | 2016 | | | | Mr. Juan Pablo Newman Aguilar
| | Chief Financial Officer / Corporate Director of Finance
Born: 1979
Business experience: Chief Financial Officer of Nacional Financiera, S.N.C., Institución de Banca de Desarrollo; Deputy Director General of Debt Issuance of the Ministry of Finance and Public Credit; and Director of Risk Management of the Ministry of Finance and Public Credit. | | 2016 | | | | Mr. Luis Ignacio Rayón Llerandi
| | Deputy Director of Budget
Born: 1963
Business experience: Executive Director of Products and Market Relations of Grupo Financiero Interacciones, S.A. de C.V.; Deputy Treasurer of Operation of the Tesorería de la Federación; and Advisor of the Tax Affairs Department of the Fondo Monetario Internacional.
| | 2016 | | | | Mr. Roberto Cejudo Pascual
| | Deputy Director of Treasury
Born: 1969
Business experience: Corporate Director of Treasury of Grupo Bimbo, S.A.B. de C.V.; Private Consultant for Pharo Capital S.C.; and Chief of Financial Staff of Grupo Financiero Serfin, S.A. de C.V. | | 2016 |
Petróleos Mexicanos—Directors and Executive Officers
| | | | | Name
| | Position with Petróleos Mexicanos
| | Year
Appointed | | | | Mr. Manuel Salvador Cruz Flores
| | Deputy Director of Accounting and Tax
Born: 1950
Business experience: Central Administrator of the General Administration for Large Taxpayers of the Servicio de Administracion Tributaria; Vice President of Taxes, Customs and Legal and Government Relations of Robert Bosch Mexico; and International Tax Director of KPMG Peat Marwick, Cárdenas Dosal, S.C.
| | 2016 | | | | Ms. Alma Rosa Moreno Razo
| | Deputy Director of Economic-Financial Performance
(before Deputy Director of Economic Performance)
Born: 1952
Business experience: Advisor to the Director General of Petróleos Mexicanos; Partner of ITG Consultants; and General Director of Management of Grupo Financiero Banorte, S.A.B. de C.V.
| | 2013 | | | | Mr. David Ruelas Rodríguez
| | Deputy Director of Risk Management and Insurance
Born: 1977
Business experience: Associate Managing Director of Corporate Financial Management of Petróleos Mexicanos; Coordinator of Governmental Programs of Petróleos Mexicanos; and Advisor to the Corporate Director of Management of Petróleos Mexicanos.
| | 2011 | | | | Mr. Carlos Alberto Treviño Medina
| | Corporate Director of Management and Services
Born: 1970
Business experience: Chief Financial Officer of the Instituto Mexicano del Seguro Social; Chief Executive Officer of Financiera Rural; and Undersecretary of Expenses of the Ministry of Finance and Public Credit.
| | 2016 | | | | Mr. Miguel Ángel Servín Diago
| | Operative Director of Procurement and Supply
Born: 1969
Business experience: Head of the Administrative Unit of the Instituto Mexicano del Seguro Social; Director General of Material Resources of the Ministry of Communications and Transportation and Advisor of the Secretary of Communications and Transportation.
| | 2016 |
Petróleos Mexicanos—Directors and Executive Officers
| | | | | Name
| | Position with Petróleos Mexicanos
| | Year
Appointed | | | | Mr. Marco Antonio Murillo
Soberanis
| | Deputy Director of Labor Relations and Services for Personnel
Born: 1959
Business experience: Acting Corporate Director of Management of Petróleos Mexicanos; Deputy Director of Human Resources of Petróleos Mexicanos; and Associate Corporate Managing Director of Human Resources of Petróleos Mexicanos.
| | 2005 | | | | Mr. Antonio Eduardo Carrillo Liceaga
| | Deputy Director of Corporate Services
Born: 1965
Business experience: Executive Coordinator of Corporate Direction of Management of Petróleos Mexicanos; Advisor of the Corporate Director of Operations of Petróleos Mexicanos; and Associate Managing Director of Public Works Agreements Standardization of Petróleos Mexicanos.
| | 2013 | | | | Mr. Marco Antonio Navarrete Prida
| | Deputy Director of Health Services
Born: 1967
Business experience: National Coordinator of Medical Subrogation Services; National Coordinator of Assigned Medical Services of Petróleos Mexicanos; Medical Coordinator (Guadalajara Area) of Petróleos Mexicanos; and Medical Supervisor of Petróleos Mexicanos for the Aguascalientes Sector. | | 2014 | | | | Mr. José Antonio Negroe Ortega
| | Deputy Director of Equity Administration
Born: 1957
Business experience: Associate Managing Director of Equity Administration and Services of Pemex-Refining; Legal Representative of the Museo Tecnológico de la CFE; and General Comptroller of Consorcio Aviacsa, S.A. de C.V.
| | 2015 | | | | Mr. Eduardo León Trauwitz
| | Deputy Director of Strategic Safeguarding
Born: 1966
Business experience: Associate Managing Director of Physical Security Services of Petróleos Mexicanos; Coordinator of Security for Mr. Enrique Peña Nieto; and Coordinator of Assistantships for the Governor of the Estado de México.
| | 2014 | | | | Mr. Alejandro Dieck Assad
| | Deputy Director of Human Resources
Born: 1958
Business experience: Founder and Chief Executive Officer of Consultores Asociados en Asesoría Integral S.A.; Director of Residual Division and Institutional Liaisons and Projects of Promotora Ambiental, S.A.B. de C.V.; and Undersecretary of Planning and Technological Development of the Ministry of Energy.
| | 2016 |
Petróleos Mexicanos—Directors and Executive Officers
| | | | | Name
| | Position with Petróleos Mexicanos
| | Year
Appointed | | | | Mr. Rodulfo Figueroa Alonso
| | Corporate Director of Planning, Coordination and Performance
Born: 1964
Business experience: Deputy Director of Planning ofPemex-Gas and Basic Petrochemicals; Associate Managing Director of Planning ofPemex-Gas and Basic Petrochemicals; and Associate Managing Director of Assessment and Information ofPemex-Gas and Basic Petrochemicals.
| | 2015 | | | | Ms. Guadalupe Merino Bañuelos
| | Deputy Director of Strategic Planning and Regulatory Analysis
Born: 1971
Business experience: Associate Managing Director of Strategic Planning of Petróleos Mexicanos; Deputy Director of Programming and Budgeting of Petróleos Mexicanos; and Deputy Director of Corporate Services of Petroóleos Mexicanos.
| | 2016 | | | | Mr. Sergio Escoto Cortés
| | Deputy Director of Programming and Coordination Execution
Born: 1967
Business experience: Acting Deputy Director of Operation and Strategy Execution of Petróleos Mexicanos; Associate Managing Director of Evaluation and Monitoring of Petróleos Mexicanos; and Associate Managing Director of Operations Analysis and Programming of Petróleos Mexicanos.
Other board memberships: Frío Espacio Control, S.A.P.I. de C.V. (Alternate).
| | 2014 | | | | Mr. Luis Fernando Betancourt
Sánchez
| | Deputy Director of Sustainable Development and Safety, Health and Environmental Protection
Born: 1967
Business experience: Associate Managing Director of Operative Discipline and Execution of the SSPA System of Petróleos Mexicanos; Associate Managing Director of Environmental Protection of Pemex-Refining; and Associate Managing Director of Implementation of SSPA System of Petróleos Mexicanos.
| | 2010 | | | | Mr. Franklin Ulin Jiménez
| | Deputy Director of Reliability
Born: 1957
Business experience: Acting Deputy Director of Operation and Strategy Execution of Petróleos Mexicanos; Associate Managing Director of Evaluation and Monitoring of Petróleos Mexicanos; and Acting Deputy Director of Maintenance Coordination of Petróleos Mexicanos.
| | 2015 |
Petróleos Mexicanos—Directors and Executive Officers
| | | | | Name
| | Position with Petróleos Mexicanos
| | Year
Appointed | | | | Mr. Jorge Collard de la Rocha
| | Deputy Director of Business Performance
Born: 1951
Business experience: Deputy Director of Management and Finance of Pemex-Petrochemicals; Deputy Director of Management and Finance of Pemex-Exploration and Production; and Acting Deputy Director of Supplies of Petróleos Mexicanos.
| | 2015 | | | | Mr. Rodrigo Becerra Mizuno
| | Chief Information Officer/ Corporate Director of Information Technology (before Corporate Officer of Business Processes and Information Technology)
Born: 1975
Business experience: Director General of Public Sector (Asia Region) of Microsoft Corporation; Executive Director of Global Government of Microsoft Corporation; and Global Manager of Public Sector of Marketing Microsoft Corporation.
| | 2016 | | | | Ms. Eugenia Berenice Torres Romero
| | Acting Deputy Director of Information Technology Services
Born: 1964
Business experience: Director of Programming and Innovation of the Ministry of Labor and Social Foresight; Deputy Director of Human Resources, Materials and General Services of the Ministry of Labor and Social Foresight and Director of Development of the Instituto Latinoamericano de Cultura Digital, A.C.
| | 2016 | | | | Mr. Juan Gerardo Dávila Vales
| | Deputy Director of Technology Alignment
Born: 1974
Business experience: Founding Partner of Ecosoluciones Citienergy, S.A.P.I. de C.V.; Chief Executive Officer of Grupo Bienestar; and Vice President of Global Financial Services LLP.
| | 2017 | | | | Mr. Rogelio Ventura Miranda
| | Deputy Director of Business Solutions
Born: 1969
Business experience: Acting Deputy Director of Solutions and Business Services of Petróleos Mexicanos; Associate Managing Director of Design and Business Solutions Integration of Petróleos Mexicanos; and Deputy Manager of Development of Petróleos Mexicanos.
| | 2017 | | | | Mr. José Manuel Carrera Panizzo
| | Corporate Director of Alliances and New Businesses
Born: 1969
Business experience: Chief Executive Officer of PMI; Chief Financial Officer of PMI; and Deputy Director of Risk Management of Petróleos Mexicanos.
| | 2015 |
Petróleos Mexicanos—Directors and Executive Officers
| | | | | Name
| | Position with Petróleos Mexicanos
| | Year
Appointed | | | | Mr. Miguel Ángel Maciel Torres
| | Deputy Director of Businesses Development of Exploration and Production
Born: 1960
Business experience: Coordinator of Migration of COPF-CIEP of Pemex Exploration and Production; Deputy Director of Field Development of Pemex-Exploration and Production; and Associate Managing Director of Field Development of the Lakach Project of Pemex-Exploration and Production.
| | 2015 | | | | Mr. Armando García Espinosa
| | Deputy Director of Businesses Development of Industrial Transformation
Born: 1967
Business experience: Deputy Director of Management and Finance of Pemex-Refining; Associate Managing Director of Budgets of Pemex-Refining; and Associate Managing Director of Financial Procedure Liaisons of Petróleos Mexicanos.
| | 2015 | | | | Mr. Luis Fernández Tovar
| | Deputy Director of International Analysis
Born: 1968
Business experience: Head of the Internal Control Unit of PMI; Local Manager of Tax Auditing of the Servicio de Administración Tributaria; and Central Manager of Tax Coordination of the Federal Entities of the Servicio de Administración Tributaria.
| | 2015 | | | | Mr. Jorge Eduardo Kim Villatoro
| | Legal Director
Born: 1979
Business experience: Legal Director of the Instituto Mexicano del Seguro Social; Head of the Legislative Tax Unit of the Ministry of Finance and Public Credit; and Director General of Protection against Administrative Acts of the Procuraduría Fiscal de la Federación. | | 2016 | | | | Mr. Fermín Fernández Guerra Espinal
| | Deputy Legal Director of Regional Operations
Born: 1976
Business experience: Deputy Legal Director of Direction of Processes and Project Contro; Executive Coordinator of the General Counsel’s Office of Petróleos Mexicanos; and Associate Managing Director of Equity Regulation of Petróleos Mexicanos.
| | 2012 | | | | Mr. Alfonso Guati Rojo Sánchez
| | Deputy Legal Director of Litigious Affairs and Portfolio Management
Born: 1966
| | 2015 |
Petróleos Mexicanos—Directors and Executive Officers
| | | | | Name
| | Position with Petróleos Mexicanos
| | Year
Appointed | | | Business experience: Founding Partner of Guati Rojo Abogados, S.C., Professor of Universidad Iberoamericana, A.C.; and Professor of Universidad Panamericana, A.C. | | | | | | Ms. Silvia María Cristina Oropeza Querejeta
| | Deputy Director of Legal Consultancy
Born: 1953
Business experience: Legal Associate Managing Director of Amendments and Agreements of Petróleos Mexicanos; Deputy Manager of Acquisitions, Leases and Service Agreements of Petróleos Mexicanos; and Chief of the Amendments, Agreements and Joint Groups Consulting Unit of Petróleos Mexicanos.
| | 2012 | | | | Mr. César Fernández Gómez
| | Deputy Legal Director of Projects and Businesses
Born: 1977
Business experience: Legal Director and Compliance Officer of Petrofac; Legal Director for Latin America and Compliance Officer of Commercial Relations in Mexico and Brazil of Moksha8 Pharmaceuticals; and Senior Associate of Barrera, Siqueiros y Torres Landa, S.C.
Other board memberships: Alimentos Funcionales Nonoencaosulados S.A. de C.V. (Secretary) and Chairman of Destilados RE, S.A.P.I. de C.V.
| | 2015 | | | | Mr. Gustavo Adolfo Aguilar Espinosa de los Monteros
| | Head of the Institutional Internal Control Unit
Born: 1967
Business experience: Head of the Liabilities Area of Petróleos Mexicanos; Head of Auditing, Complaints and Liabilities of the Instituto Mexicano del Seguro Social; and Director of Notification and Tax Execution of the Ministry of Planning, Management and Finance of the Government of Jalisco.
| | 2017 | | | | Mr. Efraín Ceballos Medina
| | Executive Coordinator of the Internal Control Unit
Born: 1973
Business experience: Deputy Director of Promotion and Internal Control Development of Petróleos Mexicanos; Operative Associate Managing Director of Development and Management Improvement of Petróleos Mexicanos; and Head of Auditing of Petróleos Mexicanos.
| | 2015 | | | | Mr. Luis Bartolini Esparza
| | Head of Internal Auditing
Born: 1970
Business experience: Head of the Internal Control
| | 2017 |
Petróleos Mexicanos—Directors and Executive Officers
| | | | | Name
| | Position with Petróleos Mexicanos
| | Year
Appointed | | | Unit of Nacional Financiera, S.N.C., Institución
de Banca de Desarrollo; Director General of Career Services of Procuraduría General de la República; and Executive Director of Movable Assets of the Servicio de Administración y Enajenación de Bienes.
| | | | | | Mr. Carlos Nicolás Juárez Ávila
| | Deputy Director of Internal Audit
Born: 1948
Business experience: Head of Internal Control Body of Pemex-Exploration and Production; Coordinator of Portfolio Audits of the Internal Control Body of the Servicio de Administración y Enajenación de Bienes of the Ministry of Finance and Public Credit; and Director of Delegations Audit of the Internal Control Body of the Attorney General Office.
| | 2013 | | | | Mr. Juan Carlos Pérez Tejada López
| | Deputy Director of Performance and Control Auditing
Born: 1958
Business experience: Associate Managing Director of Liaisons with Supervising Areas of Petróleos Mexicanos; Deputy Manager of Programming and Operative Auditing of Petróleos Mexicanos; and Superintendent of Bidding and Contract Quality of Petróleos Mexicanos.
| | 2015 | | | | Mr. Carlos Joel Hernández Rodríguez
| | Deputy Director of Subsidiary Auditing, Information Technology and Legality
Born: 1956
Business experience: Head of Internal Audit for the Internal Control Office ofPemex-Gas and Basic Petrochemicals; General Deputy Director of Casas de la Cultura Jurídica of the Suprema Corte de Justicia de la Nación; and Advisor to the Executive Management Secretariat of the Suprema Corte de Justicia de la Nación.
| | 2015 | | | | Mr. Miguel Ángel Hernández Castañeda
| | Delegate of Internal Auditing in Exploration and Production
Born: 1967
Business experience: Head of Audit for Development and Improvement of Public Management of Petróleos Mexicanos; Head of Audit for Development and Improvement of Public Management of Pemex-Exploration and Production; and Head of the Auditing Unit (Central Zone) ofPemex-Gas and Basic Petrochemicals.
| | 2015 |
Petróleos Mexicanos—Directors and Executive Officers
| | | | | Name
| | Position with Petróleos Mexicanos
| | Year
Appointed | | | | Mr. Luis Alberto Ramos Padilla
| | Delegate of Internal Auditing in Industrial Transformation
Born: 1956
Business experience: Head of the Internal Control Body of Pemex-Refining; Area Director of the Auditoría Superior de la Federación; and Visiting General Supervisor of the CNBV.
| | 2015 |
Pemex Exploration and Production—Directors and Executive Officers
| | | | | Name
| | Position with Pemex Exploration and Production
| | Year
Appointed | | | | Mr. José Antonio González Anaya
| | Chairman of the Board of Pemex Exploration and Production (refer to Petróleos Mexicanos) | | 2016 | | | | Ms. Rosanety Barrios Beltrán
| | Board Member of Pemex Exploration and Production and Head of the Industrial Transformation Policies of the Ministry of Energy
Born: 1963
Business experience: Deputy Director General of Natural Gas Transmission of the Energy Regulatory Commission; Associate Consultant of Sociedad Mexicana de Análisis Financiero; and Assistant Director of Fundamental Analysis of Casa de Bolsa Bancomer, S.A. de C.V., Grupo Financiero BBVA Bancomer.
Other board memberships: CENAGAS (Alternate) and Fideicomiso de Administración y Pago CENAGAS-BANCOMEXT.
| | 2015 | | | | Mr. Miguel Messmacher Linartas
| | Board Member of Pemex Exploration and Production and Undersecretary of Income of the Ministry of Finance and Public Credit
Born: 1972
Business experience: Head of the Economic Planning Unit of Public Finance of the Ministry of Finance and Public Credit; Economist of the IMF; and Economic Researcher of Banco de México.
Other board memberships: CFE (Alternate); Lotería Nacional para la Asistencia Pública (Alternate); Pronósticos para la Asistencia Pública (Alternate); ServicioSAE; Agroasemex, S.A.; Banco del Bienestar, S.N.C.; BANCOMEXT; BANOBRAS; BANJERCITO; NAFIN; SCV; SHF; Fondo de AdministracióCapitalización e Inversión del Sector Rural; Fondo de Garantía y Fomento para la Agricultura, Ganadería y Avicultura; Fondo de Garantía y Fomento para Actividades Pesqueras; Fondo de Operación y EnajenaciónFinanciamiento Bancario a la Vivienda; CNBV; CNSF; CONSAR; SAT (Alternate); CENAGAS; Centro Nacional de Bienes (Alternate); ServicioControl de Administración Tributariala Energía; ISSSTE; CFE (Alternate); Comisión de Fomento de lasdel as Actividades de las Organizaciones de la Sociedad Civil; Comisión Intersecretarial para la Coordinación Operativa en los Puntos de
| | 2013 |
Petróleos Mexicanos—Directors and Executive Officers
| | | | | Name
| | Position with Pemex Exploration and Production
| | Year
Appointed | | | Internación en Territorio Nacional (Alternate); Comisión Intersecretarial para el Desarrollo de los Bioenergéticos (Alternate);ticos; Comisión Intersecretarial depara la Industria Automotriz;Transición Digital; Comisión de Cambios; CENAGAS; Centro NacionalComisión Permanente de ControlServicios de Energía; Mexican Petroleum Fund for Stabilization and Development (Alternate); Instituto Nacional para el Federalismo y el Desarrollo Municipal;Salud a la Comunidad; Comisión de Comercio Exterior; Comisión Tripartita encargada de la Evaluación y Seguimiento de las Disposiciones establecidas en la Ley de Ayuda Alimentaria para los Trabajadores; Comisión Tripartita a que se refiere el artículo 15 de la Ley de Ayuda Alimentaria para los Trabajadores; Comité Interinstitucional para la Aplicación del Estímulo Fiscal a Proyectos de Inversión en la Producción Teatral Nacional; Comité Nacional de Productividad (Alternate); Comité Interinstitucional para la Aplicación del Estímulo Fiscal a Proyectos de Inversión en la Producción Cinematográfica Nacional; andComisión Nacional de Inversiones Extranjeras (Alternate); Consejo de Estabilidad del Sistema Financiero; Consejo de Salubridad General; Consejo Nacional de Armonización ContableContable; Technical Committee of the Fondo Mexicano del Petróleo para la Estabilización y el Desarrollo (Alternate); Consejo Consultivo Nacional del Sistema Nacional de Información Estadística y Geográfica; Comité Nacional de Productividad (Alternate); and Comisión to which Article 15 of the Ley de Ayuda Alimentaria para los Trabajadores (Law of Food Assistance for Workers). | | 2019 |
| | | | | Petróleos Mexicanos—Directors and Executive Officers | Name | | Position with Petróleos Mexicanos | | Year Appointed | | | | Ms. Graciela Márquez Colín | | Board Member of Petróleos Mexicanos and Secretary of Economy Born: 1965 Business experience: Visiting Professor of the University of California at San Diego; Academic Coordinator of the Center of Historical Studies of El Colegio de México; and Visiting Professor of the University of Chicago. Other board memberships: Aeropuertos y Servicios Auxiliares; Banco del Bienestar, S.N.C.; BANCOMEXT; CAPUFE; Centro de lnvestigación y Docencia Económicas, A.C.; Centro Nacional de Metrología; CFE; Comisión Nacional de Mejora Regulatoria (President); Comisión Intersecretarial de Bioseguridad de los Organismos Geneticamente Modificados; Comisión lntersecretarial de Cambio Climático; Comisión lntersecretarial de Gasto Publico, Financiamiento y Desincorporación; Comisión lntersecretarial de Vivienda; Comisión lntersecretarial de Zonas Económicas Especiales; Comisión lntersecretarial para el Desarrollo del Gobierno Electrónico; Comisión lntersecretarial para el Desarrollo Rural Sustentable; Comisión lntersecretarial para el Manejo Sustentable de Mares y Costas; Comisión lntersecretarial para la Atención de Sequias e lnundaciones; Comisión lntersecretarial para la Instrumentación de la Cruzada contra el Hambre; Comisión lntersecretarial para la Prevención y Combate a la Economía Ilegal; Comisión lntersecretarial para la Prevención y Erradicación del Trabajo lnfantil y la Protección de Adolescentes Trabajadores en Edad Permitida en Mexico; Comisión lntersecretarial para la Prevención Social de la Violencia y la Delincuencia; Comisión lntersecretarial para la Ventanilla Digital Mexicana de Comercio Exterior; Comisión lntersecretarial para la Reinserción Social y Servicios Postpenales; Comisión Nacional de Inversiones Extranjeras (Chairperson); CONAVI; Comisión Nacional del Agua; Comisión Nacional Forestal; Comisión Nacional para el Desarrollo de los Pueblos Indígenas; Comité de Control y Desempeño Institucional (Chairperson); Comité lntersectorial para la lnnovación (Chairperson); Comité Nacional de Productividad; Comité Nacional para el Desarrollo Sustentable de la Caña de Azucar; Consejo Nacional de Normalización y Certificación de Competencias Laborales; Consejo Nacional de Ordenamiento Territorial y Desarrollo Urbano; Consejo Nacional contra las Adicciones; CONACYT; Consejo Mexicano para el Desarrollo Rural Sustentable; Consejo Nacional de Protección Civil; Consejo de Salubridad General; Consejo Nacional para la Competitividad de la Micro, Pequeña y Mediana Empresa (Chairperson); Coordinación Nacional de PROSPERA, Programa de Inclusión Social; El Colegio de la Frontera Norte, A.C.; Fideicomiso de Fomento Minero (Chairperson); Fideicomisoe-México; Fideicomiso para Promover el Acceso al Financiamiento de MIPYMES y Emprendedores (President); INFONAVIT; INFONACOT; IMJUVE; Instituto Mexicano de la Propiedad Industrial (President); INMUJERES; Fondo Nacional del Emprendedor; NAFIN; Fideicomiso Público ProMéxico (Chairperson); Seguridad Alimentaria Mexicana; Servicio Geológico Mexicano; Servicio Nacional de Capacitación y Asistencia Técnica Rural; SEPOMEX; TELECOMM; Grupo Aeroportuario de la Ciudad de México, S.A. de C.V.; DICONSA, S.A. de C.V.; and LICONSA, S.A. de C.V. | | 2018 |
| | | | | Petróleos Mexicanos—Directors and Executive Officers | Name | | Position with Petróleos Mexicanos | | Year Appointed | | | | Mr. Francisco José Quiroga Fernández | | Alternate Board Member of Petróleos Mexicanos and Undersecretary of Mining of the Ministry of Economy Born: 1973 Business experience: Director of Trading of Steel and Commodities, S.A.M.; Director of Operations of Coutinho & Ferrostaal GmbH; and Director of Human Resources and Chief of Staff of the CEO of ArcelorMittal Mexico, S.A. de C.V. Other board memberships: CFE (Alternate); CONAGUA (Alternate); Chairperson of Exportadora de Sal, S.A. de C.V.; Fideicomiso de Fomento Minero (Alternate); and Servicio Geológico Mexicano (Alternate). | | 2019 |
| | | | | Petróleos Mexicanos—Directors and Executive Officers | Name | | Position with Petróleos Mexicanos | | Year Appointed | Mr. Víctor Manuel Toledo Manzur | | Board Member of Petróleos Mexicanos and Secretary of Environment and Natural Resources Born: 1945 Business experience: Researcher at the Instituto de Investigaciones en Ecosistemas y Sustentabilidad of the Universidad Nacional Autónoma de México; Researcher at the Instituto de Ecología of the Universidad Nacional Autónoma de México; and Researcher at the Instituto de Biología of the Universidad Nacional Autónoma de México. | | 2019 | | | | Mr. Julio César Jesús Trujillo Segura | | Alternate Board Member of Petróleos Mexicanos and Undersecretary of Promotion and Environmental Regulation of the Ministry of Environment and Natural Resources Born: 1975 Business experience: Deputy General Director of Improvement of Normative, Regulatory and Promotion Instruments at the Ministry of Environment and Natural Resources; and Area Director at the Ministry of Environment and Natural Resources. Other board memberships: Grupo Aeroportuario de la Ciudad de México (Alternate); Comité de Evaluación para la Dictaminación de las Zonas de Desarrollo Turístico Sustentable; ISSSTE (Alternate); IMP; National Advising Committee of Normalization of ASEA. | | 2019 | | | | Mr. Manuel Bartlett Díaz | | Board Member of Petróleos Mexicanos and Director General of CFE Born: 1936 Business experience: Senator of the LXIII and LXII Legislatures; and Governor of the State of Puebla. Other board memberships: CFE Generación I (Chairperson); CFE Generación II (Chairperson); CFE Generación III (Chairperson); CFE Generación IV (Chairperson); CFE Generación V (Chairperson); CFE Generación VI (Chairperson); CFE Transmisión (Chairperson); CFE Distribución (Chairperson); Suministrador de Servicios Básico (Chairperson); CFE Telecomunicaciones e Internet Para Todos (Chairperson); CFE Calificados (Chairperson); CFEnergía (Chairperson); and CFE Internacional (Chairperson). | | 2018 | | | | Mr. Juan Pablo Newman AguilarJosé Paullada Figueroa | | Independent Board Member of Petróleos Mexicanos Born: 1951 Business experience: Partner Director of Paullada, Guevara y Asociados, S.C.; Fiscal Attorney Officer of the Federation; Director General of the Fideicomiso Liquidador de Instituciones y Organizaciones Auxiliares de Crédito; and Director of Economic Analysis of the Ministry of Finance and Public Credit. Other board memberships: Consultant on fiscal matters to the boards of various companies. | | 2019 |
| | | | | Petróleos Mexicanos—Directors and Executive Officers | Name | | Position with Petróleos Mexicanos | | Year Appointed | Mr. José Eduardo Beltrán Hernández | | Independent Board Member of Petróleos Mexicanos Born: 1942 Business experience: President of the Political and Social Sciences of the Academia Mexicana de Ciencias, Tecnologías y Humanidades; Federal Deputy; President of the Energy Commission of the LIII Legislature of the Chamber of Deputies; and General Secretary of Government of the State of Tabasco. | | 2019 | | | | Mr. Francisco José Garaicochea y Petrirena | | Independent Board Member of Petróleos Mexicanos Born: 1931 Business experience: Chief of the Department of Petroleum Exploitation in the Engineering Division of Earth Sciences at Universidad Nacional Autónoma de México; Practices and Degrees Coordinator at Universidad Nacional Autónoma de México; Member of the Expertise Commission of the Universidad Nacional Autónoma de México; Chief of the Department of Oil Fields at Petróleos Mexicanos; Chief of the Production Division at Petróleos Mexicanos; and Professor at the Universidad de Oriente de Venezuela. Other board memberships: Grupo de Ingenieros PEMEX Constitución del 17 (Chairperson); and Observatorio Ciudadano Métrica (Vicepresident). | | 2019 | | | | Mr. Rafael Espino de la Peña | | Independent Board Member of Petróleos Mexicanos Born: 1963 Business experience: Partner Founder of Fernández, Espino y Asociados México S.C.; Director General and Board Member of Hospital Amerimed Cancún, S.A. de C.V.; and Director General of Hospital Amerimed Playa del Carmen, S.A. de C.V.. Other board memberships: Distribuidora Medisur, S.A. de C.V.; Medisur, S.A. de C.V.; lnmobiliaria Medisur, S.A. de C.V.; Operadora Medisur S.A. de C.V.; Promotora Variante S.A. de C.V.; Inmobiliaria Corbeta S.A. de C.V.; Autotransportes del Real S.A. de C.V. (Secretary); RAG Capital Partners S.A.P.I. de C.V.; RAG Capital Sports, S.A.P.I. de C.V.; Concentradora de Recursos Amerimed, S.A. de C.V.; Club de Futbol Atlante, S.A. de C.V.; Hospital Amerimed Cozumel Islamed, S.A. de C.V.; Hospital Amerimed Playa del Carmen, S.A. de C.V.; Hospital Amerimed Cancún, S.A. de C.V.; and Espino y Borunda Abogados, S.C. (Chairperson). | | 2019 | | | | Mr. Humberto Domingo Mayans Canabal | | Independent Board Member of Petróleos Mexicanos Born: 1949 Business experience: Senator of the LXII and LXIII Legislatures; Coordinator for Migration Affairs in the Southern Border of the Ministry of the Interior; and General Secretary of Government of the State of Tabasco. | | 2019 |
| | | | | Petróleos Mexicanos—Directors and Executive Officers | Name | | Position with Petróleos Mexicanos | | Year Appointed | Mr. Octavio Romero Oropeza | | Chief Executive Officer/Director General Born: 1959 Business experience: President of the MORENA Political State Council of Tabasco; Head Official of the Federal District Government; and Federal Deputy of the LVI Legislature. Other board memberships: CFE | | 2018 | | | | Mr. Alberto Velázquez García | | Chief Financial Officer / Corporate Director of Finance Born: 1970 Business experience: Director of Projects and Public Finance of Grupo Financiero Banorte, S.A.B. de C.V; Independent Consultant for Financing Structuring and Investment Projects; and Director of Public Policy Analysis of Consultora EF&I, Grupo Financiero Interacciones. | | 2018 | | | | Mr. Marcos Manuel Herrería Alamina | | Corporate Director of Management and Services Born: 1967 Business experience: Director General of Management of the Ministry of Finance of Mexico City; Private Secretary of the Head Official of the Federal District Government; and Administrative Coordinator of the Procuraduría General de Justicia of the Federal District. | | 2019 | | | | Mr. Víctor Manuel Navarro Cervantes | | Corporate Director of Planning, Coordination and Performance Born: 1963 Business experience: Managing Director of Urvian Servicios de Consultoría para la Administración Pública; General Coordinator of Administrative Modernization of the Administrative Office of the Government of the Federal District; and Director General of Management and Finance of the Sistema de Transporte Colectivo of the Federal District. | | 2018 | | | | Ms. Luz María Zarza Delgado | | Legal Director Born: 1968 Business experience: Deputy Director of Legal Counsel of Petróleos Mexicanos; General Counsel of the Universidad Autónoma del Estado de México; Legal Counsel of the State of Mexico; and Magistrate of the Electoral Court of the State of Mexico. | | 2018 | | | | Mr. Francisco Javier Vega Rodríguez | | Head of Internal Auditing Born: 1955 Business experience: Advisor “A” of Internal Auditing of Petróleos Mexicanos; and Analysis Director of Superior Audit of the ASF. | | 2019 |
| | | | | Pemex Exploration and Production—Directors and Executive Officers | Name | | Position with Pemex Exploration and Production | | Year Appointed | Mr. Octavio Romero Oropeza | | Chairperson of the Board of Pemex Exploration and Production (refer to Petróleos Mexicanos) | | 20162018 | | | | Mr. Carlos Rafael Murrieta CummingsMiguel Gerardo Breceda Lapeyre | | Board Member of Pemex Exploration and Production and Director General of Pemex Industrial Transformation Born: 1965Born: 1949
Business experience: Independent Business Consultantexperience: General Coordinator of Sendero; Corporate DirectorGreen Growth of Operationsthe Instituto Nacional de Ecología y Cambio Climático; Professor Researcher of Petroleos Mexicanosthe Universidad Autónoma de la Ciudad de México; and Consultant/DirectorProfessor Researcher of McKinsey & Co.the Universidad Politécnica de Sinaloa. Other board memberships: Administración Portuaria Integral Dos Bocas; and IMP. | | 20162018 | | | | Mr. Miguel Ángel Servín DiagoJavier Núñez López | | Board Member of Pemex Exploration and Production and Acting Operative Director of Procurement and Supply of Petróleos Mexicanos Born: 1965 Business experience: Director of Management of Xalapa, Veracruz; Chief of Staff of the LXII Legislature of the State of Tabasco Congress; and Director of Management of the Secretaría de Salud of the State of Tabasco. Other board memberships: None. | | 2018 | | | | Mr. Alberto Velázquez García | | Board Member of Pemex Exploration and Production (refer to Petróleos Mexicanos) | | 20162018 | | | | Mr. J. Javier Hinojosa PueblaJorge Alberto Arévalo Villagrán | | Board Member of Pemex Exploration and Production and Director General of Exploration and Extraction of Hydrocarbons of the Ministry of Energy Born: 1958Born: 1961
Business experience: Executiveexperience: Visiting Professor in Petroleum Engineering of Universidad Nacional Autónoma de México; Technical Director of Special Projects of Soluciones en Software Especializado Némesis, S.A. de C.V.; and Associate Managing Director of Strategies and Plans of Pemex Exploration and Production;Production. Other board memberships: Fondos Sectoriales CONACYT-Secretaría de Energía-Hidrocarburos. | | 2018 | | | | Mr. Gabriel Yorio González | | Board Member of Pemex Exploration and Production and Undersecretary of Income of the Ministry of Finance and Public Credit (refer to Petróleos Mexicanos) | | 2019 | | | | Mr. Francisco Javier Flamenco López | | Board Member of Pemex Exploration and Production, Acting Director General of Pemex Exploration and Production and Technical Deputy Director of DevelopmentExploration and Production of Pemex Exploration and Production Born: 1965 Business experience: Acting Deputy Director of Technical Specialty of Explotation of Pemex Exploration and Production; Manager of Activo Integral de Producción Bloques Norte 02 of Pemex Exploration and Production; and ChiefActing Deputy Director of StaffFields Development of the Director General of Pemex-ExplorationPemex Exploration and Production. | | 20152019 |
| | | | | Pemex Industrial Transformation—Directors and Executive Officers | | | | | Name | | Position with Pemex Industrial Transformation | | Year Appointed | Mr. José Antonio González AnayaOctavio Romero Oropeza | | ChairmanChairperson of the Board of Pemex Industrial Transformation (refer to Petróleos Mexicanos) | | 20162018 | | | | Mr. Carlos Alberto Treviño MedinaMarcos Manuel Herrería Alamina | | Board Member of Pemex Industrial Transformation (refer to Petróleos Mexicanos) | | 20162019 | | | | Mr. Claudio César de la Cerda NegreteVíctor David Palacios Gutiérrez | | Board Member of Pemex Industrial Transformation and Director General of Hydrocarbons ExplorationNatural Gas and ExtractionPetrochemicals of the Ministry of Energy Born: 1974Born: 1954
Business experience: Directorexperience: Member of Operationsgroup participating in the rescue of Jaguar ExploracióPEMEX in the areas of refining and petrochemicals from 2016 to 2018. Other board memberships: Centro Nacional de Metrología (Alternate); Fideicomiso Público de Administración y Producción de Hidrocarburos, S.A.P.I. de C.V.; DirectorPago CENAGAS – BANCOMEXT No. 0637; and Committee of TechnologyControl and Institutional Performance of Dowell Schlumberger de México, S.A. de C.V.; and Director of Geoscience of Dowell Schlumberger de México, S.A. de C.V.CENAGAS. | | 20172019 | | | | Mr. Miguel Messmacher LinartasAlberto Velázquez García | | Board Member of Pemex Industrial Transformation (refer to Petróleos Mexicanos) | | 2018 | | | | Mr. Francisco Javier Flamenco López | | Board Member of Pemex Industrial Transformation (refer to Pemex Exploration and Production) | | 20152019 | | | | Mr. Juan Pablo Newman AguilarGabriel Yorio González | | Board Member of Pemex Industrial Transformation and Undersecretary of Income of the Ministry of Finance and Public Credit (refer to Petróleos Mexicanos) | | 20162019 | | | | Mr. J. Javier Hinojosa Puebla | | Board Member of Pemex Industrial Transformation (refer to Pemex Exploration and Production) | | 2015 | | | | Mr. Carlos Rafael Murrieta CummingsMiguel Gerardo Breceda Lapeyre | | Board Member of Pemex Industrial Transformation and Director General of Pemex Industrial Transformation (refer to Pemex Exploration and Production) | | 20162018 |
Pemex Cogeneration and Services—Directors and Executive Officers
| | | | | Name
| | Position with Cogeneration and Services
| | Year
Appointed | Mr. José Antonio González Anaya | | Chairman of the Board of Pemex Cogeneration and Services (refer to Petróleos Mexicanos) | | 2016 | | | | Mr. Rodulfo Figueroa Alonso | | Board Member of Pemex Cogeneration and Services (refer to Petróleos Mexicanos) | | 2015 | | | | Mr. Leonardo Cornejo Serrano | | Board Member of Pemex Cogeneration and Services and Director of Industrial Projects of Pemex Industrial Transformation
Born: 1969
Business experience: Director of Projects of Pemex Industrial Transformation; Deputy Director of Projects of Pemex-Refining; and Coordinator of Modernization and Capacity Expansion Projects of Pemex-Refining.
| | 2016 | | | | Mr. Juan Pablo Newman Aguilar | | Board Member of Pemex Cogeneration and Services (refer to Petróleos Mexicanos) | | 2016 | | | | Mr. Gustavo Adolfo Aguilar Espinosa de los Monteros | | Board Member of Pemex Cogeneration and Services (refer to Pemex Exploration and Production) | | 2015 | | | | Mr. Gustavo Adolfo Aguilar Espinosa de los Monteros | | Board Member of Pemex Cogeneration and Services (refer to Petróleos Mexicanos) | | 2017 | | | | Ms. Raquel Buenrostro Sánchez . | | Acting Director General of Pemex Cogeneration and Services and Associate Managing Director of Planning of Pemex Cogeneration and Services Born: 1970
Business experience: Associate Managing Director of Planning of Grupo Adya Select, S. de R.L. de C.V.; Advisor to the Director of Management and Finance of PMI; and Advisor to the General Services Coordinator of the Ministry of the Interior.
| | 2017 |
Pemex Drilling and Services—Directors and Executive Officers
| | | | | Name
| | Position with Pemex Drilling and Services
| | Year
Appointed | Mr. José Antonio González Anaya | | Chairman of the Board of Pemex Drilling and Services (refer to Petróleos Mexicanos) | | 2016 | | | | Mr. Rodulfo Figueroa Alonso | | Board Member of Pemex Drilling and Services (refer to Petróleos Mexicanos) | | 2016 | | | | Mr. Carlos Alberto Treviño Medina | | Board Member of Pemex Drilling and Services (refer to Petróleos Mexicanos) | | 2016 | | | | Mr. Rodrigo Becerra Mizuno | | Board Member of Pemex Drilling and Services (refer to Petróleos Mexicanos) | | 2016 | | | | Mr. J. Javier Hinojosa Puebla | | Board Member of Pemex Drilling and Services (refer to Pemex Exploration and Production) | | 2015 | | | | Mr. Miguel Ángel Maciel Torres | | Board Member of Pemex Drilling and Services (refer to Petróleos Mexicanos) | | 2015 | | | | Mr. Miguel Ángel Lugo Valdez | | Board Member of Pemex Drilling and Services and Coordinator of Procurement and Supply for Exploration and Production of Petróleos Mexicanos
Born: 1967
Business experience: Acting Deputy Director of Strategy Management and Business Model Support of Petróleos Mexicanos; Acting Associate Managing Director of Contract Planning, Evaluation and Consolidation of Petróleos Mexicanos; Acting Associate Managing Director of Exploration and Production Contracts of Petróleos Mexicanos.
| | 2016 | | | | Mr. Pedro Virgilio Sánchez Soto | | Acting Director General of Pemex Drilling and Services and Deputy Director of Well Engineering and Business Development of Pemex Drilling and Services
Born: 1960
Business experience: Associate Managing Director of Integration and Technical Coordination of Pemex-Exploration and Production; Associate Managing Director of Programming and Evaluation (Southwestern Marine Region) of Pemex-Exploration and Production; and Manager of the Litoral de Tabasco Business Unit of Pemex-Exploration and Production.
| | 2017 |
Pemex Logistics—Directors and Executive Officers | | | | | Name | | Position with Pemex Logistics | | Year Appointed | Mr. José Antonio González AnayaOctavio Romero Oropeza | | ChairmanChairperson of the Board of Pemex Logistics (refer to Petróleos Mexicanos) | | 20162018 | | | | Mr. Carlos Alberto Treviño MedinaMarcos Manuel Herrería Alamina | | Board Member of Pemex Logistics (refer to Petróleos Mexicanos) | | 20162019 | | | | Mr. Rodrigo Becerra MizunoMs. Brenda Fierro Cervantes | | Board Member of Pemex Logistics (refer toand Deputy Director of Information Technology of Petróleos Mexicanos)Mexicanos Born: 1974 Business experience: Acting Chief Information Officer/Acting Corporate Director of Information Technology and Deputy Director of Technologic Alliance of Petróleos Mexicanos; and Project Leader of Lingo Systems, S.A. de C.V. | | 20162018 | | | | Ms. Guadalupe Merino BañuelosMr. Guillermo Alejandro Perabeles Garza | | Board Member of Pemex Logistics (refer toand Deputy Director of Strategic Planning and Regulatory Analysis of Petróleos Mexicanos)Mexicanos Born: 1948 Business experience: Deputy Manager of Strategy Optimization at Petróleos Mexicanos; Executive Director of Regulations Proposal of the Government of the Federal District; and Director of Administrative Regulation of the Government of the Federal District. | | 20162019 | | | | Mr. Luis Ignacio Rayón LlerandiCarlos Fernando Cortez González | | Board Member of Pemex Logistics (refer toand Deputy Director of Budget and Accounting of Petróleos Mexicanos)Mexicanos Born: 1971 Business experience: Acting Manager Director of Budget of Petróleos Mexicanos; Associate Managing Director of Programming and Financial Analysis of Petróleos Mexicanos; and Deputy Manager of Income and Operational Outcomes of Petróleos Mexicanos. | | 20162019 | | | | Mr. José Luis Antonio Gómez GóngoraMs. Reyna María Basilio Ortiz | | Board Member of Pemex Logistics and Coordinator of Procurement and Supply for Pemex Industrial Transformation of Petroleos Mexicanos Born: 1957Born: 1961
Business experience: Deputyexperience: Executive Director of ProcurementOperations of the Metro Project of the Federal District; and Supply for Industrial Transformation of Petróleos Mexicanos; Associate ManagingAdvisor and Director of Management of Contracts for Gas and Basic Petrochemicals of Petróleos Mexicanos; and Associate Managing Directorthe Metro Project of Material Resources ofPemex-Gas and Basic Petrochemicalsthe Federal District. | | 20152018 | | | | Mr. David Ruelas RodriguezAntonio López Velarde Loera | | Board Member of Pemex Logistics (refer toand Deputy Director of Risk Management and Reinsurance of Petróleos Mexicanos)Mexicanos Born: 1976Business experience: Associate Managing Director of Financial Risk Management of Petróleos Mexicanos; Deputy Manager of Capital Markets and Derivatives of Petróleos Mexicanos; and Deputy Manager of Derivative Transactions of Petróleos Mexicanos. | | 20162018 | | | | Mr. José Ignacio Aguilar Álvarez GreavesJavier Emiliano González del Villar | | Director General of Pemex Logistics Born: 1970Born: 1972
Business experience: Vice Presidentexperience: General Inspector of Administrationthe Federal Police; and Advisor of Petróleos Ebano; Deputy Directorthe National Commissioner of Hartree Consultores, S. de R.L. de C.V.; and Deputy Director of Hydrocarbons and Derivatives Logistics of Petróleos Mexicanos.the Comisión Nacional contra las Adicciones. | | 20172018 |
| | | | | Pemex Fertilizers—Directors and Executive Officers | | | | | Name | | Position with Pemex Fertilizers | | Year Appointed | Mr. José Antonio González AnayaOctavio Romero Oropeza | | ChairmanChairperson of the Board of Pemex Fertilizers (refer to Petróleos Mexicanos) | | 20162018 | | | | Mr. Luis Rodolfo Capitanachi Dagdug | | Board Member of Pemex Fertilizers, Associate Managing Director of Industrial Process Financials and Logistics and Associate Managing Director of Finance, Industrial Processes and Logistics of Petróóleos MexicanosMarcos Manuel Herrería Alamina
Born: 1971
Business experience: Associate Managing Director of Accounting for Productive State-Owned Subsidiaries and Other Businesses of Petróóleos Mexicanos; Acting Deputy Director of Management and Finance of Pemex-Petrochemicals; and Associate Managing Director of Financial Resources of Pemex-Petrochemicals.
| | 2015 | | | | Ms. Alma Rosa Moreno Razo | | Board Member of Pemex Fertilizers (refer to Petróleos Mexicanos) | | 20152019 | | | | Mr. Carlos Alberto Treviño Medina | | Board Member of Pemex Fertilizers (refer to Petróleos Mexicanos) | | 2016 | | | | Mr. José Ignacio Aguilar Álvarez GreavesJavier Emiliano González del Villar | | Board Member of Pemex Fertilizers (refer to Pemex Logistics) | | 20172018 | | | | Mr. Jorge Collard de la RochaÁngel Rossette Rodríguez | | Board Member of Pemex Fertilizers and Deputy Director of Gas and Petrochemicals Process of Pemex Industrial Transformation Born: 1960 Business experience: Acting Associate Managing Director of Salina Cruz Refinery of Pemex Industrial Transformation; and Managing Director of Nuevo Pemex GPC of Pemex Industrial Transformation. | | 2018 | | | | Mr. Carlos Fernando Cortez González | | Board Member of Pemex Fertilizers (refer to Petróleos Mexicanos)Pemex Logistics) | | 20152019 | | | | Mr. Valentín Matías Soto Pérez | | Board Member of Pemex Fertilizers and Deputy Director of Performance Evaluation and Continuous Improvement of Petróleos Mexicanos. Born: 1956 Business experience: Deputy Director of the Secretaría de Educación Pública; Chief of Services of the ISSSTE; and Director of the Secretaría de Seguridad Pública. | | 2019 | | | | Mr. Juan Alfredo Lozano TovarCarlos Turpin Arce | | Board Member of Pemex Fertilizers and Acting Coordinator of Budget Operation for Pemex Fertilizers Born: 1976 Business experience: Superintendent of Formulation and Operation for Other Businesses of Petróleos Mexicanos; General Superintendent of Budget Control of Pemex Refining; and Budget Coordinator of Pemex Refining. | | 2019 | | | | Mr. Francisco González Ortega | | Director General of Pemex Fertilizers Born: 1968Born: 1963
Business experience:experience: Area Director of Economic and Social Benefitsthe Mexican Presidency Office; General Director of the Instituto Mexicano del Seguro Social;Laboratory of Public Works Revisions at the Secretaría de la Contraloría General Secretary of Mexico City; and Internal Comptroller at the Conferencia InteramericanaSecretaría de Seguridad Social; and HeadObras y Servicios of the Liaisons of the Instituto Mexicano del Seguro Social.Mexico City. | | 2016 |
Pemex Ethylene—Directors and Executive Officers
| | | | | Name
| | Position with Pemex Ethylene
| | Year
Appointed | Mr. José Antonio González Anaya | | Chairman of the Board of Pemex Ethylene (refer to Petróleos Mexicanos) | | 2016 | | | | Mr. Luis Ignacio Rayón Llerandi | | Board Member of Pemex Ethylene (refer to Petróleos Mexicanos) | | 2016 | | | | Mr. Jorge Valadez Montoya | | Board Member of Pemex Ethylene and Associate Managing Director of Alliances and New Businesses for Conventional Resources of Petróleos Mexicanos
Born: 1973
Business experience: Deputy Director of Project Analysis of PMI; Project Leader of Petróleos Mexicanos; and Director of Planning and Management of Gasoductos de Chihuahua, S. de. R.L. de C.V.
Other board memberships: Mex Gas Enterprises, S.L.; and MGI Asistencia Integral, S. de R.L. de C.V.
| | 2015 | | | | Mr. Jorge Collard de la Rocha | | Board Member of Pemex Ethylene (refer to Petróleos Mexicanos) | | 2015 | | | | Mr. José Luis Antonio Gómez Góngora | | Board Member of Pemex Ethylene (refer to Pemex Logistics) | | 2015 | | | | Mr. Juan Lozano Tovar | | Board Member of Pemex Ethylene (refer to Pemex Fertilizers) | | 2016 | | | | Mr. Jose Manuel Alvarado Doria | | Board Member of Pemex Ethylene and Deputy Director of Pemex Industrial Information
Born: 1957
Business experience: Deputy Director of Production of Pemex-Gas and Basic Petrochemicals; Acting Associate Managing Director of Evaluation and Improvement ofPemex-Gas and Basic Petrochemicals; and Associate Managing Director of Operative Control, Optimization and Safety ofPemex-Gas and Basic Petrochemicals.
Other board memberships: MGC México, S.A. de C.V.; Mex Gas Trading, S.L.; Mex Gas Enterprises, S.L. and Mex Gas Supply, S.L.
| | 2016 | | | | Mr. Luis Rafael Montanaro Sánchez | | Director General
Born: 1969
Business experience: Deputy Director of Planning of Pemex Petrochemicals,
| | 2016 |
| | | | | Name
| | Position with Pemex Ethylene
| | Year
Appointed | | | Associate Managing Director of Morelos PC of Pemex-Petrochemicals; and Associate Managing Director of Strategic Planning and Business Development of Pemex-Petrochemicals.
Other board memberships: Petroquímica Mexicana de Vinilo, S.A. de C.V.; PMV Minera, S.A. de C.V.; and PMV Servicios Administrativas, S.A. de C.V.
| | 2019 |
Compensation of Directors and Officers For the year ended December 31, 2016,2019, the aggregate compensation of executive officers of Petróleos Mexicanos and the existing subsidiary entities (49(14 people) paid or accrued in that year for services in all capacities was approximately Ps. 111.530.9 million. Except in the case of the independent members, with respect to the previous Board of Directors of Petróleos Mexicanos and the boards of directors of the existing subsidiary entities, and the independent members, with respect to the new Board of Directors of Petróleos Mexicanos, the members of our boards of directors do not receive compensation for their services. The compensation paid or accrued during 20162019 to the professional members of the previous Board of Directors of Petróleos Mexicanos and boards of directors of the existing subsidiary entities was approximately Ps. 7.75.9 million. See “Item 7—Major Shareholders and Related Party Transactions—Related Party Transactions” for information about the salary advances that we offer to our executive officers as an employee benefit. Board Practices Except in the case of the independent members with respect to the Board of Directors of Petróleos Mexicanos, neither the members of the boards of directors nor the executive officers of Petróleos Mexicanos or the productivestate-owned subsidiaries are appointed for a specific term. The length of the terms of the Secretary of Energy and the Secretary of Finance and Public Credit is, however, limited by the length of their respective positions in the Mexican Government. Except in the case of the independent members first appointed under the Petróleos Mexicanos Law, theThe five independent members of the Board of Directors of Petróleos Mexicanos will be appointed forfive-year terms, and may be appointed for an additional term of the same length. The Mexican Government representatives that serve as members of the boards of directors of Petróleos Mexicanos and each of the existing subsidiary entities may be removed at the discretion of the President of Mexico. The independent members of the Board of Directors of Petróleos Mexicanos may be removed for cause, including failure to carry out the duties and obligations set forth in the Petróleos Mexicanos Law, by the President of Mexico upon Senate approval. On October 14, 2014, theThe Board of Directors of Petróleos Mexicanos appointedappoints members to and convened the four committees established by the new Petróleos Mexicanos Law to support its work. Unless otherwise specified in the new Petróleos Mexicanos Law, the memberships of these committees must consist of at least three, but no more than five, members of the Board of Directors of Petróleos Mexicanos. Each of these committees must include two independent members of the Board of Directors of Petróleos Mexicanos, with the exception of the Audit Committee, which must include three independent members. Each of the Secretary of Energy, the Secretary of Finance and Public Credit and anyministry-level secretary serving as a member of the Board of Directors of Petróleos Mexicanos may designate one or more alternates to take his or her place at committee meetings, provided that these alternates are public officials whose positions are not more than two levels below such secretary’s position in the Mexican Government.
The committees may authorize a representative of the Director General to attend their meetings as a guest with the right to participate, but not vote, when deemed advisable for the performance of their duties. Audit Committee The Audit Committee of the Board of Directors of Petróleos Mexicanos is required to, among other duties, oversee our management, evaluate our financial and operational performance, monitor the status of our internal control systems, as well as nominate our external auditors, whose appointments are approved by the Board of Directors of Petróleos Mexicanos. See “Item 16C—Principal Accountant Fees and Services.” Each of the three members of the Audit Committee is “independent” of Petróleos Mexicanos within the meaning of Rule10A-3 under the Securities Exchange Act of 1934, as amended (the Exchange Act). In accordance with the Petróleos Mexicanos Law, the Audit Committee consists of three independent members of the Board of Directors of Petróleos Mexicanos, each of whom will serve as the chair of the committee on a rotating, annual basis, as determined by the Board of Directors of Petróleos Mexicanos. The Audit Committee consists of the following members: Mr. JorgeJuan José Borja Navarrete,Paullada Figueroa, independent member of the Board of Directors of Petróleos Mexicanos and Chairperson of the Audit Committee; Mr. Octavio Francisco Pastrana Pastrana,José Eduardo Beltrán Hernández, independent member of the Board of Directors of Petróleos Mexicanos; and Mr. Felipe Duarte Olvera,Francisco José Garaicochea y Petrirena, independent member of the Board of Directors of Petróleos Mexicanos. A representative of the Director General, the Head of the Internal Auditing Area, the Legal Director or any other person may attend the Audit Committee’s meetings as a guest with the right to participate, but not vote, when deemed advisable and appropriate given the subject matter to be discussed. Human Resources and Compensation Committee The Human Resources and Compensation Committee is chaired by an independent member of the Board of Directors of Petróleos Mexicanos and includes the Secretary of Finance and Public Credit as a permanent member. The duties of the Human Resources and Compensation Committee include, among others, proposing the compensation of the Director General and other members of senior management of Petróleos Mexicanos within three levels of the Director General, as well as proposing hiring policies, performance management guidelines and the compensation of all other employees of Petróleos Mexicanos. The Human Resources and Compensation Committee of Petróleos Mexicanos consists of the following members: Mr. Carlos Elizondo Mayer-Serra,Rafael Espino de la Peña, independent member of the Board of Directors of Petróleos Mexicanos and Chairperson of the Human Resources and Compensation Committee; Mr. Octavio Francisco Pastrana Pastrana,José Eduardo Beltrán Hernández, independent member of the Board of Directors of Petróleos Mexicanos; Mr. José Antonio Meade Kuribreña,Arturo Herrera Gutiérrez, member of the Board of Directors of Petróleos Mexicanos; Mr. Ildefonso Guajardo Villarreal,Ms. Graciela Márquez Colín, member of the Board of Directors of Petróleos Mexicanos; and Mr. Rafael Pacchiano Alamán,Víctor Manuel Toledo Manzur, member of the Board of Directors of Petróleos Mexicanos. Strategy and Investment Committee The Strategy and Investment Committee is chaired by an independent member of the Board of Directors of Petróleos Mexicanos on a rotating annual basis and is required to, among other duties, analyze our business plan and assist the Board of Directors of Petróleos Mexicanos in the approval of guidelines, priorities and general policies related to investments made by Petróleos Mexicanos. The Strategy and Investment Committee of Petróleos Mexicanos consists of the following members: Mr. Octavio Francisco Pastrana Pastrana,José Eduardo Beltrán Hernández, independent member of the Board of Directors of Petróleos Mexicanos and Chairperson of the Strategy and Investment Committee; Mr. Carlos Elizondo Mayer-Serra,Juan José Paullada Figueroa, independent member of the Board of Directors of Petróleos Mexicanos; Mr. Pedro Joaquín Coldwell, member of the Board of Directors of Petróleos Mexicanos;
Mr. José Antonio Meade KuribreñMs. Norma Rocío Nahle García, member of the Board of Directors of Petróleos Mexicanos; and
Mr. Ildefonso Guajardo Villarreal,Arturo Herrera Gutiérrez, member of the Board of Directors of Petróleos Mexicanos; and Ms. Graciela Márquez Colín, member of the Board of Directors of Petróleos Mexicanos. Acquisitions, Leasing, Public Works and Services Committee The Acquisitions, Leasing, Public Works and Services Committee, is chaired by an independent member of the Board of Directors of Petróleos Mexicanos on a rotating annual basis and, 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, Public Works and Services Committee of Petróleos Mexicanos consists of the following members: Mr. Felipe Duarte Olvera,José Eduardo Beltrán Hernández, independent member of the Board of Directors of Petróleos Mexicanos and Chairperson of the Acquisitions, Leasing, Public Works and Services Committee; Mr. JorgeJuan José Borja Navarrete,Paullada Figueroa, independent member of the Board of Directors of Petróleos Mexicanos; Mr. Pedro Joaquín Coldwell, member of the Board of Directors of Petróleos Mexicanos;
Mr. José Antonio Meade KuribreñMs. Norma Rocío Nahle García, member of the Board of Directors of Petróleos Mexicanos; and
Mr. Rafael Pacchiano Alamán,Arturo Herrera Gutiérrez, member of the Board of Directors of Petróleos Mexicanos; and Mr. Víctor Manuel Toledo Manzur, member of the Board of Directors of Petróleos Mexicanos. Employees Excluding employees employed by us on a temporary basis, at December 31, 2016,2019, Petróleos Mexicanos, its subsidiary entities and subsidiary companies had 130,333125,735 employees, as compared to 139,183128,021 at December 31, 2015.2018. During 2016,2019, Petróleos Mexicanos and the productivestate-owned subsidiaries employed an average of 9,2895,561 temporary employees. The following table sets forth our employee numbers for the five years ended December 31, 2016:2019: | Year | | Petróleos Mexicanos and Subsidiary Entities | | | Subsidiary Companies | | | Total | | | Petróleos Mexicanos and Subsidiary Entities | | Subsidiary Companies | | Total | 2012 | | | 150,697 | | | | 416 | | | | 151,113 | | | 2013 | | | 154,474 | | | | 764 | | | | 155,538 | | | 2014 | | | 153,085 | | | | 804 | | | | 153,889 | | | 2015 | | | 138,397 | | | | 786 | | | | 139,183 | | | 138,397 | | 786 | | 139,183 | 2016 | | | 126,940 | | | | 3,393 | | | | 130,333 | | | 126,940 | | 3,393 | | 130,333 | 2017 | | | 124,660 | | 3,281 | | 127,941 | 2018 | | | 124,818 | | 3,203 | | 128,021 | 2019 | | | 122,646 | | 3,089 | | 125,735 |
Source: Petróleos Mexicanos and the subsidiary companies. As of December 31, 2016,2019, the Petroleum Workers’ Union represented approximately 79%81.5% of the work force of Petróleos Mexicanos and the productivestate-owned subsidiaries. The members of the Petroleum Workers’ Union are PEMEX employees and they elect their own leadership from among their ranks. Our relationship with our employees is regulated by theLey Federal de Trabajo(which we refer to as the Federal Labor Law), a collective bargaining agreement between Petróleos Mexicanos and the Petroleum Workers’ Union and the Employment Reglamento de Trabajo del Personal de Confianza de Petróleos Mexicanos y Organismos Subsidiarios (Employment Regulation for White Collar Employees of PEMEX and Subsidiary Entities.Entities). 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 September 10, 2015,July 31, 2019, Petróleos Mexicanos and the Petroleum Workers’ Union executed a newamended their collective bargaining agreement, thatwhich amendment became effective on August 1, 2019. The amended agreement provides for a 3.37% increase in wages, and will regulate their labor relations until July 31, 2017. The new collective bargaining agreement provided for a 3.99% increase in wages and a 1.75% increase in benefits. On July 20, 2016, Petróleos Mexicanos and the Petroleum Workers’ Union revised their collective bargaining agreement, which revision became effective on August 1, 2016. The revised agreement provides for a 3.17% increase in wages.2021. OnAs of November 11, 2015, Petróleos Mexicanos announced that it had signedpursuant to an agreement with the Petroleum Workers’ Union, to modify the pension regime applicable to current and new employees. Pursuant to the agreement, the retirement age for employees with less than 15 years of service has been increased fromis 60 (compared to 55 to 60.for employees with more than 15 years of service). Employees are still required tomust serve for at least 30 years in order to be eligible to receive full retirement benefits. In addition, newNew employees willhired as of that date receive individual defined contributions retirement plans, which will benefit from direct contributions from Petróleos Mexicanos, portabilityplans. Employees who began serving prior to that date are permitted and tax benefits applicable to retirement savings. Current employees will also be permittedincentivized to opt into the new defined contributions retirement plans from their existing defined benefits retirement plans.
On December 18, 2015, the Director General of Petróleos Mexicanos informed the Ministry of Finance and Public Credit that our pension liabilities were expected to decrease by Ps. 186.5 billion as a result of the modifications to our pension regime described above. As of December 31, 2015, our pension liabilities had decreased by Ps. 196.0 billion.
On December 24, 2015, the Ministry of Finance and Public Credit published in the Official Gazette of the Federation theDisposiciones de carácter general relativas a la asunción por parte del Gobierno Federal de obligaciones de pago de pensiones y jubilaciones a cargo de Petróleos Mexicanos y sus empresas productivas subsidiarias (General General provisions regarding the assumption by the Mexican Government of the payment obligations related to pensions and retirement plans of Petróleos Mexicanos and its productivestate-owned subsidiaries). subsidiaries. On August 3, 2016, the Ministry of Finance and Public Credit informed us that the Mexican Government would assume Ps. 184.2 billion in payment liabilities related to our pensions and retirement plans, and accordingly replaced the Ps. 5050.0 billion promissory note issued to us on December 24, 2015 with Ps. 184.2 billion in promissory notes. As of December 31, 2019, these promissory notes amounted to Ps. 126.5 billion. On January 25, 2019, the Mexican Government prepaid promissory notes receivable 25 and 26A with original maturity dates of 2041 and 2042, respectively, for a total amount of Ps. 9.4 billion. On February 24, 2019, the Mexican Government prepaid promissory note receivable 24 with original maturity date of 2040, for a total amount of Ps. 5.9 billion. On March 20, 2019, the Mexican Government prepaid promissory note receivable 23 with an original maturity date of 2039, for a total amount of Ps. 6.2 billion. On April 17, 2019, the Mexican Government prepaid promissory note receivable 22 with an original maturity date of 2038, for a total amount of Ps. 6.5 billion. On May 20, 2019, the Mexican Government prepaid promissory note receivable 21 with an original maturity date of 2037, for a total amount of Ps. 6.8 billion. These prepayments were part of the Mexican Government’s Strengthening Program for Petróleos Mexicanos. These amounts were transferred to the Pemex Labor Fund for the obligation payment related to its pension and retirement plan obligation. In accordance with the Federal Labor Law and collective bargaining agreement in effect as of December 31, 2015,2019, Petróleos Mexicanos and the productivestate-owned subsidiaries are under an obligation to pay seniority premiums to retiring employees and pensions to retired employees, as well as death benefits and pensions to certain survivors of retired employees. Retirees are entitled to receive increases in their pensions, of at least the increase in NCPI, whenever salary increases are granted to current employees. We also provide health and medical benefits to employees, retired employees and their beneficiaries and, subject to our overall budgetary constraints, we provide aninterest-rate subsidy on employees’ mortgage loans. On November 5, 1997, the Ministry of Finance and Public Credit 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 our retirement benefits totaled Ps. 49,19054,396 million in 20152019 and Ps. 55,69355,654 million in 2016.2018. As of December 31, 20152019 and 2016,2018, the balance of the Pemex Labor Fund was Ps. 5,229138 million and Ps. 9,4904,974 million, respectively. Item 7. | Major Shareholders and Related Party Transactions |
Major Shareholders Petróleos Mexicanos and the subsidiary entities have no shareholders because they are public entities of the Mexican Government. The Mexican Government controls us and incorporates the consolidated annual budget and financing program of Petróleos Mexicanos and the subsidiary entities into its budget, which must be approved by the Chamber of Deputies each year. Any adjustment proposed by the Board of Directors of Petróleos Mexicanos to change our annual financial balance goal or increase the limit on our wage and salary expenditures budget or our financing program must be approved by the Chamber of Deputies. See “Item 4—Information on the Company—General Regulatory Framework” for more information about the Mexican Government’s authority with respect to our budget. Our operations in the oil and gas sector are also regulated by the Mexican Government and its ministries. Mexican Government officials hold five of the ten 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 with the power to cast atie-breaking vote. An additional five seats on the Board of Directors are held by independent members appointed by the President of Mexico and ratified by the Senate. 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 our Relationship with the Mexican Government.” Related Party Transactions Article 8, Section XIDirectors and employees of Petróleos Mexicanos and the Subsidiary Entities are subject to regulations addressing conflicts of interest, including thePetróleos Mexicanos Law,Ley Federal de Responsabilidades Administrativas de los Servidores Públicos (Federal Law of Administrative Responsibilities of Public Officials), requires all public officials and theAnti-corruption Policies and Guidelines for Petróleos Mexicanos, its productive subsidiary entities and, where applicable, affiliated companies. Under these provisions, directors and employees of Petróleos Mexicanos 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.”
The Board of Directors of Petróleos Mexicanos, including the independent members who are not public officials, are subject to the duties of loyalty and diligence. In accordance with the Petróleos Mexicanos Law, an independent member of the Board of Directors of Petróleos Mexicanos 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 an existing subsidiary entity who acts in contravention of the Petróleos Mexicanos Law may be held liable for any damages that he or she caused to Petróleos Mexicanos or an existing subsidiary entity. As an employee benefit, we offer salary advances to all of our eligible Petroleum Workers’ Union andnon-union workers, including our executive officers, pursuant to the programs set forth in the collective bargaining agreement and in the Employment Regulation of White Collar Employees of Petróleos Mexicanos and Subsidiary Entities, respectively. The salary advances, which arenon-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 20162019 was Ps. 8.90.3 million. As of April 15, 2017,March 31, 2020, the aggregate amount of salary advances outstanding to our executive officers was Ps. 8.10.5 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, now held by Pemex Industrial Transformation, 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)
| | Testamentary Trust(1)
Mr. Pedro Joaquín Coldwell
| | 57%
40%
| | | | Gasolinera y Servicios Juárez, S.A. de C.V.
(which operates a retail service station)
| | Mr. Pedro Joaquín Coldwell
Mr. Ignacio Nassim Ruiz Joaquín
(nephew of Mr. Joaquín Coldwell)
Testamentary Trust(2)
| | 40%
20%
40%
| | | | 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. Ignacio Nassim Ruiz Joaquín
Testamentary Trust(3)
| | 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%
|
(1) | 60% of these shares were owned by Fausto Nassim Joaquín Ibarra (father of Pedro Joaquín Coldwell), until his death in June of 2016, after which 57% of these shares became property of an investment, management and testamentary revocable trust, which we refer to as the Testamentary Trust. 50% of the voting rights of these shares are currently exercised by Mr. Pedro Oscar Joaquín Delbouis, and 50% are exercised by Mr. Nassim Joaquín Delbouis. |
(2) | 40% of these shares were owned by Fausto Nassim Joaquín Ibarra until his death in June of 2016, after which these shares became property of the Testamentary Trust. 100% of the voting rights of these shares are currently exercised by Mr. Pedro Joaquín Coldwell. |
(3) | 20% of these shares were owned by Fausto Nassim Joaquín Ibarra until his death in June of 2016, after which these shares became property of the Testamentary Trust. 50% of the voting rights of these shares are currently exercised by Mr. Pedro Oscar Joaquín Delbouis, and 50% are exercised by Mr. Nassim Joaquín Delbouis. |
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 ornon-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 Industrial Transformation retail service stations and wholesale distributors.
Item 8. | Financial Information Consolidated Statements and Other Financial Information |
See Item 18. “Financial Statements”. 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.” Ethics CommitteeGovernmental Investigations and Liabilities UnitOther Monitoring Activities
Certain rules have been enacted in orderTheAuditoría Superior de la Federación(Superior Audit Office of the Federation, or the ASF), pursuant to promote a culture of ethics and prevent corruption in our daily operations. On November 26, 2016, the Board of Directors of Petróleos Mexicanos issuedLaw, has theCódigo de Ética para authority to annually review Petróleos Mexicanos sus empresas productivas subsidiarias y empresas filiales (Code of Ethics for Petróleos Mexicanos,and its productive subsidiary entitiesentities. In its review, the ASF takes into consideration the legal framework and affiliates, or the Code of Ethics), which applies to the members of the boards of directorsoperations of Petróleos Mexicanos and eachits subsidiary entities, as well as the results of the subsidiary entitiesreviews conducted by the relevant audit and all of our employees, includingoversight bodies under the Director General (chief executive officer) of Petróleos Mexicanos Law. 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 Chief Financial Officer ofaudit. Discrepancies in amounts spent may subject our officials to legal sanctions. However, in most instances, any observed issues are clarified and disposed of.
The Liabilities Unit at Petróleos Mexicanos, the chief accounting officer of Petróleos Mexicanos and all other employees performing similar functions. This new code of ethics replaced the code of ethics that had been in place since 2014. On December 7, 2016, our Ethics Committee was formed to monitor the implementation and enforcement of the Code of Ethics. See “Item 4—Information on the Company—Business Overview—PEMEX Corporate Matters—Ethics Committee” for more information. See “Item 16B—Code of Ethics” for more information. In addition, on December 9, 2016, the Ethic Committee reviewed the newCódigo de Conducta de Petróleos Mexicanos, sus empresas productivas subsidiarias y, en su caso, empresas filiales(Code of Conduct of Petróleos Mexicanos, its productive subsidiary entities and, where applicable, affiliated companies, or the Code of Conduct), which is scheduled to be approved and issued in 2017, replacing the code issued in 2015. This Code of Conduct delineates the code of conduct expected from all of our employees in the daily performance of their duties and is designed to promote transparency and prevent abuses.
On February 4, 2016, we launched an ethics and corporate integrity program, which incorporates high industry standards and practices related to ethics, integrity, conduct, anti-corruption strategies and institutional values. Several measures have been taken to ensure the successful implementation of the program, including the distribution of our Code of Ethics and Code of Conduct among personnel, the administration of trainings on risk management, internal control and integrity and the development of mechanisms to identify and combat corrupt practices. Additionally, we are developing tools to assess compliance with our internal ethics and integrity guidelines, and intend to launch an ethics support line and an anti-corruption webpage in the first half of 2017 to inform our partners, contractors and others about the policies and procedures to be applied to our business dealings.
Our Liabilities Unit, which is part of the SFP,Secretaría de la Función Pública (Ministry of Public Function, or the SFP), is responsible for receiving complaints and investigating violations of the FederalGeneral Law of Administrative Responsibilities of Public Officials,Liabilities, as well as imposing administrative penalties in accordance with the law.
Although we have adopted a corporate compliance program that establishes measures to identify, monitor, mitigate and remediate irregular or illicit actions, we are subject to the risk that our management, employees, contractors or any person doing business with us may engage in fraudulent activity, corruption or bribery, circumvent or override our internal controls and procedures or misappropriate or manipulate our assets for their personal benefit or of third parties to our detriment. This risk is heightened by the fact that we have a large number of complex, valuable contracts with local and foreign third parties. See “Item 3—Key Information—Risk Factors—Risk Factors Related to Our Operations—We are subject to Mexican Government Audits and Other Investigationsinternational anti-corruption, anti-bribery and anti-money laundering laws. Our failure to comply with these laws could result in penalties, which could harm our reputation and have an adverse effect on our business, results of operations and financial condition.” In MarchWe are involved in investigations by Mexican, U.S. and April 2010, the SFP filed seven criminal complaints against officersother government authorities from time to time, including recent investigations relating to Odebrecht, S.A., Grupo Fertinal, S.A. de C.V. and employees ofPemex-Refining,Agro Nitrogenados, S.A. de C.V. As a policy, we cooperate with government authorities in connection with a pipeline rupturesuch investigations. In addition, we periodically monitor our compliance with applicable laws and regulations to enhance our compliance program. Further, the SFP conducts administrative reviews and, in Nanchital, Veracruz. The SFP imposed administrative penaltiesthe past, it and other government entities have brought proceedings against these officersour senior managers and employees as well as against contractors. As of the date of this report, 28 appeals have been filed by these public sector employees, 27 of which have concluded with the following results: 16 penalties were confirmed, nine penalties were declared null and void and new resolutions were ordered with respectfor activities detrimental to two penalties, imposing new sanctions that are now final. As of the date of this report, a final resolution of the final outstanding appeal against the administrative penalties is still pending.
In May 2010, the SFP filed two criminal complaints and initiated two 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 ULSD for the economic benefit of foreign companies, including Blue Oil Trading Ltd. During November 2010, the first administrative proceedings concluded, resulting in Ms. Miyazaki Hara being fined Ps. 164.2 million and banned from holding public sector positions for 20 years. Ms. Miyazaki Hara filed a motion before theSéptima Sala Regional Metropolitana(Seventh Regional Metropolitan Court) of the Federal Court of Fiscal and Administrative Justice seeking that this resolution be declared null and void. On July 2, 2015, theSegunda Sección de la Sala Superior(Second Section of the Superior Court) of the Tax and Administrative Federal Court declared the resolution null and void. The SFP filed a motion to review this judgment, which was granted on February 27, 2017 (file No.77/2017-II). As of the date of this report, a final resolution is still pending. In addition, on June 25, 2013, the second administrative proceeding concluded, and 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 motion against this resolution before theOctava Sala Regional Metropolitana (Eighth Regional Metropolitan Court) of the Federal Court of Fiscal and Administrative Justice seeking that this additional resolution also be declared null and void, which was granted on February 20, 2017 (file No.66/2017-V). As of the date of this report, a final resolution is still pending the Superior Court’s resolution.
In December 2010, the SFP fined 15 public sector employees for irregularities in a bidding process related to the leasing of four vessels. These employees were barred from holding public sector positions for ten years and several monetary penalties were ordered. The public sector employees filed motions against these penalties. As of the date of this report, 13 of the motions were confirmed. The resolutions in ten motions were declared null and void, in four motions were declared valid and one motion is still pending. Mr. Zermeño Díaz filed anamparo against the judgment declaring the resolution valid before theDécimo Tercer Tribunal Colegiado en Materia Administrativa del Primer Circuito (Thirteenth Joint Administrative Court of the First Circuit), which, as of the date of this report, is still pending resolution.
On October 11, 2011, the SFP announced that it had fined three former officers of PMI an aggregate amount of Ps. 267.8 million, for allegedly improper contracting practices in the purchase and/or sale of petroleum products, which allegedly benefited certain of PMI’s commercial counterparties. The implicated former officers of PMI were also barred from public sector employment for a period of ten years. These former officers appealed the penalties. Two motions were granted and the resolutions declared null and void. On February 8, 2017, a judgment was issued by theSala Superior (Higher Court) of theTribunal Federal de Justicia Administrativa (Federal Court of Administrative Justice) declaring the third resolution null and void. On April 3, 2017, the SFP filed a motion to review this resolution and the former officer filed anamparo (file No. 198/2017) before theQuinto Tribunal Colegiado en Materia Administrativa del Primer Circuito (Fifth Joint Administrative Court of the First Circuit). As of the date of this report, a final resolution is 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. 11.0 million increase in his personal assets was detected. The Federal Attorney General’s Office concluded its investigation without filing a criminal complaint. The SFP filed a motion against this resolution, which was granted. As of the date of this report, this resolution is still being implemented.
On April 24, 2014, the SFP issued a resolution imposing penalties against several public sector employees in connection with operations executed with Oceanografía, S.A. de C.V. Four employees of Pemex-Exploration and Production were barred from public sector employment for six months to one year. The employees filed motions (filesNo. 14/8891-19-01-02-08-OT;10781/14-17-10-5;16172/14-17-04-7; and15972/14-17-11-4) before the Regional Court of Chiapas-Tabasco and theDécima Sala Regional Metropolitana (Tenth Regional Metropolitan Court), theCuarta Sala Regional Metropolitana (Fourth Regional Metropolitan Court) and theDécima Primera Sala Regional Metropolitana (Eleventh Regional Metropolitan Court) of the Federal Court of
Fiscal and Administrative Justice, respectively, requesting that the penalties be declared null and void. The following sets forth the status of these proceedings:
| • | | On April 4, 2015, a judgment was issued (fileNo. 14/8891-19-01-02-08-OT) declaring the resolution null and void and requesting that a new judgment be issued. On September 29, 2016, a new resolution was issued and the employee filed a new administrative claim (fileNo. 518/16-26-01-2) before theSala Regional de Tabasco del Tribunal de Justicia Administrativa (Regional Court of Tabasco of the Administrative Justice Court). As of the date of this report, a final resolution is still pending. |
| • | | On May 9, 2015, a judgment was issued (fileNo. 10781/14-17-10-5) declaring the resolution valid. On December 14, 2016, the employee filed anamparo requesting that a new judgment be issued, which was granted. As of the date of this report, a new judgment is still pending. |
| • | | On February 15, 2015, a judgment was issued (fileNo. 16172/14-17-04-7) declaring the resolution null and void. On August 11, 2016, theTribunal Colegiado de Circuito (Circuit Court) dismissed the judgment and remanded for issuance of a new resolution. As of the date of this report, a final resolution is still pending. |
On March 19, 2015, a judgment was issued (fileNo. 15972/14-17-11-4) declaring the resolution null and void, which was sustained by the Circuit Court on October 16, 2015.
Key Energy Services
On August 11, 2016, the SEC announced that Key Energy Services, Inc. agreed to pay U.S. $5 million to settle SEC charges that it violated the internal controls andbooks-and-records provisions of the Foreign Corrupt Practices Act. These violations arose from payments allegedly made by its subsidiary, Key Mexico, to one of our employees to induce him to provide advice, assistance and inside information that was used by Key Energy and Key Mexico in negotiating contracts with us. Our Liabilities Unit is currently investigating these allegations.
Odebrecht
On December 21, 2016, the U.S. Department of Justice publicly disclosed that Odebrecht S.A. (Odebrecht), a global construction conglomerate based in Brazil, pled guilty to charges of bribery and corruption in connection with, among other things, bribes paid for more than 100 projects in twelve countries. The report further disclosed that, between 2010 and 2014, Odebrecht had bribed officials of the Mexican government for an amount equal to U.S. $10.5 million, including the payment to a high-level official of a Mexican state-owned and state-controlled company of a bribe of U.S. $6 million.
On December 22, 2016, our Liabilities Unit commenced an investigation into instances of bribery or corruption related to these allegations. On January 25, 2017, we filed a criminal complaint with the Federal Attorney General’s Office against any party for acts that may have been committed against PEMEX.business. We are committed to collaborating with the Liabilities Unit, the SFPcompetent authorities to pursue and the Federal Attorney General’s Office in ordercombat illicit activity and to hold those responsible for these acts accountableprotect our interests and ensure that we recover any damages to which we are entitled.reputation.
Actions Against the Illicit Market in Fuels The illicit market in fuels in Mexico involves the theft, adulteration and illegal transport, storage, distribution and commercialization of the hydrocarbons that we and other companies produce. This criminal activity mainly consists of the following: Illegal tapping of our pipelines threatens the integrity of our pipeline system, thereby increasing the associated risks for personnel, facilities, the general population and the environment. Illegal tapping of our pipelines has caused volumetric deviations of products, explosions, loss of life, injuries and environmental damages, some of which have been material. Theft and illegal trade in fuels, which reduces our revenues by the amount that would have been generated from the sale of the stolen products and reduces our net income because the production cost of stolen product is included in our cost of sales. The increase in surveillance as well as the actions taken against illegal trade in fuels, have allowed us to protect 12.2 million liters of hydrocarbons in 2019. Tampering with the product quality, which negatively impacts consumers and our reputation. In orderrecent years we have experienced an increase in theft of and illegal trade in the fuels that we produce. We estimate that the average theft of fuel amounted to counteractapproximately 2.6 thousand barrels per day in 2019, a decrease of 84.7% as compared to 20.7 thousand barrels per day in 2018. For the illicityears ended December 31, 2019 and 2018, losses resulting from fuel market,theft amounted to Ps. 4,644.8 million and Ps. 39,388.1 million, respectively. Given the sophistication and breadth of illegal networks, in recent years we have implemented several initiatives to develop a security strategy throughoutsustainable operating model to safeguard our workers, facilities, that seeksassets and values. These initiatives have sought to: implement a strategic safeguard system, allowing us to respond in a timely manner to risks of illegal activity;
| • | | strengthenStrengthen ourSalvaguardia Estratégica (Strategic Safeguard) strategy, which allows us to respond in a timely manner to risks of illegal activity. This strategy likewise relies on federal laws and regulations designed to prevent and punish crimes relating to fuel theft. |
| • | | Strengthen coordination and collaboration between Petróleos Mexicanos and our subsidiary entities, as well as withgovernment authorities, inwhich include, among others, the three ordersOffice of government, including the Federal Attorney General’s Office,General,Procuraduría Federal del Consumidor (Federal Consumer’s Office, TaxOffice),Servicio de Administración Tributaria (Tax Administration System,Service, or the SAT), federal, state and municipal police, theSecretaría de la Defensa Nacional (Ministry of National Defense) and the Mexican navy;Navy, theSecretaría de Seguridad Pública y Protección Ciudadana (Ministry of Public Security and Citizen Protection), and the Ministry of Energy. |
Increase safety in and around pipelines, ground transportation and company facilities. optimizeIndoor and outdoor measurements, such as the verification of system measurements in our facilities and the verification by the SAT of volumetric control in our service stations. Incorporate best practices for industrial safety, civil protection and environmental preservation in Strategic Safeguard works. Optimize our human capital and modernize our technology;technology. modernizeModernize our information systems to improve our strategic decision making;decisions making and our response time. revise our security strategyTheNuevoPlan Conjunto de Atención a Instalaciones Estratégicas de Pemex (New Joint Plan for Attention to incorporate innovations from the fieldsStrategic Facilities of industrial safety, civil protection,Pemex), implemented in December 2019, is aimed at further preventing and environmental preservation.
Our initiatives aim to develop a sustainable operating model to safeguard the areas in which we operate, which comprise approximately 2.0 million square kilometers of onshore fields and 3.2 million square kilometers of Mexican territorial waters.
These initiatives are intended to strengthen our ability to combateliminating the illicit market in fuels,fuels. The New Joint Plan for Attention to Strategic Facilities of Pemex was instated to safeguard strategic facilities of Petróleos Mexicanos and include our increased investmentsas a result, during 2019, we observed a significant decrease in surveillance technology for our facilities and pipelines, as well as the reinforcementvolumetric deviation of equipment and resources availablehydrocarbon products from an average of 56.1 thousand barrels per day in 2018 to protect our personnel, facilities, the general population and the environment. In particular, during 2016, we continued the following strategic5.3 thousand barrels per day in 2019.
The principal measures in order to decrease incidents of criminal activity at our facilities:this plan are: | • | | Support of fifteen government institutions and agencies, including theConsejería Jurídica del Ejecutivo Federal(Legal Counsel to the President), theSecretaría de Gobernación (Ministry of the Interior), the Ministry of National Defense, the Mexican Navy, the Ministry of Public Security and Citizen Protection, the Secretaría de la Función Pública(Ministry of Public Issues), the Ministry of Finance and Public Credit, the Ministry of Energy, theSecretaría del Trabajo y Previsión Social (Ministry of Labor and Public Welfare), the Federal Consumer’s Office as well as the participation of theOffice of the Federal Attorney General; |
Increased vigilance by 2.1% compared to 2015Removal of personnel involved in order to mobilize these forces in patrolling areas with a higher crime rate on hydrocarbons.the illicit market for fuels; | • | | Worked with the judicial and ministerial authorities to identify 2,695 vehicles involved in the illicit market in fuels, as compared to 4,907 vehicles in 2015, which represents a 45.1% decrease, as a resultImproved monitoring of a decrease in the amount of hydrocarbons stolen along our pipeline systems. The numbersystems and strengthened our security, supported by the Ministry of individuals brought before judicial authorities in connection withNational Defense, the illicit market in fuels decreased to 583, as compared to 1,154 individuals brought before judicial authorities in 2015, which represents Mexican Navy and thePolicía 49.5% decrease, mainly due to implementation of theSistema de Justicia Penal AcusatorioFederal (Adversarial System in Criminal Justice), which requires that law enforcement, not our personnel, act as first responders to any suspected participation in hydrocarbon related crime, irrespective of whether we, or any other group initially discovered the illegal activity.(Federal Police); |
InspectedSpecial attention to 58 facilities identified as requiring priority, including 39 storage and dispatch terminals, one of which is located in a maritime terminal, 12 repumping stations, six refineries and one control center; Increase fuel distribution by ground transport; Identify and take control of access points to vehicle entrances and exits of priority facilities, as well as control rooms and vertical tank areas; and Closure of certain pipelines and increased use of trucks for the rightstransportation of wayfuel. These efforts also led to the identification and facilities through a totalsealing of 10,472,808 kilometers patrolled13,137 illegal pipeline taps in 2016, at an average of 28,693 kilometers per day by vehicle and 305 kilometers per day by foot,2019, as compared to 29,317 kilometers per day by vehicles and 306 kilometers per day by foot during 2015. These14,910 illegal pipeline taps in 2018, a decrease of 11.9%. This decrease resulted from increased surveillance activities were carried outof pipelines transportation systems, in coordination with the Ministry of National Defense, the Mexican Navy and other governmental authorities. During 2016 we were able to patrol at levels similar to 2015, despite using only half of the number of vehicles as a result to budget cuts following the 2016 Budget Adjustment Plan. Strengthened our collaborations with governmental entities, the Federal Attorney General’s Office, the federal police and the Ministry of the Interior, among others, to share information and provide support to investigative teams focused on theft and illegal trade in fuels. We have also provided training for authorities responsible for the prevention, detection and prosecution of criminal activities in the illicit market in fuels, particularly in the inspection of automobile tanks and the documentation needed to be able to transport fuel, in an effort to support intragovernmental coordination.
Police. Created territorial divisions to best use monitoring technologies along with our ground patrol, which has allowed us to detect a higher number of illegal drillings and to prevent the illegal extraction of fuels.
These measures led to the recovery of 13.1 million liters of hydrocarbon product in 2016.
These efforts also led to the identification and sealing of 6,873 illegal pipeline taps in 2016, as compared to the identification and sealing of 6,260 illegal pipeline taps during 2015, which represents a 9.8% increase. This increase resulted from both increased surveillance and an increase in the number of criminal attempts to divert our products.
Our renewedcontinued focus on the detection of illegal pipeline taps in 20152019, together with the strict application of ground transportation protocols, enabled us to collect more information and develop more effective strategies to combat fuel theft, which in turn improved our ability to deploy ground patrol for the immediate identification and sealing of pipeline taps and prevent additional extraction of our hydrocarbon products. On January 12, 2016,Additionally, some of our personnel have been implicated for their involvement in organized fuel theft and trade. It is our policy to inform theLey Federal para Prevenir y Sancionar los Delitos Cometidos en Materia de Hidrocarburos (Federal Law to Prevent and Punish Crimes Liabilities Unit at Petróleos Mexicanos when we are aware of information related to Hydrocarbons Matters) was publishedthe illicit market in fuels that involves Pemex personnel. The Liabilities Unit has the Official Gazette of the Federation, alongauthority to investigate, undertake administrative proceedings and impose penalties against employees or former employees in connection with several reforms to related laws, including theCódigo Federal de Procedimientos Penales (Criminal Procedures Federal Code), theCódigo Penal Federal (Federal Criminal Code) and theLey Federal contra la Delincuencia Organizada (Federal Law of Organized Crime). This law and the related reforms establish additional civil and criminal penalties for the illegal tapping of pipelines, the theft of hydrocarbons and the alteration of hydrocarbons measurements systems, among other infractions.this issue.
Civil Actions In the ordinary course of our business, we are a party to a number of lawsuits of various types. We evaluate the merit of each claim and assess the likely outcome, accruing a contingent liability when an unfavorable decision is probable and the amount is reasonably estimable. At December 31, 20152018 and 2016,2019, we had accrued a reserve of Ps. 12.86.5 billion and Ps. 15.18.1 billion, respectively, for our contingent liabilities in connection with these lawsuits. Our material legal proceedings are described in Note 2520 and Note 27 to our consolidatedaudited financial statements included in this report, and those descriptions are incorporated by reference under this Item. Dividends Pursuant to the Petróleos Mexicanos Law, as of January 1, 2016, Petróleos Mexicanos and its subsidiary entities are subject to a new dividend policy that will requirerequires them to pay a state dividend to the Mexican Government on an annual basis. In accordance with the Federal Revenue Law of 2016, the Federal Revenue Law of 2017, the Federal Revenue Law of 2018 and the Federal Revenue Law of 2017,2019, Petróleos Mexicanos was not required to pay a state dividend in 2016, 2017, 2018 and 2019 and will not be required to pay a state dividend in 2017.2020. For more information, see “Item 4—Taxes, Duties and Other Payments to the Mexican Government—Fiscal Regime for PEMEX—Other Payments to the Mexican Government.” Item 9. | The Offer and Listing |
Trading in the debt securities issued by Petróleos Mexicanos takes place primarily in theover-the-counter (OTC) 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. Item 10. | Additional Information |
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. Petróleos Mexicanos and the subsidiary entities, are 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 Mexican Constitution, the Petróleos Mexicanos Law, Regulations to the Petróleos Mexicanos Law, the Hydrocarbons Law and other federal laws and regulations. See “Item 4—Information on the Company—History and Development.” Under the Petróleos Mexicanos Law, the Board of Directors of Petróleos Mexicanos has the following committees: the Audit Committee, the Human Resources and Compensation Committee, the Strategy and Investment Committee and the Acquisitions, Leasing, Public Works and Services 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 independent 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 Petróleos Mexicanos Law, 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 As of December 31, 20152019 and 2016,2018, we have entered into contracts with various contractors for approximate amounts of Ps. 987,674621,732 million and Ps. 817,994379,585 million, respectively. These contracts are for the development of investment projects. See Note 24(e)26 to our consolidated financial statements included herein. 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. $7.0 billionmedium-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 byPemex-Exploration and Production,Pemex-Refining andPemex-Gas and Basic Petrochemicals. In December 2010, Petróleos Mexicanos appointed Credit Suisse Securities (USA) LLC as an agent under the 2009 distribution agreement referred to above. In each of December 2010 and January 2010, Petróleos Mexicanos increased the size of this program to U.S. $12.0 billion and U.S. $22.0 billion, respectively. Petróleos Mexicanos issued U.S. $3.5 billion of notes and bonds under this program in 2011. In 2012, Petróleos Mexicanos issued U.S. $5.3 billion of notes and bonds under this program. In 2013, Petróleos Mexicanos increased the size of this program to U.S. $32.0 billion and issued U.S. $6.9 billion of notes and bonds under it. In 2014, Petróleos Mexicanos increased the size of this program to U.S. $42.0 billion and issued U.S. $7.9 billion of notes and bonds under it. During the first three months ofIn 2017, Petróleos Mexicanos increased the size of this program to U.S. $72.0$92.0 billion and issued € 4.3€4.3 billion, U.S. $5.0 billion and £450.0 million of notes and bonds under it. In 2018, Petróleos Mexicanos increased the size of this program to U.S. $102.0 billion and issued U.S. $6.0 billion, €3.15 billion and Swiss francs 365.0 million of notes and bonds under it. In 2019, Petróleos Mexicanos issued U.S. $14.8 billion of notes and bonds under it.this program. See “Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Financing Activities.” 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. We have no control over or influence on this exchange rate policy. The Mexican Government has announced that it does not intend to change its floating exchange rate policy, but there is no guarantee that the Mexican Government will not change this policy. See “Item 3—Key Information—Exchange Rates.” 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, the 2013 Securities, the 2014 Securities, the 2016 Securities and the 20172018 Securities. As of the date of this annual report, we have registered the following securities with the Securities and Exchange Commission. Pursuant to a registration statement on FormF-4 (FileNo. 333-7796), which was declared effective by the SEC on October 17, 1997, Petróleos Mexicanos,Pemex-Exploration and Production,Pemex-Refining andPemex-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 Pemex Project Funding Master Trust (which we refer to as the Master Trust). Pursuant to a registration statement on FormF-4 (FileNo. 333-9310), which was declared effective by the SEC on August 24, 1998, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $350,000,000 of 9 1⁄4% Global Guaranteed Bonds due 2018, which we refer to as the 1998 Securities. In December 2004 and February 2006, an aggregate amount of U.S. $340,427,000 of the 1998 Securities were exchanged for bonds issued by the Master Trust. Pursuant to a registration statement on FormF-4 (FileNo. 333-10706), which was declared effective by the SEC on October 1, 1999, Petróleos Mexicanos,Pemex-Exploration and Production,Pemex-Refining andPemex-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 (POMESSM)(POMESSM) due 2027, which we refer to as the 1999 Securities. In December 2004 and February 2006, an aggregate amount of U.S. $421,522,000 of the 1999 Securities were exchanged for POMESSMPOMESSM issued by the Master Trust. All outstanding 1999 Securities of Petróleos Mexicanos were, on March 16, 2006, mandatorily exchanged for 9.50% Global Guaranteed Bonds due 2027 issued by Petróleos Mexicanos, thereby increasing the outstanding amount of the 1997 Securities.
Pursuant to a registration statement on FormF-4 (FileNo. 333-103197), which was declared effective by the SEC on February 24, 2003, the Master Trust, Petróleos Mexicanos,Pemex-Exploration and Production,Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $500,000,000 of 8.625% Bonds due 2022. Pursuant to a registration statement on FormF-4 (FileNo. 333-107905), which was declared effective by the SEC on August 21, 2003, the Master Trust, Petróleos Mexicanos,Pemex-Exploration and Production,Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $510,154,000 of 8.625% Bonds due 2022. We refer to the securities registered in 2003 under these registration statements as the 2003 Securities. Pursuant to a registration statement on FormF-4 (FileNo. 333-118373), which was declared effective by the SEC on August 31, 2004, the Master Trust, Petróleos Mexicanos,Pemex-Exploration and Production,Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act 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 FormF-4 (FileNo. 333-126941), which was declared effective by the SEC on January 13, 2006, the Master Trust, Petróleos Mexicanos,Pemex-Exploration and Production,Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $324,220,000 of 9 1⁄4% Bonds due 2018, U.S. $228,735,000 of 8.625% Bonds due 2023, U.S. $354,477,000 of 9.50% Bonds due 2027, U.S. $403,746,000 of POMESSMPOMESSM due 2027 and U.S. $500,000,000 of 6.625% Guaranteed Bonds due 2035. Pursuant to a registration statement on FormF-4 (FileNo. 333-126948), which was declared effective by the SEC on January 13, 2006, the Master Trust, Petróleos Mexicanos,Pemex-Exploration and Production,Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $25,780,000 of 9 1⁄4% Bonds due 2018, U.S. $21,265,000 of 8.625% Bonds due 2023, U.S. $45,523,000 of 9.50% Bonds due 2027 and U.S. $96,254,000 of POMESSMPOMESSM due 2027. All outstanding POMES registered under these registration statements were, on March 15, 2006, mandatorily exchanged for 9.50% Bonds due 2027. Pursuant to a registration statement on FormF-4 (FileNo. 333-136674), which was declared effective by the SEC on November 3, 2006, the Master Trust, Petróleos Mexicanos,Pemex-Exploration and Production,Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $751,995,000 of 6.625% Guaranteed Bonds due 2035. We refer to the securities registered in 2006 under these registration statements as the 2006 Securities. Pursuant to a registration statement on FormF-4 (FileNo. 333-152486), which was declared effective by the SEC on December 18, 2008, the Master Trust, Petróleos Mexicanos,Pemex-Exploration and Production, Pemex-Refining andPemex-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 FormF-4 (FileNo. 333-160799), which was declared effective by the SEC on August 25, 2009, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining andPemex-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 FormF-4 (FileNo. 333-168326), which was declared effective by the SEC on August 31, 2010, Petróleos Mexicanos,Pemex-Exploration and Production,Pemex-Refining andPemex-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. $1,000,000,000 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 FormF-4 (FileNo. 333-175821), which was declared effective by the SEC on August 31, 2011, 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 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 FormF-4 (FileNo. 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 FormF-4/A (FileNo. 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. Pursuant to a registration statement on FormF-4 (FileNo. 333-198588), which was declared effective by the SEC on September 22, 2014, Petróleos Mexicanos,Pemex-Exploration and Production,Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $500,000,000 of 3.125% Notes due 2019, up to U.S. $500,000,000 of 4.875% Notes due 2024 and up to U.S. $3,000,000,000 of 6.375% Bonds due 2045. We refer to the securities registered in 2014 as the 2014 Securities. Pursuant to a registration statement on FormF-4 (FileNo. 333-205763), which was declared effective by the SEC on February 22, 2016, Petróleos Mexicanos,Pemex-Exploration and Production, Pemex Industrial Transformation, Permex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services registered pursuant to the Securities Act up to U.S. $1,500,000,000 of 3.500% Notes due 2020, up to U.S. $1,000,000,000 of 4.250% Notes due 2025, $1,500,000,000 of 4.500% Notes due 2026, up to U.S. $1,500,000,000 of 5.50% Bonds due 2044 and up to U.S. $3,000,000,000 of 5.625% Bonds due 2046. We refer to the securities registered in 2016 as the 2016 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, the 2012 Securities, the 2013 Securities and the 2014 Securities as the Registered Securities.
Pursuant to a registration statement on FormF-4 (FileNo. 333-205763), which was declared effective by the SEC on February 22, 2016, Petróleos Mexicanos,Pemex-ExplorationExploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services Pemex Logistics and Pemex Cogeneration and ServicesLogistics registered pursuant to the Securities Act up to U.S. $1,500,000,000 of 3.500% Notes due 2020, up to U.S. $1,000,000,000 of 4.250% Notes due 2025, $1,500,000,000 of 4.500% Notes due 2026, up to U.S. $1,500,000,000 of 5.50% Bonds due 2044 and up to U.S. $3,000,000,000 of 5.625% Bonds due 2046. Pursuant to a registration statement on FormF-4 (FileNo. 333-213351), which was declared effective by the SEC on November 11, 2016, Petróleos Mexicanos, Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services Pemex Logistics and Pemex Cogeneration and ServicesLogistics registered pursuant to the Securities Act up to U.S. $750,000,000 of 5.500% Notes due 2019, up to U.S. $1,250,000,000 of 6.375% Notes due 2021, up to U.S. $2,069,302,000 of 4.625% Notes due 2023, up to U.S $3,000,000,000 of 6.875% Notes due 2026, and up to U.S.$3,500,000,000 $3,500,000,000 of 6.750% Notes due 2047. We refer to the securities registered in 2016 as the 2016 Securities.
Pursuant to a registration statement on FormF-4 (FileNo. 333-220721), which was declared effective by the SEC on February 22, 2018, Petróleos Mexicanos, Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services and Pemex Logistics registered pursuant to the Securities Act up to U.S. $1,500,000,000 5.375% Notes due 2022, up to U.S. $1,000,000,000 Floating Rate Notes due 2022, up to U.S. $5,500,000,000 6.500% Notes due 2027 and up to U.S. $2,500,000,000 6.750% Bonds due 2047. Pursuant to a registration statement on FormF-4/A (FileNo. 333-227508), which was declared effective by the SEC on November 16, 2018, Petróleos Mexicanos, Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services and Pemex Logistics registered pursuant to the Securities Act up to U.S. $2,500,000,000 5.350% Notes due 2028, up to U.S. $2,000,000,000 6.500% Notes due 2029 and up to U.S. $3,328,663,000 6.350% Bonds due 2048. We refer to the securities registered in 2018 as the 2018 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, the 2012 Securities, the 2013 Securities, the 2014 Securities and the 20142016 Securities, as the Registered Securities. 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 thisForm 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 suchnon-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. Under the Mexican Income Tax Law and rules issued by the Ministry of Finance and Public Credit applicable to PEMEX, payments of interest (which are deemed to include any amounts paid in excess of the original issue price of the relevant securities), made by a Mexican issuer (including Petróleos Mexicanos) in respect of notes or bonds and other debt securities to a Foreign Holder will generally be subject to a Mexican withholding tax assessed at a rate of 4.9%, if the following requirements are met: 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 Ministry of Finance and Public Credit; such notes or bonds are placed outside of Mexico through banks or brokerage houses in a country that is party to a treaty to avoid double taxation with Mexico; and the issuer duly complies with the information requirements established in the general rules issued by the Ministry of Finance and Public Credit 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 or the subsidiary entities, except for Pemex Fertilizers and Pemex Ethylene, in respect of the Registered Securities tonon-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 its country of residence; and such fund delivers certain information as per rules issued by the Ministry of Finance and Public Credit. Additional Amounts.Petró. Petróleos Mexicanos and the subsidiary entities, except for Pemex Fertilizers and Pemex Ethylene, have agreed, subject to specified exceptions and limitations, to: pay Additional Amounts (as defined in the indenture dated as of September 18, 1997, as supplemented, 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, as supplemented, 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, as supplemented, between Petróleos Mexicanos and Deutsche Bank) to the holders of the 2009 Securities, the 2010 Securities, the 2011 Securities, the 2012 Securities, the 2013 Securities, the 2014 Securities and the 2016 Securities in respect of the Mexican withholding taxes described above. 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 required to provide certain information or documentation necessary to enable Petróleos Mexicanos and the subsidiary entities to apply the appropriate Mexican withholding tax rate applicable to holders or beneficial owners of the Registered Securities. In the event that the specified information or documentation concerning such holder or beneficial owner, if requested, is not provided on a timely basis, the obligation of Petróleos Mexicanos and the subsidiary entities to pay Additional Amounts may be limited. Taxation of Dispositions.Capital. 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. Under the Mexican Income Tax Law, any discount received by anon-resident upon purchase of the notes or bonds from a Mexican resident or anon-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. 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 a beneficial owner of a Registered Security that is 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, certainshort-term holders of Registered Securities, traders in securities electing tomark-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 “hedging” or “conversion” transaction or other integrated investment comprised of such Registered Securities and one or more other investments, nonresident aliens present in the United States for more than 182 days in a taxable year, U.S. expatriates, entities taxed as partnerships or the partners therein, persons that have a “functional currency” other than the U.S. dollar, nor does it address the tax treatment of holders that did not acquire the Registered Securities at their issue price as part of the initial distribution. Investors who purchased the Registered Securities at a price other than the issue price should consult their tax advisor as to the possible applicability to them of the amortizable bond premium or market discount rules. In addition, this summary does not discuss the application of state, local, or foreign tax laws, U.S. federal estate or gift tax laws, the Medicare contribution tax on net investment income or the alternative minimum tax. United States Holders should consult their own tax advisers concerning the U.S. federal, state, local, foreign and other tax consequences of purchasing, owning, and disposing of a Registered Security in their particular circumstances. United States Holders that use an accrual method of accounting for tax purposes (“accrual method holders”) generally are required to include certain amounts in income no later than the time such amounts are reflected on certain financial statements (the “book/tax conformity rule”). The application of the book/tax conformity rule thus may require the accrual of income earlier than would be the case under the general tax rules described below. It is not entirely clear to what types of income the book/tax conformity rule applies, or in some cases, how the rule is to be applied if it is applicable. However, recently released proposed regulations generally would exclude, among other items, original issue discount and market discount (in either case, whether or not de minimis) from the applicability of the book/tax conformity rule. Although the proposed regulations generally will not be effective until taxable years beginning after the date on which they are issued in final form, taxpayers generally are permitted to elect to rely on their provisions currently. Accrual method holders should consult with their tax advisors regarding the potential applicability of the book/tax conformity rule to their particular situation. Taxation of Interest and Additional Amounts.A. A United States Holder will treat the gross amount of interest and Additional Amounts (i.e., without reduction for Mexican withholding taxes) as ordinary interest income in respect of the Registered Securities. Mexican withholding taxes paid at the appropriate rate applicable to the United States Holder will be treated as foreign income taxes eligible, subject to generally applicable limitations and conditions, for credit against such United States Holder’s U.S. federal income tax liability, at the election of such United States Holder, or for deduction in computing such United States Holder’s taxable income, provided that the United States Holder does not elect to claim a foreign tax credit for any foreign income taxes paid or accrued for the relevant taxable year. Interest and Additional Amounts will constitute income from sources without the United States and generally will be treated separately along with other items of “passive” income for purposes of determining the credit for foreign income taxes allowed under the Internal Revenue Code of 1986, as amended. 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. Taxation of Dispositions.Upon. 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, which is generally equal to the cost of the Registered Security to the United States Holder. Gain or loss recognized by a United States Holder on the sale, redemption or other disposition of the Registered Securities generally will belong-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 thanshort-term capital gains or ordinary income. Non-United States Holders.Subject to the discussion below under “Backup Withholding and Information Reporting,” holders The deduction of the Registered Securities that are not United States Holders (which we refer to asNon-United States Holders) generally will not becapital losses is subject to U.S. federal income or withholding tax on interest income in respect of the Registered Securities or on any gain realized on the disposition of the Registered Securities.limitations.
Backup Withholding and Information Reporting.Information. Information returns may be filed with the Internal Revenue Service with respect to payments made to certain United States Holders of the Registered 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. Backup withholding is not an additional 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. The amount of any backup withholding from a payment to a United States Holder orNon-United States Holder will be allowed as a credit against the holder’s U.S. federal income tax liability and may entitle the holder to a refund, provided that the required information is timely furnished to the IRS. Specified Foreign Financial Assets.Certain. Certain United States Holders that own “specified foreign financial assets” with an aggregate value in excess of U.S. $50,000 on the last day of the taxable year or U.S. $75,000 at any time during the taxable year are generally required to file an information statement along with their tax returns, currently on Form 8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts held at anon-U.S. financial institution, as well as securities issued by anon-U.S. issuer (which would include the Registered Securities) that are not held in accounts maintained by financial institutions. Higher reporting thresholds apply to certain individuals living abroad and to certain married individuals. Regulations extend this reporting requirement to certain entities that are treated as formed or availed of to hold direct or indirect interests in specified foreign financial assets based on certain objective criteria. United States Holders who fail to report the required information could be subject to substantial penalties. In addition, the statute of limitations for assessment of tax would be suspended, in whole or part. Prospective investors should consult their own tax advisors concerning the application of these rules to their investment in the Registered Securities, including the application of the rules to their particular circumstances. 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 Form20-F, and other information with the SEC. These materials, including this report, and the exhibits thereto, may be inspected and copied at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at1-800-SEC-0330 for further information on the public reference rooms. In addition, anyAny filings we make electronically with the SEC will be available to the public over the Internet at the SEC’s web sitewebsite at http://www.sec.gov. We maintain an Internet site at the following location:http://www.pemex.com (this website address is for information only and is not intended to be an active link or to incorporate any website information into this annual report). Item 11. | Quantitative and Qualitative Disclosures About Market Risk |
QUALITATIVE DISCLOSURE Policies for Risk Management and the Use of Derivative Financial Instruments We face market risk caused by the volatility of hydrocarbon prices, exchange rates and interest rates, credit risk associated with investments and financial derivatives, as well as liquidity risk. In order to monitor and manage these risks, we have approved general provisions relating to financial risk management, which are comprised of policies and guidelines that promote an integrated framework for risk management, regulate the use of Derivative Financial Instruments (“DFIs”)(DFIs), and guide the development of risk mitigation strategies. This regulatory framework establishes that DFIs should be used only for the purpose of mitigating financial risk. The use of DFIs for any other purpose must be approved in accordance with our current internal regulation. We have a Financial Risk Committee,Working Group (FRWG) which is a joint body for consultation, opinion and decisionsspecialized working group with decision-making authority on financial risk exposure, financial risk mitigation schemes, and negotiationDFIs trading of DFIs.Petróleos Mexicanos, the subsidiary entities, and where applicable, the subsidiary companies. Approved DFIs are mainly traded on theover-the-counter (OTC) market; however, exchange traded instruments may also be used. In the case of P.M.I. Trading, DFIs are traded on CME Clearport. The different types of DFIs that we trade are described below in the subsections corresponding to each risk type and as related to the applicable trading markets. See Note 18 to our consolidated financial statements included herein. One of our policies is to contribute to minimizing the impact that unfavorable changes in financial risk factors have on our financial results by promoting an adequate balance between incoming cash flows from operations and outgoing cash flows related to our liabilities. As part of the regulatory framework for financial risk management, we have established the eligible counterparties with which we may trade DFIs and other financial instruments. In addition, certain of the PMI subsidiariesSubsidiaries have implemented a regulatory framework for risk management with respect to its activities, which consists of policies, guidelines and procedures to manage the market risk associated with its commodity trading activities in accordance with industry best practices, such as: 1) the use of DFIs for financial risk mitigation purposes; 2) the segregation of duties; 3) valuation and monitoring mechanisms, such as the generation of a daily portfolio risk report, value at risk (VaR) computation; and 4) VaR limits, both at a global and business unit level and the implementation of stop loss mechanisms. In addition, PMI Trading also has its own risk management subcommittee that supervises the trading of DFIs. Approved DFIs are mainly traded on the OTC (Over the Counter) market; however, exchange traded instruments may also be used. In the case of PMI Trading, DFIs are traded onCME-Clearport.
The different types of DFIs that we trade are described below in the subsections corresponding to each type of risk and applicable trading markets. See Note 16 to our consolidated financial statements included herein.
One of our policies is to contribute to minimizing the impact that unfavorable changes in financial risk factors have on our financial results by promoting an adequate balance between expected incoming cash flows from operations and outgoing cash flows related to our liabilities.
As part of the regulatory framework for financial risk management, we have established in our internal guidelines the counterparties that are eligible to trade DFIs and other financial instruments.
Given that the outstanding DFIs of Petróleos Mexicanos have been entered into for risk mitigation purposes, particularly with economic hedging purposes, there is no need to establish and monitor market risk limits. For those portfolios with an open market risk exposure, our financial risk management regulatory framework establishes the implementation and monitoring of market risk metrics and limits such(such as VaR, and capital at risk (an aggregation ofmark-to-market (“MtM”) and profit and loss, or CaR)among others). We have also established credit guidelines for DFIs that Pemex Industrial Transformation offers to its domestic customers, which include the use of guarantees and credit lines. For exchange traded DFIs, we trade under the margin requirements of the corresponding exchange market, and therefore do not have internal policies for these DFIs. DFIs held with financial counterparties do not require collateral exchange clauses. Notwithstanding, our regulatory framework promotes credit risk mitigation strategies such as collateral exchangeexchange. We do not have an independent third party to verify the compliance with these internal standards; however, we have internal control procedures that certify our compliance with existing policies and guidelines. Description about Valuation Techniques Fair Value of DFIs We periodically evaluate our exposure to international hydrocarbon prices, interest rates and foreign currencies and we use derivative instruments as a mitigation mechanism when potential sources of market risk are identified. We monitor the fair value of our DFI portfolio on a periodic basis. The fair value represents the price at which one party would assume the rights and obligations of the other, and is calculated for DFIs through models commonly used in the international financial markets, based on inputs obtained from major market information systems and price providers. Our DFI portfolio is composed primarily of swaps, the prices of which are estimated by discounting flows using the appropriate factors, and contains no exotic instruments that require numerical approximations for their valuation.
We value our DFIs under standard methodologies commonly applied in the financial markets, thereby Therefore, we do not have an independent third party to value our DFIs. Nonetheless, we
We calculate the fair value of our DFIs through the tools developed by our market information providers such as Bloomberg, and through valuation models implemented in software packages used to integrate all of our business areas and accounting, such as System Applicable Products (SAP)SAP (System Applications Products). We do not have no policies to designate a calculation or valuation agent. Our DFI portfolio is composed primarily of swaps, for which fair value orMark-to-Market (MtM) is estimated by projecting future cash flows and discounting them by the corresponding discount factor; for currency options, this is done through the Black and Scholes model, and for crude oil options, through the Levy model for Asian options. Because our hedges are cash flow hedges, their effectiveness is preserved regardless of the variations in the underlying assets or reference variables, thus asset flows are fully offset by liabilities flows. Therefore, it is not necessary to measure or monitor the hedges’ effectiveness. Fair value hierarchy OurWe value our DFIs using standard methodologies commonly applied in the financial markets. The fair-value assumptions fall under Level 1 and 2inputs utilized are classified in the three levels of the fair value hierarchy for market participant assumptions, as described below.
The fair values determined by Level 1 inputs utilize quoted prices in financial markets for identical assets or liabilities. Fair values determined by Level 2 inputs are based on quoted prices for similar assets or liabilities in financial markets, and inputs other than quoted prices that are observed for assets or liabilities. Level 3 inputs are unobservable inputs for the assets or liabilities, and include situations where there is little, if any, market activity for the assets or liabilities. Management uses appropriate valuation techniques based on the available inputs to measure the fair values of our applicable assets and liabilities. When available, we measure fair value using Level 1 inputs, because they generally provide the most reliable evidence of fair value. The fair-value assumptions and inputs utilized in the valuation of our DFIs’ fair value, fall under Level 2 of the fair value hierarchy. Liquidity Sources Liquidity Risk Our main internal source of liquidity comes from our operations. Additionally, through our debt planning and the purchase and sale of U.S. dollars, we currently preserve a cash balance at a level of liquidity in domestic currency and U.S. dollars that is considered adequate to cover our investment and operating expenses, as well as other payment obligations, such as those related to DFI’s.DFIs. In addition, as of December 31, 2019, we have acquired committed revolving credit lines in order to mitigate liquidity risk, two of which provide access to Ps. 3,50028,000 million and Ps. 20,0009,000 million with expiration dates in JuneNovember 2022 and November 2019, respectively,2023, respectively; and two others that each provide access to U.S. $1,500$1,950 million and U.S. $3,250$5,500 million with expiration dates in December 2019January 2021 and January 2020,June 2024, respectively. Finally, the investment strategies of our portfolios are structured by selecting time horizons that consider each currency’s cash flow requirements in order to preserve liquidity. Certain of the PMI subsidiariesSubsidiaries mitigate their liquidity risk through several mechanisms, the most important of which is the centralized treasury, or“in-house bank,” which provides access to a syndicated credit line for up to U.S. $700 million and cash surplus capacity in the custody of the centralized structure. In addition, certain of the PMI subsidiariesSubsidiaries have access to bilateral credit lines from financial institutions for up to U.S. $1,450$743 million. These companies 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. Changes in Exposure to Main Risks Market Risk We are exposed to fluctuations in floating interest rate liabilities. We are exposed to U.S. dollar LIBOR and to Mexican peso TIIE. As of December 31, 2016, approximately 18.2%2019, 15.3% of our total net debt outstanding (including DFIs) consisted of floating rate debt. Moreover, we invest 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 our obligations payable in pesos and U.S. dollars. 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 our interest rate swap agreements, we acquire the obligation to make payments based on a fixed interest rate and are entitled to receive floating interest rate payments based on LIBOR, TIIE or a rate referenced to or calculated from TIIE. As of December 31, 2016,2019, we were a party to four interest rate swap agreements denominated in U.S. dollars for an aggregate notional amount of U.S. $1,846.3$1,178.8 million at a weighted average fixed interest rate of 2.35% and a weighted average term of 8.35.3 years. Similarly, in order to eliminate the volatility associated with variable interest rates of long-term financing operations, PMI NASAPMI-NASA has executed also four interest rate swap agreements denominated in U.S. dollars for an outstanding aggregate notional amount of U.S. $86.6$40.8 million, at a weighted average fixed interest rate of 4.17% and a weighted average term of 5.42.4 years. IBOR reference rates transition As of 2022, as a result of the decision made by the Financial Stability Board (FSB), the Interbank Offered Rates (IBORs), such as the LIBOR in dollars or the EURIBOR in euros, will cease to be published and are expected to be replaced by alternative reference rates based on risk-free rates obtained from market operations. Therefore, we have identified and are reviewing contracts expiring after December 31, 2021, that could have an impact derived from the change in the aforementioned rates. To the date, we are monitoring the evolution of the IBORs transition in the market, to anticipate any negative impact that these changes could have. We have a reduced number of financial instruments (debt instruments and DFIs) referenced to floating rates in U.S. dollars and euros with maturity after December 2021. Once the alternative reference rates are defined, and therefore the new discount curves, we will be able to estimate the impact that such changes will have on financial instruments’ market value and financial cost. AMost of our revenues are denominated in U.S. dollars, a significant amount of our revenueswhich is derived from exports of crude oil and petroleum products, which are priced and payable in U.S. dollars. Moreover,Additionally, our revenues from domestic sales of gasoline and diesel net of IEPS Tax, tax duties, incentives, and other related taxes, petrochemicals andas well as domestic sales of natural gas and ourits byproducts, are
related to international U.S. dollar-denominated prices, except for domestic sales of LPG which were priced in pesos and represented less than 5% of our revenues. Nevertheless, as of 2017, these salespetrochemicals, are referenced to international U.S. dollar-denominated prices.
Our expenses related to hydrocarbon duties are calculated based on international U.S. dollar-denominated prices and the cost of hydrocarbon imports that we acquire for resale in Mexico or use in our facilities are indexed to international U.S. dollar-denominated prices. By contrast, our capital expenditure and operating expenses are established in pesos. As a result of this cash flow structure, the depreciation of the peso against the U.S. dollar increases our financial balance. The appreciation of the peso relative to the U.S. dollar has the opposite effect. We manage this risk without the need for hedging instruments, because the impact on our revenues of fluctuations in the exchange rate between the U.S. dollar and the peso is offset in whole or in part by its impact on our obligations. Cross-Currency Swaps In order to favor the cash flow structure described above, most of ourWe prioritize debt issuances denominated in U.S. dollars; nonetheless, this is not always achievable, hencenon-U.S. dollar denominated debt issued in U.S. dollars orinternational currencies is hedged through DFIs to mitigate its exchange rate exposure, either with swaps to convert the debtby swapping it into U.S. dollars or through other DFIs to mitigate our exchange rate risk exposure.derivative structures. The rest of the debt is denominated in pesos or in UDIs, and for which most of the debt denominated in UDIs, it has been converted into pesos through DFIs in order to eliminate the inflationary risk exposure.
As a consequence of the above, our debt issued in international currencies other than U.S. dollars has exchange rate risk mitigation strategies. Through theseWe have selected strategies we havethat further soughtseek to reduce our cost of funding by leaving, in some cases, part of this exchange rate exposure unhedged when assessed appropriate to reduce our cost of funding.as appropriate. The underlying currencies of our DFIs are the euro, Swiss franc, Japanese yen Poundand pounds sterling and Australian dollar, which are each swapped against the U.S. dollar and UDIs which are swapped against the peso. In 2016,As of December 31, 2019, we did not enter into any DFIs, as no debt in currencies other than U.S. dollars or pesos was issued.
Nonetheless, during 2019 we carried out the restructure of a cross-currency swap which had a recouponing provision. This DFI hedged the exchange rate exposure of a €725 million debt maturing in 2025. For this restructure we entered into, without cost, three options structures called “Seagull Options” to hedge the same notional risk as the original swap. These structures protect the short exposure in euros against an appreciation of the euro versus the U.S. dollar in a specific range and result in a benefit if the euro depreciates up to a certain exchange rate. Additionally, in order to mitigate the exchange rate risk derived from the coupons, we entered into only coupon swaps for the same notional amount. These allowed to eliminate the recouponing provision without cost. During 2018, we entered into various cross-currency swaps to hedge currencyinflation risk arising from debt obligations denominated in euros and Swiss francs for an aggregate notional amount of U.S. $3,459.2 million and the inflation risk arising from debt denominated in UDIs for an aggregate notional amount of Ps. 1,077.16,844.9 million. During 2015, Additionally, in 2018, we entered into, without cost, structures composed of a cross-currency swap and the same kindsale of instrumentsa call option, in order to hedge currencythe notional risk arising fromof four debt obligations denominatedissues in euros and Swiss francs, for an aggregate notional amount of U.S. $3,109.3€ 3,150 million, and the inflation risk arising froman issue of debt denominated in UDIs,Swiss francs for an aggregate notional amount of Ps. 9,706.9 million. Most of our cross-currency swaps are plain vanilla except for one swap entered into in 2004 to hedge our exposure to euros, which expired in 2016. This swap was referred to as an “extinguishing swap” and was 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. This swap had a notional amount of U.S. $1,146.4 million.
Moreover, in 2016 we entered into, without cost, an options structure called the “Seagull Option” in order to cover the notional risk of a debt issued in Japanese yens for ¥80,000,000, keeping the coupons in the original currency (0.5% annual coupon rate). This structure protects our short exposure to the Japanese yen against an appreciation of the Japanese yen relative to the U.S. dollar from JPY 83.70 = U.S. $1.00 andFr. 365 million, guaranteeing complete protection up to JPY 75.00 = U.S. $1.00, with the benefit of its depreciation to an average of 117.39 Japanese Yen/U.S. Dollar.a certain exchange rate and partial protection above that level.
We recorded a total net foreign exchange lossgain of Ps. 254,012.786,930.4 million in 2016, as compared tofor the year ended December 31, 2019, a total net foreign exchange lossgain of Ps. 154,765.623,659.5 million in 2015for the year ended December 31, 2018 and to a total net foreign exchange lossgain of Ps. 76,999.223,184.1 million in 2014, which includesfor the year ended December 31, 2017. These gains include unrealized foreign exchange lossgains associated with debt of Ps. 243,182.8 million, Ps. 152,554.5 million, and Ps. 78,884.7 75,967.4 million for the yearsyear ended December 31, 2016, 20152018, Ps. 19,762.2 million for the year ended December 31, 2018 and 2014, respectively.Ps. 16,685.4 million for the year ended December 31, 2017. The depreciationappreciation of the peso caused a total net foreign exchange lossgain in 20162019 because a significant portion of our debt, (83.0%88.9% (principal only) as of December 31, 2016)2019, is denominated in foreign currency. Unrealized foreign exchange lossesgains and gainslosses do not impact our cash flows. Due to the cash flow structure described above, the depreciation of the peso relative to the U.S. dollar does not affect our ability to meet U.S. dollar-denominated financial obligations and it improves our ability to meet peso-denominated financial obligations. On the other hand, the appreciation of the peso relative to the U.S. dollar may increase our peso-denominated debt service costs on a U.S. dollar basis. Our foreign exchange loss in 2016 was due to the depreciation of the peso, from Ps. 17.2065 = U.S. $1.00 on December 31, 2015 to Ps. 20.6640 = U.S. $1.00 on December 31, 2016. Our foreign exchange loss in 2015 was due to the depreciation of the peso, from Ps. 14.7180 = U.S. $1.00 on December 31, 2014 to Ps. 17.20650 = U.S. $1.00 on December 31, 2015. Our foreign exchange loss in 2014 was due to the depreciation of the peso, from Ps. 13.0765 = U.S. $1.00 on December 31, 2013 to Ps. 14.7180 = U.S. $1.00 on December 31, 2014.
Certain of the PMI subsidiariesSubsidiaries face market risks generated by fluctuations in foreign exchange rates. In order to mitigate these risks, the boards of directors of several of these companies 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. Accordingly, certain of thesome PMI subsidiariesSubsidiaries 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’sits respective functional currency. Finally, a significant amount of PMIP.M.I. 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. dollars. PMIP.M.I. 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 from certain related sales costs denominated in domestic currency. PMIP.M.I. 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, PMIP.M.I. Trading may implement risk mitigation measures by entering into DFIs.DFIs.
| (iii) | Hydrocarbon Price Risk |
We periodically assess our revenues and expenditures structure in order to identify the main market risk factors that our cash flows are exposed to in connection with international hydrocarbon prices. Based on this assessment, we monitor our exposure to the most significant risk factors and quantify their impact on our financial balance. Our exports and domestic sales are directly or indirectly related to international hydrocarbon prices. Therefore, we are exposed to fluctuations in these prices. In terms of crude oil and natural gas, part of this risk is transferred to the Mexican Government under our current fiscal regime. WeOur exposure to hydrocarbon prices is partly mitigated by natural hedges between our inflows and outflows.
Additionally, we continuously evaluate the implementation of risk mitigation strategies, including those involving the use of DFIs, while taking into account operationalconsideration their operative and economic constraints. Our exposure to crude oil prices is partly mitigated by natural hedges between our inflows and outflows. During 2016, as a result of the changes in our fiscal regime, our sensitivity to crude oil prices decreased. Nonetheless, we have been working on a hedging strategy for the coming years in order to reduce our exposure to drops in crude oil price.budgetary feasibility.
Commodity Derivatives In April2017, the Board of Directors of Petróleos Mexicanos approved the establishment of an Annual Oil Hedging Program. Since then, we have implemented hedging strategies to partially protect our cash flows from falls in the Mexican crude oil basket price below the one established in the Federal Revenue Law. During the second half of 2017, we entered into a crude oil hedge for fiscal year 2018, pursuant to partially protect our cash flows from a decrease in the Mexican crude oil basket price established in the Federal Revenue Law. Through this instrument,which we hedged 409440 thousand barrels per day from MayJanuary to December 2017of fiscal year 2018, for U.S. $133.5 million dollars. This hedging strategy provides PEMEX with protection when the monthly average price of the Mexican crude oil basket price is between U.S. $42 and U.S. $37 dollars per barrel, which is the likely price range for an adverse scenario.$449.9 million. In 2015,Afterwards, during 2018, we entered into various swaps in ordera crude oil hedge for fiscal year 2019, pursuant to hedgewhich we hedged 320 thousand barrels per day for the risk arising from the variations in the propane import price. These DFIs were held over a percentage of the total imports volume, with maturity dates in 2015. Althoughperiod between December 2018 and December 2019, for U.S. $149.6 million.
Finally, during 2019 we entered into these contracts with economic hedging purposes,a crude oil hedge for accounting purposes, these DFIs do not qualify as hedgesfiscal year 2020, pursuant to which we hedged 243 thousand barrels per day for the period between December 2019 and were recorded as trading instruments in the financial statements. During 2016 we did not enter in any propane import price swap.December 2020, for U.S. $178.3 million. In addition to supplying natural gas, Pemex Industrial Transformation 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. Until 2016, Pemex Industrial Transformation entersentered into DFIs with Mex Gas Supply, S.L. under the opposite position to those DFIs offered to its customers in order to mitigate the market risk it bears under such offered DFIs. Mex Gas Supply, S.L. then transferstransferred the related price risk derived from the DFI position held with Pemex Industrial Transformation to international financial counterparties by entering into these opposite position DFIs with such parties. Through the above mechanism,As of 2017, Pemex Industrial Transformation maintainsmust enter into DFIs with Petróleos Mexicanos under the opposite position to those DFIs offered to its customers, thereby replacing Mex Gas Supply, S.L. However, as of December 31, 2019, no DFIs have been carried out under this mechanism. As of December 31, 2019, Pemex Industrial Transformation did not have any DFIs to report since all the DFIs of its portfolios expired on December 2, 2019. During 2017, 2018 and 2019 Pemex Industrial Transformation maintained a negligible or even null exposure to market risk. Theserisk due to the mechanism explained above. DFI portfolios have VaR and CaR limits in order to limit market risk exposure.exposure in case of entering into new trades. PMIP.M.I. 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 mitigate this risk, thereby reducing the volatility of its financial results.
In accordance with the risk management regulatory framework that PMIP.M.I. 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. (iv) | Risks Related to the Portfolio of Third-Party Shares |
As of December 31, 2016, Petróleos Mexicanos does not hold any third-party shares of companies that do not report on the financial markets and, therefore, does not hold any related DFIs. On May 2014, we held a synthetic long position on 67,969,767 shares of Repsol, with the objective of maintaining corporate and economic rights over these shares. We accomplished this by using a total return swap under which we paid variable amounts and received a total return on the Repsol shares. Under these DFIs, we were entitled to any capital gains associated with the Repsol shares and agreed to cover our counterparties for any capital losses relating to those shares in reference to an exercise price, as well as to make payments at a floating interest rate. On June 3, 2014, we made an early termination of this DFI. Following this termination, Petróleos Mexicanos no longer directly participates in Repsol.
As of December 31, 2016, PMI HBV owned 22,221,893 Repsol shares and P.M.I. Holdings Petróleos España, S.L. holds one for a total of 22,221,894 shares. These shares have no related DFIs.
Counterparty or Credit Risk When the fair value of a DFI is favorable to us, we face the risk that the counterparty will not be able to meet its obligations. We monitor our counterparties’ creditworthiness and calculate the credit risk exposure for our DFIs. As a risk mitigation strategy, we only enter into DFIs with major financial institutions with a minimum credit rating ofBBB-. These ratings are issued and revised periodically by risk rating agencies. Furthermore, we seek to maintain a diversified portfolio of counterparties. In order to estimate our credit risk exposure to each financial counterparty, the potential future exposure is calculated by projecting the risk factors used in the valuation of each DFI in order to estimate the MtM value for different periods, taking into account any credit risk mitigation provisions. 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 MtM exceeds the relevant threshold specified in the swap), thereby limiting our exposure with our counterparties to a specific threshold amount.amount, as well as the counterparties’ exposure to us. The specified thresholds were reached in fivethree cross-currency swaps from the first to the fourth quarter of 2016,during 2019, which were used to hedge the exchange rate exposure to the euro and to the Poundpounds sterling, and in nineseven cross-currency swaps during 2015,2018, which were used to hedge the exchange rate exposure to the euro and to the Australian dollar.pounds sterling. This resulted in the cash settlement of such swaps and the resetting of swap terms to return theirmark-to-market value to zero. During 2016,2019, we did not enter into any cross-currency swap with these characteristics. In addition, during 2016 we have entered into long-term DFIs with mandatory early termination clauses (pursuant to which, at a given date and irrespective of the then current MtM, the DFI will terminate and settle at the corresponding MtM, and we can either enter into a new DFI with the same counterparty or a new counterparty), which reduces the credit risk generated by the term of the DFI by bounding it to a specific date. As of December 31, 2016,2019, we have entered into three euro swaps and two Japanese yen Seagull Option structures, with early termination clauses in 2018 and 2021, respectively.2021. According to IFRS 13 “Fair Value Measurement,” the fair value or MtM 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 obligation. In accordance with market best practices,Due to the above, we apply the credit value adjustment (“CVA”)(CVA) method to calculate the fair value of our DFIs. For each DFI, the CVA is calculated by determining the difference between the MtM and the estimated MtM adjusted for credit risk. In determining the credit risk, the CVA method takes into account the current market perception about the credit risk of both counterparties, using the following inputs: (a)a) the MtM projection for each payment date based on forward yield curves; (b)b) the implied default probability obtained from both usour and the counterparty’s credit default swaps, at each payment date; and (c)c) the default recovery rates of each counterparty. Furthermore, by means of its credit guidelines for DFI operations, Pemex Industrial Transformation 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 price volatility of natural gas.DFIs. In order to qualify for these DFIs, Pemex Industrial Transformation’s customers must be party to a current natural gas supply contract and sign a domestic master derivative agreement. Additionally, beginning on 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 arewould be terminated, rights to collateral are exercised and, if the collateral iswas insufficient to cover the fair value, natural gas supply iswould be suspended until the payment is made. On August 20, 2014, certain amendments to the credit guidelines were enacted, which allowedPemex-Gas and Petrochemicals, and now Pemex Industrial Transformation, to offer to its clients with an adequate credit rating, based on an internal financial and credit assessment, DFIs with an exemption from collateral requirements up to certain amount through a credit line approved by the credit committee. Moreover, if the credit line is insufficient to cover each client’s exposure, the client is obligated to deposit collateral. If a client suffers an event of default, DFIs related to this client are terminated early and natural gas supply is suspended until the payment is made. As of December 31, 2019, Pemex Industrial Transformation had no DFIs since all the DFIs of its portfolios expired on December 2, 2019. As such, once the total settlement of the operations was carried out, the exempt credit lines expired and the guarantees deposited by the clients were entirely returned. PMIP.M.I. Trading’s credit risk associated with DFI transactions is minimizedmitigated through the use of futures and standardized instruments that are cleared throughCME-Clearport. CME Clearport.
Accounting Standards Applied and the Impact on Results We enter into derivatives transactions with the sole purpose of hedging financial risks related to our operations, firm commitments, planned transactions and assets and liabilities recorded on our statement of financial position. Nonetheless, some of these transactions do not qualify for hedge accounting treatment because they do not meet the requirements of the accounting standards for being designated as hedges. They are therefore recorded in the financial statements asnon-hedge instruments or as instruments entered into for trading purposes, despite the fact that their cash flows are offset by the cash flows of the positions (assets or liabilities) to which they are related. As a result, the changes in their fair value are recognized in the “Derivative financial instruments (cost) income—income, net” line item in the consolidated statement of comprehensive income. As of December 31, 20162019 and 2015,2018, the net fair value of our DFIs including(including both DFIs that have not reached maturity and those that have reached maturity but have not been settled,settled), recognized in our consolidated statement of financial position, was Ps. (26,010.5)(5,153.8) million and Ps. (25,699.6)6,487.0 million, respectively. As of December 31, 20162019 and 2015,2018, we did not have any DFIs designated as hedges. See Note 1618 to our consolidated financial statements included herein. For the yearsyear ended December 31, 2016, 2015 and 2014,2019, we recognized a net loss of Ps. 14,001.0, Ps. 21,449.923,263.9 million, and for the year ended December 31, 2018, we recognized a net loss of Ps. 9,438.622,258.6 million, respectively, in the “Derivative financial instruments (cost) income, net” line item with respect to DFIs treated as instruments entered into for trading purposes. According to established accounting policies, we have analyzed the different contracts that we have entered into and have determined that according to the terms thereof none of these agreements meet the criteria to be classified as embedded derivatives. Accordingly, as of December 31, 20162019 and 2015,2018, we did not recognize any embedded derivatives (foreign currency or index). As of December13, 2019 and 2018, we recognized a gain (loss) of Ps. 4,751.9 million and Ps. (3,142.7) million, respectively, in the “Derivative financial instruments (cost) income, net” line item which resulted from changes in the fair value of accounts receivable from the sale of hydrocarbons whose performance obligations have been met and whose determination of the final price is indexed to future prices of the hydrocarbons. QUANTITATIVE DISCLOSURE Fair Value The following tables show our cash flow maturities as well as the fair value of our debt and DFI portfolios as of December 31, 2016.2019. It should be noted that: For debt obligations, these tables present principal cash flow and the weighted average interest rates for fixed rate debt. For interest rate swaps, cross-currency swaps and currency options, 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 millions of British thermal units (MMBtu), and fixed average and strike prices are presented in U.S. dollars per MMBtu. ADFI’sFor crude oil, volumes are presented in millions of barrels, and fixed average and strike prices are presented in U.S. dollars per barrel. DFI’s fair value includes CVA and is calculated based on market quotes obtained from market sources such as ReutersBloomberg and Bloomberg. Forward curves for natural gas are supplied by the Kiodex Risk Workbench platform.Proveedor Integral de Precios, S.A. de C.V. (PIP). For PMIP.M.I. Trading, the prices used in commercial transactions and DFIs are published by reputable sources that are widely used in international markets, such asCME-NYMEX, Platts and Argus, among others. Fair value is calculated internally, either by discounting cash flows with the correspondingzero-coupon yield curve in the original currency, or through other standard methodologies commonly used in financial markets for specific instruments. For all instruments, the tables are based on the contract terms in order to determine the future cash flows that are categorized by expected maturity dates. This information is presented in thousands of pesos (except as noted).
*Quantitative Disclosure of Debt Cash Flow’sFlow Maturities as of December 31, 20162019(1)
| | | Year of expected maturity date | | 2022 Thereafter | | | Total carrying value | | | Fair value | | | Year of expected maturity date | | | | 2017 | | 2018 | | 2019 | | 2020 | | 2021 | | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | 2025 Thereafter | | Total Carrying Value | | Fair Value | | Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Outstanding debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fixed rate (U.S. dollars) | | Ps. 15,759,027 | | | Ps. 86,161,096 | | | Ps. 65,642,616 | | | Ps. 62,440,943 | | | Ps. 98,858,992 | | | Ps. 826,093,574 | | | Ps.1,154,956,248 | | | Ps.1,137,936,275 | | | Ps. 52,874,594 | | | Ps. 36,474,941 | | | Ps. 36,288,484 | | | Ps. 51,814,555 | | | Ps. 24,377,105 | | | Ps. 959,097,000 | | | Ps.1,160,926,679 | | | Ps.1,233,260,685 | | Average interest rate (%) | | | | | | | | | | | | | | 5.6541 | % | | | | | | | | | | | | | | | | 6.2535 | % | | | | Fixed rate (Japanese yen) | | 517,286 | | | | — | | | | — | | | | — | | | | — | | | 19,459,306 | | | 19,976,592 | | | 17,336,203 | | | | — | | | | — | | | | — | | | 5,202,000 | | | | — | | | 13,848,692 | | | 19,050,692.00 | | | 17,812,094 | | Average interest rate (%) | | | | | | | | | | | | | | 1.3665 | % | | | | | | | | | | | | | | | | 1.3483 | % | | | | Fixed rate (Pounds) | | | — | | | | — | | | | — | | | | — | | | | — | | | 8,825,434 | | | 8,825,434 | | | 11,373,345 | | | Fixed rate (pounds sterling) | | | | — | | | | — | | | 8,725,102 | | | | — | | | | — | | | 11,157,892 | | | 19,882,994.00 | | | 21,733,929 | | Average interest rate (%) | | | | | | | | | | | | | | 8.2500 | % | | | | | | | | | | | | | | | | 5.7247 | % | | | | Fixed rate (pesos) | | | — | | | | — | | | | — | | | 10,048,950 | | | 20,457,671 | | | 90,393,507 | | | 120,900,128 | | | 160,930,040 | | | 10,009,595 | | | 20,004,204 | | | 1,999,293 | | | | — | | | 57,381,081 | | | 30,985,764 | | | 120,379,937.00 | | | 114,148,170 | | Average interest rate (%) | | | | | | | | | | | | | | 7.4878 | % | | | | | | | | | | | | | | | | 7.4867 | % | | | | Fixed rate (UDIs) | | | — | | | | — | | | 17,319,897 | | | 4,464,787 | | | 3,630,557 | | | 28,288,180 | | | 53,703,421 | | | 50,809,979 | | | 5,137,194 | | | 4,183,481 | | | | — | | | | — | | | | — | | | 32,067,846 | | | 41,388,521.00 | | | 37,209,163 | | Average interest rate (%) | | | | | | | | | | | | | | 4.0559 | % | | | | | | | | | | | | | | | | 4.0514 | % | | | | Fixed rate (euros) | | 26,006,880 | | | | — | | | 29,198,138 | | | 28,061,554 | | | | — | | | 123,886,644 | | | 207,153,216 | | | 216,100,006 | | | 27,490,652 | | | 36,993,461 | | | 33,752,122 | | | 29,564,507 | | | 26,321,684 | | | 136,705,664 | | | 290,828,090.00 | | | 314,159,720 | | Average interest rate (%) | | | | | | | | | | | | | | 3.9581 | % | | | | | | | | | | | | | | | | 3.7095 | % | | | | Fixed rate (Swiss Francs) | | | — | | | 4,539,022 | | | 6,056,338 | | | 12,102,748 | | | 3,031,480 | | | | — | | | 25,729,588 | | | 26,469,543 | | | 11,669,169 | | | 2,920,578 | | | | — | | | 7,081,249 | | | | — | | | | — | | | 21,670,996.00 | | | 22,167,273 | | Average interest rate (%) | | | | | | | | | | | | | | 1.8385 | % | | | | | | | | | | | | | | | | 1.6996 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fixed rate (Australian dollars) | | 2,232,195 | | | | — | | | | — | | | | — | | | | — | | | | — | | | 2,232,195 | | | 2,346,390 | | | Average interest rate (%) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 6.1250 | % | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total fixed rate debt | | | 44,515,388 | | | | 90,700,118 | | | | 118,216,989 | | | | 117,118,982 | | | | 125,978,700 | | | | 1,096,946,645 | | | | 1,593,476,822 | | | | 1,623,301,781 | | | 107,181,204 | | | 100,576,665 | | | 80,765,001 | | | 93,662,311 | | | 108,079,870 | | | 1,183,862,858 | | | 1,674,127,909 | | | 1,760,491,034 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable rate (U.S. dollars) | | 38,811,320 | | | 27,907,661 | | | 15,984,547 | | | 52,726,647 | | | 13,366,336 | | | 45,385,885 | | | 194,182,396 | | | 195,838,382 | | | 37,129,938 | | | 14,165,499 | | | 23,671,360 | | | 10,931,702 | | | 53,275,137 | | | 14,051,426 | | | 153,225,062 | | | 153,747,749 | | Variable rate (Japanese yen) | | | — | | | | — | | | | — | | | 11,341,440 | | | | — | | | | — | | | 11,341,440 | | | 11,025,531 | | | 11,097,600 | | | | — | | | | — | | | | — | | | | — | | | | — | | | 11,097,600 | | | 11,112,957 | | Variable rate (euros) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 983,647 | | | | — | | | | — | | | 13,734,663 | | | | — | | | | — | | | 14,718,310 | | | 14,969,735 | | Variable rate (pesos) | | 65,024,075 | | | 8,742,191 | | | 28,007,709 | | | 18,347,822 | | | 8,468,176 | | | 27,764,693 | | | 156,354,666 | | | 158,109,920 | | | 55,384,990 | | | 8,456,465 | | | 8,435,081 | | | 6,991,763 | | | 10,600,586 | | | 6,989,516 | | | 96,858,401 | | | 96,135,647 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total variable rate debt | | | 103,835,395 | | | | 36,649,852 | | | | 43,992,256 | | | | 82,415,909 | | | | 21,834,512 | | | | 73,150,578 | | | | 361,878,502 | | | | 364,973,833 | | | 104,596,175 | | | 22,621,964 | | | 32,106,441 | | | 31,658,128 | | | 63,875,723 | | | 21,040,942 | | | 275,899,373 | | | 275,966,088 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total debt | | | Ps. 148,350,783 | | | | Ps.127,349,970 | | | | Ps.162,209,245 | | | | Ps.199,534,891 | | | | Ps.147,813,212 | | | | Ps.1,170,097,223 | | | | Ps.1,955,355,324 | | | | Ps.1,988,275,614 | | | Ps.211,777,379 | | | Ps.123,198,629 | | | Ps.112,871,442 | | | Ps.125,320,439 | | | Ps.171,955,593 | | | Ps.1,204,903,800 | | | Ps.1,950,027,282 | | | Ps.2,036,457,122 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note: | Numbers may not total due to rounding. |
Note: Numbers may not total due to rounding. (1) | The information in this table has been calculated using exchange rates at December 31, 20162019 of: Ps. 20.66418.8452 = U.S. $1.00; Ps. 0.177210.1734 = 1.00 Japanese yen; Ps. 25.3051324.9586 = 1.00 Poundpounds sterling; Ps. $ 5.5628836.399018 = 1.00 UDI; Ps. 21.672421.1537 = 1.00 euro; and Ps. 20.19744=19.4596 = 1.00 Swiss Franc; and Ps. 14.88428 = 1.00 Australian dollar.Franc. |
Source: PEMEX.
Quantitative Disclosure of Cash Flow’sFlow Maturities from Derivative Financial Instruments Held or Issued for Purposes other Other than Trading as of December 31, 20162019(1)(2) | | | Year of expected maturity date | | Total notional amount | | | Fair value(4) | | | Year of expected maturity date | | | | 2017 | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 Thereafter | | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | 2025 Thereafter | | Total Notional Amount | | Fair Value(3) | | Hedging instruments(2)(4) | | | | | | | | | | | | | | | | | | Hedging instruments(2)(4) | | | | | | | | | | | | | | | | | | Interest rate DFIs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate swaps (U.S. dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable to fixed | | Ps.4,899,645 | | | Ps.4,912,743 | | | Ps.4,926,477 | | | Ps.4,940,613 | | | Ps. 4,894,180 | | | Ps. 15,365,634 | | | Ps.39,939,292 | | | Ps.164,716 | | | Average pay rate | | 2.76 | % | | 2.66 | % | | 3.35 | % | | 3.83 | % | | 4.04 | % | | 4.57 | % | | N.A. | | | N.A. | | | Average receive rate | | 2.95 | % | | 2.99 | % | | 3.03 | % | | 3.06 | % | | 3.11 | % | | 3.33 | % | | N.A. | | | N.A. | | | Interest rate swaps (pesos) | | | | | | | | | | | | | | | | | | Variable to fixed | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | Ps.4,505,751 | | | Ps.4,463,405 | | | Ps.4,352,614 | | | Ps.4,219,019 | | | Ps.3,133,015 | | | Ps.2,308,537 | | | Ps.22,982,341 | | | Ps.(99,231 | ) | Average pay rate | | N.A. | | | N.A. | | | N.A. | | | N.A. | | | N.A. | | | N.A. | | | N.A. | | | N.A. | | | 3.20 | % | | 3.22 | % | | 3.25 | % | | 3.37 | % | | 3.68 | % | | 4.13 | % | | n.a. | | | n.a. | | Average receive rate | | N.A. | | | N.A. | | | N.A. | | | N.A. | | | N.A. | | | N.A. | | | N.A. | | | N.A. | | | 3.00 | % | | 2.80 | % | | 2.94 | % | | 3.17 | % | | 3.67 | % | | 4.36 | % | | n.a. | | | n.a. | | Currency DFIs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cross-currency swaps | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Receive euros/Pay U.S. dollars | | 34,775,198 | | | | — | | | 31,223,821 | | | 29,992,556 | | | | — | | | 133,024,913 | | | 229,016,488 | | | (16,484,533 | ) | | 27,352,677 | | | 35,146,769 | | | 33,626,604 | | | 43,975,261 | | | 25,095,682 | | | 141,792,559 | | | 306,989,551 | | | (6,129,828 | ) | Receive Japanese yen/ Pay U.S. dollars | | 532,711 | | | | — | | | | — | | | 17,697,534 | | | | — | | | 4,987,289 | | | 23,217,534 | | | (6,132,633 | ) | | Receive Pounds sterling/ Pay U.S. dollars | | | — | | | | — | | | | — | | | | — | | | | — | | | 10,767,349 | | | 10,767,349 | | | (211,207 | ) | | Receive Japanese yen / Pay U.S. dollars | | | 12,419,108 | | | | — | | | | — | | | 4,548,319 | | | | — | | | | — | | | 16,967,427 | | | (1,087,602 | ) | Receive Pounds sterling / Pay U.S. dollars | | | | — | | | | — | | | 9,204,373 | | | | — | | | | — | | | 11,149,951 | | | 20,354,324 | | | 516,780 | | Receive UDI/ Pay pesos | | | — | | | | — | | | 23,740,341 | | | 3,540,220 | | | 3,000,000 | | | 14,313,198 | | | 44,593,759 | | | (2,132,236 | ) | | 7,292,520 | | | 3,000,000 | | | | — | | | | — | | | | — | | | 27,450,032 | | | 37,742,553 | | | 3,116,439 | | Receive Swiss francs/ Pay U.S. dollars | | | — | | | 4,736,567 | | | 6,789,326 | | | 12,060,700 | | | 3,127,139 | | | | — | | | 26,713,732 | | | (789,449 | ) | | Receive Australian dollars/ Pay U.S. dollars | | 2,459,429 | | | | — | | | | — | | | | — | | | | — | | | | — | | | 2,459,429 | | | (126,796 | ) | | Receive Swiss francs/ | | | | | | | | | | | | | | | | | | Pay U.S. dollars | | | 10,999,144 | | | 2,851,895 | | | | — | | | 6,878,498 | | | | — | | | | — | | | 20,729,537 | | | 797,159 | | Currency Options | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Buy Put, Sell Put and sell Call on yen | | | — | | | | — | | | | — | | | | — | | | | — | | | 14,133,580 | | | 14,133,580 | | | (301,131 | ) | | Buy Put, Sell Put and Sell Call on Japanese yen | | | | — | | | | — | | | | — | | | | — | | | | — | | | 13,881,133 | | | 13,881,133 | | | 123,244 | | Buy Call, Sell Call and Sell Put on euros | | | | — | | | 36,978,146 | | | | — | | | | — | | | 26,412,961 | | | 41,732,479 | | | 105,123,586 | | | 360,731 | | Sell Call on pounds sterling | | | | — | | | | — | | | | — | | | | — | | | | — | | | 11,242,387 | | | 11,242,387 | | | (81,137 | ) | Sell Call on Swiss Francs | | | | — | | | | — | | | | — | | | 7,116,252 | | | | — | | | | — | | | 7,116,252 | | | (74,535 | ) | Sell Call on Euros | | | | — | | | | — | | | 12,678,221 | | | 13,734,740 | | | | — | | | 40,147,701 | | | 66,560,662 | | | (1,223,283 | ) |
Notes: | Numbers may not total due to rounding. |
N.A. = not applicable. Numbers may not total due to rounding. (1) | The information in this table has been calculated using the exchange raterates at December 31, 20162019 of: Ps. 20.66418.8452 = U.S. $1.00 and Ps. 21.672421.1537 = 1.00 euro. |
(2) | Our management usesWe use these DFIs to hedge market risk; however, these DFIs do not qualify for accounting purposes as hedges and are recorded in the financial statements as entered into for trading purposes. |
(3) | Positive numbers represent a favorable fair value to us. |
(4) | PMI’sThe PMI Subsidiaries’ risk management policies and procedures establish that DFIs should be used only for hedging purposes; however, DFIs are not recorded as hedges for accounting purposes. |
Source: PEMEX.
Quantitative Disclosure of Cash Flow’sFlow Maturities from Derivative Financial Instruments (Natural Gas)(Petroleum Products) Held or Issued for Purposes other than Trading as of December 31, 20162019(1)(2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | 2021 | | | 2022 Thereafter | | | Total Volume | | | Fair Value(2) | | | | (in MMBtu, except that average fixed and strike prices are in U.S. $ per MMBtu) | | | (in thousands of nominal pesos) | | Derivatives entered into with Customers of Pemex Industrial Transformation | | Short | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | European Call Option | | | (789,475 | ) | | | (270,200 | ) | | | (13,750 | ) | | | — | | | | — | | | | — | | | | (1,073,425 | ) | | | (11,488 | ) | Average strike price | | | 3.32 | | | | 3.29 | | | | 3.81 | | | | — | | | | — | | | | — | | | | 3.32 | | | | n.a. | | Variable to Fixed Swap(3) | | | (1,899,650 | ) | | | (738,488 | ) | | | (62,364 | ) | | | — | | | | — | | | | — | | | | (2,700,502 | ) | | | (25,145 | ) | Average fixed price | | | 2.89 | | | | 2.80 | | | | 2.96 | | | | — | | | | — | | | | — | | | | 2.87 | | | | n.a. | | Long | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | European Call Option | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Average strike price | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | Derivatives entered into with Third Parties to Offset Transactions entered into with Customers | | Short | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | European Call Option | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Average strike price | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | n.a. | | Long | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | European Call Option | | | 789,475 | | | | 270,200 | | | | 13,750 | | | | — | | | | — | | | | — | | | | 1,073,425 | | | | 11,548 | | Average strike price | | | 3.32 | | | | 3.29 | | | | 3.81 | | | | — | | | | — | | | | — | | | | 3.32 | | | | n.a. | | Variable to Fixed Swap(4) | | | 1,899,650 | | | | 738,488 | | | | 62,364 | | | | — | | | | — | | | | — | | | | 2,700,502 | | | | 27,869 | | Average fixed price | | | 2.85 | | | | 2.75 | | | | 2.93 | | | | — | | | | — | | | | — | | | | 2.82 | | | | n.a. | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 | | | 2021 | | | 2022 | | | 2023 | | | 2024 | | | 2025 Thereafter | | | Total Volume | | | Fair Value (2) | | | | (in thousands of barrels) | | | (in thousands of nominal pesos) | | Hedging Instruments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Exchange-traded futures(3)(5) | | | 2.4 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2.4 | | | | (124,835 | ) | Exchange-traded swaps(4)(5) | | | 4.3 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 4.3 | | | | (318,410 | ) |
Notes: | Note: Numbers may not total due to rounding. |
N.A. = not applicable.
(1) | The information in this table has been calculated using the exchange rate at December 31, 20162019 of: Ps. 20.66418.8452 = U.S. $1.00.$1.00 |
(2) | Positive numbers represent a favorable fair value to us.P.M.I. Trading. |
(3) | Under short variable to fixed swaps entered into with customers of Pemex Industrial Transformation, we will pay a variable price and receive the fixed price specified in the contract.Net position. |
(4) | Under long variable to fixed swaps entered into with customers of Pemex Industrial Transformation, we will pay the fixed price specified in the contract and receive a variable price. |
Source: Pemex Industrial Transformation
Quantitative Disclosure of Cash Flows’ Maturities from Derivative Financial Instruments (Petroleum Products) Held or Issued for Purposes other than Trading as of December 31, 2016(1)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | 2021 | | | 2022 Thereafter | | | Total Volume | | | Fair Value(2) | | | | | | | (in thousands of barrels) | | | (in thousands of nominal pesos) | | Hedging Instruments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Exchange-traded futures(3) (5) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Exchange-traded swaps(4) (5) | | | 4.1 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 4.1 | | | | (688,016 | ) |
Note: Numbers may not total due to rounding.
(1) | The information in this table has been calculated using the exchange rate at December 31, 2016 of: Ps. 20.664 = U.S. $1.00. |
(2) | Positive numbers represent a favorable fair value to PMI Trading. |
(4) | Swaps registered in CME Clearport are included in these figures. |
(5) | The balance of these financial instruments is recognized as cash and cash equivalents. PMIP.M.I. Trading considered these financial assets to be fully liquid. |
Source: P.M.I. Trading, Ltd.
Sensitivity Analysis We have entered into DFIs with the purpose to completely mitigate the market risk for specific flows or predetermined volumes associated with our operations. Our DFIs have the same characteristics (e.g. underlying assets, payment dates, amounts, or volumes) as the hedged position, but with the opposite exposure to the market risk factors. As a result of these mitigation strategies, we have a negligible sensitivity to the hedged market risk factors. See Note 1618 from our consolidated financial statements included herein. As discussed above, becauseGiven that our hedges are cash flow hedges, their effectiveness is maintained regardless of variations in the underlying assets or reference variables. Accordingly, overvariables since, through time, asset flows are fully offset by liabilities flows. Therefore, it is not necessary to measure or monitor the hedge effectiveness.
Natural gas DFIs that Pemex Industrial Transformation offers to its domestic customers are reported as transactions with trading purposes. However, such operations are fully compensated by the operations entered into with their financial counterparts through Petróleos Mexicanos, which replaced Mex Gas Supply, S.L. Through this mechanism(back-to-back),as of 2017. During 2019, Pemex Industrial Transformation maintainsmaintained a negligible or even null exposure to market risk exposure, so we dodue to this mechanism(back-to-back). As of December 31, 2019, Pemex Industrial Transformation did not considerhave any DFIs to report since all the DFIs of its portfolios expired on December 2, 2019. As such, it is not necessary to conduct either a sensitivity analysis or to measure or monitor the hedge effectiveness. Other DFIs seek to fix hydrocarbons prices,hedge the changes in the price of the commercialized products, such that the DFIs’ underlying assets arehave correlations with the same as thoseprices of the products involved in commercialization. P.M.I. Trading estimates the commercialization, so we do not consider it necessary to conduct either a sensitivity analysis or to measure or monitor the hedge effectiveness.VaR of these DFIs. Notably, the price fixing DFIs of PMIP.M.I. Trading (crude and oil)(all of them related to petroleum derivatives), are classified under cash and cash equivalents for accounting purposes due to their liquidity. Item 12. | Description of Securities Other than Equity Securities |
Not applicable. PART II Item 13. | Defaults, Dividend Arrearages and Delinquencies |
None. Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds |
None. Item 15. | Controls and Procedures |
(a) | Disclosure Controls and Procedures |
We carried out an evaluation under the supervision and with the participation of our management, including ourDirector General (chief executive officer)(Chief Executive Officer or CEO) and our ChiefDirector Corporativo de Finanzas (Chief Financial Officer or CFO), of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2016.2019. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, effective disclosure controls and procedures can provide only reasonable assurance of achieving their control objectives. Based upon our evaluation, our CEO and because of the material weakness in internal control over financial reporting described below, our Director General and our Chief Financial OfficerCFO concluded that our disclosure controls and procedures as of December 31, 20162019 were not effective to provide reasonable assurance that information required to be disclosed in the reports we filedfile and submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including Director Generalour CEO and our Chief Financial Officer,CFO, as appropriate, to allow timely decisions regarding required disclosures. (b) | Management’s Annual Report on Internal Control over Financial Reporting |
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Our internal control over financial reporting includes those policies and procedures that: | (1) | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; |
| (2) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS in accordanceand with Item 18 of Form20-F, and that our receipts and expenditures are being made only in accordance with authorizations of management and directors of the relevant entity; and |
| (3) | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness tofor future periods are subject to the risk that the related controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We conducted an assessment of the effectiveness of our internal controls over financial reporting as of December 31, 2016.2019. In making this assessment, management used the criteria set for in the “Internal Control—Integrated Framework” published by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, supplemented for information technologies with the guidelines suggested byIT Control Objectives for Sarbanes-Oxley (3rd Edition)Edition), published by the Information Systems Audit and Control Association which were(ISACA) in effect as of December 31, 2015.2014. Management relied on Auditing StandardsStandard No. 2 and 52201 of the PCAOB in order to create an appropriate framework to evaluate the effectiveness of the design and operation of our internal control over financial reporting. Management concluded that our internal control over financial reporting was not effective as of December 31, 2016. Based2019. Remediation We previously reported two material weaknesses in internal control over financial reporting in our annual report on Form20-F for the year ended December 31, 2018. As described further below, our assessmentmanagement has concluded that these material weaknesses were remediated. Remediation Plan Relating to Fuel Loss and criteria,Illicit Fuel Market Our management concluded that, as of December 31, 2018, a material weakness existed in our internal control over financial reporting due to the ineffectiveness of the design and implementation of controls providing reasonable assurances regarding prevention of unauthorized disposition of assets by having certain employees involved in the illicit market in fuels, which could have a material effect on our financial statements. During 2018, we experienced a significant increase in fuel subtraction losses from the illicit fuel market due in part to the ineffectiveness of our internal controls. Although formal governmental procedures exist for reporting illegal activity to the authorities, we did not have in place internal procedures to detect and investigate such matters. For the year ended December 31, 2018, we recognized losses in the amount of Ps. 39.4 billion resulting from the illicit market in fuels. In response to the material weakness described above, we executed a remediation plan that included, among others: Prevention of unauthorized disposition of assets: The Board of Directors of Petróleos Mexicanos approved in November 2019 our new corporate compliance program,Pemex Cumple, which supersedes our prior corporate compliance program.Pemex Cumpleis based on international best practices. We have a zero tolerance policy for acts of bribery and corruption andPemex Cumple aims, among other aspects, to mitigate risks, to implement employee training campaigns, to produce ethical chains with suppliers, contractors, service providers, clients, investors and in general any third party with which we hold commercial and business relations and thus to improve society’s confidence in us through the following objectives: | (1) | Strengthen the ethical behavior of the corporate body and our personnel; |
| (2) | Prevent and mitigate risks and sanction the acts of bribery and corruption; |
| (3) | Promote a culture of compliance with the applicable laws and regulations, assess the soundness of the controls and/or perform periodic audits to verify that the controls are efficient; and |
| (4) | Promote transparency and accountability, safekeeping the rights of the data owners to the privacy of their information. |
To this effect, the Board of Directors of Petróleos Mexicanos instructed the management to coordinate quarterly reports to the Board. Specific actions of that program include: operation of an ethics tip line, which can be accessed via telephone or online at the Pemex website, which allows any of our employees or third parties to file reports or ask for counsel regarding any conduct that may relate to or constitute a violation of our Code of Ethics, Code of Conduct, anticorruption policy or other Pemex policies. Anonymous reporting is allowed, and we have a no retaliation policy. Reports filed are revised and studied by a multidisciplinary body and taken per the operations rules to our Ethics Committee. Per the rules for the operation of the Ethics Committee, the analyst group is composed of officers from different areas including our legal department, human resources department and the Liabilities Unit at Petróleos Mexicanos (part of the SFP). Said group studies and investigates the cases reported and, in case any violation to the codes and policies is found, sanctions are imposed. In case of any administrative faults, they are reported to the Liabilities Unit at Petróleos Mexicanos for its own investigation. The Liabilities Unit at Petróleos Mexicanos imposes sanctions and any illicit activity that has been committed is reported to the relevant prosecutor’s office. In addition to alerting the authorities of any known facts that may constitute illegal actions, we entrust ad hoc independent internal investigations to evaluate compliance with applicable laws and regulations regarding specific matters that may impair business from the commercial or financial standpoints or bring reputational risks. Upon the conclusion of the investigations, findings are made known to our Board of Directors and, if any illicit activity is found, the authorities are informed. The investigations’ findings are used to enhance our corporate compliance program and to collaborate with relevant authorities to fight against acts of bribery and corruption and protect our interests and reputation. In addition to the actions we have taken to prevent the unauthorized disposition of assets referred to above, our remediation plan has also included, among other actions: | (1) | The design and implementation of formal internal procedures to detect and investigate incidents related to the illicit fuel market. |
| (2) | The update of the “Procedure to apply the criteria to be followed when there are variations in the operation of pipeline transportation systems.” |
| (3) | The implementation of policies and procedures for handling events related to clandestine takings and the illicit fuel market. |
| (4) | The strengthening of measurement controls and balances, through the dissemination and implementation of policies and guidelines on measurement and balances, as well as their instructions. |
| (5) | Updating the Guidelines to implement the exercise of the Institutional Legal Function, Policies and Procedures for dealing with events related to clandestine takings and the illicit fuel market in Petróleos Mexicanos and its subsidiary entities. |
As further described above, we also have a special tip line for the reporting of complaints and established additional mechanisms dedicated to monitoring and investigating these incidents, and we allocated additional capital and human resources to these remediation plans. In addition, the Mexican Government adopted additional measures aimed at further preventing and eliminating the illicit fuel market. See “Item 8—Financial Information—Legal Proceedings—Actions Against the Illicit Market in Fuels.” All of these actions led us to a significant decrease in fuel losses resulting from the illicit fuel market, from Ps. 39.4 billion in 2018 to Ps. 4.6 billion in 2019. However, we continue our efforts to prevent unauthorized disposal of assets in all areas involved in this process. Remediation relating to Asset Impairment Our management also concluded that, as of December 31, 2016, because, when we calculated2018, a material weakness existed in our internal control over financial reporting associated with a change in the accounting principle related to the discount rate of long-lived assets, which is used in the calculation of impairment. As a consequence of the lack of consistency in the reporting of, and the failure to timely determine, the amounts of the variables used to calculate the impairment effectof assets of Ps. 26.0 billion and to review and authorize such calculations, and, in turn, deferred taxes, we were unable to ascertain with reasonable assurance the amount of impairment of assets and deferred taxes at the time of our unaudited financial statements,that we incorrectly assumed, for purposes of the impairment analysis of our exploration and production cash generating units, the economic landscape related to the two-year life-of-field for those fields assigned to Petróleos Mexicanos on temporary basis pursuant to Round Zero rather than 25-year life-of-field allowed by the CNH. As a result,filed our unaudited consolidated financial statements as of and for the year ended December 31, 2016 only reflected2018 with the Mexican Stock Exchange. In response to the material weakness described above, we executed a net reversalremediation plan that included the following actions: | (1) | Strengthening the process to consolidate, review and finalize the financial statements of Petróleos Mexicanos and its subsidiaries, incorporating the new “SAP Business Planning and Consolidation” consolidation system. |
| (2) | Updating of relevant internal procedures to help guarantee the responsibility and supervision of the specific operating areas involved in the calculation, registration and disclosure of financial information regarding the impairment of assets, as well as in the generation of underlying information necessary to generate the calculation, by issuing the normative document “General policies and procedures for determining the impairment of assets in Petróleos Mexicanos and its EPS,” which includes the “Guide for preparing the Long-Term Price Forecast” and the “Guide for the calculation of the discount rate.” |
| (3) | Carrying out a walkthrough of the Asset Impairment Calculation process and updating the control matrix, which incorporated the control activities that are carried out in determining inputs for the calculation of impairment (including prices forecast, discount rate and cash flows). Such control matrix will be the periodic monitoring tool of the internal controls existing in that process to help ensure that our actions are being implemented effectively. |
| (4) | Updating the regulations regarding the calculation of the impairment rate of long-lived assets, including the criteria for the selection of comparable companies, depending on the case of each subsidiary entity. |
As a result of impairmentthe above actions, in the amount of Ps. 246.3 billion. In connection with the preparation of our audited consolidated financial statements as of and for the year ended December 31, 2016,2019, we appliedwere able to determine on a timely basis the 25-year life-of-field assumption allowed byamounts of the CNH which, combined with the certified reserves data, resulted in a net reversal of impairmentvariables used in the amount of Ps. 331.3 billion. Although the effect is favorable, the difference between the net reversal of impairment that we disclosed in our unaudited and audited financial statements as of and for the year ended December 31, 2016 – an amount equal to Ps. 85.0 billion—is material and reflects a failure of our internal controls to include a mechanism to ensure that the period allowed by the authorities is properly applied and that the disclosure of our unaudited results in respect of our impairment assessment is consistent with the disclosure of our audited results. In response to the material weakness described above, we executed a remediation plan, with oversight from our audit committee which includes the following actions:
1. We are strengthening controls focused on generating adequate and timely policies related to updated regulatory criteria that may affect our financial reporting.
2. We are strengthening our procedures relating to compliance with general policies. We are designing procedures to ensure that regulatory criteria, legal aspects, business rules are disseminated in a timely manner and implemented.
3. Moreover, and in order to assist us in addressing the material weakness related to long-lived impairment calculations, we are improving our internal procedures to appropriately prepare documentation that keeps track of the process for such calculations.
We did report a material weakness in internal control over financial reporting in our Annual Report on Form 20-F for the year ended December 31, 2015, as we had not, at the relevant time, established an effective design of processes and procedures to effectively respond to the nature and magnitude of the changes in the economic landscape at such time. In particular, the sharp decline in the price of crude oil in the fourth quarter of 2015 triggered the need to test carrying amounts of our wells, pipelines, properties, plant and equipment for impairment. In performing the tests, the discount rates used were lower than those required by IFRS and those used by peers in the sector and categorized our entire refinery system as a single cash generating unit instead of viewing each refinery as an independent cash-generating unit in order to determine impairment charges with respect to our wells, pipelines, properties, plant and equipment, as required by IFRS. That resulted in an estimation of recoverable amounts of assets that did not accurately reflect operating and economic conditions as of the date of our consolidated financial statements. For the reasons set forth above, those unaudited financial statements reflected only a Ps. 229.1 billion impairment of wells, pipelines, properties, plant and equipment in 2015, Ps. 248.8 billion less than the actual impairment of Ps. 477.9 billion. In addition, at that time, our internal controls did not provide a mechanism that enabled us to ensure that our disclosure regarding our impairment evaluation and our liquidity condition complied with IFRS. In our unaudited financial statements as of and for the fiscal year ended December 31, 2015, we did not appropriately disclose the assumptions for the computation
calculation of the impairment the uncertainties about the estimates used to calculate impairment and the relevantof assets impacted by the impairment and issues related to significant doubt about our ability to continue operating as a going concern in accordance with IFRS. In response to the material weakness described above, we executed a remediation plan, with oversight from our audit committee that took the following actions:
1. We re-designed our controls, including the execution of a walkthrough of the long-lived impairment calculation process, identifying new controls in their determination. In addition we implemented new controls relating to (1) the long-lived impairment analysis, including the enhancement of the evaluation of the components of future cash flows, particularly the assumptions utilized and the comparison to the requirements of IFRS in order to allows us timely identify events that may impact the assumptions and criteria for the computation, and (2) the assessment of our ability to continue operating as a going concern and our process for making the appropriate corresponding disclosure in accordance with IFRS.
2. We have updated our internal control assessment methodology in order to enhance the design and documentation of management review controls by including new internal control elements to oversee and monitor and are verifying the appropriate design and effectiveness of the internal controls over (1) our asset impairment tests to determine the recoverable amounts of our wells, pipelines, properties, plant and equipment, review of criteria and variables for the homologation and determination of the discount rate and (2) the assessment of uncertainties regarding our ability to continue operating as a going concern and other liquidity issues.
3. We updated our oversight and monitoring program for 2016 in order to perform timely tests of the effectiveness of the internal controls in connection with our (1) asset impairment tests to determine the recoverable amounts of our wells, pipelines, properties, plant and equipment and (2) assessment of our ability to continue operating as a going concern and other liquidity issues. We completed our remediation plan and have fully established enhanced controls designed to address the material weakness for each of the quarters reported during 2016.
4. We have strengthened our internal controls to establish the process for determining impairment charges. During 2016, this resulted in an estimation of recoverable amounts that accurately reflected operating and economic conditions as of the date of our consolidated financial statements, and we have reviewed the assumptions we use to calculate impairment in order to ensure that the criteria and variables used in that calculation accurately reflect the operating and economic conditions as of the date of our calculations and will include the appropriate disclosure in accordance with IFRS.
5. We have strengthened our internal controls to properly assess each of the relevant factors that could create uncertainty as to our ability to continue operating as a going concern, our liquidity condition and corresponding disclosure.
6. Moreover, and, in order to assist us in addressing the material weakness related to long-lived impairment calculation, we are preparing documentation that memorializes the process for such calculations.turn, deferred taxes computation.
(c) | Attestation Report of the Independent Registered Public Accounting Firm |
Not applicable. (d) | Changes in Internal Control over Financial Reporting |
As discussed above, during 2016, we completed the design, update and strengthening of controls, procedures and assessment methodology in order to effectively respond to the nature and magnitude of the changes in the economic landscape. We have updated the internal control processes and procedures that have been affected by these activities.
Except for these changes,the remediation actions described above, and the implementation of internal controls to identify, value and monitor leases and their accounting treatment resulting from the adoption of IFRS 16 “Leases”, there has been no change in our internal control over financial reporting during 20162019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 16A. | Audit Committee Financial Expert |
Mr. Juan José Paullada Figueroa and Mr. Jose Eduardo Beltrán Hernández, members of the Audit Committee Financial Expert The Board of Directors of Petróleos Mexicanos, has determined that it does not have anqualify as “audit committee financial expert” within the meaning of this Item 16A, serving on its Audit Committee. We believe thatand are independent, as defined in Rule10A-3 under the combined knowledge, skills and experience of the members of the Audit Committee enable them, as a group, to act effectively in the fulfillment of their tasks and responsibilities.Exchange Act.
In accordance with the Petróleos Mexicanos Law, on November 2016, we adoptedissued our Code of Ethics for Petróleos Mexicanos, its productive subsidiary entities and affiliates, a new code of ethics as defined in Item 16B of Form20-F under the Exchange Act, which took effect onAct. On November 26, 20162019, the Board of Directors of Petróleos Mexicanos approved and replacedissued our updated Code of Ethics. Our updated Code of Ethics was published in the codeOfficial Gazette of ethics that had been in place since 2014. the Federation on December 24, 2019. Our codeCode of ethicsEthics applies to the members of the Boards Directors of Petróleos Mexicanos and the subsidiary entities and all of our employees, including our Director General, (chief executive officer), our Chief Financial Officer, our chief accounting officer and all other employees performing similar functions, as well as other individuals and companies whose actions may affect our reputation. The Code of Ethics is an important component of our ethics and integrity program, which is aimed at eradicating corruption. The Code of Ethics defines values such as respect,non-discrimination, honesty, loyalty, responsibility, legality, impartiality, integrity, inclusivity and human rights, among others, that we expect will help us achieve our goals and which should be reflected in the daily behavior of our employees. Our codeCode of ethicsEthics is available on our website at http://www.pemex.com. We cannot grant waivers to the provisions of this Code. If we amend the provisions of our Code of Ethics, or if we grant any waiver of such provisions, we will disclose such amendment or waiver on our website at the same address. On December 7, 2016, our Ethics Committee was formed to monitor the implementation and enforcement of the Code of Ethics. See “Item 4—Information on the Company—Business Overview—PEMEX Corporate Matters—Ethics Committee” for more information. In addition, on November 11, 2019 the new Code of Conduct for Petróleos Mexicanos, its productive subsidiary entities and in due case, affiliates the Code of Conduct of Petróleos Mexicanos, its productive subsidiary entities and, where applicable, affiliated companies, was published into the official Gazette of the Federation. This Code of Conduct delineates behaviors expected of and banned for our employees, in accordance with the values established in the Code of Ethics approved by the Board of the Directors of Petróleos Mexicanos and contemplates data protection and transparency related matters. On September 11, 2017,the Anti-corruption Policies and Guidelines for Petróleos Mexicanos, its productive subsidiary entities and, where applicable, affiliated companiesand the Policies and Guidelines to carry out Due Diligence in Petróleos Mexicanos, its productive subsidiary entities and, where applicable, affiliated companies, in Ethics and Corporate Integrity Matters became effective. Additionally, we have an ethics tip line and a telephone number available on our website, as a mechanism to provide advice to address questions on ethics and integrity issues within PEMEX and to facilitate receipt of complaints about possible violations to our Code of Ethics or our Code of Conduct. The information received is channeled to the Ethics Committee and the appropriate areas authorized to investigate and, if applicable, pursue cases in accordance with the applicable laws. We believe that the regulations and mechanisms mentioned above, along with the legal framework applicable to PEMEX, will allow us to improve our ability to mitigate our exposure to bribery and corruption risks in our relationships with third parties. See “Item 3—Key Information—Risk Factors—Risk Factors Related to Our Operations—We are subject to Mexican and internationalanti-corruption,anti-bribery andanti-money laundering laws. Our failure to comply with these laws could result in penalties, which could harm our reputation, prevent us from obtaining governmental authorizations needed to carry out our operations and have an adverse effect on our business, results of operations and financial condition.” Item 16C. | Principal Accountant Fees and Services |
In its meeting held on October 24, 2016,July 15, 2019, the Board of Directors of Petróleos Mexicanos appointed BDOKPMG Mexico as external auditor of Petróleos Mexicanos, its productivestate-owned subsidiaries and subsidiary companies for the fiscal year 20162019 based on the proposal of the Audit Committee.audit committee. See “Item 6—Directors, Senior Management and Employees—Audit Committee.” Audit andNon-Audit Fees The following table sets forth the aggregate fees billed to us for the fiscal years 20152018 and 20162019 by BDOKPMG Mexico, our independent registered public accounting firm for the years ended December 31, 20162018, and 2015.2019. | | | Year ended December 31, | | | Year ended December 31, | | | 2015 | | | 2016 | | | 2018 | | | 2019 | | | | (in thousands of nominal pesos) | | | (in thousands of nominal pesos) | | Audit fees | | | Ps. 33,704 | | | | Ps. 46,587 | | | | Ps. 75,511 | | | | Ps. 111,431 | | Audit-related fees | | | — | | | | — | | | | 10,167 | | | | 6,345 | | Tax Fees | | | — | | | | — | | | | 5,409 | | | | 2,042 | | All other fees | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | Total fees | | | Ps. 33,704 | | | | Ps. 46,587 | | | | Ps. 91,087 | | | | Ps. 119,818 | | | | | | | | | |
Audit fees in the table above are the aggregate fees billed by BDOKPMG Mexico, in each case for services provided in connection with the audits of our annual financial statements, in each year, statutory filings and statutory audits, filings with financial regulators, regulatory filings, limited review of interim financial information, review of public filings of financial information and reviews of documents related to offerings of securities, as well as comfort and consent letters, and services provided in accordance with the instructions of the Audit Committee.audit committee. Audit Committee Approval Policies and Procedures In accordance with the Petróleos Mexicanos Law, the Audit Committeeaudit committee nominates the external auditor for approval by the Board of Directors of Petróleos Mexicanos and issues an opinion regarding the external auditor’s report on our financial statements. See “Item 6—Directors, Senior Management and Employees—Audit Committee.” On December 8, 2009, the former Audit and Performance Evaluation Committee issued criteria, which have not been reviewed by the new Audit Committee, for the performance of services by the external auditor. In accordance with these criteria, the external auditor may audit the financial statements of Petróleos Mexicanos and its subsidiary entities and subsidiary companies for no more than four consecutive fiscal years as of the date these criteria were issued, except in special circumstances. An auditing firm that has performed such services may again be considered in the selection process for our external auditor after a period of at least two years since concluding such services.
Item 16D. | Item 16D. Exemptions from the Listing Standards for Audit Committees
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Not applicable. Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers |
Not applicable. Item 16F. Change in Registrant’s Certifying Accountant
Item 16F. | Change in Registrant’s Certifying Accountant |
Not applicable. Item 16G. Corporate Governance
Item 16G. | Corporate Governance |
Not applicable. Item 16H. Mine Safety Disclosure
Item 16H. | Mine Safety Disclosure |
Not applicable. PART III Item 17. | Financial Statements |
Not applicable. Item 18. | Financial Statements |
See pagesF-1 throughF-146,F-172, incorporated herein by reference. Item 19. | Exhibits. Documents filed as exhibits to this Form20-F:Exhibits |
Documents filed as exhibits to this Form20-F: | | | 1.1 | | Ley de Petróleos Mexicanos (Petróleos Mexicanos Law), effective October 7, 2014 (English translation) (previously filed as Exhibit 1.1 to Petróleos Mexicanos’ annual report on Form20-F (FileNo. 0-99) on April 30, 2015 and incorporated by reference herein). | | | 1.2 | | Reglamento de la Ley de Petróleos Mexicanos(Regulations to the Petróleos Mexicanos Law), effective November 1, 2014 and as amended as of February 9, 2015 (English translation) (previously filed as Exhibit 1.2 to Petróleos Mexicanos’ annual report on Form20-F (FileNo. 0-99) on April 30, 2015 and incorporated by reference herein). | | | 1.3 | | Acuerdo de Creación de la Empresa Productiva del Estado Subsidiaria de Petróleos Mexicanos, denominada Pemex Exploración y Producción(Creation Resolution of the ProductiveState-Owned Subsidiary of Petróleos Mexicanos, denominated Pemex Exploration and Production), effective June 1, 2015 (English translation) (previously filed as Exhibit 3.4 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-205763) on July 21, 2015 and incorporated by reference herein). | | | 1.4 | | Acuerdo de Creación de la Empresa Productiva del Estado Subsidiaria de Petróleos Mexicanos, denominada Pemex Cogeneración y Servicios(Creation Resolution of the ProductiveState-Owned Subsidiary of Petróleos Mexicanos, denominated Pemex Cogeneration and Services), effective June 1, 2015 (English translation) (previously filed as Exhibit 3.5 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-205763) on July 21, 2015 and incorporated by reference herein). | | | 1.5 | | Acuerdo de Creación de la Empresa Productiva del Estado Subsidiaria de Petróleos Mexicanos, denominada Pemex Perforación y Servicios(Creation Resolution of the ProductiveState-Owned Subsidiary of Petróleos Mexicanos, denominated Pemex Drilling and Services), effective August 1, 2015 (English translation) (previously filed as Exhibit 3.5 to Amendment No. 1 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-205763) on February 8, 2016 and incorporated by reference herein). | | | 1.6 | | Acuerdo de Creación de la Empresa Productiva del Estado Subsidiaria de Petróleos Mexicanos, denominada Pemex Logística(Creation Resolution of the ProductiveState-Owned Subsidiary of Petróleos Mexicanos, denominated Pemex Logistics), effective October 1, 2015 (English translation) (previously filed as Exhibit 3.6 to Amendment No. 1 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-205763) on February 8, 2016 and incorporated by reference herein). | | | 1.7 | | Acuerdo de Creación de la Empresa Productiva del Estado Subsidiaria de Petróleos Mexicanos, denominada Pemex Transformación Industrial(Creation Resolution of the ProductiveState-Owned Subsidiary of Petróleos Mexicanos, denominated Pemex Industrial Transformation), effective November 1, 2015 (English translation) (previously filed as Exhibit 3.7 to Amendment No. 1 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-205763) on February 8, 2016 and incorporated by reference herein). |
| | | | | 1.8 | | AmendmentAdecuación al Acuerdo de Creación de la Empresa Productiva del Estado Subsidiaria de Petróleos Mexicanos, denominada Pemex Exploración y Producción (Amendment to the Creation Resolution of the ProductiveState-Owned Subsidiary of Petróleos Mexicanos, denominated Pemex Exploration and Production,Production), effective April 28,December 29, 2015 (English Translation) (previously filed as Exhibit 3.4 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-220721) on September 29, 2017 and incorporated by reference herein). | | | 1.9 | | Adecuación al Acuerdo de Creación de la Empresa Productiva del Estado Subsidiaria de Petróleos Mexicanos, denominada Pemex Exploración y Producción (Amendment to Creation Resolution of the ProductiveState-Owned Subsidiary of Petróleos Mexicanos, denominated Pemex Exploration and Production), effective May 12, 2016 (English translation) (previously filed as Exhibit 3.4 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-213351) on November 30, 2016 and incorporated by reference herein). | | | 1.10 | | Adecuación al Acuerdo de Creación de la Empresa Productiva del Estado Subsidiaria de Petróleos Mexicanos, denominada Pemex Exploración y Producción (Amendment to Creation Resolution of the Productive State-Owned Subsidiary of Petróleos Mexicanos, denominated Pemex Exploration and Production), effective July 1, 2019 (English translation). | | | 1.11 | | Adecuación al Acuerdo de Creación de la Empresa Productiva del Estado Subsidiaria de Petróleos Mexicanos,denominada Pemex Logística (Amendment to Creation Resolution of the Productive State-Owned Subsidiary of Petróleos Mexicanos, denominated Pemex Logistics), effective July 1, 2019 (English translation). | | | 1.12 | | Adecuación al Acuerdo de Creación de la Empresa Productiva del Estado Subsidiaria de Petróleos Mexicanos,denominada Pemex Transformación Industrial (Amendment to Creation Resolution of the Productive State-Owned Subsidiary of Petróleos Mexicanos, denominated Pemex Industrial Transformation), effective July 1, 2019 (English translation). | | | 1.13 | | Declaratoria de Liquidación y Extinción de la Empresa Productiva del Estado Subsidiaria de Petróleos Mexicanos, denominada Pemex Cogeneración y Servicios (Declaration of Liquidation and Extinction of Pemex Cogeneration and Services), effective July 27, 2018 (English translation) (previously filed as Exhibit 1.10 to the Petróleos Mexicanos Annual Report on Form20-F (FileNo. 0-99) on April 30, 2019 and incorporated by reference herein). | | | 1.14 | | Declaratoria de Extinción de la Empresa Productiva del Estado Subsidiaria de Petróleos Mexicanos, denominada Pemex Perforación y Servicios(Declaration of Extinction of Pemex Drilling and Services), effective July 1, 2019 (English translation). | | | 2.1 | | Indenture, dated as of September 18, 1997, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company) (previously filed as Exhibit 4.1 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-7796) on October 17, 1997 and incorporated by reference herein). (P) | | | 2.2 | | Indenture, dated as of August 7, 1998, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company) (previously filed as Exhibit 4.1 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-9310) on August 24, 1998 and incorporated by reference herein). (P) | | | 2.3 | | Indenture, dated as of July 31, 2000, among the Pemex Project Funding Master Trust, Petróleos Mexicanos and Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company) (previously filed as Exhibit 2.5 to the Petróleos Mexicanos Annual Report on Form20-F (FileNo. 0-99) on June 28, 2001 and incorporated by reference herein). (P) |
| | | | | 2.4 | | First supplemental indenture dated as of September 30, 2009, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of July 31, 2000 (previously filed as Exhibit 2.4 to the Petróleos Mexicanos Annual Report on Form20-F (FileNo. 0-99) on June 29, 2010 and incorporated by reference herein). | | | 2.5 | | Indenture, dated as of December 30, 2004, among the Pemex Project Funding Master Trust, Petróleos Mexicanos and Deutsche Bank Trust Company Americas (previously filed as Exhibit 2.7 to Petróleos Mexicanos’ Annual Report on Form20-F (FileNo. 0-99) on June 30, 2005 and incorporated by reference herein). | | | 2.6 | | First supplemental indenture dated as of September 30, 2009, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of December 30, 2004 (previously filed as Exhibit 2.6 to the Petróleos Mexicanos Annual Report on Form20-F (FileNo. 0-99) on June 29, 2010 and incorporated by reference herein). | | | 2.7 | | Indenture, dated as of January 27, 2009, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas (previously filed as Exhibit 2.5 to the Petróleos Mexicanos Annual Report on FormForm 20-F (FileNo. 0-99) on June 30, 2009 and incorporated by reference herein). | | | 2.8 | | Fiscal Agency Agreement between Petróleos Mexicanos and Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company), dated as of June 16, 1993, and amended and restated as of February 26, 1998 (previously filed as Exhibit 3.1 to the Petróleos Mexicanos Annual Report on Form20-F (FileNo. 0-99) on June 29, 2000 and incorporated by reference herein). (P) | | | 2.9 | | Trust Agreement, dated as of November 10, 1998, among The Bank of New York, The Bank of New York (Delaware) and Petróleos Mexicanos (previously filed as Exhibit 3.1 to the Petróleos Mexicanos Annual Report on Form20-F (FileNo. 0-99) on June 30, 1999 and incorporated by reference herein). (P) | | | 2.10 | | Amendment No. 1, dated as of November 17, 2004, to the Trust Agreement among The Bank of New York, The Bank of New York (Delaware) and Petróleos Mexicanos dated as of November 10, 1998 (previously filed as Exhibit 2.10 to the Petróleos Mexicanos Annual Report on Form20-F (FileNo. 0-99) on June 30, 2005 and incorporated by reference herein). |
| | | 2.11 | | Amendment No. 2, dated as of December 22, 2004, to the Trust Agreement among The Bank of New York, The Bank of New York (Delaware) and Petróleos Mexicanos dated as of November 10, 1998 (previously filed as Exhibit 2.11 to the Petróleos Mexicanos Annual Report on Form20-F (FileNo. 0-99) on June 30, 2005 and incorporated by reference herein). | | | 2.12 | | Amendment No. 3, dated as of August 17, 2006, to the Trust Agreement among The Bank of New York, The Bank of New York (Delaware) and Petróleos Mexicanos dated as of November 10, 1998 (previously filed as Exhibit 3.4 to the Petróleos Mexicanos Registration Statement on FormF-4/A (FileNo. 333-136674) on October 27, 2006 and incorporated by reference herein). | | | 2.13 | | Assignment and Indemnity Agreement, dated as of November 10, 1998, among Petróleos Mexicanos,Pemex-Exploración y Producción,Pemex-Refinación,Pemex-Gas y Petroquímica Básica and the Pemex Project Funding Master Trust (previously filed as Exhibit 3.2 to the Petróleos Mexicanos Annual Report on Form20-F (FileNo. 0-99) on June 30, 1999 and incorporated by reference herein). (P) | | | 2.14 | | Amendment No. 1, dated as of August 17, 2006, to the Assignment and Indemnity Agreement among Petróleos Mexicanos,Pemex-Exploración y Producción,Pemex-Refinación,Pemex-Gas y Petroquímica Básica,Pemex-Petroquímica, and the Pemex Project Funding Master Trust dated as of November 10, 1998 (previously filed as Exhibit 4.7 to the Petróleos Mexicanos Registration Statement on FormF-4/A (FileNo. 333-136674-04) on October 27, 2006 and incorporated by reference herein). | | | 2.15 | | Guaranty Agreement, dated July 29, 1996, among Petróleos Mexicanos,Pemex-Exploración y Producción,Pemex-Refinación andPemex-Gas y Petroquímica Básica (previously filed as Exhibit 4.4 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-7796) on October 17, 1997 and incorporated by reference herein). (P) |
| | | | | 2.16 | | Amendment Agreement dated as of June 24, 2014, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, amending the terms and conditions of the Petróleos Mexicanos 8.625% Bonds due 2023 issued pursuant to the Fiscal Agency Agreement between Petróleos Mexicanos and Deutsche Bank Trust Company (as amended and restated) (previously filed as Exhibit 4.9 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-198588) on September 5, 2014 and incorporated by reference herein). | | | 2.17 | | First supplemental indenture dated as of June 24, 2014, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of September 18, 1997 (previously filed as Exhibit 4.10 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-198588) on September 5, 2014 and incorporated by reference herein). | | | 2.18 | | First supplemental indenture dated as of June 24, 2014, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of August 7, 1998 (previously filed as Exhibit 4.11 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-198588) on September 5, 2014 and incorporated by reference herein). | | | 2.19 | | Second supplemental indenture dated as of June 24, 2014, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of July 31, 2000 (previously filed as Exhibit 4.12 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-198588) on September 5, 2014 and incorporated by reference herein). | | | 2.20 | | Second supplemental indenture dated as of June 24, 2014, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of December 30, 2004 (previously filed as Exhibit 4.13 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-198588) on September 5, 2014 and incorporated by reference herein). | | | 2.21 | | Fourth supplemental indenture dated as of June 24, 2014, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of January 27, 2009 (previously filed as Exhibit 4.14 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-198588) on September 5, 2014 and incorporated by reference herein). |
| | | 2.22 | | Third supplemental indenture dated as of September 10, 2014, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of July 31, 2000 (previously filed as Exhibit 2.22 to Petróleos Mexicanos’ annual report on Form20-F (FileNo. 0-99) on April 30, 2015 and incorporated by reference herein). | | | 2.23 | | Fifth supplemental indenture dated as of October 15, 2014, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of January 27, 2009 previously filed as Exhibit 2.23 to Petróleos Mexicanos’ annual report on Form20-F (FileNo. 0-99) on April 30, 2015 and incorporated by reference herein). | | | 2.24 | | Sixth supplemental indenture dated as of December 8, 2015 between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of January 27, 2009 (previously filed as Exhibit 4.17 to Amendment No. 1 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-205763) on February 8, 2016 and incorporated by reference herein). | | | 2.25 | | Seventh supplemental indenture dated as of June 14, 2016 between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of January 27, 2009 (previously filed as Exhibit 4.18 to Amendment No. 1 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-213351) on August 26, 2016 and incorporated by reference herein). | | | 2.26 | | Eighth supplemental indenture dated as of February 16, 2018 between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of January 27, 2009. | | | 2.27 | | Ninth Supplemental Indenture dated as of June 4, 2018 between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of January 27, 2009. |
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 oflong-term debt of the registrant that are not filed as exhibits to this report. | | | 4.1 | | Receivables Purchase Agreement, dated as of December 1, 1998, by and among Pemex Finance, Ltd., P.M.I. Comercio Internacional, S.A. de C.V., P.M.I. Services, B.V. and Pemex-Exploración y Producción. (previously filed as Exhibit 3.3 to the Petróleos Mexicanos Annual Report on Form20-F (FileNo. 0-99) on June 30, 1999 and incorporated by reference herein). | | | 7.1 | | Computation of Ratio of Earnings to Fixed Charges. | | | 8.1 | | For a list of subsidiaries, their jurisdiction of incorporation and the names under which they do business, see “Consolidated Structure of PEMEX” on page 4. | | | 10.1 | | Consent letters of Ryder Scott Company, L.P.GLJ Petroleum Consultants Ltd. | | | 10.2 | | Reports on Reserves Data by Ryder Scott Company, L.P.GLJ Petroleum Consultants Ltd., Independent Qualified Reserves Evaluator or Auditor, as of December 31, 2016.2019. | | | 10.3 | | Consent letters of Netherland, Sewell International, S. de R.L. de C.V. | | | 10.4 | | Reports on Reserves Data by Netherland, Sewell International, S. de R.L. de C.V., Independent Qualified Reserves Evaluator or Auditor, as of January 1, 2017.2020. | | | 10.5 | | Consent lettersletter of DeGolyer and MacNaughton. | | | 10.6 | | ReportsReport on Reserves Data by DeGolyer and MacNaughton, Independent Qualified Reserves Evaluator or Auditor, as of January 1, 2017.2020. | | | 12.1 | | CEO Certification pursuant toRule 13a-14(a)/15d-14(a). | | | 12.2 | | CFO Certification pursuant toRule 13a-14(a)/15d-14(a). | | | 13.1 | | Certification pursuant toRule 13a-14(b)/15d-14(b) and 18 U.S.C. §1350. | | | 101.INS | | XBRL Instance Document. | | | 101.SCH | | XBRL Taxonomy Extension Schema Document. | | | 101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document. | | | 101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document. | | | 101.LAB | | XBRL Taxonomy Extension Label Linkbase Document. | | | 101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document. |
SIGNATURE Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, as amended, theThe registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| | | | | PETRÓLEOS MEXICANOS | | | By: | | /S/ JUAN PABLO NEWMAN AGUILARs/ Alberto Velázquez García | | | Name: Juan Pablo Newman Aguilar | | Alberto Velázquez García | | | Title: | | Chief Financial OfficerOfficer/Corporate Director of Finance |
Date: April 28, 2017May 8, 2020
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES AND SUBSIDIARY COMPANIES CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2016, 20152019, 2018 AND 2014 AND2017 (WITH THE REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FIRM)
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES AND SUBSIDIARY COMPANIES CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2016, 20152019, 2018 AND 20142017 Index
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMReports of Independent Registered Public Accounting Firms
To the Board of Directors of Petróleos Mexicanos:Mexicanos Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated statements of financial position of Petróleos Mexicanos, Productive State-Owned Subsidiaries and Subsidiary Companies (“PEMEX”)(PEMEX) as of December 31, 20162019 and 2015, and2018, the related consolidated statements of comprehensive income, changes in equity (deficit), and cash flows for each of the three years in the two-year period ended December 31, 2016. 2019, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of PEMEX as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2019, in conformity with International Financial Reporting Standard (IFRS) as issued by the International Accounting Standards Board. Going Concern The accompanying consolidated financial statements have been prepared assuming that PEMEX will continue as a going concern. As discussed in Note 22 to the consolidated financial statements, PEMEX has suffered recurring losses from operations, has a net capital deficiency and net equity deficit. Additionally, the recent economic disruption and the decline in crude oil prices resulted in a decrease in demand for petroleum products. These conditions together with recent downgrades in credit ratings, the fiscal burden, the financial leverage, and the reduction of its working capital, have had an adverse impact on PEMEX and raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 22. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the PEMEX’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to PEMEX in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.misstatement, whether due to error or fraud. PEMEX is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. OurAs part of our audits, included considerationwe are required to obtain an understanding of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of PEMEX’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the consolidated financial statements, assessingstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ KPMG CÁRDENAS DOSAL, S.C. We have served as PEMEX’s auditor since 2018 Mexico City, Mexico May 7, 2020 The Board of Directors Petróleos Mexicanos Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated statements of comprehensive income, changes in equity (deficit), and cash flows of Petroleos Mexicanos, Productive State-Owned Subsidiaries and Subsidiary Companies (“PEMEX”) for the year ended December 31, 2017, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Petróleos Mexicanos, Productive State-Owned Subsidiaries and Subsidiary Companies as of December 31, 2016 and 2015, and the consolidated results of their operations and their cash flows of PEMEX for each of the three years in the periodyear ended December 31, 2016,2017, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.Board (“IASB”). Going concern The accompanying consolidated financial statements have been prepared assuming that PEMEX will continue as a going concern. As described in Note 2-b to the consolidated financial statements, PEMEX has suffered recurring losses from operations, has a negative cash flows from operating activities and has a working capital deficiency and a net equity deficit. As stated in Note 2-b, theseThese events or conditions, along with other matters, as set forth in such Note, indicate that a material uncertainty exists that may cast significant doubt on the PEMEX’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2-b.the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion | CASTILLO MIRANDA Y COMPAÑÍA, S. C. | | /s/ BERNARDO SOTO PEÑAFIEL | C.P.C. Bernardo Soto Peñafiel |
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the PEMEX’s consolidated financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB and in accordance with International Standards on Auditing issued by International Federation of Accountants. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. CASTILLO MIRANDA Y COMPAÑÍA, S. C. /s/ Jose Luis Villalobos Zuazua C.P.C. Jose Luis Villalobos Zuazua Mexico City, April 28, 201730, 2018 PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, 20162019 AND 20152018 (FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) | | | | | | | | | | | | | | | | | | | Note | | | December 31, 2016 | | | December 31, 2016 | | | December 31, 2015 | | | | | | | (Unaudited; U.S. dollars) | | | | | | | | ASSETS | | | | | | | | | | | | | | | | | Current assets: | | | | | | | | | | | | | | | | | Cash and cash equivalents | | | 6 | | | U.S. $ | 7,913,885 | | | Ps. | 163,532,513 | | | Ps. | 109,368,880 | | Accounts receivable, net | | | 7 | | | | 6,446,986 | | | | 133,220,527 | | | | 79,245,821 | | Inventories, net | | | 8 | | | | 2,220,870 | | | | 45,892,060 | | | | 43,770,928 | | Held-for-sale current non-financial assets | | | 9 | | | | 361,047 | | | | 7,460,674 | | | | 33,213,762 | | Available-for-sale financial assets | | | 10 | | | | 21,078 | | | | 435,556 | | | | — | | Derivative financial instruments | | | 16 | | | | 235,069 | | | | 4,857,470 | | | | 1,601,106 | | | | | | | | | | | | | | | | | | | Total current assets | | | | | | | 17,198,935 | | | | 355,398,800 | | | | 267,200,497 | | | | | | | | | | | | | | | | | | | Non-current assets: | | | | | | | | | | | | | | | | | Available-for-sale financial assets | | | 10 | | | | 291,693 | | | | 6,027,540 | | | | 3,944,696 | | Permanent investments in associates and other | | | 11 | | | | 1,120,530 | | | | 23,154,632 | | | | 24,165,599 | | Wells, pipelines, properties, plant and equipment, net | | | 12 | | | | 80,707,619 | | | | 1,667,742,248 | | | | 1,344,483,631 | | Long-term notes receivable | | | 14 | | | | 7,191,618 | | | | 148,607,602 | | | | 50,000,000 | | Deferred taxes | | | 20 | | | | 4,855,047 | | | | 100,324,689 | | | | 54,900,384 | | Restricted cash | | | 6 | | | | 507,096 | | | | 10,478,626 | | | | 9,246,772 | | Intangible assets | | | 13 | | | | 418,082 | | | | 8,639,242 | | | | 14,304,961 | | Other assets | | | 14 | | | | 460,349 | | | | 9,512,645 | | | | 7,407,660 | | | | | | | | | | | | | | | | | | | Totalnon-current assets | | | | | | | 95,552,034 | | | | 1,974,487,224 | | | | 1,508,453,703 | | | | | | | | | | | | | | | | | | | Total assets | | | | | | U.S. $ | 112,750,969 | | | | Ps. 2,329,886,024 | | | | Ps. 1,775,654,200 | | | | | | | | | | | | | | | | | | | LIABILITIES | | | | | | | | | | | | | | | | | Current liabilities: | | | | | | | | | | | | | | | | | Short-term debt and current portion of long-term debt | | | 15 | | | U.S. $ | 8,525,270 | | | | Ps. 176,166,188 | | | | Ps. 192,508,668 | | Suppliers | | | | | | | 7,338,828 | | | | 151,649,540 | | | | 167,314,243 | | Taxes and duties payable | | | 20 | | | | 2,363,511 | | | | 48,839,595 | | | | 43,046,716 | | Accounts and accrued expenses payable | | | | | | | 903,339 | | | | 18,666,607 | | | | 13,237,407 | | Derivative financial instruments | | | 16 | | | | 1,493,804 | | | | 30,867,956 | | | | 27,300,687 | | | | | | | | | | | | | | | | | | | Total current liabilities | | | | | | | 20,624,752 | | | | 426,189,886 | | | | 443,407,721 | | | | | | | | | | | | | | | | | | | Long-term liabilities: | | | | | | | | | | | | | | | | | Long-term debt | | | 15 | | | | 87,446,987 | | | | 1,807,004,542 | | | | 1,300,873,167 | | Employee benefits | | | 17 | | | | 59,059,690 | | | | 1,220,409,436 | | | | 1,279,385,441 | | Provisions for sundry creditors | | | 18 | | | | 4,273,997 | | | | 88,317,878 | | | | 73,191,796 | | Other liabilities | | | | | | | 814,844 | | | | 16,837,893 | | | | 8,288,139 | | Deferred taxes | | | 20 | | | | 200,084 | | | | 4,134,536 | | | | 2,183,834 | | | | | | | | | | | | | | | | | | | Total long-term liabilities | | | | | | | 151,795,602 | | | | 3,136,704,285 | | | | 2,663,922,377 | | | | | | | | | | | | | | | | | | | Total liabilities | | | | | | U.S. $ | 172,420,354 | | | | Ps. 3,562,894,171 | | | | Ps. 3,107,330,098 | | | | | | | | | | | | | | | | | | | EQUITY (DEFICIT), NET | | | 21 | | | | | | | | | | | | | | Controlling interest: | | | | | | | | | | | | | | | | | Certificates of Contribution “A” | | | | | | | 17,254,377 | | | | 356,544,447 | | | | 194,604,835 | | Mexican Government contributions | | | | | | | 2,116,269 | | | | 43,730,591 | | | | 43,730,591 | | Legal reserve | | | | | | | 48,496 | | | | 1,002,130 | | | | 1,002,130 | | Accumulated other comprehensive result | | | | | | | (7,907,445 | ) | | | (163,399,441 | ) | | | (306,022,973 | ) | Accumulated deficit: | | | | | | | | | | | | | | | | | From prior years | | | | | | | (61,953,977 | ) | | | (1,280,216,973 | ) | | | (552,808,762 | ) | Net loss for the year | | | | | | | (9,274,371 | ) | | | (191,645,606 | ) | | | (712,434,997 | ) | | | | | | | | | | | | | | | | | | Total controlling interest | | | | | | | (59,716,651 | ) | | | (1,233,984,852 | ) | | | (1,331,929,176 | ) | Totalnon-controlling interest | | | | | | | 47,266 | | | | 976,705 | | | | 253,278 | | | | | | | | | | | | | | | | | | | Total equity (deficit), net | | | | | | U.S. $ | (59,669,385 | ) | | | (1,233,008,147 | ) | | | (1,331,675,898 | ) | | | | | | | | | | | | | | | | | | Total liabilities and equity (deficit), net | | | | | | U.S. $ | 112,750,969 | | | | Ps. 2,329,886,024 | | | | Ps. 1,775,654,200 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | Note | | | December 31, 2019 | | | December 31, 2019 | | | December 31, 2018 | | | | | | | (Unaudited; | | | | | | | | | | | | | U.S. dollars) | | | | | | | | ASSETS | | | | | | | | | | | | | | | | | Current assets: | | | | | | | | | | | | | | | | | Cash and cash equivalents | | | 8,9 | | | U.S. $ | 3,216,821 | | | | 60,621,631 | | | | 81,912,409 | | Customers | | | 4-b,7,8,10-a | | | | 4,736,690 | | | | 89,263,870 | | | | 87,740,515 | | Other receivables | | | 4-b,7,8,10-b | | | | 4,841,647 | | | | 91,241,811 | | | | 79,399,263 | | Inventories | | | 11 | | | | 4,386,910 | | | | 82,672,196 | | | | 82,022,568 | | Current portion of notes receivable | | | 8,15-a | | | | 260,542 | | | | 4,909,970 | | | | 38,153,851 | | Derivative financial instruments | | | 8,18 | | | | 610,040 | | | | 11,496,330 | | | | 22,382,277 | | Other current assets | | | 4-b, 8 | | | | 18,390 | | | | 346,563 | | | | 1,499,078 | | | | | | | | | | | | | | | | | | | Total current assets | | | 6 | | | | 18,071,040 | | | | 340,552,371 | | | | 393,109,961 | | | | | | | | | | | | | | | | | | | Non-current assets: | | | | | | | | | | | | | | | | | Investments in joint ventures and associates | | | 8,12 | | | | 789,303 | | | | 14,874,579 | | | | 16,841,545 | | Wells, pipelines, properties, plant and equipment, net | | | 13 | | | | 64,300,167 | | | | 1,211,749,502 | | | | 1,402,486,084 | | Rights of use | | | 17 | | | | 3,757,897 | | | | 70,818,314 | | | | — | | Long-term notes receivable, net of current portion and other | | | 8,15-a | | | | 6,503,794 | | | | 122,565,306 | | | | 119,828,598 | | Deferred income taxes and duties | | | 21 | | | | 7,225,540 | | | | 136,166,747 | | | | 122,784,730 | | Intangible assets, net | | | 14 | | | | 773,912 | | | | 14,584,524 | | | | 13,720,540 | | Other assets | | | 15-b | | | | 378,700 | | | | 7,136,677 | | | | 6,425,810 | | | | | | | | | | | | | | | | | | | Total non-current assets | | | 6 | | | | 83,729,313 | | | | 1,577,895,649 | | | | 1,682,087,307 | | | | | | | | | | | | | | | | | | | Total assets | | | | | | U.S. $ | 101,800,353 | | | | 1,918,448,020 | | | | 2,075,197,268 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | Note | | December 31, 2019 | | | December 31, 2019 | | | December 31, 2018 | | | | | | (Unaudited; | | | | | | | | | | | | U.S. dollars) | | | | | | | | LIABILITIES | | | | | | | | | | | | | | | Short-term debt and current portion of long - term debt | | 8,16 | | U.S. $ | 12,996,635 | | | | 244,924,185 | | | | 191,795,709 | | Short-term leases | | 8,17 | | | 310,269 | | | | 5,847,085 | | | | — | | Suppliers | | 8 | | | 11,039,119 | | | | 208,034,407 | | | | 149,842,712 | | Income taxes and duties payable | | 21 | | | 2,689,949 | | | | 50,692,629 | | | | 65,324,959 | | Accounts and accrued expenses payable | | 8 | | | 1,382,588 | | | | 26,055,151 | | | | 24,917,669 | | Derivative financial instruments | | 8,18 | | | 883,523 | | | | 16,650,171 | | | | 15,895,245 | | | | | | | | | | | | | | | | | Total current liabilities | | 6 | | | 29,302,083 | | | | 552,203,628 | | | | 447,776,294 | | | | | | | | | | | | | | | | | Long-term liabilities: | | | | | | | | | | | | | | | Long-term debt, net of current portion | | 8,16 | | | 92,238,337 | | | | 1,738,249,903 | | | | 1,890,490,407 | | Long-term leases | | 8,17 | | | 3,305,963 | | | | 62,301,542 | | | | — | | Employee benefits | | 19 | | | 77,304,320 | | | | 1,456,815,367 | | | | 1,080,542,046 | | Provisions for sundry creditors | | 20 | | | 5,200,895 | | | | 98,011,908 | | | | 101,753,256 | | Other liabilities | | | | | 233,339 | | | | 4,397,299 | | | | 9,528,385 | | Deferred taxes | | 21 | | | 195,102 | | | | 3,676,735 | | | | 4,512,312 | | | | | | | | | | | | | | | | | Total long-term liabilities | | 6 | | | 178,477,956 | | | | 3,363,452,754 | | | | 3,086,826,406 | | | | | | | | | | | | | | | | | Total liabilities | | | | | 207,780,039 | | | | 3,915,656,382 | | | | 3,534,602,700 | | | | | | | | | | | | | | | | | EQUITY (DEFICIT) | | 6,22 | | | | | | | | | | | | | Controlling interest: | | | | | | | | | | | | | | | Certificates of Contribution “A” | | | | | 25,400,391 | | | | 478,675,447 | | | | 356,544,447 | | Mexican Government contributions | | | | | 2,320,516 | | | | 43,730,591 | | | | 43,730,591 | | Legal reserve | | | | | 53,177 | | | | 1,002,130 | | | | 1,002,130 | | Accumulated other comprehensive result | | | | | (12,739,509 | ) | | | (240,078,590 | ) | | | 71,947,067 | | Accumulated deficit: | | | | | | | | | | | | | | | From prior years | | | | | (102,578,205 | ) | | | (1,933,106,785 | ) | | | (1,752,732,435 | ) | Net loss for the year | | | | | (18,428,532 | ) | | | (347,289,362 | ) | | | (180,374,350 | ) | | | | | | | | | | | | | | | | Total controlling interest | | | | | (105,972,162 | ) | | | (1,997,066,569 | ) | | | (1,459,882,550 | ) | | | | | | | | | | | | | | | | Total non-controlling interest | | | | | (7,524 | ) | | | (141,793 | ) | | | 477,118 | | | | | | | | | | | | | | | | | Total equity (deficit) | | | | | (105,979,686 | ) | | | (1,997,208,362 | ) | | | (1,459,405,432 | ) | | | | | | | | | | | | | | | | Total liabilities and equity (deficit) | | | | U.S. $ | 101,800,353 | | | | 1,918,448,020 | | | | 2,075,197,268 | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016, 20152019, 2018 AND 20142017 (Figures stated in thousands, except as noted) | | | | | | | | | | | | | Note | | | 2019 | | 2019 | | 2018 | | 2017 | | | | Note | | 2016 | | 2016 | | 2015 | | 2014 | | | | | | (Unaudited; | | | | | | | | | | | | (Unaudited; U.S. dollars) | | | | | | | | | | | | U.S. dollars) | | | | | | | | Net sales: | | | | | | | | | | | | | | | | | | | | | Domestic | | 5 | | | U.S. $ | 32,423,561 | | | Ps. | 670,000,473 | | | Ps. | 746,235,912 | | | Ps. | 944,997,979 | | | | 6,7 | | | U.S. $ | 42,823,648 | | | 807,020,214 | | | 980,559,538 | | | 877,360,038 | | Export | | 5 | | | | 19,121,086 | | | | 395,118,117 | | | 407,214,445 | | | 630,291,313 | | | | 6,7 | | | | 31,087,083 | | | 585,842,291 | | | 691,886,610 | | | 508,539,112 | | Services income | | 5 | | | | 698,175 | | | | 14,427,081 | | | 12,912,112 | | | 11,438,582 | | | | 6,7 | | | | 483,342 | | | 9,108,680 | | | 8,673,002 | | | 11,130,569 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total of sales | | | | | 52,242,822 | | | | 1,079,545,671 | | | 1,166,362,469 | | | 1,586,727,874 | | | | | | 74,394,073 | | | 1,401,971,185 | | | 1,681,119,150 | | | 1,397,029,719 | | (Reversal) Impairment of wells, pipelines, properties, plant and equipment | | 12-d | | | | (16,033,408 | ) | | | ( 331,314,343 | ) | | 477,944,690 | | | 22,645,696 | | | Benefit from change in pension plan | | 17 | | | | — | | | | — | | | (92,177,089 | ) | | | — | | | Cost of sales | | | | | 41,985,126 | | | | 867,580,634 | | | 895,068,904 | | | 842,634,784 | | | Impairment (reversal of impairment) of wells, pipelines, properties, plant and equipment, net | | | | 6,13-e | | | | 5,151,562 | | | 97,082,214 | | | (21,418,997 | ) | | 151,444,560 | | Cost of sales: | | | | 6,23 | | | | 59,587,238 | | | 1,122,933,424 | | | 1,199,511,561 | | | 1,004,204,880 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross income (loss) | | | | | 26,291,104 | | | | 543,279,380 | | | (114,474,036 | ) | | 721,447,394 | | | Other revenues (expenses), net | | 22 | | | | 917,324 | | | | 18,955,580 | | | (2,373,266 | ) | | 37,552,397 | | | Gross income | | | | 6 | | | | 9,655,273 | | | 181,955,547 | | | 503,026,586 | | | 241,380,279 | | | | | | | | | | | | | | | | | | Other revenues (expenses): | | | | | | | | | | | | Other revenues | | | | 6,24-a | | | | 792,799 | | | 14,940,447 | | | 41,517,631 | | | 32,253,564 | | Other expenses | | | | 6,24-b | | | | (382,681 | ) | | (7,211,691 | ) | | (18,465,120 | ) | | (27,079,488 | ) | General expenses: | | | | | | | | | | | | | | | | | | | | | Distribution, transportation and sale expenses | | | | | 1,221,024 | | | | 25,231,240 | | | 28,928,639 | | | 32,182,666 | | | | 6,23 | | | | 1,161,352 | | | 21,885,911 | | | 24,357,209 | | | 21,889,670 | | Administrative expenses | | | | | 5,451,681 | | | | 112,653,533 | | | 112,472,095 | | | 111,337,114 | | | | 6,23 | | | | 6,939,105 | | | 130,768,822 | | | 134,321,481 | | | 119,939,454 | | Benefit from change in pension plan | | 17 | | | | | | — | | | (103,860,955 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss) | | | | | 20,535,723 | | | | 424,350,187 | | | (154,387,081 | ) | | 615,480,011 | | | Operating income | | | | 6 | | | | 1,964,934 | | | 37,029,570 | | | 367,400,407 | | | 104,725,231 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Financing income1 | | | | | 665,372 | | | | 13,749,255 | | | 14,990,859 | | | 3,014,187 | | | | 6 | | | | 1,299,201 | | | 24,483,706 | | | 31,557,122 | | | 16,165,853 | | Financing cost2 | | | | | (4,783,414 | ) | | | (98,844,464 | ) | | (67,773,593 | ) | | (51,559,060 | ) | | | 6 | | | | (7,050,142 | ) | | (132,861,340 | ) | | (120,727,022 | ) | | (117,644,548 | ) | Derivative financial instruments cost, net | | 16 | | | | (677,555 | ) | | | (14,000,987 | ) | | (21,449,877 | ) | | (9,438,570 | ) | | Foreign exchange loss, net | | 16 | | | | (12,292,525 | ) | | | (254,012,743 | ) | | (154,765,574 | ) | | (76,999,161 | ) | | Derivative financial instruments (cost) income, net | | | | 6 | | | | (982,320 | ) | | (18,512,026 | ) | | (22,258,613 | ) | | 25,338,324 | | Foreign exchange gain, net | | | | 6 | | | | 4,612,866 | | | 86,930,388 | | | 23,659,480 | | | 23,184,122 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Sum of financing (costs) net, derivative instruments (cost) and foreign exchange gains, net | | | | | | (2,120,395 | ) | | (39,959,272 | ) | | (87,769,033 | ) | | (52,956,249 | ) | (Loss) profit sharing in joint ventures and associates | | | | 6,12 | | | | (61,442 | ) | | (1,157,893 | ) | | 1,527,012 | | | 360,440 | | (Loss) income before duties, taxes and other | | | | | | (216,903 | ) | | (4,087,595 | ) | | 281,158,386 | | | 52,129,422 | | | | | | | (17,088,122 | ) | | | (353,108,939 | ) | | (228,998,185 | ) | | (134,982,604 | ) | | | | | | | | | | | | | | | Profit sharing in associates and other, net | | 11 | | | | 103,361 | | | | 2,135,845 | | | 2,318,115 | | | 34,368 | | | | | | | | | | | | | | | | | | | Income(loss) before duties, taxes and other | | | | | 3,550,962 | | | | 73,377,093 | | | (381,067,151 | ) | | 480,531,775 | | | | | | | | | | | | | | | | | | | Hydrocarbon extraction duties and others | | 20 | | | | 14,750,938 | | | | 304,813,375 | | | 377,087,514 | | | 760,912,095 | | | Income tax | | | 20 | | | | (1,949,862 | ) | | | (40,291,940 | ) | | (45,587,267 | ) | | (14,837,331 | ) | | Profit sharing duty, net | | | | 21 | | | | 19,782,889 | | | 372,812,500 | | | 469,933,595 | | | 338,044,209 | | Income tax benefit | | | | 21 | | | | (1,538,270 | ) | | (28,989,011 | ) | | (8,355,372 | ) | | (5,064,168 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total duties, taxes and other | | | | | 12,801,076 | | | | 264,521,435 | | | 331,500,247 | | | 746,074,764 | | | | 6 | | | | 18,244,619 | | | 343,823,489 | | | 461,578,223 | | | 332,980,041 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net loss | | | | | (9,250,114 | ) | | | (191,144,342 | ) | | (712,567,398 | ) | | (265,542,989 | ) | | | 6 | | | U.S. $ | (18,461,522 | ) | | (347,911,084 | ) | | (180,419,837 | ) | | (280,850,619 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other comprehensive results: | | | | | | | | | | | | | | | | | | | | | Items that will be reclassified subsequently to profit or loss: | | | | | | | | | | | | Items that will be reclassified subsequently: | | | | | | | | | | | | Currency translation effect | | | | | | (143,035 | ) | | (2,695,532 | ) | | 846,191 | | | (6,096,459 | ) | Available-for-sale financial assets | | 10 | | | | 10,057 | | | | 207,817 | | | (3,206,316 | ) | | (765,412 | ) | | | | | — | | | | | | — | | | 5,564,130 | | Currency translation effect | | 19 | | | | 1,034,984 | | | | 21,386,903 | | | 13,262,101 | | | 11,379,657 | | | Items that will not be reclassified subsequently to profit or loss: | | | | | | | | | | | | Actuarial gains (losses) — employee benefits | | 17 | | | | 5,143,136 | | | | 106,277,761 | | | 78,556,569 | | | (275,962,370 | ) | | Items that will not be reclassified Items that will not be reclassified: | | | | | | | | | | | | Actuarial (losses) gains - employee benefits, net of taxes | | | | | | (16,414,117 | ) | | (309,327,314 | ) | | 222,545,556 | | | 12,038,710 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total other comprehensive results | | | | | 6,188,177 | | | | 127,872,481 | | | 88,612,354 | | | (265,348,125 | ) | | | | | (16,557,152 | ) | | (312,022,846 | ) | | 223,391,747 | | | 11,506,381 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total comprehensive loss | | | | U.S. $ | (3,061,937 | ) | | Ps. | (63,271,861 | ) | | Ps. | (623,955,044 | ) | | Ps. | (530,891,114 | ) | | Total comprehensive (loss) income | | | | | U.S. $ | (35,018,674 | ) | | (659,933,930 | ) | | 42,971,910 | | | (269,344,238 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net loss attributable to: | | | | | | | | | | | | | | | | | | | | | Controlling interest | | | | U.S. $ | (9,274,371 | ) | | Ps. | (191,645,606 | ) | | Ps. | (712,434,997 | ) | | Ps. | (265,203,213 | ) | | | | U.S. $ | (18,428,532 | ) | | (347,289,362 | ) | | (180,374,350 | ) | | (280,844,899 | ) | Non-controlling interest | | | | | 24,258 | | | | 501,264 | | | (132,401 | ) | | (339,776 | ) | | | | | (32,992 | ) | | (621,722 | ) | | (45,487 | ) | | (5,720 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net loss | | | | U.S. $ | (9,250,113 | ) | | Ps. | (191,144,342 | ) | | Ps. | (712,567,398 | ) | | Ps. | (265,542,989 | ) | | | | U.S. $ | (18,461,524 | ) | | (347,911,084 | ) | | (180,419,837 | ) | | (280,850,619 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other comprehensive results attributable to: | | | | | | | | | | | | | | | | | | | | | Controlling interest | | | | U.S. $ | 6,177,425 | | | Ps. | 127,650,318 | | | Ps. | 88,571,493 | | | Ps. | (265,528,837 | ) | | | | U.S. $ | (16,557,301 | ) | | (312,025,657 | ) | | 223,834,249 | | | 11,512,259 | | Non-controlling interest | | | | | 10,751 | | | | 222,163 | | | 40,861 | | | 180,712 | | | | | | 150 | | | 2,811 | | | (442,502 | ) | | (5,878 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total other comprehensive results | | | | U.S. $ | 6,188,176 | | | Ps. | 127,872,481 | | | Ps. | 88,612,354 | | | Ps. | (265,348,125 | ) | | | | U.S. $ | (16,557,151 | ) | | (312,022,846 | ) | | 223,391,747 | | | 11,506,381 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Comprehensive (loss) income: | | | | | | | | | | | | | | | | | | | | | Controlling interest | | | | U.S. $ | (3,096,946 | ) | | Ps. | (63,995,288 | ) | | Ps. | (623,863,504 | ) | | Ps. | (530,732,050 | ) | | | | U.S. $ | (34,985,833 | ) | | (659,315,019 | ) | | 43,459,899 | | | (269,332,640 | ) | Non-controlling interest | | | | | 35,009 | | | | 723,427 | | | (91,540 | ) | | (159,064 | ) | | | | | (32,842 | ) | | (618,911 | ) | | (487,989 | ) | | (11,598 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total comprehensive loss | | | | U.S. $ | (3,061,937 | ) | | Ps. | (63,271,861 | ) | | Ps. | (623,955,044 | ) | | Ps. | (530,891,114 | ) | | Total comprehensive (loss) income | | | | | U.S. $ | (35,018,675 | ) | | (659,933,930 | ) | | 42,971,910 | | | (269,344,238 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements. 1 | Includes financing income from investments and gain on discount rate of plugging of wells in 2016, 20152019, 2018 and 2014.2017. |
2 | Mainly interest on debt. |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT), NET FOR THE YEARS ENDED DECEMBER 31, 2016, 20152019, 2018 AND 20142017 (Figures stated in thousands, except as noted) (See Note 21)22) | | | Controlling interest | | | | | | | Controlling interest | | | | | | | | | | | | | | | | Accumulated other comprehensive income (loss) | | Accumulated deficit | | Total | | | Non controlling interest | | | Total Equity (deficit), net | | | | | | | | | Accumulated other comprehensive income (loss) | | Accumulated deficit | | | | | | | | | | Certificates of Contribution “A” | | Mexican Government contributions | | Legal reserve | | Available- for sale financial assets | | Cumulative currency translation effect | | Actuarial (losses) gains on employee benefits effect | | For the year | | From prior years | | | | | | | | | Cumulative | | Actuarial | | | | | | | | | | | | Balances as of January 1, 2014 | | Ps. | 114,604,835 | | | Ps. | 115,313,691 | | | Ps. | 1,002,130 | | | Ps. | (1,800,219 | ) | | Ps. | 5,127,480 | | | Ps. | (132,392,890 | ) | | Ps. | — | | | Ps. | (287,605,549 | ) | | Ps. | (185,750,522 | ) | | Ps. | 503,882 | | | | (185,246,640 | ) | | Increase in Certificates of Contribution “A” | | 20,000,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 20,000,000 | | | | — | | | 20,000,000 | | | Increase in Mexican Government Contributions | | | — | | | 2,000,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 2,000,000 | | | | — | | | 2,000,000 | | | Decrease in Mexican Government Contributions | | | — | | | (73,583,100 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | (73,583,100 | ) | | | — | | | (73,583,100 | ) | | | | | Certificates of | | Mexican | | | | currency | | (losses) gains | | | | | | | | Non | | | | | | | Contribution | | Government | | Legal | | translation | | on employee | | For | | From | | | | controlling | | Total Equity | | | | | “A” | | contributions | | reserve | | effect | | benefits effect | | the year | | prior years | | Total | | interest | | (deficit) | | Balances as of December 31, 2017 | | | 356,544,447 | | | 43,730,591 | | | 1,002,130 | | | 44,633,012 | | | (196,520,194 | ) | | (280,844,899 | ) | | (1,471,862,579 | ) | | (1,503,317,492 | ) | | 965,107 | | | (1,502,352,385 | ) | Initial effect by the adoption of IFRS 9 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | (24,957 | ) | | (24,957 | ) | | | — | | | (24,957 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances adjusted as of January 1, 2018 | | | 356,544,447 | | | 43,730,591 | | | 1,002,130 | | | 44,633,012 | | | (196,520,194 | ) | | (280,844,899 | ) | | (1,471,887,536 | ) | | (1,503,342,449 | ) | | 965,107 | | | (1,502,377,342 | ) | Transfer to accumulated deficit | | | | — | | | | — | | | | — | | | | — | | | | — | | | 280,844,899 | | | (280,844,899 | ) | | | — | | | | — | | | | — | | Total comprehensive income (loss) | | | — | | | | — | | | | — | | | (765,412 | ) | | 11,192,953 | | | (275,956,378 | ) | | (265,203,213 | ) | | | — | | | (530,732,050 | ) | | (159,064 | ) | | (530,891,114 | ) | | | — | | | | — | | | | — | | | 1,287,215 | | | 222,547,034 | | | (180,374,350 | ) | | | — | | | 43,459,899 | | | (487,989 | ) | | 42,971,910 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2014 | | Ps. | 134,604,835 | | | Ps. | 43,730,591 | | | Ps. | 1,002,130 | | | Ps. | (2,565,631 | ) | | Ps. | 16,320,433 | | | Ps. | (408,349,268 | ) | | Ps. | (265,203,213 | ) | | Ps. | (287,605,549 | ) | | Ps. | (768,065,672 | ) | | Ps. | 344,818 | | | | (767,720,854 | ) | | Balances as of December 31, 2018 | | | U.S. $ | 356,544,447 | | | 43,730,591 | | | 1,002,130 | | | 45,920,227 | | | 26,026,840 | | | (180,374,350 | ) | | (1,752,732,435 | ) | | (1,459,882,550 | ) | | 477,118 | | | (1,459,405,432 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Transfer to accumulated deficit | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 265,203,213 | | | (265,203,213 | ) | | | — | | | | — | | | | — | | | | | | | | | | | | | 180,374,350 | | | (180,374,350 | ) | | | — | | | | | | — | | Increase in Certificates of Contribution “A” | | 60,000,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 60,000,000 | | | | — | | | 60,000,000 | | | 122,131,000 | | | | | | | | | | | | | | | 122,131,000 | | | | | 122,131,000 | | Total comprehensive income (loss) | | | — | | | | — | | | | — | | | (3,206,316 | ) | | 13,229,927 | | | 78,547,882 | | | (712,434,997 | ) | | | — | | | (623,863,504 | ) | | (91,540 | ) | | (623,955,044 | ) | | Total comprehensive loss | | | | | | | | | (2,691,157 | ) | | (309,334,500 | ) | | (347,289,362 | ) | | | | (659,315,019 | ) | | (618,911 | ) | | (659,933,930 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2015 | | Ps. | 194,604,835 | | | Ps. | 43,730,591 | | | Ps. | 1,002,130 | | | Ps. | (5,771,947 | ) | | Ps. | 29,550,360 | | | Ps. | (329,801,386 | ) | | Ps. | (712,434,997 | ) | | Ps. | (552,808,762 | ) | | Ps. | (1,331,929,176 | ) | | Ps. | 253,278 | | | Ps. | (1,331,675,898 | ) | | Transfer to accumulated deficit | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 712,434,997 | | | (712,434,997 | ) | | | — | | | | — | | | | — | | | Increase in Certificates of Contribution “A” | | 161,939,612 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 161,939,612 | | | | — | | | 161,939,612 | | | Reclassification of other comprehensive income | | | — | | | | — | | | | — | | | | — | | | | — | | | 14,973,214 | | | | — | | | (14,973,214 | ) | | | — | | | | — | | | | | Total comprehensive income (loss) | | | — | | | | — | | | | — | | | 207,817 | | | 21,169,662 | | | 106,272,839 | | | ( 191,645,606 | ) | | | — | | | ( 63,995,288 | ) | | 723,427 | | | ( 63,271,861 | ) | | Balances as of December 31, 2019 | | | U.S. $ | 478,675,447 | | | 43,730,591 | | | 1,002,130 | | | 43,229,070 | | | (283,307,660 | ) | | (347,289,362 | ) | | (1,933,106,785 | ) | | (1,997,066,569 | ) | | (141,793 | ) | | (1,997,208,362 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2016 | | Ps. | 356,544,447 | | | Ps. | 43,730,591 | | | Ps. | 1,002,130 | | | Ps. | (5,564,130 | ) | | Ps. | 50,720,022 | | | Ps. | (208,555,333 | ) | | Ps. | (191,645,606 | ) | | Ps. | (1,280,216,973 | ) | | Ps. | ( 1,233,984,852 | ) | | Ps. | 976,705 | | | Ps. | (1,233,008,147 | ) | | Balances as of December 31, 2019 | | | | | | | | | | | | | | | | | | | | | | (Unaudited US.S. dollars) | | | U.S. $ | 25,400,391 | | | 2,320,516 | | | 53,177 | | | 2,293,903 | | | (15,033,412 | ) | | (18,428,532 | ) | | (102,578,205 | ) | | (105,972,162 | ) | | (7,524 | ) | | (105,979,686 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2016 (Unaudited U.S. dollars) | | U.S.$ | 17,254,377 | | | U.S.$ | 2,116,269 | | | U.S.$ | 48,496 | | | U.S.$ | (269,267) | | | U.S.$ | 2,454,512 | | | U.S.$ | (10,092,690) | | | U.S.$ | (9,274,371 | ) | | U.S.$ | (61,953,977 | ) | | U.S.$ | (59,716,651 | ) | | U.S.$ | 47,266 | | | U.S.$ | (59,669,385) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016, 20152019, 2018 AND 20142017 (Figures stated in thousands, except as noted) | | | | | | | | | | | | | | | | | | | 2016 | | | 2016 | | | 2015 | | | 2014 | | | | (Unaudited; U.S. dollars) | | | | | | | | | | | Operating activities | | | | | | | | | | | | | | | | | Net (loss) income | | U.S. $ | (9,250,114 | ) | | | Ps. 191,144,342 | ) | | | Ps. (712,567,398 | ) | | | Ps. (265,542,989 | ) | Depreciation and amortization | | | 7,280,270 | | | | 150,439,491 | | | | 167,951,250 | | | | 143,074,787 | | (Reversal) impairment of wells, pipelines, properties, plant and equipment | | | (16,033,408 | ) | | | (331,314,343 | ) | | | 477,944,690 | | | | 22,645,696 | | Unsuccessful wells | | | 1,408,541 | | | | 29,106,084 | | | | 23,213,519 | | | | 12,148,028 | | Disposal of wells, pipelines, properties, plant and equipment | | | 182,505 | | | | 3,771,287 | | | | 24,638,537 | | | | 6,370,937 | | Loss in sale of fixed assets | | | 193,913 | | | | 27,882,480 | | | | — | | | | — | | Gain on sale of share in associates and other | | | 1,349,326 | | | | (15,211,039 | ) | | | — | | | | — | | Profit (loss) share in associates | | | (103,361 | ) | | | (2,135,845 | ) | | | (2,318,115 | ) | | | (34,368 | ) | Impairment of goodwill | | | (736,113 | ) | | | 4,007,018 | | | | (680,630 | ) | | | — | | Dividends | | | (14,198 | ) | | | (293,397 | ) | | | (359,941 | ) | | | (736,302 | ) | Effects of net present value of reserve for well abandonment | | | 579,218 | | | | 11,968,966 | | | | (608,160 | ) | | | 9,169,327 | | Net loss onavailable-for-sale financial assets | | | — | | | | — | | | | — | | | | 215,119 | | Amortization expenses related to debt issuance | | | (77,922 | ) | | | (1,610,183 | ) | | | (2,299,657 | ) | | | 312,296 | | Unrealized foreign exchange loss | | | 11,768,426 | | | | 243,182,764 | | | | 152,676,256 | | | | 78,884,717 | | Interest expense | | | 4,783,414 | | | | 98,844,464 | | | | 67,773,593 | | | | 50,909,624 | | | | | | | | | | | | | | | | | | | | | | 1,330,497 | | | | 27,493,405 | | | | 195,363,944 | | | | 57,416,872 | | Derivative financial instruments | | | 15,046 | | | | 310,905 | | | | 9,802,397 | | | | 16,354,342 | | Accounts receivable | | | (2,666,688 | ) | | | (55,104,439 | ) | | | 33,003,083 | | | | 9,261,025 | | Inventories | | | (65,761 | ) | | | (1,358,879 | ) | | | 6,167,728 | | | | 6,975,844 | | Long-term receivables | | | (158,620 | ) | | | (3,277,724 | ) | | | — | | | | — | | Intangible assets | | | (955,566 | ) | | | (19,745,821 | ) | | | — | | | | — | | Other assets | | | (101,867 | ) | | | (2,104,985 | ) | | | (16,602,365 | ) | | | (18,984,877 | ) | Accounts payable and accrued expenses | | | 149,906 | | | | 3,097,660 | | | | 1,002,403 | | | | (1,959,714 | ) | Taxes paid | | | 280,337 | | | | 5,792,879 | | | | 626,626 | | | | 1,130,595 | | Suppliers | | | (758,067 | ) | | | (15,664,703 | ) | | | 51,135,948 | | | | 9,433,102 | | Provisions for sundry creditors | | | 754,228 | | | | 15,585,374 | | | | (9,126,733 | ) | | | 356,582 | | Employee benefits | | | 2,288,670 | | | | 47,293,069 | | | | (116,022,232 | ) | | | 78,970,008 | | Deferred taxes | | | (2,119,734 | ) | | | (43,802,181 | ) | | | (53,014,159 | ) | | | (24,597,648 | ) | | | | | | | | | | | | | | | | | | Net cash flows (used in) from operating activities | | | (2,007,619 | ) | | | (41,485,440 | ) | | | 102,336,640 | | | | 134,356,131 | | | | | | | | | | | | | | | | | | | Investing activities | | | | | | | | | | | | | | | | | Acquisition of wells, pipelines, properties, plant and equipment | | | (7,327,162 | ) | | | (151,408,480 | ) | | | (253,514,001 | ) | | | (230,678,870 | ) | Exploration costs | | | (97,891 | ) | | | (2,022,826 | ) | | | (5,698,511 | ) | | | (1,593,706 | ) | Received dividends | | | — | | | | — | | | | — | | | | 336,095 | | Resources from the sale on share in associates | | | 1,097,790 | | | | 22,684,736 | | | | 4,417,138 | | | | — | | Proceeds from the sale of fixed assets | | | 27,132 | | | | 560,665 | | | | — | | | | — | | Investments in associates | | | — | | | | — | | | | (36,214 | ) | | | (3,466,447 | ) | Business acquisition | | | (209,532 | ) | | | (4,329,769 | ) | | | — | | | | | | Available-for-sale financial assets | | | — | | | | — | | | | — | | | | 12,735,337 | | | | | | | | | | | | | | | | | | | Net cash flows used in investing activities | | | (6,509,663 | ) | | | (134,515,674 | ) | | | (254,831,588 | ) | | | (222,667,591 | ) | | | | | | | | | | | | | | | | | | Financing activities | | | | | | | | | | | | | | | | | Increase in equity due to Certificates of Contributions “A” | | | 3,556,911 | | | | 73,500,000 | | | | 10,000,000 | | | | 22,000,000 | | Decrease in equity Mexican Government contributions | | | — | | | | — | | | | — | | | | (73,583,100 | ) | Loans obtained from financial institutions | | | 40,746,795 | | | | 841,991,767 | | | | 378,971,078 | | | | 423,399,475 | | Debt payments, principal only | | | (29,683,369 | ) | | | (613,377,146 | ) | | | (191,318,841 | ) | | | (207,455,492 | ) | Interest paid | | | (4,295,109 | ) | | | (88,754,141 | ) | | | (62,737,150 | ) | | | (47,248,478 | ) | | | | | | | | | | | | | | | | | | Net cash flows from financing activities | | | 10,325,228 | | | | 213,360,480 | | | | 134,915,087 | | | | 117,112,405 | | | | | | | | | | | | | | | | | | | Net increase (decrease) in cash and cash equivalents | | | 1,807,946 | | | | 37,359,366 | | | | (17,579,861 | ) | | | 28,800,945 | | Effects of change in cash value | | | 813,213 | | | | 16,804,267 | | | | 8,960,213 | | | | 8,441,864 | | Cash and cash equivalents at the beginning of the year | | | 5,292,726 | | | | 109,368,880 | | | | 117,988,528 | | | | 80,745,719 | | | | | | | | | | | | | | | | | | | Cash and cash equivalents at the end of the year (Note 6) | | U.S. $ | 7,913,885 | | | | Ps. 163,532,513 | | | | Ps. 109,368,880 | | | | Ps.117,988,528 | | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
| | | | | | | | | | | | | | | | | | | 2019 | | | 2019 | | | 2018 | | | 2017 | | | | (Unaudited; | | | | | | | | | | | | | U.S. dollars) | | | | | | | | | | | Operating activities: | | | | | | | | | | | | | | | | | Net loss | | U.S. $ | (18,461,523 | ) | | | (347,911,084 | ) | | | (180,419,837 | ) | | | (280,850,619 | ) | Items related to investment activities: | | | | | | | | | | | | | | | | | Income taxes and duties | | | 18,244,619 | | | | 343,823,489 | | | | 446,612,429 | | | | 375,258,833 | | Depreciation and amortization | | | 7,279,679 | | | | 137,187,010 | | | | 153,382,040 | | | | 156,704,513 | | Amortization of intangible assets | | | 28,833 | | | | 543,372 | | | | 2,643,326 | | | | — | | (Reversal of impairment) Impairment of wells, pipelines, properties, plant and equipment | | | 5,151,562 | | | | 97,082,214 | | | | (21,418,997 | ) | | | 151,444,560 | | Unsuccessful wells | | | 3,799,605 | | | | 71,604,308 | | | | 15,443,086 | | | | 6,164,624 | | Exploration costs | | | 424,027 | | | | 7,990,877 | | | | (2,171,218 | ) | | | (1,447,761 | ) | Loss from derecognition of disposal of wells, pipelines, properties, plant and equipment | | | 134,865 | | | | 2,541,558 | | | | 16,885,264 | | | | 17,063,671 | | Disposal of held-for-sale current non - financial assets | | | — | | | | — | | | | — | | | | 2,808,360 | | Depreciation of rights of use | | | 394,226 | | | | 7,429,275 | | | | — | | | | — | | Net loss onavailable-for-sale financial assets | | | — | | | | — | | | | — | | | | 3,523,748 | | Decrease onavailable–for-sale financial assets | | | — | | | | — | | | | — | | | | 1,360,205 | | (Gain) on sale of share in joint ventures and associates | | | — | | | | — | | | | (701,171 | ) | | | (3,139,103 | ) | Unrealized foreign exchange (income) loss of reserve for well abandonment | | | (13,734 | ) | | | (258,816 | ) | | | (6,953,200 | ) | | | 7,774,000 | | Profit sharing in joint ventures and associates | | | 61,442 | | | | 1,157,893 | | | | (1,527,012 | ) | | | (360,440 | ) | Dividends | | | — | | | | — | | | | — | | | | (180,675 | ) | Items related to financing activities | | | — | | | | | | | | | | | | | | Unrealized foreign exchange income | | | (4,151,984 | ) | | | (78,244,974 | ) | | | (19,762,208 | ) | | | (16,685,439 | ) | Interest expense | | | 7,050,142 | | | | 132,861,340 | | | | 120,727,022 | | | | 117,644,548 | | Interest income | | | (1,299,201 | ) | | | (24,483,706 | ) | | | (9,520,962 | ) | | | — | | | | | | | | | | | | | | | | | | | Funds from operating activities | | | 18,642,558 | | | | 351,322,756 | | | | 513,218,562 | | | | 537,083,025 | | Income taxes and duties paid | | | (18,440,528 | ) | | | (347,515,447 | ) | | | (443,785,240 | ) | | | (372,240,560 | ) | Derivative financial instruments | | | 617,710 | | | | 11,640,873 | | | | 5,880,442 | | | | (38,377,961 | ) | Accounts receivable | | | (705,003 | ) | | | (13,285,925 | ) | | | (286,509 | ) | | | (27,124,228 | ) | Long-term accounts receivable | | | — | | | | — | | | | — | | | | 114,693 | | Intangible assets | | | — | | | | — | | | | — | | | | (5,166,184 | ) | Inventories | | | (34,472 | ) | | | (649,629 | ) | | | (18,163,638 | ) | | | (17,966,870 | ) | Other assets | | | — | | | | — | | | | (530,711 | ) | | | (1,972,532 | ) | Accounts payable and accrued expenses | | | 60,359 | | | | 1,137,483 | | | | 1,706,268 | | | | 4,544,794 | | Suppliers | | | 2,470,724 | | | | 46,561,282 | | | | 9,887,334 | | | | (11,694,162 | ) | Provisions for sundry creditors | | | (307,113 | ) | | | (5,787,614 | ) | | | (5,950,348 | ) | | | (7,266,629 | ) | Employee benefits | | | 3,552,878 | | | | 66,954,701 | | | | 53,604,884 | | | | 50,065,396 | | Other taxes and duties | | | (1,334,980 | ) | | | (25,157,966 | ) | | | 26,205,546 | | | | (46,601,312 | ) | | | | | | | | | | | | | | | | | | Net cash flows from operating activities | | | 4,522,133 | | | | 85,220,514 | | | | 141,786,590 | | | | 63,397,470 | | Investing activities: | | | | | | | | | | | | | | | | | Long-term receivables from the Mexican Government | | | — | | | | — | | | | 2,364,053 | | | | — | | Resources from the sale ofavailable-for-sale financial assets | | | — | | | | — | | | | — | | | | 8,026,836 | | Interest received for long-term receivable from the Mexican Government | | | — | | | | — | | | | 187,615 | | | | — | | Other notes receivable | | | 3,654 | | | | 68,863 | | | | 1,246,763 | | | | — | | Proceeds from the sale of associates | | | — | | | | — | | | | 4,078,344 | | | | 3,141,710 | | Interest received | | | 860,544 | | | | 16,217,132 | | | | — | | | | — | | Other assets | | | (37,721 | ) | | | (710,867 | ) | | | — | | | | — | | Acquisition of wells, pipelines, properties, plant and equipment | | | (5,818,654 | ) | | | (109,653,693 | ) | | | (94,003,596 | ) | | | (91,859,465 | ) | Intangible assets | | | (913,773 | ) | | | (17,220,238 | ) | | | (14,957,093 | ) | | | — | | | | | | | | | | | | | | | | | | | Net cash flows used in investing activities | | | (5,905,950 | ) | | | (111,298,803 | ) | | | (101,083,914 | ) | | | (80,690,919 | ) | Excess cash to apply in financing activities | | | (1,383,817 | ) | | | (26,078,289 | ) | | | 40,702,676 | | | | (17,293,449 | ) | Financing activities: | | | | | | | | | | | | | | | | | Increase in equity due to Certificates of Contribution “A” | | | 6,480,748 | | | | 122,131,000 | | | | — | | | | — | | Long-term receivables from the Mexican Government | | | 1,724,241 | | | | 32,493,666 | | | | — | | | | — | | Interest received for long-term receivable from the Mexican Government | | | 329,591 | | | | 6,211,217 | | | | — | | | | — | | Lease payments | | | (568,284 | ) | | | (10,709,421 | ) | | | — | | | | — | | Loans obtained from financial institutions | | | 61,969,889 | | | | 1,167,834,946 | | | | 899,769,012 | | | | 704,715,468 | | Debt payments, principal only | | | (62,882,977 | ) | | | (1,185,042,283 | ) | | | (841,033,392 | ) | | | (642,059,819 | ) | Interest paid | | | (6,789,273 | ) | | | (127,945,203 | ) | | | (115,289,389 | ) | | | (108,910,417 | ) | | | | | | | | | | | | | | | | | | Net cash flows from (used in) financing activities | | | 263,935 | | | | 4,973,922 | | | | (56,553,769 | ) | | | (46,254,768 | ) | | | | | | | | | | | | | | | | | | Net decrease in cash and cash equivalents | | | (1,119,882 | ) | | | (21,104,367 | ) | | | (15,851,093 | ) | | | (63,548,217 | ) | Effects of foreign exchange on cash balances | | | (9,889 | ) | | | (186,411 | ) | | | (88,252 | ) | | | (2,132,542 | ) | Cash and cash equivalents at the beginning of the period | | | 4,346,593 | | | | 81,912,409 | | | | 97,851,754 | | | | 163,532,513 | | | | | | | | | | | | | | | | | | | Cash and cash equivalents at the end of the period (Note 9) | | U.S. $ | 3,216,822 | | | | 60,621,631 | | | | 81,912,409 | | | | 97,851,754 | | | | | | | | | | | | | | | | | | | | The accompanying notes are an integral part of these consolidated financial statements. | |
PETRÓLEOS MEXICANOS PRODUCTIVE STATE-OWNED SUBSIDIARIES AND SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014(Figures stated in thousands, except as noted)
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
NOTE 1. | NOTE 1. STRUCTURE AND BUSINESS OPERATIONS OF PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
|
Petróleos Mexicanos was created by a decree issued by the Mexican Congress on June 7, 1938. The decree was published in theDiario Oficial de la Federación (Official(“Official Gazette of the Federation)Federation”) on July 20, 1938 and came into effect on that date. On December 20, 2013, 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), was published in the Official Gazette of the Federation andFederation. This Decree came into effect on December 21, 2013 (the “Energy Reform Decree”). In accordance withand includes transitional articles setting forth the Energy Reform Decree,general framework and timeline for implementing legislation relating to the Mexican Government will carry out the exploration and extraction of hydrocarbons in the United Mexican States (“Mexico”) through assignments to productive state-owned companies, as well as through agreements with productive state-owned companies and with other companies.energy sector. As part of the secondary legislation enacted in accordance with the Energy Reform Decree, onOn August 11, 2014, theLey de Petróleos Mexicanos (the Petró“Petróleos Mexicanos Law)Law”) was published in the Official Gazette of the Federation. The Petróleos Mexicanos Law became effective on October 7, 2014, except for certain provisions. On December 2, 2014, theSecretaría de Energía (Ministry (“Ministry of Energy)Energy”) published in the Official Gazette of the Federation the declaration pursuant to which the special regime governing Petróleos Mexicanos’ activities relating to productive state-owned subsidiaries, affiliates, compensation, assets, administrative liabilities, state dividend, budget and debt levels came into effect. On June 10, 2015, theDisposiciones Generales de Contratación para Petróleos Mexicanos y sus Empresas Productivas Subsidiarias (General Contracting Provisions for Petróleos Mexicanos and its productive state-owned subsidiaries) was published in the Official Gazette of the Federation and the following day the special regime for acquisitions, leases, services and public works matters came into effect the day after.effect.
Once the Petróleos Mexicanos Law came into effect, Petróleos Mexicanos was transformed from a decentralized public entity to a productive state-owned company. Petróleos Mexicanos is a legal entity empowered to own property and carry on business in its own name with the purpose of carrying out exploration and extraction of crude oil and other hydrocarbons in Mexico. In addition, Petróleos Mexicanos is entitled to performperforms activities related to refining, gas processing and engineering and research projects to create economic value and profitability forto increase the income of the Mexican Government, as its owner, while adhering to principles of equity and social and environmental responsibility. The Subsidiary Entities,Pemex Exploración y Producción (Pemex Exploration and Production),Pemex Transformación Industrial (Pemex Industrial Transformation),Pemex Perforación y Servicios (Pemex Drilling and Services),Pemex Logística (Pemex Logistics),Pemex Cogeneración y Servicios (Pemex Cogeneration and Services),Pemex Fertilizantes (Pemex Fertilizers) andPemex Etileno (Pemex Ethylene), are productive state-owned subsidiaries empowered to own property and carry on business in their own name, subject to the direction and coordination of Petróleos Mexicanos (the “Subsidiary Entities”). The Subsidiary Entities of Petróleos Mexicanos prior to the Corporate Reorganization (defined below) werePemex-Exploración y Producción,Pemex-Refinación(Pemex-Refining),Pemex-Gas and Petroquímica Básica(Pemex-Gas and Basic Petrochemicals) andPemex-Petroquímica (Pemex-Petrochemicals)(Pemex-Petrochemicals), which were PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
decentralized public entities with a technical, industrial and commercial nature with their own corporate identity and equity, with the legal authority to own property and conduct business in their own names, and were 100% owned by Petróleos Mexicanos and controlled by the Mexican Government; they had been consolidated into and had the characteristics of subsidiaries of Petróleos Mexicanos. The Board of Directors of Petróleos Mexicanos, in its meeting held on November 18, 2014, approved the Corporate Reorganization proposed by the Chief Executive OfficerDirector General of Petróleos Mexicanos. Pursuant to the recent corporate reorganization, (the “Corporate Reorganization”), the existing four Subsidiary Entities were transformed into two new productive state-owned subsidiaries, which will have assumed all of the rights and obligations of the existing Subsidiary Entities (the “Corporate Reorganization”).Entities. Pemex-Exploration and Production was transformed into Pemex Exploration and Production, a productive state-owned subsidiary, and Pemex-Refining,Pemex-Gas and Basic Petrochemicals and Pemex-Petrochemicals were transformed into the productive state-owned subsidiary Pemex Industrial Transformation. The Board of Directors of Petróleos Mexicanos also approved the creation of the following new Subsidiary Entities:Pemex Perforación y Servicios (Pemex Drilling and Services,Services), Pemex Logistics,Pemex Cogeneración y Servicios (Pemex Cogeneration and Services,Services), Pemex Fertilizers andPemex Ethylene. Each of these productive state-owned subsidiaries may be transformed into an affiliate of Petróleos Mexicanos if certain conditions set forth in the Petróleos Mexicanos Law are met.Etileno (Pemex Ethylene) (the “Corporate Reorganization”). On March 27, 2015, the Board of Directors of Petróleos Mexicanos approved the acuerdos de creación (creation resolutions) of each productive state-owned subsidiary. The Subsidiary Entities mainly perform the following activities: | • | | Pemex Exploration and Production: This entity is in charge of exploration and extraction of crude oil and solid, liquid or gaseous hydrocarbons in Mexico, in the exclusive economic zone of Mexico and abroad. |
| • | | Pemex Industrial Transformation: This entity performs activities related to refining, processing, import, export, trading and sale of hydrocarbons. |
| • | | Pemex Drilling and Services: This entity performs drilling services and repair and services of wells. |
| • | | Pemex Logistics: This entity provides transportation, storage and related services for crude oil, petroleum products and petrochemicals to Petróleos Mexicanos, Subsidiary Entities, subsidiary companies and other companies, through pipelines and maritime and terrestrial means, and provides guard and management services. |
| • | | Pemex Cogeneration and Services: This entity generates, supplies and trades electric and thermal energy, including but not limited to the energy and thermal power produced in power plants and cogeneration plants, as well as performing technical and management services related to these activities to Petróleos Mexicanos, Subsidiary Entities, subsidiary companies and other companies, by itself or through companies in which it participates directly or indirectly. |
| • | | Pemex Fertilizers: This entity produces, distributes and commercializes ammonia, fertilizers and its derivatives, as well as provides related services. |
| • | | Pemex Ethylene: This entity commercializes, distributes and trades methane, ethane and propylene, directly or through others. |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
On April 28, 2015 the creation resolutions of the seven productive state-owned subsidiaries were published in the Official Gazette of the Federation. On May 29, 2015 the statements related to the creation resolution of the productive state-owned subsidiary Pemex Exploration and Production and the productive state-owned subsidiary Pemex Cogeneration and Services issued by the Board of Directors of Petróleos Mexicanos were published in the Official Gazette of the Federation and, accordingly, these creation resolutions came into effect on June 1, 2015. On December 29, 2015 and May 12, 2016, a modificationmodifications to the creation resolution of the productive state-owned subsidiary Pemex Exploration and Production waswere published in the Official Gazette of the Federation and became effective that same date.date, respectively. On July 31, 2015, the statements related to the creation resolution of the productive state-owned subsidiary Pemex Drilling and Services, the productive state-owned subsidiary Pemex Fertilizers and the productive state-owned subsidiary Pemex Ethylene issued by the Board of Directors of Petróleos Mexicanos were published in the Official Gazette of the Federation and, accordingly, these creation resolutions came into effect on August 1, 2015. On October 1, 2015, the statement related to the creation resolution of the productive state-owned subsidiary Pemex Logistics issued by the Board of Directors of Petróleos Mexicanos was published in the Official Gazette of the Federation and, accordingly, these creation resolutions came into effect on October 1, 2015. On October 6, 2015, the statement related to the creation resolution of the productive state-owned subsidiary Pemex Industrial Transformation issued by the Board of Directors of Petróleos Mexicanos was published in the Official Gazette of the Federation and, accordingly, these creation resolutions came into effect on November 1, 2015. The terms in capital letters not defined in these financial statements shall be understood as establishedOn July 13, 2018, the Board of Directors of Petróleos Mexicanos issued theDeclaratoria de Liquidación y Extinción de Pemex Cogeneración y Servicios (Declaration of Liquidation and Extinction of Pemex Cogeneration and Services), which was published in the Official Gazette of the Federation and became effective on July 27, 2018. Pemex Industrial Transformation is subrogated in any obligation contracted or right acquired previously, in Mexico and abroad, by Pemex Cogeneration and Services that was in force on July 27, 2018.
On June 24, 2019, the Board of Directors of Petróleos Mexicanos Law.approved the merger of Pemex Exploration and Production and Pemex Drilling and Services, as well as the merger of Pemex Industrial Transformation and Pemex Ethylene, both became effective on July 1, 2019. Pemex Exploration and Production and Pemex Industrial Transformation will remain as merging companies and Pemex Drilling and Services and Pemex Ethylene will become extinct as merged companies. On June 28, 2019, modifications to the Creation Resolutions of Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Logistics and Pemex Fertilizers, which came into effect on July 1, 2019, were published in the Official Gazette of the Federation. On July 30, 2019, the Declarations of Extinction of Pemex Drilling and Services and Pemex Ethylene, respectively, resulting from their merger with Pemex Exploration and Production and Pemex Industrial Transformation, respectively, were issued by the Board of Directors of Petróleos Mexicanos and effective on July 1, 2019, were published in the Official Gazette of the Federation. The Subsidiary Entities, and their primary purposes, are as follows: Pemex Exploration and Production: This entity is in charge of exploration and extraction of crude oil and solid, liquid or gaseous hydrocarbons in Mexico, in the exclusive economic zone of Mexico and abroad, as well as drilling services and repair and services of wells Pemex Industrial Transformation: This entity performs activities related to refining, processing, importing, exporting, trading and the sale of hydrocarbons, as well as commercializes, distributes and trades methane, ethane and propylene, directly or through others. Pemex Logistics: This entity provides transportation, storage and related services for crude oil, petroleum products and petrochemicals to PEMEX (as defined below) and other companies, through pipelines and maritime and terrestrial means, and provides guard and management services. Pemex Fertilizers: This entity produces, distributes and commercializes ammonia, fertilizers and its derivatives, as well as provides related services. The principal distinction between the Subsidiary Entities and the Subsidiary Companies (as defined below) is that the Subsidiary Entities are productive state-owned entities, whereas the Subsidiary Companies are affiliatesaffiliate companies that were formed in accordance with the applicable laws of each of the respective jurisdictions in which they were incorporated. The “Subsidiary Companies” are defined as those companies which are controlled, directly or indirectly, by Petróleos Mexicanos (see Note3-a)3-A). “Associates,” as used herein, means those companies in which Petróleos Mexicanos doeshas significant influence but not have effective control (see Note 3 a). or joint control over its financial and operating policies. 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. Verónica Anzures, DelegaciónAlcaldía Miguel Hidalgo, 11300, Ciudad de México, México. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
NOTE 2. | AUTHORIZATION AND BASIS OF PREPARATION a. | Statement of compliance |
PEMEX prepared its consolidated financial statements as of December 31, 2016 and 2015, and for the years ended December 31, 2016, 2015 and 2014, in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).Authorization –
On April 20, 2017,May 6, 2020, these consolidated financial statements under IFRS and the notes hereto were authorized for issuance by the following officers: Mr. José Antonio González Anaya,Octavio Romero Oropeza, Chief Executive Officer, Mr. Juan Pablo Newman Aguilar,Alberto Velázquez García, Chief Financial Officer, Mr. Manuel Salvador Cruz Flores,Carlos Fernando Cortez González, Deputy Director of Budgeting and Accounting, and Tax Matters, and Mr. Francisco J. Torres Suárez,Oscar René Orozco Piliado, Associate Managing Director of Accounting. These consolidated financial statements and the notes hereto as of December 31, 2016 were approved by the Board of Petróleos Mexicanos on April 27, 2017 with prior approval from the Audit Committee of the report of the Independent Registered Public Accountant,are issued pursuant to the terms of Article 13 Fraction VI of the Petróleos Mexicanos Law, Article 104 Fraction III, paragraph a, of theLey del Mercado de Valores (Securities Market Law), and of Article 33 Fraction I, paragraph a, section 3 and Article 78 of theDisposiciones de carácter general aplicables a las emisoras de valores y a otros participantes del mercado de valores (General(“General provisions applicable to securities´securities’ issuers and other participants of the securities market)market”). Audit appraisal matters are reported to the Audit Committee. The entire Board of Directors of Petróleos Mexicanos is currently acting as the Audit Committee. These consolidated financial statements are PEMEX’s first annual consolidated financial statements in whichIFRS 16, Leases (“IFRS 16”) has been applied. Changes to significant accounting policies are described in Note 4. Basis of accounting – A. | Statement of compliance |
PEMEX prepared its consolidated financial statements as of December 31, 2019 and 2018, and for the years ended December 31, 2019, 2018 and 2017, in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). b.B. | Basis of measurementaccounting |
These consolidated financial statements have been prepared using the historical cost basis method, except where it is indicated that certainwith the exception of the following items, which have been measured using the fair value model, amortized cost, present value or value in use. The principal items measured at fair value are derivative financial instruments (“DFIs”); the principal item measured at amortized cost is debt, the principal item measured at present value is the provision for employee benefits and some components of wells, pipelines, properties, plant and equipment are measured at value in use.an alternative basis. Going concern
| | | ITEM | | BASIS OF MEASUREMENT | Derivative Financial Instruments (“DFIs”) | | Fair Value | Employee Benefits | | Fair Value of plan assets less present value of the obligation (defined benefit plan) |
The consolidated financial statements have been prepared on a going concern basis, which assumes that PEMEX will be able to continue its operations and can meet its payment obligations. For the years ended December 31, 2016 and 2015, PEMEX recognized net losses of Ps. 191,144,342 and Ps.712,567,398, respectively, caused mainly by the decrease in international oil prices that commenced in August 2014, the high tax burden applicable to the industry and the depreciation of the peso relative to the U.S. dollar. Additionally, as of December 31, 2016 and December 31, 2015, PEMEX hadobligations for a negative equity of Ps. 1,233,008,147 and Ps. 1,331,675,898, respectively, and a negative working capital of Ps. 70,791,086 and Ps. 176,207,224, respectively; and net cash flows used in operating activities for Ps.41,485,440 for the year ended December 31, 2016.
PEMEX believes net cash flows from its operating and financing activities for 2017, including the use of lines of credit with certain banks, will be sufficient to meet its working capital needs, debt service and capital expenditure requirements and maintain its financial strength and flexibility in the twelve months following from the date of issuance of these consolidated financial statements.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
PEMEX is continuing to implement a business strategy that redefines it as a state-owned productive company and that enables it to operate competitively and efficiently and take advantage of benefits of the Energy Reform. PEMEX began taking certain of these actions in 2016 and will continue in 2017 as further described below:reasonable period. (See Note22-F).
| • | | 2017-2021 Business Plan: On November 3, 2016, PEMEX announced its business plan for the five-year period from 2017 through 2021, which is designed to improve cash flows, reduce net indebtedness, strengthen its financial balance, reduce financial losses in its national refining system and plan for continued cost-cutting and administrative discipline, as well as the establishment of additional alliances, including an intensivefarm-out program. |
The business plan was prepared with realistic and conservative premises, which does not include additional income from the disposal of assets.
| • | | Plan for 2017: The 2017 actions under the business plan also sets out certain objectives Petróleos Mexicanos expects to achieve with respect to its Subsidiary Entities as follows: |
Pemex Exploration and Production’s investments will focus on the most profitable projects, as well as on farm-outs and other partnerships aimed at increasing hydrocarbon production. For 2017 Pemex Exploration and Production is planning to develop farm-outs and other partnerships, including the partnership celebrated with Chevron and Inpex Corporation in the bidding round 1.4, for the rights to block 3 North of the Plegado Perdido Belt in the Gulf of Mexico and its migration of assignment through the strategic alliance with the FrenchBHP-Billiton for the Trion project.
With respect to Pemex Industrial Transformation, PEMEX is seeking partnerships for auxiliary services and the reconfiguration of certain refineries for approximately projects for 2017, such as the auxiliary services contract with Air Liquide México. S.A. de R.L. de C.V. for the hydrogen supply in the Miguel Hidalgo Refinery in Tula, Hidalgo.
Pemex Logistics is being transformed from a company designed to ensure that Petróleos Mexicanos and its subsidiaries are properly supplied to provide profitable and competitive services to multiple customers. For 2017, Pemex Logistics is working on the open season to provide services for transportation and storage of products.
PEMEX’s business plan also describes its goal to increase the profitability of Pemex Fertilizers, Pemex Ethylene, Pemex Cogeneration and Services and Pemex Drilling and Services through services contracts and partnerships for the modernization of their facilities.
| • | | 2016 Budget Adjustment. For 2017, PEMEX continues to develop actions from its “Plan de Ajuste Presupuestal 2016” (2016 Budget Adjustment Plan) which were included in its 2017-2021 business plan, as this plan contributed to increase its efficiency to enable it to be more competitive in the hydrocarbons sector in Mexico; focus investments on the most profitable projects; established partnerships with the private sector for strategic projects and promoted further development in sectors where private investment may provide economic growth in Mexico; and identified opportunities for joint arrangements that can generate additional revenues, as well as savings in investment costs. |
| • | D. | Pension Reform. As of January 1, 2016, new employees receive a defined contribution pension plan, pursuant to which both PEMEX and its employees contribute to each employee’s individual account, in contrast to the existing defined benefit pension plan, pursuant to which only PEMEX contributes. Additionally, PEMEX will provide existing employees with the option to migrate from a defined
|
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| benefit plan to a defined contribution plan, which will allow PEMEX to decrease its employee benefits service cost and the growing of its employee benefits liability.
|
| • | | Asset Sales. PEMEX will continue to evaluate the divestiture ofnon-essential assets to obtain working capital, such as the sale of Gasoductos de Chihuahua, S. de R.L. de C.V. in 2016 (see Note 11). |
| • | | Decreased Debt Financing: PEMEX will decrease its financing during the year in 2017 from Ps. 240,400,000 net indebtedness approved for 2016 to a net indebtedness approved of Ps. 150,000,000 in 2017. In addition, PEMEX will assess opportunities for liability management in accordance with market conditions, such as the liability management transaction completed on October 3, 2016, which allowed the exchange of near to maturity securities for longer term maturity securities with better conditions. |
| • | | New Budget: On July 8, 2016, the Board of Directors of Petróleos Mexicanos approved a proposal for the consolidated annual budget of Petróleos Mexicanos and its Subsidiaries Entities for 2017, which was subsequently approved by the Chamber of Deputies on November 10, 2016. The consolidated annual budget of Petróleos Mexicanos and its Subsidiary entities for 2017 is approximately Ps. 391,946,173 as compared to the Ps. 378,282,000 consolidated annual adjusted budget for 2016. |
The structural changes arising from the Energy Reform, and the actions taken by management are aimed at ensuring the continuity of PEMEX’s operations, reducing costs, generating more revenue and operating more efficiently.
In addition, PEMEX foresees a more stable scenario for the hydrocarbons market, which may allow for an improvement in its revenues. A result of this stability was the effect of the reversal of the impairment experienced in 2016, which resulted in an improvement in the financial position of PEMEX by Ps. 331.3 billion, compared to the impairment of Ps.477.9 billion in 2015.
Petróleos Mexicanos and its Subsidiaries Entities are not subject to theLey de Concursos Mercantiles (the Bankruptcy Law) and none of PEMEX’S existing financing agreements include any clause that could lead to the demand for immediate payment of the respective debt due to having negative equity.
PEMEX prepared its consolidated financial statements as of December 31, 2016 and 2015 on a going concern basis. There are certain conditions that have generated important uncertainty and significant doubts concerning the entity’s ability to continue operating, including recurring net losses, negative working capital, negative equity and negative cash flows from operating activities in 2016. PEMEX has disclosed the existence of these uncertainties, the circumstances that have caused these negative trends and the concrete actions it is taking to face them, improve its results and strengthen the feasibility to continue operating, achieving maximization and efficiencies in an economic environment which is showing recovery and some stability. These financial statements do not contain any adjustments that would be required if they were not prepared on a going concern basis.
c. | Functional and reporting currency and translation of foreign currency operations |
These consolidated financial statements are presented in Mexican pesos,which is both PEMEX’s functional currency and reporting currency, due to the following: | i. | theThe economic environment in which PEMEX operates is Mexico, where the legal currency is the Mexican peso; |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| ii. | The budget through which Petróleos Mexicanos and its Subsidiary Entities have budgetary autonomy, subject only to maintaining the financial balance (the difference between income and total net spending, including the financial cost of the public debtoperate as entities of the Mexican Government, andincluding the entities directly controlled by the Mexican Government) and the spending cap ofceiling for personnel services, proposed by SHCPis elaborated, approved and approved by the Mexican Congress,exercised in Mexican pesos. |
| iii. | Employee benefits provision was approximately 34%37% and 41%31% of PEMEX’s total liabilities as of December 31, 20162019 and 2015,2018, respectively. This provision is computed, denominated and payable in Mexican pesos; and |
| iv. | cashCash flows for payment of general expenses, taxes and duties are realized in Mexican pesos. |
Although the sales prices of severalcertain products are based on international U.S. dollar-indices, final domestic selling prices are governed by the economic and financial policies established by the Mexican Government. Accordingly, cash flows from domestic sales are generated and received in Mexican pesos. Mexico’s monetary policy regulator, the Banco de México, requires that Mexican Government entities other than financial entities sell their foreign currency to the Banco de México in accordance with its terms, receiving Mexican pesos in exchange, which is the currency of legal tender in Mexico. Translation of financial statements of foreign operationsTerms definition –
The financial statements of foreign subsidiaries and associates are translated into the reporting currency by first identifying if the functional currency is different from the currency for recording the foreign operations, and, if so, the recording currency is translated into the functional currency and then into the reporting currency using theyear-end exchange rate of each period for assets and liabilities reported in the consolidated statements of financial position; the historical exchange rate at the date of the transaction for equity items; and the weighted average exchange rate of the period for income and expenses reported in the statement of comprehensive income.
References in these consolidated financial statements and the related notes to “pesos” or “Ps.” refers to Mexican pesos, “U.S. dollars” or “US$“U.S.$” refers to dollars of the United States of America, “yen” or “¥” refers to Japanese yen, “euro” or “€” refers to the legal currency of the European Economic and Monetary Union, “Pounds sterling” or “£” refers to the legal currency of the United Kingdom and “Swiss francs” or “CHF” refers to the legal currency of the Swiss Confederation, “Canadian dollars” or “CAD” refers to the legal currency of Canada and “Australian dollars” or “AUD” refers to the legal currency of Australia.Confederation. Figures in all currencies are presented in thousands of the relevant currency unit, except exchange rates and product and share prices. e.E. | Use of judgments and estimates |
The preparation of the consolidated financial statements in accordance with IFRS requires the use of estimates and assumptions made by PEMEX’s management that affect the recorded amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of these consolidated financial statements, as well as the recorded amounts of income, costs and expenses during the year. Actual results may differ from these estimates. Significant estimates and underlying assumptions are reviewed, and the effects of such revisions are recognized in the years in which any estimates are revised and in any future periods affected by such revision. Information about estimates, assumptions and critical accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements are described in the following notes: i. | Judgments, assumptions and estimation uncertainties |
Note3-C Financial instruments – Fair Value and expected credit losses Note3-E Wells, pipelines, properties, plant and equipment – Value in use Note3-F Intangible assets and oil and natural gas exploration and license, appraisal and development expenditure – successful efforts method Note3-H Impairment ofnon-financial assets – Cash flow estimates and discount rates determination Note3-I Leases – Early cancellation or renewal options Note3-K Provisions – Environmental liabilities and retirement of assets Note3-L Employee benefits – Actuarial assumptions Note3-M Income taxes, duties and royalties – Recoverably assesment of deferred tax assets Note3-N Contingencies – Probability assessment ii. | Measurement of fair values |
Some of PEMEX’s accounting policies and disclosures require the measurement of the fair values of financial assets and liabilities, as well asnon-financial assets and liabilities. PEMEX has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values. The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which the valuations should be classified. When measuring the fair value of an asset or a liability, PEMEX uses market observable data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows. Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair value of an asset or a liability might be categorized in different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. PEMEX recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. F. | Convenience translations |
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 statements of financial position, the consolidated statements of comprehensive income, the consolidated statements of changes in equity (deficit) and the consolidated statements of cash flows have been included solely for the convenience of the reader and are unaudited. Such amounts have been translated from amounts in pesos, as a matter of arithmetic computation only, at the exchange rate for the settlement of PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
obligations in foreign currencies provided by Banco de México and SHCP at December 31, 20162019 of Ps. 20.664018.8452 per U.S. dollar. Translations herein should not be construed as a representation that the peso amounts have been or could be converted into U.S. dollars at the foregoing or any other rate. NOTE 3. Significant
NOTE 3. | SIGNIFICANT ACCOUNTING POLICIES |
PEMEX has consistently applied the following accounting policies The to each of the periods presented in the preparation of theits consolidated financial statements, except for what is mentioned in accordance with IFRS requires the use of estimates and assumptions made by PEMEX’s management that affect the recorded amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of these consolidated financial statements, as well as the recorded amounts of income, costs and expenses during the year.
Significant estimates and underlying assumptions are reviewed, and the effects of such revisions are recognized in the period in which any estimates are revised and in any future periods affected by such revision.
Information about estimates, assumptions and critical accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements are described in the following notes:
Note 3(e) Financial instruments Note 3(h) Wells, pipelines, properties, plant and equipment; Successful efforts method
Note 3(j) Impairment ofnon-financial assets
Note 3(l) Provisions
Note 3(m) Employee benefits
Note 3(n) Income taxes and duties;
Note 3(p) Contingencies
Actual results could differ from those estimates and assumptions.4, Accounting changes.
Below is a summary of the principal accounting policies, which have been consistently applied to each of the years presented and followed by PEMEX in the preparation of its consolidated financial statements:policies: a.A. | Basis of consolidation |
The consolidated financial statements include thosethe financial statements of Petróleos Mexicanos the Subsidiary Entities and the Subsidiary Companies. All intercompany balances and transactionsthose of the consolidated companies; income and expenses, as well as unrealized profits and losses resulting from operations between them have been eliminated in the preparation of the consolidated financial statements pursuant to IFRS 10, “Consolidated Financial Statements” (“IFRS 10”). 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 PEMEX’s 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.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)its subsidiaries over which it has control.
Investment in subsidiaries
The Subsidiary Entities and Subsidiary CompaniesSubsidiaries are consolidated from the date that control commences until the date that control ceases.
Petróleos Mexicanos controls a subsidiaryentities controlled by PEMEX. PEMEX “controls” an entity when it is exposed to, or has rights to, variable returns from its involvement with the companyentity and has the ability to affect those returns through its power over the company.
entity. The financial statements of subsidiaries are included in the Subsidiary Entities and Subsidiary Companies have been prepared based on the same period of Petróleos Mexicanos’ consolidated financial statements applyingfrom the same accounting policies.date on which control commences until the date on which control ceases. For more information about the Subsidiary Companies, see Note 4.5. Permanent investments
| ii. | Non-controlling interests (NCI) |
NCI are measured initially at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition. Changes in the ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. When PEMEX loses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, and any related NCI and other components of equity. Any resulting gain or loss is recognized in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost. | iv. | Interests in equity-accounted investees |
PEMEX’s interests in equity-accounted investees comprise interests in associates and a joint arrangementsventure. Associates are those entities in which PEMEX has significant influence, but not control or joint control, over the power to control financial and operational decisions. Itoperating policies. A joint venture is presumed that there is significant influence whenan arrangement in which PEMEX owns directly or indirectly between 20% and 50% of voting rights in another entity. Joint arrangements are those arrangements whereby two or more parties havehas joint control, of an arrangement. A joint arrangement is either a joint venture, where both of the parties havewhereby PEMEX has rights to the net assets of the arrangements, or a joint operation, where the parties have botharrangement, rather than rights to theits assets and obligations for theits liabilities relating to the arrangements.(joint operation).
InvestmentsInterests in associates and the joint venturesventure are recognized based onaccounted for using the equity method and recordedmethod. They are initially recognized at cost, including any goodwill identified on acquisition. With respect to joint operations, the assets, liabilities, income and expenses are recognized in relation to the share of each party and in accordance with the applicable IFRS for each of those items. The investment costwhich includes transaction costs.
These Subsequent to initial recognition, the consolidated financial statements include PEMEX’s share of the proportion of gains, lossesprofit or loss and other comprehensive income corresponding to PEMEX’s share in each investee, once these items are adjusted to align with the accounting policies(OCI) of PEMEX, fromequity accounted investees, until the date thaton which significant influence and joint control begins to the date that such influence or joint control ceases.
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. For more information about associatesjoint ventures and joint arrangements,associates, see Note 11.12. Non-controlling interests
| v. | Transactions eliminated on consolidation |
The interestsIntra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated. Unrealized gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of third parties who do not have a controllingthe PEMEX interest in the equity or comprehensive result of subsidiaries of PEMEXinvestee. Unrealized losses are presentedeliminated in the consolidated statementssame way as unrealized gains, but only to the extent that there is no evidence of financial position, the consolidated
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
statements of changes in equity (deficit) as“non-controlling interests” and as “net income and comprehensive income for the period, attributable tonon-controlling interests,” in the consolidated statements of comprehensive income.
Dividends in cash and assets other than cash
A liability for distributions of dividends in cash andnon-cash assets to third parties is recognized when the distribution is authorized by the Board of Directors. The corresponding amount is recognized directly in equity.
Distributions of dividends innon-cash assets are measured at the fair value of the assets to be distributed. Changes relating to these measurements of the fair value, between the date on which the distribution is declared and the date when the assets are transferred, are recognized directly in equity.
When distributingnon-cash assets, any difference between the carrying amount of the liability for distribution of dividends and the carrying amount of the assets distributed is recognized in the consolidated statements of comprehensive income.impairment.
b.B. | Business combinations and goodwillForeign currency |
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured as the acquisition date fair value, and the amount of anynon-controlling interest in the acquiree.
When PEMEX acquires a business, it assesses the acquired assets and liabilities in order to appropriately classify and designate each, taking into account the contractual terms, economic circumstances and other pertinent conditions as of the date of the acquisition. This includes the separation of embedded derivatives in host contractors by the acquiree. Acquired petroleum reserves and resources that can be reliably measured are recognized separately in the assessment of fair values on acquisition. Other potential reserves and rights, for which fair values cannot be reliably measured, are not recognized separately, but instead are subsumed in goodwill.
For business combinations achieved in stages, any previously held equity interest is measured at its acquisition date fair value, and any resulting gain or loss is recognized in income or loss or other comprehensive income.
Any contingent consideration to be transferred by the acquirer will be recognized at fair value on the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IAS 39 “Financial instruments: Recognition and Measurement” is measured at fair value, with changes in fair value recognized in income or loss or other comprehensive income. If contingent consideration is not with the scope of IAS 39, it is measured in accordance with the appropriate IFRS requirement. Contingent consideration that is classified as equity is not remeasured, and subsequent settlement is accounted for within equity.
Goodwill, which is initially measured at cost, is the excess of the aggregate of the consideration transferred and the amount recognized fornon-controlling interest over the fair value of the identifiable net assets acquired and liabilities assumed. If the fair value of the net asset acquired is greater than the aggregate consideration
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
transferred (bargain purchase), before recognizing a gain, PEMEX reassesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognized at the acquisition date. If the assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognized in the statement of comprehensive income.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each cash generating unit that is expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
When goodwill is allocated to a cash generating unit and certain of the operations in that unit are disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash generating unit retained.
c. | Transactions in foreigni. | Foreign currency transactions |
In accordance with IAS 21 “The Effects of Changes in Foreign Exchange Rates” (“IAS 21”), transactionsTransactions in foreign currencies are translated and recordedinto the respective functional currencies of PEMEX companies at the exchange rates at the dates of the transactions and/ortransactions.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date.Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined.Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the presentationtransaction. Foreign currency differences are generally recognized in consolidated statements of comprehensive income and presented within foreign exchange. The financial statements of foreign subsidiaries and associates are translated into the reporting currency by first identifying if the functional currency is different from the currency for recording the foreign operations, and, if so, the recording currency is translated into the functional currency and then into the reporting currency using theyear-end exchange rate of each period for assets and liabilities reported in the consolidated statements of financial information.position; the historical exchange rate at the date of the transaction for equity items; and the exchange rate at the date of the transaction for income and expenses reported in the consolidated statement of comprehensive income. ExchangeForeign currency differences arising from the settlement of monetary items or from the translation of monetary items into rates different from those at which they were translated on their initial recognition, are recognized in the results of operationsOCI and accumulated in the reporting periodcurrency translation effect, except to the extent that the translation difference is allocated to NCI.
When a foreign operation is disposed of in which they arise. When aits entirety or partially such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to the consolidated statement of comprehensive income as part of the gain or loss fromon disposal. If PEMEX disposes of part of its interest in anon-monetary item subsidiary but retains control, then the relevant proportion of the cumulative amount is recognized in other comprehensive results, any exchange difference included in that gainreattributed to NCI. When PEMEX disposes of only part of an associate or lossjoint venture while retaining significant influence or joint control, the relevant proportion of the cumulative amount is recognized in other comprehensive results. Conversely, when a gainreclassified to profit or loss from anon-monetary item is recognized in the results of operations, any exchange difference included in that gain or loss is recognized in the results of operations for the period.loss. d.C. | Fair value measurement |
PEMEX measures certain financial
Financial instruments such as DFIs at fair value as of the closing date of the relevant reporting period. 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:
| i. | in the principal market for the asset or liability; or |
| ii.i. | in the absence of a principal market, in the most advantageous market for the asset or liability. |
The principal market or the most advantageous market must be accessible for PEMEX.
Recognition and initial measurement The fair value of an asset or liability is measured by using the same assumptions that market participants would make when pricing the asset or liability under the premise that market participants take into account highest and best use of the asset or liability.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Financial instrumentsassets and liabilities, including accounts receivable and payable, are classified as: (i)initially recognized when these assets are contractually originated or acquired, or when these liabilities are contractually issued or assumed. Financial assets and financial instrumentsliabilities (unless it is an account receivable or account payable without a significant financing component) are measured and initially recognized at fair value, in the case of financial assets or liabilities not measured at fair value with changes through profitOCI, plus the transaction costs directly attributable to acquisition or loss; (ii) financial instruments held to maturity;(iii) available-for-sale financial assets; (iv) investments in equity instruments; (v) loans and receivables; and (vi) DFIs. PEMEX determines the classification of its financial instrumentsissuance, when subsequently measured at amortized cost. An account receivable or account payable without a significant financing component is initially measured at the timetransaction price. | ii. | Classification and subsequent measurement |
Financial Assets – On initial recognition, a financial asset is classified as measured at: Amortized Cost; Fair Value Through Other Comprehensive Income (“FVTOCI”)-debt investment; FVTOCI–equity investment; or Fair Value Through Profit or Loss (“FVTPL”). Financial assets are not reclassified subsequent to their initial recognition unless PEMEX changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model. | | | FINANCIAL ASSETS | | MEASUREMENT | Amortized Cost | | A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL: • it is held within a business model that has the objective of holding assets to collect contractual cash flows; and • its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. | | | Debt investment | | A debt instrument is measured at FVTOCI only if it meets both of the following conditions and is not designated as at FVTPL: • it is held within a business model that has the objective of both collecting contractual cash flows and selling financial assets; and • its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. | | | Equity investment | | On initial recognition of an equity investment that is not held for trading, PEMEX may irrevocably elect to present subsequent changes in fair value in OCI. This election is made on aninvestment-by-investment basis. |
All financial assets not classified as measured at amortized cost or FVTOCI (as described above) are measured at FVTPL. This includes all derivative financial assets (see Note 18). On initial recognition, PEMEX may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as FVTPL, if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise. Financial assets: Business model assessment – PEMEX makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes: the stated policies and objectives for the portfolio and the operation of those policies in practice, which include whether management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets; how the performance of the portfolio is evaluated and reported to PEMEX management; the risk that affects the performance of the business model (and the financial assets held within that business model) and how those risks are managed; how managers of the business are compensated (e.g., whether compensation is based on the fair value of the assets managed or the contractual cash flows collected); and the frequency, volume and timing of sales in prior periods, the reasons for such sales and expectations about future sales activity. Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with PEMEX’s continuing recognition of the assets. Financial assets that are held for trading or managed and the performance of which is evaluated on a fair value basis are measured at FVTPL. Financial Asset: Assessment whether contractual cash flows are solely payments of principal and interest – For the purposes of this assessment, principal is defined as the fair value of the financial assets on initial recognition. PEMEX’s financial instruments include cashInterest is defined as consideration for the time value of money and short-term deposits,available-for-sale financial assets, accounts receivable, other receivables, loans, accounts payable to suppliers, other accounts payable, borrowingsfor the credit risk associated with the principal amount outstanding during the relevant period of time and debts,for the basic lending risks and costs (e.g., liquidity risk and administrative costs), as well as DFIs.profit margin.
BelowIn assessing whether the contractual cash flows are descriptionssolely payments of principal and interest, PEMEX considers the contractual terms of the instrument, which includes assessing whether the financial instruments policies employed by PEMEX:asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, PEMEX considers:
contingent events that would change the amount or timing of cash flows; terms that may adjust the contractual coupon rate, including variable rate features; prepayment and extension features; and terms that limit PEMEX’s claim to cash flows from specified assets (for example,non-recourse features). A prepayment feature is consistent solely with the payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a significant discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition. Financial instrumentsassets: Subsequent measurement and gain and losses – | | | Financial assets at FVTPL | | Financial assets at FVTPL are measured at fair value and changes therein, including any interest or dividend income, are recognized in profit or loss. | | | Financial assets at amortized cost | | These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss. | | | Debt investments at FVOCI | | These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss. | | | Equity investments at FVOCI | | These assets are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in OCI and are never reclassified to profit or loss. |
Financial liabilities: Classification, subsequent measurement and gains and losses – Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as FVTPL if it is classified asheld-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are 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 purchasenet gains and sale decisions based on their fair value in accordance with PEMEX’s documented risk management or investment strategy. In addition, directly attributable transaction costslosses, including any interest expense, are recognized in the consolidated statements of comprehensive income for the year. These financial instruments are recognized at fair value and corresponding changes relating to dividend income are recognized in the consolidated statements of comprehensive income.
Available-for-sale financial assets
Available-for-sale financial assets arenon-DFIs that are designated asavailable-for-sale or are not classified in any of the previous categories. PEMEX’s investments in certain equity securities and debt securities are classified asavailable-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 Other financial assets that require the delivery of such assets within a period of time established by market practiceliabilities are recognized as of the negotiation date (the date on which PEMEX commits to purchase or sell the asset).
Loans and receivables
Loans and receivables are initially recognized at fair value. After initial recognition, loans and debt securities that bear interest aresubsequently measured at amortized cost using the effective interest rate (“EIR”) method, less impairment losses.method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.
The amortized cost is calculated
Financial assets – PEMEX derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which PEMEX neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. PEMEX enters into transactions whereby it transfers assets recognized in its statement of financial position but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized. Financial liabilities – PEMEX derecognizes a financial liability when its contractual obligations are discharged, cancelled or expired. PEMEX also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value. On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any discountnon-cash assets transferred or premium on acquisitionliabilities assumed) is recognized in profit or loss. Financial assets and feesfinancial liabilities are offset, and costs that are an integral part of the EIR method. Amortization of costsnet amount is included under the heading of financing costpresented in the statement of comprehensive income.financial position when, and only when, PEMEX has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously. v. | Derivative financial instruments and hedge accounting |
PEMEX uses DFIs to hedge the risk exposure in foreign currency, interest rate and the price of commodities related to its products. Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are met. These contracts are not accounted as designated hedging instruments. DFIs are accounted for as financial assets when the fair value is positive and as a financial liability when the fair value is negative. Financial instruments and contract assets – PEMEX recognizes loss allowances for Estimated Credit Losses (“ECLs”) on: financial assets measured at amortized cost; debt investments measured at FVOCI; and PEMEX measures loss allowances at an amount equal to lifetime ECL, except for the following, which are measured as12-month ECLs: debt securities that are determined to have low credit risk at the reporting date; and other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition. PEMEX considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to PEMEX in full, without recourse by PEMEX to actions such as realizing security (if any is held). PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESPEMEX considers that a debt instrument has a low credit risk, when its credit rating is classified as “investment grade”. The investment grade classification is based on minimum credit ratings of Baa3 (Moody’s) andBBB- (S&P and Fitch), as well as its equivalent in other rating agencies.
AND SUBSIDIARY COMPANIESLifetime ECLs are the credit losses that result from all possible default events over the expected life of a financial instrument.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014The maximum period considered when estimating ECLs is the maximum contractual period over which PEMEX is exposed to credit risk.
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Measurement of ECLs –
Derivative financial instruments
DFIs presented inECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the consolidated statementpresent value of financial position are carried at fair value. Inall cash shortfalls (for example, the case of DFIs held for trading, changes in fair value are recorded in profit or loss; indifference between the case of DFIs formally designated as and that qualify for hedging, changes in fair value are recorded incash flows due to the statement of comprehensive income using cash flow or fair value hedge accounting, with gains or losses classifiedentity in accordance with the earnings treatmentcontract and the cash flows that PEMEX expects to receive).
ECLs are discounted at the effective interest rate of the hedge transaction.financial asset. 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 underlying contracts and measured, recognized, presented and disclosed as DFIs, such as when the economic risks and terms of the embedded derivative are not clearly and closely related to the underlying contract.
Impairment ofCredit-impaired financial assets –
At each reporting date, PEMEX evaluatesassesses 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.carried at amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is impaired if objective evidence indicates‘credit-impaired’ when one or more events that have a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effectdetrimental impact on the estimated future cash flows of the financial asset.asset have occurred. Objective evidenceEvidence that a financial asset or group of assets is impairedcredit-impaired includes the following observable data:
significant financial difficulty of the issuerborrower or obligor, issuer; a breach of contract such as a default or delinquency in interestbeing more than 90 days past due; the restructuring of a loan or principal payments; the lender, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concessionadvance by PEMEX on terms that the lenderit would not otherwise consider; consider otherwise; it becomingis probable that the borrower will enter bankruptcy or other financial reorganization; or the disappearance of an active market for that financial asseta security because of financial difficulties; or observable data indicating that there is a measurable decreasedifficulties. Presentation of allowance for ECL in the estimated future cash flows. Impairments by asset are: Impairmentstatement of financial assets carried at amortized costposition –
The impairment ofLoss allowances for financial assets carriedmeasured at amortized cost is measured asare deducted from the difference between the assetsgross carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset´s original effective interest rate. The amount of the loss shall be recognized in profit or loss.assets.
If, in a subsequent period, theWrite-off –
The gross carrying amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the impairment loss previously recognized shall be reversed in profit or loss. Impairment in available-for-sale financial assets
Additionally to the above mentioned, a significant or prolonged decline in the fair value of an available- for- sale financial asset is also objective evidencewritten off when PEMEX has no reasonable expectation of impairment.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
When thererecovering a financial asset in its entirety or a portion thereof. In the case of individual customers, PEMEX’s policy is objective evidence ofto cancel the impairment of an asset, the accumulated loss recognized in other comprehensive income shall be reclassified from equity to profit or loss even thoughgross carrying amount when the financial asset has not been derecognized.
If,met the uncollectibility report as established in thePolíticas Generales y Procedimientos para Cancelar Adeudos (Procedure towrite-off financial assets). For corporate customers, PEMEX individually makes an assessment with respect to the timing and amount ofwrite-off based on whether there is a subsequent period, the impairment loss decreases and the reduction could be objectively related to an event occurring after the impairment recognition, this impairment loss previously recognized shall be reversed in profit or loss.
f. | Cash and cash equivalents |
Cash and cash equivalents are comprisedreasonable expectation of cash balances on hand, net of overdrafts, deposits in bank accounts, foreign currency reserves and instruments with maturities of three months or less from the acquisition daterecovery. However, financial assets that are written off could still be subject to an insignificant riskenforcement activities in order to comply with the PEMEX’s procedures for recovery of changes in their fair value, which are used in the management of PEMEX’s short-term commitments.amounts due
Cash subject to restrictions or that cannot be exchanged or used to settle a liability within 12 months is presented asnon-current assets.
g.D. | Inventories and cost of sales |
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 formula. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated selling costs. The estimate takes into consideration, among other things, the decrease in the value of inventories due to obsolescence. 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. Advance payment to suppliers for inventory purchases are recognized as part of inventory when the risks and benefits of the ownership of the inventory have been transferred to PEMEX. h.E. | Wells, pipelines, properties, plant and equipment |
Wells,
| i. | Recognition and measurement |
Items of wells, pipelines, properties, plant and equipment are recorded at acquisition or construction cost, which includes capitalized borrowing cost, less accumulated depreciation and accumulated impairment losses. 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 to capitalize as fixed assets, otherwise they are recognized as exploration expenses. Other expenditures on exploration are recognized as exploration expenses as they are incurred.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
In accordance with IAS 16, “Property, Plant and Equipment” (“IAS 16”), initialInitial costs of 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.
The cost of financing projects that require large investments and 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, interest on financing and any other costs directly attributable to start up. In some cases, the cost also includes the costcosts of plugging of wells and removal.removal at present value. 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, they are transferred to the respective component of wells, pipelines, properties, plant and equipment and depreciation or amortization begins. If significant parts of an item of wells, pipelines, properties, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment. Until December 2018, the capitalized value of financial leases was presented in the item of wells, pipes, properties, plant and equipment, net. As of January 1, 2019 they are presented as part of the rights of use line item. Any gain or loss on disposal of an item of wells, pipelines, properties, plant and equipment is recognized in profit or loss. 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. | ii. | Subsequent expenditure |
The costs of major maintenance or replacement of a significant component of an item of wells, pipelines, properties, plant and equipment are recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to PEMEX and its cost can be measured reliably. The costs of recurring maintenance, repairs and renovations of wells, pipelines, properties, plant and equipment carried out to maintain the facilities in normal operation conditions are recognized in profit or loss as incurred. Depreciation and amortization of capitalized costs in wells are determined based on the estimated economic life of the field to which the wells belong, considering the relationship between the production of barrels of oil equivalent for the period and proved developed reserves of the field, as of the beginning of the year,period, with quarterly updates for new development investments. Depreciation of other elements of pipelines, properties, plant and equipment is recognized in profit or loss on a straight-line basis over the estimated useful life of the asset, beginning as of the date that the asset is available for use, or in the case of construction, from the date that the asset is completed and ready for use. When parts of an item of wells, pipelines,Until December 2018, properties, and equipment are significant relative to the total cost of the item, the part is depreciated separately.
Estimated useful lives of items of properties, plant and equipment are reviewed if expectations differ from previous estimates.
Pipelines, properties, and equipment received from customers are initially recognized at fair value as revenue from ordinary operating activities if PEMEX has no future obligations to the customer who transferred the item. In contrast, if PEMEX does have future obligations to such a customer, the initial recognition is recorded as a deferred liability based on the period in which the assets will provide services to the customers.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
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 arewere 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 itemThe estimated useful lives of wells, pipelines, properties, plant and equipment when the risksfor current and benefitscomparative periods are described in Note 13.
Estimated useful lives of the ownership have been transferred to PEMEX.items of properties, plant and equipment are reviewed and updated prospectively if expectations differ from previous estimates. F. | Intangible assets and oil and natural gas exploration and license, appraisal and development expenditure |
Intangible assets acquired separately are measured at initial recognition at their acquisition cost. After the initial recognition, intangible assets are valued at their acquisition cost, less: (i) accumulated amortization, under the straight-line method during the estimated useful life of the intangible asset and (ii) accumulated impairment losses. Rights-of-way and software licenses are amortized over the lesser of their contract period or the remaining life of the asset to which they are associated. As of December 31, 2019, the rights of way were recognized as right of use, due to the adoption of IFRS 16. The estimated useful lives of elements of intangible assets for current and comparative periods are described in Note 14. The estimated useful lives and residual values of intangible assets are reviewed at each reporting date and adjusted if appropriate. | ii. | Wells not assigned to a reserve, oil and natural gas exploration, appraisal and development expenditure |
| a. | Wells not assigned to a reserve |
Wells not assigned to a reserve mainly include drilling, evaluation and development costs for oil and natural gas, andrights-of-way. | b. | Oil and natural gas exploration, appraisal and development expenditures |
Oil and natural gas exploration, evaluation and development expenses are accounted for using the principles of the successful efforts method of accounting, as described below: Successful Efforts Method – Pemex Exploration and Production applies IFRS 6 - Exploration and Evaluation of Mineral Resources, which allows an entity to develop an accounting policy for exploration and evaluation assets. Therefore, Pemex Exploration and Production uses the method of successful efforts, which requires a cause and effect relationship between the costs incurred and the recognition of specific reserves. Generally, if a cost is incurred without an identifiable future benefit, it is charged to expenses. Before PEMEX is able to determine the accounting treatment of a cost, it must be classified as a property acquisition, exploration, development or production cost. Exploration and appraisal expenditure – Geological and geophysical exploration costs including topographic costs, geological studies, property access rights, remuneration and expenses of geologists and geophysicists are charged to expenses as incurred. Costs directly associated with an exploration well, other than the costs mentioned in the preceding paragraph, are initially capitalized as an intangible asset (wells not assigned to a reserve) until the drilling of the well is complete and the results have been evaluated. These costs include employee compensation, materials and fuel used, platform costs and payments made to contractors. If potentially commercial quantities of hydrocarbons are not found, the exploration well costs are written off against profit or loss. If hydrocarbons are found and, subject to additional assessment activity, are likely to be capable of commercial development, the costs continue to be carried as an asset. If it is determined that development will not occur, then the costs are expensed against profit or loss. Costs directly associated with the evaluation activity performed to determine the size, characteristics and commercial potential of a reserve after the initial hydrocarbon discovery, including the costs of evaluation of wells where no hydrocarbons were found, are initially capitalized as an intangible asset (wells not assigned to a reserve). When proved reserves of oil and natural gas are determined and development is approved by management, the relevant expenditure is transferred to wells, pipelines, properties, plant and equipment. Exploration wells more than 12 months old are recognized as an expense unless: (a)(i) they are in an area requiring major capital expenditure before production can begin, (ii) commercially productive quantities of reserves have been found, and (iii) they are subject to further exploration or appraisal activity, in that, either drilling or additional exploration wells are underway or firmly planned for the near future or (b) proved reserves are recorded within 12 months of completion of the exploratory drilling. PEMEX periodically assesses the amounts included within fixed assets to determine whether capitalization is initially appropriate and can continue. Exploration wells capitalized beyond 12 months are subject to additional scrutiny as to whether the facts and circumstances have changed and therefore whether the conditions described in the preceding paragraph no longer apply. Development expenditure – Expenditure on the construction, installation and completion of infrastructure facilities such as platforms, pipelines and the drilling of development wells, including service and unsuccessful development or delineation wells, is capitalized within wells, pipelines, properties, plant and equipment and is depreciated from the commencement of production as described in the accounting policy for wells, pipelines, properties, plant and equipment. Acquisition of property – Acquisition of properties establishes that they must be capitalized when the costs related to the acquisition of properties are incurred, with proven or unproven reserves, which include the fees for the possession or lease, concession, or other form that represents the right to extract oil or gas. Exploration – Exploration includes all expenses related to the search for oil and / or gas reserves, including depreciation and applicable costs of supporting equipment and facilities, and the costs of drilling exploratory wells and exploratory stratigraphic wells. Some exploration costs are charged directly to expenses when they occur, such as the costs of maintaining unexploited properties, since such costs do not increase the possibilities that said lands contain proven reserves. The costs of geologists, topographers and geophysicists, including wages and other related expenses, are also charged directly to expenses when they occur because they do not represent the acquisition of an identifiable asset since these studies represent research expenses. All costs for drilling exploratory wells are capitalized and classified as wells, pipelines, property, plant and equipment, not associated with a reserve, until it is determined whether or not a well has proven reserves. Once the exploratory wells are completed, the future treatment of these costs is determined. Development – Development costs are associated with previously discovered proven reserves, with previously known future benefits. Therefore, all costs incurred in development activities must be capitalized. Development includes all costs incurred in creating a system of productive wells, related equipment, and facilities in proven reserves so that oil and / or gas can be extracted. Developmental costs are related to specific proven reserves. The cost of building roads to gain access to proven reserves is a development cost, as is the cost of providing facilities for the extraction, treatment, collection and storage of oil and / or gas. Developmental costs also include depreciation and operating costs of equipment and facilities used in developmental activities. Likewise,non-productive development wells (dry holes) are capitalized, since they are considered as a cost of creating the total production system for proven reserves. Production – Production includes the costs incurred to raise oil and / or gas to the surface, its collection, treatment, processing and field storage. The production function ends in the storage tank of the production field or, in exceptional circumstances, at the first point of delivery of the oil and / or gas to the main line, refinery, marine terminal or common transport. G. | Crude oil and natural gas reserves |
Under Mexican law, all crude oil and other hydrocarbon reserves located in the subsoil of Mexico are owned by the Mexican nation and not by PEMEX. In accordance with the aforementioned and based on the applicable regulation as of the date of these consolidated financial statements, the reserves assigned to PEMEX by the Mexican Government are not registered for accounting purposes because they are not PEMEX’s property. PEMEX estimates total proved oil and natural gas reserve volumes in accordance with the definitions, methods and procedures established in Rule4-10(a) of RegulationS-X (“Rule4-10(a)”) of the U.S. Securities and Exchange Commission (“SEC”) as amended, and where necessary, in accordance with the Standards 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 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. j.H. | Impairment ofnon-financial assets |
The carrying amounts of PEMEX’snon-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 the asset or its cash-generating unit exceeds the recoverable amount, PEMEX records an impairment charge in its consolidated statement of comprehensive income.profit or loss. A cash-generating unit is the smallest identifiable group of assets which can generate cash flows independently from other assets or groups of assets. The recoverable amount of an asset or a cash-generating unit is defined as the higher of its fair value minus the costs of disposal and its value in use. The value in use is the discounted present value of the net future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. In measuring value in use, the discount rate applied is thepre-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,Cash Generating Unit (“CGU”), assuming that such participants were acting in their best economic interest. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
In the case of cash-generating assets or items dedicated to the exploration and evaluation of hydrocarbons reserves, the recoverable amount is determined using the value in use based on the proved reserves and probable reserves, in some cases, for the risk factor associated with such reserves. Both impairment losses and reversals are recognized in the statement of comprehensive income in the costs and expenses line items in which the depreciation and amortization are recognized. Impairment losses may not be presented as part of the costs that have been capitalized in the value of any asset. Impairment losses related to inventories are recognized as part of cost of sales. Impairment losses on investments in associates, joint ventures and other permanent investments are recognized as profit (loss) sharing in associates. An impairment loss shall be reversed if there has been a change in the estimates used since the date when the impairment loss was recognized. These reversals will not exceed the carrying value of the asset as though no impairment had been recognized. Impairment losses and reversals are presented in a separate line item in the consolidated statement of comprehensive income. PEMEX has applied IFRS 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under IAS 17 and IFRIC 4. The determinationdetails of accounting policies under IAS 17 and IFRIC 4 are disclosed separately. Policy applicable after January 1, 2019 At inception of a contract, PEMEX assesses whether an agreementa contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, PEMEX uses the definition of a lease in IFRS 16. This policy is applied to contracts entered into or modified, on or after January 1, 2019. As a lessee – At commencement or on modification of a contract that contains a lease component, PEMEX allocates the consideration in the contract to each lease component on the basis of its relative stand-alone prices. However, PEMEX has elected for some leases not to separatenon-lease components and to account for the lease andnon-lease components as a single lease component. PEMEX recognizes aright-of-use asset and a lease liability at the lease commencement date. Theright-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. Theright-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to PEMEX by the end of the lease term or the cost of theright-of-use asset reflects that PEMEX will exercise a purchase option. In that case, theright-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, theright-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. Useful lives are shown in Note 17. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, PEMEX’s incremental borrowing rate. Generally, PEMEX uses its incremental borrowing rate as the discount rate. PEMEX determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased. Lease payments included in the measurement of the lease liability comprise the following: fixed payments, includingin-substance fixed payments; variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; amounts expected to be payable under a residual value guarantee; and the exercise price under a purchase option that PEMEX is reasonably certain to exercise, lease payments in an optional renewal period if PEMEX is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless PEMEX is reasonably certain not to terminate early. The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in PEMEX’s estimate of the amount expected to be payable under a residual value guarantee, if PEMEX changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revisedin-substance fixed lease payment. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of theright-of-use asset or is recorded in profit or loss if the carrying amount of theright-of-use asset has been reduced to zero. PEMEX presents separately theright-of-use assets and lease liabilities in the statement of financial position. Short-term leases and leases oflow-value assets – PEMEX has elected not to recognizeright-of-use assets and lease liabilities for leases oflow-value assets and short-term leases. PEMEX recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term. Policy applicable before January 1, 2019 – For contracts entered into before January 1, 2019, PEMEX determined whether the arrangement was or contained a lease based on the economic substanceassessment of whether: fulfilment of the agreement at the date of execution. An agreement contains a lease if performance under the agreement depends uponarrangement was dependent on the use of a specific asset or assets, or if assets; and the agreement grantsarrangement had conveyed a right to use the asset. An arrangement conveyed the right to use the asset.asset if one of the following was met: the purchaser had the ability or right to operate the asset while obtaining or controlling more than an insignificant amount of the output; the purchaser had the ability or right to control physical access to the asset while obtaining or controlling more than an insignificant amount of the output; or facts and circumstances indicated that it was remote that other parties would take more than an insignificant amount of the output, and the price per unit was neither fixed per unit of output nor equal to the current market price per unit of output. As a lessee – FinanceIn the comparative period, as a lessee PEMEX classified leases which transfer to PEMEXthat transferred substantially all the inherent benefits and risks of the risks and rewards of ownership as finance leases. When this was the case, the leased property, are capitalizedassets were measured initially at the date the lease commences, and the value is recorded asan amount equal to the lower of thetheir fair value of the leased property and the present value of the minimum lease payments. Payments onMinimum lease payments were the payments over the lease are divided betweenterm that the financial costslessee was required to make, excluding any contingent rent. Subsequent to initial recognition, the assets were accounted for in accordance with the accounting policy applicable to that asset.
Assets held under other leases were classified as operating leases and the amortization of the remaining debt principal in order to achieve a constant effective interest rate for the outstanding liability. The financing costs arewere not recognized in thePEMEX’s statement of comprehensive income. Operating lease payments arefinancial position. Payments made under operating leases were recognized as expenses in the statement of comprehensive incomeprofit or loss on a straight linestraight-line basis over the term of the lease. Lease incentives received were recognized as an integral part of the total lease and variable rent payments are recognized inexpense, over the operating results on an accrued basis.term of the lease.
Provisions are determined by discounting the expected future cash flows at apre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost. PEMEX recognizes provisions when, as a result of a past event, PEMEX has incurred a legal or assumed present obligation for which a future disbursement is probable and the value of such disbursement is reasonably estimable. In certain cases, such amounts are recorded at their present value. Environmental liabilities – In accordance with applicable legal requirements and accounting practices, an environmental liability is recognized when the cash outflows are probable and the amount is reasonably estimable. Disbursements related to the conservation of the environment that are linked to revenue from current or future operations are accounted as expenses or assets, depending on the circumstances of each disbursement. Disbursements related to past operations, which no longer contribute to current or future revenues, are accounted for as current period expenses. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
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 a reasonable estimated cost, is identified. Retirement of assets – The obligations associated with the future retirement of assets, including those related to the retirement of wells, pipelines, properties, plant and equipment and their components are recognized at the date that the retirement obligation is incurred, based on the discounted cash flow method. The determination of the fair value is based on existing technology and regulations. If a reliable estimation of fair value cannot be made at the time the obligation is incurred, the accrual will be recognized when there is sufficient information to estimate the fair value. The obligations related to the costs of future retirement of assets associated with the principal refining processes for gas and petrochemicals are not recognized. These assets are considered to have an indefinite useful life due to the potential for maintenance and repairs. 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 plugging fornon-producing wells is recognized in the statement of comprehensive income at the end of each period. All estimations are based on the useful lives of the wells, considering their discounted present value. Salvage values are not considered, as these values commonly have not traditionally existed. Beginning January 1, 2016, Petróleos Mexicanos
| i. | Short-term employee benefits |
Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if PEMEX has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the Subsidiary Entities operates both aobligation can be estimated reliably. | ii. | Defined contribution plans |
Obligations for contributions to defined contribution plan and a defined benefit pension plan. Until December 31, 2015, PEMEX only operated a defined benefit pension plan. Defined contribution pension plan
In this plan, both Petróleos Mexicanos andplans are expensed as the Subsidiary Entities and its employees contribute to the worker’s individual account. PEMEX’srelated service is provided. Prepaid contributions are recognized onas an accrual basis as cost, expense or asset and are credited to liability.
Contributions to the defined contribution planextent that are not expected to be fully settled within 12 months after the enda cash refund or a reduction in future payments is available.
PEMEX’s net obligation in respect of the annual reporting period in which the employee rendered related services; they will be discounted using the defined benefit plan discount rate. Defined benefit plan
Under the defined benefit plan, Petróleos Mexicanos and the Subsidiary Entities are the only parties that contribute to a trust which is managed separately. Petróleos Mexicanos and the Subsidiary Entities recognize the cost for defined benefit plans based on independent actuarial computations applyingis calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. Actuarial gains and losses areWhen the calculation results in a potential asset for PEMEX, the recognized within other comprehensive results for the period in which they are determined. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The costs of prior services are recognized within profit or loss for the period in which they are determined.
The asset or liability in the defined benefit plan comprises the present value of the defined benefit obligation less the fair value of plan assets for which obligations have to be settled. The value of any asset is limited to the present value of economic benefits available in the form of any economic benefit represented byfuture refunds from the plan reimbursements or reductions of thein future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.
In addition,New remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in OCI. PEMEX determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability (asset) at such time, taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other long termexpenses related to defined benefit plans are recognized in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. PEMEX recognizes gains and losses from the settlement of a defined benefit plan when the settlement occurs. | iv. | Other long-term employee benefits |
PEMEX’s net obligation in respect of long-term employee benefits includeis the seniority premiums payableamount of future benefit that employees have earned in return for disability, deaththeir service in the current and survivors benefits, medical services, gas and basic food basket for beneficiaries. Termination benefitsprior periods. That benefit is discounted to determine its present value. New remeasurements are recognized in profit or loss forin the yearperiod in which they are incurred.arise.
Termination benefits are expensed at the earlier of when PEMEX can no longer withdraw its offer of those benefits and when PEMEX recognizes costs for a restructuring. If benefits are not expected to be settled in full within 12 months of the reporting date, then they are discounted. L. | Income taxes, duties and dutiesroyalties |
CurrentIncome tax expense comprises current and deferred tax. It is recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in OCI.
The interest and penalties related to income taxes, including uncertain tax treatments, do not meet the definition of income taxes, and are therefore accounted for under IAS 37 “Provisions, Contingent Liabilities and Contingent Assets.” Current tax comprises the expected tax payable or receivable on the taxable income tax assets or liabilitiesloss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current and prior years are measured astax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to be recovered from the tax authorities,income taxes, if any. It is measured using either the tax rates in forceenacted or substantively enacted at the reporting date. Current tax rates which are in the process of being approved and are substantially completed by the end of the year.also includes any tax arising from dividends. Current income taxes related with items that are recognized as equity shall be presented in the other comprehensive income of the year. Periodically, PEMEX evaluates the positions taken in its tax returns for those regulations that are subject to interpretation and books corresponding provisions, if it is deemed necessary. Deferred income taxes
Deferred taxes are recorded based on the assets and liabilities method, which consists on the recognitionare offset only if certain criteria are met.
Deferred tax is recognized in respect of deferred taxes by applying tax rates applicable to the income tax to the temporary differences between the carrying value and tax valuesamounts of assets and liabilities atfor financial reporting purposes and the date of these consolidated financial statements. amounts used for taxation purposes. Deferred tax liabilities areis not recognized for all taxable temporary differences, except to the extent that the deferred tax liability arises from:for: The initial recognition of goodwill ortemporary differences on the initial recognition of an assetassets or liabilityliabilities in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit or tax loss; and taxable temporary differences associated with investments in subsidiaries, branches and associates, and interest in joint arrangements, when the parent, investor, joint venture or joint operator is able to control the timing of reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, carry forward of both unused tax credits and unused tax losses to the extent that it is probable that taxable profit will be available against deductible temporary differences, and that the carry forward of both unused tax credits and unused tax losses can be utilized, unless:
The deferred tax asset relating to deductible temporary difference arises from the initial recognition of asset or liability derived from a transaction that is not a business combination and at the time of the transaction,that affects neither accounting profit nor taxable profit or tax loss; and
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
In respect of deductible temporary differences associated withrelated to investments in subsidiaries, associates and interestsjoint arrangements to the extent that PEMEX is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in joint ventures, deferredthe foreseeable future; and taxable temporary differences arising from the initial recognition of goodwill. Deferred tax assets are recognized onlyfor unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profitprofits will be available against which they can be used. Future taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of taxable temporary differences can be utilized. The carrying amount ofis insufficient to recognize a deferred tax asset isin full, then future taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the business plans of PEMEX. Deferred tax assets are reviewed at the end of each reporting period. PEMEX reduces the carrying amount of a deferred tax assetdate and are reduced to the extent that it is no longer probable that a sufficient taxable profitthe related tax benefit will be available to allowrealized. Such reductions are reversed when the benefitprobability of that deferred tax asset to be utilized in whole or in part. future taxable profits improves.
Unrecognized deferred tax assets are revaluedreassessed at each reporting date and will be recognized to the extent that it ishas become probable that future taxable incomeprofits will be sufficient to allow for the recovery of the deferred tax asset.available against which they can be used. Deferred tax assets and liabilities areis measured at the tax rates that are expected to applybe applied to the periodtemporary differences when the asset is realized or the liability is settled, based onthey reverse, using tax rates (and tax laws) that have been enacted or substantively enacted by the end ofat the reporting period.date. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which PEMEX expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and deferred tax liabilities related with items that are recognized in equity shall be presented directly in other comprehensive income. Deferred tax assets and deferred tax liabilities are offset only if PEMEX has a legal right to set off current tax assets against current tax liabilities andcertain criteria are levied by the same taxation authority or the same taxable entity.met.
Income taxes and duties
| iii. | Duties, royalties and considerations |
Duties – PEMEX is subject to taxes and special duties, which are based on the value of hydrocarbons extracted, with certain deductions. These taxes and duties are recognized in accordance with IAS 12, “Income Taxes” (IAS 12), when they have the characteristics of income tax, which occurs when such taxes are set by a government authority and are determined based on a formula that considers the balance of income (or extraction valued at a selling price) less expenses. Taxes and duties that meet this criteria should beare recognized for current and deferred income tax based on the above paragraphs. Taxes and duties that do not meet this criteria are recognized as liabilities, affecting thein costs and expenses relating to the transactions that gave rise to them. o. | Impuesto Especial sobre Producción y Servicios |
(Special Tax on ProductionRoyalties and Services, or “IEPS Tax”)considerations –
The IEPS Tax chargedRoyalties and considerations are payable pursuant to customers is a witholding on domestic saleslicense agreements. These royalties are recognized as liabilities and affect the items of gasoline, dieselcosts and fossil fuels. The applicable quotas depend on, among other factors,expenses related to the product, producer’s price, freight costs, commissions and the region in which the respective product is sold.operations that gave rise to them (see Note 13).
Contingency losses 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 assured. ‘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 in the principal or, in its absence, the most advantageous market to which PEMEX has access at that date. The fair value of a liability reflects itsnon-performance risk. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESA number of PEMEX accounting policies and disclosures require the measurement of fair values, for both financial andnon-financial assets and liabilities (see Note 8).
AND SUBSIDIARY COMPANIESWhen one is available, PEMEX measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as ‘active’ if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSIf there is no quoted price in an active market, then PEMEX uses valuation techniques that maximize the use of relevant observable inputs and minimize the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014If an asset or a liability measured at fair value has a bid price and an ask price, then PEMEX measures assets and long positions at the bid price and liabilities and short positions at the ask price.
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)The best evidence of the fair value of a financial instrument on initial recognition is normally the transaction price (i.e., the fair value of the consideration given or received). If PEMEX determines that the fair value on initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique for which any unobservable inputs are judged to be insignificant in relation to the measurement, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value on initial recognition and the transaction price. Subsequently, that difference is recognized in profit or loss on an appropriate basis over the life of the instrument but no later than when the valuation is fully supported by observable market data or the transaction is closed out.
O. | Revenue from contracts with customers |
Revenue is measured based on the consideration specified in a contract with a customer. PEMEX recognizes revenue when it transfers control over a good or service to a customer (see Note 7). Sales revenue is recognized at the moment when the risks and benefits of ownership of crude oil, refined or gas products, and derivative and petrochemical products are transferred to the customers who acquire them, which occurs as follows:
in accordance with contractual terms;
the moment at which the customer picks up product at PEMEX’s facilities; or
the moment at which PEMEX delivers the product to the delivery point.
Services rendered are recognized as services income when the customers accept the receipt of the services.
r. | Presentation of consolidated statements of comprehensive income |
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 belongs.
Revenues
Represents revenues from sale or products or services.
Cost of sales
Cost of sales represents the acquisition and production costs of inventories at the time of sale. Cost of sales mainly includes depreciation, amortization, salaries, wages and benefits, a portion of the cost of the reserve for employee benefits and operating expenses related to the production process.
Other revenues (expenses), net
Other revenues (expenses), net consist primarily of income an expenses concepts that are not related directly to the operation of PEMEX.
Transportation, distribution and sale expenses
Transportation, distribution and sale expenses are costs in connection to the storage, sale and delivery of products, such as depreciation and operating expenses associated with these activities.
Administrative expenses
Administrative expenses are costs related to PEMEX’s areas that provide administrative support.
Financing income
Financing income is comprised of interest income, financial income and other income from financial operations between PEMEX and third parties.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Financing cost
Financing cost is comprised of interest expenses, commissions and other expenses related to financing operations minus any portion of the financing cost that is capitalized.
Derivative financial instruments (cost) income, net
Derivative financial instruments (cost) income represents the net effect of the profit or loss for the year associated with DFIs.
Foreign exchange loss, net
Exchange rate variations relating to assets or liabilities governed by contracts denominated in foreign currencies are recorded in income (loss) for the year.
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 Board of Directors in order to allocate resources and assess the profitability of the segments. t.Q. | Non-current assets held for sale,non-current assets held for distribution to owners and discontinued operationsPresentation of consolidated statements of comprehensive income |
Non-current asset held for sale
PEMEX classifies anon-current asset, or disposal group of assets, as held for sale if (a) its carrying amount will be recovered principally through a sale transaction rather than through continuing use; (b) the asset or group of assets is availableCosts and expenses shown in its present condition for immediate sale and (c) the sale is expected to be completed within one year from the date of classification, or more, with certain exceptions.
Non-current assets classified as held for sale are measured at the lower of its carrying amount, and fair value minus cost of sales and presented in a separate line item in thePEMEX’s consolidated statements of financial position.Non-current assets classified as held for sale are not subject to depreciation or amortization after the classification as held for sale.
The liabilities of a disposal group classified as held for saleincome are presented separately from other liabilities in the statement of financial position. Those assets and liabilities are not offset and presented asbased on their function, which allows for a single amount.
Non-current asset held for distribution to owners
When PEMEX agrees to distribute anon-current asset, or disposal group of assets, to owners, this asset or disposal group of assets, is classified as held for distribution to owners if: a)non-current asset or disposal group of assets, is available for immediate distribution in their present conditions and b) the distribution must be highly expected to be completed within one year from the date of classification, with certain exceptions.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Non-current assets classified as held for distribution are measured at the lower of its carrying amount and fair value less cost of distribution and it is presented in a separate line item in the consolidated financial statements.Non-current assets classified as held for distribution are not subject to depreciation or amortization after the classification as held for distribution.
The liabilities of a disposal group classified as held for distribution to owners are presented separately from other liabilities in the statement of financial position. Those assets and liabilities shall not be offset and shall be presented as a single amount.
Discontinued operations
A discontinued operation is a component of an entity that either has been disposed of or is classified as held for sale, and either:
represents a separate major line of business or geographical area of operations;
is part or a single coordinated plan to dispose of a separated major line of business or geographical area of operations; or
is a subsidiary acquired exclusively with a view to resale.
The revenues or expenses from discontinued operations, including profits or losses from previous years, are presented in a specific line item in the consolidated financial statement of comprehensive income.
u. | New accounting policies not yet adopted |
The IASB issued the new IFRS mentioned below, which are applicable to PEMEX and are effective for annual periods beginning January 1, 2016:
a) Amendments to IAS 16 and IAS 38 “Intangible Assets” (“IAS 38”), to clarify acceptable methods of depreciation and amortization.
The amended IAS 16 prohibits entities from using revenue-based depreciation methods for items in property, plant and equipment.
The amended IAS 38 introduces a rebuttable presumption that revenue is not an appropriate basis for amortization of an intangible asset. This presumption can only be rebutted in two limited circumstances: a) the intangible asset is expressed as a measure of revenue; or b) ordinary revenue and the lifebetter understanding of the assets are highly associated.
The expected future reductions in selling prices could be indicativecomponents of PEMEX’s operating income. This classification allows for a reduction ofcomparison to the future economic benefits embodied in an asset.
The amendments had no impact on these consolidated financial statements.
b) Amendmentsindustry to IFRS 11, “Joint Arrangements” (“IFRS 11”), to address accounting for interest acquisition in joint operations.
The amendments to IFRS 11 address how a joint operator should account for the acquisition of an interest in a joint operation that constitutes a business. IFRS 11 now requires that such transactions be
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)which PEMEX belongs.
| i. | accounted for using the related principles to business combination accounting established in IFRS 3, “Business Combinations” (“IFRS 3”), and additionally requires certain related disclosures.Operating profit
|
The amendments also require disclosureOperating profit is the result generated from the continuing principal revenue-producing activities of significant information required by IFRS 3. PEMEX as well as other income and expenses related to operating activities. Operating profit excludes net finance costs, share of profit of equity-accounted investees and income taxes and duties.Revenues – The most significant impactRepresents revenues from sale or products or services. Cost of sales – Cost of sales represents the acquisition and production costs of inventories, depreciation, amortization, salaries, wages and benefits, a portion of the amendments to IFRS 11 will be the recognition of goodwill (when there is an excesscost of the transferred consideration overreserve for employee benefits and operating expenses related to the identifiable net asset)production process, production taxes and the recognitionduties, exploration costs,non-operating costs, among others. Other revenues and other expenses – Other revenues and other expenses consist primarily of deferred tax assetsincome and liabilities. These amendmentsexpenses that are not only applicable in an interest acquisition for a joint operation, but also apply when a business is contributedrelated directly to the joint operation upon its creation. of PEMEX.The amendments had no impact onTransportation, distribution and sale expenses –
Transportation, distribution and sale expenses are costs in connection with the storage, sale and delivery of products, such as the depreciation and operating expenses associated with these consolidated financial statements. c) Amendments to IFRS 5,“Non-Current AssetsHeld-for-Sale and Discontinued Operations” (“IFRS 5”). Change in distribution methods.
The amendments to IFRS 5 introduce specific guidance for the reclassification of an asset fromheld-for-sale toheld-for-distribution-to-owners (or vice versa) or the discontinuation ofheld-for-distribution accounting.
The amendments state that:
Such reclassifications should not be considered changes to a plan of sale or a plan of distribution to owners and that the classification, presentation and measurement requirements applicable to the new method of disposal should be applied; and
Assets that no longer meet the criteria forheld-for-distribution-to-owners (and do not meet the criteria forheld-for-sale) should be treated in the same manner as assets that cease to be classified asheld-for-sale.
The amendments had no impact on these consolidated financial statements.
d) Amendments to IFRS 7, “Financial Instruments: Disclosures” (“IFRS 7”)
The amendments to IFRS 7 provide additional guidance to clarify whether a servicing contract constitutes continuing involvement in a transferred asset for purposes of the required disclosure relating to transferred assets.
The amendments apply retrospectively; however, to avoid the risk of hindsight affecting the determination of the required fair value disclosure, an entity is not required to apply the amendments to any period beginning prior to the annual period during which the amendments are first applied. The amendments also include an amendment to IFRS 1, “First Time Adoption of International Financial Reporting Standards (IFRS 1).”
The amendments apply retrospectively in accordance with IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors” (“IAS 8”).
The amendments had no impact on these consolidated financial statements.activities.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESAdministrative expenses –
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
e) AmendmentsAdministrative expenses are costs related to IAS 19, “Employee Benefits” (“IAS 19”) Discount rate: issuing in a regional market.
The amendments to IAS 19 clarifyPEMEX’s areas that investment-grade corporate bonds used to estimate the discount rate for post-employment benefits should be issued in the same currency as the benefits to be paid. These amendments also provide for the assessment of the depth of the market for investment-grade corporate bonds at the relevant currency level.
The amendments apply retrospectively in accordance with IAS 8.
The amendments had no impact on these consolidated financial statements.administrative support.
v. | New IFRS not yet adoptedii. | Financing income and financing cost and derivative financial instruments income (cost), net |
The IASB issued amendmentsFinancing income –
Financing income is comprised of interest income, financial income and new IFRS that are not effective asother income from financial operations between PEMEX and third parties. Financing cost – Financing cost is comprised of interest expenses, commissions and other expenses related to PEMEX’s financing operations less any portion of the issuance date of these consolidated financial statements but could have effect in subsequent PEMEX’s financial information.financing cost that is capitalized. Amendments that will be applicable in 2017:
a) IAS 12 “Income Taxes: Recognition of Deferred Tax Assets for Unrealized Losses” (“IAS 12”)
The IASB issues amendmentsWhen calculating interest income and expenses, the effective interest rate is applied to IAS 12 to clarify the diversity of practices in the recognition of deferred tax assets for unrealized losses related to debt instruments measured at fair value. The amendments to IAS 12 include some explanatory paragraphs and an illustrative example.
The amendments clarify the following aspects of IAS 12:
Unrealized losses on debt instruments measured at fair value for accounting purposes and measured at cost for tax purposes give rise to deductible temporary differences regardless of whether the debt instrument’s holder expects to recover thegross carrying amount of the debt instrument by sale or by use.
The carrying amount of an asset does not limit(when the estimation of probable future taxable profits.
Estimates of future taxable profits exclude tax deductions resulting fromasset has no credit impairment), to the reversal of deductible temporary differences.
An entity assesses a deferred tax asset in combination with other deferred tax assets. Where tax law restricts the utilization of tax losses, an entity would assess a deferred tax asset in combination with other deferred tax assetsamortized cost of the same type.
The amendments areliability or to the present value lease liabilities. However, for financial assets with credit impairment after initial recognition, interest income is calculated by applying the effective interest rate at the amortized cost of the financial asset. If the asset ceases to be applied retrospectively and are effective for annual periods beginning on or after January 1, 2017. Earlier application is permitted.
PEMEX is inimpaired, the process of evaluating the impact that these standards will have on its consolidated financial statements.
b) Amendments to IAS 7 “Statement of Cash Flows” (“IAS 7”)
The IASB issued amendments to IAS 7. The amendments are intended to clarify disclosure providedinterest income calculation returns to the user ofgross base.
Derivative financial statements about an entity’s financing activities. instruments income (cost), net –PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Changes
The amendments in IAS 7 come withIncludes the objective that entities shall provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities.
To achieve this objective, the IASB requires that the following changes in liabilities arising from financing activities are disclosed: (i) changes from financing cash flows; (ii) changes arising from obtaining or losing control of subsidiaries or other businesses; (iii) the effectsresult of changes in foreign exchange rate; (iv) changes inthe fair values; and (v) other changes.
The IASB defines liabilities arising from financing activities as liabilities “for which cash flows were, or future cash flows will be, classified in the statementsvalue of cash flows as cash flows from financing activities.” It also stresses that the new disclosure requirements also relate to changes in financial assets if they meet the same definition.
The amendments state that one way to fulfill the new disclosure requirements is to provide reconciliation between the opening and closing balances in the statement of financial position for liabilities arising from financing activities.
Finally, the amendments state that changes in liabilities arising from financing activities must be disclosed separately from changes in other assets and liabilities.
The amendments are effective for annual periods beginning on or after January 1, 2017. Earlier application is permitted. Entities need not provide comparative information when they first apply the amendments.
PEMEX is in the process of evaluating the impact that these standards will have on its financial statements.
c) IFRS 12 “Disclosure of Interest in Other Entities” (“IFRS 12”) – Annual Improvements to IFRS 2014 – 2016 Cycle.
As of December 2016, the IASB published Annual Improvements to IFRS 2014 – 2016 Cycle, which clarified the scope of IFRS 12, by specifying that the disclosure requirements apply to all subsidiaries, joint arrangements, associates and unconsolidated structured entities classified as held for sale, held for distribution or as discontinued operations in accordance with IFRS 5, with certain exceptions.
The amendments are going to be applied restrospectively and are effective for annual periods beginning on or after January 1, 2017.
PEMEX is in the process of evaluating the impact that these standards will have on its financial statements.
Amendments effective for periods beginning in 2018:
a) IFRS 15, “Revenue from Contracts with Customers” (“IFRS 15”)
The IASB issued the amendment to IFRS 15 to provide a single comprehensive model for the accounting of revenue from contracts with customers and replaces the current guidelines on revenue recognition.
The core principle of the new IFRS 15 is that an entity should recognize revenue as the promised transfer of goods or services to the customer, valued at the amount that the entity expects to be entitled in exchanged for those goods or services.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Pursuant to IFRS 15, an entity should:
identify customer contracts that fall within the scope of the new standard;
identify the separate performance obligations in the contract based on the following criteria: i) sales of goods or services, separately, ii) sales that are dependent or interrelated with other products or services; and iii) homogeneous and consistent sales pattern;
determine the price of the transaction by applying the following considerations: i) variable consideration and constraining estimates of variable consideration; ii) the existence of a significant financing component in the contract; iii) anynon-cash consideration; and iv) the consideration payable to the customer;
allocate the transaction price to each separate performance obligation; and
recognize revenue when (or as) each performance obligation is satisfied either over time or at a point in time.
The new IFRS 15 enhances disclosures of revenue. This standard must be applied for periods beginning on or after January 1, 2018, and early application is permitted. During the year of application, entities may apply the rule retrospectively or use a modified approach.
PEMEX is in the process of evaluating the impact that these standards will have on its financial statements.
b) IFRS 9, “Financial Instruments” (“IFRS 9”(2014))
The IASB issued IFRS 9 (2009) and IFRS 9 (2010), which introduced new classification and measurement requirements. In 2013, the IASB released a new model for hedge accounting. The final version of IFRS 9, which was issued in July 2014 (“IFRS 9 (2014)”), replaces the previous versions of IFRS 9 and completes the IASB’s project to replace IAS 39, “Financial Instruments.”
The package of improvements introduced by IFRS 9 (2014) includes a logical model for classification and measurement, a single, forward-looking “expected loss” impairment model and a substantially reformed approach to hedge accounting.
Classification and Measurement
Classification under IFRS 9 (2014) determines how financial assets and liabilities are recognized in financial statements and, in particular, how they are measured on an ongoing basis. IFRS 9 (2014) introduces a logical approach to the classification of financial assets, which is based on the cash flow characteristics of the financial asset and the entity’s business model for managing the financial assets. This principle-based approach replaces the existing classification and measurement requirements.
Impairment
As part of IFRS 9 (2014), the IASB introduced a new, single impairment model that is applicable to all financial instruments and eliminates the complexity associated with multiple impairment models. The new
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
impairment model requires an entity to recognize expected credit losses on a timelier basis and to update the amount of expected losses throughout the useful life of a financial instrument. Additional disclosure is required to describe the basis for recognizing expected credit losses and any changes in the estimated amount of expected credit losses.
Hedge Accounting
IFRS 9 (2014) includes significant changes to hedge accounting, such as new disclosure requirements that require a description of an entity’s risk management activities. The new model represents a comprehensive review of hedge accounting and aligns the accounting with risk management in order to better reflect risk management activities in the financial statements. These changes are intended to provide better disclosure about the risks that an entity faces and the impact of risk management activities on its financial information.
Credit Risk
IFRS 9 (2014) also aims to eliminate the volatility in financial results caused by changes in the credit risk of liabilities that are measured at fair value. Under IFRS 9 (2014), earnings from the impairment credit risk of liabilities are recognized in other comprehensive income rather than directly in profit or net loss.
IFRS 9 (2014) is effective for annual periods beginning on or after January 1, 2018. Earlier application is permitted. Additionally, the new standards relating to credit risk may be applied early and in isolation, without adopting other modifications to the recognition ofderivative financial instruments.
PEMEX is in the process of evaluating the impact that these standards will have on its financial statements.
c) IAS 28 “Investments in Associates and Joint Ventures” (“IAS 28”) – Annual Improvements to IFRS 2014 – 2016 Cycle.
As of December 2016, the IASB published Annual Improvements to IFRS Cycle 2014 – 2016, which clarified that a venture capital organization or a mutual fund, unit trust and similar entities may elect, at initial recognition, to measure investment in an associate or joint venture at fair value through recognizing the changes in profits.
The amendments are effective for periods beginning on or after January 1, 2018.
PEMEX is in the process of evaluating the impact that these standards will have on its financial statements.
d) Amendments to IAS 40 “Investment Property” (“IAS 40”) – Transfers of Investment Property
These amendments were made to state that an entity transfer a property to, or from, investment property occurs when, and only when, there is evidence of a change of use. A change of use occurs if property meets, or ceases to meet, the definition of investment property. A change in management’s intentions for the use of a property by itself does not constitute evidence of a change in use.
Additionally, examples of evidence of a change in use were included.
The amendments are effective for periods beginning on or after January 1, 2018.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
NOTE 4. | ACCOUNTING CHANGES AND RECLASSIFICATIONS |
PEMEX is in the process of evaluating the impact that these standards will have on its financial statements.
e) Interpretation of IFRIC 22 “Foreign Currency Transactions and Advance Considerations” (IFRIC 22)
As of December 2016, IASB published an interpretation of IFRIC 22 developed by the International Financial Reporting Standards Interpretations Committee (the Interpretations Committee). The interpretation clarified when to recognize payments and collections of foreign currency transactions paid in advance due the fact that it observed some diversity in practice regarding these transactions.
The interpretations recognized foreign currency transactions when:
there is consideration that is denominated or priced in a foreign currency;
| a. | the entity recognizes a prepayment asset or a deferred income liability in respect of that consideration, in advance of the recognition of the related asset, expense or income; and
the prepayment asset or deferred income liability isnon-monetary.
The Interpretations Committee concluded that:
The date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of thenon- monetary prepayment asset or deferred income liability.
If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt.
IFRIC 22 is effective for annual reporting periods beginning on or after January 1, 2018. Entities may apply the rule retrospectively, or prospectively, in accordance with IAS 8 with certain exemptions.
PEMEX is in the process of evaluating the impact that these standards will have on its financial statements.
Standards effective for periods beginning in 2019
IFRS 16 “Leases” (“IFRS 16”) |
In January 2016, the IASB published a new accounting standard IFRS 16, which replacesreplaced IAS 17, “Leases“Leases” and Guide interpretations.”related interpretations, including IFRIC 4 “Determining whether an Arrangement contains a Lease” (“IFRIC 4”). The main changes from the previous standard are:
From January 1, 2019, PEMEX applied IFRS 16 provides a comprehensive model for the identification offirst time. Several other amendments and interpretations apply for the lease arrangements and their treatmentfirst time in 2019, but do not have a material impact on the consolidated financial statements of both lesseesPEMEX.IFRS 16 introduces a single, on balance sheet accounting model for lessees. A lessee recognizes aright-of-use asset representing its right to use the underlying asset and lessors; the new standard applies a control modellease liability representing its obligation to the identification of leases, distinguishing between leases and service contracts on the basis of whether there is an identified asset controlled by the customer;
the distinction between financial and operating leasing is removed, therefore, the assets and liabilitiesmake lease payments. There are recognized in respect of all leases, with some exceptionsrecognition exemptions for short-term leases and leases of low-value assets;assets. Lessor accounting remains similar to previous accounting policies.PEMEX applied IFRS 16 initially on January 1, 2019 using the modified retrospective approach. There was no impact against retained earnings because as of January 1, 2019 the rights of use and the lease liability were for the same amount (in addition to a reclassification of the previously recognized finance leases). Accordingly, the comparative information presented for 2018 has not been restated and it is presented, as previously reported, under IAS 17 and related interpretations. The details of the changes in accounting policies are disclosed below.PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESPreviously, PEMEX determined at contract inception whether an arrangement was or contained a lease under IFRIC 4. PEMEX now assesses whether a contract is or contains a lease based on the new definition of a lease under IFRS 16. Under IFRS 16, a contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration.
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
On transition to IFRS 16, PEMEX elected to apply the standard does not include significant changespractical expedient to adopt the requirements for accounting by lessors.definition of lease at the time of transition. This means it applied IFRS 16 to all contracts entered into before January 1, 2019 and identified as leases in accordance with IAS 17 and IFRIC 4. The standard is effective for annual periods beginningdefinition of a lease under IFRS 16 has been applied only to contracts entered into or modified on or after January 1, 2019, with earlier application permitted for entities that have also adopted IFRS 15, “Revenue from Contracts with Customers.” PEMEX is in the process of assessing the impact this new standard will have on its financial statements.2019.
w.ii. | ReclassificationsAs a lessee
|
For comparison purposes,PEMEX recognizes assets and liabilities for its operating leases, which primarily consist of transportation and railway equipment, docks, hydrogen supply plants, electric power and steam gas storage facilities.
As a lessee, PEMEX previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under IFRS 16, PEMEX recognizesright-of-use assets and lease liabilities for most leases, and these leases areon-balance sheet. PEMEX has elected not to recognizeright-of-use and lease liabilities for some leases of short-term leases. PEMEX recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term. Significant accounting policy – PEMEX recognizes aright-of-use asset and a lease liability at the lease commencement date. Theright-of-use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, PEMEX’s incremental borrowing rate. PEMEX uses its incremental borrowing rate as the discount rate. The lease liability is subsequently measured as increased by the interest cost on the lease liability and decreased by lease payments made. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, a change in the estimate of the amount expected to be payable under a residual value guarantee or, as appropriate, changes in the assessment of whether a purchase or extension option or reasonably certain to be exercised or a termination option is reasonably certain not to be exercised. PEMEX has applied judgement to determine the lease term for some lease contracts in which it is a lessee that include renewal options. The assessment of whether PEMEX is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities andright-of-use assets recognized. Transition – Previously, PEMEX classified a number of leases as operating leases under IAS 17. These leases include transportation and railway equipment, docks, hydrogen supply plants, electric power and steam gas storage facilities. The leases typically run for a period of up to 20 years. Some leases include an option to renew the lease for an additional 5 years or without defined term after the end of thenon-cancellable period. At transition, for leases classified as operating leases under IAS 17, lease liabilities were measured at the present value of the remaining lease payments, discounted at PEMEX’s incremental borrowing rate as at January 1, 2019.Right-of-use assets are measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments. PEMEX applied this approach to all operating leases. PEMEX used the following amountspractical expedients when applying IFRS 16 to leases previously classified as operating leases under IAS 17: Applied the exemption not to recognizeright-of-use assets and liabilities for leases with less than 12 months of lease term. Excluded initial direct costs from measuring theright-of-use asset at the date of initial application. Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease. PEMEX leases certain production equipment that were classified as finance leases under IAS 17. For these leases, the carrying amount of theright-of use asset and the lease liability at January 1, 2019 were determined at the carrying amount of the lease asset and lease liability under IAS 17 immediately before that date. PEMEX reclassified intangible assets to rights of use of the rights of way that they had registered in that concept until December 31, 2018. iii. | Impacts on financial statements |
Impact in the consolidatedtransition – On transition to IFRS 16 (effective as of January 1, 2019), PEMEX’s recognized additionalright-of-use assets and additional lease liabilities. The impact on transition is summarized below. | | | | | | | Total | | Right of use assets | | Ps. | 72,760,580 | * | Lease liability | | Ps. | 70,651,797 | |
| * | Includes the reclassification of rights of way that were presented as intangible assets. The liability is not recognized due to prepayments made. |
When measuring lease liabilities for leases that were classified as operating leases, PEMEX discounted lease payments using its incremental borrowing rate at January 1, 2019. The weighted-average rate applied was 7.7%. | | | | | | | 2019 | | Operating lease commitment at December 31, 2018 | | Ps. | 62,723,909 | | Undisclosed leases in 2018 Financial statements | | | 40,186,551 | | | | | | | Operating lease commitment | | | 102,910,460 | | | | | | | Operating lease commitment discounted using the incremental borrowing rate at January 1, 2019 | | Ps. | 65,608,174 | | Lease liabilities from financial leases previously recognized up to December 31, 2018 | | | 6,053,280 | | Recognition exemption for: | | | | | Short-term leases | | | (1,009,657 | ) | | | | | | Lease liabilities recognized at January 1, 2019 | | Ps. | 70,651,797 | | | | | | |
Some other accounting standards were effective as January 1, 2019 but did not have a significant impact on PEMEX’s financial statementsstatements. Somenon-material amounts as of December 31, 20152018 were reclassifiedregrouped to add long-term notes receivable as a separate line item from other assets inconform their presentation to the consolidatedstatement of financial statements as of December 31, 2016.position for 2019. | | | | | | | | | | | | | Line item | | December 31, 2015 (as previously reported) | | | Reclassification | | | December 31, 2015 (following reclasification) | | Other assets | | Ps. | 57,407,660 | | | Ps. | (50,000,000 | ) | | Ps. | 7,407,660 | | Long-term notes receivable | | Ps. | — | | | Ps. | 50,000,000 | | | Ps. | 50,000,000 | |
NOTE 5. | These reclassifications had no impact on PEMEX’s total assets or liabilities.
NOTE 4. SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
|
As of December 31, 2016,2019 and 2018, the Subsidiary Entities consolidated in these financial statements include Pemex Exploration and Production, Pemex Industrial Transformation, Pemex CogenerationLogistics and Services,Pemex Fertilizers. Former Subsidiary Entities Pemex Drilling and Services Pemex Logistics, Pemex Fertilizers and Pemex Ethylene.Ethylene were also consolidated in these financial statements until June 30, 2019 and Pemex Cogeneration and Services was also consolidated in these financial statements until July 27, 2018 (see Note 1). TheAs of December 31, 2019 and 2018, the consolidated Subsidiary Companies are as follows:
| • | | P.M.I.PEP Marine, Ltd. (PMI Mar)DAC. (PEP DAC) (i)(v) |
| • | | P.M.I. Services, B.V. (PMI SHO) (i)(viii) |
| • | | P.M.I. Holdings, B.V. (PMI HBV)(i) |
| • | | P.M.I. Trading Ltd.DAC (PMI Trading)(i)(vi) |
| • | | PEMEX InternacionalP.M.I. Holdings Petróleos España, S. A. (PMI SES)L. (HPE)(i) |
| • | | P.M.I. Holdings Petróleos España, S.L. (HPE)Services North America, Inc. (PMI SUS)(i) |
| • | | P.M.I. Services North América, Inc. (PMI SUS) (i) |
| • | | P.M.I. Holdings North América, Inc. (PMI HNA) (i) |
| • | | P.M.I. Norteamérica, S. A. de C. V. (PMI NASA)(i) |
| • | | P.M.I. Comercio Internacional, S. A. de C. V. (PMI CIM)(i)(ii) |
P.M.I. Campos Maduros SANMA, S. de R. L. de C. V. (SANMA) Pro-Agroindustria, S. A. de C. V. (AGRO) | • | | PMI Field Management Resources, S.L. (FMR) (i) |
| • | | PMI Campos Maduros SANMA, S. de R. L. de C. V. (SANMA) (i) |
| • | | Pro-Agroindustria, S. A. de C. V. (AGRO) (i)(iii) |
| • | | PMIP.M.I. Azufre Industrial, S. A. de C. V. (PMI AZIND) (i)(iii) |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| • | | PMI Infraestructura de Desarrollo, S. A. de C. V. (PMI ID) (i)(iii) |
| • | | PMI Cinturón Transoceánico Gas Natural, S.A.P.T.I. Infraestructura de C.V. (PMI CT)Desarrollo, S. A. de C. V. (PTI ID) (i)(iv)(vii) |
| • | | PMIP.M.I. Cinturón Transoceánico Gas LP, S.A.Natural, S. A. de C.V.C. V. (PMI TG)CT) (i)(iv) |
| • | | PMI Servicios PortuariosP.M.I. Transoceánicos, S.A.nico Gas LP, S. A. de C.V.C. V. (PMI SP)TG)(i)(iv) |
| • | | PMI Midstream del Centro, S.A. de C.V. (PMI MC) (i)(iv) |
Pemex Procurement International, Inc. (PPI)
| • | | Hijos de J. Barreras,P.M.I. Servicios Portuarios Transoceánicos, S. A. (HJ BARRERAS)de C. V. (PMI SP) (ii)(i) |
| • | | Pemex Finance, Ltd. (FIN)P.M.I. Midstream del Centro, S. A. de C. V. (PMI MC)(i) |
PEMEX Procurement International, Inc. (PPI) | • | | Hijos de J. Barreras, S. A. (HJ BARRERAS)(ii) |
| • | | Mex Gas Internacional, S.L. (MGAS)PEMEX Finance, Ltd. (FIN) (v)(iv) |
| • | | Pemex Desarrollo e Inversión Inmobiliaria, S.A. de C.V. (III)(vi) |
Mex Gas Internacional, S. L. (MGAS) Pemex Desarrollo e Inversión Inmobiliaria, S. A. de C. V. (PDII) Kot Insurance Company, AG. (KOT) PPQ Cadena Productiva, S.L. (PPQCP) III Servicios, S. A. de C. V. (III Servicios) | • | | PMIPM.I. Ducto de Juárez, S. de R.L. de C.V. (PMI DJ)(i)(vii) |
PMX Fertilizantes Holding, S.A de C.V. (PMX FH) PMX Fertilizantes Pacífico, S.A. de C.V. (PMX FP) | • | | Compañía Mexicana de Exploraciones, S.A. de C.V. (COMESA)(ii) |
| • | | PMX Cogeneración Internacional, S.L. (MG COG)P.M.I. Trading Mexico, S.A. de C.V. (TRDMX) (viii)(x)(i) |
Holdings Holanda Services, B.V. (HHS) | • | | i. | | PMX Cogeneración S.A.P.I. de C.V. (PMX COG) (viii) |
| • | | PMX Fertilizantes Holding, S.A de C.V. (PMX FH) (viii) |
| • | | PMX Fertilizantes Pacífico, S.A. de C.V. (PMX FP) (viii) |
| • | | Grupo Fertinal (GP FER) (viii) |
| • | | Compañía Mexicana de Exploraciones, S.A. de C.V. (COMESA) (ix) |
| i. | Member Company of the “PMI Subsidiaries”. |
| | ii. | | Non-controlling Interest Company.interest company. |
| | iii. | | As of August 2014, these companies were included in2018, this company was consolidated by MGAS, through the consolidated financial statementsacquisition of PEMEX.its shares. |
| | iv. | | iv.On December 17, 2018 PEMEX acquired the total shares in this company and as of December 31, 2018 this company is no longer part of thenon-controlling interest. | | As of February 2015, these companies were included in the consolidated financial statements of PEMEX. |
v. | | v.Formerly P.M.I. Marine DAC until August 2018 | | Until May 2014, formerly Mex Gas International, Ltd. |
vi. | | vi.Formerly P.M.I. Trading Ltd until August 2018. | | Until September 2015, formerly Instalaciones Inmobiliarias para Industrias, | vii. | | Formerly PMI Infraestructura de Desarrollo, S.A. de C.V. until March 2019. On May 30, 2019 these shares were transferred to Pemex Industrial Transformation. |
| | viii. | | vii. | As of January 2016, this company started operations and was included in the consolidated financial statements of PEMEX. |
| viii. | As of June 2016, this company started operations and was included in the consolidated financial statements of PEMEX. |
| ix. | As of July 2016 thisThis company was includedliquidated in the consolidated financial statements of PEMEX.2019. |
NOTE 6. | x. | Until October 2016, formerly Mex Gas Cogeneración S.L.SEGMENT FINANCIAL INFORMATION |
NOTE 5. Segment financial information
PEMEX’s primary business is the exploration and production of crude oil and natural gas, as well as the production, processing, marketing and distribution of petroleum and petrochemical products. After the Corporate Reorganization,During 2019, PEMEX’s operations are nowwere conducted through nineeight business segments: explorationExploration and production, industrial transformation, cogenerationProduction, Industrial Transformation, Drilling and services, drillingServices (merged into Pemex Exploration and services, logistics, ethylene, PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
fertilizers,Production as of July 1, 2019, see Note 1), Logistics, Ethylene (merged into Pemex Industrial Transformation as of July 1, 2019, see Note 1), Fertilizers, the Trading Companies and Corporate and Other Operating Subsidiary Companies. The results for refining, gas and basic petrochemicals and petrochemicals reported in a separate segment during 2015, are now reported under the industrial transformation segment. In addition, information for 2015 relating to the segments of the Subsidiary Entities includes the results of the operation as of its creation date (see Note 1). For comparison purposes, results for the year ended December 31, 2015 are also presented using Industrial Transformation, and do not separate out the results for refining, gas and basic petrochemicals and petrochemicals. Due to PEMEX’s structure, there are significant quantitiesamounts of inter-segment sales among the reporting segments, which are made at internal transfer prices established by PEMEX reflectingthat are intended to reflect international market prices. Prior to July 27, 2018, PEMEX’s operations were also conducted through the Cogeneration and Services business segment (liquidated company as of July 27, 2018, see Note 1).
The primary sources of revenue for PEMEX’s business segments following the Corporate Reorganization are as described below: The exploration and production segment earns revenues from domestic sales of domestic crude oil and natural gas, and from exporting crude oil through certain of the Trading Companies. Export sales are made through PMI CIM to approximately 3423 major customers in various foreign markets. Approximately half of PEMEX’s crude oil is sold to Pemex Industrial Transformation. | • | | The industrial transformation segment earns revenues from sales of refined petroleum products and derivatives, mainly to third parties within the domestic market. This segment also sells a significant portion of the fuel oil it produces to theComisión Federal de Electricidad (Federal Eletricity Commission, or “CFE”) and a significant portion of jet fuel produced to theAeropuertos y Servicios Auxiliares (“Airports and Auxiliary Services Agency”). The refining segment’s most important products are different types of gasoline and diesel. |
The industrial transformation segment earns revenues from sales of refined petroleum products and derivatives, mainly to third parties within the domestic market. This segment also sells a significant portion of the fuel oil produced to the Comisión Federal de Electricidad (Federal Electricity Commission, or “CFE”) and a significant portion of jet fuel produced to Aeropuertos y Servicios Auxiliares (the Airports and Auxiliary Services Agency). The refining segment’s most important products are different types of gasoline and diesel. Industrial transformation also earns revenues from domestic sources generated by sales of natural gas, liquefied petroleum gas, naphtha, butane and ethane and certain other petrochemicals such as methane derivatives, ethane derivatives, aromatics and derivatives.
The cogeneration segment receivesreceived income from the cogeneration, supply and sale of electricity and thermal energy; itenergy and also provides technical and management activities associated with these services. During 2018 this company did not generate income. This entity was liquidated on July 27, 2018 (see Note 1). The drilling segment receives income from drilling services, and wells repairservicing and services.repairing wells. This entity was merged into Pemex Exploration and Production on July 1, 2019 (see Note 1). The logistics segment earns income from transportation storage and related servicesstorage of crude oil, petroleum products and petrochemicals, through strategies such as well as related services, which it provides by employing pipelines and maritimeoffshore and terrestrialonshore resources, and from the provision ofproviding services related to the maintenance, and handling, of the products and guardguarding and management services.of these products. The ethylene segment earns revenues from the distribution and trade of methane, ethane and propylene in the domestic market. This entity was merged into Pemex Industrial Transformation on July 1, 2019 (see Note 1). The fertilizers segment earns revenues from trading ammonia, fertilizers and its derivatives, mostly in the domestic market. The trading companies segment, which consist of PMI CIM, PMI NASA, PMI Trading and MGAS (the “Trading Companies”), earn revenues from trading crude oil, natural gas and petroleum and petrochemical products withinin international markets. The segment related to corporate and other operating Subsidiary Companies provides administrative, financing, consulting and logistical services, as well as economic, tax and legal advice andre-insurance services to PEMEX’s entities and companies. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The following tables present the condensed financial information of these segments, after elimination of unrealized intersegment gain (loss), and include only select line items. The columns before intersegment eliminations include unconsolidated figures. As a result, the line items presented below may not total. These reporting segments are those which PEMEX’s management evaluates in its analysis of PEMEX and makes decisions.on which it bases its decision-making. These reporting segments are presented in PEMEX’s reporting currency. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of/for the year ended December 31, 2019 | | Exploration and Production | | | Industrial Transformation | | | Drilling and Services(1) | | | Logistics | | | Fertilizers | | | Ethylene(2) | | | Trading Companies | | | Corporate and Other Operating Subsidiary Companies | | | Intersegment eliminations | | | Total | | Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trade | | Ps. | 409,059,838 | | | Ps. | 791,912,881 | | | Ps. | | | | Ps. | — | | | Ps. | 1,634,300 | | | Ps. | 5,254,234 | | | Ps. | 175,509,189 | | | Ps. | 9,492,063 | | | Ps. | — | | | Ps. | 1,392,862,505 | | Intersegment | | | 330,977,190 | | | | 127,164,644 | | | | 2,758,454 | | | | 88,604,529 | | | | 560,987 | | | | 722,992 | | | | 484,139,042 | | | | 100,021,336 | | | | (1,134,949,174 | ) | | | — | | Services income | | | 452,569 | | | | 2,085,081 | | | | 20,755 | | | | 4,663,770 | | | | 853 | | | | 3,690 | | | | 67,982 | | | | 1,813,980 | | | | — | | | | 9,108,680 | | (Impairment) reversal of wells pipelines, properties, plant and equipment, net | | | (169,834,947 | ) | | | 42,243,942 | | | | — | | | | 34,119,240 | | | | (2,298,775 | ) | | | — | | | | (1,311,674 | ) | | | — | | | | — | | | | (97,082,214 | ) | Cost of sales | | | 474,407,431 | | | | 962,544,415 | | | | (1,918,085 | ) | | | 51,298,858 | | | | 3,380,826 | | | | 7,977,771 | | | | 646,671,417 | | | | 49,979,372 | | | | (1,071,408,581 | ) | | | 1,122,933,424 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross income (loss) | | | 96,247,219 | | | | 862,133 | | | | 4,697,294 | | | | 76,088,681 | | | | (3,483,461 | ) | | | (1,996,855 | ) | | | 11,733,122 | | | | 61,348,007 | | | | (63,540,593 | ) | | | 181,955,547 | | Other revenue | | | 6,765,641 | | | | 3,032,601 | | | | 30,949 | | | | 202,800 | | | | 22,575 | | | | 77,625 | | | | 444,289 | | | | 4,363,967 | | | | — | | | | 14,940,447 | | Other expenses | | | (6,088,330 | ) | | | (551,926 | ) | | | (45,784 | ) | | | (311,878 | ) | | | (7,147 | ) | | | | | | | — | | | | (130,791 | ) | | | (75,835 | ) | | | (7,211,691 | ) | Distribution, transportation and sales expenses | | | 262,642 | | | | 23,881,788 | | | | — | | | | 22,467 | | | | 288,347 | | | | 126,064 | | | | 1,323,007 | | | | 31,323 | | | | (4,049,727 | ) | | | 21,885,911 | | Administrative expenses | | | 58,889,451 | | | | 50,067,272 | | | | 282,524 | | | | 8,504,381 | | | | 615,830 | | | | 585,069 | | | | 2,575,536 | | | | 68,791,707 | | | | (59,542,948 | ) | | | 130,768,822 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss) | | | 37,772,437 | | | | (70,606,252 | ) | | | 4,399,935 | | | | 67,452,755 | | | | (4,372,210 | ) | | | (2,630,363 | ) | | | 8,278,868 | | | | (3,241,847 | ) | | | (23,753 | ) | | | 37,029,570 | | Financing income | | | 82,736,593 | | | | 1,924,073 | | | | 248,966 | | | | 697,130 | | | | 65,049 | | | | 14,090 | | | | 801,046 | | | | 156,297,750 | | | | (218,300,991 | ) | | | 24,483,706 | | Financing cost | | | (133,855,016 | ) | | | (6,161,047 | ) | | | (386,894 | ) | | | (434,392 | ) | | | (770,869 | ) | | | (185,433 | ) | | | (971,573 | ) | | | (208,419,002 | ) | | | 218,322,886 | | | | (132,861,340 | ) | Derivative financial instruments (cost) income, net | | | (2,262,632 | ) | | | (9,231 | ) | | | — | | | | — | | | | — | | | | — | | | | (1,471,566 | ) | | | (14,768,593 | ) | | | (4 | ) | | | (18,512,026 | ) | Foreign exchange (loss) income, net | | | 78,219,349 | | | | 3,710,324 | | | | 95,658 | | | | 214,157 | | | | 48,226 | | | | (35,843 | ) | | | (212,619 | ) | | | 4,891,136 | | | | — | | | | 86,930,388 | | Profit (loss) sharing in joint ventures and associates | | | 28,770 | | | | 105,447 | | | | — | | | | (17,682 | ) | | | (2,314,587 | ) | | | — | | | | 1,195,058 | | | | (295,764,002 | ) | | | 295,609,103 | | | | (1,157,893 | ) | Taxes, duties and other | | | 372,141,985 | | | | — | | | | 1,498,122 | | | | (19,902,667 | ) | | | — | | | | (1,446,202 | ) | | | 2,433,349 | | | | (10,901,098 | ) | | | — | | | | 343,823,489 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income | | | (309,502,484 | ) | | | (71,036,686 | ) | | | 2,859,543 | | | | 87,814,635 | | | | (7,344,391 | ) | | | (1,391,347 | ) | | | 5,185,865 | | | | (350,103,460 | ) | | | 295,607,241 | | | | (347,911,084 | ) | Total current assets | | | 985,938,224 | | | | 220,597,465 | | | | — | | | | 111,583,417 | | | | 7,773,098 | | | | — | | | | 161,300,389 | | | | 718,345,361 | | | | (1,864,985,583 | ) | | | 340,552,371 | | Totalnon-current assets | | | 769,244,352 | | | | 385,462,326 | | | | — | | | | 160,374,484 | | | | 1,720,770 | | | | — | | | | 43,127,474 | | | | 1,001,402,395 | | | | (783,436,153 | ) | | | 1,577,895,648 | | Total current liabilities | | | 393,129,182 | | | | 290,128,797 | | | | — | | | | 28,995,291 | | | | 12,648,563 | | | | — | | | | 125,341,872 | | | | 1,564,317,345 | | | | (1,862,357,422 | ) | | | 552,203,628 | | Totalnon-current liabilities | | | 2,210,050,053 | | | | 682,521,743 | | | | — | | | | 78,111,581 | | | | 6,121,684 | | | | — | | | | 3,382,236 | | | | 2,080,349,970 | | | | (1,697,084,513 | ) | | | 3,363,452,754 | | Equity (deficit), net | | | (847,996,658 | ) | | | (366,590,749 | ) | | | — | | | | 164,851,029 | | | | (9,276,379 | ) | | | — | | | | 75,703,755 | | | | (1,924,919,559 | ) | | | 911,020,199 | | | | (1,997,208,362 | ) | Depreciation and amortization | | | 102,959,025 | | | | 24,653,730 | | | | 369,636 | | | | 6,521,380 | | | | (323,902 | ) | | | 607,016 | | | | 93,193 | | | | 2,306,932 | | | | — | | | | 137,187,010 | | Net periodic cost of employee benefits | | | 34,522,749 | | | | 54,339,969 | | | | 12,056 | | | | 243,330 | | | | (6,361 | ) | | | 7,860 | | | | 37,512 | | | | 27,019,834 | | | | — | | | | 116,176,949 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of/for the year ended December 31, 2016 | | Exploration and Production | | | Industrial Transformation | | | Cogeneration and Services | | | Drilling and Services | | | Logistics | | | Fertilizers | | | Ethylene | | | Trading Companies | | | Corporate and Other Operating Subsidiary Companies | | | Intersegment eliminations | | | Total | | Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trade | | Ps. | — | | | Ps. | 648,088,013 | | | Ps. | — | | | Ps. | — | | | Ps. | — | | | Ps. | 3,873,403 | | | Ps. | 15,392,552 | | | Ps. | 395,118,117 | | | Ps. | 2,646,505 | | | Ps. | — | | | Ps. | 1,065,118,590 | | Intersegment | | | 616,380,615 | | | | 117,096,378 | | | | 51,913 | | | | 1,981,754 | | | | 68,316,958 | | | | 900,464 | | | | 1,764,438 | | | | 405,293,283 | | | | 50,683,175 | | | | (1,262,468,978 | ) | | | — | | Services income | | | — | | | | 5,565,604 | | | | 132,521 | | | | 70,112 | | | | 2,813,887 | | | | 1,908 | | | | 60,141 | | | | 236,230 | | | | 5,925,854 | | | | (379,176 | ) | | | 14,427,081 | | (Reversal) Impairment of wells pipe-lines, properties, plant and equipment | | | (271,709,433 | ) | | | (52,498,881 | ) | | | — | | | | — | | | | (5,829,520 | ) | | | — | | | | (1,276,509 | ) | | | — | | | | | | | | — | | | | (331,314,343 | ) | Cost of sales | | | 359,064,884 | | | | 823,763,927 | | | | 166,721 | | | | 143,956 | | | | 61,248,584 | | | | 5,506,198 | | | | 13,936,213 | | | | 783,691,245 | | | | 9,018,456 | | | | (1,188,959,550 | ) | | | 867,580,634 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross income (loss) | | | 529,025,164 | | | | (515,051 | ) | | | 17,713 | | | | 1,907,910 | | | | 15,711,781 | | | | (730,423 | ) | | | 4,557,427 | | | | 16,956,385 | | | | 50,237,078 | | | | (73,888,604 | ) | | | 543,279,380 | | Other revenues (expenses), net | | | 27,346,794 | | | | 19,964,654 | | | | — | | | | 591,704 | | | | (27,189,969 | ) | | | 32,710 | | | | 63,989 | | | | 3,412,711 | | | | (4,600,209 | ) | | | (666,804 | ) | | | 18,955,580 | | Distribution, transportation and sales expenses | | | — | | | | 50,792,317 | | | | 8,232 | | | | 6 | | | | 148,215 | | | | 185,168 | | | | 481,727 | | | | 229,432 | | | | 49,162 | | | | (26,663,019 | ) | | | 25,231,240 | | Administrative expenses | | | 54,509,047 | | | | 34,183,846 | | | | 32,126 | | | | 983,560 | | | | 7,175,451 | | | | 731,479 | | | | 2,101,834 | | | | 1,157,182 | | | | 60,497,232 | | | | (48,718,224 | ) | | | 112,653,533 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss) | | | 501,862,911 | | | | (65,526,560 | ) | | | (22,645 | ) | | | 1,516,048 | | | | (18,801,854 | ) | | | (1,614,360 | ) | | | 2,037,855 | | | | 18,982,482 | | | | (14,909,525 | ) | | | 825,835 | | | | 424,350,187 | | Financing income | | | 56,040,129 | | | | 11,056,345 | | | | — | | | | 72,995 | | | | 373,301 | | | | 4,358 | | | | 64,582 | | | | 1,098,079 | | | | 125,964,466 | | | | (180,925,000 | ) | | | 13,749,255 | | Financing cost | | | (109,946,363 | ) | | | (3,188,892 | ) | | | (12,055 | ) | | | (642,711 | ) | | | (481,741 | ) | | | (20,217 | ) | | | (2,980 | ) | | | (1,342,351 | ) | | | (163,400,779 | ) | | | 180,193,625 | | | | (98,844,464 | ) | Derivative financial instruments (cost) income, net | | | — | | | | 3,172 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (1,951,959 | ) | | | (12,052,200 | ) | | | — | | | | (14,000,987 | ) | Foreign exchange (loss) income, net | | | (217,166,718 | ) | | | (12,858,875 | ) | | | — | | | | (1,570,317 | ) | | | (1,118,537 | ) | | | (29,263 | ) | | | (2,843 | ) | | | 174,866 | | | | (21,441,056 | ) | | | — | | | | (254,012,743 | ) | (Loss) profit sharing in associates | | | (21,164 | ) | | | 649,520 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,586,503 | | | | (117,426,818 | ) | | | 117,347,804 | | | | 2,135,845 | | Taxes, duties and other | | | 276,647,448 | | | | — | | | | — | | | | (481,581 | ) | | | (10,010,686 | ) | | | — | | | | — | | | | 7,380,870 | | | | (9,014,616 | ) | | | — | | | | 264,521,435 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income | | | (45,878,653 | ) | | | (69,865,290 | ) | | | (34,700 | ) | | | (142,404 | ) | | | (10,018,145 | ) | | | (1,659,482 | ) | | | 2,096,614 | | | | 11,166,750 | | | | (194,251,296 | ) | | | 117,442,264 | | | | (191,144,342 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total current assets | | | 983,260,710 | | | | 795,237,287 | | | | 388,422 | | | | 6,032,213 | | | | 22,087,801 | | | | 1,724,967 | | | | 5,817,262 | | | | 125,081,531 | | | | 611,464,455 | | | | (2,195,695,848 | ) | | | 355,398,800 | | Permanent investments in associates and other | | | 139,523 | | | | 257,159 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 17,568,893 | | | | (244,932,588 | ) | | | 250,121,645 | | | | 23,154,632 | | Wells, pipelines, properties, plant and equipment, net | | | 1,176,504,263 | | | | 311,432,174 | | | | — | | | | 21,023,629 | | | | 86,695,514 | | | | 7,771,634 | | | | 20,086,650 | | | | 6,691,813 | | | | 37,536,571 | | | | — | | | | 1,667,742,248 | | Total assets | | | 2,206,418,541 | | | | 1,107,094,580 | | | | 388,423 | | | | 27,673,598 | | | | 130,824,921 | | | | 9,556,469 | | | | 26,007,319 | | | | 155,376,864 | | | | 2,359,024,145 | | | | (3,692,478,836 | ) | | | 2,329,886,024 | | Total current liabilities | | | 340,011,451 | | | | 666,467,674 | | | | 472,236 | | | | 3,894,121 | | | | 19,824,792 | | | | 2,995,088 | | | | 3,879,828 | | | | 78,894,485 | | | | 1,497,612,971 | | | | (2,187,862,760 | ) | | | 426,189,886 | | Long-term debt | | | 1,737,109,328 | | | | 31,495,027 | | | | — | | | | 12,489,423 | | | | 4,382,109 | | | | — | | | | — | | | | 3,597,938 | | | | 1,757,315,685 | | | | (1,739,384,968 | ) | | | 1,807,004,542 | | Employee benefits | | | 362,312,386 | | | | 575,277,374 | | | | 191,876 | | | | 441,127 | | | | 571,702 | | | | 20,362 | | | | 21,893 | | | | (749,034 | ) | | | 282,321,750 | | | | — | | | | 1,220,409,436 | | Total liabilities | | | 2,533,221,665 | | | | 1,278,138,290 | | | | 664,829 | | | | 16,853,202 | | | | 29,336,417 | | | | 3,015,450 | | | | 3,901,722 | | | | 86,885,889 | | | | 3,553,477,189 | | | | (3,942,600,482 | ) | | | 3,562,894,171 | | Equity (deficit), net | | | (326,803,124 | ) | | | (171,043,710 | ) | | | (276,406 | ) | | | 10,820,396 | | | | 101,488,504 | | | | 6,541,019 | | | | 22,105,597 | | | | 68,490,975 | | | | (1,194,453,044 | ) | | | 250,121,646 | | | | (1,233,008,147 | ) | Depreciation and amortization | | | 124,329,921 | | | | 17,425,472 | | | | — | | | | 2,559,357 | | | | 2,230,557 | | | | 481,241 | | | | 1,395,232 | | | | 86,707 | | | | 1,931,004 | | | | — | | | | 150,439,491 | | Net periodic cost of employee benefits | | | 32,617,215 | | | | 52,886,397 | | | | 5,860 | | | | 31,491 | | | | 30,340 | | | | (1,178 | ) | | | 1,424 | | | | (552,735 | ) | | | 24,719,602 | | | | — | | | | 109,738,416 | | Acquisition of wells, pipelines, properties, plant and equipment | | | 70,418,370 | | | | 32,254,531 | | | | — | | | | 2,053,139 | | | | 26,344,495 | | | | 889,420 | | | | 1,724,690 | | | | 1,019,484 | | | | 21,031,214 | | | | — | | | | 155,735,343 | |
(1) | This company was merged on June 30, 2019. All operations for periods subsequent to the merger were transferred to Pemex Exploration and Production (See Note 1).Therefore, these amounts are not comparable with 2018 figures. |
(2) | This company was merged on June 30, 2019. All operations for periods subsequent to the merger were transferred to Pemex Industrial Transformation (See Note 1). Therefore, these amounts are not comparable with 2018 figures. |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of/for the year ended December 31, 2018 | | Exploration and Production | | | Industrial Transformation | | | Cogeneration and Services(1) | | | Drilling and Services | | | Logistics | | | Fertilizers | | | Ethylene | | | Trading Companies | | | Corporate and Other Operating Subsidiary Companies | | | Intersegment eliminations | | | Total | | Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trade | | Ps. | 482,262,631 | | | Ps. | 960,558,229 | | | Ps. | — | | | Ps. | — | | | Ps. | — | | | Ps. | 2,933,424 | | | Ps. | 12,809,114 | | | Ps. | 204,103,954 | | | Ps. | 9,778,796 | | | Ps. | — | | | Ps. | 1,672,446,148 | | Intersegment | | | 397,199,590 | | | | 141,997,392 | | | | — | | | | 3,414,033 | | | | 63,672,574 | | | | 65,802 | | | | 1,635,050 | | | | 640,382,216 | | | | 119,762,378 | | | | (1,368,129,035 | ) | | | — | | Services income | | | 23,110 | | | | 546,136 | | | | — | | | | 198,775 | | | | 4,708,217 | | | | 4,742 | | | | 13,379 | | | | 64,038 | | | | 3,114,605 | | | | — | | | | 8,673,002 | | Reversal (Impairment) of wells pipelines, properties, plant and equipment, net | | | 65,013,616 | | | | 659,610 | | | | — | | | | — | | | | (40,288,338 | ) | | | (2,246,264 | ) | | | — | | | | ( 1,719,627 | ) | | | — | | | | — | | | | 21,418,997 | | Cost of sales | | | 402,979,694 | | | | 1,091,796,331 | | | | — | | | | (1,350,678 | ) | | | 42,694,683 | | | | 4,509,881 | | | | 15,952,951 | | | | 837,820,025 | | | | 54,148,722 | | | | (1,249,040,048 | ) | | | 1,199,511,561 | | Gross income (loss) | | | 541,519,253 | | | | 11,965,036 | | | | — | | | | 4,963,486 | | | | (14,602,230 | ) | | | (3,752,177 | ) | | | (1,495,408 | ) | | | 5,010,556 | | | | 78,507,057 | | | | (119,088,987 | ) | | | 503,026,586 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other income | | | 23,672,128 | | | | 6,633,510 | | | | 1,788 | | | | 62,488 | | | | 178,431 | | | | 81,808 | | | | 149,035 | | | | 1,703,304 | | | | 7,683,041 | | | | 1,352,098 | | | | 41,517,631 | | Other expenses | | | (11,196,845 | ) | | | (1,263,080 | ) | | | — | | | | (3,860,217 | ) | | | (40,248,271 | ) | | | (10,389 | ) | | | (7 | ) | | | 87,697 | | | | (911,091 | ) | | | 38,937,083 | | | | (18,465,120 | ) | Distribution, transportation and sales expenses | | | 106,510 | | | | 26,616,527 | | | | — | | | | 63 | | | | 82,755 | | | | 387,397 | | | | 251,459 | | | | 280,407 | | | | 94,457 | | | | (3,462,366 | ) | | | 24,357,209 | | Administrative expenses | | | 67,988,247 | | | | 51,613,434 | | | | — | | | | 965,397 | | | | 11,592,604 | | | | 785,883 | | | | 1,860,759 | | | | 1,541,092 | | | | 74,525,804 | | | | (76,551,739 | ) | | | 134,321,481 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income | | | 485,899,779 | | | | (60,894,495 | ) | | | 1,788 | | | | 200,297 | | | | (66,347,429 | ) | | | (4,854,038 | ) | | | (3,458,598 | ) | | | 4,980,058 | | | | 10,658,746 | | | | 1,214,299 | | | | 367,400,407 | | Financing income | | | 94,009,399 | | | | 7,475,509 | | | | 1 | | | | 350,326 | | | | 1,351,514 | | | | 4,916 | | | | 26,565 | | | | 702,471 | | | | 142,481,311 | | | | (214,844,890 | ) | | | 31,557,122 | | Financing cost | | | (127,343,514 | ) | | | (1,910,666 | ) | | | — | | | | (771,639 | ) | | | (220,721 | ) | | | (478,044 | ) | | | (79,335 | ) | | | (1,379,583 | ) | | | (202,865,030 | ) | | | 214,321,510 | | | | (120,727,022 | ) | Derivative financial instruments (cost) income, net | | | (19,132,060 | ) | | | (11,304 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | 382,568 | | | | (3,497,812 | ) | | | (5 | ) | | | (22,258,613 | ) | Foreign exchange (loss) income, net | | | 28,035,087 | | | | (1,707,558 | ) | | | — | | | | 31,051 | | | | 167,982 | | | | (2,577 | ) | | | (28,542 | ) | | | 920,488 | | | | (3,756,451 | ) | | | — | | | | 23,659,480 | | Profit (loss) sharing in joint ventures and associates | | | 54,149 | | | | — | | | | — | | | | — | | | | (1,092 | ) | | | — | | | | — | | | | 1,012,490 | | | | (124,094,148 | ) | | | 124,555,613 | | | | 1,527,012 | | Taxes, duties and other | | | 469,669,529 | | | | — | | | | — | | | | (407,217 | ) | | | (2,474,189 | ) | | | — | | | | 1,446,202 | | | | 1,840,409 | | | | (8,496,511 | ) | | | — | | | | 461,578,223 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income | | | (8,146,689 | ) | | | (57,048,514 | ) | | | 1,789 | | | | 217,252 | | | | (62,575,557 | ) | | | (5,329,743 | ) | | | (4,986,112 | ) | | | 4,778,083 | | | | (172,576,873 | ) | | | 125,246,527 | | | | (180,419,837 | ) | Total current assets | | | 1,109,407,361 | | | | 238,486,786 | | | | — | | | | 11,478,067 | | | | 15,343,841 | | | | 2,772,995 | | | | 8,337,752 | | | | 137,727,664 | | | | 723,490,973 | | | | (1,853,935,478 | ) | | | 393,109,961 | | Totalnon-current assets | | | 1,023,144,103 | | | | 283,521,897 | | | | — | | | | 15,267,696 | | | | 100,097,224 | | | | 4,187,744 | | | | 17,771,292 | | | | 28,939,309 | | | | 1,624,995,944 | | | | (1,415,837,902 | ) | | | 1,682,087,307 | | Total current liabilities | | | 334,709,929 | | | | 155,402,987 | | | | — | | | | 2,962,370 | | | | 31,418,555 | | | | 9,682,768 | | | | 6,710,315 | | | | 98,007,805 | | | | 1,662,808,360 | | | | (1,853,926,795 | ) | | | 447,776,294 | | Totalnon-current liabilities | | | 2,254,024,319 | | | | 529,484,079 | | | | — | | | | 10,739,495 | | | | 10,332,359 | | | | 108,467 | | | | 149,750 | | | | 4,272,341 | | | | 2,116,660,861 | | | | (1,838,945,265 | ) | | | 3,086,826,406 | | Equity (deficit), net | | | (456,182,784 | ) | | | (162,878,383 | ) | | | — | | | | 13,043,898 | | | | 73,690,151 | | | | (2,830,496 | ) | | | 19,248,979 | | | | 64,386,827 | | | | (1,430,982,304 | ) | | | 423,098,680 | | | | (1,459,405,432 | ) | Depreciation and amortization | | | 124,671,118 | | | | 19,183,640 | | | | — | | | | 1,483,248 | | | | 4,409,226 | | | | (246,697 | ) | | | 1,385,445 | | | | 403,122 | | | | 2,092,938 | | | | — | | | | 153,382,040 | | Net periodic cost of employee benefits | | | 33,688,888 | | | | 51,239,055 | | | | — | | | | 27,105 | | | | 191,132 | | | | 9,162 | | | | 8,839 | | | | (321,683 | ) | | | 26,861,666 | | | | 2,917,450 | | | | 114,621,614 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of/for the year ended December 31, 2015 | | Exploration and Production | | | Industrial Transformation | | | Cogeneration and Services | | | Drilling and Services | | | Logistics | | | Fertilizers | | | Ethylene | | | Trading Companies | | | Corporate and Other Operating Subsidiary Companies | | | Intersegment eliminations | | | Total | | Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trade | | Ps. | — | | | Ps. | 740,190,020 | | | Ps. | — | | | Ps. | — | | | Ps. | — | | | Ps. | 1,494,478 | | | Ps. | 4,551,413 | | | Ps. | 407,214,446 | | | Ps. | — | | | Ps. | — | | | Ps. | 1,153,450,357 | | Intersegment | | | 690,642,133 | | | | 126,294,195 | | | | — | | | | 1,511,970 | | | | 598,853 | | | | 209,970 | | | | 473,990 | | | | 353,137,149 | | | | 18,296,515 | | | | (1,191,164,775 | ) | | | — | | Services income | | | — | | | | 7,549,061 | | | | — | | | | — | | | | 10,355,988 | | | | 236 | | | | 17,893 | | | | 661,683 | | | | 5,107,109 | | | | (10,779,858 | ) | | | 12,912,112 | | Impairment of wells, pipelines, properties, plant and equipment | | | 394,396,580 | | | | 76,442,079 | | | | — | | | | — | | | | 5,829,519 | | | | — | | | | 1,276,512 | | | | — | | | | — | | | | — | | | | 477,944,690 | | Benefit from change in pension plan | | | (46,368,308 | ) | | | (45,808,781 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (92,177,089 | ) | Cost of sales | | | 427,158,621 | | | | 876,531,944 | | | | 2,793 | | | | 706,896 | | | | 10,727,462 | | | | 1,707,548 | | | | 4,965,414 | | | | 749,655,199 | | | | 5,895,648 | | | | (1,182,282,621 | ) | | | 895,068,904 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross (loss) income | | | (84,544,760 | ) | | | (33,131,966 | ) | | | (2,793 | ) | | | 805,074 | | | | (5,602,140 | ) | | | (2,864 | ) | | | (1,198,630 | ) | | | 11,358,079 | | | | 17,507,976 | | | | (19,662,012 | ) | | | (114,474,036 | ) | Other (expenses) revenues, net | | | (7,957,202 | ) | | | 1,243,040 | | | | — | | | | 38 | | | | 26,941 | | | | 14,680 | | | | 19,909 | | | | 1,666,783 | | | | 721,759 | | | | 1,890,786 | | | | (2,373,266 | ) | Distribution, transportation and sales expenses | | | — | | | | 35,292,527 | | | | 1,448 | | | | — | | | | 3,009 | | | | 4,416 | | | | 62,071 | | | | 428,613 | | | | 254 | | | | (6,863,699 | ) | | | 28,928,639 | | Administrative expenses | | | 18,454,281 | | | | 40,529,587 | | | | 47,670 | | | | 8,553 | | | | 104,794 | | | | 152,404 | | | | 519,351 | | | | 1,967,581 | | | | 61,609,813 | | | | (10,921,939 | ) | | | 112,472,095 | | Benefit from change in pension plan | | | (17,853,725 | ) | | | (39,975,450 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (46,031,780 | ) | | | — | | | | (103,860,955 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating (loss) income | | | (93,102,518 | ) | | | (67,735,590 | ) | | | (51,911 | ) | | | 796,559 | | | | (5,683,002 | ) | | | (145,004 | ) | | | (1,760,143 | ) | | | 10,628,668 | | | | 2,651,448 | | | | 14,412 | | | | (154,387,081 | ) | Financing income | | | 25,852,078 | | | | 2,789,535 | | | | — | | | | 43,690 | | | | 37 | | | | 3,503 | | | | 7,728 | | | | 1,147,870 | | | | 110,816,691 | | | | (125,670,273 | ) | | | 14,990,859 | | Financing cost | | | (90,822,360 | ) | | | (13,738,104 | ) | | | 2,110 | | | | (95,280 | ) | | | (61,153 | ) | | | — | | | | — | | | | (1,299,580 | ) | | | (87,289,616 | ) | | | 125,530,390 | | | | (67,773,593 | ) | Derivative financial instruments (cost) income, net | | | — | | | | 6,463 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,347,323 | | | | (22,803,663 | ) | | | — | | | | (21,449,877 | ) | Foreign exchange loss, net | | | (132,165,427 | ) | | | (7,364,486 | ) | | | (7,509 | ) | | | (92,046 | ) | | | (11,090 | ) | | | (3,600 | ) | | | (2,802 | ) | | | (49,190 | ) | | | (15,069,424 | ) | | | — | | | | (154,765,574 | ) | (Loss) profit sharing in associates and other | | | (473,082 | ) | | | 671,868 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,056,259 | | | | (749,900,890 | ) | | | 749,963,960 | | | | 2,318,115 | | Taxes, duties and other | | | 376,682,705 | | | | 1,839,021 | | | | — | | | | 197,491 | | | | (2,069,848 | ) | | | — | | | | — | | | | 5,134,176 | | | | (50,283,298 | ) | | | — | | | | 331,500,247 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income | | | (667,394,014 | ) | | | (87,209,335 | ) | | | (57,310 | ) | | | 455,432 | | | | (3,685,360 | ) | | | (145,101 | ) | | | (1,755,217 | ) | | | 8,697,174 | | | | (711,312,156 | ) | | | 749,838,489 | | | | (712,567,398 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total current assets | | | 709,252,019 | | | | 313,801,630 | | | | 655,239 | | | | 2,171,717 | | | | 49,162,929 | | | | 1,594,643 | | | | 4,988,511 | | | | 73,116,155 | | | | 275,582,816 | | | | (1,163,125,162 | ) | | | 267,200,497 | | Permanent investments in associates and other | | | 919,654 | | | | 6,687,977 | | | | — | | | | — | | | | — | | | | 8,500 | | | | — | | | | 11,845,489 | | | | (242,233,405 | ) | | | 246,937,384 | | | | 24,165,599 | | Wells, pipelines, properties, plant and equipment, net | | | 966,144,619 | | | | 246,463,069 | | | | — | | | | 22,647,454 | | | | 58,078,603 | | | | 7,405,969 | | | | 18,480,684 | | | | 3,045,704 | | | | 22,217,529 | | | | — | | | | 1,344,483,631 | | Total assets | | | 1,698,909,240 | | | | 567,486,579 | | | | 655,240 | | | | 24,917,981 | | | | 111,307,038 | | | | 9,034,376 | | | | 23,705,118 | | | | 93,266,620 | | | | 1,443,189,885 | | | | (2,196,817,877 | ) | | | 1,775,654,200 | | Total current liabilities | | | 278,507,394 | | | | 104,569,842 | | | | 469,524 | | | | 1,981,652 | | | | 14,698,159 | | | | 1,486,468 | | | | 4,534,980 | | | | 34,749,438 | | | | 1,157,183,570 | | | | (1,154,773,306 | ) | | | 443,407,721 | | Long-term debt | | | 1,252,239,594 | | | | 16,707,005 | | | | — | | | | 12,031,849 | | | | 4,850,905 | | | | — | | | | — | | | | 3,607,840 | | | | 1,285,676,066 | | | | (1,274,240,092 | ) | | | 1,300,873,167 | | Employee benefits | | | 379,150,943 | | | | 609,492,623 | | | | 61,171 | | | | 417,817 | | | | 368,036 | | | | 12,533 | | | | 3,611 | | | | (59,581 | ) | | | 289,938,288 | | | | — | | | | 1,279,385,441 | | Total liabilities | | | 1,985,557,185 | | | | 735,280,560 | | | | 530,696 | | | | 14,431,318 | | | | 19,917,100 | | | | 1,499,001 | | | | 4,538,591 | | | | 41,420,792 | | | | 2,747,910,113 | | | | (2,443,755,258 | ) | | | 3,107,330,098 | | Equity (deficit), net | | | (286,647,945 | ) | | | (167,793,981 | ) | | | 124,544 | | | | 10,486,663 | | | | 91,389,938 | | | | 7,535,375 | | | | 19,166,527 | | | | 51,845,828 | | | | (1,304,720,228 | ) | | | 246,937,381 | | | | (1,331,675,898 | ) | Depreciation and amortization | | | 144,567,149 | | | | 20,916,796 | | | | — | | | | 612,741 | | | | 337,364 | | | | 158,505 | | | | 442,504 | | | | 84,493 | | | | 831,698 | | | | — | | | | 167,951,250 | | Net periodic cost of employee benefits | | | 23,608,485 | | | | 21,392,600 | | | | (298 | ) | | | — | | | | (310 | ) | | | — | | | | — | | | | (119,819 | ) | | | 17,668,484 | | | | — | | | | 62,549,142 | | Acquisition of wells, pipelines, properties, plant and equipment | | | 184,786,051 | | | | 68,935,841 | | | | — | | | | — | | | | 1,544,224 | | | | 320,762 | | | | 1,882,108 | | | | 677,314 | | | | 6,711,511 | | | | — | | | | 264,857,811 | |
(1) | This company was liquidated on July 27, 2018. Except for certain expenses incurred in the liquidation, all operations were transferred to Pemex Industrial Transformation (See Note 1). |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of/for the year ended December 31, 2017 | | Exploration and Production | | | Industrial Transformation | | | Cogeneration and Services (1) | | | Drilling and Services | | | Logistics | | | Fertilizers | | | Ethylene | | | Trading Companies | | | Corporate and Other Operating Subsidiary Companies | | | Intersegment eliminations | | | Total | | Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trade | | Ps. | — | | | Ps. | 857,456,146 | | | Ps. | — | | | Ps. | — | | | Ps. | — | | | Ps. | 4,123,006 | | | Ps. | 12,621,648 | | | Ps. | 508,539,112 | | | Ps. | 3,159,238 | | | Ps. | — | | | Ps. | 1,385,899,150 | | Intersegment | | | 762,637,362 | | | | 150,360,283 | | | | 114,233 | | | | 3,400,456 | | | | 70,671,871 | | | | 642,965 | | | | 1,565,757 | | | | 539,193,190 | | | | 79,031,944 | | | | (1,607,618,061 | ) | | | — | | Services income | | | — | | | | 6,116,937 | | | | 334,755 | | | | 41,741 | | | | 3,714,941 | | | | 2,339 | | | | 26,733 | | | | 66,621 | | | | 826,502 | | | | — | | | | 11,130,569 | | (Impairment) reversal of wells pipelines, properties, plant and equipment, net | | | (129,350,315 | ) | | | (15,952,092 | ) | | | — | | | | — | | | | — | | | | (1,935,500 | ) | | | — | | | | — | | | | (4,206,653 | ) | | | — | | | | (151,444,560 | ) | Cost of sales | | | 391,089,410 | | | | 1,004,683,554 | | | | 472,732 | | | | 468,171 | | | | 50,926,263 | | | | 6,001,259 | | | | 14,272,340 | | | | 1,031,997,901 | | | | 33,033,923 | | | | (1,528,740,673 | ) | | | 1,004,204,880 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross income (loss) | | | 242,197,637 | | | | (6,702,280 | ) | | | (23,744 | ) | | | 2,974,026 | | | | 23,460,549 | | | | (3,168,449 | ) | | | (58,202 | ) | | | 15,801,022 | | | | 45,777,108 | | | | (78,877,388 | ) | | | 241,380,279 | | Other income | | | 21,602,100 | | | | 10,119,278 | | | | 2,646 | | | | 125,591 | | | | 584,686 | | | | 11,456 | | | | 202,211 | | | | 1,330,172 | | | | (974,856 | ) | | | (749,721 | ) | | | 32,253,563 | | Other expenses | | | (11,398,055 | ) | | | (8,603,740 | ) | | | — | | | | (157,045 | ) | | | (24,719,122 | ) | | | (2,443 | ) | | | (179,181 | ) | | | (1,022,960 | | | | (4,370,016 | ) | | | 23,373,074 | | | | (27,079,488 | ) | Distribution, transportation and sales expenses | | | — | | | | 26,049,566 | | | | 13,581 | | | | | | | | 73,526 | | | | 528,370 | | | | 334,663 | | | | 375,482 | | | | 59,043 | | | | (5,544,561 | ) | | | 21,889,670 | | Administrative expenses | | | 58,539,119 | | | | 38,994,887 | | | | 37,679 | | | | 888,776 | | | | 7,459,928 | | | | 352,537 | | | | 1,105,554 | | | | 1,564,859 | | | | 62,001,641 | | | | (51,005,526 | ) | | | 119,939,454 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss) | | | 193,862,563 | | | | (70,231,195 | ) | | | (72,358 | ) | | | 2,053,796 | | | | (8,207,341 | ) | | | (4,040,343 | ) | | | (1,475,389 | ) | | | 14,167,893 | | | | (21,628,448 | ) | | | 296,053 | | | | 104,725,231 | | Financing income | | | 121,293,404 | | | | 11,427,907 | | | | 147 | | | | 57,313 | | | | 1,622,827 | | | | 2,248 | | | | 46,113 | | | | 905,405 | | | | 145,907,795 | | | | (265,097,306 | ) | | | 16,165,853 | | Financing cost | | | (136,378,338 | ) | | | (2,398,643 | ) | | | (19,882 | ) | | | (795,947 | ) | | | (2,307,427 | ) | | | (211,004 | ) | | | (1,964 | ) | | | (1,328,827 | ) | | | (239,003,771 | ) | | | 264,801,255 | | | | (117,644,548 | ) | Derivative financial instruments (cost) income, net | | | (1,613,874 | ) | | | 5,835 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (772,143 | ) | | | 27,718,506 | | | | — | | | | 25,338,324 | | Foreign exchange (loss) income, net | | | 10,043,316 | | | | 4,924,209 | | | | — | | | | 227,365 | | | | 613,099 | | | | (20,925 | ) | | | (10,486 | ) | | | (4,318 | ) | | | 7,411,862 | | | | — | | | | 23,184,122 | | Profit (loss) sharing in joint ventures and associates | | | (75,195 | ) | | | 485,224 | | | | — | | | | — | | | | (74 | ) | | | — | | | | — | | | | 1,049,809 | | | | (212,666,494 | ) | | | 211,567,170 | | | | 360,440 | | Taxes, duties and other | | | 338,169,260 | | | | — | | | | — | | | | 276,967 | | | | (7,444,967 | ) | | | — | | | | — | | | | 1,972,718 | | | | 6,063 | | | | — | | | | 332,980,041 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income | | | (151,037,384 | ) | | | (55,786,663 | ) | | | (92,093 | ) | | | 1,265,560 | | | | (833,949 | ) | | | (4,270,024 | ) | | | (1,441,726 | ) | | | 12,045,101 | | | | (292,266,613 | ) | | | 211,567,172 | | | | (280,850,619 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Depreciation and amortization | | | 127,742,568 | | | | 17,935,112 | | | | — | | | | 2,368,123 | | | | 4,562,140 | | | | 422,930 | | | | 1,688,493 | | | | (19,798 | ) | | | 2,004,945 | | | | — | | | | 156,704,513 | | Net periodic cost of employee benefits | | | 32,794,386 | | | | 52,538,989 | | | | — | | | | 39,697 | | | | (4,954 | ) | | | (1,999 | ) | | | (12,561 | ) | | | 16,166 | | | | 22,703,351 | | | | — | | | | 108,073,075 | |
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of / for the year ended December 31, 2014 | | Exploration and Production | | | Refining | | | Gas and Basic Petrochemicals | | | Petrochemicals | | | Trading Companies | | | Corporate and Other Operating Subsidiary Companies | | | Intersegment eliminations | | | Total | | Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trade | | Ps. | — | | | Ps. | 758,988,560 | | | Ps. | 157,715,607 | | | Ps. | 28,293,812 | | | Ps. | 630,291,313 | | | Ps. | — | | | Ps. | — | | | Ps. | 1,575,289,292 | | Intersegment | | | 1,134,519,972 | | | | 78,453,236 | | | | 84,198,317 | | | | 15,181,899 | | | | 433,732,307 | | | | 65,377,209 | | | | (1,811,462,940 | ) | | | — | | Services income | | | — | | | | 4,016,699 | | | | 2,038,629 | | | | 779,978 | | | | 777,160 | | | | 4,743,987 | | | | (917,871 | ) | | | 11,438,582 | | Impairment of wells, pipelines, properties, plant and equipment | | | 21,199,705 | | | | — | | | | — | | | | 1,445,991 | | | | — | | | | — | | | | — | | | | 22,645,696 | | Cost of sales | | | 336,376,922 | | | | 916,867,969 | | | | 238,920,142 | | | | 46,215,742 | | | | 1,059,616,060 | | | | 3,730,490 | | | | (1,759,092,541 | ) | | | 842,634,784 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross income (loss) | | | 776,943,345 | | | | (75,409,474 | ) | | | 5,032,411 | | | | (3,406,044 | ) | | | 5,184,720 | | | | 66,390,706 | | | | (53,288,270 | ) | | | 721,447,394 | | Other (expenses) revenues, net | | | (3,190,604 | ) | | | 39,332,749 | | | | 376,111 | | | | (361,504 | ) | | | 643,043 | | | | 1,011,199 | | | | (258,597 | ) | | | 37,552,397 | | Distribution, transportation and sales expenses | | | — | | | | 31,071,231 | | | | 3,024,325 | | | | 1,061,157 | | | | 493,651 | | | | 468 | | | | (3,468,166 | ) | | | 32,182,666 | | Administrative expenses | | | 43,131,979 | | | | 31,941,961 | | | | 11,038,955 | | | | 14,107,044 | | | | 1,806,000 | | | | 59,442,914 | | | | (50,131,739 | ) | | | 111,337,114 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss) | | | 730,620,762 | | | | (99,089,917 | ) | | | (8,654,758 | ) | | | (18,935,749 | ) | | | 3,528,112 | | | | 7,958,523 | | | | 53,038 | | | | 615,480,011 | | Financing income | | | 14,784,998 | | | | 258,069 | | | | 2,653,747 | | | | 142,115 | | | | 1,157,820 | | | | 87,371,829 | | | | (103,354,391 | ) | | | 3,014,187 | | Financing cost | | | (74,492,786 | ) | | | (9,917,204 | ) | | | (346,660 | ) | | | (72,354 | ) | | | (1,068,869 | ) | | | (69,026,534 | ) | | | 103,365,347 | | | | (51,559,060 | ) | Derivative financial instruments income (cost), net | | | — | | | | — | | | | 8,116 | | | | — | | | | 4,652,123 | | | | (14,098,809 | ) | | | — | | | | (9,438,570 | ) | Foreign exchange loss, net | | | (63,865,750 | ) | | | (5,077,441 | ) | | | (132,849 | ) | | | (29,136 | ) | | | (96,785 | ) | | | (7,797,200 | ) | | | — | | | | (76,999,161 | ) | Profit (loss) sharing in associates | | | 203,285 | | | | — | | | | 284,080 | | | | — | | | | (247,303 | ) | | | (263,425,082 | ) | | | 263,219,388 | | | | 34,368 | | Taxes, duties and other | | | 760,627,534 | | | | — | | | | (21,772,116 | ) | | | — | | | | 3,839,908 | | | | 3,379,438 | | | | — | | | | 746,074,764 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income | | | (153,377,025 | ) | | | (113,826,493 | ) | | | 15,583,792 | | | | (18,895,124 | ) | | | 4,085,190 | | | | (262,396,711 | ) | | | 263,283,382 | | | | (265,542,989 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Depreciation and amortization | | | 121,034,025 | | | | 11,435,739 | | | | 7,039,030 | | | | 2,685,896 | | | | 80,990 | | | | 799,107 | | | | — | | | | 143,074,787 | | Net periodic cost of employee benefits | | | 37,582,742 | | | | 38,198,504 | | | | 9,338,059 | | | | 11,512,589 | | | | 177,003 | | | | 24,914,431 | | | | — | | | | 121,723,328 | | Acquisition of wells, pipelines, properties, plant and equipment | | | 174,019,012 | | | | 39,087,896 | | | | 5,632,770 | | | | 4,709,838 | | | | 2,545,075 | | | | 8,007,600 | | | | — | | | | 234,002,191 | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
PEMEX’s management measures the performance of the segments 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:
The following tables present accounting conciliations between individual and consolidated information.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of/for the year ended December 31, 2016 | | Exploration and Production | | | Industrial Transformation | | | Cogeneration and Services | | | Drilling and Services | | | Logistics | | | Fertilizers | | | Ethylene | | | Trading Companies | | | Corporate and Other Operating Subsidiary Companies | | Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | By segment | | Ps. | 616,380,615 | | | | 771,597,427 | | | | 184,434 | | | | 6,263,093 | | | | 71,130,845 | | | | 4,775,775 | | | | 17,217,131 | | | | 800,979,076 | | | | 59,255,534 | | Less unrealized intersegment sales | | | — | | | | (847,432 | ) | | | — | | | | (4,211,227 | ) | | | — | | | | — | | | | — | | | | (331,446 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated sales | | Ps. | 616,380,615 | | | | 770,749,995 | | | | 184,434 | | | | 2,051,866 | | | | 71,130,845 | | | | 4,775,775 | | | | 17,217,131 | | | | 800,647,630 | | | | 59,255,534 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | By segment | | Ps. | 503,679,153 | | | | (60,347,367 | ) | | | (22,645 | ) | | | 1,271,202 | | | | (25,701,065 | ) | | | (2,877,725 | ) | | | (3,504,812 | ) | | | 19,526,997 | | | | ( 14,909,526 | ) | Less unrealized intersegment sales | | | — | | | | (847,432 | ) | | | — | | | | (4,211,227 | ) | | | — | | | | — | | | | — | | | | (331,446 | ) | | | — | | Less unrealized gain due to production cost valuation of inventory | | | (273,237 | ) | | | 3,572,498 | | | | — | | | | 3,815,371 | | | | — | | | | 905,910 | | | | (2,163 | ) | | | (213,069 | ) | | | — | | Less capitalized refined products | | | (1,661,986 | ) | | | (7,904,259 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Less amortization of capitalized interest | | | 118,981 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Less depreciation of revaluated assets | | | — | | | | — | | | | — | | | | 640,702 | | | | 6,899,211 | | | | 357,455 | | | | 5,544,830 | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated operating income (loss) | | Ps. | 501,862,911 | | | | (65,526,560 | ) | | | (22,645 | ) | | | 1,516,048 | | | | (18,801,854 | ) | | | (1,614,360 | ) | | | 2,037,855 | | | | 18,982,482 | | | | ( 14,909,526 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | By segment | | Ps. | (44,069,001 | ) | | | (61,639,067 | ) | | | (381,214 | ) | | | (387,250 | ) | | | (16,917,356 | ) | | | (7,820,835 | ) | | | (3,780,706 | ) | | | 11,711,265 | | | | (194,251,297 | ) | Less unrealized intersegment sales | | | — | | | | (847,432 | ) | | | — | | | | (4,211,227 | ) | | | — | | | | — | | | | — | | | | (331,446 | ) | | | — | | Less unrealized gain due to production cost valuation of inventory | | | (273,237 | ) | | | 3,572,498 | | | | — | | | | 3,815,371 | | | | — | | | | 905,910 | | | | (2,163 | ) | | | (213,069 | ) | | | — | | Less capitalized refined products | | | (1,661,986 | ) | | | (7,904,259 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Less equity method elimination | | | 6,590 | | | | (3,047,030 | ) | | | 346,514 | | | | — | | | | — | | | | 4,897,988 | | | | 334,653 | | | | — | | | | — | | Less amortization of capitalized interest | | | 118,981 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Less depreciation of revaluated assets | | | — | | | | — | | | | — | | | | 640,702 | | | | 6,899,211 | | | | 357,455 | | | | 5,544,830 | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated net (loss) income | | Ps. | (45,878,653 | ) | | | (69,865,290 | ) | | | (34,700 | ) | | | (142,404 | ) | | | (10,018,145 | ) | | | (1,659,482 | ) | | | 2,096,614 | | | | 11,166,750 | | | | (194,251,297 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | �� | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of/for the year ended December 31, 2016 | | Exploration and Production | | | Industrial Transformation | | | Cogeneration and Services | | | Drilling and Services | | | Logistics | | | Fertilizers | | | Ethylene | | | Trading Companies | | | Corporate and Other Operating Subsidiary Companies | | Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | By segment | | Ps. | 2,232,052,453 | | | | 1,151,907,566 | | | | 425,141 | | | | 30,990,147 | | | | 254,615,026 | | | | 10,421,225 | | | | 43,067,636 | | | | 170,782,928 | | | | 2,359,024,145 | | Less unrealized intersegment sales | | | 483,230 | | | | (4,158,101 | ) | | | — | | | | — | | | | — | | | | — | | | | (5,304 | ) | | | (332,529 | ) | | | — | | Less unrealized gain due to production cost valuation of inventory | | | (3,246,782 | ) | | | (33,361,438 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (5,688,341 | ) | | | — | | Less capitalized refined products | | | (1,661,986 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Less depreciation of revalued assets | | | (20,585,300 | ) | | | — | | | | — | | | | (3,316,549 | ) | | | (123,790,105 | ) | | | (5,300,044 | ) | | | (12,746,136 | ) | | | (652 | ) | | | — | | Less equity method for unrealized profits | | | (742,055 | ) | | | ( 7,293,447 | ) | | | (36,718 | ) | | | — | | | | — | | | | 4,435,288 | | | | (4,308,877 | ) | | | (8,960,344 | ) | | | — | | Less amortization of capitalized interest | | | 118,981 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (424,198 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated assets | | Ps. | 2,206,418,541 | | | | 1,107,094,580 | | | | 388,423 | | | | 27,673,598 | | | | 130,824,921 | | | | 9,556,469 | | | | 26,007,319 | | | | 155,376,864 | | | | 2,359,024,145 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | By segment | | Ps. | 2,533,221,665 | | | | 1,282,558,220 | | | | 664,829 | | | | 16,457,347 | | | | 29,336,417 | | | | 3,015,450 | | | | 3,901,722 | | | | 85,392,123 | | | | 3,553,477,189 | | Less unrealized intersegment sales | | | — | | | | (4,419,930 | ) | | | — | | | | 395,855 | | | | — | | | | — | | | | — | | | | 1,493,766 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated liabilities | | Ps. | 2,533,221,665 | | | | 1,278,138,290 | | | | 664,829 | | | | 16,853,202 | | | | 29,336,417 | | | | 3,015,450 | | | | 3,901,722 | | | | 86,885,889 | | | | 3,553,477,189 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of/for the year ended December 31, 2015 | | Exploration and Production | | | Industrial Transformation | | | Cogeneration and Services | | | Drilling and Services | | | Logistics | | | Fertilizers | | | Ethylene | | | Trading Companies | | | Corporate and Other Operating Subsidiary Companies | | Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | By segment | | Ps. | 690,642,133 | | | Ps. | 874,630,488 | | | Ps. | — | | | Ps. | 1,511,970 | | | Ps. | 10,954,841 | | | Ps. | 1,704,684 | | | Ps. | 5,048,600 | | | Ps. | 761,213,475 | | | Ps. | 23,403,624 | | Less unrealized intersegment sales | | | — | | | | (597,212 | ) | | | — | | | | — | | | | — | | | | — | | | | (5,304 | ) | | | (200,197 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated sales | | Ps. | 690,642,133 | | | Ps. | 874,033,276 | | | Ps. | — | | | Ps. | 1,511,970 | | | Ps. | 10,954,841 | | | Ps. | 1,704,684 | | | Ps. | 5,043,296 | | | Ps. | 761,013,278 | | | Ps. | 23,403,624 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | By segment | | Ps. | (89,473,302 | ) | | Ps. | (88,819,558 | ) | | Ps. | (51,911) | | | Ps. | 700,748 | | | Ps. | (6,875,252 | ) | | Ps. | (262,145 | ) | | Ps. | (2,288,747 | ) | | Ps. | 10,334,138 | | | Ps. | 2,651,448 | | Less unrealized intersegment sales | | | — | | | | (597,212 | ) | | | — | | | | — | | | | — | | | | — | | | | (5,304 | ) | | | (200,197 | ) | | | — | | Less unrealized gain due to production cost valuation of inventory | | | (251,995 | ) | | | 21,681,180 | | | | — | | | | — | | | | — | | | | — | | | | 2,163 | | | | 494,727 | | | | — | | Less capitalized refined products | | | (3,496,201 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Less amortization of capitalized interest | | | 118,980 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Less depreciation of revaluated assets | | | — | | | | — | | | | — | | | | 95,811 | | | | 1,192,250 | | | | 117,141 | | | | 531,745 | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated operating (loss) income | | Ps. | (93,102,518 | ) | | Ps. | (67,735,590 | ) | | Ps. | (51,911 | ) | | Ps. | 796,559 | | | Ps. | (5,683,002 | ) | | Ps. | (145,004 | ) | | Ps. | (1,760,143 | ) | | Ps. | 10,628,668 | | | Ps. | 2,651,448 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | By segment | | Ps. | (663,719,119 | ) | | Ps. | (107,164,261 | ) | | Ps. | (57,310 | ) | | Ps. | 359,621 | | | Ps. | (4,877,610 | ) | | Ps. | (262,242 | ) | | Ps. | (2,314,774 | ) | | Ps. | 8,402,644 | | | Ps. | (711,312,156 | ) | Less unrealized intersegment sales | | | — | | | | (597,212 | ) | | | — | | | | — | | | | — | | | | — | | | | (5,304 | ) | | | (200,197 | ) | | | — | | Less unrealized gain due to production cost valuation of inventory | | | (251,995 | ) | | | 21,681,180 | | | | — | | | | — | | | | — | | | | — | | | | 2,163 | | | | 494,727 | | | | — | | Less capitalized refined products | | | (3,496,201 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | Less equity method elimination | | | (45,679 | ) | | | (1,129,042 | ) | | | — | | | | — | | | | — | | | | — | | | | 30,953 | | | | — | | | | — | | Less amortization of capitalized interest | | | 118,980 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Less depreciation of revaluated assets | | | — | | | | — | | | | — | | | | 95,811 | | | | 1,192,250 | | | | 117,141 | | | | 531,745 | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated net (loss) income | | Ps. | (667,394,014 | ) | | Ps. | (87,209,335 | ) | | Ps. | (57,310 | ) | | Ps. | 455,432 | | | Ps. | (3,685,360 | ) | | Ps. | (145,101 | ) | | Ps. | (1,755,217 | ) | | Ps. | 8,697,174 | | | Ps. | (711,312,156 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of/for the year ended December 31, 2015 | | Exploration and Production | | | Industrial Transformation | | | Cogeneration and Services | | | Drilling and Services | | | Logistics | | | Fertilizers | | | Ethylene | | | Trading Companies | | | Corporate and Other Operating Subsidiary Companies | | Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | By segment | | | Ps.1,722,396,075 | | | | Ps. 599,848,048 | | | | Ps.655,240 | | | | Ps.28,875,231 | | | | Ps.247,480,983 | | | | Ps.15,166,563 | | | | Ps.45,951,979 | | | | Ps. 98,305,071 | | | | Ps.1,443,189,885 | | Less unrealized intersegment sales | | | 1,132 | | | | (3,502,902 | ) | | | — | | | | — | | | | — | | | | — | | | | (5,304 | ) | | | (293,536 | ) | | | — | | Less unrealized gain due to production cost valuation of inventory | | | (19,699,526 | ) | | | (25,264,947 | ) | | | — | | | | — | | | | — | | | | — | | | | 2,163 | | | | (4,744,915 | ) | | | — | | Less capitalized refined products | | | (3,496,201 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | Less equity method for unrealized profits | | | (411,221 | ) | | | (3,593,620 | ) | | | — | | | | — | | | | — | | | | — | | | | (3,952,754 | ) | | | — | | | | — | | Less amortization of capitalized interest | | | 118,981 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Less market value of fixed assets elimination | | | — | | | | — | | | | — | | | | (3,957,250 | ) | | | (136,173,945 | ) | | | (6,132,187 | ) | | | (18,290,966 | ) | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated assets | | | Ps.1,698,909,240 | | | | Ps.567,486,579 | | | | Ps.655,240 | | | | Ps.24,917,981 | | | | Ps.111,307,038 | | | | Ps.9,034,376 | | | | Ps.23,705,118 | | | | Ps. 93,266,620 | | | | Ps.1,443,189,885 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | By segment | | | Ps.1,985,557,185 | | | | Ps.735,280,560 | | | | Ps.530,696 | | | | Ps.14,431,318 | | | | Ps.19,917,100 | | | | Ps. 1,499,001 | | | | Ps. 4,538,591 | | | | Ps.39,895,655 | | | | Ps.2,747,910,113 | | Less unrealized intersegment sales | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,525,137 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated liabilities | | | Ps.1,985,557,185 | | | | Ps. 735,280,560 | | | | Ps.530,696 | | | | Ps.14,431,318 | | | | Ps. 19,917,100 | | | | Ps. 1,499,001 | | | | Ps. 4,538,591 | | | | Ps. 41,420,792 | | | | Ps.2,747,910,113 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | | | | | | | | | | | For the year ended December 31, 2014 | | Exploration and Production | | | Refining | | | Gas and Basic Petrochemicals | | | Petrochemicals | | | Trading Companies | | | Corporate and Other Subsidiary Companies | | Sales: | | | | | | | | | | | | | | | | | | | | | | | | | By segment | | Ps. | 1,134,519,972 | | | Ps. | 844,558,586 | | | Ps. | 243,972,757 | | | Ps. | 44,258,725 | | | Ps. | 1,064,903,042 | | | Ps. | 70,121,196 | | Less unrealized intersegment sales | | | — | | | | (3,100,091 | ) | | | (20,204 | ) | | | (3,036 | ) | | | (102,262 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated sales | | Ps. | 1,134,519,972 | | | Ps. | 841,458,495 | | | Ps. | 243,952,553 | | | Ps. | 44,255,689 | | | Ps. | 1,064,800,780 | | | Ps. | 70,121,196 | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss): | | | | | | | | | | | | | | | | | | | | | | | | | By segment | | Ps. | 730,817,884 | | | Ps. | (101,970,712 | ) | | Ps. | (9,527,142 | ) | | Ps. | (19,066,287 | ) | | Ps. | 5,844,320 | | | Ps. | 7,958,523 | | Less unrealized intersegment sales | | | — | | | | (3,100,091 | ) | | | (20,204 | ) | | | (3,036 | ) | | | (102,262 | ) | | | — | | Less unrealized gain due to productioncost valuation of inventory | | | 3,473,742 | | | | 5,980,886 | | | | 892,588 | | | | 133,574 | | | | (2,213,946 | ) | | | — | | Less capitalized refined products | | | (3,789,845 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | Less amortization of capitalized interest | | | 118,981 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated operating income (loss) | | Ps. | 730,620,762 | | | Ps. | (99,089,917 | ) | | Ps. | (8,654,758 | ) | | Ps. | (18,935,749 | ) | | Ps. | 3,528,112 | | | Ps. | 7,958,523 | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss): | | | | | | | | | | | | | | | | | | | | | | | | | By segment | | Ps. | (153,150,787 | ) | | Ps. | (116,707,288 | ) | | Ps. | 16,255,028 | | | Ps. | (19,129,147 | ) | | Ps. | 6,401,398 | | | Ps. | (262,297,846 | ) | Less unrealized intersegment sales | | | — | | | | (3,100,091 | ) | | | (20,204 | ) | | | (3,036 | ) | | | (102,262 | ) | | | — | | Less unrealized gain due to productioncost valuation of inventory | | | 3,473,742 | | | | 5,980,886 | | | | 892,588 | | | | 133,574 | | | | (2,213,946 | ) | | | — | | Less capitalized refined products | | | (3,789,845 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | Less equity method for unrealized profits | | | (29,116 | ) | | | — | | | | (1,543,620 | ) | | | 103,485 | | | | — | | | | (98,865 | ) | Less amortization of capitalized interest | | | 118,981 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated net (loss) income | | Ps. | (153,377,025 | ) | | Ps. | (113,826,493 | ) | | Ps. | 15,583,792 | | | Ps. | (18,895,124 | ) | | Ps. | 4,085,190 | | | Ps. | (262,396,711 | ) | | | | | | | | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Supplemental geographic information:information – | | | For the years ended December 31, | | | For the years ended December 31, | | | | 2016 | | | 2015 | | | 2014 | | | 2019 | | | 2018 | | | 2017 | | Domestic sales | | Ps. | 670,000,473 | | | Ps. | 746,235,912 | | | Ps. | 944,997,979 | | | Ps. | 807,020,214 | | | Ps. | 980,559,538 | | | Ps. | 877,360,038 | | | | | | | | | | | | | | | | | | | | | Export sales: | | | | | | | | | | | | | United States | | | 221,954,461 | | | | 266,826,499 | | | | 481,364,906 | | | | 372,134,617 | | | | 434,838,159 | | | | 302,912,999 | | Canada, Central and South America | | | 14,058,897 | | | | 11,027,813 | | | | 17,575,078 | | | | 3,102,066 | | | | 11,274,714 | | | | 13,943,080 | | Europe | | | 64,348,997 | | | | 58,707,787 | | | | 54,214,041 | | | | 131,498,445 | | | | 158,900,339 | | | | 71,470,613 | | Other | | | 94,755,762 | | | | 70,652,346 | | | | 77,137,288 | | | | 79,107,163 | | | | 86,873,398 | | | | 120,212,420 | | | | | | | | | | | | | | | | | | | | | Total export sales | | | 395,118,117 | | | | 407,214,445 | | | | 630,291,313 | | | | 585,842,291 | | | | 691,886,610 | | | | 508,539,112 | | | | | | | | | | | | | | | | | | | | | Services income | | | 14,427,081 | | | | 12,912,112 | | | | 11,438,582 | | | Services income* | | | | 9,108,680 | | | | 8,673,002 | | | | 11,130,569 | | | | | | | | | | | | | | | | | | | | | Total sales | | Ps. | 1,079,545,671 | | | Ps. | 1,166,362,469 | | | Ps. | 1,586,727,874 | | | Ps. | 1,401,971,185 | | | Ps. | 1,681,119,150 | | | Ps. | 1,397,029,719 | | | | | | | | | | | | | | | | | | | | |
* | Services income as of December 31, 2019, 2018 and 2017 represent approximately 80%, 63% and 92%, from domestic sales, respectively. |
PEMEX does not have significant long-lived assets outside of Mexico. The following table shows incomeIncome by product:product –
| | | | | | | | | | | | | | | | | | | | | For the years ended December 31, | | | For the years ended December 31, | | | | 2016 | | | 2015 | | | 2014 | | | 2019 | | | 2018 | | | 2017 | | Domestic sales | | | | | | | | | | | | | Refined petroleum products and derivatives (primarily gasolines) | | | Ps. 578,718,674 | | | | Ps. 660,573,780 | | | | Ps. 830,545,046 | | | Ps. | 725,759,040 | | | Ps. | 850,342,124 | | | Ps. | 738,943,017 | | Gas | | | 59,648,576 | | | | 54,497,824 | | | | 77,813,359 | | | | 66,303,063 | | | | 110,219,691 | | | | 116,021,269 | | Petrochemical products | | | 31,633,223 | | | | 31,164,308 | | | | 36,639,574 | | | | 14,958,111 | | | | 19,997,723 | | | | 22,395,752 | | | | | | | | | | | | | | | | | | | | | Total domestic sales | | | Ps. 670,000,473 | | | | Ps. 746,235,912 | | | | Ps. 944,997,979 | | | Ps. | 807,020,214 | | | Ps. | 980,559,538 | | | Ps. | 877,360,038 | | | | | | | | | | | | | | | | | | | | | Export sales | | | | | | | | | | | | | Crude oil | | | Ps. 288,625,794 | | | | Ps. 288,170,451 | | | | Ps. 475,056,981 | | | Ps. | 408,771,392 | | | Ps. | 482,259,045 | | | Ps. | 356,623,114 | | Refined petroleum products and derivatives (primarily gasolines) | | | 92,705,248 | | | | 118,129,615 | | | | 153,436,847 | | | | 118,495,443 | | | | 167,796 ,526 | | | | 124,644,353 | | Gas | | | 20,995 | | | | 27,283 | | | | 64,397 | | | | 53,353,075 | | | | 34,446,277 | | | | 22,253,493 | | Petrochemical products | | | 13,766,080 | | | | 887,096 | | | | 1,733,088 | | | | 5,222,382 | | | | 7,384,762 | | | | 5,018,152 | | | | | | | | | | | | | | | | | | | | | Total export sales | | | Ps. 395,118,117 | | | | Ps. 407,214,445 | | | | Ps. 630,291,313 | | | Ps. | 585,842,291 | | | Ps. | 691,886,610 | | | Ps. | 508,539,112 | | | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
NOTE 6. CASH, CASH EQUIVALENTS AND RESTRICTED CASH
a. As of December 31, 20162019, 2018 and 2015,2017, the revenues were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | For the year ended December 31, | | Exploration and Production | | | Industrial Transformation | | | Cogeneration and Services(1) | | | Drilling and Services(2) | | | Logistics | | | Fertilizers | | | Ethylene(3) | | | Trading Companies | | | Corporate and Other Operating Subsidiary Companies | | | Total | | Geographical market 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | United States | | | 226,689,583 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 144,578,641 | | | | 866,393 | | | | 372,134,617 | | Other | | | 57,106,954 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 21,001,222 | | | | 4,101,054 | | | | 82,209,230 | | Europe | | | 124,974,855 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 6,409,388 | | | | 1,903,942 | | | | 133,288,185 | | Local | | | 741,015 | | | | 793,997,962 | | | | — | | | | 20,755 | | | | 4,663,770 | | | | 1,635,153 | | | | 5,257,924 | | | | 3,587,920 | | | | 4,434,654 | | | | 814,339,153 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | Ps. | 409,512,407 | | | | 793,997,962 | | | | | | | | 20,755 | | | | 4,663,770 | | | | 1,635,153 | | | | 5,257,924 | | | | 175,577,171 | | | | 11,306,043 | | | Ps. | 1,401,971,185 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2018* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | United States | | | 276,785,650 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 158,713,210 | | | | — | | | | 435,498,860 | | Other | | | 51,708,232 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — �� | | | | 40,743,480 | | | | 5,660,310 | | | | 98,112,022 | | Europe | | | 153,765,163 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 4,647,265 | | | | 2,905,858 | | | | 161,318,286 | | Local | | | 26,696 | | | | 961,104,365 | | | | — | | | | 198,775 | | | | 4,708,217 | | | | 2,938,166 | | | | 12,822,493 | | | | 64,037 | | | | 4,327,233 | | | | 986,189,982 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | Ps. | 482,285,741 | | | | 961,104,365 | | | | — | | | | 198,775 | | | | 4,708,217 | | | | 2,938,166 | | | | 12,822,493 | | | | 204,167,992 | | | | 12,893,401 | | | Ps. | 1,681,119,150 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2017* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | United States | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 320,069,332 | | | | — | | | | 320,069,332 | | Other | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 71,209,448 | | | | — | | | | 71,209,448 | | Europe | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 117,260,334 | | | | 1,062,795 | | | | 118,323,129 | | Local | | | — | | | | 863,573,083 | | | | 334,755 | | | | 41,741 | | | | 3,714,941 | | | | 4,125,345 | | | | 12,648,381 | | | | 66,619 | | | | 2,922,945 | | | | 887,427,810 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | Ps. | — | | | | 863,573,083 | | | | 334,755 | | | | 41,741 | | | | 3,714,941 | | | | 4,125,345 | | | | 12,648,381 | | | | 508,605,733 | | | | 3,985,740 | | | Ps. | 1,397,029,719 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Major products and services 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Crude oil | | | 408,771,392 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 408,771,392 | | Gas | | | 288,446 | | | | 66,014,617 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 53,353,075 | | | | — | | | | 119,656,138 | | Refined petroleum products | | | — | | | | 722,239,101 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 121,028,417 | | | | 986,965 | | | | 844,254,483 | | Oher | | | — | | | | 3,659,163 | | | | | | | | — | | | | — | | | | 1,634,300 | | | | 5,254,234 | | | | 1,127,697 | | | | 8,505,098 | | | | 20,180,492 | | Services | | | 452,569 | | | | 2,085,081 | | | | — | | | | 20,755 | | | | 4,663,770 | | | | 853 | | | | 3,690 | | | | 67,982 | | | | 1,813,980 | | | | 9,108,680 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | Ps. | 409,512,407 | | | | 793,997,962 | | | | — | | | | 20,755 | | | | 4,663,770 | | | | 1,635,153 | | | | 5,257,924 | | | | 175,577,171 | | | | 11,306,043 | | | Ps. | 1,401,971,185 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | For the period ended December 31, 2018* | | Exploration and Production | | | Industrial Transformation | | | Cogeneration and Services(1) | | | Drilling and Services(2) | | | Logistics | | | Fertilizers | | | Ethylene(3) | | | Trading Companies | | | Corporate and Other Operating Subsidiary Companies | | | Total | | Crude oil | | | 482,259,045 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 482,259,045 | | Gas | | | 3,586 | | | | 110,216,105 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 34,446,277 | | | | — | | | | 144,665,968 | | Refined petroleum products | | | — | | | | 850,342,124 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 167,796,526 | | | | — | | | | 1,018,138,650 | | Oher | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,933,424 | | | | 12,809,114 | | | | 1,861,151 | | | | 9,778,796 | | | | 27,382,485 | | Services | | | 23,110 | | | | 546,136 | | | | — | | | | 198,775 | | | | 4,708,217 | | | | 4,742 | | | | 13,379 | | | | 64,038 | | | | 3,114,605 | | | | 8,673,002 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | Ps. | 482,285,741 | | | | 961,104,365 | | | | — | | | | 198,775 | | | | 4,708,217 | | | | 2,938,166 | | | | 12,822,493 | | | | 204,167,992 | | | | 12,893,400 | | | Ps. | 1,681,119,150 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2017* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Crude oil | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 356,623,113 | | | | — | | | | 356,623,113 | | Gas | | | — | | | | 116,021,269 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 22,253,493 | | | | — | | | | 138,274,762 | | Refined petroleum products | | | — | | | | 738,943,017 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 124,644,353 | | | | — | | | | 863,587,370 | | Oher | | | — | | | | 2,491,860 | | | | — | | | | — | | | | — | | | | 4,123,006 | | | | 12,621,648 | | | | 5,018,153 | | | | 3,159,238 | | | | 27,413,905 | | Services | | | — | | | | 6,116,937 | | | | 334,755 | | | | 41,741 | | | | 3,714,941 | | | | 2,339 | | | | 26,733 | | | | 66,621 | | | | 826,502 | | | | 11,130,569 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | Ps. | — | | | | 863,573,083 | | | | 334,755 | | | | 41,741 | | | | 3,714,941 | | | | 4,125,345 | | | | 12,648,381 | | | | 508,605,733 | | | | 3,985,740 | | | Ps. | 1,397,029,719 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Timing of revenue recognition 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Products transferred at a point in time | | | 409,059,838 | | | | 791,912,881 | | | | — | | | | — | | | | — | | | | 1,634,300 | | | | 5,254,234 | | | | 175,509,189 | | | | 9,492,063 | | | | 1,392,862,505 | | Products and services transferred over the time | | | 452,569 | | | | 2,085,081 | | | | — | | | | 20,755 | | | | 4,663,770 | | | | 853 | | | | 3,690 | | | | 67,982 | | | | 1,813,980 | | | | 9,108,680 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | Ps. | 409,512,407 | | | | 793,997,962 | | | | — | | | | 20,755 | | | | 4,663,770 | | | | 1,635,153 | | | | 5,257,924 | | | | 175,577,171 | | | | 11,306,043 | | | Ps. | 1,401,971,185 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Products transferred at a point in time | | | 482,262,631 | | | | 960,558,229 | | | | — | | | | — | | | | — | | | | 2,933,424 | | | | 12,809,114 | | | | 204,103,954 | | | | 9,778,796 | | | | 1,672,446,148 | | Products and services transferred over the time | | | 23,110 | | | | 546,136 | | | | — | | | | 198,775 | | | | 4,708,217 | | | | 4,742 | | | | 13,379 | | | | 64,038 | | | | 3,114,605 | | | | 8,673,002 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | Ps. | 482,285,741 | | | | 961,104,365 | | | | — | | | | 198,775 | | | | 4,708,217 | | | | 2,938,166 | | | | 12,822,493 | | | | 204,167,992 | | | | 12,893,401 | | | Ps. | 1,681,119,150 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2017* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Products transferred at a point in time | | | — | | | | 857,456,146 | | | | — | | | | — | | | | — | | | | 4,123,006 | | | | 12,621,648 | | | | 508,539,111 | | | | 3,159,239 | | | | 1,385,899,150 | | Products and services transferred over the time | | | — | | | | 6,116,937 | | | | 334,755 | | | | 41,741 | | | | 3,714,941 | | | | 2,339 | | | | 26,733 | | | | 66,622 | | | | 826,501 | | | | 11,130,569 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | Ps. | — | | | Ps. | 863,573,083 | | | Ps. | 334,755 | | | Ps. | 41,741 | | | Ps. | 3,714,941 | | | Ps. | 4,125,345 | | | Ps. | 12,648,381 | | | Ps. | 508,605,733 | | | Ps. | 3,985,740 | | | Ps. | 1,397,029,719 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | * PEMEX applied the modified retrospective transition method to the implementation of IFRS 15. Under this method the comparative financial information is notre-established. | |
(1) | This company was liquidated on July 27, 2018. Except for certain expenses incurred in the liquidation, all the operations were transferred to Pemex Industrial Transformation (see Note 1). |
(2) | This company was merged on June 30, 2019. All the operations for periods subsequent to the merger were transferred to Pemex Exploration and Production (see Note 1).Therefore these amounts are not comparable with 2018 figures. |
(3) | This company was merged on June 30, 2019. All the operations for periods subsequent to the merger were transferred to Pemex Industrial Transformation (see Note 1). Therefore these amounts are not comparable with 2018 figures. |
Nature, performance obligations and timing of revenue recognition Revenue is measured based on the consideration specified in a contract with a customer. PEMEX recognizes revenue when it transfers control over a good or service to a customer. The following table provides information about the nature and timing of the satisfaction of performance obligations in contracts with customers, including significant payment terms and the related revenue. | | | | | Products / services | | Nature, performance obligations | | Timing of revenue recognition | Crude oil sales | | Export sales of crude oil are based on delivery terms established in contracts or orders. All sales are performed by the Free on Board International commercial term (“FOB” Incoterm). Crude oil sale contracts consider possible customers’ claims due to product quality, volume or delays in boarding, which are estimated in the price of the transaction. For orders that have variations in price, revenue is adjusted on the closing date of each period. The subsequent variations in the fair value at the different reporting dates are recognized according to IFRS 9 The price of the product is determined based on a market components formula and, with respect to crude oil. | | Revenue is recognized at a point in time when control of the crude oil has transferred to the customer, which occurs when the product is delivered at the point of shipping. Invoices are generated at that time and are mostly payable within the deadlines established in contracts or orders. For international market crude oil sales, revenue is recognized with a provisional price, which undergoes subsequent adjustments until the product has arrived at the port of destination. There may be a period of up to 2 months in determining the final sale price, such as in the case of sales to some regions. Revenue is measured initially estimating the variable compensations such as quality and volume claims, delays in boarding etc. | | | | Sale of petroleum products | | For all petroleum products, there is only one performance obligation that includes transport and handling services to the point of delivery. The price is determined based on the price at the point of delivery, adding the price of the services rendered (freight, handling of jet fuel, etc.) with the provisions and terms established by theComisión Reguladora de Energía (Energy Regulatory Commission or “ERC”). There are penalties for delivery failures and/or payment obligations, as well as quality and volume claims, which are known days after the transaction. | | Revenue is recognized at a point in time when control is transferred to the customer, which occurs either at the point of shipping or when it is delivered at the customer’s facilities. Therefore, transportation fees can be included in the price of sale of the product and are considered part of a single performance obligation since transportation is rendered before control is transferred. Revenue is measured initially estimating the variable compensations such as quality and volume claims, etc. |
| | | | | Sales of natural gas | | There is only one performance obligation that includes transport and handling services to the point of delivery. The transaction price is established at the time of sale, including the estimation of variable considerations such as capacity, penalties, adjustments for quality or volume claims, and incentives for the purchase of products; which are known days after the transaction. Such variable consideration is recognized to the extent that it is probable that it will not be reversed in a future period. | | Revenue is recognized at a point in time when control is transferred to the customer, which occurs when it is delivered at the customer’s facilities. Therefore, transportation fees can be included in the price of sale of the product and are considered part of a single performance obligation since transportation is rendered before control is transferred. Revenue is measured initially estimating the variable compensations as quality and volume claims, etc. | | | | Services | | In cases where within the same service order there are transportation and storage services, there could exist more than one performance obligation, depending on the term of the service. Price is not distributed when there is a performance obligation, except, when there is more than one performance obligation, in which case, the price of the transaction will be assigned according to the service price established in the service order. When there is a performance obligation, the price is not distributed, but if it is considered that there is more than one performance obligation, the price of the transaction is considered based on the prices established in the service orders and which also include penalties such as quality and volume claims. | | Income is recognized over time as the service is rendered. | | | | Other products | | There is only one performance obligation that includes transportation for delivery to destination. The sale and delivery of the product are made at the same time and because they are FOB, transportation fees are included in the price of sale of the product. The transaction price is established at the time of sale, including the estimation of variable considerations such as capacity, penalties, extraordinary sales not included in contracts, adjustments for quality or volume claims, and incentives for the purchase of products; which are known days after the transaction. | | The price of the product is estimated on the date of sale and considered as variable compensations such as quality and volume claims, etc. |
B. | Accounts receivable in the statement of financial position |
As of December 31, 2019 and 2018, PEMEX had accounts receivable derived from customer contracts in the amounts of Ps. 89,263,870 and Ps. 87,740,515 , respectively (see Note 10). | i. | Expiration of contracts |
PEMEX has no outstanding performance obligations to disclose as of December 31, 2018 due to the nature of its operations. | ii. | Significant financial component, less than one year |
PEMEX does not need to adjust the amount committed in consideration for goods and services to account for the effects of a significant financing component, since the transfer and the time of payment of a good or service committed to the customer is less than one year. PEMEX applied the practical expedient, so disclosure about remaining performance obligations that conclude in less than one year is not needed. When PEMEX is entitled to consideration for an amount that directly corresponds to the value of the performance that PEMEX has completed, it may recognize an income from ordinary activities for the amount to which it has the right to invoice. NOTE 8. | FINANCIAL INSTRUMENTS |
A. | Accounting classifications and fair values of financial instruments |
The following tables present information about PEMEX’s carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy, as of December 31, 2019 and 2018. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. Further, for the current year, the fair value of disclosure of lease liabilities is also not required. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Carrying amount | | | Fair value hierarchy | | As of December 31, 2019 | | FVTPL | | | FVOCI –debt instruments | | | FVOCI –equity instruments | | | Financial assets at amortized cost | | | Other financial liabilities | | | Total carrying amount | | | Level 1 | | | Level 2 | | | Level 3 | | | Total | | Financial assets measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Derivative financial instruments | | Ps. | 11,496,330 | | | | — | | | | — | | | | — | | | | — | | | | 11,496,330 | | | | — | | | | 11,496,330 | | | | — | | | | 11,496,330 | | Equity instruments(i) | | | — | | | | — | | | | 346,563 | | | | — | | | | — | | | | 346,563 | | | | — | | | | 346,563 | | | | — | | | | 346,563 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | Ps. | 11,496,330 | | | | — | | | | 346,563 | | | | — | | | | — | | | | 11,842,893 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Financial assets not measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | Ps. | — | | | | — | | | | — | | | | 60,621,631 | | | | — | | | | 60,621,631 | | | | — | | | | — | | | | — | | | | — | | Customers, net | | | — | | | | — | | | | — | | |
| 89,263,870
|
| | | — | | |
| 89,263,870
|
| | | — | | | | — | | | | — | | | | — | | Employees and officers | | | — | | | | — | | | | — | | | . | 3,667,242 | | | | — | | | . | 3,667,242 | | | | — | | | | — | | | | — | | | | — | | Sundry debtors | | | — | | | | — | | | | — | | |
| 27,748,849
|
| | | — | | |
| 27,748,849
|
| | | — | | | | — | | | | — | | | | — | | Investments in joint ventures, associates and other | | | — | | | | — | | | | — | | | | 14,874,579 | | | | — | | | | 14,874,579 | | | | — | | | | — | | | | — | | | | — | | Long-term notes receivable | | | — | | | | — | | | | — | | | | 127,475,276 | | | | — | | | | 127,475,276 | | | | — | | | | — | | | | — | | | | — | | Other assets | | | — | | | | — | | | | — | | |
| 3,451,096
|
| | | — | | |
| 3,451,096
|
| | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | Ps. | — | | | | — | | | | — | | |
| 327,102,543
|
| | | — | | |
| 327,102,543
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Financial liabilities measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Derivative financial instruments | | Ps. | (16,650,171 | ) | | | — | | | | — | | | | — | | | | — | | | | (16,650,171 | ) | | | — | | | | (16,650,171 | ) | | | — | | | | (16,650,171 | ) | Total | | Ps. | (16,650,171 | ) | | | — | | | | — | | | | — | | | | — | | | | (16,650,171 | ) | | | | | | | | | | | | | | | | | Financial liabilities not measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Suppliers | | Ps. | — | | | | — | | | | — | | | | — | | | | (208,034,407 | ) | | | (208,034,407 | ) | | | — | | | | — | | | | — | | | | — | | Accounts and accrued expenses payable | | | — | | | | — | | | | — | | | | — | | | | (26,055,151 | ) | | | (26,055,151 | ) | | | — | | | | — | | | | — | | | | — | | Leases | | | — | | | | — | | | | — | | | | — | | | | (68,148,627 | ) | | | (68,148,627 | ) | | | — | | | | — | | | | — | | | | — | | Debt | | | — | | | | — | | | | — | | | | — | | | | (1,983,174,088 | ) | | | (1,983,174,088 | ) | | | — | | | | (2,035,079,540 | ) | | | — | | | | (2,035,079,540 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | Ps. | — | | | | — | | | | — | | | | — | | | | (2,285,412,273 | ) | | | (2,285,412,273 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(i) | Related to our participation in TAG Pipeline Sur, S. de R.L. de C.V. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Carrying amount | | | Fair value hierarchy | | As of December 31, 2018 | | FVTPL | | | FVOCI – debt instruments | | | FVOCI – equity instruments | | | Financial assets at amortized cost | | | Other financial liabilities | | | Total carrying amount | | | Level 1 | | | Level 2 | | | Level 3 | | | Total | | Financial assets measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Derivative financial instruments | | Ps. | 22,382,277 | | | | — | | | | — | | | | — | | | | — | | | Ps. | 22,382,277 | | | | — | | | | 22,382,277 | | | | — | | | | 22,382,277 | | Equity instruments | | | — | | | | — | | | | 245,440 | | | | — | | | | — | | | | 245,440 | | | | — | | | | 245,440 | | | | — | | | | 245,440 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | Ps. | 22,382,277 | | | | — | | | | 245,440 | | | | — | | | | — | | | Ps. | 22,627,717 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Financial assets not measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | Ps. | — | | | | — | | | | — | | | | 81,912,409 | | | | — | | | Ps. | 81,912,409 | | | | — | | | | — | | | | — | | | | — | | Customers, net | | | — | | | | — | | | | — | | |
| 87,740,515
|
| | | — | | |
| 87,740,515
|
| | | — | | | | — | | | | — | | | | — | | Sundry debtors | | | — | | | | — | | | | — | | | | 26,323,568 | | | | — | | | | 26,323,568 | | | | | | | | | | | | | | | | | | Employees and officers | | | — | | | | — | | | | — | | | | 6,333,216 | | | | — | | | | 6,333,216 | | | | | | | | | | | | | | | | | | Investments in joint ventures, associates and other | | | — | | | | — | | | | — | | | | 16,841,545 | | | | — | | | | 16,841,545 | | | | — | | |
| —
|
| | | — | | | | — | | Long-term notes receivable | | | — | | | | — | | | | — | | | | 157,982,449 | | | | — | | | | 157,982,449 | | | | — | | | | — | | | | — | | | | — | | Total | | Ps. | — | | | | — | | | | — | | |
| 377,133,702
|
| | | — | | | Ps. | 377,133,702 | | | | | | | | | | | | | | | | | | Financial liabilities measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Derivative financial instruments | | Ps. | (15,895,245 | ) | | | — | | | | — | | | | — | | | | — | | | Ps. | (15,895,245 | ) | | | — | | | | (15,895,245 | ) | | | — | | | | (15,895,245 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | Ps. | (15,895,245 | ) | | | — | | | | — | | | | — | | | | — | | | Ps. | (15,895,245 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Financial liabilities not measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Suppliers | | Ps. | — | | | | — | | | | — | | | | — | | | | (149,842,712 | ) | | Ps. | (149,842,712 | ) | | | — | | | | — | | | | — | | | | — | | Accounts and accrued expenses payable | | | — | | | | — | | | | — | | | | — | | | | (24,917,669 | ) | | | (24,917,669 | ) | | | — | | | | — | | | | — | | | | — | | Debt | | | — | | | | — | | | | — | | | | — | | | | (2,082,286,116 | ) | | | (2,082,286,116 | ) | | | — | | | | (1,913,377,218 | ) | | | — | | | | (1,913,377,218 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | Ps. | — | | | | — | | | | — | | | | — | | | | (2,257,046,497 | ) | | | Ps. (2,257,046,497) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Debt is valued and registered at amortized cost and the fair value of 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, the estimated fair value does not necessarily represent the actual terms at which existing transactions could be liquidated or unwound. As of December 31, 2019 and 2018, PEMEX had monetary assets and liabilities denominated in foreign currency as indicated below: | | | | | | | | | | | | | | | | | | | | | As of December 31, 2019 | | Foreign currency | | | | Asset | | | Liability | | | Net Asset (Liability) | | | Exchange rate | | | Equivalent in Mexican Pesos | | U.S. dollar | | | 11,817,320 | | | | 76,053,967 | | | | (64,236,647 | ) | | 18. | 8452 | | | $ | (1,210,552,454 | ) | Euro | | | 1,974 | | | | 27,932,908 | | | | (27,930,934 | ) | | 21. | 1537 | | | | (590,842,588 | ) | Pounds sterling | | | 29 | | | | 1,575,918 | | | | (1,575,889 | ) | | 24. | 9586 | | | | (39,331,978 | ) | Japanese yen | | | — | | | | 221,975,145 | | | | (221,975,145 | ) | | 0. | 1734 | | | | (38,490,490 | ) | Swiss francs | | | — | | | | 1,666,864 | | | | (1,666,864 | ) | | 19. | 4596 | | | | (32,436,504 | ) | | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | | | | | | | | Ps. | (1,911,654,014 | ) | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | As of December 31, 2018 | | Foreign currency | | | | Asset | | | Liability | | | Net Asset (Liability) | | | Exchange rate | | | Equivalent in Mexican Pesos | | U.S. dollar | | | 8,458,532 | | | | 80,583,838 | | | | (72,125,306 | ) | | 19. | 6829 | | | | (1,419,635,185 | ) | Euro | | | 14,459 | | | | 15,714,542 | | | | (15,700,083 | ) | | 22. | 5054 | | | | (353,336,648 | ) | Pounds sterling | | | — | | | | 816,469 | | | | (816,469 | ) | | 25. | 0878 | | | | (20,483,411 | ) | Japanese yen | | | — | | | | 467,077,295 | | | | (467,077,295 | ) | | 0. | 1793 | | | | (83,746,959 | ) | Swiss francs | | | — | | | | 2,843,298 | | | | (2,843,298 | ) | | 19. | 9762 | | | | (56,798,290 | ) | | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | Ps. | (1,934,000,493 | ) | | | | | | | | | | | | | | | | | | | | | |
The information related to “Cash and cash equivalents”, “Accounts receivable”, “Investment in joint ventures and associates”, “Long-term notes receivable and other assets”, “Debt”, “Leases” and “Derivative Financial Instruments” is described in the following notes, respectively: Note 9, Cash and cash equivalents. Note 10, Customers and other accounts receivable. Note 12, Investment in joint ventures and associates. Note 15, Long-term notes receivable and other assets. Note 8, Derivative financial instruments. PEMEX values the fair value of its financial instruments under standard methodologies commonly applied in the financial markets. PEMEX’s related assumptions and inputs therefore fall under the three Levels of the fair value hierarchy for market participant assumptions, as described below. The fair values determined by Level 1 inputs utilize quoted prices in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs are based on quoted prices for similar assets or liabilities in active markets, and inputs other than quoted prices that are observed for assets or liabilities. Level 3 inputs are unobservable inputs for the assets or liabilities, and include situations where there is little, if any, market activity for the assets or liabilities. Management uses appropriate valuation techniques based on the available inputs to measure the fair values of PEMEX’s applicable financial assets and liabilities. When available, PEMEX measures fair value using Level 1 inputs, because they generally provide the most reliable evidence of fair value. NOTE 9. | CASH AND CASH EQUIVALENTS |
As of December 31, 2019 and 2018, cash and cash equivalents were as follows: | | | 2016 | | | 2015 | | | 2019 | | | 2018 | | Cash on hand and in banks(i) | | Ps. | 71,430,427 | | | Ps. | 52,509,683 | | | Ps. | 27,502,675 | | | Ps. | 41,974,735 | | Marketable securities | | | 92,102,086 | | | | 56,859,197 | | | Highly liquid investments(ii) | | | | 33,118,956 | | | | 39,937,674 | | | | | | | | | | | | | | | | | Ps. | 163,532,513 | | | Ps. | 109,368,880 | | | Ps. | 60,621,631 | | | Ps. | 81,912,409 | | | | | | | | | | | | | | |
(i) | (i) | Cash on hand and in banks is primarily composed of cash in banks. |
b. At December 31, 2016, and 2015, restricted cash was as follows:
(ii) | Mainly composed of short-term Mexican Government investments. |
| | | | | | | | | | | 2016 | | | 2015 | | Restricted cash | | | Ps. 10,478,626 | | | | Ps. 9,246,772 | | | | | | | | | | |
Restricted cash as of December 31, 2016 and 2015 is primarily composed of the deposit made by Pemex-Exploration and Production in the amount of U.S. $465,060 as a result of an arbitration claim before the International Court of Arbitration of the International Chamber of Commerce (the “ICA”). At December 31, 2016 and 2015, this deposit, including income interest, amounted to Ps. 9,624,804 and Ps. 8,010,298, respectively (see Note 25). On December 31, 2016 and 2015, PMI HBV made deposits of U.S. $ 41,319 and U.S. $ 71,861, respectively, in an account in Banco Santander, S.A. as additional collateral for a credit agreement in accordance with the terms of the agreement. The credit agreement requires that PMI HBV maintain aloan-to-value ratio based on the ratio between the principal amount of debt and the market value in U.S. dollars of the Repsol S. A. (“Repsol”) shares owned by PMI HBV. Accordingly, PMI HBV deposited this amount in order to maintain theloan-to-value ratio required under the credit agreement. As of December 31, 2016 and 2015, this deposit, including income interest, amounted to Ps. 853,822 and Ps.1,236,474, respectively (see Note 10).
NOTE 7.
NOTE 10. | CUSTOMERS AND OTHER ACCOUNTS RECEIVABLE NET |
As of December 31, 20162019 and 2015,2018, accounts receivable and other receivables were as follows: | | | | | | | | | | | 2016 | | | 2015 | | Domestic customers, net | | Ps. | 41,884,579 | | | Ps. | 29,328,750 | | Export customers, net | | | 34,859,341 | | | | 17,131,455 | | Sundry debtors | | | 18,736,922 | | | | 10,837,297 | | Prepaid taxes | | | 29,361,303 | | | | 10,710,521 | | Employees and officers | | | 6,054,251 | | | | 5,523,740 | | Advances to suppliers | | | 2,246,437 | | | | 5,634,114 | | Insurance claims | | | 38,497 | | | | 43,490 | | Other accounts receivable | | | 39,197 | | | | 36,454 | | | | | | | | | | | | | Ps. | 133,220,527 | | | Ps. | 79,245,821 | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | 2019 | | | 2018 | | Domestic customers, net | | Ps. | 46,792,824 | | | Ps. | 48,520,478 | | Export customers, net | | | 42,471,046 | | | | 39,220,037 | | | | | | | | | | | Total customers | | Ps. | 89,263,870 | | | Ps. | 87,740,515 | | | | | | | | | | |
Beginning in 2019, customers and other accounts receivable are presented separately in the statement of financial position. Presentation for prior periods has been split to conform to the current period. The following table shows a breakdown of accounts receivable based on their credit history at December 31, 20162019 and 2015:2018, as well as the relation between the breakdown and the impaired amount: | | | Domestic customers | | | Domestic customers | | | | 2016 | | | 2015 | | | 2019 | | | 2018 | | Current | | | Ps. | 44,898,986 | | | Ps. | 47,662,317 | | 1 to 30 days | | Ps. | 1,767,718 | | | Ps. | 620,034 | | | | 801,299 | | | | 1,172,961 | | 31 to 60 days | | | 658,456 | | | | 28,278 | | | | 302,817 | | | | 133,538 | | 61 to 90 days | | | 263,447 | | | | (32,411 | ) | | | 604,025 | | | | 375,790 | | More than 90 days | | | 1,016,553 | | | | 692,040 | | | | 1,285,883 | | | | 584,886 | | | | | | | | | | | | | | | Past due | | | 3,706,174 | | | | 1,307,941 | | | Impaired (reserved) | | | (458,428 | ) | | | (667,883 | ) | | | | | | | | | | Unimpaired | | | 3,247,746 | | | | 640,058 | | | Current | | | 38,636,833 | | | | 28,688,692 | | | Total | | | | 47,893,010 | | | | 49,929,492 | | Impaired (reserved) (1) | | | | (1,100,186 | ) | | | (1,409,014 | ) | | | | | | | | | | | | | | Total | | Ps. | 41,884,579 | | | Ps. | 29,328,750 | | | Ps. | 46,792,824 | | | Ps. | 48,520,478 | | | | | | | | | | | | | | |
| | | Export customers | | | Export customers | | | | 2016 | | | 2015 | | | 2019 | | | 2018 | | Current | | | Ps. | 36,037,725 | | | Ps. | 39,169,790 | | 1 to 30 days | | Ps. | 341,184 | | | Ps. | 323 | | | | 5,895,862 | | | | 34,839 | | 31 to 60 days | | | 6,824 | | | | 425 | | | | 11,120 | | | | 3,313 | | 61 to 90 days | | | 35,372 | | | | 37,239 | | | | 31,182 | | | | 26,444 | | More than 90 days | | | 624,157 | | | | 413,603 | | | | 677,980 | | | | 307,089 | | | | | | | | | | | | | | | Past due | | | 1,007,537 | | | | 451,590 | | | Total | | | | 42,653,869 | | | | 39,541,475 | | Impaired (reserved) | | | (374,699 | ) | | | (312,004 | ) | | | (182,823 | ) | | | (321,438 | ) | | | | | | | | | Unimpaired | | | 632,838 | | | | 139,586 | | | Current | | | 34,226,503 | | | | 16,991,869 | | | | | | | | | | | | | | | | Total | | Ps. | 34,859,341 | | | Ps. | 17,131,455 | | | Ps. | 42,471,046 | | | Ps. | 39,220,037 | | | | | | | | | | | | | | |
As of December 31, 2019 and 2018, PEMEX has exposure to credit risk related to accounts receivable with an average payment term of 46 and 36 days, respectively. Additionally, the reconciliation for impaired accounts receivable is as follows: | | | Domestic customers | | | | | | | | | Domestic customers | | | | 2016 | | | 2015 | | | 2019 | | | 2018 | | Balance at the beginning of the year | | | Ps. (667,883 | ) | | | Ps. (598,624 | ) | | Ps. | (1,409,014 | ) | | Ps. | (951,932 | ) | Additions against income | | | (218,836 | ) | | | (196,856 | ) | | Application against estimation | | | 428,291 | | | | 127,597 | | | Adjustment on initial application of IFRS9 | | | | — | | | | 44,590 | | | | | | | | | | Balance at January 1 under IFRS 9 | | | | (1,409,014 | ) | | | (907,342 | ) | Impairment accounts receivable | | |
| 308,828
|
| | | (501,672 | ) | | | | | | | | | | | | | | Balance at the end of the year | | | Ps. (458,428 | ) | | | Ps. (667,883 | ) | | Ps. | (1,100,186 | ) | | Ps. | (1,409,014 | ) | | | | | | | | | | | | | |
| | | | | | | | | | | Export customers | | | | 2019 | | | 2018 | | Balance at the beginning of the year | | Ps. | (321,438 | ) | | Ps. | (272,813 | ) | Adjustment on initial application of IFRS9 | | | — | | | | (69,639 | ) | | | | | | | | | | Balance at January 1 under IFRS 9 | | | (321,438 | ) | | | (342,452 | ) | Amount used | | | 345,354 | | | | — | | Translation effects | | | 26,941 | | | | — | | Impairment accounts receivable | | | (233,680 | ) | | | 21,014 | | | | | | | | | | | Balance at the end of the year | | Ps. | (182,823 | ) | | Ps. | (321,438 | ) | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESMethodology to determine the estimation of the impairment of the accounts receivable
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | Export customers | | | | 2016 | | | 2015 | | Balance at the beginning of the year | | Ps. | (312,004 | ) | | Ps. | (309,252 | ) | Additions against income | | | (25,931 | ) | | | (119,819 | ) | Aplication against estimation | | | — | | | | 145,811 | | Translation effects | | | (36,764 | ) | | | (28,744 | ) | | | | | | | | | | Balance at the end of the year | | | Ps. (374,699) | | | | Ps. (312,004) | | | | | | | | | | |
NOTE 8. INVENTORIES, NETPEMEX allocates each exposure to a credit risk grade based on data that is determined to be predictive of the risk of loss (including but not limited to, audited financial statements, management accounts and cash flow projections and available information about customers) and applying experienced credit judgment. Credit risk grades are defined using qualitative and quantitative factors that are indicative of the risk of default. Exposures within each credit risk grade are segmented by each Subsidiary Entity and its commercial business lines, so the expected credit loss rate is calculated for each segment based on actual credit loss experienced over the past two years. These rates are multiplied by scale factors to reflect differences between the economic conditions during the period over which historical data has been collected, current conditions and PEMEX’s view of economic conditions over the expected lives of the receivables.
As of December 31, 20162019, the expected percentage of credit loss for accounts receivable for each Subsidiary Entity and 2015,Subsidiary Company was: 1.72% for Pemex Fertilizers, 1.06% for Pemex Industrial Transformation, 1.53% for Pemex Corporate, 1.20% for Pemex Logistics, 0.07% for PMI CIM and 0.47% for PMI TRD. As of December 31, 2018, the expected percentage of credit loss for accounts receivable for each Subsidiary Entity and Subsidiary Company was: 0.72% for Pemex Fertilizers, 2.70% for Pemex Industrial Transformation, 3.15% for Corporate, 0.69% for Pemex Ethylene, 10.80% for Pemex Logistics, 21.71% for Pemex Drilling and Services, 0.06% for PMI CIM and 4.65% for PMI TRD. The amount of (impairment) reversal of impairment of accounts receivable recognized in the income statement for 2019 and 2018 was Ps. (447,441) and Ps. 582,855, respectively. B. | Other accounts receivable |
| | | | | | | | | | | 2019 | | | 2018 | | Financial assets: | | | | | | | | | Sundry debtors | | Ps. | 27,748,849 | | | Ps. | 26,323,568 | | Employees and officers | |
| 3,667,242
|
| | | 6,333,216 | | | | | | | | | | | Total financial assets | | | 31,416,091 | | | | 32,656,784 | | Non-financial assets: | | | | | | | | | Special Tax on Production and Services | | | 31,587,018 | | | | 32,601,541 | | Taxes to be recovered and prepaid taxes | |
| 26,162,225
|
| |
| 12,870,094
|
| Advances to suppliers | | | 565,817 | | | | 597,000 | | Other accounts receivable | | | 1,510,661 | | | | 673,845 | | | | | | | | | | | Totalnon-financial assets: | | | 59,825,721 | | | | 46,742,480 | | | | | | | | | | | Total other account receivable | | Ps. | 91,241,811 | | | Ps. | 79,399,263 | | | | | | | | | | |
As of December 31, 2019 and 2018, inventories were as follows: | | | 2016 | | | 2015 | | | 2019 | | | 2018 | | Refined and petrochemicals products | | | Ps. 21,534,846 | | | | Ps. 23,673,427 | | | Ps. | 41,211,837 | | | Ps. | 43,134,519 | | Products in transit | | | | 22,719,635 | | | | 16,260,213 | | Crude oil | | | 11,391,310 | | | | 11,461,185 | | | | 14,087,218 | | | | 16,708,606 | | Products in transit | | | 7,735,163 | | | | 3,262,252 | | | Materials and products in stock | | | 4,721,834 | | | | 5,145,874 | | | | 4,381,628 | | | | 5,292,796 | | Materials in transit | | | 419,547 | | | | 120,750 | | | | 127,594 | | | | 490,403 | | Gas and condesate products | | | 89,360 | | | | 107,440 | | | Gas and condensate products | | | | 144,284 | | | | 136,031 | | | | | | | | | | | | | | | | | | Ps. 45,892,060 | | | | Ps. 43,770,928 | | | Ps. | 82,672,196 | | | Ps. | 82,022,568 | | | | | | | | | | | | | | |
NOTE 9. HELD—FOR—SALENON-FINANCIAL ASSETS
NOTE 12. | INVESTMENTS IN JOINT VENTURES AND ASSOCIATES |
The investments in joint ventures and associates as of December 31, 2019 and 2018, were as follows: | | | | | | | | | | | | | Percentage | | December 31, | | | | of investment | | 2019 | | | 2018 | | Deer Park Refining Limited | | 49.99% | | Ps. | 12,652,599 | | | Ps. | 14,731,030 | | Sierrita Gas Pipeline LLC | | 35.00% | | | 1,171,593 | | | | 1,068,995 | | Frontera Brownsville, LLC. | | 50.00% | | | 446,202 | | | | 472,898 | | Texas Frontera, LLC. | | 50.00% | | | 199,923 | | | | 228,564 | | CH 4 Energía, S. A. | | 50.00% | | | 192,614 | | | | 155,878 | | Administración Portuaria Integral de Dos Bocas, S. A. de C.V. | | 40.00% | | | 165,370 | | | | 118,478 | | Ductos el Peninsular, S. A. P. I. de C. V. | | 30.00% | | | — | | | | 17,244 | | Other-net | | Various | | | 46,278 | | | | 48,458 | | | | | | | | | | | | | | | | | Ps. | 14,874,579 | | | Ps. | 16,841,545 | | | | | | | | | | | | |
Profit (loss) sharing in joint ventures and associates: | | | | | | | | | | | | | | | December 31, | | | | 2019 | | | 2018 | | | 2017 | | Deer Park Refining Limited | | Ps. | (1,438,308 | ) | | Ps. | 872,885 | | | Ps. | 920,409 | | Sierrita Gas Pipeline LLC | | | 118,959 | | | | 124,209 | | | | 129,401 | | Frontera Brownsville, LLC. | | | 47,719 | | | | 59,973 | | | | 66,798 | | Texas Frontera, LLC. | | | 47,585 | | | | 55,316 | | | | 51,412 | | Administración Portuaria Integral de Dos Bocas, S.A. de C.V. | | | 46,893 | | | | 54,149 | | | | (75,195 | ) | CH4 Energía S.A. de C.V. | | | 36,864 | | | | 15,395 | | | | 125,132 | | PMV Minera, S.A. de C.V.(i) | | | — | | | | 6,863 | | | | 6,253 | | Ductos el Peninsular, S. A. P. I. de C. V. | | | (17,605 | ) | | | (1,092 | ) | | | 74 | | Petroquímica Mexicana de Vinilo, S. A. de C. V.(i) | | | — | | | | 352,816 | | | | (1,223,640 | ) | Ductos y Energéticos del Norte, S.A. de C.V.(ii) | | | — | | | | — | | | | 360,092 | | Other, net | | | — | | | | (13,502 | ) | | | (296 | ) | | | | | | | | | | | | | | Profit sharing in joint ventures and associates, net | | Ps. | (1,157,893 | ) | | Ps. | 1,527,012 | | | Ps. | 360,440 | | | | | | | | | | | | | | |
| a.(i) | Petróleos Mexicanos andOn November 30, 2018, PEMEX received theCentro Nacional de Control de Gas Natural (National Center of Natural Gas Control, or CENAGAS) signed a framework agreement on October 29, 2015 payment for the transfer to CENAGASsale of assets associated with theSistema Nacional de Gasoductos (National Gas Pipeline System) valued at approximately Ps. 33,213,762 as of December 31, 2015. As a result of further review of the assets, during 2016 this value was increased to Ps.35,333,411. As of December 31, 2016, CENAGAS and Pemex Logistics have jointly agreed (pursuant to terms set by theComisiónReguladora de Energía (Energy Regulatory Commission) on the valuation of these assets, leading to a final value of the transferred assets of Ps. 7,450,931, plus Value Added Tax (“VAT”), which triggered a loss of Ps. 27,882,480. On December 30, 2016, Pemex Logistics received Ps. 560,665 as a first payment and the outstanding adjustment amount was recorded as a long-term account receivable. |
The remaining amount to be paid by CENAGAS, Ps. 8,027,628 (including VAT), will be receivedits total 44.09% interest in the form of a consideration payment which will take into account depreciation inflation accumulated in each payment period and a rate of cost of capital determined by the Energy Regulatory Commission. These factors are subject to a determination of variables over the time (see Note14-a).
| b. | Additionally, pursuant to Round Zero, PEMEX was provisionally assigned titles to escrow. The ownership of the fixed assets located in those blocks will be transferred when the blocks are awarded to third parties in subsequent rounds. |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
As a result of the Energy Reform Decree, the secondary legislation and the corresponding initial adjudication of rights for the exploration and extraction of oil and solid hydrocarbons mentioned in transitory article 6 of the Energy Reform Decree, certain assignments that Pemex Exploration and Production received from the Mexican Government were affected. These investments will be compensated at their fair value pursuant to the terms determined by Ministry of Energy.
In 2016, pursuant to Round 1.3, the Ministry of Energy awarded certain contractual areas for the exploration and extraction of oil and solid hydrocarbons to third parties and their respective fixed assets will be transferred from PEMEX to such third parties. During 2016, PEMEX submitted the application for compensation from the Ministry of Energy for the fixed assets located in those areas, and, on December 31, 2016, these fixed assets were reclassified asheld-for-salenon-financial assets at book value of Ps. 7,460,674, as follows:
| | | | | | | | | Fields | | As of December 31, 2016 | | 22 | | Not-requested but temporarily assigned fields | | | Ps. 2,736,358 | | 3 | | Not-requested and unassigned fields | | | 71,974 | | | | | | | | | | | | | | 2,808,332 | | 317 | | Fields permanently unassigned | | | 4,652,342 | | | | | | | | | | | Total | | | Ps. 7,460,674 | | | | | | | | |
NOTE 10. AVAILABLE—FOR—SALENON-CURRENT FINANCIAL ASSETS
On January 1, 2015, PEMEX had a total of 19,557,003 shares of Repsol valued at Ps. 3,944,696, which represented approximately 1.48% of Repsol’s share capital.
On January 16, 2015, PMI HBV received 575,205 new Repsol shares, valued at Ps. 163,834, as anin-kind dividend resulting from a flexible dividend declared by Repsol in December 2014.
On June 15, 2015, Repsol declared flexible dividends to its shareholders, of which PMI HBV received 592,123 new Repsol shares in July 2015, valued at Ps. 171,451.
On August 4, 2015, PMI HBV obtained a loan for U.S. $250,000, which bears interest at a rate of 1.79% and is due in 2018. The loan is collateralized by 20,724,331 Repsol shares which are presented asnon-current assets.
On December 16, 2015, Repsol declared flexible dividends to its shareholders, from which PMI HBV received 942,015 new Repsol shares as anin-kind dividend in January 2015. This amount was recognized as an account receivable of Ps.188,490 as of December 31, 2015.
On June 13, 2016, Repsol declared flexible dividends to its shareholders, of which PMI HBV received 555,547 new Repsol shares as anin-kind dividend on July 18, 2016, valued at Ps. 128,051.
Since the 1,497,562 new Repsol shares were received as anin-kind dividend during 2016 are not included in the loan agreement obtained by PMI HBV in August 2015, these shares are presented as short termavailable-for-sale current financial assets amounting to Ps. 435,556. These shares were sold in January 2017.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
On December 14, 2016, Repsol declared flexible dividends to its shareholders, of which PMI HBV received 584,786 new Repsol shares as anin-kind dividend in January 23, 2017. This amount was recognized as an account receivable of Ps.165,346 as of December 31, 2016.
As of December 31, 2016 and December 31, 2015, the investments in 20,724,331 shares of Repsol held by PMI HBV were valued at Ps. 6,027,540 and Ps. 3,944,696, respectively. These shares are presented undernon-current assets. The effect of the valuation on the investment at fair value was recorded in other comprehensive result in the statement of changes in equity (deficit) as a profit of Ps. 207,817 at December 31, 2016, and a loss of Ps. 3,206,316 at December 31, 2015.
As of December 31, 2016 and 2015, PEMEX’s direct holdings of Repsol shares amounted to approximately 1.52% and 1.48% respectively, of Repsol’s total shares.
NOTE 11. PERMANENT INVESTMENTS IN ASSOCIATES AND OTHER
The permanent investments in associates and other as of December 31, 2016 and 2015, were as follows:
| | | | | | | | | | | | | | | | | | | Percentage of investment | | | 2016 | | | 2015 | | Deer Park Refining Limited | | | | | 49.99% | | | Ps. | 14,039,384 | | | Ps. | 10,600,545 | | Petroquímica Mexicana de Vinilo, S. A. de C. V. | | (i) | | | 44.09% | | | | 4,309,050 | | | | 3,954,251 | | TAG Norte Holding, S. de R. L. de C. V. | | (ii)(iii) | | | 5.00% | | | | 1,909,527 | | | | 283,524 | | Sierrita Gas Pipeline LLC | | | | | 35.00% | | | | 1,112,338 | | | | 983,059 | | TAG Pipelines Sur, S. de R. L. de C. V. | | (ii)(iii) | | | 5.00% | | | | 507,596 | | | | 61,747 | | Frontera Brownsville, LLC. | | | | | 50.00% | | | | 478,414 | | | | 404,129 | | Texas Frontera, LLC. | | | | | 50.00% | | | | 260,828 | | | | 224,834 | | CH4 Energía, S. A. | | | | | 50.00% | | | | 194,868 | | | | 183,474 | | Administración Portuaria Integral de Dos Bocas, S.A. de C.V. | | | | | 40.00% | | | | 139,523 | | | | 160,687 | | PMV Minera, S.A. de C.V. | | | | | 44.09% | | | | 61,779 | | | | 51,270 | | Gasoductos de Chihuahua, S. de R. L. de C. V. | | (iv) | | | 50.00% | | | | — | | | | 6,454,806 | | Compañía Mexicana de Exploraciones, S. A. de C. V. | | (v) | | | 60.00% | | | | — | | | | 758,967 | | Other-net | | | | | Various | | | | 141,325 | | | | 44,306 | | | | | | | | | | | | | | | | | | | | | | | | | Ps. | 23,154,632 | | | Ps. | 24,165,599 | | | | | | | | | | | | | | | | |
i. | On April 20, 2016, an explosion occurred in the “Planta de Clorados 3” (Chlorinated Plant 3) of the Petroquímica Mexicana de Vinilo, resultingS.A. de C.V. and 44.09% interest in approximately Ps.461,000PMV Minera, S.A. de C.V. which were recorded as investments in damages. Chorinated Plant 3 incurred the greatest amountjoint ventures and associates. The sale price was Ps. 3,198,597 and Ps. 53,701, respectively, for a gain of damaged, including the loss of certain assetsPs. 689,268 and the closure of the plant for an undefined amount of time. The Chlorine-Soda plants and the ethylene plants did not register any damage.Ps. 1,646, respectively. |
ii. | (ii) | On December 15, 2015,November 16, 2017, PEMEX completed the divestiture of PMI HBV’s ownershipsold its 50% interest in the TAGDuctos y Energéticos del Norte, Holding, S. de R.L. de C.V.C. V., and TAG Pipelines Sur, S. de R.L. de C.V., joint ventures with TETL México Sur, S. de R.L. de C.V., at a price of Ps. 3,590,963, or 45% of the ownership interest, with a profit of Ps. 342,954. The figures presented representMex-Gas International’s 5% ownership interest in such companies. |
iii. | As of December 31, 2016, due to the loss of significant influence in TAG Norte Holding, S. de R.L. de C.V. and y TAG Pipelines Sur, S. de R.L. de C.V. companies, PEMEX valued these investments at fair value. The difference between the fair value at the end of the period and the book value amounted to Ps.1,763,759. As of December 31, 2016, the fair value was higher than the book value. |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
iv. | On September 28, 2016, PEMEX completed the divestiture of its 50% ownership interest in the Gasoductos de Chihuahua S. de R.L. de C.V. joint venture with Infraestructura Energética Nova, S.A.B. deof C.V. The stock was sold for Ps. 22,684,736,a total of U.S. $ 3,141,710, yielding a profitgain of Ps. 15,211,039.3,139,103. |
v. | Beginning July 1, 2016 this company was included in the consolidated financial statements of PEMEX. Until June 30, 2016 this Company was accounted for as a permanent investment in an associate under the equity method (see Note3-a). |
Profit (loss) sharing in associates and others:
| | | | | | | | | | | | | | | 2016 | | | 2015 | | | 2014 | | Deer Park Refining Limited | | Ps. | 1,437,850 | | | Ps. | 1,913,835 | | | Ps. | (232,960 | ) | Gasoductos de Chihuahua, S. de R. L. de C. V. | | | 638,126 | | | | 666,779 | | | | 244,958 | | Sierrita Gas Pipeline LLC | | | 105,825 | | | | 152,445 | | | | 6,478 | | TAG Norte Holding, S. de R. L. de C. V. | | | — | | | | 34,602 | | | | (108,126 | ) | TAG Pipelines Sur, S. de R. L. de C. V. | | | — | | | | (6,543 | ) | | | (57,330 | ) | Petroquímica Mexicana de Vinilo, S. A. de C. V. | | | (190,468 | ) | | | (61,952 | ) | | | (89,280 | ) | Compañía Mexicana de Exploraciones, S. A. de C. V. | | | — | | | | (496,774 | ) | | | 114,677 | | Other, net | | | 144,512 | | | | 115,723 | | | | 155,951 | | | | | | | | | | | | | | | Profit sharing in associates and other, net | | Ps. | 2,135,845 | | | Ps. | 2,318,115 | | | Ps. | 34,368 | | | | | | | | | | | | | | |
The following tables show condensed financial information of major investments recognized under the equity method during 2016as of December 31, 2019 and 2015: Condensed statements of financial position2018 and for the years ended December 31, 2019, 2018 and 2017:
| | | | | | | | | | | | | | | | | | | Deer Park Refining Limited | | | Gasoductos de Chihuahua, S. de R. L. de C. V. | | | | 2016 | | | 2015 | | | 2016 | | | 2015 | | Total assets | | Ps. | 42,428,275 | | | Ps. | 33,249,652 | | | Ps. | — | | | Ps. | 26,573,119 | | | | | | | Total liabilities | | Ps. | 14,346,643 | | | Ps. | 12,046,441 | | | Ps. | — | | | Ps. | 13,663,507 | | Total equity | | | 28,081,632 | | | | 21,203,211 | | | | | | | | 12,909,612 | | | | | | | | | | | | | | | | | | | Total liabilities and equity | | Ps. | 42,428,275 | | | Ps. | 33,249,652 | | | Ps. | — | | | Ps. | 26,573,119 | | | | | | | | | | | | | | | | | | |
Condensed statements of comprehensive income
| | | | | | | | | | | | | | | | | | | Condensed statements of financial position | | | | Deer Park Refining Limited | | | Sierrita Gas Pipeline, LLC | | | | 2019 | | | 2018 | | | 2019 | | | 2018 | | Total assets | | Ps. | 43,959,482 | | | Ps. | 41,119,684 | | | Ps. | 3,554,650 | | | Ps. | 3,140,289 | | | | | | | | | | | | | | | | | | | Total liabilities | | | 18,651,754 | | | Ps. | 11,654,678 | | | | 207,241 | | | Ps. | 86,014 | | Total equity | | | 25,307,728 | | | | 29,465,006 | | | | 3,347,409 | | | | 3,054,275 | | | | | | | | | | | | | | | | | | | Total liabilities and equity | | Ps. | 43,959,482 | | | Ps. | 41,119,684 | | | Ps. | 3,554,650 | | | Ps. | 3,140,289 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Deer Park Refining Limited | | | Gasoductos de Chihuahua, S. de R. L. de C. V. | | | | December 31, | | | August 31 | | | December 31, | | | | 2016 | | | 2015 | | | 2014 | | | 2016 | | | 2015 | | | 2014 | | Sales and other income | | Ps. | 16,750,155 | | | Ps. | 16,658,705 | | | Ps. | 11,996,951 | | | Ps. | 3,798,666 | | | Ps. | 4,617,982 | | | Ps. | 2,406,375 | | Costs and expenses | | | 13,874,172 | | | | 12,830,653 | | | | 12,462,917 | | | | 2,522,415 | | | | 3,284,424 | | | | 1,916,459 | | | | | | | | | | | | | | | | | | | | | | | | | | | Net result | | Ps. | 2,875,983 | | | Ps. | 3,828,052 | | | Ps. | (465,966 | ) | | Ps. | 1,276,251 | | | Ps. | 1,333,558 | | | Ps. | 489,916 | | | | | | | | | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | Condensed statements of comprehensive income | | | | Deer Park Refining Limited | | | Sierrita Gas Pipeline, LLC | | | | December 31, | | | December 31, | | | | 2019(1) | | | 2018 | | | 2017 | | | 2019 | | | 2018 | | | 2017 | | Sales and other income | | Ps. | 13,560,847 | | | Ps. | 17,519,219 | | | Ps. | 16,427,064 | | | Ps. | 669,579 | | | Ps. | 615,150 | | | Ps. | 840,414 | | Costs and expenses | | | 16,437,750 | | | | 15,773,274 | | | | 14,586,061 | | | | 329,695 | | | | 260,272 | | | | 470,697 | | | | | | | | | | | | | | | | | | | | | | | | | | | Net result | | Ps. | (2,876,903 | ) | | Ps. | 1,745,945 | | | Ps. | 1,841,003 | | | Ps. | 339,884 | | | Ps. | 354,878 | | | Ps. | 369,717 | | | | | | | | | | | | | | | | | | | | | | | | | | �� |
(1) | 2019 net loss was due to the major maintenance of the Refinery that produced a decrease in the processing of crude oil in refined products. |
Additional information about the significant permanent investments in associatesjoint ventures and otherassociates is presented below: | • | | Deer Park Refining Limited. On March 31, 1993, PMI NASA acquired 50%49.99% of the Deer Park Refinery. In its capacity as General Partnergeneral partner of Deer Park Refining Limited Partnership, Shell is responsible for the operation and management of the Refinery,refinery (installed capacity of approximately 340,000 barrels per day of crude oil). Management decisions are made jointly with respect to investment in or disposal of assets, distribution of dividends, indebtedness and equity operations. In accordance with the purposeinvestment contract and the operation of which isthe agreement, the participants have the rights to provide oil refinery services to PMI NASA and Shell for a processing fee. Shell is responsible for determining the crude oil and production materials requirements and both partners are required to provide in equal amounts. Deer Park returns to PMI NASA and Shell productsnet assets in the same equal amounts. Shell is responsible for purchasing the total amountproportion of finished products in stock at market prices. Thistheir participation.This joint venture is recorded under the equity method. |
| • | | Petroquímica Mexicana de Vinilo, S.A. de C.V.On September 13, 2013, Pemex-Petrochemicals (now Pemex Industrial Transformation), through its subsidiary PPQ Cadena Productiva, S.L. and Mexichem founded Petroquímica Mexicana de Vinilo, S.A. de C.V. (Mexicana de Vinilo). The principal activity ofPetroquímica Mexicana de Vinilo, S.A. de C.V.is the production and sale of chemicals. Mexicana de Vinilo’s main products are: chlorine, caustic soda, ethylene and monomers of vinyl chloride. Mexichem is responsible for operational and financial decisions for Mexicana de Vinilo. This investment is recorded under the equity method. |
| • | | TAG Norte Holding, S. de R. L. de C. V.This company was created on June 6, 2014, and is the holding company of other enterprises aimed at developing infrastructure projects related to hydrocarbon transport. This investment is accounted at fair value as described in footnote (iii) to the table above. |
| • | | Sierrita Gas Pipeline LLC.LLC. This company was created on June 24, 2013. Its main activity is the developing of projects related to the transporttransportation infrastructure of gas in the United States. This investment is recorded under the equity method. |
| • | | TAG Pipelines Sur, S. de R. L. de C. V.This company was created on November 27, 2013. The principal activity is the operation and maintenance of the southern portion of the Ramones II project. The investment is accounted at fair value as described in footnote (iii) to the table above. |
| • | | Frontera Brownsville, LLC. Effective April 1, 2011, PMI SUS entered into a joint venture with TransMontaigne Operating Company L.P (TransMontaigne) to create Frontera Brownsville, LLC. Frontera Brownsville, LLC was incorporated in Delaware, U. S.,United States, and has the corporate power to own and operate certain facilities for the storage and treatment of clean petroleum products. This investment is recorded under the equity method. |
| • | | Texas Frontera, LLC. This company was constituted on July 27, 2010, and its principal activity is the lease of tanks for the storage of refined product. PMI SUS, which owns thr 50% of interest in Texas Frontera, entered into a joint venture with Magellan OLP, L.P. (Magellan), and together they are responsible forentitled to the results in proportion of thistheir respective investment. As of December 31, 2016, theThe company has seven tanks with a capacity of 120,000 barrels of capacity, each of them.per tank. This joint venture is recorded under the equity method. |
| • | | CH4 Energía, S.A.S.A. This company was constituted on December 21, 2000. CH4 Energía engages in the purchase and sale of natural gas and in all activities related to the trading of the natural gas, such as transport and distribution in Valle de Toluca, México. This joint venture is recorded under the equity method. |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| • | | Administración Portuaria Integral de Dos Bocas, S.A. de C.V.C.V. This company was constituted on August 12, 1999. Its primarilyprimary activity is administrating the use of water and land inDos Bocas port, areaswhich is in Mexico’s public domain; operatesdomain, promoting the useport’s infrastructure and development of building sites. It also providesproviding related port services. This investment is recorded under the equity method. |
| • | | Ductos el Peninsular S.A.P.I. de C.V. This company was created on September 22, 2014. Its primary activity is the construction and operation of an integral transportation system and storage of petroleum products in the Peninsula of Yucatán. |
| • | | Petroquímica Mexicana de Vinilo, S.A. de C.V. On September 13, 2013, Pemex-Petrochemicals (now Pemex Industrial Transformation), through its subsidiary PPQ Cadena Productiva, S.L. and Mexichem, S.A.B. de C.V. (“Mexichem”) founded Petroquímica Mexicana de Vinilo, S.A. de C.V. (“Mexicana de Vinilo”). The principal activity of Mexicana de Vinilo is the production and sale of chemicals. Mexicana de Vinilo’s main products are chlorine, caustic soda, ethylene and monomers of vinyl chloride. Mexichem has been responsible for operational and financial decisions for Mexicana de Vinilo. On December 20, 2017, Petroquímica Mexicana de Vinilo permanently closed the plant. In November 2018, PEMEX sold its total ownership interest in this company. |
| • | | PMV Minera, S.A. de C.V.C.V. This company was constituted on October 1, 2014 and the principal activity is the extraction and sale of salmuera (mixture of salt and water). This investment is recorded under the equity method. In November 2018, PEMEX sold its total ownership interest in PMV Minera, S.A. de C.V. |
NOTE 13. | WELLS, PIPELINES, PROPERTIES, PLANT AND EQUIPMENT, NET |
| • | | Gasoductos de Chihuahua, S. de R.L. de C.V. On February 6, 1997, Pemex Industrial Transformation (before Pemex-Refining) entered into a joint venture with IEnova Gasoductos Holding, S. de R.L de C.V. to own and operate companies related to gas transportation and distribution, called Gasoductos de Chihuahua, S. de R.L. de C.V. Decision-making requires the consent of both partners during a meeting. The participation of each of the partners was 50% of the share capital. This investment was recorded under the equity method until August 2016, when PEMEX completed the divestiture of this company as described in footnote (iv) to the table above. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Plants | | | Drilling equipment | | | Pipelines | | | Wells | | | Buildings | | | Offshore platforms | | | Furniture and equipment | | | Transportation equipment | | | Construction in progress (1) | | | Land | | | Unproductive fixed assets | | | Other fixed assets | | | Total fixed assets | | Investment Balances as of January 1, 2018 | | | 756,025,360 | | | | 23,443,116 | | | | 481,868,176 | | | | 1,267,747,910 | | | | 64,700,471 | | | | 313,429,941 | | | | 51,057,652 | | | | 23,171,636 | | | | 129,736,382 | | | | 44,546,699 | | | | — | | | | 118,651 | | | | 3,155,845,995 | | Acquisitions | | | 13,362,218 | | | | 1,059,027 | | | | 852,308 | | | | 38,829,246 | | | | 329,969 | | | | 4,958,299 | | | | 473,812 | | | | 117,632 | | | | 54,407,962 | | | | 434,698 | | | | (106 | ) | | | — | | | | 114,825,065 | | Reclassifications | | | 1,400,531 | | | | 45,268 | | | | (1,603,022 | ) | | | — | | | | 37,343 | | | | (4,039,499 | ) | | | 3,015,144 | | | | 101,424 | | | | 32,280 | | | | (6,620 | ) | | | 2,780,266 | | | | (869 | ) | | | 1,762,246 | | Capitalization | | | 25,752,538 | | | | — | | | | 2,456,977 | | | | 21,269,614 | | | | 991,061 | | | | — | | | | 163,000 | | | | 227,334 | | | | (50,828,761 | ) | | | — | | | | — | | | | (31,763 | ) | | | — | | Reversal of impairment (Impairment) | | | 20,226,139- | | | | — | | | | (59,632,531 | ) | | | 59,774,797 | | | | (831,561 | ) | | | 12,133,524 | | | | — | | | | (6,981,561 | ) | | | (3,269,810 | ) | | | — | | | | — | | | | — | | | | 21,418,997 | | Disposals | | | (5,496,395 | ) | | | (4,466,446 | ) | | | (2,705,958 | ) | | | (8,297,844 | ) | | | (382,120 | ) | | | — | | | | (2,689,566 | ) | | | (1,476,513 | ) | | | (725,540 | ) | | | (623,152 | ) | | | (2,780,160 | ) | | | (53,361 | ) | | | (29,697,055 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2018 | | Ps. | 811,270,391 | | | | 20,080,965 | | | | 421,235,950 | | | | 1,379,323,723 | | | | 64,845,163 | | | | 326,482,265 | | | | 52,020,042 | | | | 15,159,952 | | | | 129,352,513 | | | | 44,351,625 | | | | — | | | | 32,659 | | | | 3,264,155,248 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Transfers to rights of use | | | — | | | | (7,005,141 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (7,005,141 | ) | Acquisitions | | | 8,337,019 | | | | 252,382 | | | | 1,251,488 | | | | 29,072,723 | | | | 316,499 | | | | 5,436,425 | | | | 184,863 | | | | 1,735,581 | | | | 82,520,111 | | | | 182,563 | | | | — | | | | — | | | | 129,289,654 | | Reclassifications | | | (1,381,310 | ) | | | — | | | | 428,738 | | | | — | | | | (51,885 | ) | | | (614,430 | ) | | | (234,643 | ) | | | 47,110 | | | | (106,429 | ) | | | (16,161 | ) | | | 35,403 | | | | — | | | | (1,893,607 | ) | Unsuccessful wells | | | — | | | | — | | | | — | | | | (69,231,587 | ) | | | — | | | | — | | | | — | | | | — | | | | (7,922,365 | ) | | | — | | | | — | | | | — | | | | (77,153,952 | ) | Capitalization | | | 6,830,064 | | | | — | | | | 6,538,540 | | | | 35,251,706 | | | | 143,312 | | | | 13,013,199 | | | | 2,566 | | | | 955,134 | | | | (62,722,409 | ) | | | (12,112 | ) | | | — | | | | — | | | | — | | (Impairment) reversal of impairment | | | 24,464,081 | | | | — | | | | (4,008,680 | ) | | | (83,730,351 | ) | | | (499,722 | ) | | | (31,991,592 | ) | | | — | | | | (1,430,077 | ) | | | 114,127 | | | | — | | | | — | | | | — | | | | (97,082,214 | ) | Disposals | | | (3,396,366 | ) | | | (235,382 | ) | | | (301,359 | ) | | | (151,405 | ) | | | (1,435,140 | ) | | | — | | | | (1,565,266 | ) | | | (112,482 | ) | | | (1,310,108 | ) | | | (356,379 | ) | | | (35,403 | ) | | | (32,659 | ) | | | (8,931,949 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2019 | | Ps. | 846,123,879 | | | | 13,092,824 | | | | 425,144,677 | | | | 1,290,534,809 | | | | 63,318,227 | | | | 312,325,867 | | | | 50,407,562 | | | | 16,355,218 | | | | 139,925,440 | | | | 44,149,536 | | | | — | | | | — | | | | 3,201,378,039 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Accumulated depreciation and amortization Balances as of January 1, 2018 | | | (394,024,147 | ) | | | (5,013,984 | ) | | | (159,959,414 | ) | | | (908,399,636 | ) | | | (41,041,009 | ) | | | (165,207,235 | ) | | | (38,972,938 | ) | | | (6,718,306 | ) | | | — | | | | — | | | | — | | | | — | | | | (1,719,336,669 | ) | Depreciation and amortization | | | (44,925,549 | ) | | | (1,347,046 | ) | | | (14,799,664 | ) | | | (70,255,577 | ) | | | (2,026,403 | ) | | | (15,968,324 | ) | | | (2,827,887 | ) | | | (1,231,590 | ) | | | — | | | | — | | | | — | | | | — | | | | (153,382,040 | ) | Reclassifications | | | (212,207 | ) | | | (45,953 | ) | | | 232,680 | | | | — | | | | 17,387 | | | | 1,344,469 | | | | (3,003,850 | ) | | | (94,772 | ) | | | — | | | | — | | | | — | | | | — | | | | (1,762,246 | ) | Disposals | | | 2,558,780 | | | | 408,502 | | | | 1,262,358 | | | | 5,187,467 | | | | 125,769 | | | | — | | | | 2,643,297 | | | | 625,618 | | | | — | | | | — | | | | — | | | | — | | | | 12,811,791 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2018 | | Ps. | (436,603,123 | ) | | | (5,998,481 | ) | | | (173,264,040 | ) | | | (973,467,746 | ) | | | (42,924,256 | ) | | | (179,831,090 | ) | | | (42,161,378 | ) | | | (7,419,050 | ) | | | — | | | | — | | | | — | | | | — | | | | (1,861,669,164 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Transfers to rights of use | | | — | | | | 943,639 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 943,639 | | Depreciation and amortization | | | (49,473,592 | ) | | | (591,168 | ) | | | (16,380,653 | ) | | | (51,574,532 | ) | | | (2,131,913 | ) | | | (13,820,275 | ) | | | (2,556,539 | ) | | | (658,338 | ) | | | — | | | | — | | | | — | | | | — | | | �� | (137,187,010 | ) | Reclassifications | | | 1,303,186 | | | | — | | | | 41,225 | | | | — | | | | 205,661 | | | | 116,278 | | | | 220,301 | | | | 6,956 | | | | — | | | | — | | | | — | | | | — | | | | 1,893,607 | | Disposals | | | 3,308,366 | | | | 128,561 | | | | 184,172 | | | | 817 | | | | 1,226,345 | | | | — | | | | 1,449,659 | | | | 92,471 | | | | — | | | | — | | | | — | | | | — | | | | 6,390,391 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2019 | | Ps. | (481,465,163 | ) | | | (5,517,449 | ) | | | (189,419,296 | ) | | | (1,025,041,461 | ) | | | (43,624,163 | ) | | | (193,535,087 | ) | | | (43,047,957 | ) | | | (7,977,961 | ) | | | — | | | | — | | | | — | | | | — | | | | (1,989,628,537 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Wells, pipelines, properties, plant and equipment—net as of December 31, 2018 | | Ps. | 374,667,268 | | | | 14,082,484 | | | | 247,971,910 | | | | 405,855,977 | | | | 21,920,907 | | | | 146,651,175 | | | | 9,858,664 | | | | 7,740,902 | | | | 129,352,513 | | | | 44,351,625 | | | | — | | | | 32,659 | | | | 1,402,486,084 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Wells, pipelines, properties, plant and equipment—net as of December 31, 2019 | | Ps. | 364,658,716 | | | | 7,575,375 | | | | 235,725,381 | | | | 265,493,348 | | | | 19,694,064 | | | | 118,790,780 | | | | 7,359,605 | | | | 8,377,257 | | | | 139,925,440 | | | | 44,149,536 | | | | — | | | | — | | | | 1,211,749,502 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Depreciation rates | | | 3 to 5 | % | | | 5 | % | | | 2 to 7 | % | | | — | | | | 3 to 7 | % | | | 4 | % | | | 3 to 10 | % | | | 4 to 20 | % | | | — | | | | — | | | | — | | | | — | | | | — | | Estimated useful lives | | | 20 to 35 | | | | 20 | | | | 15 to 45 | | | | — | | | | 33 to 35 | | | | 25 | | | | 3 to 10 | | | | 5 to 25 | | | | — | | | | — | | | | — | | | | — | | | | — | |
(1) | • | | Compañía Mexicana de Exploraciones S.A. de C.V., (“COMESA”). COMESA was founded on November 12, 1968 to support PEMEX’s exploration programs. The operations of COMESA are focused on designing integral solutions for the energy sector, along the value chain for ExplorationMainly wells, pipelines and Production, Refining, Petrochemicals, Geothermal energy and other energy areas all over the energy sector in Mexico, South America and the United States of America. COMESA’s principal activities are: gravimetric, magnetometric and microseismic studies, land seismic data acquisition (2D,3D, 3C), marine Seismic data acquisition, seismic data processing, seismic data interpretation and integration, vertical Seismic Profile (VSP) 2D and 3D, reservoir characterization and visualization, conceptualization and definition for exploration process. Until June 30, 2016 this company was accounted under the equity method. Beginning July 1, 2016 this company was included in the consolidation.plants. |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
NOTE 12. WELLS, PIPELINES, PROPERTIES, PLANT AND EQUIPMENT, NET
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Plants | | | Drilling equipment | | | Pipelines | | | Wells | | | Buildings | | | Offshore platforms | | | Furniture and equipment | | | Transportation equipment | | | Construction in progress | | | Land | | | Unproductive fixed assets | | | Other fixed assets | | | Total fixed assets | | Investment | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of January 1, 2015 | | Ps. | 758,965,433 | | | | 46,129,352 | | | | 571,099,029 | | | | 1,191,385,012 | | | | 64,403,269 | | | | 337,246,010 | | | | 54,819,706 | | | | 24,002,014 | | | | 195,817,249 | | | | 42,813,007 | | | | 10,825,706 | | | | 583,753 | | | | 3,298,089,540 | | Acquisitions | | Ps. | 21,066,695 | | | | 6,117,156 | | | | 5,331,416 | | | | 49,027,740 | | | | 2,624,138 | | | | 6,874,162 | | | | 1,531,683 | | | | 236,284 | | | | 155,841,872 | | | | 12,077,308 | | | | 114,062 | | | | 4,015,295 | | | | 264,857,811 | | Reclassifications | | Ps. | 1,871,739 | | | | (313,503 | ) | | | 2,816,080 | | | | — | | | | 937,482 | | | | 774 | | | | (607,369 | ) | | | 387,331 | | | | 1,809,152 | | | | 23,804 | | | | (6,448,543 | ) | | | (3,275,979 | ) | | | (2,799,032 | ) | Capitalization | | Ps. | 33,362,415 | | | | — | | | | 17,144,630 | | | | 76,065,532 | | | | 1,301,395 | | | | 13,670,992 | | | | 35,933 | | | | 590,435 | | | | (141,792,676 | ) | | | 209,655 | | | | — | | | | (588,311 | ) | | | — | | Impairment | | Ps. | (97,981,310 | ) | | | — | | | | (34,543,415 | ) | | | (249,962,633 | ) | | | — | | | | (95,457,330 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (477,944,688 | ) | Disposals | | Ps. | (68,872,958 | ) | | | (30,252,662 | ) | | | (141,868,232 | ) | | | — | | | | (2,981,818 | ) | | | (2,006,512 | ) | | | (2,813,759 | ) | | | (9,886,969 | ) | | | — | | | | (11,775,972 | ) | | | (4,491,225 | ) | | | (103,880 | ) | | | (275,053,987 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2015 | | Ps. | 648,412,014 | | | | 21,680,343 | | | | 419,979,508 | | | | 1,066,515,651 | | | | 66,284,466 | | | | 260,328,096 | | | | 52,966,194 | | | | 15,329,095 | | | | 211,675,597 | | | | 43,347,802 | | | | — | | | | 630,878 | | | | 2,807,149,644 | | Acquisitions | | Ps. | 20,406,464 | | | | 1,629,710 | | | | 1,265,011 | | | | 8,239,480 | | | | 2,541,802 | | | | 9,866,984 | | | | 545,271 | | | | 2,063,519 | | | | 107,682,868 | | | | 1,487,434 | | | | 6,800 | | | | — | | | | 155,735,343 | | Reclassifications | | Ps. | 150,817 | | | | — | | | | (1,268,887 | ) | | | 8,649,686 | | | | (6,610,184 | ) | | | — | | | | (561,569 | ) | | | (325,778 | ) | | | (282,044 | ) | | | 50,709 | | | | 2,039 | | | | (137,246 | ) | | | (332,457 | ) | Capitalization | | Ps. | 15,943,630 | | | | — | | | | 11,851,378 | | | | 40,825,973 | | | | 1,085,323 | | | | 17,318,279 | | | | 2,769 | | | | 2,918,621 | | | | (89,945,973 | ) | | | — | | | | — | | | | — | | | | — | | Impairment | | Ps. | 81,135,967 | | | | — | | | | 31,967,407 | | | | 198,974,994 | | | | — | | | | 35,640,491 | | | | 438,979 | | | | 8,743 | | | | (16,852,238 | ) | | | — | | | | — | | | | — | | | | 331,314,343 | | Disposals | | Ps. | (7,602,782 | ) | | | (40,937 | ) | | | ( 3,648,989 | ) | | | (4,382,867 | ) | | | (558,374 | ) | | | (449,645 | ) | | | (2,644,957 | ) | | | (551,355 | ) | | | (4,864,062 | ) | | | (314,327 | ) | | | (8,839 | ) | | | (2,126 | ) | | | (25,069,260 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2016 | | Ps. | 758,446,110 | | | | 23,269,116 | | | | 460,145,428 | | | | 1,318,822,917 | | | | 62,743,033 | | | | 322,704,205 | | | | 50,746,687 | | | | 19,442,845 | | | | 207,414,148 | | | | 44,571,618 | | | | — | | | | 491,506 | | | | 3,268,797,613 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Accumulated depreciation and amortization | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of January 1, 2015 | | Ps. | (339,292,292 | ) | | | (27,771,648 | ) | | | (232,658,051) | | | | (695,718,382 | ) | | | (37,144,310 | ) | | | (124,922,867 | ) | | | (37,051,446 | ) | | | (12,811,151 | ) | | | — | | | | — | | | | (7,345,255 | ) | | | — | | | | (1,514,715,402 | ) | Depreciation and amortization | | Ps. | (41,107,609 | ) | | | (3,041,899 | ) | | | (16,777,673 | ) | | | (84,823,893 | ) | | | (1,608,620 | ) | | | (15,986,093 | ) | | | (3,533,648 | ) | | | (1,071,815 | ) | | | — | | | | — | | | | — | | | | — | | | | (167,951,250 | ) | Reclassifications | | Ps. | (1,148,744 | ) | | | 283,636 | | | | (310,859 | ) | | | — | | | | (113,573 | ) | | | — | | | | 1,259,561 | | | | (402,648 | ) | | | — | | | | — | | | | 3,231,659 | | | | — | | | | 2,799,032 | | Disposals | | Ps. | 60,264,739 | | | | 29,951,896 | | | | 110,415,176 | | | | 98,636 | | | | 1,154,416 | | | | — | | | | 2,812,054 | | | | 8,391,094 | | | | — | | | | — | | | | 4,113,596 | | | | — | | | | 217,201,607 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2015 | | Ps. | (321,283,906 | ) | | | (578,015 | ) | | | (139,331,407 | ) | | | (780,443,639 | ) | | | (37,712,087 | ) | | | (140,908,960 | ) | | | (36,513,479) | | | | (5,894,520 | ) | | | — | | | | — | | | | — | | | | — | | | | (1,462,666,013) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Depreciation and amortization | | Ps. | (44,549,443 | ) | | | (2,364,560 | ) | | | (15,153,879 | ) | | | (70,090,038 | ) | | | (1,796,383 | ) | | | (12,252,810 | ) | | | (3,205,089 | ) | | | (1,027,289 | ) | | | — | | | | — | | | | — | | | | — | | | | (150,439,491 | ) | Reclassifications | | Ps. | (10,521 | ) | | | — | | | | (166,632 | ) | | | (3,077 | ) | | | (108,718 | ) | | | — | | | | 166,914 | | | | 454,492 | | | | — | | | | — | | | | — | | | | — | | | | 332,458 | | Disposals | | Ps. | 5,826,891 | | | | — | | | | 2,286,691 | | | | — | | | | 492,557 | | | | — | | | | 2,560,988 | | | | 550,554 | | | | — | | | | — | | | | — | | | | — | | | | 11,717,681 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2016 | | Ps. | (360,016,979 | ) | | | (2,942,575 | ) | | | (152,365,227 | ) | | | (850,536,754 | ) | | | (39,124,631 | ) | | | (153,161,770 | ) | | | (36,990,666 | ) | | | (5,916,763 | ) | | | — | | | | — | | | | — | | | | — | | | | (1,601,055,365 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Wells, pipelines, properties, plant and equipment—net as of December 31,2015 | | Ps. | 327,128,108 | | | | 21,102,328 | | | | 280,648,101 | | | | 286,072,012 | | | | 28,572,379 | | | | 119,419,136 | | | | 16,452,715 | | | | 9,434,575 | | | | 211,675,597 | | | | 43,347,802 | | | | — | | | | 630,878 | | | | 1,344,483,631 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Wells, pipelines, properties, plant and equipment—net as of December 31,2016 | | Ps. | 398,429,131 | | | | 20,326,541 | | | | 307,780,201 | | | | 468,286,163 | | | | 23,618,402 | | | | 169,542,435 | | | | 13,756,021 | | | | 13,526,082 | | | | 207,414,148 | | | | 44,571,618 | | | | — | | | | 491,506 | | | | 1,667,742,248 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Depreciation rates | | | 3 a 5 | % | | | 5 | % | | | 2 a 7 | % | | | — | | | | 3 a 7 | % | | | 4 | % | | | 3 a 10 | % | | | 4 a 20 | % | | | — | | | | — | | | | — | | | | — | | | | — | | Estimated useful lives | | | 20 a 35 | | | | 20 | | | | 15 a 45 | | | | — | | | | 33 a 35 | | | | 25 | | | | 3 a 10 | | | | 5 a 25 | | | | — | | | | — | | | | — | | | | — | | | | — | |
a.A. | As of December 31, 2016, 20152019, 2018 and 2014,2017, the financing cost identified with fixed assets in the construction or installation stage, capitalized as part of the value of such fixed assets, was Ps. 3,667,752,2,959,025, Ps. 5,258,8542,198,191 and Ps. 3,997,121,3,060,963, respectively. Financing cost rates during 2019, 2018 and 2017 were 5.27% to 6.84%, 4.94% to 6.07% and 6.40% to 12.20%, respectively. |
b.B. | The combined depreciation of fixed assets and amortization of wells for the fiscal years ended December 31, 2016, 20152019, 2018 and 2014,2017, recognized in operating costs and expenses, was Ps. 150,439,491, 167,951,250137,187,010, Ps. 153,382,040 and Ps. 143,074,787,156,704,513, respectively, which includes costs related to plugging and abandonment of wells for the years ended December 31, 2016, 20152019, 2018 and 20142017 of Ps. 1,698,312, Ps.1,401,870,4,700,151, Ps. 983,438 and Ps. 2,011,027,850,015, respectively. |
c.C. | As of December 31, 20162019 and 2015,2018, provisions relating to future plugging of wells costs amounted to Ps. 64,967,710 and80,849,900and Ps. 56,894,695,84,050,900, respectively, and are presented in the “Provisions for plugging of wells” (see Note 18)20). |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
d.D. | As of December 31, 20162019 and 2018, acquisitions of property, plant and equipment include transfers from wells unassigned to a reserve for Ps. 5,986,055 and Ps. 6,726,769, respectively (see Note 14) and Ps. 1,072,537 fromavailable-for-salenon-financial assets as of December 31, 2019. |
E. | As of December 31, 2019, 2018 and 2017, PEMEX recognized a net impairment of Ps. (97,082,214), a net reversal of impairment of Ps. (331,314,343)21,418,997 and a net impairment of Ps.477,944,688Ps. (151,444,560), respectively, which is presented as of December 31, 2015. These amounts are explained as follows: |
| i. | As of December 31, 2016, PEMEX recognized a net reversal of impairment in the amount of Ps. (331,314,343) arising from (1) a reversal of Ps. (350,686,687) mainly due to the reallocation of resources towards oil fields with highest profitability and net cash flows arising from relatively greater efficiency in oil extraction and lower production costs; the appreciation of the U.S. dollar against the Mexican peso, the change in the period used to estimate long-term prices of proved reserves and the recoverable amount of fixed assets as well as an improvement in the forecasts of prices in refineries and the decrease in the discount rate; and (2) an impairment of fixed assets of Ps. 19,372,344, mainly due to the fact that cash flows were not sufficient to cover the recovery value of an exploration and production project as a result of the increase in investments in this strategic gas project and the decrease in the production in a petrochemical center. Net reversal of impairment as well as the impairment for the years ended December 31, 2016 and 2015 are presented in a separate line item in the consolidated statement of comprehensive income.income as follows: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | (Impairment) | | | Reversal of impairment | | | (Impairment) / Reversal of impairment, net | | | (Impairment) | | | Reversal of impairment | | | Reversal of impairment / (Impairment) , net | | | (Impairment) | | | Reversal of impairment | | | (Impairment) / Reversal of impairment, net | | Pemex Exploration and Production | | Ps. | (307,913,947 | ) | | Ps. | 138,079,000 | | | Ps. | (169,834,947 | ) | | Ps. | (63,252,635 | ) | | Ps. | 128,266,251 | | | Ps. | 65,013,616 | | | Ps. | (129,350,315 | ) | | Ps. | - | | | Ps. | (129,350,315 | ) | Pemex Industrial Transformation | | | (1,275,480 | ) | | | 43,519,422 | | | | 42,243,942 | | | | (13,788,470 | ) | | | 14,448,080 | | | | 659,610 | | | | (19,751,882 | ) | | | 3,799,790 | | | | (15,952,092 | ) | Pemex Logistics | | | — | | | | 34,119,240 | | | | 34,119,240 | | | | (40,288,338 | ) | | | — | | | | (40,288,338 | ) | | | — | | | | — | | | | — | | Pemex Fertilizers | | | (2,298,775 | ) | | | — | | | | (2,298,775 | ) | | | (2,246,264 | ) | | | — | | | | (2,246,264 | ) | | | (1,935,500 | ) | | | — | | | | (1,935,500 | ) | AGRO | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (4,206,653 | ) | | | — | | | | (4,206,653 | ) | PMI Azufre Industrial | | | (796,263 | ) | | | — | | | | (796,263 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | PMI NASA | | | (1,162,014 | ) | | | 646,603 | | | | (515,411 | ) | | | (1,719,627 | ) | | | — | | | | (1,719,627 | ) | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | Ps. | (313,446,479 | ) | | Ps. | 216,364,265 | | | Ps. | (97,082,214 | ) | | Ps. | (121,295,334 | ) | | Ps. | 142,714,331 | | | Ps. | 21,418,997 | | | Ps. | (155,244,350 | ) | | Ps. | 3,799,790 | | | Ps. | (151,444,560 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash Generating Unit of Pemex Exploration and Production As of December 31, 2019, Pemex Exploration and Production recognized a net impairment of Ps. (169,834,947) mainly due to: (i) a decrease in production profiles volume in the barrel of crude oil equivalent generating a negative effect of Ps. (225,019,093), mainly in the Aceite Terciario del Golfo (“ATG”), Cantarell Chuc and Crudo Ligero Marino CGU. There were increases in the volume production profiles of new fields located in the UGE Yaxche (Xikin, Tetl, Teekit, Suuk, Pokche and Mulach fields) and Cuenca the Veracruz UGE (Ixachi field); however, these effects were only offset by those UGE’s that presented a decrease in their production profiles; (ii) a decrease in crude oil and gas prices, generating a negative effect of Ps. (58,110,000) mainly in Cantarell, ATG, Chuc and Tsimin Xux ; (iii) a decrease in exchange rate from Ps. 19.6829 = U.S. $1.00 as of December 31, 2018 to Ps. 18.8452 = U.S. $1.00 of December 31, 2019 resulting in a negative effect of Ps. (15,307,000) mainly in Cantarell, Yaxché, Chuc and Tsimin Xux CGU’s; (iv) derived from the application of the Energy Reform in 2013, which defined that the exploratory wells of Round 1.3 will not contribute resources to Pemex Exploration and Production, and for that reason, an impairment of Ps. (9,477,854) was recognized. These effects were offset by (i) a decrease in discount rate of Ps. 120,821,000 due to the updating of comparable companies taken as reference to the determination of the discount rate with the same risk profile, mainly in the ATG, Cantarell and Chuc; and (ii) a net benefit from lower income in production profile of Ps. 17,258,000, mainly in ATG, Cantarell and Chuc as a result of lower income in their production profiles. As of December 31, 2018, Pemex Exploration and Production recognized a net reversal of impairment in the amount of Ps. (271,709,432) as of December 31, 2016, arising from (1) a reversal of Ps. (288,581,670)65,013,616 mainly due to (i) an advance of production in Cantarell for rethinking physical goals for the reallocationperiod from 2024 to 2029 with a recovery of resources towards oil fieldsPs. 98,673,388. This computation was projected using a discount rate of 7.03% and a tax rate of 30% (observable market) on the operating profit with highest profitabilityan economic horizon of 25 years, compared to a discount rate of 14.40% that includes the cost of financing and the pyramiding of taxes and observable rights in similar companies, including the Profit-sharing; (ii) application in the fourth quarter of the relevant discount rate and tax rate (observable market), a net cash flows arising from relatively greater efficiencybenefit was generated in oil extraction and lower production costs, which fields are located primarilymost of the projects with respect to the previous year, mainly in the Aceite Terciario del Golfo project in the amount of Ps. 29,592,863. The foregoing was partially offset by an impairment of Ps. (63,252,635), mainly in (i) the Aguas Someras 2 projects in the amount of Ps. (58,318,030), (ii) the Crudo Ligero Marino Burgos,projects, mainly due to higher water and salt content in the hydrocarbons reserves, (iii) the Yaxche Project, due to operating impacts in the fields directly related to production, and (iv) the Tsimin Xux and Chuc projects, mainly due to the natural decline of proved hydrocarbon reserves. Pemex Exploration and Production recognized an impairment in the amount of Ps. 129,350,315 as of December 31, 2017, arising from: (i) the deferral of the development investments in the first 5 years of the economic horizon in the proved reserves, which caused a decrease in production and consequently in income, as well as there-categorization of part of the proved reserves as probable reserve, as a consequence of budget adjustments in the strategic investments in the Cantarell, andAceite terciario del Golfo, Crudo Ligero Marino, Antonio J. Bermudez crude oilBermúdez and Tzimin Xux projects, (ii) insufficient cash flows to make up for costs recovery at the Burgos and Lakach projects as a result of the appreciation of the Mexican peso against the U.S. dollar against the Mexican peso by 20.1%4.3%, from a peso–U.S. dollar exchange rate of Ps. 17.2065 to U.S. $1.00 as of December 31, 2015 to a peso–U.S. dollar exchange rate of Ps. 20.6640 to U.S. $1.00 as of December 31, 2016 to a peso–U.S. dollar exchange rate of Ps. 19.7867 to U.S. $1.00 as of December 31, 2017, given that cash inflows are denominated in U.S. dollars and then translated to the reporting currency using the exchange rate at the enddate of the period,report; (iii) the change in the period used to estimate long-term prices of proved reserves and the recoverable amount of fixed assets from 20 years to 25 years in accordance with the amendment to theLineamientos que regulan el procedimiento de cuantificación y certificación de reservas de la nación y el informe de los recursos contingentes relacionados (Guidelines regulating the quantification and certification procedures of the nation’s reserves and the related contingent resources report), (iv) by the authorization that the assignments to safeguard for two years be considered in an undetermined time until they are bidded and assigned to a contract and (v) the decrease0.3% increase in the discount rate; (2) an impairment of fixed assets of Ps. 16,872,238, mainly due(iv) a 7.2% decrease in crude oil forward prices from 60.24 usd/bl in 2016 to 55.89 usd/bl in 2017 and (v) the fact that cash flows were not sufficient to covernatural decline in production in the recovery value of the Lakach project as a result of the increase in investments in this strategic gasMacuspana project. The cash generating units of Pemex Exploration and Production are investment projects in productive fields with hydrocarbon reserves associated with proved reserves (1P). These productive hydrocarbon fields contain varying degrees of heating power consisting of a set of wells and are supported by fixed assets associated directly with the production, such as pipelines, production facilities, offshore platforms, specialized equipment and machinery. Each project represents the smallest unit which can concentrate the core revenues, with clear costs and expenses that enable future cash flows (value in use) to be determined.
To determine the value in use of long-lived assets associated to hydrocarbon extraction, the net present value of reserves is determined based on the following assumptions:
| | | Average crude oil price | | 60.24 U.S. dollars/bl | Average gas price | | 4.69 U.S. dollars/mpc | Average condensates price | | 40.22 U.S. dollars/bl | Discount rate | | 14.36% annually |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The total forecast production, calculated with a horizon of 25 years is 7,092 million bpce.
Pemex Exploration and Production determines the recoverable amount of fixed assets based on the long-term estimated prices for Pemex Exploration and Production’s proved reserves (1P). The recoverable amount on each asset is the value in use.
Cash Generating Units which conform Industrial Transformation
As of December 31, 2016, Industrial Transformation recognized a net reversal of impairment of Ps. (52,498,881) mainly due to (1) a reversal of Ps. (54,998,987) corresponding to Madero and Minatitlán refineries due to higher prices than were forecasted in 2015 during the market decline, the reduction of the discount rate in the National Refinery System from 13.72% to 12.06%, and the appreciation of the U.S. dollar against the Mexican peso by 20.1%, from a peso–U.S. dollar exchange rate of Ps. 17.2065 to U.S. $1.00 as of December 31, 2015 to a peso–U.S. dollar exchange rate of Ps. 20.6640 to U.S. $1.00 as of December 31, 2016; (2) the cash generating units of the Arenque gas processor complex also recognized a reversal of impairment of Ps. (268,161) due to the improvement in prices of generated products and the appreciation of the U.S. dollar against the Mexican peso, improved efficiency in operating expenses and (3) three cash generating units presented impairment, including Ps. 65,105 in the gas Matapionche Processor Center, Ps. 2,590,870 in the Cangrejera Petrochemical Center and Ps. 112,292 for the Independencia Petrochemical Center, due to a decrease in the methanol price produced in these petrochemical centers.
Cash-generating units in Pemex Industrial Transformation are processing centers grouped according to their types of processes as refineries, gas complex processors, and petrochemical centers. These centers produce various finished products for direct sale to or intermediate products that can be processed in another of its cash generating units or by a third party.
Each processing center of Industrial Transformation represents the smallest unit which can concentrate the core revenues, with clear costs and expenses that enable future cash flows (value in use) to be determined.
Cash flows determination is made based on PEMEX’s business plans, operating financial programs, forecasts of future prices of products related to the processes of the cash generating units, budget programs and different statistic models that consider historical information of processes and the capacity of different processing centers.
Cash generating unit of refining
To determine the value in use of long-lived assets associated with refineries of the National Refinery System, the net present value of reserves were determined based on the following assumptions:
| | | Average crude oil price | | 52.30 U.S. dollars per processed
barrel (2016-2029)
| Processed volume | | 1,100 mbd (2016-2033 average) | Rate of U.S. dollar | | $20.6640 mxp/usd | Useful lives of the cash generating units | | Average of 14 years | Discount rate | | 12.06% annually |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The recoverable amount of the assets is value in use. To determine of cash flows the volume of volumes product produced and sold are taken into consideration. As of December 31, 2016, the value in use for the Minatitlán and Madero Refineries was Ps. 79,113,512. As of December 31, 2016, the projection of cash flows was based on a period of 14 years for each refinery.
Cash generating unit of gas
To determine the value in use of long-lived assets associated with gas processing centers, the net present value of reserves is determined based on the following assumptions:
| | | Processed volume | | Variable because the load inputs are
diverse
| Rate of U.S. dollar | | $20.6640 mxp/usd | Useful lives of the cash generating units | | Average of 10 years | Discount rate | | 10.72% annually |
The recoverable amount of assets based on each asset’s value in use. The value in use for each asset is calculated based on cash flows, taking into consideration volumes produced and sold. As of December 31, 2016, the value in use amounted to Ps.572,909 in the Matapionche gas processing center. Until December 31, 2016, the projection of cash flows was calculated based on a period of 10 years according to the useful life of each gas processing center.
Cash generating unit of petrochemicals
To determine the value in use of long-lived assets associated with petrochemicals centers, the net present value of reserves is determined based on the following assumptions:
| | | Processed volume | | Variable because the load inputs are
diverse
| Rate of U.S. dollar | | $20.6640 mxp/usd | Useful lives of the cash generating units | | Average of 4 years | Discount rate | | 10.29% annually |
The recoverable amount of assets is based on each asset’s value in use. The value in use for each asset is calculated based on cash flows, taking into consideration volumes produced and sold. As of December 31, 2016, the value in use of impairment fixed assets amounted to Ps. 4,148,373 in the petrochemicals centers Cangrejera and Independencia. Until December 31, 2016, the projection of cash flows was calculated based on a period of 4 years according to the useful life of each petrochemical center.
Cash generating unit of logistics
The cash generating units of PEMEX’s logistics segments are pipelines, tankers, storage terminals and transportation equipment used for service, transport and storage of oil, oil products and petrochemicals.
Pemex Logistics calculates the recoverable amount of assets based on the value in use. The value in use for each asset is calculated based on cash flows, taking into consideration services income. As of December 31,
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
2016, the value in use amounted to Ps. 139,436,715. Until December 31, 2016, the projection of cash flows was calculated based on a period of 5 years. During 2016 the discount rate used was 12.63%.
As of December 31, 2016, reversal of impairment amounted Ps. (5,829,520), mainly due to improvements in operating costs.
Cash generating unit of ethylene
Pemex Ethylene calculates the recoverable amount of assets based on the value in use. The value in use for each asset is calculated based on cash flows, taking into consideration services income. As of December 31, 2016 the value in use of impairment fixed assets amounted to Ps. (1,276,510). During 2016 the discount rate used was 10.29%.
| ii. | As of December 31, 2015, PEMEX recognized an impairment of fixed assets in the amount of Ps. 477,944,688, mainly due to the decrease in cash flows as a result of the steep decline in crude oil prices, a higher discount rate, and a decrease in the period used to calculate future cash flows, which affected certain projects. |
Cash generating unit of exploration and production
The cash generating units of Pemex Exploration and Production are investment projects grouped from productive fields with hydrocarbon reserves associated with proved reserves (1P).reserves. These productive hydrocarbon fields contain varying degrees of heating power consisting of a set of wells and are supported by fixed assets associated directly with production, such as pipelines, production facilities, offshore platforms, specialized equipment and machinery.
Each project represents the smallest unit which can concentrate the core revenues, with clear costs and expenses that enable future cash flows (value in use) to be determined. To determine the value in use of long-lived assets associated with hydrocarbon extraction, the net present value of reserves is determined based on the following assumptions:
| | | Crude oil average price | | 57.57 U.S. dollars/bl (2016-2034) | Gas average price | | 3.39 U.S. dollars/mpc (2016-2034) | Condensated average price | | 41.63 U.S. dollars/bl (2016-2034) | Total production | | 8,694 mm bpce | Average rate of U.S. dollar | | $17.40 mxp/usd (2016-2034) | Production horizon | | 19 years | Discount rate | | 15.48% annually |
Pemex Exploration and Production determines the recoverable amount of fixed assets based on the long-term estimated prices for Pemex Exploration and Production’s proved reserves (1P).reserves. The recoverable amount on each asset is the value in use. As of December 31, 2015 To determine the value in use of impairment fixedlong-lived assets amountedassociated to Ps. 266,214,532. Until December 31, 2014, hydrocarbon extraction, the net present value of reserves is determined based on the following assumptions: | | | | | | | | | 2019 | | 2018 | | 2017 | Average crude oil price | | 48.69 USD/bl | | 58.02 USD/bl | | 55.89 USD/bl | Average gas price | | 5.07 USD/mpc | | 4.89 USD/mpc | | 4.92 USD/mpc | Average condensates price | | 57.67 USD/bl | | 43.21 USD/bl | | 38.33 USD/bl | Discount rate | | 6.18% annual | | 7.03% annual | | 14.40% annual |
For 2019, 2018 and 2017 the total forecast production, calculated with a horizon of 25 years was 7,123, 6,192 and 7,091 million barrels per day of crude oil equivalent, respectively. Pemex Exploration and Production, in compliance with practices observed in the industry, estimates the recovery value of asset by determining its value in use, based its estimates of long-term prices foron cash flows associated with proved reserves onafter taxes and using a 25 year period for the projection of cash flows; however, due to changes in the applicable regulatory provisions as a result of the Energy Reform, as of January 1, 2015, the period used to PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
estimate long-term prices was reduced to 20 years as a contractual limit. The discount rate, used in 2015 was 15.48%, which included an assessment of factors of market risk, country risk, capital cost and cost of debt. Cash flows projections were determined based on the assumptions described above, presenting a declining rate of growth of Ps. 394,396,580. The main projects that were affected by this declining rate of growth were Cantarell, Aceite Terciario del Golfo, Crudo Ligero Marino, Antonio J. Bermudez and Burgos.also after taxes.
Cash Generating Units of industrial transformationPemex Industrial Transformation As of December 31, 2015, industrial transformation cash generating units2019, 2018 and 2017, Pemex Industrial Transformation recognized Ps. 76,442,079a net reversal of impairment of long-lived assets, mainly due to: anPs. 42,243,942, Ps. 659,610 and a net impairment of Ps. 75,724,859(15,952,092), respectively. The net reversal of impairment was in the following cash generating unitunits: | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | Salina Cruz Refinery | | Ps. | 13,535,526 | | | Ps. | - | | | Ps. | (5,579,997 | ) | Minatitlán Refinery | | | 9,391,433 | | | | 14,448,080 | | | | (5,691,005 | ) | Madero Refinery | | | 7,721,233 | | | | — | | | | (8,480,880 | ) | Morelos Petrochemical Complex | | | 7,547,233 | | | | — | | | | — | | Tula Refinery | | | 2,180,074 | | | | — | | | | — | | Cangrejera Petrochemical Center | | | 3,143,924 | | | | — | | | | — | | | | | | | | | | | | | | | Reversal of impairment | | | 43,519,423 | | | | 14,440,080 | | | | (19,751,882 | ) | | | | | | | | | | | | | | Pajaritos Petrochemical Complex | | | (1,275,480 | ) | | | — | | | | 3,565,355 | | Independencia Petrochemical Center | | | — | | | | — | | | | 112,292 | | Arenque Gas Processor Complex | | | — | | | | — | | | | 57,039 | | Matapionche Gas Processor Complex | | | — | | | | — | | | | 65,104 | | Salina Cruz Refinery | | | — | | | | (7,955,528 | ) | | | — | | Tula Refinery | | | — | | | | (5,099,635 | ) | | | — | | Madero Refinery | | | — | | | | (733,307 | ) | | | — | | | | | | | | | | | | | | | Impairment | | | (1,275,480 | ) | | | (13,788,470 | ) | | | 3,799,790 | | | | | | | | | | | | | | | Net reversal of impairment | | Ps. | 42,243,943 | | | Ps. | 659,610 | | | Ps. | (15,952,092 | ) | | | | | | | | | | | | | |
In 2019, the net reversal of refining,impairment was mainly due to (i) important maintenance plans to recover assets use levels; (ii) a greater supply of light crude oil by Pemex Exploration and Production improving the quality of refined products such as gasoline, turbosines and decreasing residual products such as fuel oil; (iii) an impairment of Ps. 325,200increase in the cash generating unitdiscount rate of gas and an impairment of Ps.392,020 in the cash generating unit of petrochemicals. Cash generating unit of refining
As a result of the Corporate Reorganization, the cash generating units of PEMEX’s refining activities were redefinedrefined products, gas, petrochemicals and a decrease in ethylene by 0.03%, 0.09%, 0.06%, and 0.5% respectively, due to those refineries locatedthe effect of weighting of elements with which the references are determined; and (iv) the appreciation of the peso against the U.S. dollar, from a peso/U.S. dollar exchange rate of Ps. 19.6829 = U.S. $1.00 as of December 31, 2018 to Ps. 18.8452 = U.S. $1.00 as of December 31, 2019, which are used as cash flows when U.S. dollars are taken as reference.
In 2018, the net reversal of impairment was mainly due to (i) an increase in processing of refined products due to higher imports of crude oil and humid gas resulting in an increase in income related to transportation fees; (ii) the appreciation of the U.S. dollar against the peso, from apeso-U.S. dollar exchange rate of Ps.19.7867 to U.S. $1.00 as of December 31, 2017 to apeso-U.S. dollar exchange rate of Ps. 19.6829 to U.S. $1.00 as of December 31, 2018; (iii) a decrease in the following strategic pointsdiscount rate of Mexico: Cadereyta, Minatitlán, Salamanca, Salina Cruz, Madero and Tula. The National Refinery System was previously a cash generating unit.units of refined products and gas and petrochemicals by 0.1% and 8.1%, respectively; and (iv) an increase in maintenance of the refineries and a decrease in gas production. The impairment for 2017, was mainly due to (i) an increase in capitalizable maintenance expenses in refining; (ii) the appreciation of the Mexican peso against the U.S. dollar, from a peso–U.S. dollar exchange rate of Ps. 20.6640 to U.S. $1.00 as of December 31, 2016 to a peso–U.S. dollar exchange rate of Ps. 19.7867 to U.S. $1.00 as of December 31, 2017; partially offset by (i) an increase in the transportation fees; (ii) an increase in the processing of wet gas due to higher imports of this product and redistribution by Pemex Exploration and Production; (iii) an increase in prices arising from the price liberalization in 2017; and (iv)a decrease in the discount rate of cash generating units of refined products, gas and petrochemicals of 4.4%, 4.5%, and 5.6%, respectively. To determine the value in use of long-lived assets associated with refineriesthe cash-generating units of the National Refinery System,Pemex Industrial Transformation, the net present value of reservescash flows was determined based on the following assumptions: | | | | | | | | | | | | | | | | | | | | | | | As of December 31, | | | 2019 | | 2018 | | 2017 | | 2019 | | 2018 | | 2017 | | 2019 | | 2018 | | 2017 | | 2019 | | | Refining | | Gas | | Petrochemicals | | Ethylene** | Average crude oil Price | | 54.13 usd | | 53.98 usd | | 51.30 usd | | N.A. | | N.A. | | N.A. | | N.A. | | N.A. | | N.A. | | N.A. | Processed volume | | 723 mbd | | 680 mbd | | 767mbd | | 2,056 mmpcd of humid gas | | 2,717 mmpcd of humid gas | | 3,085 mmpcd of humid gas | | Variable because the load inputs are diverse | Rate of U.S. dollar | | $18.8452 | | $19.6829 | | $19.7867 | | $18.8452 | | $19.68 | | $19.7867 | | $18.8452 | | $19.6829 | | $19.7867 | | $18.8452 | Useful lives of the cash generating units (year average) | | 12 | | 14 | | 16 | | 7 | | 8 | | 9 | | 7 | | 7 | | 6 | | 6 | Discount rate | | 11.47% | | 11.52% | | 11.523 | | 10.22% | | 10.22% | | 10.24% | | 8.61% | | 8. 92% | | 9.71 | | 8.03% | Period * | | 2020 - 2032 | | 2019-2034 | | 2014- 2034 | | 2020 - 2027 | | 2019- 2027 | | 2018-2029 | | 2020 - 2027 | | 2019-2026 | | 2016-2024 | | 2020 - 2026 |
| | | Crude oil average price | * | 56.02 U.S. dollars per processed
barrel (2016-2029)The first 5 years are projected and stabilize at year 6.
|
Processed volume** | | 204.4 mbd (2016-2029 average) | Average rate of U.S. dollar | | $17.40 mxp/usd (2016-2029) | Useful lives of the cash generating units | | Average of 14 years | Discount rate | | 13.72% annuallyThis entity was merged into Pemex Industrial Transformation on July 1, 2019 (see Note 1). |
Cash-generating units in Pemex Industrial Transformation are processing centers grouped according to their types of processes as refineries, gas complex processors, and petrochemical centers. These centers produce various finished products for direct sale to customers or intermediate products that can be processed in another of its cash generating units or by a third party. Each processing center of Pemex Industrial Transformation represents the smallest unit that has distinguishable revenues, with clear costs and expenses that enable future cash flows (value in use) to be determined. Cash flow determinations are made based on PEMEX’s business plans, operating financial programs, forecasts of future prices of products related to the processes of the cash generating units, budget programs and various statistical models that consider historical information of processes and the capacity of various processing centers. The recoverable amount of the refineries’ assets is based on each asset’s value in use. The value in use for each asset is calculated based on cash flows, taking into consideration the volumes to be produced and sold.sales to be carried out. As of December 31, 20152018 and 2017, the value in use for the impairment of impairment fixed assets amounted to Ps. 1,801,000. Until December 31, 2015, the projection of cash flows was based on a period of 14 years. During 2015 the discount rate used was 13.72%. As of December 31, 2015, the total impairment charge on long-lived assets was Ps. 75,724,859, including impairment charges of Ps. 53,890,967 recorded by the Minatitlán cash generating unit and Ps. 21,833,892 recorded by the Madero cash generating unit.
Cash generating unit of gas
The cash generating units of PEMEX’s gas and petrochemicals activities are gas processing centers located in the following strategic points of Mexico: Ciudad Pemex, Cactus, Nuevo Pemex, La Venta, Coatzacoalcos, Matapionche, Poza Rica, Burgos and Arenque.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)as follows:
| | | | | | | | | | | 2018 | | | 2017 | | Minatitlán Refinery | | Ps. | 54,846,565 | | | Ps. | 32,531,925 | | Madero Refinery | | | 21,083,328 | | | | 11,420,952 | | Salina Cruz Refinery | | | 9,428,152 | | | | 12,051,597 | | Cangrejera Petrochemical Center | | | — | | | | 17,544,825 | | Independencia Petrochemical Center | | | — | | | | 3,146,413 | | Arenque Gas Processor Complex | | | — | | | | 1,283,201 | | Matapionche Gas Processor Complex | | | — | | | | 1,074,729 | | Tula Refinery | | | 39,429,897 | | | | — | | | | | | | | | | | Total value in use | | Ps. | 124,787,942 | | | Ps. | 79,053,642 | | | | | | | | | | |
To determine the value in useCash Generating Units of long-lived assets associated with gas processing centers, the net present valuePemex Logistics
Cash Generating Units of reserves is determined based on the following assumptions:Pipelines | | | Crude oil average price | | $ 50.61 mxp per mdpc
(2016-2029)
| Processed volume | | 2,021 mmpcd of sour gas
(2016-2029)
| | | 805 mmpcd ofwet-sweet gas
(2016-2029)
| Average rate of U.S. dollar | | $17.40 mxp/usd (2016-2029) | Useful lives of the cash generating units | | Average of 11 years | Discount rate | | 9.52% annually |
The recoverable amount of assets is based on each asset’s value in use. The value in use for each asset is calculated based on cash flows, taking into consideration volumes produced and sold. As of December 31, 2015 the value in use2019, Pemex Logistics recognized a reversal of impairment fixed assets amountedin the CGU of pipelines for Ps. 34,119,240 mainly due to (i) a decrease in the projections cost of losses from fuels subtraction from Ps. 39,388,055 as of December 31, 2018 to Ps. 235,000. Until4,644,846 as of December 31, 2015,2019, which led to an improvement in future cash flows. Furthermore, the projectionCRE established a mechanism that allowed Pemex Logistics to recover, through the pipeline transportation fee, a significant amount of cash flows was calculated based onthe losses derived from fuel subtraction. Finally, a period of 13 years. During 2015decrease in the discount rate from 13.55% at the end of 2018 to 11.94% at the end of 2019 due to the differences in curves used was 9.52%.in reference rates between Mexican pesos and U.S. dollars. As of December 31, 2015, impairment of wells, pipelines, properties, plant and equipment includes2018, Pemex Logistics recognized an impairment charge on long-lived assetsin the CGU of pipelines for Ps. (40,288,338), mainly due to a decrease in projected cash inflows of 46%, from an annual average of Ps. 325,200 recorded47,219,903 at the end of 2017 to Ps. 25,271,404 at the end of 2018, in addition to an increase in the cost of losses from fuels subtraction of 40%. This increase was partially offset by a decrease in direct operating costs of 58%, from annual average costs at the Arenqueend of 2017 of Ps. 16,485,969 to Ps. 6,880,967 at the end of December 2018, as well as a decrease in the discount rate, from 15.41% at the end of 2017 to 13.55% at the end of 2018. The recoverable amounts of the assets as of December 31, 2019 and 2018, corresponding to the discounted cash generating unit.flows at the rate of11.94% and 13.55%, respectively, as follows:
| | | | | | | | | | | 2019 | | | 2018 | | TAD, TDGL, TOMS (Storage terminals) | | Ps. | 147,249,859 | | | Ps. | 92,772,003 | | Land Transport (white pipes) | | | — | | | | 445,377 | | Pipelines | | | 104,719,495 | | | | — | | Primary logistics | | | 73,821,371 | | | | 111,941,265 | | | | | | | | | | | Total | | Ps. | 325,790,725 | | | Ps. | 205,158,645 | | | | | | | | | | |
Cash Generating Units of Pemex Fertilizers Cash generating unit of petrochemicals The cash generating units of PEMEX’s petrochemicals segment are petrochemicals centers locatedplants used in the following strategic points of Mexico: Independencia and Cangrejera.ammonia process.
The recoverable amount of assets is based on each asset’s value in use. The value in use for each asset is calculated based onTo determine cash flows, taking into consideration volumes to be produced and sold. Assales to be carried out were taken into consideration. The discount rates used as of December 31, 2015 there was no value in use for these cash generating units. Until December 31, 2015,2019, 2018 and 2017 were 10.15%, 8.92% and 9.71%, respectively, due to the projectionupdating of cash flows was calculated based on a periodcomparable companies taken as reference to the determination of 14 years. During 2015 the discount rate used was 8.84%.rate. As of December 31, 2015,2019, 2018 and 2017, Pemex Fertilizers recognized an impairment of wells, pipelines, properties, plantPs. (2,298,775), Ps. (2,246,264) and equipment includes an impairment charge on long-lived assets of Ps. 392,020 recorded by the Cangrejera cash generating unit. Cash generating unit of logistics
The(1,935,500), respectively in cash generating units mentioned above. The impairment was mainly caused from the decrease in projected production due to the lack of PEMEX’s logistics segments are pipelines, tankers, storage terminals and transportation equipment used for service, transport and storageraw material.
Cash Generating Units of oil, oil products and petrochemicals. Cash generating units were redefined as a result of the Corporate Reorganization in 2015, prior to which they were part of cash generating units from The National Refinery System and imported products. Pemex Logistics calculates the recoverable amount of assets based on the value in use. The value in use for each asset is calculated based on cash flows, taking into consideration services income. As of December 31, 2015 the value in use of impairment fixed assets amounted to Ps. 93,873,919. Until December 31, 2015, the projection of cash flows was calculated based on a period from 5 to 21 years. During 2015 the discount rate used was 8.42%.PMI NASA
As of December 31, 2015,2019, PMI NASA recognized an impairment of wells, pipelines, properties, plant and equipment includesPs. (515,411), due to (i) an impairment charge on long-lived assetsin the Flotel Reforma Pemex of Ps. 5,829,519 recorded by the cash generating units mentioned above. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Cash generating unit(1,146,278) as a result of ethylene
Pemex Ethylene calculates the recoverable amount of assets based on each asset’s value in use. The value in use for each asset is calculated based on cash flows, taking into consideration salesrate adjustments; and services income. As of December 31, 2015 the value in use(ii) a reversal of impairment fixed assets amounted toof Ps. 129,843. During 2015630,866 in the discount rate used was 7.28%.Cerro de la Pez Flotel, as a consequence of the recovery in the development of projects.
As of December 31, 2015,2018, PMI NASA recognized an impairment of wells, pipelines, properties,Ps. (1,719,627), due to the disuse of the Cerro de la Pez Flotel, as a consequence of the reduction in the development of projects in recent months. This impairment was calculated by comparing the disbursement that would have to be made to acquire a flotel with similar characteristics compared to the valuation made by a specialized company of the flotel. Cash Generating Unit of Pemex Azufre Industrial PMI AZIND, a 99% subsidiary of MGAS, has, as a principal asset, a sulfur solidifying plant, and equipment includes an impairment charge on long-lived assetslocated in the maritime sulfur storage terminal in the integral port administration of Ps. 1,276,510 recorded byCoatzacoalcos, Veracruz; this plant is considered the cash generating units mentioned above.unit of this company. PEMEX’snet-future cash flow projections are based
As of December 31, 2019, PMI AZIND recognized an impairment of Ps. (796,203), due to an appraisal on the best available estimationssulfur solidifying plant which resulted in a decrease of revenuesits value. Pro-Agroindustria, S.A. de C.V. As of December 31, 2017,Pro-Agroindustria, S.A. de C.V. recognized an impairment for Ps. (4,206,653) related to its nitric acid, ammonium nitrate and expensesUAN 32 acquired plants, the rehabilitation of which has not yet commenced. The company will not be able to develop an alternate plan for the cash-generating units, using forecasts, past performances and market developement. PEMEX’s annual budget and business plan set macroeconomic variables for eachrehabilitation of these plants in the cash-generating units using real basis and including some variables, such as production volume, market prices, exchange rates, among other variables, which are usedfollowing five years due to quantify estimated income and expenses. Forecasts are prepared based on internal values and are updated based on changes to certain relevant information from external sources (mainly price predictions made by consultants and specialized entities). The key value assumptions, which are the more sensitive variables used to calcultate net cash flows, and the general principles used to generate these assumptions are as follows:its financing commitments.
F. | i.As of December 31, 2019, drilling equipment that was acquired through capital lease arrangements were classified as rights of use that amounted to Ps. 6,223,655 (see Note 17). |
G. | Sales prices for oilPEMEX can conduct exploration and gas.extraction activities through Exploration and Extraction Contracts (“EECs”). The resulting pricesEECs are consistent with those usedawarded individually, through associations or joint ventures based on guidelines approved by PEMEX to make investing decisionsthe NHC and are based on observable prices in the international market from the date of the statement of financial position.classified into: |
| ii.a. | Reserves and production programs. Proved reserves of oil and gas are estimated on the basis of oil and gas reserves as of December 31, 2016 adjusted to comply with applicable rules, with the framework established by the SEC and with the framework established by the Sociedad de Ingenieros Petroleros, taking into account the development plan. Productions programs are estimated on the basis of reserves, production levels in actual wells and development plans established for each productive field.Production-sharing contracts; |
| iii. | Operating expenses and investments. Operating expenses and investments are calculated in the first year based on PEMEX’s annual budget for the first year and subsequently updated in accordance with asset development programs. PEMEX does not include expenses related to enhancement of assets in order to carry out tests using value in accordance with IAS 36, “Impairment of Assets.” |
These future net cash flows estimates are discounted to their present value using discount rates for specific cash-generating units based on the currency in which they are denominated, their cash flows and risks associated with these cash flows. Discount rates are intended to reflect current market assessments of the time value of money and the specific risks of each asset. Accordingly, various discount rates used take into account the country risk. To ensure calculations are consistent and avoid double counting, the cash flow projections do not take into account the risks that have already been incorporated in the discount rates used. The discount rates reflect current market conditions and the specific risks associated with these assets.
e.b. | As a result of the Energy Reform Decree, the secondary legislation and the corresponding initial adjudication of rights for the exploration and extraction of oil and solid hydrocarbons mentioned in transitory article 6 of the Energy Reform Decree, certain assignments that Pemex Exploration andProfit-sharing contracts;
|
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| Production received from the Mexican Government were affected. These investments are expected to be compensated at their economic fair value. As of December 31, 2016, the carrying amount of the investments affected is as follows: |
| | | | | | | | | | | Fields | | | Amount | | Temporarily assigned fields | | | 6 | | | Ps. | 2,107,126 | | Unassigned requested fields | | | 44 | | | | 12,077,947 | | Exploratory areas not assigned | | | 14 | | | | 843,960 | | | | | | | | | | | Total | | | | | | Ps. | 15,029,033 | | | | | | | | | | |
f. | PEMEX entered into certain capital lease arrangements for tankers. These leases expire on various dates until 2018. |
As of December 31, 2013, PEMEX had entered into nine capital lease arrangements for drilling equipment. These leases expire on various dates over the next 10 years.
As of December 31, 2015, PEMEX had entered into certain capital lease arrangements for two offshore platforms. These leases expire on various dates over the next 10 years.
As of December 31, 2016 and 2015, assets acquired through these capital leases were as follows:
| | | | | | | | | | | 2016 | | | 2015 | | Investment in tankers and drilling equipment | | Ps. | 11,142,197 | | | Ps. | 11,142,197 | | Less accumulated depreciation | | | (1,274,314 | ) | | | (1,176,208 | ) | | | | | | | | | | | | Ps. | 9,867,883 | | | Ps. | 9,965,989 | | | | | | | | | | |
The liabilities relating to the assets listed above are payable in the years following December 31, 2016 as presented below:
| | | | | | | | | Year | | Pesos | | | U.S. dollars | | 2017 | | | Ps. 2,037,107 | | | U.S.$ | 98,583 | | 2018 | | | 1,941,756 | | | | 93,968 | | 2019 | | | 1,245,341 | | | | 60,266 | | 2020 | | | 1,245,341 | | | | 60,266 | | 2021 | | | 1,245,341 | | | | 60,266 | | 2022 and thereafter | | | 3,499,546 | | | | 169,355 | | | | | | | | | | | | | | 11,214,432 | | | | 542,704 | | Less: short-term unaccrued interest | | | 436,619 | | | | 21,129 | | Less: long-term unaccrued interest | | | 1,218,753 | | | | 58,980 | | | | | | | | | | | Total capital leases | | | 9,559,060 | | | | 462,595 | | Less: current portion of leases (excluding interest) | | | 1,600,488 | | | | 77,753 | | | | | | | | | | | Total long-term capital leases | | | Ps. 7,958,572 | | | U.S. $ | 384,842 | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The capitalized interest expense from financial leases for the years ended December 31, 2016, 2015 and 2014 was Ps.500,654, Ps. 450,760 and Ps. 242,436, respectively.
The discount rates applied to the calculation of capitalized leases were as follows:
| i. | 7.96 % rate in nominal terms (4.45% in real terms) as of December 31, 2016. |
| ii.c. | 7.96 % rate in nominal terms (5.71% in real terms) as of December 31, 2015.License agreements; and |
| iii.d. | 7.96% rate in nominal terms (3.73% in real terms) as of December 31, 2014.Service contracts. |
Certain of the EECs are operated though joint arrangements, for which PEMEX recognizes in its financial statements both the rights to the assets and the obligations for the liabilities, as well as profits and losses relating to the arrangements. EECs as of December 31, 2019 are: a. | Production-sharing contracts: |
The object of the Profit-sharing contracts is the execution of oil activities under shared production contracts among Mexico through the Mexican Government via the NHC, Pemex Exploration and Production (as contractor), for the contractual area and the sharing of costs, risks, and terms and conditions involved in the contract and in accordance with the applicable regulations and best practices of the industry receiving, in exchange, benefits in favor of the contractor. I. | Production contracts without a partner |
Hydrocarbons Exploration and Extraction Contract for Block 29, Cuenca del Sureste, in which Pemex Exploration and Production owns 100% of the project. Hydrocarbon Extraction Contract for theEk-Balam (shallow water) Block. Pemex Exploration and Production owns 100% of this contractual area. g.II. | Certain infrastructure assets used for oil and gas activities are guaratees for the U.S. $1,100,000 and U.S. $600,000 sale and lease back agreements dated as of June 17, 2016 and July 8, 2016 (see Note 15).Production contracts in consortium |
Exploration and Extraction Contract related to Block 2 Tampico Misantla, pursuant to a consortium formed by Pemex Exploration and Production and Deutsche Erdoel AG (“DEA”) and Compañía Española de Petróleos, S. A. U., (jointly liable). The object of the contract is the realization of oil activities, under shared production contracts, by the contractor for the contractual area and the sharing of costs, risks, terms and conditions involved in the contract and in accordance with the applicable regulations and best practices of the industry, receiving in exchange, benefits in favor of the contractor. Pemex Exploration and Production and DEA each have a 50% interest in this contractual area. Pemex Exploration and Production is the operator under this contract. Exploration and Extraction Contract, related to Block 8 Cuencas del Sureste, pursuant to a consortium formed by Pemex Exploration and Production, EPC Hidrocarburos México, S. A. de C. V. (EPC). and Ecopetrol Global Energy, S. L. U. (jointly liable). Pemex Exploration and Production was designated by all the participating companies and with the approval of the NHC as the operator of this contract and all operational aspects of the petroleum activities will be carried out only by the operator on behalf of all participating companies. Pemex Exploration and Production and EPC each have a 50% interest in this contractual area. Exploration and Extraction Contract, related to Block 16, Tampico Misantla, pursuant to a consortium by Pemex Exploration and Production, DEUTSCHE Erdoel México S. de R.L. de C.V. (as operator) and CEPSA E.P. México S. de R.L. de C.V., as jointly liable. Pemex Exploration and Production owns 40% of this contractual area, DEUTSCHE Erdoel México S. de R.L. de C.V. owns 40%, and CEPSA E.P. México S. de R.L. de C.V. owns 20%. Exploration and Extraction Contract, related to Block 17, Tampico Misantla, pursuant to a consortium by Pemex Exploration and Production, DEUTSCHE Erdoel México S. de R.L. de C.V. (as operator) and CEPSA E.P. México S. de R.L. de C.V., as jointly liable. Pemex Exploration and Production owns 40% of this contractual area, DEUTSCHE Erdoel México S. de R.L. de C.V. owns 40%, and CEPSA E.P. México S. de R.L. de C.V. owns 20%. Exploration and Extraction Contract, related to Block 18, Tampico Misantla, pursuant to a consortium by Pemex Exploration and Production (as operator) and CEPSA E.P. México S. de R.L. de C.V. (as partner). Pemex Exploration and Production owns 80% of this contractual area, and CEPSA E.P. México S. de R.L. de C.V. owns 20%. Hydrocarbons Exploration and Extraction Contract for Block 32, Cuenca del Sureste, by Pemex Exploration and Production (as operator) and Total E&P México, S.A. de C.V. (as partner). Pemex Exploration and Total E&P México, S.A. de C.V each have a 50% interest in this contractual area. Hydrocarbons Exploration and Extraction Contract for Block 33, Cuenca del Sureste, by Pemex Exploration and Production (as operator) and Total E&P México, S.A. de C.V. Pemex Exploration and Total E&P México, S.A. de C.V each have a 50% interest in this contractual area. Hydrocarbons Exploration and Extraction Contract for Block 35, Cuenca del Sureste, by Shell Exploración y Extracción de México, S.A. de C.V (as operator) and Pemex Exploration and Production. Total E&P México, S.A. de C.V. and Pemex Exploration each have a 50% interest in this contractual area. Exploration and Extraction Contract, related to the Santuario El Golpe Block, pursuant to a consortium formed by Pemex Exploration and Production (as partner) and Petrofac México, S.A. de C.V. (PETROFAC), as operator. Pemex Exploration and Production owns 64% of this contractual area and PETROFAC owns 36%. Exploration and Extraction Contract, related to the Misión Block, pursuant to a consortium formed by Pemex Exploration and Production (as partner) and Servicios Múltiples de Burgos, S.A. de C.V. (as operator). Pemex Exploration and Production owns 51% of this contractual area and Servicios Múltiples de Burgos owns 49%. Exploration and Extraction Contract, related to Ébano Block, pursuant to a consortium formed by Pemex Exploration and Production (as partner), DS Servicios Petroleros, S.A. de C.V. (as operator) and D&S Petroleum S.A. de C.V. (as partner). Pemex Exploration and Production owns 45% of this contractual area, Servicios Múltiples de Burgos owns 54.99%, while D&S Petroleum S.A. de C.V. owns 0.01%. h.b. | As of December 31, 2016, certain fixed assets were reclassified asheld-for-salenon-financial assets in the amout of Ps. 7,460,674 (see Note9-b).License contracts |
NOTE 13. INTANGIBLE ASSETSThe nature of the contract relationship is the execution of oil activities, under the license contracting modality, under which the contractor is granted the right to explore and extract at its exclusive cost and risk hydrocarbons owned by the Mexican nation, who must comply with the obligations arising from the contract in the name and representation of each of the signatory companies in the contractual area in accordance with the applicable regulations, industry best practices and the terms and conditions of the contract. The contractor shall be entitled to payment for hydrocarbons produced, in accordance with the terms of the contracts, and after payments to the Mexican Government are made.
I. | License contracts without association |
Hydrocarbons Exploration and Extraction Contract for Block 5, Plegado Perdido, in which Pemex Exploration and Production owns 100% of the project. Hydrocarbons Exploration and Extraction Contract for Block 18, Cordilleras Mexicanas, in which Pemex Exploration and Production owns 100% of the project. II. | License contracts in association |
Hydrocarbons Exploration and Extraction Contract for Block 3 “Plegado Perdido”, in deep waters, formed by INPEX Corporation (“INPEX”) (as partner), Chevron Energía de Mexico, S. de R.L. de C.V. (“Chevron”) (as operator) and Pemex Exploration and Production, (as partner). Chevron, Pemex Exploration and Production and INPEX have a 37.50%, 27.50% and 35.00% interest in this project, respectively, and will be jointly liable for all obligations of the contractors according to this contract regardless of their participation interest. Hydrocarbons Exploration and Extraction Contract for Block 2, Plegado Perdido, formed by Pemex Exploration and Production (as partner) and Shell Exploración y Extracción de México, S.A. de C.V. (as operator). Pemex Exploration and Production and Shell Exploración y Extracción de México, S.A. de C.V. each have a 50% interest in this project. Hydrocarbons Exploration and Extraction Contract for Block 22, Cuenca Salina, formed by Pemex Exploration and Production, Inpex E&P México, S.A. de C.V., (as partners), and Chevron (as operator). Chevron, Pemex Exploration and Production and Inpex E&P México, S.A. de C.V., have a 37.5%, 27.5% and 35% interest in this project, respectively. A licensing contract with BHP Billiton Petróleo Operaciones de México, S. de R.L. (“BHP Billiton”) for the Trión Block. BHP Billiton owns 60% of the contractual area, while Pemex Exploration and Production owns 40%, and each of the signatory companies are jointly liable for all obligations of the contractors. Hydrocarbons Exploration and Extraction Contract for the Cárdenas Mora Block, for onshore fields, formed by Pemex Exploration and Production (as partner), Petrolera Cárdenas Mora, S. A. P. I. de C. V. (as operator) and Cheiron Holding Limited (jointly liable). Pemex Exploration and Production and Petrolera Cárdenas Mora, S. A. P. I. de C. V. each have a 50% of interest in this project. Hydrocarbons Exploration and Extraction Contract for the Ogarrio Block, for onshore fields, formed by Pemex Exploration and Production (as partner), Deutche Erdoel México, S. de R.L. de C.V. (as operator) and DEA Deutche Erdoel, A.G. (“DEA”) (jointly liable). Pemex Exploration and Production and DEA each have a 50% interest in this project. Hydrocarbons Exploration and Extraction Contract for the Miquetla Block, for onshore fields, formed by Pemex Exploration and Production (as partner) and Operadora de Campos DWF, S.A. de C.V. (as operator). Pemex Exploration and Production has a 49% interest in this project while Operadora de Campos DWF, S.A. de C.V. has a 51% interest. See below for a condensed statement of comprehensive income and condensed statement of financial position, summarizing the projects listed above: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Production-sharing contracts | | | | | | | | | | | | | | | | | As of /For the year ended December 31, 2019 | | EK / Balam | | | Block 2 | | | Block 8 | | | Block 16 | | | Block 17 | | | Block 18 | | | Block 29 | | | Block 32 | | | Block 33 | | | Santuario El Golpe | | | Misión | | | Ébano | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net sales | | | 12,341,712 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,690,908 | | | | 972,780 | | | | 709,705 | | Cost of sales | | | 5,283,643 | | | | 87,696 | | | | 130,234 | | | | 12,937 | | | | 18,047 | | | | 58,199 | | | | 20,660 | | | | 39,546 | | | | 64,447 | | | | 914,498 | | | | 931,658 | | | | 313,765 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross income (loss) | | | 7,058,069 | | | | (87,696 | ) | | | (130,234 | ) | | | (12,937 | ) | | | (18,047 | ) | | | (58,199 | ) | | | (20,660 | ) | | | (39,546 | ) | | | (64,447 | ) | | | 776,410 | | | | 41,122 | | | | 395,939 | | Other income (loss), net | | | (272,589 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Administrative expenses | | | 105,341 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss) | | | 6,680,139 | | | | (87,696 | ) | | | (130,234 | ) | | | (12,937 | ) | | | (18,047 | ) | | | (58,199 | ) | | | (20,660 | ) | | | (39,546 | ) | | | (64,447 | ) | | | 776,410 | | | | 41,122 | | | | 395,939 | | Taxes, duties and other | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss) | | | 6,680,139 | | | | (87,696 | ) | | | (130,234 | ) | | | (12,937 | ) | | | (18,047 | ) | | | (58,199 | ) | | | (20,660 | ) | | | (39,546 | ) | | | (64,447 | ) | | | 776,410 | | | | 41,122 | | | | 395,939 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | | 9 | | | | 7,685 | | | | 7,690 | | | | — | | | | — | | | | 35,721 | | | | 1 | | | | 20,632 | | | | — | | | | 5 | | | | 5 | | | | — | | Accounts receivable | | | 12,341,723 | | | | 127,107 | | | | 26,521 | | | | 28,954 | | | | 11,886 | | | | 11,787 | | | | — | | | | 25,262 | | | | 32,640 | | | | 1,912,671 | | | | 1,332,374 | | | | 709,705 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total current assets | | | 12,341,732 | | | | 134,792 | | | | 34,211 | | | | 28,954 | | | | 11,886 | | | | 47,508 | | | | 1 | | | | 45,894 | | | | 32,640 | | | | 1,912,676 | | | | 1,332,379 | | | | 709,705 | | Wells, pipelines, properties, plant and equipment, net | | | 24,944,217 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,222,964 | | | | 1,460,005 | | | | 1,352,301 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total assets | | | 37,285,949 | | | | 134,792 | | | | 34,211 | | | | 28,954 | | | | 11,886 | | | | 47,508 | | | | 1 | | | | 45,894 | | | | 32,640 | | | | 3,135,640 | | | | 2,792,384 | | | | 2,062,005 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Suppliers | | | 793,743 | | | | — | | | | — | | | | 12,937 | | | | 18,047 | | | | 273 | | | | 162 | | | | 162 | | | | 64,447 | | | | 981,659 | | | | 607,862 | | | | 242,625 | | Taxes and duties payable | | | 4,930 | | | | 12,613 | | | | 16,286 | | | | — | | | | — | | | | 24,450 | | | | 14,147 | | | | 30,887 | | | | — | | | | — | | | | — | | | | — | | Other current liabilities | | | 2,658,298 | | | | 209,875 | | | | 148,159 | | | | 28,954 | | | | 11,886 | | | | 80,984 | | | | 6,352 | | | | 54,391 | | | | 32,640 | | | | 221,768 | | | | 359,598 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total liabilities | | | 3,456,971 | | | | 222,488 | | | | 164,445 | | | | 41,891 | | | | 29,933 | | | | 105,707 | | | | 20,661 | | | | 85,440 | | | | 97,087 | | | | 1,203,427 | | | | 967,461 | | | | 242,625 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Equity (deficit), net | | | 33,878,978 | | | | (87,696 | ) | | | (130,234 | ) | | | (12,937 | ) | | | (18,047 | ) | | | (58,199 | ) | | | (20,660 | ) | | | (39,546 | ) | | | (64,447 | ) | | | 1,932,212 | | | | 1,824,923 | | | | 1,819,380 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Production-sharing contracts | | As of /For the year ended December 31, 2018 | | EK / Balam | | | Block 2 | | | Block 8 | | | Block 16 | | | Block 17 | | | Block 18 | | | Block 29 | | | Block 32 | | | Block 33 | | | Block 35 | | | Santuario El Golpe | | | Misión | | | Ébano | | Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net sales | | | 10,374,061 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,268,482 | | | | 644,768 | | | | 421,591 | | Cost of sales | | | 4,204,499 | | | | 57,197 | | | | 67,481 | | | | 12,485 | | | | 10,332 | | | | 60,624 | | | | 8,072 | | | | 5,871 | | | | 8,337 | | | | 20,142 | | | | 305,733 | | | | 306,110 | | | | 97,643 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross income (loss) | | | 6,169,562 | | | | (57,197 | ) | | | (67,481 | ) | | | (12,485 | ) | | | (10,332 | ) | | | (60,624 | ) | | | (8,072 | ) | | | (5,871 | ) | | | (8,337 | ) | | | (20,142 | ) | | | 962,749 | | | | 338,658 | | | | 323,948 | | Other income (loss), net | | | 157,876 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Administrative expenses | | | 129,451 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss) | | | 6,197,987 | | | | (57,197 | ) | | | (67,481 | ) | | | (12,485 | ) | | | (10,332 | ) | | | (60,624 | ) | | | (8,072 | ) | | | (5,871 | ) | | | (8,337 | ) | | | (20,142 | ) | | | 962,749 | | | | 338,658 | | | | 323,948 | | Taxes, duties and other | | | 3,980 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss) | | | 6,194,007 | | | | (57,197 | ) | | | (67,481 | ) | | | (12,485 | ) | | | (10,332 | ) | | | (60,624 | ) | | | (8,072 | ) | | | (5,871 | ) | | | (8,337 | ) | | | (20,142 | ) | | | 962,749 | | | | 338,658 | | | | 323,948 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | | — | | | | 54,617 | | | | 112,592 | | | | — | | | | — | | | | — | | | | — | | | | 10,578 | | | | — | | | | — | | | | — | | | | — | | | | — | | Accounts receivable | | | 11,698,071 | | | | 27,376 | | | | 27,189 | | | | 874 | | | | 927 | | | | — | | | | — | | | | — | | | | 35,454 | | | | 3,701 | | | | 1,308,008 | | | | 669,805 | | | | 335,434 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total current assets | | | 11,698,071 | | | | 81,993 | | | | 139,780 | | | | 874 | | | | 927 | | | | — | | | | — | | | | 10,578 | | | | 35,454 | | | | 3,701 | | | | 1,308,008 | | | | 669,805 | | | | 335,434 | | Wells, pipelines, properties, plant and equipment, net | | | 20,344,054 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,022,923 | | | | 2,210,968 | | | | 406,075 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total assets | | | 32,042,125 | | | | 81,993 | | | | 139,780 | | | | 874 | | | | 927 | | | | — | | | | — | | | | 10,578 | | | | 35,454 | | | | 3,701 | | | | 2,330,931 | | | | 2,880,773 | | | | 741,509 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Suppliers | | | 1,466,286 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 35,984 | | | | — | | Taxes and duties payable | | | 3,980 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Other current liabilities | | | 2,436,996 | | | | 139,190 | | | | 207,261 | | | | 13,359 | | | | 11,259 | | | | 60,624 | | | | 8,072 | | | | 16,449 | | | | 43,791 | | | | 23,843 | | | | 301,619 | | | | 207,387 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total current liabilities | | | 3,907,262 | | | | 139,190 | | | | 207,261 | | | | 13,359 | | | | 11,259 | | | | 60,624 | | | | 8,072 | | | | 16,449 | | | | 43,791 | | | | 23,843 | | | | 301,619 | | | | 243,371 | | | | — | | Other liabilities | | | 69,195 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total liabilities | | | 3,976,457 | | | | 139,190 | | | | 207,261 | | | | 13,359 | | | | 11,259 | | | | 60,624 | | | | 8,072 | | | | 16,449 | | | | 43,791 | | | | 23,843 | | | | 301,619 | | | | 243,371 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Equity (deficit), net | | | 28,605,668 | | | | (57,197 | ) | | | (67,481 | ) | | | (12,485 | ) | | | (10,332 | ) | | | (60,624 | ) | | | (8,072 | ) | | | (5,871 | ) | | | (8,837 | ) | | | (20,142 | ) | | | 2,029,312 | | | | 2,637,402 | | | | 741,509 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | License contracts | | As of /For the year ended December 31, 2019 | | Block 3 | | | Block 2 | | | Block 5 | | | Block 18 | | | Block 22 | | | Cárdenas Mora | | | Ogarrio | | | Miquetla | | Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net sales | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,359,678 | | | | 1,503,287 | | | | 291,271 | | Cost of sales | | | 38,963 | | | | 138,970 | | | | 119,687 | | | | 127,344 | | | | 80,626 | | | | 1,393,579 | | | | 927,624 | | | | 140,277 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross income (loss) | | | (38,963 | ) | | | (138,970 | ) | | | (119,687 | ) | | | (127,344 | ) | | | (80,626 | ) | | | (33,901 | ) | | | 575,662 | | | | 150,994 | | Other income (loss), net | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Administrative expenses | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss) | | | (38,963 | ) | | | (138,970 | ) | | | (119,687 | ) | | | (127,344 | ) | | | (80,626 | ) | | | (33,901 | ) | | | 575,662 | | | | 150,994 | | Taxes, duties and other | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss) | | | (38,963 | ) | | | (138,970 | ) | | | (119,687 | ) | | | (127,344 | ) | | | (80,626 | ) | | | (33,901 | ) | | | 575,662 | | | | 150,994 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | | — | | | | — | | | | — | | | | — | | | | — | | | | 14 | | | | 493 | | | | — | | Accounts receivable | | | — | | | | 10,867 | | | | — | | | | — | | | | 16,811 | | | | 1,784,730 | | | | 1,796,868 | | | | 291,271 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total current assets | | | — | | | | 10,867 | | | | — | | | | — | | | | 16,811 | | | | 1,784,744 | | | | 1,797,362 | | | | 291,271 | | Wells, pipelines, properties, plant and equipment, net | | | — | | | | — | | | | — | | | | — | | | | | | | | 1,781,796 | | | | 1,188,771 | | | | 105,499 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total assets | | | — | | | | 10,867 | | | | — | | | | — | | | | 16,811 | | | | 3,566,540 | | | | 2,986,133 | | | | 396,769 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Suppliers | | | 38,963 | | | | 138,970 | | | | 648 | | | | 273 | | | | 80,626 | | | | 1,816,599 | | | | 1,026,189 | | | | 132,325 | | Taxes and duties payable | | | — | | | | — | | | | 82,155 | | | | 87,698 | | | | — | | | | — | | | | — | | | | — | | Other current liabilities | | | — | | | | 10,867 | | | | 36,884 | | | | 39,373 | | | | 16,811 | | | | — | | | | 294,075 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total liabilities | | | 38,963 | | | | 149,836 | | | | 119,687 | | | | 127,344 | | | | 97,438 | | | | 1,816,599 | | | | 1,320,264 | | | | 132,325 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Equity (deficit), net | | | (38,963 | ) | | | (138,970 | ) | | | (119,687 | ) | | | (127,344 | ) | | | (80,626 | ) | | | 1,749,941 | | | | 1,665,869 | | | | 264,444 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | License contracts | | | | | | | | | | | As of /For the year ended December 31, 2018 | | Block 3 | | | Block 2 | | | Block 5 | | | Block 18 | | | Block 22 | | | Cárdenas Mora | | | Ogarrio | | | Miquetla | | Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net sales | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,586,080 | | | | 1,265,620 | | | | | | Cost of sales | | | 58,261 | | | | 41,156 | | | | 52,555 | | | | 9,390 | | | | 186,693 | | | | 714,233 | | | | 604,373 | | | | 2,713 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross income (loss) | | | (58,261 | ) | | | (41,156 | ) | | | (52,555 | ) | | | (9,390 | ) | | | (186,693 | ) | | | 871,847 | | | | 661,247 | | | | (2,713 | ) | Other income (loss), net | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Administrative expenses | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss) | | | (58,261 | ) | | | (41,156 | ) | | | (52,555 | ) | | | (9,390 | ) | | | (186,693 | ) | | | 871,847 | | | | 661,247 | | | | (2,713 | ) | Taxes, duties and other | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss) | | | (58,261 | ) | | | (41,156 | ) | | | (52,555 | ) | | | (9,390 | ) | | | (186,693 | ) | | | 871,847 | | | | 661,247 | | | | (2,713 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | | — | | | | — | | | | — | | | | 3,362 | | | | — | | | | — | | | | — | | | | — | | Accounts receivable | | | 14,888 | | | | 6,151 | | | | — | | | | — | | | | 23,555 | | | | 1,820,428 | | | | 1,300,773 | | | | 406 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total current assets | | | 14,888 | | | | 6,151 | | | | — | | | | 3,362 | | | | 23,555 | | | | 1,820,428 | | | | 1,300,774 | | | | 406 | | Wells, pipelines, properties, plant and equipment, net | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,528,860 | | | | 2,122,341 | | | | 26,206 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total assets | | | 14,888 | | | | 6,151 | | | | — | | | | 3,362 | | | | 23,555 | | | | 4,349,288 | | | | 3,423,115 | | | | 26,612 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Suppliers | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Taxes and duties payable | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Other current liabilities | | | 73,149 | | | | 47,307 | | | | 52,555 | | | | 12,752 | | | | 210,248 | | | | 860,137 | | | | 564,565 | | | | 2,943 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total current liabilities | | | 73,149 | | | | 47,307 | | | | 52,555 | | | | 12,752 | | | | 210,248 | | | | 860,137 | | | | 564,565 | | | | 2,943 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total liabilities | | | 73,149 | | | | 47,307 | | | | 52,555 | | | | 12,752 | | | | 210,248 | | | | 860,137 | | | | 564,565 | | | | 2,943 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Equity (deficit), net | | | (58,261 | ) | | | (41,156 | ) | | | (52,555 | ) | | | (9,390 | ) | | | (186,693 | ) | | | 3,489,151 | | | | 2,858,550 | | | | 26,669 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NOTE 14. | INTANGIBLE ASSETS, NET |
At December 31, 20162019 and 2015,2018, intangible assets, net are mainly wells unassigned to a reserve and other components of intangible assets, which amounted Ps. 8,639,242to Ps.14,584,524 and Ps. 14,304,961,Ps.13,720,540, respectively as follows: | | | | | | | | | | | 2016 | | | 2015 | | Wells unassigned to a reserve: | | | | | | | | | Balance at the beginning of period | | | Ps. 14,304,961 | | | | Ps. 14,970,904 | | Additions to construction in progress | | | 20,526,300 | | | | 28,725,376 | | Transfers against expenses | | | (9,798,246 | ) | | | (13,081,780 | ) | Transfers against fixed assets | | | (16,393,773 | ) | | | (16,309,539 | ) | | | | | | | | | | Balance at the end of period | | | Ps. 8,639,242 | | | | Ps. 14,304,961 | | | | | | | | | | |
A. | Wells unassigned to a reserve |
| | | | | | | | | | | 2019 | | | 2018 | | Wells unassigned to a reserve: | | | | | | | | | Balance at the beginning of period | | Ps. | 9,779,239 | | | Ps. | 9,088,563 | | Additions to construction in progress | | | 17,028,974 | | | | 20,352,351 | | Transfers against expenses | | | (7,990,877 | ) | | | (12,934,906 | ) | Transfers against fixed assets | | | (5,986,055 | ) | | | (6,726,769 | ) | | | | | | | | | | Balance at the end of period | | Ps. | 12,831,281 | | | Ps. | 9,779,239 | | | | | | | | | | |
In addition, as of December 31, 20162019 and 2015,2018, PEMEX recognized expenses related to unsuccessful wells of Ps. 19,307,83879,595,185 and Ps. 10,131,739,13,271,868, respectively, directly in its statement of comprehensive income. NOTE 14. LONG-TERM NOTES RECEIVABLE AND OTHER ASSETS
B. | Other intangible assets |
| | | | | | | | | | | | | As of December 31, 2019 | | Licenses | | | Exploration expenses, evaluation of assets and concessions | | | Total | | Cost | | | | | | | | | | | | | Balance at the beginning of the year | | | 4,391,069 | | | | 2,255,551 | | | Ps. | 6,646,620 | | Additions | | | 201,853 | | | | 28,850 | | | | 230,703 | | Effects of foreign exchange | | | (13,436 | ) | | | (96,724 | ) | | | (110,160 | ) | | | | | | | | | | | | | | | | | 4,579,486 | | | | 2,187,677 | | | | 6,767,163 | | Amortization accumulated | | | | | | | | | | | | | Balance at the beginning of the year | | | (3,871,442 | ) | | | (743,865 | ) | | Ps. | (4,615,307 | ) | Amortization | | | (386,414 | ) | | | (70,617 | ) | | | (457,031 | ) | Effects of foreign exchange | | | 25,553 | | | | 32,865 | | | | 58,418 | | | | | | | | | | | | | | | | | | (4,232,303 | ) | | | (781,617 | ) | | | (5,013,920 | ) | Balance at the end of the year | | | 347,183 | | | | 1,406,060 | | | Ps. | 1,753,243 | | | | | | | | | | | | | | | Useful lives | | | 1 to 3 years | | | | Up to 36 years | | | | | |
As of December 31, 2019, the rights of way were recognized as right of use, due to the adoption of IFRS 16. | | | | | | | | | | | | | | | | | As of December 31, 2018 | | Rights of way | | | Licenses | | | Exploration expenses, evaluation of assets and concessions | | | Total | | Cost | | | | | | | | | | | | | | | | | Balance at the beginning of the year | | Ps. | 2,311,743 | | | | 3,586,553 | | | | 1,940,583 | | | Ps. | 7,838,879 | | Additions | | | 40,323 | | | | 638,479 | | | | 325,471 | | | | 1,004,273 | | Effects of foreign exchange | | | — | | | | (10,397 | ) | | | (10,503 | ) | | | (20,900 | ) | | | | | | | | | | | | | | | | | | | | | 2,352,066 | | | | 4,214,635 | | | | 2,255,551 | | | | 8,822,252 | | Amortization accumulated | | | | | | | | | | | | | | | | | Balance at the beginning of the year | | Ps. | (179,312 | ) | | | (1,401,443 | ) | | | (668,047 | ) | | Ps. | (2,248,802 | ) | Amortization | | | (86,332 | ) | | | (2,480,760 | ) | | | (76,234 | ) | | | (2,643,326 | ) | Effects of foreign exchange | | | — | | | | 10,761 | | | | 416 | | | | 11,177 | | | | | | | | | | | | | | | | | | | | | | (265,644 | ) | | | (3,871,442 | ) | | | (743,865 | ) | | | (4,880,951 | ) | Balance at the end of the year | | Ps. | 2,086,422 | | | | 343,193 | | | | 1,511,686 | | | Ps. | 3,941,301 | | | | | | | | | | | | | | | | | | | Useful lives | | | 23 years | | | | 1 to 3 years | | | | Up to 36 years | | | | | |
Amortization of rights of way (until 2018), exploration expenses, evaluation of assets and concessions are recognized in cost of sales. Amortization of licenses is recognized in administrative expenses. a.NOTE 15. | LONG-TERM NOTES RECEIVABLE AND OTHER ASSETS |
A. | Long-term notes receivable |
As of December 31, 20162019 and 2015,2018, the balance of long-term notes receivable was as follows: | | | | | | | | | | | 2016 | | | 2015 | | Promissory notes issued by the Mexican Government | | | Ps. 140,578,871 | | | | Ps. 50,000,000 | | Other long-term notes receivable(i) | | | 8,028,731 | | | | — | | | | | | | | | | | Total long-term notes receivable | | | Ps. 148,607,602 | | | | Ps. 50,000,000 | | | | | | | | | | |
| (i) | Primarily CENAGAS, see Note9-a. |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | 2019 | | | 2018 | | Promissory notes issued by the Mexican Government | | Ps. | 121,624,852 | | | Ps. | 118,827,894 | | Other long-term notes receivable (1) | | | 940,454 | | | | 1,000,704 | | | | | | | | | | | | | | | 2016 | | | 2015 | | Total promissory notes | | | Ps. 142,124,620 | | | | Ps.50,000,000 | | Less: current portion of notes receivable(2) | | | 1,545,749 | | | | — | | | | | | | | | | | Long-term promissory notes | | | Ps. 140,578,871 | | | | Ps.50,000,000 | | | | | | | | | | |
| | | | | | (2) | The current portion of the promissory notes and the total yield payments due are allocated under sundry debtors in accounts receivable, net (see Note 7). |
| On December 24, 2015, the SHCP published in the Official Gazette of the Federation theDisposiciones de carácter general relativas a la asunción por parte del Gobierno Federal de obligaciones de pago de pensiones y jubilaciones a cargo de Petróleos Mexicanos y sus empresas productivas subsidiarias (General provisions regarding the assumption by the Mexican Government of the payment obligationsTotal long-term notes receivable
| | Ps. | 122,565,306 | | | Ps. | 119,828,598 | | | | | | | | | | |
(1) | Mainly collection rights related to pensionsValue Added Tax from thenon-recourse factoring contract between Pemex Logistics and retirement plans of Petróleos MexicanosBanco Mercantil del Norte, S.A. |
Promissory notes issued by the Mexican Government | | | | | | | | | | | 2019 | | | 2018 | | Total promissory notes issued by the Mexican Government | | Ps. | 126,534,822 | | | | Ps 156,981,745 | | Less: current portion of notes receivable issued by the Mexican Government, net of expected credit losses (2) | | | 4,909,970 | | | | 38,153,851 | | | | | | | | | | | Long-term promissory notes | | Ps. | 121,624,852 | | | Ps. | 118,827,894 | | | | | | | | | | |
(2) | The amount reflects the principal and its productive state-owned subsidiaries). These regulations stated the terms, conditions, financing mechanisms and payment arrangements pursuant to which the SHCP would assume a portion of the payment obligations related to PEMEX’s pensions and retirement plans. An independent expert reviewed the calculation, the methodology used, the maturity profile and all of the information provided by PEMEX. In accordance with these provisions and prior to the completion of the independent expert’s review described above, on December 24, 2015, the Mexican Government issued in advance payment, through the SHCP, a Ps. 50,000,000non-negotiableinterest from promissory note due December 31, 2050 payable to Petróleos Mexicanos. The promissory note, which accrued interest at a rate of 6.93% per year, was recognized as a long-term note receivable4 innon-current assets once the independent expert named by SHCP concluded its review.
On August 5, 2016, Petróleos Mexicanos received 2019 and promissory notes issued by the Mexican Government at a discount value of Ps. 184,230,5863 and 21 to 26A in 2018 ,as well as of June 29, 2016, as part of the Mexican Government’s assumption of a portion of the payment liabilities related to Petróleos Mexicanos and Subsidiary Entities’ pensions and retirement plans, which notes were delivered in exchange for the Ps. 50,000,000 promissory notes issued to Petróleos Mexicanosmatured on December 24, 2015. On August 15, 2016 Petróleos Mexicanos exchanged Ps. 47,000,000 of these promissory notes for short-term floating rate Mexican Government debt securities, known as Bonos de Desarrollo del Gobierno Federal (Development Bonds of the Federal Government or “BONDES D”). Petróleos Mexicanos then sold the BONDES D to Mexican development banks at market prices.March 31, 2020 and 2019, respectively.
|
On December 24, 2015, the SHCP published in the Official Gazette of the Federation theDisposiciones de carácter general relativas a la asunción por parte del Gobierno Federal de obligaciones de pago de pensiones y jubilaciones a cargo de Petróleos Mexicanos y sus empresas productivas subsidiarias (General provisions regarding the assumption by the Mexican Government of the payment obligations related to pensions and retirement plans of Petróleos Mexicanos and its productive state-owned subsidiaries). These regulations stated the terms, conditions, financing mechanisms and payment arrangements pursuant to which the SHCP would assume a portion of the payment obligations related to PEMEX’s pensions and retirement plans. An independent expert reviewed the calculation, the methodology used, the maturity profile and all of the information provided by PEMEX. In accordance with these provisions and prior to the completion of the independent expert’s review described above, on December 24, 2015, the Mexican Government issued in advance payment, through the SHCP, a Ps. 50,000,000non-negotiable promissory note due December 31, 2050 payable to Petróleos Mexicanos. The promissory note, which accrued interest at a rate of 6.93% per year, was recognized as a long-term note receivable innon-current assets once the independent expert named by SHCP concluded its review. On August 5, 2016, Petróleos Mexicanos received promissory notes issued by the Mexican Government at a Ps. 135,439,612 increase in equity as a result of the Ps. 184, 230,586 discount value of Ps. 184,230,586 as of June 29, 2016, as part of the Mexican Government’s assumption of a portion of the payment liabilities related to Petróleos Mexicanos and Subsidiary Entities’ pensions and retirement plans, which notes were delivered in exchange for the Ps. 50,000,000 promissory notes issued to Petróleos Mexicanos on December 24, 2015. On August 15, 2016, Petróleos Mexicanos exchanged Ps. 47,000,000 of these promissory notes for short-term floating rate Mexican Government debt securities, known asBonos de Desarrollo del Gobierno Federal (Development Bonds of the Mexican Government or “BONDES D”). Petróleos Mexicanos then sold the BONDES D to Mexican development banks at market prices. Petróleos Mexicanos recognized a Ps. 135,439,612 increase in equity as a result of the Ps. 184,230,586 of the promissory notes as of June 29, 2016, minus the Ps. 50,000,000 promissory note received by Petróleos Mexicanos on December 24, 2015, plus a Ps. 1,209,026 increase in the value of the promissory notes from June 29, 2016 to August 15, 2016, the date on which PEMEX received the promissory notes. As of December 31, 2019 and 2018, these promissory notes amounted to Ps. 126,534,822 and Ps. 156,981,745, respectively. PEMEX intends to hold them to maturity. These promissory notes will be converted into cash with annual maturity dates ranging from 2020 to 2036 and yielding rates ranging from 5.39% to 7.00%, as follows: | | | | | | | | | As of December 31, 2019 | | Number of Promissory Notes | | Maturity | | Yield Rate Range | | Principal Amount | | 1 | | 2020 | | 5.39% | | Ps. | 4,909,970 | (1) | 1 | | 2021 | | 5.57% | | | 5,846,979 | | 1 | | 2022 | | 5.74% | | | 6,500,329 | | 1 | | 2023 | | 5.88% | | | 7,112,804 | | 1 | | 2024 | | 5.99% | | | 7,534,758 | | 5 | | 2025 to 2029 | | 6.06% to 6.62% | | | 40,018,603 | | 5 | | 2030 to 2034 | | 6.70% to 6.90% | | | 39,692,547 | | 2 | | 2035 to 2036 | | 6.95% to 7.00% | | | 14,918,832 | | | | | | | | | | | | | Total promissory notes | | | | Ps. | 126,534,822 | | | | Less: current portion | | | | | 4,909,970 | | | | | | | | | | | | | Long-term notes receivable | | | | Ps. | 121,624,852 | | | | | | | | | | |
(1) | The amount of the promissory notes asnote is Ps. 4,917,970, less an impairment of June 29, 2016, minus the Ps. 50,000,000 promissory note received by Petróleos Mexicanos on December 24, 2015, plus a Ps. 1,209,026 increase in the value of the promissory notes from June 29, 2016 to August 15, 2016, the date on which PEMEX received the promisorry notes.(see Note 21)8,000. |
From January 1 to December 31, 2019 and 2018 PEMEX recognized Ps. 8,266,574 and Ps. 9,737,131, respectively in accrued interests from these promissory notes. This amount was recognized as financing income in the consolidated statement of comprehensive income. Yield rates for these promissory notes are fixed all throughout their lifespans and up to their maturities. In addition, PEMEX believes the promissory notes do not have a credit risk because they are issued by the Mexican Government in Mexican pesos. The expected credit losses as of December 31, 2019 were Ps. 8,000 which are presented net from the current portion of notes receivable. As of December 31, 2019, as part of the Mexican Government’s strategy to finance PEMEX, Petróleos Mexicanos received the prepayment of 7 promissory notes (one maturing in 2019 and 6 in anticipated form) in the amount of Ps. 38,704,883 (Ps. 32,493,666 of principal and Ps. 6,211,217 of interest), which was transferred to theFideicomiso Fondo Laboral Pemex (“Pemex Labor Fund” or “FOLAPE”) for the obligation payment related to its pension and retirement plan obligation. The monetization of 2 promissory notes took place after the document’s expiration date, resulting in additional interest of Ps. 614. As of December 31, 2018 two promissory notes have expired: the first with maturity on March 31, 2017 in the amount of Ps. 1,562,288 (Ps. 1,518,932 of principal and Ps. 43,356 of interest), and the second with maturity on March 31, 2018 in the amount of Ps. 2,551,024 (Ps. 2,364,053 of principal and Ps. 186,971 of interest), which were transferred to the FOLAPE, for the payment obligations related to pensions and retirement plans. The payment of the second promissory note was carried out two days after the expiration date, which generated additional interest of Ps. 644. The monetized amount of the second promissory note was Ps. 2,551,668 (Ps. 2,364,053 of principal and Ps. 187,615 of interest). B. | PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESOther assets
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
As of December 31, 2016, these promissory notes at discount valued amounted to Ps. 142,124,620. PEMEX intends is to hold them to maturity. These promissory notes will be converted into cash with annual maturity dates ranging from 2017 to 2042 and annual rates ranging from 4.35% to 7.04%
|
At December 31, 2019 and 2018, the balance of other assets was as follows: | | | | | | | | | Number of Promissory Notes | | Maturity | | Yield Rate Range | | Principal Amount (discount value) | | 1 | | 2017 | | 4.35% | | Ps. | 1,545,749 | | 1 | | 2018 | | 4.65% | | | 2,408,634 | | 1 | | 2019 | | 5.14% | | | 3,402,849 | | 1 | | 2020 | | 5.39% | | | 4,192,132 | | 1 | | 2021 | | 5.57% | | | 4,957,840 | | 5 | | 2022 to 2026 | | 4.74% a 6.11% | | | 30,986,252 | | 5 | | 2027 to 2031 | | 6.32% a 6.77% | | | 33,280,216 | | 5 | | 2032 to 2036 | | 6.81% a 7.00% | | | 31,370,504 | | 6 | | 2037 to 2042 | | 6.94% a 7.04% | | | 29,980,444 | | | | | | | | | | | | | Total promissory notes | | Ps. | 142,124,620 | | | | Less: current portion | | | 1,545,749 | | | | | | | | | | | Long-term notes receivable | | Ps. | 140,578,871 | | | | | | | | |
From August 2016 to December 2016, PEMEX received Ps. 3,597,654 in accrued yields from these promissory notes, which was recognized as financing income in the consolidated statement of comprehensive income.
The promissory notes have fixed yield rates. Accordingly they are not exposed to market risk. In addition, PEMEX believes the promissory notes do not have anon-compliance risk because they are issued by the Mexican Government in Mexican pesos.
At December 31, 2016 and 2015, the balance of other assets was as follows:
| | | | | | | | | | | 2019 | | | 2018 | | Insurance | | Ps. | 2,967,625 | | | Ps. | 3,591,079 | | Payments in advance | | | 2,650,251 | | | | 1,114,513 | | Other | | | 1,518,801 | | | | 1,720,218 | | | | | | | | | | | Total other assets | | Ps. | 7,136,677 | | | Ps. | 6,425,810 | | | | | | | | | | |
| | | | | | | | | | | 2016 | | | 2015 | | Payments in advance | | Ps. | 2,558,767 | | | Ps. | 1,980,260 | | Other | | | 6,953,878 | | | | 5,427,400 | | | | | | | | | | | Total other assets | | Ps. | 9,512,645 | | | Ps. | 7,407,660 | | | | | | | | | | |
NOTE 15. 16. | DEBT The Federal Income Law applicable to PEMEX as of January 1, 2016, published in the Official Journal of the Federation on November 18, 2015, authorized Petróleos Mexicanos and its Subsidiaries Entities to incur an internal net debt up to Ps. 110,500,000 and an external net debt up to U.S. $8,500,000. PEMEX can incur additional internal or external debt, as long as the total amount of net debt (Ps.240,550,000 equivalent to U.S. $15,722,000) does not exceed the ceiling established by the Federal Income Law.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
On November 18, 2014, the Board of Directors of Petróleos Mexicanos approved policies and general requirements for obligations that constitute public debt of Petróleos Mexicanos and Subsidiary Entities, in accordance with the Article 107 of the Petroleos Mexicanos Law.
Subsequently, the Board of Directors of PEMEX, approved the debt program for fiscal year 2016 in accordance with Article 13 section XXVI of the Petróleos Mexicanos Law.
During 2016,
|
The Federal Income Law applicable to PEMEX as of January 1, 2019, published in the Official Gazette of the Federation on December 28, 2018, authorized Petróleos Mexicanos and its Subsidiary Entities to incur an internal net debt up to Ps. 4,350,000 and an external net debt up to U.S. $5,422,500. PEMEX can incur additional internal or external debt, as long as the total amount of net debt (Ps. 112,000,000 equivalent to U.S. $5,640,000) does not exceed the ceiling established by the Federal Income Law. The Board of Directors approves the terms and conditions for the incurrence of obligations that constitute public debt of Petróleos Mexicanos for each fiscal year, in accordance with the Petróleos Mexicanos Law and theReglamento de la Ley de Petróleos Mexicanos (Regulations to the Petróleos Mexicanos Law). These terms and conditions are promulgated in accordance with the guidelines approved by the SHCP for Petróleos Mexicanos for the respective fiscal year. During the period from January 1 to December 31, 2019, PEMEX participated in the following financing activities: | a. | On January 25, 2016, Petróleos Mexicanos increased its Medium-Term Notes Program from U.S. $52,000,000 to U.S. $62,000,000. |
On June 28, 2019, Petróleos Mexicanos entered into a U.S. $5,500,000 revolving credit facility due 2024 and a U.S. $2,500,000 term loan facility due 2024. | b. | On February 4, 2016, Petróleos Mexicanos issued U.S. $5,000,000 of debt securities under its Medium-Term Notes Program, Series C, in three tranches: (i) U.S. $750,000 of its 5.500% Notes due February 2019; (ii) U.S. $1,250,000 of its 6.375% Notes due February 2021; and (iii) U.S. $3,000,000 of its 6.875% Notes due August 2026. All debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services. |
On July 29, 2019, Petróleos Mexicanos entered into a credit line by Export Credit Agency in the amount of U.S. $206,901 which bears interest at a rate linked to six-month LIBOR due 2028. | c. | On February 5, 2016, Petróleos Mexicanos obtained a loan from a line of credit for Ps. 7,000,000,000 bearing interest at a floating rate linked to the TIIE, plus 0.55%, and matured on January 2017. |
From September to October 2019, Petróleos Mexicanos conducted financing and liability management transactions pursuant to which | d. | On March 15, 2016, Petróleos Mexicanos issued €2,250,000 of debt securities U.S. $62,000,000 Medium-Term Notes Program, Series C in two tranches: (i) €1,350,000 of its 3.750% Notes due to March 2019 and (ii) €900,000 of its 5.125% Notes due to March 2023. All debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services. |
On September 23, 2019, Petróleos Mexicanos issued the following debt securities under its U.S. $102,000,000 Medium-Term Notes Program, Series C: (1) U.S. $1,250,000 6.490% Notes due 2027; (2) U.S. $3,250,000 6.840% Notes due 2030; and (3) U.S. $3,000,000 7.690% Bonds due 2050. All debt securities under this program are jointly and severally guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics and their respective successors and assignees. On September 23, 2019, Petróleos Mexicanos consummated a tender offer pursuant to which it purchased (1) U.S. $491,803 aggregate principal amount of its outstanding 6.000% Notes due 2020; (2) U.S. $242,511 aggregate principal amount of its outstanding 3.500% Notes due 2020; (3) U.S. $1,897,615 aggregate principal amount of its outstanding 5.500% Notes due 2021; (4) U.S. $883,977 aggregate principal amount of its outstanding 6.375% Notes due 2021; (5) U.S. $17,316 aggregate principal amount of its outstanding 8.625% Bonds due 2022; (6) U.S. $96,970 aggregate principal amount of its outstanding Floating Rate Notes due 2022; (7) U.S. $235,177 aggregate principal amount of its outstanding 5.375% Notes due 2022; (8) U.S. $361,601 aggregate principal amount of its outstanding 4.875% Notes due 2022; (9) U.S. $344,853 aggregate principal amount of its outstanding 3.500% Notes due 2023; and (10) U.S. $433,946 aggregate principal amount of its outstanding 4.625% Notes due 2023. | e. | On March 17, 2016, Petróleos Mexicanos borrowed Ps. 2,000,000 from a credit line at a floating rate linked to TIIE and matured on March 2017. |
On September 27, 2019, Petróleos Mexicanos consummated an exchange offer pursuant to which it exchanged (1) U.S. $940,618 aggregate principal amount of its outstanding 4.875% Notes due 2022, (2) U.S. $53,310 aggregate principal amount of its outstanding 8.625% Bonds due 2022, (3) U.S. $334,442 aggregate principal amount of its outstanding Floating Rate Notes due 2022, (4) U.S. $654,668 aggregate principal amount of its outstanding 5.375% Notes due 2022, (5) U.S. $389,985 aggregate principal amount of its outstanding 3.500% Notes due 2023, (6) U.S. $612,735 aggregate principal amount of its outstanding 4.625% Notes due 2023, (7) U.S. $58,982 aggregate principal amount of its outstanding 8.625% Guaranteed Bonds due 2023, (8) U.S. $466,787 aggregate principal amount of its outstanding 4.875% Notes due 2024, (9) U.S. $208,769 aggregate principal amount of its outstanding 4.250% Notes due 2025, (10) U.S. $1,439,479 aggregate principal amount of its outstanding 6.500% Bonds due 2041, (11) U.S. $730,486 aggregate principal amount of its outstanding 5.500% Bonds due 2044, (12) U.S. $1,439,519 aggregate principal amount of its outstanding 6.375% Bonds due 2045 and (13) U.S. $277,215 aggregate principal amount of its outstanding 5.625% Bonds due 2046 for U.S. $1,102,232 aggregate principal amount of its new 6.490% Notes due 2027, U.S. $1,163,586 aggregate principal amount of its new 6.840% Notes due 2030 and U.S. $5,065,788 aggregate principal amount of its new 7.690% Bonds due 2050. | f. | On March 17, 2016, Petróleos Mexicanos borrowed Ps. 3,300,000 from a credit line at a floating rate linked to TIIE and matured on March 2017. |
On October 11, 2019, Petróleos Mexicanos consummated an exchange offer pursuant to which it exchanged (1) U.S. $7,698 aggregate principal amount of its outstanding 4.875% Notes due 2022, (2) U.S. $10 aggregate principal amount of its outstanding 8.625% Bonds due 2022, (3) U.S. $120 aggregate principal amount of its outstanding Floating Rate Notes due 2022, (4) U.S. $500 aggregate principal amount of its outstanding 5.375% Notes due 2022, (5) U.S. $4,247 aggregate principal amount of its outstanding 3.500% Notes due 2023, (6) U.S. $3,050 aggregate principal amount of its outstanding 4.625% Notes due 2023, (7) U.S. $20 aggregate principal amount of its outstanding 8.625% Guaranteed Bonds due 2023, (8) U.S. $595 aggregate principal amount of its outstanding 4.875% Notes due 2024 and (9) U.S. $273 aggregate principal amount of its outstanding 4.250% Notes due 2025 for U.S. $8,198 aggregate principal amount of its new 6.490% Notes due 2027, U.S. $7,245 aggregate principal amount of its new 6.840% Notes due 2030 and U.S. $617 aggregate principal amount of its new 7.690% Bonds due 2050. | g. | On March 23, 2016, Petróleos Mexicanos issued Ps. 5,000,000 of Certificados Bursátiles due to October 2019 at a floating rate linked to TIIE. As of December 31, 2016, all debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services. |
On November 14, 2019, Petróleos Mexicanos entered into a Ps. 28,000,000 syndicated revolving credit line due in 2022. | h. | On March 28, 2016, Petróleos Mexicanos borrowed Ps. 9,700,000 from a credit line at a floating rate linked to TIIE, and matured on March 2017. |
On December 23, 2019, Petróleos Mexicanos issued Ps. 5,100,368 aggregate principal amount of Certificados Bursatiles due 2024 at a rate linked to the TIIE plus 1%. These Certificados Bursatiles were issued under Petróleos Mexicanos’ Ps. 100,000,000 or UDI equivalent Certificados Bursátiles Program. | i. | On April 19, 2016, Petróleos Mexicanos borrowed €500,000 from a credit line at fixed rate of 5.11%, which matures on March 2023. |
| j. | On May 31, 2016, Petróleos Mexicanos obtained a U.S. $300,000 bilateral credit line from Export Development Canada (EDC), due on May 2021, which bears interest at a floating rate linked to the London Interbank Offered Rate (“LIBOR”). |
As of December 31, 2019, Petróleos Mexicanos had U.S. $7,450,000 and Ps. 37,000,000 in available credit lines in order to ensure liquidity, of which U.S. $6,780,000 and Ps. 16,000,000 are available. | k. | On June 14, 2016, Petróleos Mexicanos issued CHF 375,000 of debt securities under its Medium-Term Notes Program, Series C, in two tranches: (1) CHF 225,000 of its 1.50% Notes due to June 2018 and
|
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
All the financing activities were guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services (until July 1, when merged, see Note 1) and Pemex Logistics. From January 1 to December 31, 2019, HHS obtained U.S. $22,456,000 from its revolving credit line and repaid U.S. $21,600,000. As of December 31, 2018, the outstanding amount under this revolving credit line was U.S. $700,000. As of December 31, 2019, the outstanding amount under this revolving credit line was U.S. $1,556,000. The Federal Income Law applicable to PEMEX as of January 1, 2018, published in the Official Gazette of the Federation on November 15, 2017, authorized Petróleos Mexicanos and its Subsidiary Entities to incur an internal net debt up to Ps. 30,000,000 and an external net debt up to U.S. $6,182,800. PEMEX can incur additional internal or external debt, as long as the total amount of net debt (Ps. 143,000,000 equivalent to U.S. $7,813,000) does not exceed the ceiling established by the Federal Income Law. The Board of Directors approves the terms and conditions for the incurrence of obligations that constitute public debt of Petróleos Mexicanos for each fiscal year, in accordance with the Petróleos Mexicanos Law and the Regulations to the Petróleos Mexicanos Law. These terms and conditions are promulgated in accordance with the guidelines approved by the SHCP for Petróleos Mexicanos for the respective fiscal year. Subsequently, the Board of Directors of PEMEX approved the debt program for fiscal year 2018 in accordance with Article 13 section XXVI of the Petróleos Mexicanos Law. During the period from January 1 to December 31, 2018, PEMEX participated in the following financing activities: | (2) CHF 150,000 of its 2.35% Notes due to December 2021. The Notes are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services. |
On February, 12, 2018, Petróleos Mexicanos issued U.S. $4,000,000 of debt securities under its U.S. $92,000,000 Medium-Term Notes Program, Series C, in two tranches: (1) U.S. $2,500,000 5.35% Notes due 2028 and (2) U.S. $1,500,000 6.35% Bonds due 2048. | l. | On June 17, 2016, Pemex Exploration and Production obtained approximately U.S. $1,100,000 in connection with the sale and leaseback of certain infrastructure assets used for oil and gas activities. As part of this transaction, Pemex Exploration and Production entered into a15-year financial lease agreement, which will last for the greater part of the economic life of the asset, at a fixed rate of 8.38%, pursuant to which Pemex Exploration and Production will retain the operation of these assets and the title and ownership of such assets will revert to Pemex Exploration and Production at the end of this period following payment of an agreed price. This transaction was recognized as a financing activity due to the fact that PEMEX retained all of the risks and benefits associated with ownership of the asset and substantially all of the operating rights of the asset. |
On February 12, 2018, Petróleos Mexicanos consummated an exchange offer pursuant to which it exchanged (1) U.S. $952,454, aggregate principal amount of its outstanding 5.500% Bonds due 2044 for U.S. $881,899, aggregate principal amount of its new 6.350% Bonds due 2048 and (2) U.S. $ 1,021,065, aggregate principal amount of its outstanding 5.625% Bonds due 2046 for U.S. $946,764, aggregate principal amount of its new 6.350% Bonds due 2048. | m. | On July 8, 2016, Pemex Industrial Transformation obtained approximately U.S. $600,000 in connection with the sale and leaseback of a plant located in the Madero Refinery. As part of this transaction, Pemex Industrial Transformation entered into a20-year financial lease agreement pursuant to which Pemex Industrial Transformation will retain the operation of the plant and title and ownership will revert to Pemex Industrial Transformation at the end of this period following payment of an agreed price. This transaction was recognized as a financing activity due to the fact that Pemex Industrial Transformation retained all of the risks and benefits associated with ownership of the asset and substantially all of the operating rights of the asset. |
On March 5, 2018, Petróleos Mexicanos consummated a tender offer pursuant to which it purchased U.S. $138,598 aggregate principal amount of its outstanding 3.125% Notes due 2019, U.S. $558,644 aggregate principal amount of its outstanding 5.500% Notes due 2019, U.S. $91,843 aggregate principal amount of its outstanding 8.000% Notes due 2019, U.S. $183,017 aggregate principal amount of its outstanding 6.000% Notes due 2020 and U.S. $817,303 aggregate principal amount of its outstanding 3.500% Notes due 2020. | n. | On July 26, 2016, Petróleos Mexicanos issued ¥80,000,000 Bonds at 0.54% due July 2026. The Bonds are guaranteed by the Japan Bank for International Cooperation. |
On March 27, 2018, Petróleos Mexicanos entered into a credit line in the amount of U.S. $181,101, which bears interest at a rate linked to LIBOR plus 70 basis points, due February 2025 and was used on April 13, 2018. On April 16, 2018, Petróleos Mexicanos increased its Medium-Term Notes Program, Series C, from U.S. $92,000,000 to U.S. $102,000,000. | o. | On September 21, 2016, Petróleos Mexicanos issued U.S. $4,000,000 aggregate principal amount of debt securities under its U.S. $62,000,000 Medium-Term Notes Program, Series C, in two tranches: (i) U.S. $2,000,000 of its 4.625% Notes due to September 2023 and (ii) U.S. $2,000,000 of its 6.750% Bonds due to September 2047. The debt securities are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services. |
On May 24, 2018, Petróleos Mexicanos issued €3,150,000 of debt securities under its U.S. $102,000,000 Medium Term Notes Program, Series C in four tranches: (i) €600,000 of its 2.500% Notes due on November 24, 2022; (ii) €650,000 of its Floating Rate Notes due on August 24, 2023; (iii) €650,000 of its 3.625% Notes due on November 24, 2025; and (iv) €1,250,000 of its 4.750% Notes due on February 26, 2029. All debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services and their respective successors and assignees. | p. | On October 3, 2016, Petróleos Mexicanos consummated a tender and exchange offer pursuant to which it (i) purchased U.S. $687,725 aggregate principal amount of its outstanding 8.000% Notes due 2019 and U.S. $657,050 aggregate principal amount of its outstanding 5.750% Notes due 2018 and (ii) exchanged (a) U.S. $73,288 aggregate principal amount of its outstanding 5.750% Notes due 2018 for U.S. $69,302 aggregate principal amount of its 4.625% Notes due 2023 and U.S. $8,059 aggregate principal amount of its 6.750% Bonds due 2047 and (b) U.S. $1,591,961 aggregate principal amount of its outstanding 5.500% Bonds due 2044 for U.S. $1,491,941 aggregate principal amount of its 6.750% Bonds due 2047. The 4.625% Notes due 2023 and 6.750% Bonds due 2047 are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services and represent reopenings of the 4.625% Notes due 2023 and 6.750% Bonds due 2047, respectively, originally issued on September 21, 2016 |
On June 4, 2018, Petróleos Mexicanos issued CHF365,000 of its 1.750% Notes due 2023 under its U.S. $102,000,000 Medium Term Notes Program, Series C. | q. | On December 6, 2016, Petróleos Mexicanos increased its Medium-Term Notes Program, Series C, from U.S. $ 62,000,000 to U.S. $72,000,000. |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
On June 26, 2018,Pro-Agroindustrias, refinanced a credit line for U.S. $250,000 by entering into a new credit line for the same amount, which bears interest at a floating rate linked to LIBOR plus 300 basis points on a quarterly basis and matures on December 26, 2025. This credit agreement is guaranteed by Petróleos Mexicanos. | r. | On December 13, 2016, Petróleos Mexicanos issued U.S. $5,500,000 of its debt securities under its Medium-Term Notes Program, Series C in three tranches: (1) U.S. $3,000,000 at fixed rate of 6.50% due March 2027, (2) U.S. $1,500,000 a fixed rate of 5.375% due March 2022, and (3) U.S. $1,000,000 at a floating rate linked to LIBOR, due March 2022. As of December 31, 2016, all debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services. |
On August 23, 2018, Petróleos Mexicanos entered into a loan agreement in the amount of U.S. $200,000, which bears interest at a floating rate linked to LIBOR and matures in 2023. | s. | On December 14, 2016, Petróleos Mexicanos entered into a term loan credit facility in the amout of U.S. $300,000 at floating rate linked to LIBOR, matures on December 2019. |
Between January 1 and December 31, 2016, PMI HBV obtained and paid U.S. $11,369,800 in revolving credit lines. As of December 31, 2016 there
On October 23, 2018 Petróleos Mexicanos issued U.S. $2,000,000, of debt securities under U.S. $102,000,000 of its 6.500%, Medium-Term Notes Program, Series C, due 2029. On November 9, 2018, Petróleos Mexicanos entered into a revolving credit facility in the amount of Ps. 9,000,000, which matures in 2023. On November 30, 2018, Petróleos Mexicanos borrowed U.S. $250,000 from a bilateral credit line, which bears interest at a floating rate linked to LIBOR plus 80 basis points and matures in 2028. As of December 31, 2018, Petróleos Mexicanos had U.S. $6,700,000 and Ps. 32,500,000 in available credit lines in order to ensure liquidity, which U.S. $6,400,000 and Ps. 26,200,000 are available. All the financing activities were guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services (in the case of Pemex Cogeneration and Services, until July 27, 2018, the date it was liquidated (see Note 1)). From January 1 to December 31, 2018, PMI HBV (until July 31, 2018) and P.M.I. Holdings Holland Services, B.V., obtained U.S. $21,449,200 from its revolving credit line and repaid U.S. $21,099,000. As of December 31, 2017, the outstanding amount under this revolving credit line was U.S. $350,000. As of December 31, 2018, the outstanding amount under this revolving credit line was U.S. $700,000. 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. 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, 2019 and 2018 and as of the date of the issuance of these consolidated financial statements, PEMEX was in compliance with the covenants described above. As of December 31, 2019, long-term debt was no outstanding amount. As of December 31, 2016, Petróleos Mexicanos had U.S. $4,750,000 and Ps. 23,500,000 in available credit lines in order to ensure liquidity. The available amounts are U.S. $4,630,000 and Ps. 3,500,000, respectively.
The Federal Income Law applicable to PEMEX as of January 1, 2015, published in the Official Journal of the Federation on November 13, 2014, authorized Petróleos Mexicanos and its Subsidiaries Entities to incur an internal net debt up to Ps. 110,500,000 and an external net debt up to U.S. $6,500,000. PEMEX can incur additional internal or external debt, as long as the total amount of net debt (Ps.195,000,000 equivalent to U.S. $15,000,000) does not exceed the ceiling established by the Federal Income Law.
On November 18, 2014, the Board of Directors of Petróleos Mexicanos approved policies and general requirements for obligations that constitute public debt of Petróleos Mexicanos and Subsidiary Entities, in accordance with the Article 107 of the Petroleos Mexicanos Law.
Subsequently, the Board of Directors of PEMEX, approved the debt program for fiscal year 2015 in accordance with Article 13 section XXVI of the Petróleos Mexicanos Law.
During 2015, the significant financing activities of PEMEX were as follows:
| | | | | | | | | | | | | | | Rate of interest (1) | | Maturity | | Pesos | | | Foreign currency | | U.S. dollars | | | | | | | | | | | | | Bonds | | Fixed from 1.7% to 9.5% and LIBOR plus 0.35% to 3.65% | | Various to 2050 | | | 1,118,518,559 | | | U.S. $ | 59,352,968 | | Project financing | | Fixed from 2.45% and LIBOR plus 0.24% to 1.75% | | Various to 2028 | | | 41,154,129 | | | | 2,183,799 | | Direct loans | | Fixed from 2.50% to 5.25% and LIBOR plus 1.65% to 3.50% | | Various to 2031 | | | 62,698,930 | | | | 3,327,050 | | Syndicated loans | | LIBOR plus 2.35% | | Various to 2024 | | | 47,107,647 | | | | 2,499,716 | | Bank loans | | LIBOR plus 1.19% to 3.50% | | Various to 2023 | | | 1,862,411 | | | | 98,827 | | Revolving credit lines | | LIBOR plus 1.85% | | 2020 | | | 12,626,284 | | | | 670,000 | | Financing of Infrastructure asset | | Fixed from 5.4% and 8.4% | | Various to 2036 | | | 28,143,335 | | | | 1,493,395 | | Total financing in U.S. dollars | | | | | | | 1,312,111,295 | | | U.S. $ | 69,625,755 | | | | | | | | | | | | | | | Euros | | | | | | | | | | | | | Bonds | | Fixed from 1.875% to 5.5% and EURIBOR plus 2.4% | | Various to 2030 | | | 293,984,741 | | | € | 13,897,557 | | Direct loans | | Fixed to 5.11% and EURIBOR plus 2.5% | | Various to 2023 | | | 11,561,660 | | | | 546,554 | | | | | | | | | | | | | | | Total financing in Euros | | | | | | | 305,546,401 | | | € | 14,444,111 | | | | | | | | | | | | | | | Japanese yen: | | | | | | | | | | | | | Bonds | | Fixed from 0.54% to 3.5% and LIBOR yen plus 0.75% | | Various to 2026 | | | 30,148,292 | | | ¥ | 173,865,582 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | Rate of interest (1) | | Maturity | | Pesos | | | Foreign currency
| | Pesos | | | | | | | | | | | | | Certificados bursátiles | | Mexican Government Treasury Certificates (“Cetes”) , TIIE(1) plus 0.15% to 1.00%, and fixed at 7.19% to 9.1% | | Various to 2026 | | | 133,409,581 | | | | | | Direct loans | | Fixed at 6.55% and 7.01% and TIIE plus 0.85% to 4.01% | | Various to 2029 | | | 38,558,166 | | | | | | Syndicated loans | | TIIE plus 0.95% | | Various to 2025 | | | 24,270,589 | | | | | | | | | | a. | On January 16, 2015, Petróleos Mexicanos obtained a direct loan for Ps. 7,000,000 bearing interest at a floating rate linked to the Tasa de Interés Interbancaria de Equilibrio (Interbank Equilibrium Interest Rate, or “TIIE”) 28 days plus 35 base points, and matured on January 16, 2016. |
| b. | On January 22, 2015, Petróleos Mexicanos increased its Medium-Term Notes Program from U.S. $42,000,000 to U.S. $52,000,000. As of December 31, 2015, all debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services. |
| c. | On January 23, 2015, Petróleos Mexicanos issued U.S. $6,000,000 of its debt securities under its U.S. $52,000,000 Medium-Term Notes Program, Series C in three tranches: (1) U.S. $1,500,000 of its 3.500% Notes due 2020; (2) U.S. $1,500,000 of its 4.500% Notes due 2026; and (3) U.S. $3,000,000 of its 5.625% Bonds due 2046. |
| | | | | Revolving credit lines | | TIIE plus 1.50% and 1.95% | | Various to 2020 | | | 21,000,000 | | | | | | | | | | | | d. | On January 30, 2015, Petróleos Mexicanos amended the terms of its revolving credit facility in order to increase the amount available thereunder from U.S. $1,250,000 to U.S. $3,250,000 and to extend the maturity date to February 5, 2020. On February 5, 2015, Petróleos Mexicanos borrowed U.S. $1,950,000 under this facility to prepay in full its U.S. $700,000 credit facility dated as of December 17, 2014. |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| e. | On February 11, 2015, Petróleos Mexicanos issued Ps. 24,287,902 aggregate principal amount of Certificados Bursátiles in three tranches. The first tranche was issued at a fixed rate of 7.47% due 2026 in an aggregate principal amount of Ps. 17,000,000, consisting of (1) an international offering outside of Mexico of Ps. 9,000,000 of “Euroclearable Certificados Bursátiles,” which are eligible for clearance through Euroclear Clearance System plc and Indeval, and (2) a concurrent offering to the public in Mexico of Ps. 8,000,000. This issuance was a reopening of the same series of Certificados Bursátiles due 2026 that was originally issued on November 27, 2014. The second tranche was issued at a floating rate due 2020 in an aggregate principal amount of Ps. 4,300,000. This issuance was a reopening of the same series of Certificados Bursátiles due 2020 that was originally issued on November 27, 2014. The third tranche was issued at a fixed rate of 3.94% due 2026 in an aggregate principal amount of 565,886,800 Unidades de Inversión (“UDIs”), equivalent to Ps. 2,987,902. This issuance represented the fourth reopening of the same series originally issued on January 30, 2014 and subsequently reopened on July 2, 2014, September 11, 2014 and November 27, 2014. These certificados bursátiles were issued under Petróleos Mexicanos’ Ps. 200,000,000 or UDI equivalent Certificados Bursátiles Program. |
| | | | | Total financing in pesos | | | | | | | 217,238,336 | | | | | | Unidades de Inversión Certificados bursátiles | | | | | | | | | | | | | Certificados bursátiles | | Zero rate and Fixed at 3.02% to 5.23% | | Various to 2035 | | | 41,388,521 | | | | | | | | | | | | f. | On February 11, 2015, Petróleos Mexicanos entered into a term loan credit facility in the amount of U.S. $ 2,000,000. On February 17, 2015, Petróleos Mexicanos borrowed U.S. $2,000,000 under this facility to prepay in full its credit agreement dated as of November 18, 2010. |
| g. | On March 24, 2015, the CNBV authorized Petróleos Mexicanos’ Short-Term Certificados Bursátiles Program for an aggregate revolving amount of Ps. 100,000,000. As of September 30, 2015, all debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services. |
| | | | | Other currencies: | | | | | | | | | | | | | Bonds | | Fixed from 1.5% to 8.25% | | Various to 2025 | | | 41,553,990 | | | | | | | | | | | | h. | On April 21, 2015, Petróleos Mexicanos issued €2,250,000 of its debt securities under its U.S. $52,000,000 Medium-Term Notes Program, Series C in two tranches: (1) €1,250,000 of its 2.750% Notes due 2027; and (2) €1,000,000 of its 1.875% Notes due 2022. As of December 31, 2015, all debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services. |
| i. | On May 6, 2015, AGRO withdrew U.S. $50,000 from its credit line, withdrawals from which bear interest at a floating rate linked to LIBOR, which matures on December 18, 2017. |
| | | | | Total principal in pesos(2) | | | | | | | 1,947,986,835 | | | | | | Plus: accrued interest | | | | | | | 33,146,807 | | | | | | Notes payable to contractors(3) | | | | | | | 2,040,446 | | | | | | | | | | | | j. | On June 26, 2015, Petróleos Mexicanos received a disbursement of U.S. $500,000 from its revolving credit lines. |
| k. | On July 7, 2015, Petróleos Mexicanos obtained a loan for Ps. 18,000,000 bearing interest at a floating rate linked to TIIE plus 0.95%, which matures on July 7, 2025. |
| | | | | Total principal and interest | | | | | | | 1,983,174,088 | | | | | | Less: short-term maturities | | | | | | | 210,530,524 | | | | | | Current portion of notes payable to contractors(3) | | | | | 1,246,854 | | | | | | Accrued interest | | | | | | | 33,146,807 | | | | | | | | | | | | l. | On July 16, 2015, Petróleos Mexicanos issued in the Mexican market Ps. 7,721,582 aggregate principal amount of Certificados Bursátiles under its Ps. 200,000,000 or UDI equivalent Certificados Bursátiles Program, in three tranches: (1) an aggregate principal amount of Ps. 650,000 at a floating rate linked to the TIIE plus 0.15% due 2020; (2) an aggregate principal amount of Ps. 6,100,000 at a fixed rate of 7.47% due 2026; and (3) an aggregate principal amount of 183,941 UDIs, equivalent to approximately Ps. 971,582, at a fixed rate of 3.94% due 2026. As of December 31, 2015, all debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services. |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| m. | On July 31, 2015, Petróleos Mexicanos issued U.S. $525,000 of notes due 2025, which bear interest at a fixed rate of 2.46%. The notes are guaranteed by the Export-Import Bank of the United States. |
| | | | | Total short-term debt and current portion of long-term debt | | | | | 244,924,185 | | | | | | | | | | | | n. | On August 4, 2015, PMI HBV obtained a loan for U.S. $250,000, which bears interest at a rate of 1.79% and is due in 2018. The loan is collateralized by 20,724,331 Repsol shares. |
| o. | On August 14, 2015, Petróleos Mexicanos borrowed U.S. $500,000 in two tranches, each of them of U.S $250,000 of its revolving credit lines and dollars, and matured in August 2015. |
| | | | p. | On August 28, 2015, Petróleos Mexicanos borrowed U.S. $120,000 from a certain U.S. $3,250,000 revolving credit line, which bears interest at a floating rate linked to the LIBOR that is due in February 2016. |
Long-term debt | q. | On September 2015, Petróleos Mexicanos borrowed U.S. $800,000 from its revolving credit lines entered into with international financial institutions. |
| r. | On September 30, 2015, Petróleos Mexicanos entered into a credit facility in the amount of Ps. 5,000,000, which bears interest at a floating rate linked to the TIIE and matures in September 2023. This credit facility was fully disbursed on October 7, 2015. |
| s. | On September 30, 2015, Petróleos Mexicanos borrowed U.S. $500,000 from its revolving credit line, which bears interest at a rate linked to LIBOR and matures in December 2025. The credit facility is guaranteed by the Export-Import Bank of the United States. |
| t. | On September 30, 2015, Petróleos Mexicanos borrowed U.S. $475,000 from its revolving credit line, which bears interest at a rate linked to LIBOR and matures in December 2025. The credit facility is guaranteed by the Export-Import Bank of the United States. |
| u. | On September 30, 2015, Petróleos Mexicanos issued in the Mexican market Ps. 7,400,493, aggregate principal amount of Certificados Bursátiles under its Ps. 200,000,000, or UDI equivalent Certificados Bursátiles Program, in two tranches: (1) an aggregate principal amount of Ps. 1,357,737 at a fixed rate of 3.68% due 2018; and (2) an aggregate principal amount of 1,138,056 UDIs, equivalent to approximately Ps. 6,042,756, at a fixed rate of 5.23% due 2035. As of December 31, 2015, all debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services. |
| v. | On October 7, 2015, Petróleos Mexicanos obtained a loan from a line of credit for Ps. 5,000,000, bearing interest at a floating rate linked to the TIIE, which matures on September 30, 2023. |
| w. | On October 16, 2015, Petróleos Mexicanos obtained a loan from a line of credit for Ps. 5,000,000, bearing interest at a floating rate linked to the TIIE, which matures on October 16, 2022. |
| x. | On November 6, 2015, Petróleos Mexicanos issued € 100,000 of notes due 2030, which bear interest at a fixed rate of 4.625%. The notes are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services. |
| y. | On December 8, 2015, Petróleos Mexicanos issued CHF 600,000 of its 1.5% Notes due 2020 under its U.S. $52,000,000 Medium-Term Notes Program, Series C. The notes are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services. |
| z. | On December 15, 2015, Petróleos Mexicanos obtained a loan for Ps. 10,000,000, bearing interest at a floating rate linked to the TIIE, which matures on March 15, 2016. |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| aa. | On December 21, 2015, Petróleos Mexicanos entered into a new bilateral revolving credit facility in the amount of Ps. 3,500,000; the facility bears interest at a floating rate linked to the TTIE of 28 days, plus 60 base points and matures on December 21, 2018. This facility will replace the revolving credit facility that expired on December 23, 2015. |
| bb. | On December 29, 2015, Petróleos Mexicanos obtained a loan for Ps. 4,400,000, bearing interest at a floating rate linked to the TIIE, which matures on March 29, 2016. |
| cc. | In addition, during the period from January 1, 2015 to December 21, 2015, Petróleos Mexicanos made another disbursement totaling U.S. $132,700. |
| dd. | From January 1, 2015 to December 31, 2015, P.M.I. Holdings B.V. obtained U.S. $1,540,000 in financing from its revolving credit line and repaid U.S. $2,040,000. As of December 31, 2014, the outstanding amount under this revolving credit line was US$500,000. As of December 31, 2015 there were not pending payments. |
As of December 31, 2015, Petróleos Mexicanos had U.S. $4,500,000 and Ps. 23,500,000 in lines of credit in order to ensure liquidity, of which U.S. $130,000 and Ps. 9,100,000, respectively, remain available.
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.
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, 2016 and as of the date of the issuance of these consolidated financial statements, PEMEX was in compliance with the covenants described above.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
As of December 31, 2016, long-term debt was as follows:
| | | | | | | | | | | | | | | | | | | | | | Pesos | | | Foreign currency | | | | Rate of interest(1) | | Maturity | | | (thousands) | | | (thousands) | | U.S. dollars | | | | | | | | | | | | | | | Bonds | | Fixed from 3.125% to 9.5% and LIBOR plus 0.35% to 2.02% | | | Various to 2046 | | | Ps. | 1,131,389,914 | | | U.S. $ | 54,751,738 | | Purchasing loans | | LIBOR plus 0.8% to 0.85% | | | Various to 2016 | | | | 2,479,680 | | | | 120,000 | | Project financing | | Fixed from 2.35% to 5.45% and LIBOR plus 0.01% to 1.71% | | | Various to 2021 | | | | 84,711,684 | | | | 4,099,481 | | Direct loans | | Fixed at 5.44% and LIBOR plus 1.0% | | | Various to 2018 | | | | 33,100,587 | | | | 1,601,848 | | Syndicated loans | | LIBOR plus 0.85% | | | Various to 2020 | | | | 41,056,571 | | | | 1,986,865 | | Bank loans | | Fixed from 3.5% to 5.28% | | | Various to 2023 | | | | 4,339,826 | | | | 210,019 | | Financial leases | | Fixed from 0.38% to 1.99% | | | Various to 2025 | | | | 9,559,060 | | | | 462,595 | | Lease-back (See Financing activities for 2016(l)and m))(4) | | Fixed from 0.45% to 0.7% | | | Various to 2036 | | | | 35,513,114 | | | | 1,718,598 | | | | | | | | | | | | | | | | | Total financing in U.S. dollars | | | | | | | | | 1,342,150,436 | | | U.S. $ | 64,951,144 | | | | | | | | | | | | | | | | | Euros | | | | | | | | | | | | | | | Bonds | | Fixed from 3.125% to 6.375% | | | Various to 2030 | | | | 196,317,016 | | | € | 9,058,388 | | Project financing | | Fixed at 2% | | | Various to 2016 | | | | 10,836,200 | | | | 500,000 | | | | | | | | | | | | | | | | | Total financing in Euros | | | | | | | | | 207,153,216 | | | € | 9,558,388 | | | | | | | | | | | | | | | | | Japanese yen: | | | | | | | | | | | | | | | Bonds | | Fixed at 3.5% and LIBOR yen plus 0.75% | | | Various to 2023 | | | | 30,800,746 | | | ¥ | 173,809,300 | | Project financing | | Fixed at 1.56% and Prime Rate yen plus 2.56% | | | Various to 2017 | | | | 517,286 | | | | 2,919,056 | | | | | | | | | | | | | | | | | Total financing in yen | | | | | | | | | 31,318,032 | | | ¥ | 176,728,356 | | | | | | | | | | | | | | | | | Pesos | | | | | | | | | | | | | | | Certificados bursátiles | | Mexican Government Treasury Certificates (“Cetes”) , TIIE(1)less 0.06% to 0.35%, and fixed at 7.19% to 9.15% | | | Various to 2026 | | | Ps. | 173,151,985 | | | | | | Direct loans | | Fixed at 6.55% and TIIE plus 0.55% to 1.25% | | | Various to 2025 | | | | 45,563,848 | | | | | | Syndicated loans | | TIIE plus 0.95 | | | Various to 2025 | | | | 38,538,961 | | | | | | Revolved loans | | TIIE plus 0.55 | | | To 2016 | | | | 20,000,000 | | | | | | | | | | | | | | | | | | | | | Total financing in pesos | | | | | | | | Ps. | 277,254,794 | | | | | | | | | | | | | | | | | | | | | Unidades de Inversión Certificados bursátiles | | | | | | | | | | | | | | | Certificados bursátiles | | Zero rate and Fixed at 3.02% to 5.23% | | | Various to 2035 | | | | 53,703,421 | | | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | | | | | | | | Pesos | | | Foreign currency | | | | Rate of interest(1) | | Maturity | | | (thousands) | | | (thousands) | | Other currencies: | | | | | | | | | | | | | | | Bonds | | Fixed from 2.5% to 8.25% | | | Various to 2022 | | | | 36,786,665 | | | | | | | | | | | | | | | | | | | | | Total principal in pesos(2) | | | | | | | | | 1,948,366,564 | | | | | | Plus: accrued interest | | | | | | | | | 27,815,467 | | | | | | Notes payable to contractors(3) | | | | | | | | | 6,988,699 | | | | | | | | | | | | | | | | | | | | | Total principal and interest | | | | | | | | | 1,983,170,730 | | | | | | Less: short-term maturities | | | | | | | | | 144,169,619 | | | | | | Current portion of notes payable to contractors(3) | | | | | | | | | 4,181,102 | | | | | | Accrued interest | | | | | | | | | 27,815,467 | | | | | | | | | | | | | | | | | | | | | Total short-term debt and current portion of long-term debt | | | | | | | | | 176,166,188 | | | | | | | | | | | | | | | | | | | | | Long-term debt (Note 16(c)) | | | | | | | | | Ps. 1,807,004,542 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Rate of interest(1) | | Maturity | | | Peso (thousands) | | | Foreign currency (thousands) | | U.S. dollars | | | | | | | | | | | | | | | Bonds | | Fixed from 3.125 % to 9.5% and LIBOR plus 0.35% to 2.02% | | | Various to 2046 | | | | Ps. 727,841,896 | | | U.S. $ | 42,300,404 | | Purchasing loans | | LIBOR plus 0.8% to 0.85% | | | Various to 2016 | | | | 75,192,405 | | | | 4,370,000 | | Project financing | | Fixed from 2.35% to 5.45% and LIBOR plus .01% to 1.71% | | | Various to 2021 | | | | 81,621,345 | | | | 4,743,634 | | Direct loans | | Fixed at 5.44% and LIBOR plus 1.0% | | | Various to 2018 | | | | 15,255,958 | | | | 886,639 | | Syndicated loans | | LIBOR plus 0.85% | | | Various to 2020 | | | | 34,158,029 | | | | 1,985,182 | | Bank loans | | Fixed from 3.5% to 5.28% | | | Various to 2023 | | | | 4,200,888 | | | | 244,145 | | Financial leases | | Fixed from 0.38% to 5.28% | | | Various to 2023 | | | | 9,214,921 | | | | 535,549 | | | | | | | | | | | | | | | | | Total financing in U.S. dollars | | | | | | | | | 947,485,442 | | | U.S. $ | 55,065,553 | | | | | | | | | | | | | | | | | Euros | | | | | | | | | | | | | | | Bonds | | Fixed from 3.125% to 6.375% | | | Various to 2030 | | | | 143,993,293 | | | € | 7,653,433 | | Project financing | | Fixed at 2% | | | Various to 2016 | | | | 24 | | | | 1 | | | | | | | | | | | | | | | | | Total financing in Euros | | | | | | | | | 143,993,317 | | | € | 7,653,434 | | | | | | | | | | | | | | | | | Japanese yen: | | | | | | | | | | | | | | | Bonds | | Fixed at 3.5% and LIBOR yen plus 0.75% | | | Various to 2023 | | | | 13,432,600 | | | ¥ | 94,000,000 | | Project financing | | Fixed at 1.56% and Prime Rate yen plus 2.56% | | | Various to 2017 | | | | | | | | | | | | | | | | | | | 1,251,426 | | | | 8,757,358 | | | | | | | | | | | | | | | | | Total financing in yen | | | | | | | | | 14,684,026 | | | ¥ | 102,757,358 | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | | | | | | Rate of interest(1)
| | Maturity
| | Pesos
(thousands) | | | Foreign
currency
(thousands) | | Pesos
| | | | | | | | | | | | | Certificados bursátiles
| | Mexican Federal Treasury Certificates (“Cetes”) , TIIE(1) less 0.06% to 0.35%, and fixed at 7.19% to 9.15% | | Various to 2026 | | | Ps. 185,777,844 | | | | | | Direct loans
| | Fixed at 6.55% and TIIE plus 0.55% to 1.25% | | Various to 2025 | | | 38,485,205 | | | | | | Syndicated loans
| | TIIE plus 0.95 | | Various to 2025 | | | 43,437,901 | | | | | | Revolved loans
| | TIIE plus 0.55 | | To 2016 | | | 14,400,000 | | | | | | | 1,738,249,903 | | | | | | | | | | | | | | | | | | | |
As of December 31, 2018, long-term debt was as follows: | | | | | | | | | | | | | | | Rate of interest(1) | | Maturity | | Pesos | | | Foreign currency | | U.S. dollars | | | | | | | | | | | | | Bonds | | Fixed from 1.7% to 9.5% and LIBOR plus 0.35% to 3.65% | | Various to 2048 | | Ps. | 1,163,861,026 | | | U.S. $ | 59,130,566 | | Purchasing loans | | LIBOR plus 0.85% | | Various to 2019 | | | 5,904,870 | | | | 300,000 | | Project financing | | Fixed from 2.45% to 3.81% and LIBOR plus 0.24% to 1.75% | | Various to 2028 | | | 52,159,977 | | | | 2,650,015 | | Direct loans | | Fixed from 3.31% to 5.25% and LIBOR plus 1.65% to 1.75% | | Various to 2031 | | | 51,365,998 | | | | 2,609,676 | | Syndicated loans | | LIBOR plus 0.85% | | Various to 2020 | | | 39,164,611 | | | | 1,989,778 | | Bank loans | | LIBOR plus 1.19% to 3.50% | | Various to 2023 | | | 2,704,412 | | | | 137,399 | | Financial leases | | Fixed from 4.44% to 4.54% | | Various to 2025 | | | 6,053,280 | | | | 307,540 | | Project financing | | Fixed from 5.4% to 8.4% | | Various to 2036 | | | 30,903,650 | | | | 1,570,076 | | | | | | | | | | | | | | | Total financing in U.S. dollars | | | | | | | 1,352,117,824 | | | U.S. $ | 68,695,050 | | | | | | | | | | | | | | | Euros | | | | | | | | | | | | | Bonds | | Fixed from 1.875% to 5.5% | | Various to 2030 | | | 334,044,298 | | | € | 14,842,851 | | Financial leases | | Fixed to 11.26% | | Various to 2022 | | | 222 | | | | 10 | | | | | | | | | | | | | | | Direct loans | | Fixed to 5.11% | | Various to 2023 | | | 11,255,352 | | | | 500,118 | | Total financing in Euros | | | | | | | 345,299,872 | | | € | 15,342,979 | | | | | | | | | | | | | | | Japanese yen: | | | | | | | | | | | | | Bonds | | Fixed from 0.54% to 3.5% and LIBOR yen plus 0.75% | | Various to 2026 | | | 31,171,326 | | | ¥ | 173,850,117 | | | | | | | | | | | | | | |
Total financing in pesos
| | | | | | | Ps. 282,100,950 | | | | | | Unidades de Inversión Certificados bursátiles
| | | | | | | | | | | | | Certificados bursátiles
| | Zero rate and Fixed at 3.02% to 5.23% | | Various to 2035 | | | 51,964,883 | | | | | | | | | | | | | | | Rate of interest(1) | | Maturity | | Pesos | | | Foreign currency | | Pesos | | | | | | | | | | | | | Certificados bursátiles | | Mexican Government Treasury Certificates (“Cetes”) , TIIE(1) less 0.06% to 1.35%, and fixed at 7.19% to 9.1% | | Various to 2026 | | Ps. | 148,090,688 | | | | | | Direct loans | | Fixed at 6.55% and TIIE plus 0.50% to 4.0% | | Various to 2029 | | | 32,309,858 | | | | | | Syndicated loans | | TIIE plus 0.95% | | Various to 2025 | | | 28,925,329 | | | | | | | | | | | | | | | | | | | Total financing in pesos | | | | | | Ps. | 209,325,875 | | | | | | Unidades de Inversión Certificados bursátiles | | | | | | | | | | | | | Certificados bursátiles | | Zero rate and Fixed at 3.02% to 5.23% | | Various to 2035 | | | 59,727,769 | | | | | | | | | | | | | | | | | | | Other currencies: | | | | | | | | | | | | | Bonds | | Fixed from 1.5% to 8.25% | | Various to 2025 | | | 48,192,756 | | | | | | | | | | | | | | | | | | | Total principal in pesos(2) | | | | | 2,045,835,422 | | | | | | Plus: accrued interest | | | | | | | 33,432,631 | | | | | | Notes payable to contractors(3) | | | | | 3,018,063 | | | | | | | | | | | | | | | | | | | Total principal and interest | | | | | 2,082,286,116 | | | | | | Less: short-term maturities | | | | | 154,191,754 | | | | | | Short-term portion of financing lease | | | | | 2,490,963 | | | | | | Current portion of notes payable to contractors(3) | | | | | 1,680,361 | | | | | | Accrued interest | | | | | | | 33,432,631 | | | | | | | | | | | | | | | | | | | Total short-term debt and current portion of long-term debt | | | | | 191,795,709 | | | | | | | | | | | | | | | | | | | Long-term debt | | | | | | Ps. | 1,890,490,407 | | | | | | | | | | | | | | | | | | | Other currencies:
| | | | | | | | | | | | | Bonds
| | Fixed from 2.5% to 8.25% | | Various to 2022 | | | 26,357,327 | | | | | | | | | | | | |
The following table presents the roll-forward of total debt of PEMEX for each of the year ended December 31, 2019 and 2018, which includes short and long-term debt: | | | | | | | | | | | 2019(i) | | | 2018(i) | | Changes in total debt: | | | | | | | | | At the beginning of the year | | Ps. | 2,082,286,116 | | | Ps. | 2,037,875,071 | | Transfers to lease liabilities | | | (6,053,280 | ) | | | — | | Loans obtained - financing institutions | | | 1,167,834,946 | | | | 899,769,012 | | Debt payments | | | (1,185,042,283 | ) | | | (841,033,392 | ) | Accrued interest | | | 128,061,187 | | | | 120,727,022 | | Interest paid | | | (127,945,203 | ) | | | (115,289,389 | ) | Foreign exchange | | | (75,967,395 | ) | | | (19,762,208 | ) | | | | | | | | | | At the end of the year | | Ps. | 1,983,174,088 | | | Ps. | 2,082,286,116 | | | | | | | | | | |
(i) | These amounts include accounts payable by Financed Public Works Contracts (“FPWC”) (formerly known as Multiple Services Contracts), which do not generate cash flows. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 | | | 2021 | | | 2022 | | | 2023 | | | 2024 | | | 2025 and thereafter | | | Total | | Maturity of the total principal outstanding and accrued interest as of December 31, 2019, for each of the years ending December 31. | | Ps. | 244,924,185 | | | | 123,198,628 | | | | 112,871,443 | | | | 125,320,439 | | | | 171,955,593 | | | | 1,204,903,800 | | | Ps. | 1,983,174,088 | |
| | | | (1) | As of December 31, 2019 and 2018, interest rates were as follows: 3 month LIBOR of 1.90838% and 2.80763%, respectively; 6 month LIBOR of 1.91213% and 2.875630%, respectively; TIIE rate of 7.5555% and 8.5897%, respectively, for 28 days; TIIE rate of 7.4465% and 8.6375%, respectively, for 91 days. |
Total principal in pesos(2)
| | | | | | | 1,466,585,945 | | | | | Includes financing from foreign banks of Ps. 1,648,779,936 and Ps. 1,746,196,819, as of December 31, 2019 and 2018, respectively. |
Plus: accrued interest
| | | | | | | 18,488,522 | | | | (3) | The total amounts of notes payable to contractors as of December 31, 2019 and 2018, current and long-term, are as follows: | Notes payable to contractors(3)
| | | | | | | 8,307,368 | | | | | | | | | | | | |
| | | | | | | | | | | 2019 | | | 2018 | | Total notes payable to contractors(a) (b) | | Ps. | 2,040,446 | | | Ps. | 3,018,063 | | Less: current portion of notes payable to contractors | | | 1,246,854 | | | | 1,680,361 | | | | | | | | | | | Notes payable to contractors (long-term) | | Ps. | 793,592 | | | Ps. | 1,337,702 | | | | | | | | | | |
(a) | PEMEX has entered into FPWCs pursuant to which the hydrocarbons and construction in progress are property of Pemex Exploration and Production. Pursuant to the FPWC, the contractors manage the work in progress, classified as development, infrastructure and maintenance. As of December 31, 2019 and 2018, PEMEX had an outstanding amount payable of Ps. 755,860 and Ps. 1,153,108, respectively. |
(b) | During 2007, PemexExploration and Production contracted for the purchase of a Floating Production Storage and Offloading (“FPSO”) vessel. The investment in the vessel totaled U.S. $723,575. As of December 31, 2019 and 2018, the outstanding balances owed to the contractor were Ps. 1,284,587 (U.S. $68,165) and Ps. 1,864,955 (U.S. $94,751), respectively. In accordance with the contract, the estimated future payments are as follows: |
| | | | | Year | | Amount | | 2020 | | U. | S. $ 29,478 | | 2021 | | | 25,267 | | 2022 | | | 16,844 | | Total | | | 71,589 | | | | | | | Less accrued interest | | | 3,424 | | | | | 68,165 | | | | | | |
(4) | As of December 31, 2019 and 2018, PEMEX used the following exchange rates to translate the outstanding balances in foreign currencies to pesos in the statement of financial position: |
| | | | | | | | | | | 2019 | | | 2018 | | U.S. dollar | | Ps. | 18.8452 | | | Ps. | 19.6829 | | Japanese yen | | | 0.1734 | | | | 0.1793 | | Pounds sterling | | | 24.9586 | | | | 25.0878 | | Euro | | | 21.1537 | | | | 22.5054 | | Swiss francs | | | 19.4596 | | | | 19.9762 | | Canadian dollar | | | 14.5315 | | | | 14.4138 | | Australian dollar | | | 13.2435 | | | | 13.8617 | |
| | | NOTE 17. | LEASES | Total principal and interest
|
PEMEX leases plants, transportation and storage equipment, port facilities, buildings and land. Leases generally run for a period of 1 to 20 years, in some cases with an option to renew the lease after that date. Some lease payments are renegotiated every five years to reflect that the rent payments are market compliant. Some of the leases provide for additional rental payments that are based on changes in local price indexes. For certain leases, PEMEX has restrictions to enter into a sublease agreement. Plants, transport and storage equipment, port facilities, buildings and land leases were entered into in previous years as service, transportation and building leases. Previously, these leases were classified as operating leases under IAS 17. PEMEX has rights of use assets for equipment whose contractual terms are from one to three years. These leases are short-term and / orlow-value item leases. PEMEX has decided not to recognize theright-of-use assets and lease liabilities for these leases. Lease information where PEMEX is a lessee is presented as follows: | | | | | | 1,493,381,835 | | | | | | Less: short-term maturities
| | | | | | | 169,342,715 | | | | | | Current portion of notes payable to contractors(3)
| | | | | | | 4,677,431 | | | | | | Accrued interest
| | | | | | | 18,488,522 | | | | | | | | | | | | | | | | | | | Total short-term debt and current portion of long-term debt
| | | | | | | 192,508,668 | | | | | | | | | | | | | | | | | | | Long-term debt (Note 16(c))
| | | | | | | Ps. 1,300,873,167 | | | | | | | | i. | Rights of use assets are as follow: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Transport and storage equipment | | | Plants | | | Drilling equipment(1) | | | Rights of way | | | Port facilities | | | Buildings | | | Lands | | | Total | | Balance at the beginning of the year | | Ps. | 40,029,595 | | | | 24,099,662 | | | | 6,223,655 | | | | 1,922,291 | | | | 371,348 | | | | 75,771 | | | | 38,258 | | | | 72,760,580 | | Depreciation for the year | | | (5,377,668 | ) | | | (1,854,894 | ) | | | (162,153 | ) | | | (86,343 | ) | | | (33,949 | ) | | | (16,015 | ) | | | (3,029 | ) | | | (7,534,050 | ) | Additions | | | 895,291 | | | | 3,448,691 | | | | — | | | | — | | | | 1,286,054 | | | | 5,456 | | | | — | | | | 5,635,492 | | Foreign Exchange effects | | | (43,709 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (43,709 | ) | Balance at the end of the year | | Ps. | 35,503,509 | | | | 25,693,459 | | | | 6,061,502 | | | | 1,835,949 | | | | 1,623,453 | | | | 65,212 | | | | 35,229 | | | | 70,818,313 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated useful life | | | 3 to 10 years | | | | 20 years | | | | 20 years | | | | 23 years | | | | 20 years | | | | 1 to 5 years | | | | 5 years | | | | | |
| ii. | Leases liabilities are as follows: |
| | | | | | | Total | | Lease liabilities recognized at January 1, 2019 | | Ps. | 70,651,797 | | - New leases | | | 5,683,676 | | - Payments of principal and interests from leases | | | (10,709,421 | ) | - Accrued interest | | | 4,800,153 | | - Foreign exchange | | | (2,277,578 | ) | | | | | | Lease liabilities at December 31, 2019 | | Ps. | 68,148,627 | | | | | | |
The obligation recognized as of December 31, 2019, amounted to Ps. 68,148,627, of which Ps. 5,847,085 was recognized in current liabilities and Ps. 62,301,542 in non-current liabilities. | iii. | Amounts recognized in the statement of comprehensive Income |
| | | | | | | 2019 Total | | Depreciation of rights of use | | Ps. | 7,429,274 | | Interests from financial lease liabilities | | | 5,360,072 | | Expenses related to short-term leases | | | 58,701 | |
| | | | | | | Total | | 2018 Operating leases under IAS 17 | | | | |
Lease expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | 2021 | | | 2022 and thereafter | | | Total | | Maturity of the total principal outstanding and accrued interest as of December 31, 2016, for each of the years ending December 31. | | | Ps.176,166,188 | | | | Ps.127,349,970 | | | | Ps.162,209,245 | | | | Ps.199,534,891 | | | | Ps.147,813,212 | | | | Ps.1,170,097,224 | | | | Ps.1,983,170,730 | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | 2016(i) | | | 2015(i) | | Changes in total debt: | | | | | | | | | At the beginning of the year | | | Ps.1,493,381,835 | | | | Ps.1,143,250,503 | | Loans obtained—financing institutions | | | 829,579,084 | | | | 378,971,078 | | Loans obtained—financing lease | | | 21,924,053 | | | | 7,066,052 | | Debt payments | | | (613,377,146 | ) | | | (191,318,841 | ) | Accrued interest | | | 98,847,751 | | | | 67,773,593 | | Interest paid | | | (88,757,428 | ) | | | (62,737,150 | ) | Foreign exchange | | | 243,182,764 | | | | 152,676,257 | | Expenses related to debt issuance | | | (1,610,183 | ) | | | (2,299,657 | ) | | | | | | | | | | At the end of the year | | | Ps.1,983,170,730 | | | | Ps.1,493,381,835 | | | | | | | | | | |
| Ps. | 7,780,691 | | (i) | These amounts include accounts payable by Financed Public Works Contracts (“FPWC”) (formerly known as Multiple Services Contracts), which do not generate cash flows. |
| (1) | As of December 31, 2016 and 2015, interest rates were as follows: 3 month LIBOR of 0.99789% and 0.6127%, respectively; 6 month LIBOR of 1.31767% and 0.8461%, respectively; TIIE rate of 6.1066% and 3.55%, respectively, for 28 days; TIIE rate of 6.1875% and 3.58%, respectively, for 91 days; Cetes rate of 5.69% and 3.05%, respectively, for 28 days; Cetes rate of 5.96% and 3.29%, respectively, for 91 days; Cetes rate of 6.09% and 3.58%, respectively, for 182 days. |
| (2) | Includes financing from foreign banks of Ps. 1,600,968,832 and Ps. 1,123,936,915, as of December 31, 2016 and 2015, respectively. |
| (3) | The total amounts of notes payable to contractors as of December 31, 2016 and 2015, current and long-term, are as follows: |
| | | | | | | | | | | 2016 | | | 2015 | | Total notes payable to contractors(a)(b) | | | Ps.6,988,699 | | | | Ps.8,307,368 | | Less: current portion of notes payable to contractors | | | 4,181,102 | | | | 4,677,431 | | | | | | | | | | | Notes payable to contractors (long-term) | | | Ps.2,807,597 | | | | Ps.3,629,937 | | | | | | | | | | |
| (a) | PEMEX has entered into FPWCs pursuant to which the hydrocarbons and construction in progress are property of Pemex Exploration and Production. Pursuant to the FPWC, the contractors manage the work in progress, classified as development, infrastructure and maintenance. As of December 31, 2016 and 2015, PEMEX had an outstanding amount payable of Ps. 3,986,565 and Ps. 5,372,799, respectively. |
| iv. | PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES2018 Capital Leases
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| (b) | During 2007, Pemex-Exploration and Production contracted for the purchase of a Floating Production Storage and Offloading (“FPSO”) vessel. The investment in the vessel totaled U.S. $723,575. As of December 31, 2016 and 2015, the outstanding balances owing to the contractor |
As of December 31, 2018, assets acquired through these capital leases were Ps. 3,002,134 (U.S. $145,283) and Ps. 2,934,569 (U.S. $170,550), respectively. In accordance with the contract, the estimated future payments are as follows: |
| | | | | Year | | Amount | | 2017 | | U.S. $ | 25,267 | | 2018 | | | 25,267 | | 2019 | | | 25,267 | | 2020 | | | 25,267 | | 2021 | | | 25,267 | | 2022 and thereafter | | | 18,948 | | | | | | | Total | | U.S $ | 145,283 | | | | | | |
| (4) | PEMEX obtained financing through the sale and leaseback of certain infrastructure assets and a plant, which will require periodic payments through 2036. |
This transaction was recognized as a financing activity due to the fact that PEMEX retained all of the risks and benefits associated with ownership of the asset and substantially all of the operating rights to the assets.
The outstanding liability for this transaction is payable as follows:
| | | | | | | | | Years | | Pesos | | | U.S. dollars | | 2017 | | Ps. | 4,058,336 | | | U.S. $ | 196,396 | | 2018 | | | 4,058,336 | | | | 196,396 | | 2019 | | | 4,058,336 | | | | 196,396 | | 2020 | | | 4,058,336 | | | | 196,396 | | 2021 | | | 4,058,336 | | | | 196,396 | | 2022 and thereafter | | | 45,241,719 | | | | 2,189,399 | | | | | | | | | | | | | | 65,533,399 | | | | 3,171,379 | | Less: short-term unaccrued interest | | | 2,580,807 | | | | 124,893 | | Less: long-term unaccrued interest | | | 27,439,478 | | | | 1,327,888 | | | | | | | | | | | Total financing | | | 35,513,114 | | | | 1,718,598 | | Less: short-term portion of financing | | | 1,477,529 | | | | 71,503 | | | | | | | | | | | | | | Total long term financing | | | Ps. 34,035,585 | | | | U.S. $ 1,647,095 | | | | | | | | | | |
| | | | | | | 2018 | | Investment in drilling equipment | | Ps. | 7,963,262 | | Less accumulated depreciation | | | (886,946 | ) | | | | (5) | As of December 31, 2016 and 2015, PEMEX used the following exchange rates to translate the outstanding balances in foreign currencies to pesos in the statement of financial position: |
| | | | | | | | | | | 2016 | | | 2015 | | U.S. dollar | | | Ps. 20.6640 | | | | Ps. 17.2065 | | Japanese yen | | | 0.1772 | | | | 0.14290 | | Pounds sterling | | | 25.3051 | | | | 25.4983 | | Euro | | | 21.6724 | | | | 18.8084 | | Swiss francs | | | 20.1974 | | | | 17.3487 | | Canadian dollar | | | 15.2896 | | | | 12.4477 | | Australian dollar | | | 14.8842 | | | | 12.5538 | |
| | | | Ps. | 7,076,316 | | | | | PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| |
The liabilities relating to the assets listed above are payable in the years following December 31, 2018 as presented below: | | | | | | | | | Year | | Pesos | | | U.S. dollars | | 2019 | | Ps. | 1,255,105 | | | U.S. $ | 63,766 | | 2020 | | | 1,186,253 | | | | 60,268 | | 2021 | | | 1,186,253 | | | | 60,268 | | 2022 | | | 1,186,253 | | | | 60,268 | | 2023 | | | 1,186,253 | | | | 60,268 | | 2024 and thereafter | | | 892,218 | | | | 45,330 | | | | | | | | | | | | | | 6,892,335 | | | | 350,168 | | Less: short-term unaccrued interest | | | 251,768 | | | | 12,791 | | Less: long-term unaccrued interest | | | 587,287 | | | | 29,837 | | | | | | | | | | | Total capital leases | | | 6,053,280 | | | | 307,540 | | Less: current portion of leases (excluding interest) | | | 934,546 | | | | 47,480 | | | | | | | | | | | Total long-term capital leases | | Ps. | 5,118,734 | | | U.S. $ | 260,060 | | | | | | | | | | |
The interest expense from capital leases for the year ended December 31, 2018, was Ps. 301,449. Due to the adoption of IFRS 16, as of January 1, 2019, PEMEX recognizes the capital lease as rights of use and lease liability. NOTE 16. 18. | DERIVATIVE FINANCIAL INSTRUMENTS PEMEX faces market risk caused by the volatility of hydrocarbon prices, exchange rates and interest rates, credit risk associated with investments and financial derivatives, as well as liquidity risk. In order to monitor and manage these risks, PEMEX has approved general provisions relating to financial risk management, which are comprised of policies and guidelines that promote an integrated framework for risk management, regulate the use of derivative financial instruments (“DFIs”),
|
PEMEX faces market risk caused by the volatility of hydrocarbon prices, exchange rates and interest rates, credit risk associated with investments and financial derivatives, as well as liquidity risk. In order to monitor and manage these risks, PEMEX has approved general provisions relating to financial risk management, which are comprised of policies and guidelines that promote an integrated framework for risk management, regulate the use of DFIs, and guide the development of risk mitigation strategies. This regulatory framework establishes that DFIs should be used only for the purpose of mitigating financial risk. The use of DFIs for any other purpose must be approved in accordance with PEMEX’s current internal regulation. PEMEX has a Financial Risk Working Group (FRWG) which is a specialized working group with decision-making authority on financial risk exposure, financial risk mitigation schemes, and DFIs trading of Petróleos Mexicanos, the subsidiary entities, and where applicable, the subsidiary companies. Approved DFIs are mainly traded on the OTC (Over the Counter) market; however, exchange traded instruments may also be used. In the case of PMI Trading, DFIs are traded onCME-Clearport. The different types of DFIs that PEMEX trades are described below in the subsections corresponding to each risk type and as related to the applicable trading markets. One of PEMEX’s policies is to contribute minimizing the impact that unfavorable changes in financial risk factors have on its financial results by promoting an adequate balance between incoming cash flows from operations and outgoing cash flows related to its liabilities. As part of the regulatory framework for financial risk management, PEMEX has established the eligible counterparties with which it may trade DFIs and other financial instruments. In addition, certain PMI companies have implemented a regulatory framework for risk management with respect to its activities, which consists of policies, guidelines and procedures to manage the market risk associated with its commodity trading activities in accordance with industry best practices, such as: 1) the use of DFIs for financial risk mitigation purposes; 2) the segregation of duties; 3) valuation and monitoring mechanisms, such as the generation of a daily portfolio risk report, value at risk (“VaR”) computation; and 4) VaR limits, both at a global and business unit level and the implementation of stop loss mechanisms. Given that PEMEX’s outstanding DFIs have been entered into for risk mitigation purposes, particularly with economic hedging purposes, there is no need to establish and monitor market risk limits. For those portfolios with an open market risk exposure, PEMEX’s financial risk management regulatory framework establishes the implementation and monitoring of market risk metrics and limits (such as VaR, among others). PEMEX has also established credit guidelines for DFIs that Pemex Industrial Transformation offers to its domestic customers, which include the use of guarantees and credit lines. For exchange traded DFIs, PEMEX trades under the margin requirements of the corresponding exchange market, and therefore does not have internal policies for these DFIs. DFIs held with financial counterparties do not require collateral exchange clauses. Notwithstanding, PEMEX’s regulatory framework promotes credit risk mitigation strategies such as collateral exchange. PEMEX does not have an independent third party to verify compliance with these internal standards; however, PEMEX has internal control procedures that certify compliance with existing policies and guidelines. 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 December 31, 2019, approximately 15.3% of PEMEX’s total net debt outstanding (including DFIs) consisted of floating rate debt. Occasionally, for strategic reasons or in order to offset the expected inflows and outflows, PEMEX has entered into interest rate swaps. Under its interest rate swap agreements, PEMEX acquires the obligation to make payments based on a fixed interest rate and is entitled to receive floating interest rate payments based on LIBOR, TIIE or a rate referenced to or calculated from TIIE. As of December 31, 2019, Petróleos Mexicanos was a party to four interest rate swap agreements denominated in U.S. dollars for an aggregate notional amount of U.S. $1,178,750 at a weighted average fixed interest rate of 2.35% and a weighted average term of 5.3 years. Similarly, in order to eliminate the volatility associated with variable interest rates of long-term financing operations, PMI NASA has also executed four interest rate swap agreements denominated in U.S. dollars for an aggregate notional amount of U.S. $40,783, at a weighted average fixed interest rate of 4.17% and a weighted average term of 2.4 years. Moreover, PEMEX invests 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 exposure to market risk. IBOR reference rates transition As of 2022, as a result of the decision made by the Financial Stability Board (FSB), the Interbank Offered Rates (IBORs), such as the LIBOR in dollars or the EURIBOR in euros, will cease to be published and are expected to be replaced by alternative reference rates based on risk-free rates obtained from market operations. Therefore, PEMEX has identified and is reviewing contracts expiring after December 31, 2021, that could have an impact derived from the change in the aforementioned rates. To the date, PEMEX is monitoring the evolution of the IBORs transition in the market, to anticipate any negative impact that these changes could have. PEMEX has a reduced number of financial instruments referenced to floating rates in U.S. dollars and euros with maturity after December 2021. This portfolio is composed of debt instruments and DFI as shown below: | | | | | | | | | Notional Amounts | | Euros | | | U.S. $ | | (in thousands of each Currency) | | | | | | | Debt | | | (650,000 | ) | | | (5,424,910 | ) | DFI | | | | | | | | | Interest Rate Swaps | | | | | | | 733,750 | | Cross-currency Swaps | | | 650,000 | | | | (1,254,259 | ) | figures not audited | |
Once the alternative reference rates are defined, and therefore the new discount curves, PEMEX will be able to estimate the impact that such changes will have on financial instruments’ market value and financial cost. Most of PEMEX’s revenues are denominated in U.S. dollars, a significant amount of which is derived from exports of crude oil and petroleum products, which are priced and payable in U.S. dollars. Additionally, PEMEX’s revenues from domestic sales of gasoline and diesel net of IEPS Tax, tax duties, incentives, and other related taxes, as well as domestic sales of natural gas and its byproducts, LPG and petrochemicals, are referenced to international U.S. dollar-denominated prices. PEMEX’s expenses related to hydrocarbon duties are calculated based on international U.S. dollar-denominated prices and the cost of hydrocarbon imports that PEMEX acquires for resale in Mexico or use in its facilities are indexed to international U.S. dollar-denominated prices. By contrast, PEMEX’s capital expenditure and operating expenses are established in pesos. As a result of this cash flow structure, the depreciation of the peso against the U.S. dollar increases PEMEX’s financial balance. The appreciation of the peso relative to the U.S. dollar has the opposite effect. PEMEX manages this risk without the need for hedging instruments, because the impact on PEMEX’s revenues of fluctuations in the exchange rate between the U.S. dollar and the peso is offset in whole or in part by its impact on its obligations. PEMEX prioritizes debt issuances denominated in U.S. dollars; nonetheless, this is not always achievable, hencenon-U.S. dollar denominated debt issued in international currencies is hedged through DFIs to mitigate their exchange rate exposure, either by swapping it into U.S. dollars or through other derivative structures. The rest of the debt is denominated in pesos or in UDIs, and for the debt denominated in UDIs, it has been converted into pesos through DFIs in order to eliminate the inflationary risk exposure. As a consequence of the above, PEMEX’s debt issued in international currencies other than U.S. dollars has exchange rate risk mitigation strategies. PEMEX has selected strategies that further seek to reduce its cost of funding by leaving, in some cases, part of this exchange rate exposure unhedged when assessed as appropriate. The underlying currencies of PEMEX’s DFIs are the euro, Swiss franc, Japanese yen and pounds sterling against the U.S. dollar and UDIs against the peso. As of December 31, 2019, PEMEX did not enter into any DFIs, since no debt in currencies other than U.S. dollars or pesos was issued. Nonetheless, during 2019 PEMEX carried out the restructure of a cross-currency swap which had a recouponing provision. This DFI hedged the exchange rate exposure of a €725,000 debt with maturity in 2025. For this restructure PEMEX entered into, without cost, three options structures called “Seagull Options” to hedge the same notional risk as the original swap. These structures protect the short exposure in euros against an appreciation of the euro versus the U.S. dollar in a specific range and result in a benefit if the euro depreciates up to a certain exchange rate. Additionally, in order to mitigate the exchange rate risk derived from the coupons, PEMEX entered into only coupon swaps for the same notional amount. These allowed to eliminate the recouponing provision without cost. During 2018, PEMEX entered into various cross-currency swaps to hedge inflation risk arising from debt obligations denominated in UDIs for an aggregate notional amount of Ps. 6,844,866. Additionally, in 2018, PEMEX entered into, without cost, structures which are composed of a cross-currency swap and the sale of a call option, in order to hedge the notional risk of four debt issues in euros for an aggregate notional amount of € 3,150,000, and an issue of debt in Swiss francs for Fr. 365,000, guaranteeing complete protection up to a certain exchange rate and partial protection above that level. PEMEX recorded a total net foreign exchange gain of Ps. 86,930,388, Ps. 23,659,480 and Ps. 23,184,122, for the years ended December 31, 2019, 2018 and 2017, respectively; these amounts include the unrealized foreign exchange gain associated with debt of Ps. 75,967,395, Ps. 19,762,208 and Ps. 16,685,439 for the years ended December 31, 2019, 2018 and 2017, respectively. The appreciation of the peso during 2019, 2018 and 2017 caused a total net foreign exchange gain because a significant part of PEMEX’s debt, 88.87% (principal only) as of December 31, 2019 is denominated in foreign currency. Unrealized foreign exchange gains and losses do not impact PEMEX’s cash flows. Due to the cash flow structure described above, the depreciation of the peso relative to the U.S. dollar does not affect PEMEX’s ability to meet U.S. dollar-denominated financial obligations and improves PEMEX’s ability to meetpeso-denominated financial obligations. On the other hand, the appreciation of the peso relative to the U.S. dollar may increase PEMEX’s peso debt service costs on a U.S. dollar basis. Certain of the PMI companies face market risks generated by fluctuations in foreign exchange rates. In order to mitigate these risks, the boards of directors of several of these companies 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. Accordingly, some PMI companies will, from time to time, enter into DFIs in order to mitigate the risk associated with financing operations denominated in currencies other than their respective functional currency. 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 PEMEX subsidiaries 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, as well as from 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. | iii. | Hydrocarbon Price Risk |
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’s exports and domestic sales are directly or indirectly related to international hydrocarbon prices. Therefore, PEMEX is exposed to fluctuations in these prices. In terms of crude oil and natural gas, part of this risk is transferred to the Mexican Government under PEMEX’s current fiscal regime. PEMEX’s exposure to hydrocarbon prices is partly mitigated by natural hedges between its inflows and outflows. Additionally, PEMEX continuously evaluates the implementation of risk mitigation strategies, including those involving the use of DFIs, taking into consideration their operative and budgetary feasibility. In 2017, the Board of Directors of Petróleos Mexicanos approved the establishment of an Annual Oil Hedging Program. Since then, PEMEX has implemented hedging strategies to partially protect its cash flows from falls in the Mexican crude oil basket price below the one established in the Federal Revenue Law. During the second half of 2017, PEMEX entered into a crude oil hedge for fiscal year 2018, pursuant to which PEMEX hedged 440 thousand barrels per day from January to December of fiscal year 2018, for U.S. $449,898. Afterwards, during 2018, PEMEX entered into a crude oil hedge for fiscal year 2019, pursuant to which PEMEX hedged 320 thousand barrels per day for the period between December 2018 and December 2019, for U.S. $149,588. Finally, during 2019 PEMEX entered into a crude oil hedge for fiscal year 2020, pursuant to which PEMEX hedged 243 thousand barrels per day for the period between December 2019 and December 2020, for U.S. $178,268. In addition to supplying natural gas, Pemex Industrial Transformation 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. Until 2016, Pemex Industrial Transformation entered into DFIs with Mex Gas Supply, S.L. under the opposite position to those DFIs offered to its customers in order to mitigate the market risk it bears under such offered DFIs. Mex Gas Supply, S.L. then transferred the related price risk derived from the DFI position held with Pemex Industrial Transformation to international financial counterparties by entering into these opposite position DFIs with such parties. As of 2017, Pemex Industrial Transformation must enter into DFIs with Petróleos Mexicanos under the opposite position to those DFIs offered to its customers, thereby replacing Mex Gas Supply, S.L. However, as of December 31, 2019, no DFIs have been carried out under this mechanism. As of December 31, 2019, Pemex Industrial Transformation did not have any DFIs to report since all the DFIs of its portfolios expired on December 2, 2019. During 2017, 2018 and 2019 Pemex Industrial Transformation maintained a negligible or even null exposure to market risk due to the mechanism explained above. DFI portfolios have VaR and CaR limits in order to limit market risk exposure in case of entering into new trades. 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 mitigate this risk, thereby reducing the volatility of its financial results. | iv. | Market risk quantification |
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 theone-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, 2019, the VaRs of PEMEX’s investment portfolios were Ps. (17.90) for the Peso Treasury Portfolio, Ps. 0.00 for FOLAPE, and U.S. $ 0.00 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 MtM 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 10 basis points (bp) over the zero coupon rate curves. The 10bp parallel shift may be used to estimate in a simple manner the impact for proportional values to this shift and was selected in accordance with market practices for financial risk management. 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. Interest rate and currency DFIs Interest rate sensitivity to + 10 bp | | | | | | | | | | | | | | | | | | | Interbank Yield Curves | | | | | | PEMEX Curves | | Currency | | Sensitivity debt | | | Sensitivity DFIs | | | Sensitivity net | | | Sensitivity debt | | CHF | | | 2,539 | | | | (2,348 | ) | | | 192 | | | | 2,404 | | Euro | | | 86,317 | | | | (72,484 | ) | | | 13,833 | | | | 69,048 | | Pound Sterling | | | 5,059 | | | | (4,752 | ) | | | 307 | | | | 4,426 | | Yen | | | 6,488 | | | | (2,784 | ) | | | 3,704 | | | | 5,404 | | Peso | | | 24,523 | | | | 743 | | | | 25,266 | | | | 20,770 | | UDI | | | 16,463 | | | | (13,326 | ) | | | 3,137 | | | | 12,754 | | U.S. dollar | | | 1,113,697 | | | | 239,182 | | | | 1,352,879 | | | | 497,419 | | | | | | | | | figures not audited | |
In addition, PEMEX performed a retrospective sensitivity analysis of the impact on its financial statements for the years ended December 31, 2019, 2018 and 2017, in which PEMEX assumed either an increase or decrease of 25 basis points in the floating interest rates of its debt and corresponding hedges. At December 31, 2019, 2018 and 2017, had market interest rates been 25 basis points higher, with all other variables remaining constant, net loss for the year would have been Ps. 644,506, Ps. 649,339 and Ps. 704,011 higher for December 31, 2019, 2018 and 2017, respectively, primarily as a result of an increase in interest expense. Conversely, had market interest rates been 25 basis points lower, net loss for the year would have been Ps. 644,506, Ps. 649,339 and Ps. 704,011 lower at December 31, 2019, 2018 and 2017, respectively, primarily as a result of a decrease in interest expense. Exchange rate risk quantification The investments of PEMEX’s portfolios do not face foreign exchange rate 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, net income is exposed tomark-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. The 1% may be used to estimate in a simple manner the impact for proportional values to this increase and was selected in accordance with market practices for financial risk management. 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 theone-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 its 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. These DFIs along with the debt that they hedge are shown in the following table: Interest rate and currency DFIs Exchange rate sensitivity +1% and VaR 95% | | | | | | | | | | | | | | | | | | | | | | | Interbank Yield Curves | | | | | | PEMEX Curves | | | | Sensitivity | | | Sensitivity | | | Sensitivity | | | VaR 95% | | | Sensitivity | | Currency | | Debt | | | DFIs | | | Net | | | Net | | | Debt | | CHF | | | (12,121 | ) | | | 12,082 | | | | (39 | ) | | | (24 | ) | | | (11,763 | ) | Euro | | | (198,642 | ) | | | 140,860 | | | | (57,782 | ) | | | (29,721 | ) | | | (174,649 | ) | Pound Sterling | | | (12,636 | ) | | | 12,586 | | | | (50 | ) | | | (50 | ) | | | (11,533 | ) | Yen | | | (16,990 | ) | | | 9,021 | | | | (7,969 | ) | | | (4,756 | ) | | | (15,349 | ) | Peso | | | (119,360 | ) | | | (21,478 | ) | | | (140,838 | ) | | | (113,622 | ) | | | (111,585 | ) | UDI | | | (23,230 | ) | | | 23,230 | | | | 0 | | | | 0 | | | | (19,745 | ) | figures not audited | |
As shown in the table above, exchange rate risk derived from debt denominated in currencies other than pesos and U.S. dollars is almost fully hedged by DFIs. The exchange rate risk exposure to the Swiss franc, euro, pound sterling and Japanese yen is a result of the delta of the structures described above (Seagull Options and Calls), and considering the current exchange rate levels, represents a lower funding cost than the hedging strategies carried out through swaps. In addition, PEMEX performed a retrospective sensitivity analysis of the impact on its financial statements of the years ended December 31, 2019, 2018 and 2017, in which PEMEX 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, 2019, 2018 and 2017, had the peso depreciated against the U.S. dollar by 10% with other variables remaining constant, net income would have been Ps.180,408, Ps.192,025 and Ps. 149,669 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.180,408, Ps. 192,025 and Ps. 149,669, respectively, primarily as a result of the decrease in exchange rate losses. Hydrocarbon price risk quantification Pemex Industrial Transformation 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, 2019, Pemex Industrial Transformation’s natural gas DFI portfolios had no market risk exposure. Open market risk exposure would be measured using the20-day Delta-Gamma VaR methodology, with a confidence level of 95%, based on 500 daily observations; VaR and CaR would be monitored and mitigated bypre-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 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 U.S. $(15,016) as of December 31, 2019. This VaR was calculated using the historical method with a 99% confidence level,two-year history and aone-day horizon. The minimum VaR recorded on the year was U.S. $(4,177) (registered on January 29, 2019) and the maximum VaR recorded on the year was U.S. $(20,821) (registered on August 2, 2019). As of December 31, 2018, the global VaR was U.S. $(8,687). The quantification of crude oil price risk is carried out by using theone-day horizon historical VaR, with a confidence level of 95%, over a period of one year. As of December 31, 2019, this was U.S.$ (11,361). When the fair value of a DFI is favorable to PEMEX, PEMEX faces the risk that the counterparty will not be able to meet its obligations. PEMEX monitors its counterparties’ creditworthiness and calculates the credit risk exposure for its DFIs. As a risk mitigation strategy, PEMEX only enters into DFIs with major financial institutions with a minimum credit rating ofBBB-. These ratings are issued and revised periodically by risk rating agencies. Furthermore, PEMEX seeks to maintain a diversified portfolio of counterparties. In order to estimate PEMEX’s credit risk exposure to each financial counterparty, the potential future exposure is calculated by projecting the risk factors used in the valuation of each DFI in order to estimate the MtM value for different periods, taking into account any credit risk mitigation provisions. 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 MtM exceeds the relevant threshold specified in the swap), thereby limiting the exposure to its counterparties to a specific threshold amount, as well as the counterparties’ exposure to PEMEX. The specified thresholds were reached in three cross-currency swaps during 2019, which were used to hedge the exchange rate exposure to the euro and to the pounds sterling, and in seven cross-currency swaps during 2018, which were used to hedge the exchange rate exposure to the euro and to the pounds sterling. This resulted in the cash settlement of such swaps and the resetting of swap terms to return theirmark-to-market value to zero. During 2019, PEMEX did not enter into any cross-currency swap with these characteristics. In addition, PEMEX has entered into long-term DFIs with mandatory early termination clauses (pursuant to which, at a given date and irrespective of the current MtM, the DFI will terminate and settle at the corresponding MtM, and PEMEX can either enter into a new DFI with the same counterparty or a new counterparty), which reduces the credit risk generated by the term of the DFI by bounding it to a specific date. As of December 31, 2019, PEMEX has entered into two Japanese yen Seagull Option structures, with early termination clauses in 2021. According to IFRS 13 “Fair Value Measurement,” the fair value or MtM 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 obligation. Due to the above, PEMEX applies the credit value adjustment (“CVA”) method to calculate the fair value of its DFIs. For each DFI, the CVA is calculated by determining the difference between the MtM and the estimated MtM adjusted for credit risk. In determining the credit risk, the CVA method takes into account the current market perception about the credit risk of both counterparties, using the following inputs: a) the MtM projection for each payment date based on forward yield curves; b) the implied default probability obtained from both, PEMEX and the counterparty’s credit default swaps, at each payment date; and c) the default recovery rates of each counterparty. The current and potential exposures, aggregated by credit rating, are as follows: Maximum Credit Exposure by term in Petróleos Mexicanos | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Rating | | Current | | | Less than 1 year | | | 1-3 years | | | 3-5 years | | | 5-7 years | | | 7-10 years | | | More than 10 years | | A+ | | | (72,209 | ) | | | 742,962 | | | | 854,567 | | | | 475,113 | | | | 339,170 | | | | 131,657 | | | | — | | A | | | (130,249 | ) | | | 522,461 | | | | 612,378 | | | | 578,755 | | | | 178,066 | | | | 165,637 | | | | — | | A- | | | (27,245 | ) | | | 136,227 | | | | 8,981 | | | | — | | | | — | | | | — | | | | — | | BBB+ | | | 30,782 | | | | 1,466,768 | | | | 2,061,585 | | | | 2,182,363 | | | | 2,260,625 | | | | 1,163,814 | | | | 628,498 | | BBB | | | 11,789 | | | | 17,647 | | | | 17,870 | | | | — | | | | — | | | | — | | | | — | | BBB- | | | (96,518 | ) | | | 132,334 | | | | 290,902 | | | | 266,888 | | | | 228,173 | | | | 164,372 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | Figures not audited | |
PEMEX also faces credit risk derived from its investments. As of December 31, 2019, the notional amounts of investments in domestic currency, organized by the credit ratings of the issuances, were as follows: | | | | | Credit rating of issuances* | | Notional amount | | mxAAA | | Ps. | 100,368 | | Figures not audited | |
* | Minimum S&P, Moody’s and Fitch credit rating in National Credit Rating Scale. |
The table above does not include domestic currency Mexican Government bonds since, given the current credit rating, the default probability in this currency is zero according to the default’s frequency matrices from rating agencies. Furthermore, by means of its credit guidelines for DFI operations, Pemex Industrial Transformation significantly reduces its credit risk exposure related to the DFIs. In order to qualify for these DFIs, Pemex Industrial Transformation’s customers must be party to a current natural gas supply contract and sign a domestic master derivative agreement. Additionally, beginning on 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 would be terminated, rights to collateral are exercised and, if the collateral was insufficient to cover the fair value, natural gas supply would be suspended until the payment is made. On August 20, 2014, certain amendments to the credit guidelines were enacted, which allowedPemex-Gas and Petrochemicals, and now Pemex Industrial Transformation, to offer to its clients with an adequate credit rating, based on an internal financial and credit assessment, DFIs with an exemption from collateral requirements up to certain amount through a credit line approved by the credit committee. Moreover, if the credit line is insufficient to cover each client’s exposure, the client is obligated to deposit collateral. If a client suffers an event of default, DFIs related to this client are terminated early and natural gas supply is suspended until the payment is made. As of December 31, 2019, Pemex Industrial Transformation had no DFIs since all the DFIs of its portfolios expired on December 2, 2019. As such, once the total settlement of the operations was carried out, the exempt credit lines expired and the guarantees deposited by the clients were entirely returned. PMI Trading’s credit risk associated with DFI transactions is mitigated through the use of futures and standardized instruments that are cleared throughCME-Clearport. PEMEX’s main internal source of liquidity comes from its operations. Additionally, through its debt planning and the purchase and sale of U.S. dollars, PEMEX currently preserves a cash balance at a level of liquidity in domestic currency and U.S. dollars that is considered adequate to cover its investment and operating expenses, as well as other payment obligations, such as those related to DFIs. In addition, as of December 31, 2019, PEMEX has acquired committed revolving credit lines in order to mitigate liquidity risk, two of which provide access to Ps. 28,000,000 and Ps. 9,000,000 with expiration dates in November 2022 and November 2023, respectively; and two others that each provide access to U.S. $1,950,000 and U.S. $5,500,000 with expiration dates in January 2021 and June 2024, respectively. Finally, the investment strategies of PEMEX’s portfolios are structured by selecting time horizons that consider each currency’s cash flow requirements in order to preserve liquidity. Certain PMI companies mitigate their liquidity risk through several mechanisms, the most important of which is the centralized treasury, which provides access to a syndicated credit line for up to U.S. $700,000 and cash surplus capacity in the custody of the centralized structure. In addition, certain PMI companies have access to bilateral credit lines from financial institutions for up to U.S. $743,000. These companies 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, 2019 and 2018. It should be noted that: For debt obligations, these tables present principal cash flow and the weighted average interest rates for fixed rate debt. For interest rate swaps, cross-currency swaps and currency options, 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 millions of British thermal unit (MMBtu), and fixed average and strike prices are presented in U.S. dollars per MMBtu. For crude oil, volumes are presented in millions of barrels, and fixed average and strike prices are presented in U.S. dollars per barrel. DFIs’ fair value includes CVA and is calculated based on market quotes obtained from market sources such as Bloomberg and Proveedor Integral de Precios, S.A. de C.V. (“PIP”). For PMI Trading, the prices used in commercial transactions and DFIs are published by reputable sources that are widely used in international markets, such asCME-NYMEX, Platts and Argus, among others. Fair value is calculated internally, either by discounting cash flows with the correspondingzero-coupon yield curve in the original currency, or through other standard methodologies commonly used in financial markets for specific instruments. For all instruments, the tables are based on the contract terms in order to determine the future cash flows that are categorized by expected maturity dates. Quantitative Disclosure of Debt Cash Flow Maturities as of December 31, 2019(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year of expected maturity date | | | | 2020 | | | 2021 | | | 2022 | | | 2023 | | | 2024 | | | 2025 Thereafter | | | Total Carrying Value | | | Fair Value | | Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Outstanding debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fixed rate (U.S. dollars) | | Ps. | 52,874,594 | | | Ps. | 36,474,941 | | | Ps. | 36,288,484 | | | Ps. | 51,814,555 | | | Ps. | 24,377,105 | | | Ps. | 959,097,000 | | | Ps. | 1,160,926,679 | | | Ps. | 1,233,260,685 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 6.2535 | % | | | | | Fixed rate (Japanese yen) | | | — | | | | — | | | | — | | | | 5,202,000 | | | | — | | | | 13,848,692 | | | | 19,050,692 | | | | 17,812,094 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 1.3483 | % | | | | | Fixed rate (pound sterling) | | | — | | | | — | | | | 8,725,102 | | | | — | | | | — | | | | 11,157,892 | | | | 19,882,994 | | | | 21,733,929 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 5.7247 | % | | | | | Fixed rate (pesos) | | | 10,009,595 | | | | 20,004,204 | | | | 1,999,293 | | | | — | | | | 57,381,081 | | | | 30,985,764 | | | | 120,379,937 | | | | 114,148,170 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 7.4867 | % | | | | | Fixed rate (UDIs) | | | 5,137,194 | | | | 4,183,481 | | | | — | | | | — | | | | — | | | | 32,067,846 | | | | 41,388,521 | | | | 37,209,163 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 4.0514 | % | | | | | Fixed rate (euros) | | | 27,490,652 | | | | 36,993,461 | | | | 33,752,122 | | | | 29,564,507 | | | | 26,321,684 | | | | 136,705,664 | | | | 290,828,090 | | | | 314,159,720 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 3.7095 | % | | | | | Fixed rate (Swiss francs) | | | 11,669,169 | | | | 2,920,578 | | | | — | | | | 7,081,249 | | | | — | | | | — | | | | 21,670,996 | | | | 22,167,273 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 1.6996 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total fixed rate debt | | | 107,181,204 | | | | 100,576,665 | | | | 80,765,001 | | | | 93,662,311 | | | | 108,079,870 | | | | 1,183,862,858 | | | | 1,674,127,909 | | | | 1,760,491,034 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable rate (U.S. dollars) | | | 37,129,938 | | | | 14,165,499 | | | | 23,671,360 | | | | 10,931,702 | | | | 53,275,137 | | | | 14,051,426 | | | | 153,225,062 | | | | 153,747,749 | | Variable rate (Japanese yen) | | | 11,097,600 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 11,097,600 | | | | 11,112,957 | | Variable rate (euros) | | | 983,647 | | | | — | | | | — | | | | 13,734,663 | | | | — | | | | — | | | | 14,718,310 | | | | 14,969,735 | | Variable rate (pesos) | | | 55,384,990 | | | | 8,456,465 | | | | 8,435,081 | | | | 6,991,763 | | | | 10,600,586 | | | | 6,989,516 | | | | 96,858,401 | | | | 96,135,647 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total variable rate debt | | | 104,596,175 | | | | 22,621,964 | | | | 32,106,441 | | | | 31,658,128 | | | | 63,875,723 | | | | 21,040,942 | | | | 275,899,373 | | | | 275,966,088 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total debt | | Ps. | 211,777,379 | | | Ps. | 123,198,629 | | | Ps. | 112,871,442 | | | Ps. | 125,320,439 | | | Ps. | 171,955,593 | | | Ps. | 1,204,903,800 | | | Ps. | 1,950,027,282 | | | Ps. | 2,036,457,122 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note: Numbers may not total due to rounding. (1) | The information in this table has been calculated using exchange rates at December 31, 2019 of: Ps. 18.8452 = U.S. $1.00; Ps. 0.1734 = 1.00 Japanese yen; Ps. 24.9586= 1.00 pound sterling; Ps. 6.399018 = 1.00 UDI; Ps. 21.1537 = 1.00 euro; and Ps. 19.4596= 1.00 Swiss franc. |
Quantitative Disclosure of Debt Cash Flow Maturities as of December 31, 2018(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year of expected maturity date | | | | 2019 | | | 2020 | | | 2021 | | | 2022 | | | 2023 | | | 2024 Thereafter | | | Total Carrying Value | | | Fair Value | | Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Outstanding debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fixed rate (U.S. dollars) | | Ps | 53,962,520 | | | Ps | 40,098,959 | | | Ps | 94,686,304 | | | Ps | 83,674,076 | | | Ps | 91,790,092 | | | Ps | 827,719,134 | | | Ps | 1,191,931,085 | | | Ps. | 1,084,252,622 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 5.8927 | % | | | | | Fixed rate (Japanese yen) | | | — | | | | — | | | | — | | | | — | | | | 5,379,000 | | | | 14,317,126 | | | | 19,696,126 | | | | 16,603,524 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 1.3484 | % | | | | | Fixed rate (pound sterling) | | | — | | | | — | | | | — | | | | 8,763,410 | | | | — | | | | 11,205,575 | | | | 19,968,985 | | | | 20,257,139 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 5.7248 | % | | | | | Fixed rate (pesos) | | | — | | | | 10,017,084 | | | | 20,257,747 | | | | 1,999,192 | | | | — | | | | 88,324,131 | | | | 120,598,154 | | | | 101,639,764 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 7.4872 | % | | | | | Fixed rate (UDIs) | | | 19,386,459 | | | | 4,999,710 | | | | 4,066,182 | | | | — | | | | — | | | | 31,275,418 | | | | 59,727,769 | | | | 51,079,974 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 2.7362 | % | | | | | Fixed rate (euros) | | | 21,466,509 | | | | 29,215,492 | | | | 39,343,306 | | | | 35,884,701 | | | | 31,437,421 | | | | 173,348,554 | | | | 330,695,983 | | | | 325,772,611 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 3.7123 | % | | | | | Fixed rate (Swiss francs) | | | 5,991,035 | | | | 11,966,770 | | | | 3,001,116 | | | | — | | | | 7,264,850 | | | | — | | | | 28,223,771 | | | | 27,916,889 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 1.8697 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total fixed rate debt | | | 100,806,523 | | | | 96,298,015 | | | | 161,354,655 | | | | 130,321,379 | | | | 135,871,363 | | | | 1,146,189,938 | | | | 1,770,841,873 | | | | 1,627,522,522 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable rate (U.S. dollars) | | | 23,231,281 | | | | 63,823,350 | | | | 14,517,807 | | | | 32,878,778 | | | | 11,136,784 | | | | 17,616,801 | | | | 163,204,801 | | | | 169,873,202 | | Variable rate (Japanese yen) | | | — | | | | 11,475,200 | | | | — | | | | — | | | | — | | | | — | | | | 11,475,200 | | | | 11,264,120 | | Variable rate (euros) | | | — | | | | — | | | | — | | | | — | | | | 14,601,014 | | | | — | | | | 14,601,014 | | | | 16,093,157 | | Variable rate (pesos) | | | 34,322,574 | | | | 18,352,215 | | | | 8,456,465 | | | | 8,407,405 | | | | 6,968,237 | | | | 12,220,826 | | | | 88,727,722 | | | | 88,624,217 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total variable rate debt | | | 57,553,855 | | | | 93,650,765 | | | | 22,974,272 | | | | 41,286,183 | | | | 32,706,035 | | | | 29,837,627 | | | | 278,008,737 | | | | 285,854,697 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total debt | | Ps. | 158,360,378 | | | Ps. | 189,948,780 | | | Ps. | 184,328,927 | | | Ps. | 171,607,562 | | | Ps. | 168,577,398 | | | Ps. | 1,176,027,565 | | | Ps. | 2,048,850,610 | | | Ps. | 1,913,377,218 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note: Numbers may not total due to rounding. | (1) | The information in this table has been calculated using exchange rates at December 31, 2018 of: Ps. 19.6829 = U.S. $1.00; Ps. 0.17930 = 1.00 Japanese yen; Ps. 25.0878 = 1.00 pound sterling; Ps. 6.226631 = 1.00 UDI; Ps. 22.5054 = 1.00 euro; and Ps. 19.9762 = 1.00 Swiss franc. |
Quantitative Disclosure of Cash Flow Maturities from Derivative Financial Instruments Held or Issued for Purposes Other than Trading as of December 31, 2019(1) (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year of expected maturity date | | | | | | | 2020 | | | 2021 | | | 2022 | | | 2023 | | | 2024 | | | 2025 Thereafter | | | Total Notional Amount | | | Fair Value (3) | | Hedging instruments(2) (4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate DFIs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate swaps (U.S. dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable to fixed | | Ps. | 4,505,751 | | | Ps. | 4,463,405 | | | Ps. | 4,352,614 | | | Ps. | 4,219,019 | | | Ps. | 3,133,015 | | | Ps. | 2,308,537 | | | Ps. | 22,982,341 | | | Ps. | (99,231 | ) | Average pay rate | | | 3.20 | % | | | 3.22 | % | | | 3.25 | % | | | 3.37 | % | | | 3.68 | % | | | 4.13 | % | | | n.a. | | | | n.a. | | Average receive rate | | | 3.00 | % | | | 2.80 | % | | | 2.94 | % | | | 3.17 | % | | | 3.67 | % | | | 4.36 | % | | | n.a. | | | | n.a. | | Currency DFIs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cross-currency swaps | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Receive euros/Pay U.S. dollars | | | 27,352,677 | | | | 35,146,769 | | | | 33,626,604 | | | | 43,975,261 | | | | 25,095,682 | | | | 141,792,559 | | | | 306,989,551 | | | | (6,129,828 | ) | Receive Japanese yen / Pay U.S. dollars | | | 12,419,108 | | | | — | | | | — | | | | 4,548,319 | | | | — | | | | — | | | | 16,967,427 | | | | (1,087,602 | ) | Receive pounds sterling / Pay U.S. dollars | | | — | | | | — | | | | 9,204,373 | | | | — | | | | — | | | | 11,149,951 | | | | 20,354,324 | | | | 516,780 | | Receive UDI/ Pay pesos | | | 7,292,520 | | | | 3,000,000 | | | | — | | | | — | | | | — | | | | 27,450,032 | | | | 37,742,553 | | | | 3,116,439 | | Receive Swiss francs/ Pay U.S. dollars | | | 10,999,144 | | | | 2,851,895 | | | | — | | | | 6,878,498 | | | | — | | | | — | | | | 20,729,537 | | | | 797,159 | | Currency Options | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Buy Put, Sell Put and Sell Call on Japanese yen | | | — | | | | — | | | | — | | | | — | | | | — | | | | 13,881,133 | | | | 13,881,133 | | | | 123,244 | | Buy Call, Sell Call and Sell Put on euros | | | — | | | | 36,978,146 | | | | — | | | | — | | | | 26,412,961 | | | | 41,732,479 | | | | 105,123,586 | | | | 360,731 | | Sell Call on pound sterling | | | — | | | | — | | | | — | | | | — | | | | — | | | | 11,242,387 | | | | 11,242,387 | | | | (81,137 | ) | Sell Call on Swiss francs | | | — | | | | — | | | | — | | | | 7,116,252 | | | | — | | | | — | | | | 7,116,252 | | | | (74,535 | ) | Sell Call on Euros | | | — | | | | — | | | | 12,678,221 | | | | 13,734,740 | | | | — | | | | 40,147,701 | | | | 66,560,662 | | | | (1,223,283 | ) |
N.A. = not applicable. Numbers may not total due to rounding. | (1) | The information in this table has been calculated using exchange rates at December 31, 2019 of: Ps. 18.8452= U.S. $1.00 and Ps. 21.1537 = 1.00 euro. |
| (2) | PEMEX’s management uses these DFIs to hedge market risk; however, these DFIs do not qualify for accounting purposes as hedges and are recorded in the financial statements as entered into for trading purposes. |
| (3) | Positive numbers represent a favorable fair value to PEMEX. |
| (4) | PMI’s risk management policies and procedures establish that DFIs should be used only for the purpose of mitigating financial risk. The use ofhedging purposes; however, DFIs are not recorded as hedges for any other purpose must be approved in accordance with PEMEX’s current internal regulation.accounting purposes. One of PEMEX’s policies is to contribute minimizing the impact that unfavorable changes in financial risk factors have on its financial results by promoting an adequate balance between expected incoming cash flows from operations and outgoing cash flows related to its liabilities.
In addition, certain PMI subsidiaries have implemented a regulatory framework for risk management with respect to its activities, which consists of policies, guidelines and procedures to manage the market risk associated with its commodity trading activities in accordance with industry best practices, such as: the use of DFIs for financial risk mitigation purposes; the segregation of duties; valuation and monitoring mechanisms, such as the generation of a daily portfolio risk report, value at risk (VaR) computation; and VaR limits, both at a global and business unit level and the implementation of stop loss mechanisms. In addition, PMI Trading also has its own risk management subcommittee which supervises the trading of DFIs.
|
Quantitative Disclosure of Cash Flow Maturities from Derivative Financial Instruments Held or Issued for Purposes Other than Trading as of December 31, 2018(1) (2) A. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year of expected maturity date | | | | | | | | | | 2019 | | | 2020 | | | 2021 | | | 2022 | | | 2023 | | | 2024 Thereafter | | | Total Notional Amount | | | Fair Value(3) | | Hedging instruments(2)(4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate DFIs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate swaps (U.S. dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable to fixed | | Ps. | 4,692,574 | | | Ps. | 4,706,039 | | | Ps. | 4,661,811 | | | Ps. | 4,546,095 | | | Ps. | 4,406,561 | | | Ps. | 5,683,437 | | | PS. | 28,696,517 | | | Ps. | 644,746 | | Average pay rate | | | 3.18 | % | | | 3.20 | % | | | 3.22 | % | | | 3.25 | % | | | 3.37 | % | | | 3.74 | % | | | N.A. | | | | N.A. | | Average receive rate | | | 4.22 | % | | | 4.07 | % | | | 3.94 | % | | | 4.08 | % | | | 4.40 | % | | | 5.25 | % | | | N.A. | | | | N.A. | | Currency DFIs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cross-currency swaps | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Receive euros/Pay U.S. dollars | | | 20,782,857 | | | | 28,568,548 | | | | 36,709,101 | | | | 35,121,361 | | | | 45,930,033 | | | | 175,091,781 | | | | 342,203,681 | | | | 5,495,541 | | Receive Japanese yen/ Pay U.S. dollars | | | — | | | | 12,971,158 | | | | — | | | | — | | | | 4,750,499 | | | | — | | | | 17,721,657 | | | | (1,112,629 | ) | Receive pounds sterling/ Pay U.S. dollars | | | — | | | | — | | | | — | | | | 9,819,995 | | | | — | | | | 11,645,585 | | | | 21,465,580 | | | | (297,318 | ) | Receive UDI/ Pay pesos | | | 23,740,341 | | | | 7,292,520 | | | | 3,000,000 | | | | — | | | | — | | | | 27,450,032 | | | | 61,482,893 | | | | (4,392,093 | ) | Receive Swiss francs/ Pay U.S. dollars | | | 6,466,978 | | | | 11,488,074 | | | | 2,978,666 | | | | — | | | | 7,184,259 | | | | — | | | | 28,117,977 | | | | 486,310 | | Currency Options | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Buy Put, Sell Put and Sell Call on Japanese yen | | | — | | | | — | | | | — | | | | — | | | | — | | | | 14,355,685 | | | | 14,355,685 | | | | 222,491 | | Buy Call, Sell Call and Sell Put on euros | | | — | | | | — | | | | 39,497,823 | | | | 13,542,111 | | | | 14,670,620 | | | | 99,308,812 | | | | 167,019,366 | | | | 165,458 | | Sell Call on pound sterling | | | — | | | | — | | | | — | | | | — | | | | — | | | | 11,296,695 | | | | 11,296,695 | | | | (232,636 | ) | Sell Call on Swiss francs | | | — | | | | — | | | | — | | | | — | | | | 7,315,424 | | | | — | | | | 7,315,424 | | | | (183,093 | ) |
N.A. = not applicable. Numbers may not total due to rounding. i. Interest rate risk
PEMEX is exposed to fluctuationsThe information in floating interest rate liabilities. PEMEX is exposed to U.S. dollar LIBOR and to Mexican peso TIIE. As ofthis table has been calculated using exchange rates at December 31, 2016, approximately 18.2% of PEMEX’s total net debt outstanding consisted of floating rate debt.
Occasionally, for strategic reasons or in order to offset the expected inflows and outflows, PEMEX has entered into interest rate swaps. Under its interest rate swap agreements, PEMEX acquires the obligation to make payments based on a fixed interest rate and is entitled to receive floating interest rate payments based on LIBOR, TIIE or a rate referenced to or calculated from TIIE.
As of December 31, 2016, PEMEX was a party to four interest rate swap agreements denominated in U.S. dollars for an aggregate notional amount of U.S. $1,846,250 at a weighted average fixed interest rate of 2.35% and a weighted average term of 8.27 years.
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 aggregate notional amount of U.S. $86,545, at a weighted average fixed interest rate of 4.17% and a weighted average term of 5.41 years.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Moreover, PEMEX invests 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 exposure to market risk.
ii. Exchange rate risk
A significant amount of PEMEX’s revenue 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 IEPS Tax, tax duties, incentives, and other related taxes, petrochemicals and natural gas and its byproducts are related to international U.S. dollar-denominated prices, except for domestic sales of liquefied petroleum gas (LPG), which are priced in pesos and represent less than 5% of PEMEX’s revenues.
PEMEX’s expenses related to hydrocarbon duties are calculated based on international U.S. dollar-denominated prices and the cost of hydrocarbon imports that PEMEX acquires for resale in Mexico or use in its facilities are indexed to international U.S. dollar-denominated prices. By contrast, PEMEX’s capital expenditure and operating expenses are established in pesos.
As a result of this cash flow structure, the depreciation of the peso against the U.S. dollar increases PEMEX’s financial balance. The appreciation of the peso relative to the U.S. dollar has the opposite effect. PEMEX manages this risk without the need for hedging instruments, because the impact on PEMEX’s revenues of fluctuations in the exchange rate between the U.S. dollar and the peso is offset in whole or in part by its impact on its obligations.
In order to favor the cash flow structure described above, most of PEMEX’s debt is issued in U.S. dollars or hedged through DFIs, either with swaps to convert the debt into U.S. dollars or through other DFIs, in order to mitigate the exchange rate risk exposure. The rest of the debt is denominated in pesos or in UDIs, where most of the debt denominated in UDIs has been converted into pesos through DFIs in order to eliminate the inflationary risk exposure.
As a consequence of the above, PEMEX debt issued in international currencies other than the U.S. dollar has exchange rate risk mitigation strategies. Through these strategies, PEMEX has further sought to reduce its cost of funding by leaving, in some cases, part of this exchange rate exposure unhedged when assessed appropriate.
The underlying currencies of PEMEX’s DFIs are the Euro, Swiss franc, Japanese yen, Pound Sterling and Australian dollar versus the U.S. dollar, and UDIs, versus the Mexican peso.
In 2016, PEMEX entered into various cross-currency swaps to hedge currency risk arising from debt obligations denominated in euros and Swiss francs for an aggregate notional amount of U.S. $3,459,236 and the inflation risk arising from debt denominated in UDIs, for an aggregate notional amount of2018 of: Ps. 1,077,101. During
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
2015, PEMEX entered into the same kind of instruments to hedge currency risk arising from debt obligations denominated in euros and Swiss francs, for an aggregate notional amount of U.S. $3,109,298 and the inflation risk arising from debt denominated in UDIs, for an aggregate notional amount of Ps. 9,706,932.
Most of PEMEX’s cross-currency swaps are plain vanilla except for one swap entered into in 2004 to hedge its exposure to euro, which expired in 2016. This swap was referred to as an “extinguishing swap” and was obtained in order to hedge long-term obligations. The main characteristic of extinguishing swaps was 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. This swap had a notional amount of U.S. $1,146,410.
Moreover, in 2016, PEMEX entered into, without cost, an options structure called the “Seagull Option” in order to cover the notional risk of a debt issue in Japanese yen for ¥80,000,000, keeping the coupons in the original currency (0.5% annual coupon rate). This structure protects the short exposure in Japanese yen against an appreciation of the Japanese yen versus the U.S. dollar from JPY 83.70 and up to JPY 75.00, and recognizes a benefit if the Japanese yen depreciates to an average of 117.39 JPY / USD.
PEMEX recorded a total net foreign exchange loss of Ps. 254,012,743 in 2016, as compared to a total net foreign exchange loss of Ps. 154,765,574 in 2015 and to a total net foreign exchange loss of Ps. 76,999,161 in 2014, which includes the unrealized foreign exchange loss associated with debt of Ps. 243,182,764, Ps. 152,554,454 and Ps. 78,884,717 for the years ended December 31, 2016, 2015 and 2014, respectively. The depreciation of the peso caused a total net foreign exchange loss because a significant part of PEMEX’s debt (83.0% as of December 31, 2016) is denominated in foreign currency. Unrealized foreign exchange losses and gains do not impact PEMEX’s cash flows. Due to the cash flow structure described above, the depreciation of the peso relative to the U.S. dollar does not affect PEMEX’s ability to meet U.S. dollar-denominated financial obligations and improves PEMEX’s ability to meetpeso-denominated financial obligations. On the other hand, the appreciation of the peso relative to the U.S. dollar may increase PEMEX’s peso debt service costs on a U.S. dollar basis. PEMEX’s foreign exchange loss in 2016 was due to the depreciation of the peso, from Ps. 17.206519.6829 = U.S. $1.00 on December 31, 2015 to Ps.20.6640and Ps. 22.5054 = U.S. $1.00 on December 31, 2016. PEMEX’s foreign exchange loss in 2015 was due to the depreciation of the peso, from Ps. 14.7180 = U.S. $1.00 on December 31, 2014 to Ps.17.2065 = U.S. $1.00 on December 31, 2015. PEMEX’s foreign exchange loss in 2014 was due to the depreciation of the peso, from Ps. 13.0765 = U.S. $1.00 on December 31, 2013 to Ps. 14.7180 = U.S. $1.00 on December 31, 2014.1.00 euro.
Certain PMI subsidiaries face market risks generated by fluctuations in foreign exchange rates. In order to mitigate these risks, the boards of directors of several of these companies 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. Accordingly, certain PMI subsidiaries 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.
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 PEMEX subsidiaries 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.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
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.
iii. Hydrocarbon Price Risk
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.
|
| (2) | PEMEX’s exports and domestic sales are directly or indirectly related to international hydrocarbon prices. Therefore, PEMEX is exposed to fluctuations inmanagement uses these prices. In terms of crude oil and natural gas, part of this risk is transferred to the Mexican Government under PEMEX’s current fiscal regime. PEMEX continuously evaluates the implementation of risk mitigation strategies, including those involving the use of DFIs while taking into account operational and economic constraints.
PEMEX’s exposure to crude oil prices is partly mitigated by natural hedges between its inflows and outflows. During 2016, as a result of the changes in the PEMEX’s fiscal regime, its sensitivity to crude oil prices decreased. Nonetheless, PEMEX has been working on a hedging strategy for the coming years in order to reduce its exposure to drops in crude oil price.
In 2015, PEMEX entered into various swaps in order to hedge the risk arising from the variations of the propane price of its imports. These DFIs were held over a percentage of the total imports volume with maturity dates in 2015. Although PEMEX entered into these contracts with economic hedging purposes, for accounting purposes,market risk; however, these DFIs do not qualify as hedges and were recorded as trading instruments in the financial statements. During 2016, PEMEX did not enter into any propane import price swaps.
In addition to supplying natural gas, Pemex Industrial Transformation 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 Industrial Transformation enters into DFIs with Mex Gas Supply, S.L. under the opposite position to those DFIs offered to its customers in order to mitigate the market risk it bears under such offered DFIs. Mex Gas Supply, S.L. then transfers the related price risk derived from the DFI position held with Pemex Industrial Transformation to international financial counterparties by entering into these opposite position DFIs with such parties. Through the above mechanism, Pemex Industrial Transformation maintains a negligible or even null exposure to market risk. These portfolios have VaR and Capital at Risk (“CaR”—An aggregation of Mark to Market “MtM” and Profit and Loss “P&L”) limits in order to limit market risk exposure.
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 mitigate this risk, thereby reducing the volatility of its financial results.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
iv. Risks relating to the portfolio of third-party shares
As of December 31, 2016 Petróleos Mexicanos does not hold any third party shares of companies that do not participate in financial markets and, therefore, does not hold any related DFIs. On May 2014, PEMEX held a synthetic long position on 67,969,767 shares of Repsol, with the objective of maintaining corporate and economic rights over these shares. PEMEX accomplished this by using a total return swap under which PEMEX paid variable amounts and received a total return on the Repsol shares. Under these DFIs, PEMEX was entitled to any capital gains associated with the Repsol shares and agreed to cover its counterparties for any capital losses relating to those shares in reference to an exercise price, as well as to make payments at a floating interest rate. On June 3, 2014, PEMEX made an early termination of its DFI. Following this termination, Petróleos Mexicanos no longer directly participates in Repsol.
Between July and September 2011, PEMEX acquired 57,204,240 shares of Repsol through its subsidiary PMI HBV. In order to protect this investment, PMI HBV entered into a structured product consisting of long put, short call and long call options with maturities in 2012, 2013 and 2014. The exposure to the exchange rate associated with the shares financing was covered by euro exchange rate forwards maturing in 2012, 2013 and 2014. All corresponding DFIs expired in 2012, 2013 and 2014, so there were no DFIs in place at the close of 2014. Although these DFIs were entered into with the purpose of hedging the exposure to the share price of Repsol, for accounting purposes, these DFIs do not qualify as hedges and were recorded as trading instruments in the financial statements.
As of December 31, 2016, PMI HBV owned 22,221,893 Repsol shares and HPE holds one for a total of 22,221,894 shares. These shares have no related DFIs.
v. Market risk quantification
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 theone-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, 2016, the VaR of PEMEX’s investment portfolios was Ps. (461.6) for the Peso Treasury Portfolio, Ps. (38.6) for the Fondo Laboral Pemex Portfolio (“FOLAPE”), Ps. (15.5) for the Fideicomiso de Cobertura Laboral y de Vivienda Portfolio (“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 MtM 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
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
portfolio to a parallel shift of 10 basis points (bp) over the zero coupon rate curves. The 10bp parallel shift may be used to estimate in a simple manner the impact for proportional values to this shift and was selected in accordance with market practices for financial risk management.
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.
INTEREST RATE and CURRENCY DFIs
| | | | | | | | | | | | | | | | | Interest rate sensitivity to + 10 bp | | | | Interbank Yield Curves | | | | | | | | Currency | | Sensitivity debt | | | Sensitivity DFIs | | | Sensitivity net | | | PEMEX Curves Sensitivity debt | | AUD | | | 36,676 | | | | (36,676 | ) | | | 0 | | | | 36,319 | | CHF | | | 4,446,080 | | | | (4,446,080 | ) | | | 0 | | | | 4,032,264 | | Euro | | | 67,026,628 | | | | (67,026,628 | ) | | | 0 | | | | 49,162,441 | | Pound Sterling | | | 2,869,215 | | | | (2,869,215 | ) | | | 0 | | | | 2,462,337 | | Yen | | | 9,642,639 | | | | (4,653,708 | ) | | | 4,988,931 | | | | 6,741,888 | | Peso | | | 47,171,321 | | | | 3,096,961 | | | | 50,268,282 | | | | 40,695,583 | | UDI | | | 17,737,545 | | | | (10,382,347 | ) | | | 7,355,198 | | | | 14,291,786 | | U.S. dollar | | | 729,563,673 | | | | 75,281,102 | | | | 804,844,774 | | | | 352,524,570 | | | | | | | | | | | | | Amounts in U.S. dollars | |
In addition, PEMEX performed a retrospective sensitivity analysis of the impact on its financial statements for the years ended December 31, 2016, 2015 and 2014, in which PEMEX assumed either an increase or decrease of 25 basis points in the floating interest rates of its debt and corresponding hedges.
At December 31, 2016, 2015 and 2014, had market interest rates been 25 basis points higher, with all other variables remaining constant, net income for the year would have been Ps. 841,024, Ps. 922,268 and Ps. 7,297,773 lower for December 31, 2016, 2015 and 2014, respectively, primarily as a result of an increase in interest expense. Conversely, had market interest rates been 25 basis points lower, net income for the year would have been Ps. 841,024, Ps. 922,268 and Ps. 7,297,773 greater at December 31, 2016, 2015 and 2014, respectively, primarily as a result of a decrease in interest expense.
Exchange rate risk quantification
The investments of PEMEX’s portfolios do not face foreign exchange rate 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, net income is exposed tomark-to-market volatility as a result of changes in the exchange rates used in their valuation.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
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. The 1% may be used to estimate in a simple manner the impact for proportional values to this increase and was selected in accordance with market practices for financial risk management.
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 theone-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 its 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.
INTEREST RATE and CURRENCY DFIs
| | | | | | | | | | | | | | | | | | | | | | | Interbank Yield Curves | | | | | | PEMEX Curves 1% Debt | | Currency | | 1% Debt | | | 1% DFIs | | | 1% Net | | | VaR 95% Net | | | AUD | | | (1,139,617 | ) | | | 1,139,617 | | | | 0 | | | | 0 | | | | (1,135,496 | ) | CHF | | | (13,757,737 | ) | | | 13,757,737 | | | | 0 | | | | 0 | | | | (12,809,496 | ) | Euro | | | (126,172,455 | ) | | | 126,172,455 | | | | 0 | | | | 0 | | | | (104,578,013 | ) | Pound Sterling | | | (6,219,613 | ) | | | 6,219,613 | | | | 0 | | | | 0 | | | | (5,503,942 | ) | Yen | | | (17,156,740 | ) | | | 11,818,964 | | | | (5,337,775 | ) | | | (6,091,892 | ) | | | (13,725,191 | ) | Peso | | | (161,626,313 | ) | | | (21,079,370 | ) | | | (182,705,683 | ) | | | (234,335,192 | ) | | | (153,507,202 | ) | UDI | | | (27,466,689 | ) | | | 20,246,729 | | | | (7,219,960 | ) | | | (9,526,703 | ) | | | (24,588,646 | ) |
Amounts in U.S. dollars
As shown in the table above, exchange rate risk derived from debt denominated in currencies other than pesos and U.S. dollars is almost fully hedged by DFIs.
The exchange rate risk exposure to the Japanese yen is a result of the fact that, underyear-end market levels (116.6 JPY / USD), the Seagull Option structure described above (which protects the short exposure in Japanese yen against an appreciation of the Japanese yen against the US dollar from 83.70 JPY / USD and up to 75.00 JPY / USD) allowed PEMEX to profit from the depreciation of the Japanese yen relative to the U.S. Dollar.
In addition, PEMEX performed a retrospective sensitivity analysis of the impact on its financial statements of the years ended December 31, 2016, 2015 and 2014, in which PEMEX 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, 2016, 2015 and 2014, had the peso depreciated against the U.S. dollar by 10% with other variables remaining constant, net income would have been Ps.124,512,400, Ps.105,915,340 and Ps. 70,280,300 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.124,512,400, Ps.105,915,340 and Ps. 70,280,300, respectively, primarily as a result of the decrease in exchange rate losses.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Quantification of risks related to third-party shares
Shares are exposed to price risk and euro/U.S. dollar exchange rate risk. The quantification of these risks was carried out using theone-day horizon historical VaR, with a confidence level of 95%, over 500 observations, of Repsol’s share price in euros converted to U.S. dollars. In addition, the sensitivity to an increase of 1% in the euro/U.S. dollar exchange rate is provided for informational purposes.
| | | | | | | | | | | | | | | | | Equity DFIs | | | | | | | | | | | | | Currency | | Shares | | | Equity risk Shares value | | | VaR EQ | | | FX risk 1% | | Euro | | | 22,221,894 | | | | 313,635,679 | | | | (11,539,301 | ) | | | 3,136,357 | | | | | | | | | | | | | Amounts in U.S. dollars | |
Hydrocarbon price risk quantification
Pemex Industrial Transformation 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, 2016, Pemex Industrial Transformation’s natural gas DFI portfolio had no market risk exposure.
Market risk exposure is measured using the20-day Delta-Gamma VaR methodology, with a confidence level of 95%, based on 500 daily observations; VaR and CaR are monitored and mitigated bypre-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 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 U.S. $(23,198) as of December 31, 2016. This VaR was calculated using the historical method with a 99% confidence level,two-year history and aone-day horizon. The minimum VaR recorded on the year was U.S. $(4,145) (registered on February 16, 2016) and the maximum VaR recorded on the year was U.S. $(23,198) (registered on December 30, 2016). As of December 31, 2015, the global VaR was US $(12,789).
When the fair value of a DFI is favorable to PEMEX, PEMEX faces the risk that the counterparty will not be able to meet its obligations. PEMEX monitors its counterparties’ creditworthiness and calculates the credit risk exposure for its DFIs. As a risk mitigation strategy, PEMEX only enters into DFIs with major financial institutions with a minimum credit rating ofBBB-. These ratings are issued and revised periodically by risk rating agencies. Furthermore, PEMEX seeks to maintain a diversified portfolio of counterparties.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
In order to estimate PEMEX’s credit risk exposure to each financial counterparty, the potential future exposure is calculated by projecting the risk factors used in the valuation of each DFI in order to estimate the MtM value for different periods, taking into account any credit risk mitigation provisions.
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 MtM 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 five cross-currency swaps from the first to the fourth quarter of 2016, which were used to hedge the exchange rate exposure to the euro and to the Pound Sterling, and in nine cross-currency swaps during 2015, which were used to hedge the exchange rate exposure to the euro and the Australian dollar. This resulted in the cash settlement of such swaps and the resetting of swap terms to return theirmark-to-market value to zero. During 2016, PEMEX did not enter into any cross-currency swap with these characteristics.
In addition, during 2016 PEMEX entered into long-term DFIs with mandatory early termination clauses (pursuant to which, at a given date, regardless of the MtM of the transaction, the DFI has an early termination with the settlement of the corresponding MtM, requiring that PEMEX enter into a new DFI with the same counterparty or with a new one), which reduces the credit risk generated by the term of the DFI by limiting it to a specific date. As of December 31, 2016, PEMEX has entered into three euro swaps and two Japanese yen Seagull Option structures, with termination clauses in 2018 and 2021, respectively.
According to IFRS 13 “Fair Value Measurement,” the fair value or MtM 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 obligation. In accordance with market best practices, PEMEX applies the credit value adjustment (“CVA”) method to calculate the fair value of its DFIs.
For each DFI, the CVA is calculated by determining the difference between the MtM and the estimated MtM adjusted for credit risk. In determining the credit risk, the CVA method takes into account the current market perception about the credit risk of both counterparties, using the following inputs: a) the MtM projection for each payment date based on forward yield curves; b) the implied default probability obtained from both, PEMEX and the counterparty credit default swaps’, at each payment date; and c) the default recovery rates of each counterparty.
The current and potential exposures, aggregated by credit rating, are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Maximum Credit Exposure by term in Petróleos Mexicanos | | | | | | | | | | Rating | | Current | | | Less than 1 year | | | 1-3 years | | | 3-5 years | | | 5-7 years | | | 7-10 years | | | More than 10 years | | A+ | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | A | | | 0 | | | | 339 | | | | 578 | | | | 671 | | | | 269 | | | | 124 | | | | 0 | | A- | | | 0 | | | | 192 | | | | 273 | | | | 237 | | | | 216 | | | | 224 | | | | 0 | | BBB+ | | | 0 | | | | 561 | | | | 1193 | | | | 1362 | | | | 1034 | | | | 898 | | | | 259 | | BBB | | | 0 | | | | 110 | | | | 160 | | | | 189 | | | | 206 | | | | 139 | | | | 0 | | In millions of U.S. dollars | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
PEMEX also faces credit risk derived from its investments. As of December 31, 2016, the notional amounts of investments in domestic currency, organized by the credit ratings of the issuances, were as follows:
| | | | | Credit rating of
issuances*
| | Notional amount
(In millions of pesos) | | mxAAA
| | | Ps. 21,774.77 | | mxAA
| | | 250.35 | | mxA
| | | 70.01 | | * Minimum S&P, Moody’s and Fitch credit rating.
| | National Credit Rating Scale.
| | Does not include investments in Mexican Government bonds.
| |
The table above does not include domestic currency Mexican Government bonds because these issuances are considered not to carry default risk in this currency.
PEMEX held an investment in a note linked to United Mexican States’ credit risk that was issued by a U.S. financial institution with a BBB+ credit rating. This note matured in June 2016 and had a face value of U.S. $108,000. As of December 31, 2016, PEMEX does not hold an investment in structured notes.
Furthermore, by means of its credit guidelines for DFI operations, Pemex Industrial Transformation 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.
In order to qualify for these DFIs, Pemex Industrial Transformation’s customers must be party to a current natural gas supply contract and sign a domestic master derivative agreement.
Additionally, beginning on 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.
On August 20, 2014, certain amendments to the credit guidelines were enacted, which allowedPemex-Gas and Petrochemicals, and now Pemex Industrial Transformation, to offer to its clients with an adequate credit rating, based on an internal financial and credit assessment, DFIs with an exemption from collateral requirements up to certain amount through a credit line approved by the credit committee. Moreover, if the credit line is insufficient to cover each client’s exposure, the client is obligated to deposit collateral. If a client suffers an event of default, DFIs related to this client are terminated early and natural gas supply is suspended until the payment is made.
As of December 31, 2016, Pemex Industrial Transformation’s DFIs had a fair value of U.S. $0 (deferred premiums included) for clients with exempted credit lines and U.S. $514,126 for clients with guaranteed credit lines. The total amount of exempt credit lines rose to U.S. $1,025,852,430, representing 0% usage of available exempt credit lines, while the total amount of guaranteed credit lines rose to U.S. $57,884,274, representing a 1% usage of available guaranteed credit lines.
As of December 31, 2016, 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 Industrial Transformation.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
As of December 31, 2016, Pemex Industrial Transformation had open DFIs with 11 customers, of which 10 are industrial customers (91%) and one is both an industrial customer and distributor (9%). Of the total volume (in millions of British thermal units or MMBtu) of DFIs, industrial customers represented 77%, and customers who are both industrial and distributor customers represented 23%.
As of December 31, 2016 and 2015, Pemex Industrial Transformation 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, which has kept the credit limits within the set limits; and (ii) when certain DFIs matured,Pemex-Gas and Basic Petrochemicals, and now Pemex Industrial Transformation, had used domestic customers’ payments to meet its international obligations.
The potential future exposure of Mex Gas Supply, S.L.’s DFI portfolio was calculated in an analogous manner to the analysis of Petróleos Mexicanos’ DFI positions. The current and potential exposure, aggregated by credit rating, is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Maximum Credit Exposure by term in Pemex Industrial Transformation | | | | | | | | | | Rating | | Current | | | Less than 1 year | | | 1-3 years | | | 3-5 years | | | 5-7 years | | | 7-10 years | | | More than 10 years | | A | | | 0.68 | | | | 0.68 | | | | 0.27 | | | | — | | | | — | | | | — | | | | — | | A- | | | 2.95 | | | | 2.95 | | | | 2.47 | | | | — | | | | — | | | | — | | | | — | | BBB+ | | | 1.16 | | | | 1.16 | | | | 0.34 | | | | — | | | | — | | | | — | | | | — | | In millions of U.S. dollars | |
PMI Trading’s credit risk associated with DFI transactions is mitigated through the use of futures and standardized instruments that are cleared throughCME-Clearport.
Through its debt planning and the purchase and sale of U.S. dollars, PEMEX currently preserves cash balance at a level of liquidity in domestic currency and U.S. dollars that is considered adequate to cover its investment and operating expenses, as well as other payment obligations.
In addition, PEMEX has acquired committed revolving credit lines in order to mitigate liquidity risk, two of which provide access to Ps. 3,500,000 and Ps. 20,000,000 with expiration dates in June and November 2019, respectively; and two others that each provides access to U.S. $1,500,000 and U.S. $3,250,000 with expiration dates in December 2019 and January 2020, respectively.
Finally, the investment strategies of PEMEX’s portfolios are structured by selecting time horizons that consider each currency’s cash flow requirements in order to preserve liquidity.
Certain PMI subsidiaries mitigate their liquidity risk through several mechanisms, the most important of which is the centralized treasury or“in-house bank,” which provides access to a syndicated credit line for up to U.S. $700,000 and cash surplus capacity in the custody of the centralized structure. In addition, certain PMI subsidiaries have access to bilateral credit lines from financial institutions for up to U.S. $1,450,000.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
These companies 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, 2016 and 2015. It should be noted that:
For debt obligations, these tables present principal cash flow and the weighted average interest rates for fixed rate debt.
For interest rate swaps, cross currency swaps, and currency options, 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 millions of British thermal unit (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, the prices used in commercial transactions and DFIs are published by reputable sources that are widely used in international markets, such asCME-NYMEX, Platts and Argus, among others.
Fair value is calculated internally, either by discounting cash flows with the correspondingzero-coupon yield curve in the original currency, or through other standard methodologies commonly applied in financial markets for specific instruments.
For all instruments, tables are based on the contract terms in order to determine the future cash flows that are categorized by expected maturity dates.
This information is presented in thousands of pesos, except as noted.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Quantitative Disclosure of Debt Cash Flow’s Maturities as of December 31, 2016(1)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year of expected maturity date | | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | 2021 | | | 2022 thereafter | | | Total carrying value | | | Fair value | | Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Outstanding debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fixed rate (U.S. dollars) | | | Ps 15,759,027 | | | Ps | 86,161,096 | | | Ps | 65,642,616 | | | Ps | 62,440,943 | | | Ps | 98,858,992 | | | Ps | 826,093,574 | | | Ps | 1,154,956,248 | | | Ps | 1,137,936,275 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 5.6541 | % | | | | | Fixed rate (Japanese yen) | | | 517,286 | | | | — | | | | — | | | | — | | | | — | | | | 19,459,306 | | | | 19,976,592 | | | | 17,336,203 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 1.3665 | % | | | | | Fixed rate (Pounds) | | | — | | | | — | | | | — | | | | — | | | | — | | | | 8,825,434 | | | | 8,825,434 | | | | 11,373,345 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 8.2500 | % | | | | | Fixed rate (pesos) | | | — | | | | — | | | | — | | | | 10,048,950 | | | | 20,457,671 | | | | 90,393,507 | | | | 120,900,128 | | | | 160,930,040 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 7.4878 | % | | | | | Fixed rate (UDIs) | | | — | | | | — | | | | 17,319,897 | | | | 4,464,787 | | | | 3,630,557 | | | | 28,288,180 | | | | 53,703,421 | | | | 50,809,979 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 4.0559 | % | | | | | Fixed rate (euros) | | | 26,006,880 | | | | — | | | | 29,198,138 | | | | 28,061,554 | | | | — | | | | 123,886,644 | | | | 207,153,216 | | | | 216,100,006 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 3.9581 | % | | | | | Fixed rate (Swiss Francs) | | | — | | | | 4,539,022 | | | | 6,056,338 | | | | 12,102,748 | | | | 3,031,480 | | | | — | | | | 25,729,588 | | | | 26,469,543 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 1.8385 | % | | | | | Fixed rate (Australian dollars) | | | 2,232,195 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,232,195 | | | | 2,346,390 | | Average interest rate (%) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 6.1250 | % | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total fixed rate debt | | | 44,515,388 | | | | 90,700,118 | | | | 118,216,989 | | | | 117,118,982 | | | | 125,978,700 | | | | 1,096,946,645 | | | | 1,593,476,822 | | | | 1,623,301,781 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable rate (U.S. dollars) | | | 38,811,320 | | | | 27,907,661 | | | | 15,984,547 | | | | 52,726,647 | | | | 13,366,336 | | | | 45,385,885 | | | | 194,182,396 | | | | 195,838,382 | | Variable rate (Japanese yen) | | | — | | | | — | | | | — | | | | 11,341,440 | | | | — | | | | — | | | | 11,341,440 | | | | 11,025,531 | | Variable rate (euros) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Variable rate (pesos) | | | 65,024,075 | | | | 8,742,191 | | | | 28,007,709 | | | | 18,347,822 | | | | 8,468,176 | | | | 27,764,693 | | | | 156,354,666 | | | | 158,109,920 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total variable rate debt | | | 103,835,395 | | | | 36,649,852 | | | | 43,992,256 | | | | 82,415,909 | | | | 21,834,512 | | | | 73,150,578 | | | | 361,878,502 | | | | 364,973,833 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total debt | | | 148,350,783 | | | | 127,349,970 | | | | 162,209,245 | | | | 199,534,891 | | | | 147,813,212 | | | | 1,170,097,223 | | | | 1,955,355,324 | | | | 1,988,275,614 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note: | Numbers may not total due to rounding. |
(1) | The information in this table has been calculated using exchange rates at December 31, 2016 of: Ps. 20.664 = U.S. $1.00; Ps. 0.17721 = 1.00 Japanese yen; Ps. 25.30513 = 1.00 Pound sterling; Ps. $ 5.562883 = 1.00 UDI; Ps. 21.6724 = 1.00 euro; Ps. 20.19744= 1.00 Swiss Franc; and Ps. 14.88428 = 1.00 Australian dollar. |
Source: PEMEX
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Quantitative Disclosure of Debt Cash Flow’s Maturities as of December 31, 2015(1)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year of expected maturity date | | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | 2021 thereafter | | | Total carrying value | | | Fair value | | Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Outstanding debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fixed rate (U.S. dollars) | | Ps | 12,829,312 | | | Ps | 11,855,937 | | | Ps | 82,984,743 | | | Ps | 52,181,092 | | | Ps | 50,502,077 | | | Ps | 528,285,394 | | | Ps | 738,638,555 | | | Ps | 693,943,114 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 5.3598 | % | | | | | Fixed rate (Japanese yen) | | | 834,293 | | | | 417,133 | | | | — | | | | — | | | | — | | | | 4,287,000 | | | | 5,538,426 | | | | 5,606,358 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 3.1698 | % | | | | | Fixed rate (Pounds) | | | — | | | | — | | | | — | | | | — | | | | — | | | | 8,885,952 | | | | 8,885,952 | | | | 10,767,887 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 8.2500 | % | | | | | Fixed rate (pesos) | | | 7,500,000 | | | | — | | | | — | | | | — | | | | 10,064,778 | | | | 110,946,135 | | | | 128,510,913 | | | | 176,496,022 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 7.5851 | % | | | | | Fixed rate (UDIs) | | | — | | | | — | | | | — | | | | 16,754,153 | | | | 4,318,678 | | | | 30,892,053 | | | | 51,964,884 | | | | 44,959,784 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 5.3275 | % | | | | | Fixed rate (euros) | | | 15,987,190 | | | | 22,513,392 | | | | — | | | | — | | | | 24,308,184 | | | | 81,184,552 | | | | 143,993,318 | | | | 136,416,000 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 4.0517 | % | | | | | Fixed rate (Swiss Francs) | | | — | | | | — | | | | — | | | | 5,200,092 | | | | 10,391,550 | | | | — | | | | 15,591,642 | | | | 15,342,323 | | Average interest rate (%) | | | | | | | | | | | | | | | | | | | | | | | | | | | 1.8335 | % | | | | | Fixed rate (Australian dollars) | | | — | | | | 1,879,733 | | | | — | | | | — | | | | — | | | | — | | | | 1,879,733 | | | | 1,998,003 | | Average interest rate (%) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 6.1250 | % | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total fixed rate debt | | | 37,150,795 | | | | 36,666,195 | | | | 82,984,743 | | | | 74,135,337 | | | | 99,585,267 | | | | 764,481,086 | | | | 1,095,003,423 | | | | 1,085,529,491 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable rate (U.S. dollars) | | | 98,054,813 | | | | 26,444,912 | | | | 21,175,683 | | | | 10,682,902 | | | | 42,961,127 | | | | 17,834,819 | | | | 217,154,256 | | | | 211,799,779 | | Variable rate (Japanese yen) | | | — | | | | — | | | | — | | | | — | | | | 9,145,600 | | | | — | | | | 9,145,600 | | | | 8,446,427 | | Variable rate (euros) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Variable rate (pesos) | | | 38,814,538 | | | | 29,895,944 | | | | 8,619,552 | | | | 22,902,913 | | | | 18,211,267 | | | | 35,145,822 | | | | 153,590,036 | | | | 152,252,128 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total variable rate debt | | | 136,869,351 | | | | 56,340,856 | | | | 29,795,235 | | | | 33,585,815 | | | | 70,317,994 | | | | 52,980,641 | | | | 379,889,892 | | | | 372,498,334 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total debt | | | 174,020,146 | | | | 93,007,051 | | | | 112,779,978 | | | | 107,721,152 | | | | 169,903,261 | | | | 817,461,727 | | | | 1,474,893,315 | | | | 1,458,027,825 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note: | Numbers may not total due to rounding. |
(1) | The information in this table has been calculated using exchange rates at December 31, 2015 of: Ps. 17.2065 = U.S. $1.00; Ps. 0.1429 = 1.00 Japanese yen; Ps. 25.49831 = 1.00 Pound sterling; Ps. 5.381175 = 1.00 UDI; Ps. 18.80843 = 1.00 euro; Ps. 17.34876 = 1.00 Swiss Franc; and Ps. 12.55386 = 1.00 Australian dollar. |
Source: PEMEX
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Quantitative Disclosure of Cash Flow’s Maturities from Derivative Financial Instruments
Held or Issued for Purposes Other than Trading as of December 31, 2016(1)(2)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year of expected maturity date | | | Total Notional Amount | | | Fair Value | | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | 2021 | | | 2022 Thereafter | | | | Hedging instruments(2)(4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate DFIs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate swaps (U.S. dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable to fixed | | | Ps. 4,899,645 | | | | Ps. 4,912,743 | | | | Ps. 4,926,477 | | | | Ps. 4,940,613 | | | | Ps 4,894,180 | | | | Ps 15,365,634 | | | | Ps. 39,939,292 | | | | Ps. 164,716 | | Average pay rate | | | 2.76 | % | | | 2.66 | % | | | 3.35 | % | | | 3.83 | % | | | 4.04 | % | | | 4.57 | % | | | N.A. | | | | N.A. | | Average receive rate | | | 2.95 | % | | | 2.99 | % | | | 3.03 | % | | | 3.06 | % | | | 3.11 | % | | | 3.33 | % | | | N.A. | | | | N.A. | | Interest rate swaps (pesos) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable to fixed | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Average pay rate | | | N.A. | | | | N.A. | | | | N.A. | | | | N.A. | | | | N.A. | | | | N.A. | | | | N.A. | | | | N.A. | | Average receive rate | | | N.A. | | | | N.A. | | | | N.A. | | | | N.A. | | | | N.A. | | | | N.A. | | | | N.A. | | | | N.A. | | Currency DFIs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cross-currency swaps | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Receive euros/Pay U.S. dollars | | | 34,775,198 | | | | — | | | | 31,223,821 | | | | 29,992,556 | | | | — | | | | 133,024,913 | | | | 229,016,488 | | | | (16,484,533 | ) | Receive Japanese yen/ Pay U.S. dollars | | | 532,711 | | | | — | | | | — | | | | 17,697,534 | | | | — | | | | 4,987,289 | | | | 23,217,534 | | | | (6,132,633 | ) | Receive Pounds sterling/ Pay U.S. dollars | | | — | | | | — | | | | — | | | | — | | | | — | | | | 10,767,349 | | | | 10,767,349 | | | | (211,207 | ) | Receive UDI/ Pay pesos | | | — | | | | — | | | | 23,740,341 | | | | 3,540,220 | | | | 3,000,000 | | | | 14,313,198 | | | | 44,593,759 | | | | (2,132,236 | ) | Receive Swiss francs/ Pay U.S. dollars | | | — | | | | 4,736,567 | | | | 6,789,326 | | | | 12,060,700 | | | | 3,127,139 | | | | — | | | | 26,713,732 | | | | (789,449 | ) | Receive Australian dollars/ Pay U.S. dollars | | | 2,459,429 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,459,429 | | | | (126,796 | ) | Currency Options | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Buy Put, Sell Put and sell Call on yen | | | — | | | | — | | | | — | | | | — | | | | — | | | | 14,133,580 | | | | 14,133,580 | | | | (301,131 | ) |
N.A. = not applicable.
Numbers may not total due to rounding.
(1) | The information in this table has been calculated using exchange rates at December 31, 2016 of: Ps. 20.664 = U.S. $1.00 and Ps. 21.6724 = 1.00 euro. |
(2) | PEMEX’s management uses these DFIs to hedge market risk; however, these DFIs do not qualify for accounting purposes as hedges and are recorded in the financial statements as entered into for trading purposes. |
(3) | Positive numbers represent a favorable fair value to PEMEX. |
(4) | PMI’s risk management policies and procedures establish that DFIs should be used only for hedging purposes; however DFIs are not recorded as hedges for accounting purposes. |
Source: PEMEX
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Quantitative Disclosure of Cash Flow’s Maturities from Derivative Financial Instruments
Held or Issued for Purposes Other than Trading as of December 31, 2015(1)(2)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year of expected maturity date | | | Total notional amount | | | Fair value(3) | | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | 2021 Thereafter | | | | Hedging instruments(2)(4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate DFIs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate swaps (U.S. dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable to fixed | | Ps. | 4,069,129 | | | Ps. | 4,079,836 | | | Ps | 4,090,743 | | | Ps. | 4,102,179 | | | Ps | 4,113,949 | | | Ps | 16,869,943 | | | Ps. | 37,325,779 | | | Ps. | (192,666) | | Average pay rate | | | 2.09 | % | | | 2.40 | % | | | 3.05 | % | | | 3.47 | % | | | 3.82 | % | | | 4.25 | % | | | N.A. | | | | N.A. | | Average receive rate | | | 2.93 | % | | | 2.97 | % | | | 3.00 | % | | | 3.02 | % | | | 3.06 | % | | | 3.24 | % | | | N.A. | | | | N.A. | | Interest rate swaps (pesos) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable to fixed | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Average pay rate | | | N.A. | | | | N.A. | | | | N.A. | | | | N.A. | | | | N.A. | | | | N.A. | | | | N.A. | | | | N.A. | | Average receive rate | | | N.A. | | | | N.A. | | | | N.A. | | | | N.A. | | | | N.A. | | | | N.A. | | | | N.A. | | | | N.A. | | Currency DFIs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cross-currency swaps | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Receive euros/Pay U.S. dollars | | | 19,725,704 | | | | 28,956,612 | | | | — | | | | — | | | | 30,263,050 | | | | 83,793,246 | | | | 162,738,612 | | | | (19,088,133 | ) | Receive Japanese yen/ Pay U.S. dollars | | | 887,184 | | | | 443,581 | | | | — | | | | — | | | | 14,736,383 | | | | 4,152,816 | | | | 20,219,964 | | | | (5,419,164 | ) | Receive Pounds sterling/ Pay U.S. dollars | | | — | | | | — | | | | — | | | | — | | | | — | | | | 10,951,197 | | | | 10,951,197 | | | | (693,597 | ) | Receive UDI/ Pay pesos | | | — | | | | — | | | | — | | | | 16,105,371 | | | | 3,540,220 | | | | 16,236,097 | | | | 35,881,688 | | | | 294,255 | | Receive Swiss francs/ Pay U.S. dollars | | | — | | | | — | | | | — | | | | 5,653,336 | | | | 10,042,704 | | | | — | | | | 15,696,040 | | | | (281,999 | ) | Receive Australian dollars/ Pay U.S. dollars | | | — | | | | 2,047,918 | | | | — | | | | — | | | | — | | | | — | | | | 2,047,918 | | | | (46,526 | ) | Exchange rate forward | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Receive euros/Pay U.S. dollars | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
N.A. = not applicable.
Numbers may not total due to rounding.
(1) | The information in this table has been calculated using the exchange rate at December 31, 2015 of: Ps. 17.20650 = U.S. $1.00 and Ps. 18.80843 = 1.00 euro. |
(2) | PEMEX’s management uses these DFIs to hedge market risk; however, these DFIs do not qualify for accounting purposes as hedges and are recorded in the financial statements as entered into for trading purposes. |
(3) | Positive numbers represent a favorable fair value to PEMEX. |
(4) | PMI’s risk management policies and procedures establish that DFIs should be used only for hedging purposes; however DFIs are not recorded as hedges for accounting purposes. |
Source: PEMEX
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
B. | Fair value of derivative financial instruments |
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.
PEMEX monitors the fair value of its DFI portfolio on a periodic basis. The fair value represents the price at which one party would assume the rights and obligations of the other, and is calculated for DFIs through models commonly used in the international financial markets, based on inputs obtained from major market information systems and price providers.
PEMEX’s DFIs portfolio is composed primarily of swaps, the prices of which are estimated by discounting flows using the appropriate factors, and contains no exotic instruments that require numerical approximations for their valuation.
Embedded derivatives
In accordance with established policies, PEMEX has analyzed the different contracts it has entered into and has determined that according to the terms thereof, none meet the criteria necessary to be classified as embedded derivatives. Accordingly, as of December 31, 2016 and 2015, PEMEX did not recognize any embedded derivatives (foreign currency or index).
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, some of these transactions do not qualify for hedge accounting treatment because they do not meet the requirements of the accounting standards for designation as hedges. They are therefore recorded in the financial statements asnon-hedge instruments or as instruments entered into for trading purposes, despite the fact that their cash flows are offset by the cash flows of the positions (assets or liabilities) to which they relate. As a result, the changes in their fair value are recognized in the “Derivative financial instruments (cost) income, net” line item in the consolidated statement of comprehensive income.
As of December 31, 2016 and 2015, the net 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), recognized in the consolidated statement of financial position, was Ps. (26,010,486) and Ps. (25,699,581), respectively. As of December 31, 2016 and 2015, PEMEX did not have any DFIs designated as hedges.
The following table shows the fair values and notional amounts of PEMEX’sover-the-counter (“OTC”) DFIs that were designated asnon-hedges for accounting purposes and entered into for trading purposes as of December 31, 2016 and 2015. It should be noted that:
DFI’s fair value includes the 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.
Fair value is calculated internally, either by discounting cash flows with the correspondingzero-coupon yield curve, in the original currency, or through other standard methodologies commonly applied in the financial markets for certain specific instruments.
The information is presented in thousands of pesos (except as noted).
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | | | | | | | | | December 31, 2016 | | | December 31, 2015 | | DFI | | Position | | Notional amount | | | Fair Value | | | Notional Amount | | | Fair value | | Interest rate swaps | | PEMEX pays fixed in U.S. dollar and receives floating in3-month U.S. dollar LIBOR + spread. | | | 20,018,250 | | | | (90,451 | ) | | | 18,819,609 | | | | (245,232 | ) | Interest rate swaps | | PEMEX pays fixed in U.S. dollar and receives floating in6-month U.S. dollar LIBOR + spread. | | | 18,132,660 | | | | 312,210 | | | | 16,776,338 | | | | 127,586 | | Cross-currency swaps | | PEMEX pays fixed in pesos and receives notional in UDI. | | | 23,740,341 | | | | (4,815,373 | ) | | | 16,105,371 | | | | (207,713 | ) | Cross-currency swaps | | PEMEX pays the28-day TIIE + spread in pesos and receives fixed in UDI. | | | 20,853,418 | | | | 2,683,138 | | | | 19,776,317 | | | | 501,968 | | Cross-currency swaps | | PEMEX pays fixed in U.S. dollar and receives fixed in Japanese yen. | | | 5,520,000 | | | | (116,507 | ) | | | 5,483,580 | | | | (475,356 | ) | Cross-currency swaps | | PEMEX pays floating in6-month U.S. dollar LIBOR + spread and receives floating in6-month yen LIBOR + spread. | | | 17,697,534 | | | | (6,016,126 | ) | | | 14,736,383 | | | | (4,943,807 | ) | Cross-currency swaps | | PEMEX pays fixed in U.S. dollar and receives fixed in euro. | | | 229,016,488 | | | | (16,484,533 | ) | | | 162,738,612 | | | | (19,088,133 | ) | Cross-currency swaps | | PEMEX pays floating in6-month U.S. dollar LIBOR + spread and receives fixed in Pound sterling. | | | 10,767,349 | | | | (211,207 | ) | | | 10,951,197 | | | | (693,597 | ) | Cross-currency swaps | | PEMEX pays fixed in U.S. dollar and receives fixed in CHF. | | | 26,713,732 | | | | (789,449 | ) | | | 15,696,040 | | | | (281,999 | ) | Cross-currency swaps | | PEMEX pays fixed in U.S. dollar and receives fixed in AUD. | | | 2,459,429 | | | | (126,796 | ) | | | 2,047,918 | | | | (46,526 | ) | Currency Options | | PEMEX buys put, sells put and sells call | | | 14,133,580 | | | | (301,131 | ) | | | — | | | | — | | Propane gas swaps | | PEMEX receives floating. | | | — | | | | — | | | | 1,702,618 | | | | (276,553 | ) | Natural gas swaps | | PEMEX receives fixed. | | | (160,214 | ) | | | (25,145 | ) | | | (240,934 | ) | | | 37,675 | | Natural gas swaps | | PEMEX receives floating. | | | 157,545 | | | | 27,869 | | | | 236,960 | | | | (32,990 | ) | Natural gas options | | PEMEX Long Call. | | | 73,653 | | | | 11,548 | | | | 269,091 | | | | 5,426 | | Natural gas options | | PEMEX Short Call. | | | (73,653 | ) | | | (11,488 | ) | | | (269,091 | ) | | | (5,310 | ) | Interest rate swaps | | PEMEX pays fixed in U.S. dollar and receives floating in U.S. dollar LIBOR 1M. | | | 1,788,382 | | | | (57,043 | ) | | | 1,729,833 | | | | (75,019 | ) | | | | | | | | | | | | | | | | | | | | Subtotal | | | | | | | | $ | (26,010,486 | ) | | | | | | | Ps.(25,699,581 | ) |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | | | | | | | | | | December 31, 2016 | | | December 31, 2015 | | DFI | | Market | | | Volume (MMb) | | | Fair value | | | Volume (MMb) | | | Fair value | | Futures | | | Exchange traded | | | | — | | | $ | — | | | | 0.4 | | | $ | (7,994 | ) | Petroleum Products Swaps | | | Exchange traded | | | | 4.1 | | | $ | (688,016 | ) | | | 11.6 | | | $ | 550,952 | |
Notes: Numbers may not total due to rounding.
(1) | The fair value of the Futures and the Petroleum Products Swaps, was recognized as “Cash and cash equivalents” in the statement of financial position because PEMEX considered these financial assets to be fully liquid. |
The exchange rate for U.S. dollars as of December 31, 2016 and 2015 was Ps. 20.664 and Ps. 17.2065 per U.S. dollar, respectively. The exchange rate for euros as of December 31, 2016 and 2015 was Ps. 21.6724 and Ps. 18.80843 per euro, respectively.
For the years ended December 31, 2016, 2015 and 2014, PEMEX recognized a net loss of Ps. 14,000,987, Ps. 21,449,877 and Ps. 9,438,570, respectively, in the “Derivative financial instruments (cost) income, net” line item with respect to DFIs treated as instruments entered into for trading purposes.
|
| (3) | Positive numbers represent a favorable fair value to PEMEX. |
| (4) | PMI’s risk management policies and procedures establish that DFIs should be used only for hedging purposes; however, DFIs are not recorded as hedges for accounting purposes. |
The following tables show the estimated amount of principal and interest cash flow maturities of PEMEX’s financial liabilities as of December 31, 2019 and 2018 (DFIs are not included): Financial Liabilities Interest and Principal Cash Flow Maturities as of December 31, 2019(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year of expected maturity date | | | | Total Carrying Value | | | 2020 | | | 2021 | | | 2022 | | | 2023 | | | 2024 | | | 2025 Thereafter | | | Total | | Financial Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Suppliers | | | 208,034,407 | | | | 208,034,407 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 208,034,407 | | Accounts and accrued expenses Payable | | | 26,055,151 | | | | 26,055,151 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 26,055,151 | | Leases | | | 68,148,627 | | | | 11,424,336 | | | | 9,982,471 | | | | 9,507,408 | | | | 9,493,269 | | | | 9,361,805 | | | | 62,776,808 | | | | 112,546,097 | | Debt | | | 1,983,174,088 | | | | 312,757,186 | | | | 222,227,670 | | | | 205,355,068 | | | | 213,879,603 | | | | 254,613,606 | | | | 2,104,560,030 | | | | 3,313,393,163 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | Ps. | 2,285,412,273 | | | Ps. | 558,271,080 | | | Ps. | 232,210,141 | | | Ps. | 214,862,476 | | | Ps. | 223,372,872 | | | Ps. | 263,975,411 | | | Ps. | 2,167,336,838 | | | Ps. | 3,660,028,818 | |
Note: Numbers may not total due to rounding. (1) | The followinginformation in this table presentshas been calculated using exchange rates at December 31, 2019 of: Ps. 18.8452 = U.S. $1.00; Ps. 0.1734 = 1.00 Japanese yen; Ps. 24.9586= 1.00 pound sterling; Ps. 6.399018 = 1.00 UDI; Ps. 21.1537 = 1.00 euro; and Ps. 19.4596= 1.00 Swiss franc. |
Financial Liabilities Interest and Principal Cash Flow Maturities as of December 31, 2018(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year of expected maturity date | | | | Total Carrying Value | | | 2019 | | | 2020 | | | 2021 | | | 2022 | | | 2023 | | | 2024 Thereafter | | | Total | | Financial Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Suppliers | | | 149,842,712 | | | | 149,842,712 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 149,842,712 | | Accounts and accrued expenses Payable | | | 24,917,669 | | | | 24,917,669 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 24,917,669 | | Debt | | | 2,082,286,116 | | | | 263,380,210 | | | | 290,101,037 | | | | 275,601,994 | | | | 253,943,698 | | | | 244,198,663 | | | | 1,918,608,927 | | | | 3,245,834,529 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | Ps. | 2,257,046,497 | | | Ps. | 438,140,591 | | | Ps. | 290,101,037 | | | Ps. | 275,601,994 | | | Ps. | 253,943,698 | | | Ps. | 244,198,663 | | | Ps. | 1,918,608,927 | | | Ps. | 3,420,594,910 | |
Note: Numbers may not total due to rounding. (1) | The information in this table has been calculated using exchange rates at December 31, 2018 of: Ps. 19.6829 = U.S. $1.00; Ps. 0.17930 = 1.00 Japanese yen; Ps. 25.0878 = 1.00 pound sterling; Ps. 6.226631 = 1.00 UDI; Ps. 22.5054 = 1.00 euro; and Ps. 19.9762 = 1.00 Swiss franc. |
B. | Fair value of derivative financial instruments |
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. PEMEX monitors the fair value of its DFI portfolio on a periodic basis. The fair value represents the price at which one party would assume the rights and obligations of the other, and is calculated for DFIs through models commonly used in the international financial markets, based on inputs obtained from major market information systems and price providers. Therefore, PEMEX does not have an independent third party to value its DFIs. PEMEX calculates the fair value of its DFIs through the tools developed by its market information providers such as Bloomberg, and through valuation models implemented in software packages used to integrate all of PEMEX´s business areas and accounting, such as SAP (System Applications Products). PEMEX does not have policies to designate a calculation or valuation agent. PEMEX’s DFI portfolio is composed primarily of swaps, for which fair value is estimated by projecting future cash flows and discounting them with the corresponding discount factor; for currency options, this is done through the Black and Scholes model, and for crude oil options, through the Levy model for Asian options. According to IFRS 13 “Fair Value Measurement”, the MtM 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 obligation. Due to the above, PEMEX applies the credit value adjustment (“CVA”) method to calculate the fair value of its DFIs. Given that PEMEX’s hedges are cash flow hedges, their effectiveness is preserved regardless of variations in the underlying assets or reference variables since, through time, asset flows are fully offset by liabilities flows. Therefore, it is not necessary to measure or monitor the hedges’ effectiveness. PEMEX’s assumptions and inputs considered in the calculation of the fair value of its DFIs fall under Level 2 of the fair value hierarchy for market participant assumptions. Embedded derivatives In accordance with established accounting policies, PEMEX has analyzed the different contracts that PEMEX has entered into and has determined that according to the terms thereof none of these agreements meet the criteria to be classified as embedded derivatives. Accordingly, as of December 31, 2019 and 2018, PEMEX did not recognize any embedded derivatives (foreign currency or index). As of December 31, 2019 and 2018, PEMEX recognized a gain (loss) of Ps. 4,751,897 and Ps. (3,142,662), respectively, in the “Derivative financial instruments (cost) income, net” line item which resulted from changes in the fair value of the accounts receivable from the sale of hydrocarbons whose performance obligations have been met and whose determination of the final price is indexed to future prices of the hydrocarbons. 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, some of these transactions do not qualify for hedge accounting treatment because they do not meet the requirements of the accounting standards for designation as hedges. They are therefore recorded in the financial statements as instruments entered into for trading purposes, despite the fact that their cash flows are offset by the cash flows of the positions (assets or liabilities) to which they relate. As a result, the changes in their fair value are recognized in the “Derivative financial instruments (cost) income, net” line item in the consolidated statement of comprehensive income. As of December 31, 2019 and 2018, the net 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), recognized in the consolidated statement of financial position, was Ps. (5,153,841) and Ps. 6,487,032, respectively. As of December 31, 2019 and 2018, PEMEX did not have any DFIs designated as hedges. The following table shows the fair values and notional amounts of PEMEX’s DFIs, including those with an open position and those that have matured but that have not been settled, which were designated asnon-hedges for accounting purposes and entered into for trading purposes as of December 31, 2019 and 2018. It should be noted that: DFI’s fair value includes CVA and is calculated based on market quotes obtained from market sources such as Bloomberg and PIP. Fair value is calculated internally, either by discounting cash flows with the correspondingzero-coupon yield curve, in the original currency, or through other standard methodologies commonly used in the financial markets for certain specific instruments. | | | | | | | | | | | | | | | | | | | | | | | December 31, 2019 | | | December 31, 2018 | | | | | | Notional | | | Fair | | | Notional | | | Fair | | DFI | | POSITION | | Amount | | | Value | | | Amount | | | Value | | Interest rate swaps | | PEMEX pays fixed in U.S. dollar and receives floating in3-month U.S. dollar LIBOR + spread. | | | 11,189,338 | | | | (79,096 | ) | | | 14,147,084 | | | | 228,909 | | Interest rate swaps | | PEMEX pays fixed in U.S. dollar and receives floating in6-month U.S. dollar LIBOR + spread. | | | 11,024,442 | | | | (9,181 | ) | | | 13,433,579 | | | | 420,029 | | Cross-currency swaps | | PEMEX pays the28-day TIIE + spread in pesos and receives fixed in UDI. | | | 37,742,553 | | | | 3,116,439 | | | | 37,742,553 | | | | (237,428 | ) | Cross-currency swaps | | PEMEX pays fixed in pesos and receives notional in UDI. | | | — | | | | — | | | | 23,740,341 | | | | (4,154,665 | ) | Cross-currency swaps | | PEMEX pays floating in6-month U.S. dollar LIBOR + spread and receives floating in6-month yen LIBOR + spread. | | | 12,419,108 | | | | (1,403,975 | ) | | | 12,971,158 | | | | (1,532,612 | ) | Cross-currency swaps | | PEMEX pays fixed in U.S. dollar and receives fixed in Japanese yen. | | | 4,548,319 | | | | 316,373 | | | | 4,750,499 | | | | 419,983 | | Cross-currency swaps | | PEMEX pays floating in3-month U.S. dollar LIBOR + spread and receives floating in3-month euro LIBOR + spread. | | | 14,432,394 | | | | (523,552 | ) | | | 15,073,938 | | | | (122,974 | ) | Cross-currency swaps | | PEMEX pays fixed in U.S. dollar and receives fixed in euro. | | | 292,557,157 | | | | (5,606,276 | ) | | | 327,129,743 | | | | 5,618,515 | | Cross-currency swaps | | PEMEX pays floating in6-month U.S. dollar LIBOR + spread and receives fixed in pound sterling. | | | 9,204,373 | | | | 526,632 | | | | 9,819,995 | | | | (2,573 | ) | Cross-currency swaps | | PEMEX pays fixed in U.S. dollar and receives fixed in pound sterling. | | | 11,149,951 | | | | (9,852 | ) | | | 11,645,585 | | | | (294,745 | ) | Cross-currency swaps | | PEMEX pays fixed in U.S. dollar and receives fixed in CHF. | | | 20,729,537 | | | | 797,159 | | | | 28,117,976 | | | | 486,310 | | Currency Options | | PEMEX Buy Put, Sell Put and Sell Call on Japanese yen | | | 13,881,133 | | | | 123,244 | | | | 14,355,685 | | | | 222,491 | | Currency Options | | PEMEX Buy Call, Sell Call and Sell Put on euro | | | 105,123,586 | | | | 360,731 | | | | 95,923,285 | | | | 2,708,534 | | Currency Options | | PEMEX Sell Call on pound sterling | | | 11,242,387 | | | | (81,137 | ) | | | 11,296,695 | | | | (232,636 | ) | Currency Options | | PEMEX Sell Call on CHF | | | 7,116,252 | | | | (74,535 | ) | | | 7,315,424 | | | | (183,093 | ) | Currency Options | | PEMEX Sell Call on euro | | | 66,560,662 | | | | (1,223,283 | ) | | | 71,096,081 | | | | (2,543,075 | ) | Natural gas swaps | | PEMEX receives fixed. | | | — | | | | — | | | | (3,669 | ) | | | 136 | | Natural gas swaps | | PEMEX receives floating. | | | — | | | | — | | | | 3,622 | | | | (94 | ) | Natural gas options | | PEMEX Long Call. | | | — | | | | — | | | | 989 | | | | 4 | | Natural gas options | | PEMEX Short Call. | | | — | | | | — | | | | (989 | ) | | | (4 | ) | Interest rate swaps | | PEMEX pays fixed in U.S. dollar and receives floating in U.S. dollar LIBOR 1M. | | | 768,561 | | | | (10,954 | ) | | | 1,115,854 | | | | (4,192 | ) | Subtotal | | | | | | | | | (3,781,263 | ) | | | | | | | 796,821 | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | December 31, 2019 | | | December 31, 2018 | | DFI | | Volume (MMb) | | | Fair Value | | | Volume (MMb) | | | Fair Value | | Crude Oil Options | | | 85.05 | | | | (1,372,577 | ) | | | 111.68 | | | | 5,690,212 | |
| | | | | | | | | | | | | December 31, 2019 | | December 31, 2018 | DFI | | Market | | Volume (MMb) | | Fair value | | Volume (MMb) | | Fair value | Futures | | Exchange traded | | 2.4 | | Ps.(124,835) | | 2.6 | | Ps. 441,954 | Petroleum Products Swaps | | Exchange traded | | 4.3 | | Ps.(318,410) | | 4.9 | | Ps. 760,603 |
Notes: Amounts may not total due to rounding. (1) | The fair value of the location onFutures and the consolidatedPetroleum Products Swaps was recognized as “Cash and cash equivalents” in 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, 2016 and 2015:because PEMEX considered these financial assets to be fully liquid. | | | | | | | | | | | | | Derivatives assets | | Derivatives not designated as hedging instruments | | Location in statement of financial position | | Fair value | | | | | | 2016 | | | 2015 | | Embedded derivatives | | Derivative financial instruments | | Ps. | — | | | Ps. | — | | Forwards | | Derivative financial instruments | | | — | | | | — | | Futures | | Derivative financial instruments | | | — | | | | — | | Stock options | | Derivative financial instruments | | | — | | | | — | | Currency options | | Derivative financial instruments | | | — | | | | — | | Natural gas options | | Derivative financial instruments | | | 11,548 | | | | 5,432 | | Equity swaps | | Derivative financial instruments | | | — | | | | — | | Cross-currency swaps | | Derivative financial instruments | | | 4,503,550 | | | | 1,426,626 | | Natural gas swaps | | Derivative financial instruments | | | 30,162 | | | | 41,462 | | Petroleum product swaps | | Derivative financial instruments | | | — | | | | — | | Propane swaps | | Derivative financial instruments | | | — | | | | 127,586 | | Interest rate swaps | | Derivative financial instruments | | | 312,210 | | | | — | | Others | | Derivative financial instruments | | | — | | | | — | | | | | | | | | | | | | Total derivatives not designated as hedging instruments | | | 4,857,470 | | | | 1,601,106 | | | | | | | | | | | | | Total assets | | Ps. | 4,857,470 | | | Ps. | 1,601,106 | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | Derivatives liabilities | | Derivatives not designated as hedging instruments | | Location in statement of financial position | | Fair value | | | | | | 2016 | | | 2015 | | Embedded derivatives | | Derivative financial instruments | | Ps. | — | | | Ps. | — | | Forwards | | Derivative financial instruments | | | — | | | | — | | Futures | | Derivative financial instruments | | | — | | | | — | | Stock options | | Derivative financial instruments | | | — | | | | — | | Currency options | | Derivative financial instruments | | | (301,131 | ) | | | — | | Natural gas options | | Derivative financial instruments | | | (11,488 | ) | | | (5,316 | ) | Equity swaps | | Derivative financial instruments | | | — | | | | — | | Cross-currency swaps | | Derivative financial instruments | | | (30,380,405 | ) | | | (26,661,789 | ) | Natural gas swaps | | Derivative financial instruments | | | (27,438 | ) | | | (36,777 | ) | Petroleum product swaps | | Derivative financial instruments | | | — | | | | — | | Propane swaps | | Derivative financial instruments | | | — | | | | (276,553 | ) | Interest rate swaps | | Derivative financial instruments | | | (147,494 | ) | | | (320,252 | ) | Others | | Derivative financial instruments | | | — | | | | — | | | | | | | | | | | | | Total derivatives not designated as hedging instruments | | | (30,867,956 | ) | | | (27,300,687 | ) | | | | | | | | | | | | Total liabilities | | Ps. | (30,867,956 | ) | | Ps. | (27,300,687 | ) | | | | | | | | | | | | Net total | | Ps. | (26,010,486 | ) | | Ps. | (25,699,581 | ) | | | | | | | | | | | |
The following tables presents the net gain (loss) recognized in income on PEMEX’s DFIs for the years ended December 31, 2016, 2015 and 2014, and the line location in the consolidated statement of comprehensive income of such gains and losses.
| | | | | | | | | | | Derivatives not designated as hedging instruments | | Location of gain (loss) recognized in statement of operations on derivatives | | Amount of gain (loss) recognized in statement of operations on derivatives | | | | | | 2016 | | | 2015 | | Embedded derivatives | | Derivative financial instruments (cost) income, net | | Ps. | — | | | Ps. | — | | Forwards | | Derivative financial instruments (cost) income, net | | | — | | | | — | | Futures | | Derivative financial instruments (cost) income, net | | | (1,925,969 | ) | | | 1,387,177 | | Stock options | | Derivative financial instruments (cost) income, net | | | — | | | | — | | Currency options | | Derivative financial instruments (cost) income, net | | | (298,789 | ) | | | — | | Natural gas options | | Derivative financial instruments (cost) income, net | | | (671 | ) | | | 4,786 | | Equity swaps | | Derivative financial instruments (cost) income, net | | | — | | | | — | | Cross-currency swaps | | Derivative financial instruments (cost) income, net | | | (11,633,605 | ) | | | (21,358,898 | ) |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | Derivatives not designated as hedging instruments | | Location of gain (loss) recognized in statement of operations on derivatives | | Amount of gain (loss) recognized in statement of operations on derivatives | | | | | | 2016 | | | 2015 | | Natural gas swaps | | Derivative financial instruments (cost) income, net | | | 831 | | | | 4,355 | | Petroleum product swaps | | Derivative financial instruments (cost) income, net | | | — | | | | — | | Propane swaps | | Derivative financial instruments (cost) income, net | | | (3,805 | ) | | | (1,136,188 | ) | Interest rate swaps | | Derivative financial instruments (cost) income, net | | | (138,979 | ) | | | (351,109 | ) | Others | | Derivative financial instruments (cost) income, net | | | — | | | | — | | | | | | | | | | | | | Total | | Ps. | (14,000,987 | ) | | Ps. | (21,449,877 | ) | | | | | | | | | | | | | | | | | | | | | | | 2014 | | Embedded derivatives | | Derivative financial instruments (cost) income, net | | | | | | Ps | . — | | Forwards | | Derivative financial instruments (cost) income, net | | | | | | | (146,415 | ) | Futures | | Derivative financial instruments (cost) income, net | | | | | | | 4,696,862 | | Stock options | | Derivative financial instruments (cost) income, net | | | | | | | (93,715 | ) | Currency options | | Derivative financial instruments (cost) income, net | | | | | | | — | | Natural gas options | | Derivative financial instruments (cost) income, net | | | | | | | 4,535 | | Equity swaps | | Derivative financial instruments (cost) income, net | | | | | | | 2,402,992 | | Cross-currency swaps | | Derivative financial instruments (cost) income, net | | | | | | | (15,815,498 | ) | Natural gas swaps | | Derivative financial instruments (cost) income, net | | | | | | | 4,977 | | Petroleum product swaps | | Derivative financial instruments (cost) income, net | | | | | | | — | | Propane swaps | | Derivative financial instruments (cost) income, net | | | | | | | — | | Interest rate swaps | | Derivative financial instruments (cost) income, net | | | | | | | (492,308 | ) | Others | | Derivative financial instruments (cost) income, net | | | | | | | — | | | | | | | | | | | | | Total | | | Ps. | (9,438,570 | ) | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
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The exchange rate for U.S. dollars as of December 31, 2019 and 2018 was Ps. 18.8452 and Ps. 19.6829 per U.S. dollar, respectively. The exchange rate for euros as of December 31, 2019 and 2018 was Ps. 21.1537 and Ps. 22.5054 per euro, respectively. For the years ended December 31, 2019, 2018 and 2017, PEMEX recognized a net (loss) gain of Ps. (23,263,923), Ps. (22,258,613) and Ps. 25,338,324, respectively, in the “Derivative financial instruments (cost) income, net” line item with respect to DFIs treated as instruments entered into for trading purposes. The following table presents the fair value of PEMEX’s DFIs that are included in the consolidated statement of financial position in Derivative financial instruments (including both DFIs that have not reached maturity and those that have reached maturity but have not been settled), as of December 31, 2019 and 2018: PEMEX values its DFIs under standard methodologies commonly applied in the financial markets. PEMEX’s related assumptions therefore fall under Level 2 of the fair value hierarchy for market participant assumptions, as described below. | | | | | | | | | | | Derivatives assets Fair value | | | | December 31, 2019 | | | December 31, 2018 | | Derivatives not designated as hedging instruments | | | | | | | | | Crude oil options | | Ps. | — | | | Ps. | 5,690,212 | | Currency options | | | 559,751 | | | | 2,931,025 | | Natural gas options | | | — | | | | 4 | | Cross-currency swaps | | | 10,936,579 | | | | 13,111,838 | | Natural gas swaps | | | — | | | | 260 | | Interest rate swaps | | | — | | | | 648,938 | | Others | | | — | | | | — | | | | | | | | | | | Total derivatives not designated as hedging instruments | | | 11,496,330 | | | | 22,382,277 | | | | | | | | | | | Total assets | | Ps. | 11,496,330 | | | Ps. | 22,382,277 | | | | | | | | | | |
| | | | | | | | | | | Derivatives liabilities Fair value | | | | December 31, 2019 | | | December 31, 2018 | | Derivatives not designated as hedging instruments | | | | | | | | | Forwards | | Ps. | — | | | Ps. | — | | Crude oil options | | | (1,372,577 | ) | | | — | | Currency options | | | (75,776 | ) | | | — | | Natural gas options | | | — | | | | (4 | ) | Cross-currency swaps | | | (15,102,586 | ) | | | (15,890,830 | ) | Natural gas swaps | | | — | | | | (218 | ) | Interest rate swaps | | | (99,232 | ) | | | (4,193 | ) | Others | | | — | | | | — | | | | | | | | | | | Total derivatives not designated as hedging instruments | | | (16,650,171 | ) | | | (15,895,245 | ) | | | | | | | | | | Total liabilities | | Ps. | (16,650,171 | ) | | Ps. | (15,895,245 | ) | | | | | | | | | | Net total | | Ps. | (5,153,841 | ) | | Ps. | 6,487,032 | | | | | | | | | | |
The following tables presents the net gain (loss) recognized in income on PEMEX’s DFIs for the years ended December 31, 2019, 2018 and 2017, in the consolidated statement of comprehensive income which is presented in the “Derivative financial instruments (cost) income, net” line item: | | | | | | | | | | | | | Derivatives not designated as hedging instruments | | Amount of gain (loss) recognized in the Statement of operations on derivatives | | | | December 31, 2019 | | | December 31, 2018 | | | December 31, 2017 | | Embedded derivatives | | Ps. | 4,751,897 | | | Ps. | (3,142,662 | ) | | Ps. | — | | Forwards | | | — | | | | 2,007,393 | | | | (1,976,241 | ) | Futures | | | (1,460,990 | ) | | | 374,112 | | | | (779,950 | ) | Crude oil options | | | (2,762,358 | ) | | | 2,329,051 | | | | (3,771,604 | ) | Currency options | | | (2,447,050 | ) | | | (2,210,301 | ) | | | 5,255,931 | | Natural gas options | | | 49 | | | | 185 | | | | 673 | | Cross-currency swaps | | | (16,019,238 | ) | | | (21,902,567 | ) | | | 27,747,290 | | Natural gas swaps | | | 2 | | | | 117 | | | | 1,780 | | Interest rate swaps | | | (574,338 | ) | | | 286,059 | | | | (34,306 | ) | Others | | | — | | | | — | | | | (1,105,249 | ) | | | | | | | | | | | | | | Total | | Ps. | (18,512,026 | ) | | Ps. | (22,258,613 | ) | | Ps. | 25,338,324 | | | | | | | | | | | | | | |
The fair values determined by Level 1 inputs utilize quoted prices in financial markets for identical assets or liabilities. Fair values determined by Level 2 inputs are based on quoted prices for similar assets or liabilities in financial markets, and inputs other than quoted prices that are observed for the assets or liabilities. Level 3 inputs are unobservable inputs for the assets or liabilities, and include situations where there is little, if any, market activity for the assets or liabilities.
Management uses appropriate valuation techniques based on the available inputs to measure the fair values of PEMEX’s applicable assets and liabilities.
When available, PEMEX measures fair value using Level 1 inputs, because they generally provide the most reliable evidence of fair value.
The following tables present information about PEMEX’s financial assets and liabilities measured at fair value, and indicate the fair value hierarchy of the inputs utilized to determine the fair values as of December 31, 2016 and 2015.
| | | | | | | | | | | | | | | | | | | Fair value hierarchy | | | Total as of 2016 | | | | Level 1 | | | Level 2 | | | Level 3 | | | Assets: | | | | | | | | | | | | | | | | | Derivative financial instruments | | Ps. | — | | | Ps. | 4,857,470 | | | Ps. | — | | | Ps. | 4,857,470 | | Available-for-sale financial assets | | | 6,463,096 | | | | — | | | | — | | | | 6,463,096 | | Permanent investments in associates and other | | | | | | | | | | | 23,154,632 | | | | 23,154,632 | | | | | | | Liabilities: | | | | | | | | | | | | | | | | | Derivative financial instruments | | | — | | | | (30,867,956 | ) | | | — | | | | (30,867,956) | | | | | | | | | | | | | | | | | | Total as of 2015 | | Assets: | | | | | | | | | | | | | | | | | Derivative financial instruments | | Ps. | — | | | Ps. | 1,601,106 | | | Ps. | — | | | Ps. | 1,601,106 | | Available-for-sale financial assets | | | 3,944,696 | | | | — | | | | — | | | | 3,944,696 | | Permanent investments in associates and other | | | | | | | | | | | 24,165,599 | | | | 24,165,599 | | | | | | | Liabilities: | | | | | | | | | | | | | | | | | Derivative financial instruments | | | — | | | | (27,300,687 | ) | | | — | | | | (27,300,687) | |
When market quotes are not available to measure the fair value of PEMEX’s DFIs, PEMEX uses Level 2 inputs to calculate the 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, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The following table shows the carrying value and the estimated fair value of the remaining financial assets and liabilities, which are not valued at fair value, as of December 31, 2016 and 2015:
| | | | | | | | | | | | | | | | | | | Carrying value | | | Fair value | | | Carrying value | | | Fair value | | Assets: | | | | | | | | | | | | | | | | | Cash and cash equivalents | | Ps. | 163,532,513 | | | Ps. | 163,532,513 | | | Ps. | 109,368,880 | | | Ps. | 109,368,880 | | Accounts receivable, net | | | 133,220,527 | | | | 133,220,527 | | | | 79,245,821 | | | | 79,245,821 | | Long-term notes receivable | | | 148,607,602 | | | | 148,607,602 | | | | 50,000,000 | | | | 50,000,000 | | | | | | | Liabilities: | | | | | | | | | | | | | | | | | Suppliers | | | 151,649,540 | | | | 151,649,540 | | | | 167,314,243 | | | | 167,314,243 | | Accounts and accrued expenses payable | | | 18,666,607 | | | | 18,666,607 | | | | 13,237,407 | | | | 13,237,407 | | Short-term debt and current portion of long-term debt | | | 176,166,188 | | | | 176,166,188 | | | | 192,508,668 | | | | 192,508,668 | | Long-term debt | | | 1,807,004,542 | | | | 1,812,109,426 | | | | 1,300,873,167 | | | | 1,265,519,157 | |
The fair values of the financial current assets and current liabilities presented in the table above are included for informational purposes.
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.
The information related to “Cash and cash equivalents”, “Accounts receivable, net”,“Available-for-sale financial assets”, “Permanent investments in associates”, “Long-term notes receivable” and “Debt” is described in the following notes, respectively:
Note 6, Cash, Cash Equivalents and Restricted Cash;
Note 7, Accounts Receivable, Net;
Note 10,Available-for-Sale Financial Assets;
Note 11, Permanent Investments in Associates;
Note 14, Long-term Notes Receivable and other; and
Note 15, Debt.
NOTE 17. 19. | EMPLOYEE BENEFITS Until December 31, 2015, Petróleos Mexicanos and Subsidiary Entities only had defined benefit pension plans for the retirement of its employees, to which only Petróleos Mexicanos and Subsidiary Entities contributes.
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Until December 31, 2015, Petróleos Mexicanos and Subsidiary Entities only had defined benefit pension plans for the retirement of its employees, to which only Petróleos Mexicanos and the Subsidiary Entities contribute. Benefits under these plans are based on an employee’s salary and years of service completed at retirement. As of January 1, 2016, Petróleos Mexicanos and Subsidiary Entities also has a defined contribution pension plan, in which both Petróleos Mexicanos and Subsidiary Entities and the employee contribute to an employee’s individual account. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Benefits under the defined benefit plan are mainly based off of years of service completed by the employee, and their remuneration at the date of retirement. The obligations and costs of these plans are recognized based on an actuarial valuation prepared by independent experts. Within the regulatory framework of plan assets, there are no minimum funding requirements. Petróleos Mexicanos and the Subsidiary Entities have established additional plans to cover post-employment benefits, which are based on actuarial studies prepared by independent experts and which include disability, post-mortem pension and the death of retired employees.
As of December 31, 2016, Petróleos Mexicanos and Subsidiary Entities also have a defined contribution pension plan, in which both Petróleos Mexicanos and Subsidiary Entities and the employee contribute to an employee’s individual account.
Benefits under the defined benefit plan are mainly based on the years of service completed by the employee, and their remuneration at the date of retirement. The obligations and costs of these plans are recognized based on an actuarial valuation prepared by independent experts. Within the regulatory framework of plan assets, there are no minimum funding requirements. Petróleos Mexicanos and the Subsidiary Entities have established additional plans to cover post-employment benefits, which are based on actuarial studies prepared by independent experts and which include disability, post-mortem pension and the death of retired employees, as well as medical services for retired employees and beneficiaries. As of December 31, 2019, Petróleos Mexicanos and Subsidiary Entities funded its employees benefits through Mexican trusts, the resources of which come from the retirement line item of PEMEX’s annual budget (an operating expense), or any other line item that substitutes or relates to this line item, or that is associated to the same line item and the interests, dividends or capital gains obtained from the investments of the trusts. In 2019, the Board of Directors of Petróleos Mexicanos approved modifications to the organic structure of the Company. As a result of this, the Subsidiary Entities and the Corporate transferred and / or received active personnel through the figure of Employer Substitution, with which the Subsidiary Entities and the Corporate recognized the Retirement Obligations of the transferred Personnel whose impact was calculated in the actuarial study carried out by the independent experts. The following table show the amounts associated with PEMEX’s labor obligations: | | | | | | | | | | | December 31, | | | | 2019 | | | 2018 | | Liability for defined benefits at retirement and post-employment at the end of the year | | Ps. | 1,438,849,732 | | | Ps. | 1,067,317,120 | | Liability for other long-term benefits | | | 17,965,635 | | | | 13,224,926 | | | | | | | | | | | Total liability for defined benefits recognized in the consolidated statement of financial position at the end of the year | | Ps. | 1,456,815,367 | | | Ps. | 1,080,542,046 | | | | | | | | | | |
The amount reflected in the Employee Benefit Reserve at the end of the year includes both the defined benefit plan (DB) and the defined contribution plan (DC). As for the defined contribution scheme, the Assets (liabilities) recognized in the balance sheet(DC-warranty) of Ps. 2,023,220 and the Expense in the Income Statement for the period from January to December 2019 (Net Cost of the Period, DC-warranty) of Ps. 316,915. PEMEX’s contribution to the Defined contribution plan during year 2019 amounts to Ps. 523,482. The following tables contain detailed information regarding PEMEX’s retirement and post-employment benefits: | | | | | | | | | | | December 31, | | Changes in the liability for defined benefits | | 2019 | | | 2018 | | Liability for defined benefits at the beginning of the year | | Ps. | 1,067,317,120 | | | Ps. | 1,241,072,307 | | Current Service cost | | | 15,871,004 | | | | 20,819,804 | | Net interest | | | 95,643,572 | | | | 97,571,478 | | Defined benefits paid by the fund | | | (5,759,721 | ) | | | (5,547,170 | ) | Actuarial losses (gains) in other comprehensive results due to: | | | | | | | | | Change in financial assumptions(1) | | | 304,527,285 | | | | (214,105,342 | ) | Change in demographic assumptions(1) | | | (9,012,031 | ) | | | (71,958,462 | ) | For experience during the year | | | 25,228,095 | | | | 53,779,484 | | Assets of the plan during the year | | | (43,628 | ) | | | 646,318 | | Effect of the liability ceiling * | | | (127,137 | ) | | | 279,674 | | Transfer to Long-term Benefits* | | | — | | | | 410,775 | | Real interest, excluding earned interests * | | | (363,873 | ) | | | — | | Adjustment to the Defined Contribution Plan * | | | 61,583 | | | | — | | Remeasurements | | | (96,828 | ) | | | 2,146 | | Contributions paid to the fund | | | (54,395,709 | ) | | | (55,653,892 | ) | | | | | | | | | | Defined benefit liabilities at end of year | | Ps. | 1,438,849,732 | | | Ps. | 1,067,317,120 | | | | | | | | | | |
* | The concepts come from the retirement line itemvaluation of PEMEX’s annual budget (an operating expense), or any other line item that substitutes or relates to this line item, or that is associated to the same line item and the interests, dividends or capital gains obtained from the investmentsPMI CIM´s liabilities. |
(1) | The amount of the trusts. The following table showactuarial losses and (gains) corresponding to the amounts associated with PEMEX’s labor obligations:
| | | | | | | | | | | December 31, | | | | 2016 | | | 2015 | | Defined Benefits Liabilities | | | | | | | | | Liability for defined benefits at retirement and post-employment at the end of the year | | Ps. | 1,202,624,665 | | | Ps. | 1,258,480,019 | | Liability for other long-term benefits | | | 17,784,771 | | | | 20,905,422 | | | | | | | | | | | Total liability for defined benefits recognized in the consolidated statement of financial position at the end of the year | | Ps. | 1,220,409,436 | | | Ps. | 1,279,385,441 | | | | | | | | | | |
The following tables contain detailed information regarding PEMEX’s retirement and post-employment benefits:
| | | | | | | | | | | December 31, | | | | 2016 | | | 2015 | | Changes in the liability for defined benefits | | | | | | | | | Liability for defined benefits at the beginning of the year | | Ps. | 1,258,480,019 | | | Ps. | 1,455,240,835 | | Recognition of the modifications in plan pensions | | | (571,713 | ) | | | (198,951,179 | ) | Current Service cost | | | 23,111,918 | | | | 34,680,772 | | Net interest | | | 90,527,624 | | | | 99,671,447 | | Past service costs | | | (33,244 | ) | | | | | Defined benefits paid by the fund | | | (4,892,767 | ) | | | (4,291,090 | ) | Actuarial (gains) losses in other comprehensive results due to: | | | | | | | | | Change in financial assumptions | | | (149,533,263 | ) | | | (54,415,586 | ) | Change in demographic assumptions | | | 4,842,109 | | | | (46,507,299 | ) | For experience during the year | | | 36,103,857 | | | | 21,875,522 | | In plan assets during the year | | | 285,123 | | | | 366,511 | | Effect of Adoption in subsidiary | | | (1,742 | ) | | | | | Contributions paid to the fund | | | (55,693,256 | ) | | | (49,189,914 | ) | | | | | | | | | | Defined benefit liabilities at end of year | | Ps. | 1,202,624,665 | | | Ps. | 1,258,480,019 | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
In 2016 and 2015, the net actuarial gains recognized in other comprehensive income net of income deferred tax of Ps. (106,387,640) and Ps.(78,680,852), respectively, related to retirement and post-employment benefits not includingof Ps. (309,327,314) generated in the normalyear-to-yearperiod from January to December 2019, correspond mainly to the decrease in the discount rate from 9.29% to 7.53%, as well as the gradual increase in the mortality table fornon-disabled retirees. Other influencing factors were the change in the obligations based on changesdue to movements in the population, age, seniority, wages,salary, pensions and benefits, mainly due tobenefits.
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| | | | | | | | | | | December 31, | | | | 2019 | | | 2018 | | Changes in pension plan assets | | | | | | | | | Plan assets at the beginning of year | | Ps. | 7,200,471 | | | Ps. | 8,485,692 | | Return on plan assets | | | 833,638 | | | | 862,175 | | Payments by the pension fund | | | (59,967,278 | ) | | | (56,834,688 | ) | Company contributions to the fund | | | 54,395,709 | | | | 55,653,892 | | Actuarial (gains) losses in plan assets | | | 43,683 | | | | (653,583 | ) | Effect of the liability ceiling | | | 157,774 | | | | (313,017 | ) | | | | | | | | | | Adjustment to the Defined Contribution Plan * | | | (61,582 | ) | | | — | | Clearance Price* | | | (17,408 | ) | | | — | | | | | | | | | | | Pension plan assets at the end of year | | Ps. | 2,585,007 | | | Ps. | 7,200,471 | | | | | | | | | | |
* | The concepts come from the increase in the discount and expected return on plan assets rates, from 7.41% in 2015 to 8.17% in 2016.valuation of PMI CIM´s liabilities. |
The Labor Fund reduction was due to budgetary requirements derived from the need to meet a financial balance goal in cash flow. In this sense, during 2019 PEMEX’s administration implemented a strategy whereby the contributions to the Fund are scheduled and executed taking into account the initial balance plus the cost of payrolls and retirements for the year, maintaining a minimum operating balance without the operational continuity risk or payment to personnel. Contributions from PEMEX to the Pemex Labor Fund include the payments in advance of the promissory notes matured from January to May 2019 in the amount of Ps. 38,704,883 (Ps. 32,493,666 of principal and Ps. 6,211,217 of interest), for the assumption by the Mexican Government of the payment obligations related to pensions and retirement plans of Petróleos Mexicanos and its Subsidiary Entities (see Note15-A). The expected contribution to the Pemex Labor Fund for 2020 amounts to Ps. 63,485,625 and the expected payments are Ps. 72,405,842. As of December 31, 2019 and 2018, the amounts and types of plan assets are as follows: | | | | | | | | | | | December 31, | | Plan Assets | | 2019 | | | 2018 | | Cash and cash equivalents | | Ps. | 138,795 | | | Ps. | 4,976,125 | | Debt instruments | | | 2,446,212 | | | | 2,224,346 | | | | | | | | | | | Total plan assets | | Ps. | 2,585,007 | | | Ps. | 7,200,471 | | | | | | | | | | |
| | | | | | | | | | | December 31, | | Changes in Defined Benefit Obligations (DBO) | | 2019 | | | 2018 | | Defined benefit obligations at the beginning of the year | | Ps. | 1,074,233,038 | | | Ps. | 1,249,557,999 | | Service costs | | | 14,516,102 | | | | 18,365,156 | | Financing costs | | | 96,350,258 | | | | 98,759,209 | | Past service costs | | | 77,045 | | | | (103,845 | ) | Payments by the fund | | | (65,727,000 | ) | | | (62,388,283 | ) | Change in financial assumptions | | | 304,527,285 | | | | (214,105,342 | ) | Change in demographic assumptions | | | (9,012,031 | ) | | | (71,958,462 | ) | For experience during the year | | | 25,228,095 | | | | 53,779,484 | | Obligations settled | | | (14,237 | ) | | | (457,168 | ) | Remeasurements | | | — | | | | 2,139 | | Reductions | | | (129,909 | ) | | | — | | Modifications to the pension plan | | | 1,307,769 | | | | 2,782,151 | | | | | | | | | | | Defined benefit obligations at the end of year | | Ps. | 1,441,356,415 | | | Ps. | 1,074,233,038 | | | | | | | | | | |
The effects on the Defined Benefits Liability upon retirement and post employment at the end of the period are: The effect of an increase or decrease of one percentage point in the discount rate is a-12.33% increase or a 15.57% decrease in defined benefit obligations. The effect of an increase or decrease of one percentage point in the increase rate in medical services with respect to the cost and obligations related to medical services point is a 3.76% increase or a-2.86% decrease in defined benefit obligations. The effect of an increase or decrease of one percentage point in the inflation is 9.36% and-7.92%, respectively in defined benefit obligations. The effect of an increase or decrease of one percentage point in the wage is a 1.39% and-1.21%, respectively in defined benefit obligations. The effects previously mentioned were determined using the projected unit credit method which was the same method used in the prior valuation. Assumptions regarding future mortality are based on EMSSA2009 to Unique Circular of theComisión Nacional de Seguros y Fianzas (National Commission of Insurance and Bonds) and include improvements to the mortality rate established in 2019. For the December valuation, the mortality table for retired personnel was updated using an actuarial proposal based on the experience of Petróleos Mexicanos and its Subsidiary Entities. The mortality table for the incapacitated personnel is the EMSSInc-IMSS2012 and for the disabled personnel the EMSSInv-IMSS2012. PEMEX’s plan assets is held in the FOLAPE trust, 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. The following tables present additional fair value disclosure about plan assets and indicate their rank, in accordance with IFRS 13, as of December 31, 2019 and 2018: | | | | | | | | | | | | | | | | | | | Fair value measurements as of December 31, 2019 | | Plan assets | | Quoted prices in active markets for identical assets (level 1) | | | Significant observable inputs (level 2) | | | Significant unobservable inputs (level 3) | | | Total | | Cash and cash equivalents | | Ps. | 138,795 | | | Ps. | — | | | Ps. | — | | | Ps. | 138,795 | | Debt instruments | | | 2,446,212 | | | | — | | | | — | | | | 2,446,212 | | | | | | | | | | | | | | | | | | | Total | | Ps. | 2,585,007 | | | Ps. | — | | | Ps. | — | | | Ps. | 2,585,007 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | Fair value measurements as of December 31, 2018 | | Plan assets | | Quoted prices in active markets for identical assets (level 1) | | | Significant observable inputs (level 2) | | | Significant unobservable inputs (level 3) | | | Total | | Cash and cash equivalents | | Ps. | 4,976,125 | | | Ps. | — | | | Ps. | — | | | Ps. | 4,976,125 | | Debt instruments | | | 2,224,346 | | | | — | | | | — | | | | 2,224,346 | | | | | | | | | | | | | | | | | | | Total | | Ps. | 7,200,471 | | | Ps. | — | | | Ps. | — | | | Ps. | 7,200,471 | | | | | | | | | | | | | | | | | | |
As of December 31, 2019 and 2018, the principal actuarial assumptions used in determining the defined benefit obligation for the plans are as follows: | | | | | | | | | | | December 31, | | | | 2019 | | | 2018 | | Rate of increase in salaries | | | 5.02 | % | | | 5.02 | % | Rate of increase in pensions | | | 4.00 | % | | | 4.00 | % | Rate of increase in medical services | | | 7.65 | % | | | 7.65 | % | Inflation assumption | | | 4.00 | % | | | 4.00 | % | Rate of increase in basic basket for active personnel | | | 5.00 | % | | | 5.00 | % | Rate of increase in basic basket for retired personnel | | | 4.00 | % | | | 4.00 | % | Rate of increase in gas and gasoline | | | 4.00 | % | | | 4.00 | % | Discount and return on plan assets rate(1) | | | 7.53 | % | | | 9.29 | % | Average length of obligation (years) | | | 17.52 | | | | 15.04 | |
| | | | | | | | | | | December 31, | | | | 2016 | | | 2015 | | Changes in pension plan assets | | | | | | | | | Plan assets at the beginning of year | | Ps. | 5,228,909 | | | Ps. | 2,993,244 | | Expected return on plan assets | | | 742,477 | | | | 340,335 | | Payments by the pension fund | | | (51,889,821 | ) | | | (46,843,824 | ) | Company contributions to the fund | | | 55,693,256 | | | | 49,189,912 | | Actuarial (gains) losses in plan assets | | | (285,155 | ) | | | (450,758 | ) | | | | | | | | | | Pension plan assets at the end of year | | Ps. | 9,489,666 | | | Ps. | 5,228,909 | | | | | | | | | | |
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.
The expected contribution to the fund for 2017 amounts to Ps. 53,387,230 and the expected payments for 2017 is Ps. 60,851,407.
As of December 31, 2016 and 2015, the amounts and types of plan assets are as follows:
| | | | | | | | | Plan Assets | | 2016 | | | 2015 | | Cash and cash equivalents | | Ps. | 5,906,660 | | | Ps. | 343,488 | | Available-for-sale financial assets | | | 2,694,291 | | | | 4,061,655 | | Debt instruments | | | 888,715 | | | | 823,766 | | | | | | | | | | | Total plan assets | | Ps. | 9,489,666 | | | Ps. | 5,228,909 | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | 2016 | | | 2015 | | Changes in Defined Benefit Obligations (DBO) | | | | | | | | | Defined benefit obligations at the beginning of the year | | Ps. | 1,263,708,928 | | | Ps. | 1,458,234,079 | | Service costs | | | 23,107,851 | | | | 34,693,923 | | Financing costs | | | 91,270,383 | | | | 100,049,689 | | Past service costs | | | (33,244 | ) | | | (66,160 | ) | Payments by the fund | | | (56,778,359 | ) | | | (51,134,915 | ) | Amount of (gains) and losses recognized through other comprehensive income: | | | (108,589,515 | ) | | | (79,116,509 | ) | Modifications to the pension plan | | | (571,713 | ) | | | (198,951,179 | ) | | | | | | | | | | Defined benefit obligations at the end of year | | Ps. | 1,212,114,331 | | | Ps. | 1,263,708,928 | | | | | | | | | | |
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-12.27% increase or a 15.53% decrease in defined benefit obligations.
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 22.75% increase or a-17.38% decrease in defined benefit obligations.
Assumptions regarding future mortality are based on EMSSA2009 to Unique Circular of theComisión Nacional de Seguros y Fianzas (National Commission of Insurance and Bonds) and include changes to the mortality rate established in 2016.
The following tables present additional fair value disclosure about plan assets and indicate their rank, in accordance with IFRS 13, as of December 31, 2016 and 2015:
| | | | | | | | | | | | | | | | | | | Fair value measurements | | Plan Assets | | Quoted prices in active markets for identical assets (level 1) | | | Significant observable inputs (level 2) | | | Significant unobservable inputs (level 3) | | | Total | | Cash and cash equivalents | | Ps. | 5,906,660 | | | Ps. | — | | | Ps. | — | | | Ps. | 5,906,660 | | Available—for—sale financial assets | | | 2,694,291 | | | | — | | | | — | | | | 2,694,291 | | Debt instruments | | | 888,715 | | | | — | | | | — | | | | 888,715 | | | | | | | | | | | | | | | | | | | Total | | Ps. | 9,489,666 | | | Ps. | — | | | Ps. | — | | | Ps. | 9,489,666 | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | | | | | Fair value measurements | | Plan Assets | | Quoted prices in active markets for identical assets (level 1) | | | Significant observable inputs (level 2) | | | Significant unobservable inputs (level 3) | | | Total | | Cash and cash equivalents | | Ps. | 343,488 | | | Ps. | — | | | Ps. | — | | | Ps. | 343,488 | | Available—for—sale financial assets | | | 4,061,655 | | | | — | | | | — | | | | 4,061,655 | | Debt instruments | | | 823,766 | | | | — | | | | — | | | | 823,766 | | | | | | | | | | | | | | | | | | | Total | | Ps. | 5,228,909 | | | Ps. | — | | | Ps. | — | | | Ps. | 5,228,909 | | | | | | | | | | | | | | | | | | |
As of December 31, 2016 and 2015, the principal actuarial assumptions used in determining the defined benefit obligation for the plans are as follows:
| | | | | | | | | | | 2016 | | | 2015 | | Rate of increase in salaries | | | 4.77 | % | | | 5.00 | % | Rate of increase in pensions | | | 3.75 | % | | | 3.75 | % | Rate of increase in medical services | | | 7.65 | % | | | 7.65 | % | Inflation assumption | | | 3.75 | % | | | 3.75 | % | Discount and expected return on plan assets rate | | | 8.17 | % | | | 7.41 | % | Average length of obligation (years) | | | 17.67 | | | | 19.31 | |
(1) | In accordance with IAS 19, the discount rate used iswas determined by consideringusing as a reference the government zero coupon curve generated from the Bondsinterest rates observed in Mexican Government bonds denominated in pesos (Cetes and M and Cetes,bonds), as well as the flow of payments expected to cover contingent liabilities.obligations. Other long-term benefits
Petróleos Mexicanos and Subsidiary Entities has established other long-term benefit plans for its employees, to which employees do not contribute, which correspond to the seniority premiums payable for disability, death and survivors benefits (payable to the widow and beneficiaries of worker), medical service, gas and basic basket for beneficiaries. Benefits under these plans are based on an employee’s salary and years of service completed at separation date. Obligations and costs of such plans are recorded in accordance with actuarial valuations performed by independent actuaries.
The amounts recognized for long-term obligations for the years ended December 31, 2016 and 2015
|
Other long-term benefits Petróleos Mexicanos and Subsidiary Entities has established other long-term benefit plans for its employees, to which employees do not contribute, which correspond to the seniority premiums payable for disability, death and survivor benefits (payable to the widow and beneficiaries of worker), medical service, gas and basic basket for beneficiaries. Benefits under these plans are based on an employee’s salary and years of service completed at separation date. Obligations and costs of such plans are recorded in accordance with actuarial valuations performed by independent actuaries. The amounts recognized for long-term obligations for the years ended December 31, 2019 and 2018 are as follows: | | | | | | | | | | | December 31, | | Change in the liability for defined benefits | | 2019 | | | 2018 | | Liabilities defined benefit at the beginning of year | | Ps. | 13,224,926 | | | Ps. | 17,363,815 | | Present cost services | | | — | | | | (18,085 | ) | Charge to income for the year | | | 2,164,866 | | | | 2,885,875 | | Actuarial losses (gains) recognized in income due to: | | | | | | | | | Change in financial assumptions | | | 5,007,261 | | | | (3,741,132 | ) | Change in demographic assumptions | | | (245,829 | ) | | | (751,052 | ) | For experience during the year | | | (2,418,954 | ) | | | (2,259,569 | ) | Real interest, excluding earned interests * | | | 264,917 | | | | 125,485 | | Effect of the liability ceiling * | | | (30,638 | ) | | | 33,344 | | Adjustment to the Defined Contribution Plan * | | | (914 | ) | | | — | | Benefits paid | | | — | | | | (2,980 | ) | Transfer to the post-employment benefit fund recognized in other comprehensive income | | | — | | | | (410,775 | ) | | | | | | | | | | Liabilities defined benefit at the end of year | | Ps. | 17,965,635 | | | Ps. | 13,224,926 | | | | | | | | | | |
*The concepts come from the valuation of PMI CIM´s liabilities. The expected long-term benefit payments amount to Ps. 336,526. The principal actuarial assumptions used in determining the defined benefit obligation for the plans are: The effect of an increase or decrease of one percentage point in the discount rate is a-17.02% increase or a 21.66% decrease, respectively, in defined benefit obligations. The effect of an increase or decrease of one percentage point in the increase rate in medical services with respect to the cost and obligations related to medical services is a 8.52% increase or a-5.89% decrease, respectively, in defined benefit obligations. The effect of an increase or decrease of one percentage point in the inflation is 0% in defined benefit obligations. The effect of an increase or decrease of one percentage point in the wage is a 4.57% increase or a -4.04% decrease, respectively in defined benefit obligations. The effects previously mentioned, were determined using the projected unit credit method which was the same used in the prior valuation. | | | | | | | | | | | December 31, | | | | 2019 | | | 2018 | | Rate of increase in salaries | | | 5.02 | % | | | 5.02 | % | Inflation assumption | | | 4.00 | % | | | 4.00 | % | Rate of increase in basic basket for active personnel | | | 5.00 | % | | | 5.00 | % | Rate of increase in basic basket for retired personnel | | | 4.00 | % | | | 4.00 | % | Rate of increase in gas and gasoline | | | 4.00 | % | | | 4.00 | % | Discount and return on plan assets rate | | | 7.53 | % | | | 9.29 | % | Average length of obligation (years) | | | 17.52 | | | | 15.04 | |
In accordance with IAS 19, the discount rate was determined using as a reference the interest rates observed in Mexican Government bonds denominated in pesos (Cetes and M bonds), as well as the flow of payments expected to cover contingent obligations. | | | | | | | | | | | 2016 | | | 2015 | | Change in the liability for defined benefits | | | | | | | | | Liabilities defined benefit at the beginning of year | | | Ps.20,905,422 | | | | Ps.18,847,693 | | Charge to income for the year | | | 3,420,158 | | | | 5,818,221 | | Actuarial (gains) losses recognized in income due to: | | | | | | | | | Change in financial assumptions | | | (3,028,211 | ) | | | (1,746,245 | ) | Change in demographic assumptions | | | (119,982 | ) | | | (40,831 | ) | For experience during the year | | | (3,390,396 | ) | | | (1,973,416 | ) | Benefits paid | | | (2,220 | ) | | | — | | | | | | | | | | | Liabilities defined benefit at the end of year | | | Ps.17,784,771 | | | | Ps.20,905,422 | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The principal actuarial assumptions used in determining the defined benefit obligation for the plans are as follows:
| | | | | | | | | | | 2016 | | | 2015 | | Rate of increase in salaries | | | 4.77 | % | | | 5.00 | % | Inflation assumption | | | 3.75 | % | | | 3.75 | % | Discount and expected return on plan assets rate | | | 8.17 | % | | | 7.41 | % | Average length of obligation (years) | | | 17.67 | | | | 19.31 | |
In accordance with IAS 19, the discount rate used is determined by considering the government zero coupon curve generated from the fixed rate bonds Mexican Government (“Bonds M”) and Cetes, as well as the flow of payments expected to cover contingent liabilities.
NOTE 18. 20. | PROVISIONS FOR SUNDRY CREDITORS |
At December 31, 2019 and 2018, the provisions for sundry creditors and others is as follows: | | | | | | | | | | | 2019 | | | 2018 | | Provision for plugging of wells (Note 13) | | Ps. | 80,849,900 | | | Ps. | 84,050,900 | | Provision for trails in process (Note 27) | | | 8,075,031 | | | | 6,483,078 | | Provision for environmental costs | | | 9,086,977 | | | | 11,219,278 | | | | | | | | | | | | | Ps. | 98,011,908 | | | Ps. | 101,753,256 | | | | | | | | | | |
The following tables show the allowance account for plugging of wells, trials in progress and environmental costs: | | | | | | | | | | | Plugging of wells | | | | 2019 | | | 2018 | | Balance at the beginning of the year | | Ps. | 84,050,900 | | | Ps. | 68,797,600 | | (Decrease) Increase capitalized in fixed assets | | | (2,826,003 | ) | | | 22,313,529 | | Unwinding of discount against income | | | 3,318,384 | | | | (6,770,200 | ) | Unrealized foreign exchange loss | | | (3,577,200 | ) | | | (183,000 | ) | Amount used | | | (116,181 | ) | | | (107,029 | ) | | | | | | | | | | Balance at the end of the year | | Ps. | 80,849,900 | | | Ps. | 84,050,900 | | | | | | | | | | |
| | | | | | | | | | | Trials in progress | | | | 2019 | | | 2018 | | Balance at the beginning of the year | | Ps. | 6,483,078 | | | Ps. | 7,812,689 | | Additions against income | | | 1,901,930 | | | | 1,194,547 | | Provision cancellation | | | (309,977 | ) | | | (2,502,807 | ) | Amount used | | | — | | | | (21,351 | ) | | | | | | | | | | Balance at the end of the year | | Ps. | 8,075,031 | | | Ps. | 6,483,078 | | | | | | | | | | |
| | | | | | | | | | | Environmental costs | | | | 2019 | | | 2018 | | Balance at the beginning of the year | | Ps. | 11,219,278 | | | Ps. | 11,067,134 | | Additions against income | | | 4,745,835 | | | | 1,390,838 | | Provision cancellation | | | (6,873,905 | ) | | | (1,106,693 | ) | Amount used | | | (4,231 | ) | | | (132,001 | ) | | | | | | | | | | Balance at the end of the year(1) | | Ps. | 9,086,977 | | | Ps. | 11,219,278 | | | | | | | | | | |
(1) | At December 31, 2016 and 2015,PEMEX is subject to the provisions for sundry creditors and others is as follows:
| | | | | | | | | | | 2016 | | | 2015 | | Provision for plugging of wells (Note 12) | | | Ps.64,967,710 | | | | Ps.56,894,695 | | Provision for trails in process (Note 25) | | | 15,119,692 | | | | 12,775,263 | | Provision for environmental costs | | | 8,230,476 | | | | 3,521,838 | | | | | | | | | | | | | | Ps.88,317,878 | | | | Ps.73,191,796 | | | | | | | | | | |
The following tables show the allowance account for plugging of wells, trials in progress and environmental costs:
| | | | | | | | | | | Plugging of wells | | | | 2016 | | | 2015 | | Balance at the beginning of the year | | | Ps.56,894,695 | | | | Ps.52,460,749 | | Additions capitalized in fixed assets | | | (3,878,503 | ) | | | 5,067,782 | | Discount rate against income | | | 11,968,966 | | | | (608,160 | ) | Deductions | | | (17,448 | ) | | | (25,676 | ) | | | | | | | | | | Balance at the end of the year | | | Ps.64,967,710 | | | | Ps.56,894,695 | | | | | | | | | | |
| | | | | | | | | | | Trials in progress | | | | 2016 | | | 2015 | | Balance at the beginning of the year | | | Ps.12,775,263 | | | | Ps.19,787,440 | | Additions against income | | | 3,049,202 | | | | 2,013,242 | | Discount rate against income | | | (632,806 | ) | | | (2,608,494 | ) | Deductions(1) | | | (71,967 | ) | | | (6,416,925 | ) | | | | | | | | | | Balance at the end of the year | | | Ps.15,119,692 | | | | Ps.12,775,263 | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | Environmental costs | | | | 2016 | | | 2015 | | Balance at the beginning of the year | | | Ps. 3,521,838 | | | | Ps. 6,174,754 | | Additions against income | | | 6,118,454 | | | | 1,087,867 | | Discount rate against income | | | (1,347,285 | ) | | | (3,622,807 | ) | Deductions | | | (62,531 | ) | | | (117,976 | ) | | | | | | | | | | Balance at the end of the year(2) | | | Ps. 8,230,476 | | | | Ps. 3,521,838 | | | | | | | | | | |
| (1) | Deductions made during 2015 are the result of the agreement between PEMEX and Conproca achieved during the third quarter of 2015. |
| (2) | PEMEX is subject to the provisions of theLey General del Equilibrio Ecológico y la Protección al Ambiente (General Law on Ecological Equilibrium and Environmental Protection). To comply with this law, environmental audits of PEMEX’s larger operating, storage and transportation facilities have been or are being conducted. Following the completion of such audits, PEMEX has signed various agreements with theProcuraduría Federal de Protección al Ambiente (Federal Attorney of Environmental Protection) to implement environmental remediation and improve environmental plans. Such plans contemplate remediation for environmental damages, as well as related investments for the improvement of equipment, maintenance, labor and materials. |
Provision for plugging of wells
PEMEX records a provision at present value for the future plugging costimprovement of an oil production facility or pipeline atequipment, maintenance, labor and materials. The period of execution of these works is not defined, as they are subject to the timebudgets that it is built.
The plugging provision represents the present value of plugging costs relatedmay be granted 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.
|
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. The decrease in the provision against fixed assets in 2019 corresponds to a decrease in the direct costs reported by the current contracts for the plugging of wells. For 2018, the discount rates used in 2018 compared to 2017 rates showed an increase in the national rate by an average of 12% and 11% on average for the U.S. dollar rate, resulting in a decrease in provision at the end of 2018 by Ps. 6,770,200. 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. Well plugging of works will be carried out as follows: NOTE 19. DISCLOSURES OF CASH FLOW
The following items representnon-cash transactions and are presented for disclosure purposes:
| | | | | | | | | | | | | | | For the years ended December 31, | | | | 2016 | | | 2015 | | | 2014 | | Investing activities | | | | | | | | | | | | | Available-for-sale financial assets | | Ps. | 207,816 | | | Ps. | (3,206,316 | ) | | Ps. | (765,412 | ) | Financing activities | | | | | | | | | | | | | Employee benefits equity effect(i) | | | 106,277,761 | | | | 78,556,569 | | | | (275,962,370 | ) | Net (benefits) cost of the year for employee benefits(i) | | | 109,738,416 | | | | (62,549,142 | ) | | | 121,723,328 | | Financed Public Works Contracts | | | 146,217,292 | | | | 2,001,093 | | | | 3,207,947 | | Currency translation effect | | | 21,386,902 | | | | 13,262,101 | | | | 11,379,657 | | Accrued interest | | | 9,326,945 | | | | 4,816,784 | | | | 3,856,736 | |
| (i) | Items that do not impact cash flows but that reflect the actuarial valuation at the end of the year. |
| | | | | Year | | Amount | | 2020 | | Ps. | 3,102,131 | | 2021 | | | 4,252,905 | | 2022 | | | 6,247,100 | | 2023 | | | 4,031,808 | | 2024 | | | 5,687,936 | | More than 5 years | | | 57,528,020 | | | | | | | Total | | Ps. | 80,849,900 | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
NOTE 20. 21. | INCOME TAXES AND FEDERAL DUTIES |
TheLey de Ingresos sobre Hidrocarburos (“Hydrocarbons Revenue Law”) was published in the Official Gazette of the Federation on August 11, 2014, and came into effect, on January 1, 2015. The Hydrocarbons Revenue law and the Federal Revenue Law were published in the Official Gazette of the Federation on August 11, 2014 and November 13, 2014, respectively, and came into effect, in each case, on January 1, 2015. TheLey de Ingresos sobre Hidrocarburos (Hydrocarbons Revenue Law) and the Federal Revenue Law sets forth the fiscal regime for fiscal year 2015 comprise the fiscal regime applicable to PEMEX for fiscal year 2015. The new fiscal regime applicable to Petróleos Mexicanos applicable to the assignments and the contracts that were established on such date. Likewise, every year the Federal Revenue Law is published in the Official Gazette of the Federation and includes specific regulations for Petróleos Mexicanos and the Subsidiary Entities. Tax regime applicable to Assignments The fiscaltax regime applicable to the exploration and production for the assignments granted to PEMEX by the Mexican Government contemplatesincludes the following taxes and duties: a. | Derecho por la Utilidad Compartida “DUC” (Profit-sharing Duty). |
As of January 1, 2015, Pemex Exploration and Production is obligated to pay a Profit-sharing Duty. As of January 1, 20162019 and 2015,2018, the applicable rate of this duty was 68.75%65.00% and 70%66.25% respectively. The computation of this duty is based on the excess of the value of hydrocarbons produced during the fiscal year (including self-consumption, shrinkage and burning), minus certain permitted deductions by the Hydrocarbons Revenue Law, including part of the investments and some costs, expenses and duties. Pursuant to the Hydrocarbons Revenue Law, this duty decreaseshas been decreased on an annual basis. As of January 1, 2020, this duty was set at 58.00%. During 2019, this duty will be set at 65%. During 2016, this duty totaledwas Ps. 304,299,019343,242,476 from annual payments presented on April 3, 2017March 10, 2020 paid as follows: Ps. 301,050,325,347,515,447, in monthly installment payments, resulting in a favorable balance of Ps. 4,272,971, presented in accounts receivable, net line item in the statement of financial position.
During 2018, this duty totaled Ps. 443,294,170 from annual payments presented on March 25, 2019 paid as follows: Ps. 443,785,240, in monthly installment payments and a payablefavorable balance amounting to Ps. 3,248,694. During 2015 this duty totaled Ps. 375,990,409, paid as follows: Ps. 266,136,000491,070, presented in monthly advance payments, Ps. 85,234,004accounts receivable, net line item in monthly installment payments and a payable balance amounting to Ps. 24,620,405 asthe statement of December 31, 2015.financial position.
The accounting result differs from the tax result mainly due to differences in depreciation,non-deductible expenses and others. Such differences generate a defereddeferred DUC. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBERTotal DUC and other as of December 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)2019, 2018 and 2017 are integrated as follows:
| | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | DUC | | Ps. | 343,242,476 | | | Ps. | 443,294,170 | | | Ps. | 372,902,629 | | DUC from prior years | | | (39 | ) | | | 14,883 | | | | 2,095,429 | | Other | | | — | | | | 446,464 | | | | 260,775 | | Deferred DUC expense (benefit) | | | 29,570,063 | | | | 26,178,078 | | | | (37,214,624 | ) | | | | | | | | | | | | | | Total DUC and other | | Ps. | 372,812,500 | | | Ps. | 469,933,595 | | | Ps. | 338,044,209 | | | | | | | | | | | | | | |
The principal factors generating the deferred DUC are the following: | | | | | | | | | | | 2016 | | | 2015 | | Deferred DUC asset: | | | | | | | | | Provisions | | Ps. | 570,544,863 | | | Ps. | 34,632,301 | | | | | | | | | | | Total deferred DUC asset | | | 570,544,863 | | | | 34,632,301 | | | | | | | | | | | Deferred Profit-sharing duty liability: | | | | | | | | | Wells, pipelines, properties, plant and equipment | | | (473,406,721 | ) | | | (29,231,976 | ) | | | | | | | | | | Deferred DUC liability | | | (473,406,721 | ) | | | (29,231,976 | ) | | | | | | | | | | Deferret asset net | | | 97,138,142 | | | | 5,400,325 | | Valuation reserve(1) | | | (69,486,571 | ) | | | (5,400,325 | ) | | | | | | | | | | Net, deferred DUC asset | | Ps. | 27,651,571 | | | Ps. | — | | | | | | | | | | |
| | | | | | | | | | | 2019 | | | 2018 | | Deferred DUC asset: | | | | | | | | | Tax credits | | Ps. | 546,317,620 | | | Ps. | 577,278,473 | | | | | | | | | | | Deferred Profit-sharing duty liability: | | | | | | | | | Wells, pipelines, properties, plant and equipment | | | (151,479,977 | ) | | | (288,913,978 | ) | | | | | | | | | | Deferred DUC asset net | | | 394,837,643 | | | | 288,364,495 | | Unrecognized Deferred DUC | | | (385,719,590 | ) | | | (249,676,378 | ) | | | | | | | | | | Net, deferred DUC asset | | Ps. | 9,118,054 | | | Ps. | 38,688,117 | | | | | | | | | | |
Deferred income taxes not recognized | (1) | PEMEX added to its valuation reserve since it estimates that some allowed deductions will not materialize in future years. |
The expected benefitexpense for DUC is different from that which would result from applying the 65%65.00% rate to the tax base, as a result of the items mentioned below: | | | 2016 | | | 2015 | | | 2019 | | | 2018 | | | 2017 | | Expected expense: | | Ps. | 159,897,683 | | | Ps. | 200,925,491 | | | Ps. | 43,432,712 | | | Ps. | 307,269,035 | | | Ps. | 127,436,912 | | Increase (decrease) resulting from: | | | | | | | | | | | Non-cumulative profit | | | (423,761,673 | ) | | | 483,449,494 | | | Non-deductible expenses | | | 263,863,990 | | | | (684,374,984 | ) | | Expected benefit contract | | | | (4,948,542 | ) | | | (5,797,144 | ) | | | — | | Duties from prior year | | | | (26 | ) | | | 9,860 | | | | — | | Non-cumulative profit(1) | | | | (1,130,442,995 | ) | | | (593,158,584 | ) | | | (514,780,219 | ) | Non-deductible expenses(1) | | | | 1,091,958,851 | | | | 291,676,831 | | | | 387,343,306 | | Production value | | | 441,655,000 | | | | 483,916,169 | | | | 495,394,906 | | | | 610,206,103 | | | | 518,433,469 | | Deductible duties | | | (29,918,201 | ) | | | (34,200,348 | ) | | | (39,891,325 | ) | | | (55,005,397 | ) | | | (39,503,110 | ) | Deferred DUC reserve | | | | — | | | | — | | | | (48,689,612 | ) | Deferred DUC expense | | | | 29,570,063 | | | | 26,178,078 | | | | — | | Deductions cap | | | (107,437,780 | ) | | | (73,033,117 | ) | | | (112,261,105 | ) | | | (111,906,534 | ) | | | (94,552,741 | ) | DUC from prior years | | | | (39 | ) | | | 14,883 | | | | 2,095,429 | | Other | | | | — | | | | 446,464 | | | | 260,775 | | | | | | | | | | | | | | | | | | DUC-Profit-sharing duty expense | | Ps. | 304,299,019 | | | Ps. | 376,682,705 | | | Ps. | 372,812,500 | | | Ps. | 469,933,595 | | | Ps. | 338,044,209 | | | | | | | | | | | | | | | | | |
(1) | For 2019, fluctuations changes are included which have no effect on the determination of the DUC. |
On AprilAugust 18, 2016, a decree granting a fiscal benefit to Pemex Exploration and Production (assignee) was published in2017, the Official Gazette of the Federation published a decree, granting tax benefits for extraction activities in assignments with mature and increases/ or marginal fields, substantially increasing the limit on the amount Pemex Exploration and Production can deduct forpercentage of costs, expenses and investments that PEMEX could deduct for purposes of calculating the DUC. As a result, PEMEX received a tax benefit of Ps. 8,677,891, Ps. 11,110,177 and Ps. 7,769,915, as of December 31, 2019, 2018 and 2017, respectively. On May 24, 2019, the Official Gazette of the Federation published a decree, granting tax benefits through the application of higher deduction limits on concepts such as costs, expenses and investments stated in the calculation of itsHydrocarbons Revenue Law on the DUC for terrestrial areas orassessment in maritime areas with water depths lowerassignments other than 500 meters. The benefit was granted to furtherthose applied in the Mexican Government’s strategic hydrocarbon exploration and extraction activities through assignments, in light of historically low international hydrocarbons prices in late 2015 and early 2016 combined withprevious paragraph. As a historically low oil production platform in Mexico, thereby, together with other actions avoiding that the worldwide economic conditions had affected the national economy. The benefit obtained was Ps. 40,213,913. Additionally, the Mexican Government grantedresult, PEMEX a fiscal support on November 16, by Ps. 28,439,379. This benefit consisted inreceived a tax credit against the DUCbenefit of Ps. 17,110,177 as a measure to mitigate the impact generated in the financial environment of the Mexican hydrocarbons exploration and extraction companies (assignees), as international energy prices continued to be depressed, generating effects on the economies of several countries, including Mexico. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBERDecember 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)2019.
b. | Derecho de Extracción de Hidrocarburos (Hydrocarbons Extraction Duty). |
This duty is to be calculated based onusing a rate based on a formula applicable to each type of hydrocarbon, the volume of production and utilizing the relevant market price for hydrocarbons in U.S. Dollars. During 20162019 Pemex Exploration and Production made payments of Ps.43,517,383.Ps. 61,371,269, which are included in the cost of sales line item. c. | Derecho de Exploración de Hidrocarburos (Exploration Hydrocarbons Duty). |
The Mexican Government is entitled to collect aPemex Exploration and Production as “assignee” must make monthly payment of Ps. 1,175.42payments for this duty, which rates for 2019 were 1,355.82 pesos per square kilometer ofnon-producing areas. After 60 months, this tax increases to Ps. 2,810.783,242.17 pesos per square kilometer for each additional month that the area is not producing. These amounts will be updated on an annual basis in accordance with the national consumer price index.
During 2016,2019, Pemex Exploration and Production made payments under this duty, totaling Ps. 962,740.1,049,713, which are included in the cost of sales line item. d. | Impuesto por la actividad de Exploración y Extracción de Hidrocarburos (Exploration and Extraction Hydrocarbons Duty). |
The assignments granted by the Mexican Government create a tax on the exploration and extraction activities carried out in the corresponding area. The monthly tax paid during the exploration phase and until the extraction phase begins is 1,533.151,768.45 pesos per square kilometer. During the extraction phase, the monthly tax from the start of the extraction phase and until the assignment ends is 6,132.607,073.83 pesos per square kilometer. During 20162019 payments for this tax amounted Ps. 3,944,738.4,421,537, which are included in the cost of sales line item. Tax Regime applicable to contracts: As of January 1, 2015, the tax regime applicable to Pemex Exploration and Production for contracts is set forth in the Hydrocarbons Revenue lawLaw which regulates, among other things, the fiscal terms applicable to the exploration and extraction contracts (license, profit sharing contracts, production sharing and services) and sets duties and other taxes paid to the Mexican Government. The Hydrocarbons Revenue Law also establishes the following duties applicable to PEMEX in connection with assignments granted to it by the Mexican Government: | • | | Cuota Contractual para la Fase Exploratoria (Exploration Phase Contractual Fee) |
During the exploration phase of an exploration and extraction contract, the Mexican Government is entitled to collect a monthly payment of 1,175.421,355.82 pesos per square kilometer ofnon-producing areas. After 60 months, this fee increases to 2,810.783,242.17 pesos per square kilometer for each additional month that the area is not producing. The fee amount will be updated on an annual basis in accordance with the national consumer price index. PEMEX did not trigger this fee in 2016. Royalty payments to the Mexican Government are determined based on the “contractual value” of the relevant hydrocarbons, which is based on a variety of factors, including the type of underlying hydrocarbons (e.g., crude oil, associated natural gas,non-associated natural gas or condensates), the PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
volume of production and the market price. Royalties are payable in connection with licensing contracts, production-sharing contracts and profit-sharing contracts. PEMEX did not trigger this royalty payment in 2016. | • | | Pago del Valor Contractual (Contractual Value Payment) |
Licensing contracts require a payment to the Mexican GovernementGovernment calculated as a percentage of the “contractual value” of the hydrocarbons produced, as determined by the SHCP on acontract-by-contract basis. PEMEX did not trigger this contractual value payment in 2016. | • | | Porcentaje a la Utilidad Operativa (Operating Profit Payment) |
Production-sharing contracts and profit-sharing contracts require a payment equivalent to a specified percentage of operating profits. In the case of production-sharing contracts, this payment shall be madein-kind through delivery of the hydrocarbons produced. In the case of profit-sharing contracts, this payment shall be made in cash. PEMEX did not trigger this type of payment in 2016. | • | | Bono a la Firma (Signing Bonus) |
Upon execution of a licensing contract, a signing bonus is to be paid to the Mexican Government in an amount specified by the SHCP in the relevant bidding terms and conditions or in the contracts resulting from a migration. PEMEX did not trigger this signing bonus in 2016. | • | | Impuesto por la actividad de Exploración y Extracción de Hidrocarburos (Hydrocarbons Exploration and Extraction Activities Tax) |
Contracts for exploration and extraction granted by the Mexican Government will include a specified tax on the exploration and extraction activities carried out in the relevant area. A monthly tax of 1,533.151,768.45 pesos per square kilometer is payable during the exploration phase until the extraction phase begins. During the extraction phase of a project, a monthly tax of 6,132.67,073.83 pesos per square kilometer is payable from the starting date until the relevant contract for exploration and extraction is terminated. Other applicable taxes Beginning with the creation of theThe Subsidiary Entities during 2015, they becameare subject to the Income Tax Law and the Value Added Tax Law. Pemex Industrial Transformation is also subject to the Special Tax on Production and Services (IEPS Tax).
20162019 indirect taxes are below mentioned:as listed below:
IEPS Tax on the sale of automotive fuels: This is a tax imposed on domestic sales of automotive fuels, including gasoline and diesel, which Pemex Industrial Transformation collects on behalf of the Mexican Government. The applicable quotas for 20162018 were: 4.164.81 pesos per liter of Magna gasoline; 3.524.06 pesos per liter of Premium gasoline and 4.585.28 pesos per liter of diesel. This fee is updated annually according to inflation and adjusted monthly by the tax authorities. IEPS Tax to benefit Mexican states and municipalities: This tax is a quota on domestic sales of automotive fuels, including gasoline and diesel, which Pemex Industrial Transformation collects on behalf of the Mexican PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Government. The applicable quotas for 20162019 were 36.6842.43 cents per liter of Magna gasoline, 44.7551.77 cents per liter of premium gasoline and 30.4435.21 cents per liter of diesel. This rate is updated annually with inflation. The funds raised by this quota are allocated to the states and municipalities as provided in the Tax Coordination Law. IEPS Tax on Fossil Fuels: This tax is a quota on the internal sales of fossil fuels, which Pemex Industrial Transformation collects on behalf of the Mexican Government. The applicable quotas for 20162019 were 6.297.26 cents per liter for propane, 8.159.40 cents per liter for butane, 11.0512.74 cents per liter for jet and other fuel, 13.2015.22 cents per liter for turbosine and other kerosene, 13.4015.46 cents per liter for diesel, 14.3116.50 cents per liter for fuel oil and Ps. 16.6019.15 per ton for petroleum coke. This share increasesrate is updated annually according to inflation. b. | Value Added Tax (“VAT”) |
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, applicable to payers of this tax. The general rate to be applied is 16%. Certain activities with incentives will have the rate of 0%. Beginning on January 1, 2019, a new Decree of fiscal incentives applies to the northern border region, which consists of a credit equivalent to 50% of the general rate, applicable directly at the time of the sale or service. This incentive is applicable in 6 states in the northern border region and includes 43 municipalities in those states. Petróleos Mexicanos and its Subsidiary Entities apply this tax benefit for the operations they carry out within the municipalities of the States included in the Decree. The VAT is caused by the sales of goods, rendering of services, granting of the temporary use of goods in the national territory and by the importation of goods and services to the national territory. VAT taxpayers transfer VAT to their customers and are entitled to credit the VAT paid to their suppliers and on their imports. The net balance between VAT transferred to customers and paid to suppliers and on imports results each month in the VAT to be paid to the tax authorities or in an amount in favor of the taxpayer. The taxpayer has the right to credit VAT in favor against VAT payable in future months, to request a refund or to offset it against other payable federal taxes. Taxes on Income are described below: As of January 1, 2015, Petróleos Mexicanos, Subsidiary Entities and the subsidiary companies residing in Mexico for tax purposes are subject to the Income Tax Law. This tax is calculated by applying a rate of 30% to the tax result. Tax result is the excess of total revenues over the allowed deductions and tax losses from previous years. Accounting income differs from taxable income primarily due to the effects of inflation and differences between depreciation and othernon-deductible expenses. For the years ended December 31, 2016, 20152019, 2018 and 2014, Petroleos2017, Petróleos Mexicanos and its Subsidiary Companies incurred the following income tax expense (benefit): | | | 2016 | | | 2015 | | | 2014 | | | 2019 | | | 2018 | | | 2017 | | Current income tax | | Ps. | 6,201,842 | | | Ps. | 7,426,892 | | | Ps. | 4,673,476 | | | Ps. | 4,247,998 | | | Ps. | 3,109,971 | | | Ps. | 3,546,912 | | Deferred income tax | | | (18,842,211 | ) | | | (53,014,159 | ) | | | (775,506 | ) | | | (33,237,010 | ) | | | (11,465,343 | ) | | | (9,334,064 | ) | | | | | | | | | | | | | | | | | | | | Total(1) | | Ps. | (12,640,369 | ) | | Ps. | (45,587,267 | ) | | Ps. | 3,897,970 | | | Ps. | (28,989,012 | ) | | Ps. | (8,355,372 | ) | | Ps. | (5,787,152 | ) | | | | | | | | | | | | | | | | | | | | Income tax REFIPRE (Preferent Fiscal Regime) from PMH HBV dividends | | | Ps. | — | | | Ps. | — | | | Ps. | 722,984 | | | | | | | | | | | | |
As of December 31, 2019 and 2018, the deferred income tax asset net of Pemex Industrial Transformation and Pemex Exploration and Production has not been recognized because it is estimated that not enough taxable income will be generated in future periods. | (1) | As a result of the repeal of the IRP, Petróleos Mexicanos recognized these amounts in the statement of comprehensive income for the year ended December 31, 2014. |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Income taxes non-recognized
| | | | | | | | | | | Tax effect | | | | 2019 | | | 2018 | | Assets | | | | | | | | | Provisions | | Ps. | 181,119,082 | | | Ps. | 161,103,132 | | Properties, plant and equipment | | | 6,736,006 | | | | 17,825,338 | | Tax loss carryforwards | | | 588,208,624 | | | | 489,166,032 | | | | | | | | | | | Total assets | | Ps. | 776,063,712 | | | Ps. | 668,094,502 | | Liabilities | | | | | | | | | Well, pipelines, properties, plant and equipment | | Ps. | 127,849,064 | | | Ps. | 159,942,782 | | Other | | | 584,711 | | | | 1,072,383 | | | | | | | | | | | Total liabilities | | | 128,433,775 | | | | 161,015,165 | | | | | | | | | | | Total assets, net | | Ps. | 647,629,937 | | | Ps. | 507,079,337 | | | | | | | | | | |
The principal factors generating the deferred income tax are the following: | | | December 31, | | | | | | | | | | | | 2016 | | | 2015 | | | 2018 | | | Recognized in profit and loss | | | Recognized in OCI | | | 2019 | | Deferred income tax asset: | | | | | | | | | | | | | Provisions | | Ps. | 5,906,581 | | | Ps. | 25,414,822 | | | Ps. | 8,836,693 | | | Ps. | 43,491 | | | Ps. | — | | | Ps. | 8,880,184 | | Employee benefits provision | | | 125,973,332 | | | | 247,834,882 | | | | 40,314,749 | | | | 17,362,550 | | | | 10,613,057 | | | | 68,290,356 | | Advance payments from clients | | | 1,046,010 | | | | 1,015,357 | | | | 35,807 | | | | 269,193 | | | | | | 305,000 | | Accrued liabilities | | | 2,269,561 | | | | 1,514 | | | | 611,652 | | | | 1,489,359 | | | | | | 2,101,011 | | Reserve due to depreciation of inventories | | | | 982,228 | | | | (792,477 | ) | | | | | 189,751 | | Non-recoverable accounts receivable | | | 778,179 | | | | 104,346 | | | | 763,924 | | | | (54,596 | ) | | | | | 709,328 | | Derivative financial instruments | | | 223,518 | | | | 22,506 | | | | 29,674 | | | | 106,586 | | | | | | 136,260 | | Wells, pipelines, properties and equipment | | | 458,273,897 | | | | 446,970,333 | | | | 11,862,776 | | | | (3,791,206 | ) | | | | | 8,071,570 | | Tax loss carryforwards(1) | | | 43,327,737 | | | | 14,894,231 | | | Tax loss carry-forwards(1) | | | | 20,659,110 | | | | 17,768,533 | | | | | | 38,427,643 | | | | | | | | | | | | | | | | | | | | | Total deferred income tax asset | | | 637,798,815 | | | | 736,257,991 | | | | 84,096,613 | | | | 32,401,433 | | | | 10,613,057 | | | | 127,111,103 | | Valuation reserve(2) | | | (565,125,697 | ) | | | (681,357,607 | ) | | | | | | | | | | Net deferred income tax asset | | | 72,673,118 | | | | 54,900,384 | | | | | | | | | | | Deferred income tax liability: | | | | | | | | | | | | | Wells, pipelines, properties plant and equipment | | | (3,632,294 | ) | | | (1,909,529 | ) | | Wells, pipelines, properties, plant and equipment | | | | (2,630,597 | ) | | | 1,015,893 | | | | | | (1,614,704 | ) | Other | | | (502,242 | ) | | | (274,305 | ) | | | (1,881,715 | ) | | | (180,316 | ) | | | | | (2,062,031 | ) | | | | | | | | | | | | | | | | | | | | Total deferred income tax liability | | | (4,134,536 | ) | | | (2,183,834 | ) | | | (4,512,312 | ) | | | 835,577 | | | | | | (3,676,735 | ) | Net long-term deferred income tax asset | | | Ps. | 79,584,301 | | | Ps. | 33,237,010 | | | Ps. | 10,613,057 | | | Ps. | 123,434,368 | | | | | | | | | | | | | | | | | | | | | Net long-term deferred income tax liability | | Ps. | 68,538,582 | | | Ps. | 52,716,550 | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 2017 | | | Recognized in profit and loss | | | Recognized in OCI | | | 2018 | | Deferred income tax asset: | | | | | | | | | | | | | | | | | Provisions | | Ps. | 7,110,665 | | | Ps. | 1,726,028 | | | Ps. | — | | | Ps. | 8,836,693 | | Employee benefits provision | | | 47,086,457 | | | | 2,181,696 | | | | (8,953,404 | ) | | | 40,314,749 | | Advance payments from clients | | | 42,208 | | | | (6,401 | ) | | | — | | | | 35,807 | | Accrued liabilities | | | 744,865 | | | | (133,213 | ) | | | — | | | | 611,652 | | Reserve due to depreciation of inventories | | | — | | | | 982,228 | | | | — | | | | 982,228 | | Non-recoverable accounts receivable | | | 739,748 | | | | 24,176 | | | | — | | | | 763,924 | | Derivative financial instruments | | | 79,255 | | | | (49,581 | ) | | | — | | | | 29,674 | | Wells, pipelines, properties and equipment | | | 3,990,113 | | | | 7,872,663 | | | | — | | | | 11,862,776 | | Tax loss carry-forwards(1) | | | 21,532,979 | | | | (873,869 | ) | | | — | | | | 20,659,110 | | | | | | | | | | | | | | | | | | | Total deferred income tax asset | | | 81,326,290 | | | | 11,723,727 | | | | (8,953,404 | ) | | | 84,096,613 | | Deferred income tax liability: | | | | | | | | | | | | | | | | | Wells, pipelines, properties, plant and equipment | | | (3,443,618 | ) | | | 813,021 | | | | — | | | | (2,630,597 | ) | Other | | | (810,310 | ) | | | (1,071,405 | ) | | | — | | | | (1,881,715 | ) | | | | | | | | | | | | | | | | | | Total deferred income tax liability | | | (4,253,928 | ) | | | (258,384 | ) | | | — | | | | (4,512,312 | ) | | | | | | | | | | | | | | | | | | Net long-term deferred income tax liability | | Ps. | 77,072,362 | | | Ps. | 11,465,343 | | | Ps. | (8,953,404 | ) | | Ps. | 79,584,301 | | | | | | | | | | | | | | | | | | |
(1) | | (1) Tax loss carryforwards expiresexpire in 2026.
| (2) Due to PEMEX’s estimate that not enough taxable income will be generated in future periods, a valuation reserve was recognized to account for the deferred income tax asset.2029.
|
Expense attributable to the profit (loss) from continuing operations before income taxes was different from that which would result from applying the 30% rate to profit, as a result of the items listed below: | | | For the years ended December 31, | | | For the years ended December 31, | | | | 2016 | | 2015 | | 2014 | | | 2019 | | | 2018 | | | 2017 | | Expected income tax expense | | Ps. | (14,901,324 | ) | | Ps. | (3,089,241 | ) | | Ps. | 272,457 | | | Ps. | 3,707,023 | | | Ps. | (41,316,168 | ) | | Ps. | (20,055,588 | ) | Increase (decrease) resulting from: | | | | | | | | | | | | | Tax effect ofinflation-net | | | 8,098,213 | | | (1,618,327 | ) | | 4,020,358 | | | | 6,487,844 | | | | 11,742,346 | | | | 14,302,118 | | Difference between accounting and tax depreciation | | | (1,765,183 | ) | | (107,231 | ) | | 1,116,630 | | | | (5,290,734 | ) | | | (3,359,548 | ) | | | (3,713,920 | ) | Unrecognized Deferred tax asset(1) | | | | — | | | | 21,885,731 | | | | — | | Impairment reserve for deferred taxes | | | | (24,189,922 | ) | | | — | | | | — | | Retirement benefits | | | | (10,698,848 | ) | | | — | | | | — | | Non-deductible expenses | | | 1,558,120 | | | (1,921,515 | ) | | 2,437,778 | | | | 4,826,745 | | | | 1,781,012 | | | | 1,954,659 | | Others-net(1) | | | (5,630,195 | ) | | (38,850,953 | ) | | (3,949,253 | ) | | Others-net | | | | (3,831,120 | ) | | | 911,255 | | | | 1,725,579 | | | | | | | | | | | | | | | | | | | | | Income tax expense | | Ps. | (12,640,369 | ) | | Ps. | (45,587,267 | ) | | Ps. | 3,897,970 | | | Income tax benefit | | | Ps. | (28,989,012 | ) | | Ps. | (8,355,372 | ) | | Ps. | (5,787,152 | ) | | | | | | | | | | | | | | | | | | | |
(1) | (1) | AsDue to the fact that the circumstances to evaluate the recovery of December 31, 2016, the tax benefit from pending tax losses to be amortized in Pemex Logistics improved in 2019, a deferred tax effect of gains and losses from Petróleos Mexicanos and PMI CIM’s performance are presented in (loss) profit comprehensive income in the amounts of Ps. (1,914,534) and Ps. (109,879), respectively. As of December 31, 2015 and 2014, the deferred tax effect of PMI CIM’s performanceasset was Ps. (124,285) and Ps. (51,720), respectively.recognized. |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBERAs of December 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)2019 and 2018, the net accumulated effect of actuarial gains and losses on deferred tax was Ps. 19,347,685 and Ps. 8,734,628, respectively. In addition, as of December 31, 2019 and 2018, the deferred tax effect of actuarial gains and losses is presented in comprehensive (loss) income in the amounts of Ps.10,613,057 and Ps. (8,953,404), respectively.
d.NOTE 22. | Impuestos a los Rendimientos Petroletos (IRP)EQUITY (DEFICIT) |
Until December 31, 2014, theImpuesto a los Rendimientos Petroleros (Hydrocarbons Income Tax or “IRP”) was applicable to Petróleos Mexicanos and its Subsidiary Entities other than Pemex-Exploration and Production, and was calculated by applying a 30% rate to the excess of total revenues minus authorized deductions, in accordance with the IRP Federal Income Tax Law.
For the years ended on December 31, 2014, PEMEX generated an IRP was as follows:
| | | | | | | 2014 | | Current IRP
| | Ps. | 5,086,841 | | Deferred IRP(1)
| | | (23,822,142 | ) | | | | | | Total IRP
| | Ps. | (18,735,301 | ) | | | | | |
| (1) | As a result of the repeal of the IRP in 2015, Petróleos Mexicanos and its Productive Subsidiary and Companies wrote down in 2015 the Ps. 23,822,142 effect of the deferred IRP for 2014 and recognized deferred income taxes for Ps. 124,002 in the related statement of comprehensive income for the year ended December 31, 2014. |
The expense (benefit) attributable to the profit (loss) from continuing operations before IRP was different from that which would result from applying the 30% rate to profit, as can be seen below:
| | | | | | | December 31,
2014 | | Expected IRP expense (benefit)
| | Ps. | (5,065,075 | ) | Increase (decrease) resulting from:
| | | | | Tax effect ofinflation-net
| | | 4,182,641 | | Deferred tax write down
| | | (23,822,142 | ) | Difference between accounting and tax depreciation
| | | 1,116,630 | | Non-taxable loss from Equity Participation
| | | (3,129,801 | ) | Non-deductible expenses
| | | 5,367,726 | | Other-net
| | | 2,614,720 | | | | | | | IRP expense
| | Ps. | (18,735,301 | ) | | | | | |
NOTE 21. EQUITY (DEFICIT), NET
a. | Certificates of Contribution “A” |
On January 19, 2015,The capitalization agreement between Petróleos Mexicanos and the Mexican Government made an equity contributionstates that the Certificates of Ps. 10,000,000 to Petróleos Mexicanos in accordance with theLey Federal del Presupuesto y Responsabilidad Hacendaria (Federal Law of Budget and Fiscal Accountability).Contribution “A” constitute permanent capital.
On December 24, 2015,August 3, 2016, the Mexican Government through the SHCP, issued Ps. 184,230,586 in exchange for a Ps. 50,000,000non-negotiable promissory note in favor of Ps. 50,000,000 duePetróleos Mexicanos on December 31, 205024, 2015, for the assumption by the Mexican Government of the payment obligations related to pensions and retirement plans of Petróleos Mexicanos and its Subsidiary Entities (see Note 14). PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
On April 21, 2016, the Mexican Government made an equity contribution to Petróleos Mexicanos in the amount of Ps. 26,500,000 following the guidelines established in the Federal Budget and Fiscal Responsibility. This contribution was recognized as an increase in Certificates of Contribution “A.”
On August 3, 2016, the Mexican Government issued Ps. 184,230,586 in exchange for the Ps. 50,000,000non-negotiable promissory note issued to Petróleos Mexicanos on December 24, 2015, which was recognized as a Ps. 135,439,612 increase in equity. The Ps. 135,439,612 increase in equity was the result of the Ps. 184,230,586 value of the promissory notes as of June 29, 2016, minus the Ps. 50,000,000 promissory note received by Petróleos Mexicanos on December 24, 2015, plus a Ps. 1,209,026 increase in the discount value of the promissory notes from June 29, 2016 to August 15, 2016, the date on which Petróleos Mexicanos received the promissory notes.notes (see Note15-A).
The capitalization agreement betweenOn September 11, 2019, Petróleos Mexicanos and the Mexican Government states that thereceived Ps. 122,131,000 in Certificates of Contribution “A” constitute permanent capital.from the Mexican Government to help improve PEMEX’s financial position.
PEMEX’s permanent equity isCertificates of Contribution “A” are as follows: | | | | | | | Amount | | Certificates of Contribution “A” as of December 31, 20142017 | | Ps. | Ps. 134,604,835356,544,447 | | Increase in Certificates of Contribution “A” during 20152018 | | | 60,000,000— | | | | | | | Certificates of Contribution “A” as of December 31, 20152018 | | | 194,604,835356,544,447 | | Increase in Certificates of Contribution “A” during 20162019 | | | 161,939,612122,131,000 | | | | | | | Certificates of Contribution “A” as of December 31, 20162019 | | Ps. | Ps. 356,544,447 478,675,447 | | | | | | |
b. | Mexican Government contributions |
AsDuring 2019 and 2018 there were no Mexican Government contributions apart from Certificates of Contribution “A” as of December 31, 2016 and 2015 there were not operations in Mexican Government contibutions.2019.
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. As of December 31, 2016During 2019 and 2015,2018, there were no changes to the legal reserve.
d. | Accumulated other comprehensive income (loss) |
As a result of the discount rate analysis related to employee benefits liability, for the period ended December 31, 2019, PEMEX recognized net actuarial losses in other comprehensive income (loss) net of deferred income tax for Ps. 309,334,500, related to retirement and post-employment benefits as a result of a decrease in the discount rates. Furthermore, for the period ended December 31, 2018, PEMEX recognized net actuarial gains in other comprehensive income (loss) net of deferred income tax for Ps. 222,545,556, related to retirement and post-employment benefits as a result of an increase in the discount rates. e. | Accumulated deficit from prior years |
PEMEX has recorded negative earnings in the past several years. However, theLey de Concursos Mercantiles (Commercial(“Commercial Bankruptcy Law of Mexico)Mexico”) is not applicable to Petróleos Mexicanos and the Subsidiary Entities. 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 (see Note2-a). 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). PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)equity.
e.f. | Uncertainty related to Going concern |
The consolidated financial statements have been prepared on a going concern basis. Facts and conditions During 2019, 2018 and 2017, PEMEX recognized a net loss of Ps. 347,911,084, Ps. 180,419,837 and Ps. 280,850,619, respectively. In addition, as of December 31, 2019 PEMEX had a negative equity of Ps. 1,997,208,362, mainly due to continuous net losses, and a negative working capital of Ps. 211,651,257 as of December 31, 2019. PEMEX also has substantial debt, incurred mainly to finance investments needed to carry out its operations. Due to its heavy fiscal burden resulting from the payment of hydrocarbon extraction duties and other taxes, the cash flows derived from PEMEX’s operations in recent years have not been sufficient to fund its operations and investment programs. As a result, PEMEX’s indebtedness has increased significantly, and its working capital has decreased. Additionally, the recent significant crude oil price drop, which started in March 2020 and the negative economic impact as a result of the current global health crisis caused by theCovid-19 pandemic have negatively impacted PEMEX’s financial performance (see Note 28). PEMEX’s revenues have decreased both from the decline in crude oil prices and from a decrease in the demand of petroleum products. In March and April 2020, certain ratings agencies downgraded PEMEX’s credit rating. Most recent credit downgrades have been mainly driven by the effects ofCovid-19 and the associated reduced economic activity, as well the low crude oil prices and the downgrade of the Mexican Government’s sovereign debt rating. These downgrades could have an impact on PEMEX’s access to the financial markets, the cost and terms of PEMEX’s new debt and contract renegotiations that PEMEX may carry out during 2020 (see Note 28). PEMEX has budget autonomy, and, in public finance terms, is subject to the cash flows financial balance goals approved in theDecreto de Presupuesto de Egresos de la Federación (“Federal Expenditure Budget Decree”). This represents the difference between its gross revenues (inflows) and its total budgeted expenditures (outflows) including the financial cost of its debt, which is proposed by the SHCP and approved by the Chamber of Deputies. The Federal Budget for 2020 authorized PEMEX to have a negative financial balance budget of Ps. 62,623,500. This shortfall does not consider payments of principal of PEMEX’s debt due in 2020. In addition, PEMEX estimates that the drop in crude oil prices, the lower economic activity caused by the Covid-19 pandemic and the volatility of the foreign exchange rates, will increase the negative financial balance for 2020. This additional negative financial balance reflects efforts to mitigate the impact of the adverse conditions through a reduction of PEMEX’s capital expenditures for exploration and productions activities by approximately Ps. 40,500,000, its operating expenses by approximately Ps. 5,000,000, and a Ps. 65,000,000 tax benefit granted by the Mexican Government, by offsetting DUC payments up to such amount. PEMEX has short- term debt principal maturities of Ps. 211,491,554, as of December 31, 2019. PEMEX is carrying out the following actions, among others, to preserve liquidity: In order to satisfy its short-term debt obligations, in January 2020 PEMEX issued notes and bonds in the international markets for a total of U.S.$ 5,000,000 and conducted a liability management program (debt restructuring plan). Additionally, PEMEX has the capacity to refinance its short-term debt maturities through direct and revolving bank credit facilities and loans guaranteed by export credit agencies. TheLey de Ingresos de la Federación para el Ejercicio Fiscal de 2020 (“Revenue Law for 2020”) also authorized PEMEX a net additional indebtedness up to Ps. 34,875,000, which is considered as public debt by the Mexican Government and may be used to partially cover its negative financial balance. This indebtedness may arise from available credit lines and other financing sources. If necessary, PEMEX has Ps. 177,396,740 (U.S. $7,450,000 and Ps. 37,000,000) in available credit lines in order to provide liquidity, subject to the authorized net indebtedness. PEMEX is currently working on a strategy for savings from better negotiation of current and future contracts, for obtaining revenues from its crude price oil hedge program of its Mexican crude oil production and alternative financing mechanisms that do not constitute public debt, in order to improve its financial condition. PEMEX believes it has the capacity to comply with its payments obligations and its operating continuity, however, PEMEX’s future cash flows are uncertain, and certain events are outside of its control. Any adverse impact from sustained decrease in crude oil prices below the budgeted average price for 2020 and from the slow-down of the economy would have an adverse impact on PEMEX’s results of operation, cash flows and may require it to consider additional actions to address the shortfalls. The combined effect of the above-mentioned events indicates the existence of significant doubt about PEMEX’s ability to continue as a going concern. On July 15, 2019, the Board of Directors of Petróleos Mexicanos approved PEMEX’s business plan for 2019 through 2023 (the “2019-2023 Business Plan”). The 2019-2023 Business Plan describes goals such as modernizing the company, improving its competitiveness and guaranteeing its financial viability in the short, medium and long-term. The 2019-2023 Business Plan describes measures intended to address the main structural problems of the company: its high tax burden, its debt and low investment. PEMEX continuously monitors and updates its 2019-2023 Business Plan. PEMEX is currently reviewing this plan to assess the impact that the March 2020 drop in crude oil prices and the Covid-19 pandemic will have on the business plan. Even though these events will impact PEMEX’s 2020 results of operations and investment activity (see Note 28), PEMEX is committed to the above detailed actions of its 2019-2023 Business Plan. On the other hand, PEMEX conducted liability management programs (debt restructuring plan) during 2019 and at the beginning of 2020 that improved its debt profile, from U.S. $8,700,000 to U.S. $6,300,000 and improved PEMEX’s liquidity for 2020 and future years. Petróleos Mexicanos and its Subsidiary Entities are not subject to the Ley de Concursos Mercantiles (the Bankruptcy Law) and none of PEMEX’s existing financing agreements include any financial covenants that could lead to the demand for immediate payment of its debt due to having negative equity ornon-compliance with financial ratios. PEMEX prepared its consolidated financial statements as of December 31, 2019 and 2018 on a going concern basis. There are certain conditions that have generated important uncertainty and significant doubts concerning the entity’s ability to continue operating, including recurring net losses, negative working capital and negative equity. These financial statements do not contain any adjustments that would be required if they were not prepared on a going concern basis. g. | Non-controlling interest |
Effective July 1, 2005, PEMEX entered into an option agreement with BNP Private Bank & Trust Cayman Limited; the option was not excercisedexercised and was terminated on July 20, 2015. On July 1, 2015, PEMEX also entered into a new option agreement with SML Trustees Limited to acquire 100% of the shares of Pemex Finance, Ltd, which allows PEMEX to have control over Pemex Finance Ltd. because of the potential voting rights. As of the date of these consolidated financial statements the option agreement has not been exercised. As a result, Until November 30, 2018, the financial results of Pemex Finance, Ltd. arewere included in thesethe consolidated financial statements of PEMEX. Under IFRS, variations in income and equity from Pemex Finance, Ltd. arewere presented in the consolidated statements of changes in equity (deficit), net as“non-controlling interest,”interest”, and as net income and comprehensive income for the year, attributable tonon-controlling interest, in the consolidated statements of comprehensive income, due to the fact that PEMEX doesdid not currently own any of the shares of Pemex Finance, Ltd. On December 17, 2018, PEMEX exercised its option to purchase all shares of Pemex Finance Ltd., and as of December 31, 2019 and 2018, this company is no longer presented as a“non-controlling interest”. Similarly, because PEMEX does not currently own all of the shares of PMI CIM, HJ BARRERAS and COMESA, variations in income and equity from these entities are also presented in the consolidated statements of changes in equity (deficit) as“non-controlling interest.” As of December 31, 20162019 and 2015,2018,non-controlling interest represented losses of Ps. 141,793 and gains of Ps. 976,705 and Ps. 253,278,477,118 , respectively, in PEMEX’s equity (deficit). NOTE 23. | COST AND EXPENSES BY NATURE |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
NOTE 22. OTHER REVENUES ANDEXPENSES-NET
Other revenuesCost and expenses—netexpenses by nature for each of the years ended December 31, 2016, 20152019, 2018 and 2014,2017, was as follows:
| | | | | | | | | | | | | | | 2016 | | | 2015 | | | 2014 | | Revenues: | | | | | | | | | | | | | Fiscal support (Profit-sharing duty) (see Note 20 a.) | | Ps. | 28,439,379 | | | Ps. | — | | | Ps. | — | | Price of sale share (see Note11-iv) | | | 22,684,736 | | | | — | | | | — | | Assets value transferred to CENAGAS (see Note9-a) | | | 7,450,931 | | | | — | | | | — | | Other income for services | | | 4,266,854 | | | | 3,953,888 | | | | 1,607,273 | | Gain on sale of fixed assets | | | 2,687,652 | | | | | | | | | | Provisions | | | 1,240,222 | | | | 3,657,465 | | | | 969,850 | | Other | | | 12,988,579 | | | | 3,335,489 | | | | 4,364,756 | | Negative IEPS | | | — | | | | 2,519,126 | | | | 43,108,707 | | Claims recovery | | | 3,695,217 | | | | 1,975,281 | | | | 780,509 | | Bidding terms, sanctions, penalties and other | | | 3,223,437 | | | | 1,262,458 | | | | 3,031,159 | | Franchise fees | | | 1,059,333 | | | | 1,148,528 | | | | 1,055,753 | | | | | | | | | | | | | | | Total other revenues | | | 87,736,340 | | | | 17,852,235 | | | | 54,918,007 | | | | | | | | | | | | | | | Expenses: | | | | | | | | | | | | | Loss in the Assets value transferred to CENAGAS (see Note9-a) | | | (35,333,411 | ) | | | — | | | | — | | Transportation and distribution of natural gas | | | (8,830,967 | ) | | | (369,317 | ) | | | — | | Loss in the sale of associates (see Note11-iv) | | | (7,473,698 | ) | | | — | | | | — | | Claims | | | (4,757,116 | ) | | | (12,527,548 | ) | | | (5,885,828 | ) | Impairment of goodwill | | | (4,007,018 | ) | | | | | | | | | Disposal of assets | | | (2,140,943 | ) | | | (3,364,063 | ) | | | (1,778,641 | ) | Services provided | | | (2,656,571 | ) | | | (3,237,984 | ) | | | (2,281,174 | ) | Other | | | (779,496 | ) | | | (552,955 | ) | | | (3,054,848 | ) | Other provisons | | | (2,801,540 | ) | | | (173,634 | ) | | | (4,365,119 | ) | | | | | | | | | | | | | | Total other expenses | | | (68,780,760 | ) | | | (20,225,501 | ) | | | (17,365,610 | ) | | | | | | | | | | | | | | Other revenues andexpenses-net | | Ps. | 18,955,580 | | | Ps. | (2,373,266 | ) | | Ps. | 37,552,397 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | Purchases | | Ps. | 600,657,759 | | | Ps. | 756,867,203 | | | Ps. | 581,355,161 | | Depreciation of wells, pipelines, properties, plant and equipment, depreciation of rights of use and amortization of intangible assets | | | 145,159,657 | | | | 153,382,040 | | | | 156,704,513 | | Net periodic cost of employee benefits | | | 116,176,949 | | | | 114,621,614 | | | | 108,073,075 | | Personnel services | | | 101,252,318 | | | | 104,284,007 | | | | 94,470,130 | | Unsuccessful wells | | | 76,279,192 | | | | 15,443,086 | | | | 6,164,624 | | Exploration and Extraction Hydrocarbons Duty and taxes | | | 67,106,181 | | | | 88,145,519 | | | | 63,900,374 | | Maintenance | | | 65,640,388 | | | | 48,562,536 | | | | 48,011,036 | | Raw materials and spare parts | | | 22,729,422 | | | | 16,850,075 | | | | 19,165,103 | | Auxiliary services with third-parties | | | 19,492,638 | | | | 23,675,019 | | | | 21,924,327 | | Exploration expenses | | | 12,764,473 | | | | 13,048,078 | | | | 6,562,463 | | Other operation taxes and duties | | | 10,942,558 | | | | 12,248,474 | | | | 9,900,726 | | Other operating costs and expenses | | | 12,711,674 | | | | 16,672,534 | | | | 1,755,170 | | Integrated Contracts | | | 9,947,983 | | | | 8,015,606 | | | | 15,378,544 | | Insurance | | | 5,821,020 | | | | 5,647,101 | | | | 4,948,610 | | Losses from fuels subtraction(1) | | | 4,644,846 | | | | 39,439,107 | | | | 22,945,447 | | Freight | | | 3,197,421 | | | | 3,525,843 | | | | 10,317,132 | | Inventory variations | | | 1,063,678 | | | | (62,237,591 | ) | | | (25,542,431 | ) | | | | | | | | | | | | | | Total cost of sales and general expenses | | Ps. | 1,275,588,157 | | | Ps. | 1,358,190,251 | | | Ps. | 1,146,034,004 | | | | | | | | | | | | | | |
NOTE 23. RELATED PARTIES
(1) | In accordance with Resolution RES / 179/2017, issued by the ERC, losses from fuels subtraction are losses outside the scope of the contemplated operating costs as a result of various illicit actions, including the theft of and illicit market in fuels. |
Pemex Logistics is responsible for distributing hydrocarbons through the pipelines, preserving their quality and delivering them from the point of reception to the user at the point of destination. Pemex Logistics determines the volume of missing hydrocarbons through monthly calculations. Balances
NOTE 24. | OTHER REVENUES AND OTHER EXPENSES |
Other revenues andexpenses-net for each of the years ended December 31, 2019, 2018 and 2017, was as follows: | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | Revenues from reinsurance premiums | | Ps. | 4,869,266 | | | Ps. | 3,615,907 | | | Ps. | 1,986,568 | | Other income for services | | | 1,994,572 | | | | 3,786,253 | | | | 4,720,546 | | Claims recovery | | | 2,687,258 | | | | 3,979,698 | | | | 16,386,250 | | Other | | | 3,418,551 | | | | 7,525,714 | | | | 4,277,207 | | Bidding terms, sanctions, penalties and other | | | 1,503,437 | | | | 630,365 | | | | 825,956 | | Franchise fees | | | 389,730 | | | | 1,125,339 | | | | 917,934 | | Gain on sale of fixed assets | | | 77,633 | | | | 1,850,052 | | | | | | Participation rights(1) | | | — | | | | 14,165,042 | | | | — | | Sale of fixed assets by bidding(2) | | | — | | | | 3,301,653 | | | | — | | Price of sale share | | | — | | | | 1,262,987 | | | | 3,139,103 | | Cash distributions | | | — | | | | 274,621 | | | | — | | | | | | | | | | | | | | | Total other revenues | | Ps. | 14,940,447 | | | Ps. | 41,517,631 | | | Ps. | 32,253,564 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | Transportation and distribution of natural gas | | Ps. | (5,735,145 | ) | | Ps. | (12,600,191 | ) | | Ps. | (8,447,031 | ) | Other | | | (1,280,841 | ) | | | (5,348,666 | ) | | | (7,927,150 | ) | Claims | | | (173,414 | ) | | | (474,299 | ) | | | (3,640,036 | ) | Transportation and distribution of natural gas | | | (22,291 | ) | | | (41,964 | ) | | | (6,652,878 | ) | Loss in the sale of associates | | | — | | | | — | | | | (412,393 | ) | | | | | | | | | | | | | | Total other expenses | | Ps. | (7,211,691 | ) | | Ps. | (18,465,120 | ) | | Ps. | (27,079,488 | ) | | | | | | | | | | | | | |
(1) | Relates to rights receivable of EECs, for which the operators of the EECs guarantee their participation in such contracts. |
(2) | Relates mainly to exploration and production fixed assets. |
The balances and transactions with related parties are mainly due to: (i) the sale and purchase of products, (ii) the billing of administrative services, rendered and (iii) financial loans amongbetween related parties. The terms Directors and conditionsemployees of transactions withPetróleos Mexicanos and the Subsidiary Entities are subject to regulations related parties were no more favorable than those available to other parties on an arm’s length basis. Underconflict of interest such as the Petróleos Mexicanos Law,Ley Federal de Responsabilidades Administrativas de los Servidores Públicos (Federal Law of Administrative Responsibilities of Public Officials), which applies to PEMEX’s directors and employees,thePolíticas y Lineamientos Anticorrupción para Petróleos Mexicanos, sus Empresas Productivas Subsidiarias y, en su caso, Empresas Filiales (Anticorruption Policies and Guidelines for Petróleos Mexicanos, its Subsidiary Productive Companies and, where applicable, Subsidiary Companies). Under these provisions, PEMEX’s 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
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
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.” Related parties include individuals and companies that do not form part of PEMEX, but that could take advantage of being in a privileged position as a result of their relation with PEMEX. Also included are situations in which PEMEX could take advantage of a special relationship in order to benefit its financial position or results of operations. Prior to his appointmentMain operations identified by PEMEX with this kind of directors and officers are as Secretaryfollows:
Mr. Manuel Bartlett Díaz, Chief Executive Officer of Energy, Mr. Pedro Joaquín Coldwell, ChairmanCFE, was appointed member of the Board of Directors of Petróleos Mexicanos sincein December 2012, as well as certain members of his family, held ownership interests in companies that have entered into2018. CFE has executed several purchase agreements with Pemex-Refining, which are now obligations of Pemex Industrial Transformation, 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 these consolidated financial statements, Mr. Pedro Joaquín Coldwell as well as certain members of his family hadTransformation. During 2019, CFE acquired the following ownership interests:products from Pemex Industrial Transformation: | | | | | | | CompanyProduct
| | Name
| | Ownership
share2019 | | Servicio Cozumel, S. A. de C. V. (which operates a retail service station)Heavy fuel oil
| | Mr. Pedro Joaquín ColdwellPs. | (23,028,554 | ) | Industrial diesel | | | 60(7,248,091 | %) | Freights | | | (11,772 | ) | Natural Gas | | | (1,135,644 | ) | Fuel oil | | | (562,289 | ) | Transport of natural gas | | | (483,579 | ) | | | Mr. Pedro Oscar Joaquín Delbouis
(son of Mr. Joaquín Coldwell) | | | Total | | Ps. | 20 (32,469,929 | %) | | | Mr. Nassim Joaquín Delbouis
(son of Mr. Joaquín Coldwell) | | | 20 | % | Planta de Combustible Cozumel, S. A. de C. V. (which operates as a wholesale distributor)
| | Fideicomiso Testamentario¹ | | | 57 | % | | | Mr. Pedro Joaquín Coldwell | | | 40 | % | Gasolinera y Servicios Juárez, S. A. de C. V. (which operates a retail service station)
| | Mr. Pedro Joaquín Coldwell | | | 40 | % | | | Fideicomiso Testamentario² | | | 40 | % | | | Mr. Ignacio Nassim Ruiz Joaquín
(nephew of Mr. Joaquín Coldwell) | | | 20 | % | Combustibles Caleta, S. A. de C. V. (which operates a retail service station)
| | Mr. Pedro Joaquín Coldwell | | | 20 | % | | | Mr. Pedro Oscar Joaquín Delbouis | | | 20 | % | | | Mr. Nassim Joaquín Delbouis | | | 20 | % | | | Fideicomiso Testamentario³ | | | 20 | % | | | Mr. Ignacio Nassim Ruiz Joaquín | | | 20 | % | Combustibles San Miguel, S. A. de C. V. (which operates a retail service station)
| | Mr. Pedro Joaquín Coldwell | | | 25 | % | | | Mr. Pedro Oscar Joaquín Delbouis | | | 25 | % | | | Mr. Nassim Joaquín Delbouis | | | 25 | % | | | Mr. Ignacio Nassim Ruiz Joaquín | | | 25 | % |
1 | 60% of these shares were owned by Fausto Nassim Joaquín Ibarra (father of Pedro Joaquín Coldwell), until his death in June of 2016, after which 57% of these shares became property of an investment, management and testamentary revocable trust, which is referred to as the Testamentary Trust. 50% of the voting rights of these shares are currently exercised by Mr. Pedro Oscar Joaquín Delbouis, and 50%are exercised by Mr. Nassim Joaquín Delbouis. |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBERAs of December 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
2 | 40% of these shares were owned by Fausto Nassim Joaquín Ibarra until his death in June of 2016, after which these shares became property of the Testamentary Trust. 100% of the voting rights of these shares are currently exercised by Mr. Pedro Joaquín Coldwell. |
3 | 20% of these shares were owned by Fausto Nassim Joaquín Ibarra until his death in June of 2016, after which these shares became property of the Testamentary Trust. 50% of the voting rights of these shares are currently exercised by Mr. Pedro Oscar Joaquín Delbouis, and 50% are exercised by Mr. Nassim Joaquín Delbouis. |
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 ornon-renewal of which may adversely affect their business. These agreements are based on PEMEX’s standard forms of agreements and contain the standard terms and conditions applicable to all of2019, CFE owed Pemex Industrial Transformation’s retail service stations and wholesale distributors.Transformation a total amount of Ps. 870,147.
a.A. | Compensation of Directors and Officers |
For the years ended December 31, 2016, 20152019, 2018 and 2014,2017, the aggregate compensation of executive officers of Petróleos Mexicanos and the Subsidiary Entities paid or accrued in that year for services in all capacities was approximately Ps. 111,541,30,988, Ps. 116,93051,188 and Ps. 79,831,50,749, respectively. Retirement and former employee benefits are granted as described in Note 17.19. Except in the case of the professional members, with respect to the previous Board of Directors of Petróleos Mexicanos and the boards of directors of the existing Subsidiary Entities, and the independent members, with respect to the new Board of Directors of Petróleos Mexicanos, 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 2016, 20152019, 2018 and 20142017 to the professional members of the previous Board of Directors of Petróleos Mexicanos and boards of directors of the existing Subsidiary Entities was approximately Ps. 7,693,5,985, Ps. 17,899,8,878, and Ps. 12,599,7,525, respectively. As an employee benefit, PEMEX offers salary advances to all of its eligible Petroleum Workers’ Union andnon-union workers, including 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 SubsidiariosEmpresas Productivas Subsidiarias (Employment Regulation of White Collar Employees of Petróleos Mexicanos and Subsidiary Entities), respectively. The salary advances, which arenon-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 employees take advantage of this benefit. As of December 31, 2019, there was no outstanding amount of salary advances to executive officers. The amount of salary advances outstanding to executive officers at December 31, 20162018 was Ps. 7,436 and at December 31, 2015 was Ps. 5,765.2,069. The amount of salary advances outstanding to executive officers at April 15, 2017March 31, 2020 was Ps. 8,147. NOTE 24. COMMITMENTS453.
A. | PMI CIM has entered into several contracts for the sale of crude oil on the international market to foreign companies. The terms and conditions of these contracts are specific to each client, and their durations may be indefinite (evergreen contracts) or they may contain a minimum obligatory period (long-term contracts). |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
b.B. | PEMEX has entered into a nitrogen supply contract for the pressure maintenance program at the Cantarell complex. During 2007, an additional contract was entered into with the purpose of supplying nitrogen to theKu-Maloob-Zap complex and extending the original contract until 2027. At December 31, 20162019 and 2015,2018, the value of the nitrogen to be supplied during the term of the contract was approximately Ps. 8,646,72635,718,401 and Ps. 8,920,228,42,295,796, respectively. In the event of the annulment of the contract and depending on the circumstances, PEMEX has the right or the obligation to acquire the vendor’s nitrogen plant under the terms of the contract. |
Estimated future payments under this contract for upcoming fiscal years are as follows: | | | | | 2017 | | Ps. | 807,280 | | 2018 | | | 807,321 | | 2019 | | | 817,922 | | 2020 | | | 820,505 | | 2021 | | | 821,187 | | 2022 and thereafter | | | 4,572,511 | | | | | | | Total | | Ps. | 8,646,726 | | | | | | |
| | | | | 2020 | | Ps. | 4,465,691 | | 2021 | | | 4,767,534 | | 2022 | | | 4,786,926 | | 2023 | | | 4,804,471 | | 2024 | | | 4,836,432 | | 2025 and thereafter | | | 12,057,347 | | | | | | | Total | | Ps. | 35,718,401 | | | | | | |
c.C. | As of December 31, 2016,2019, PEMEX had entered into FPWCs by means of which the contractor manages and is responsible for financing performance of the work to be undertaken. |
As of December 31, 20162019 and 2015,2018, the estimated value of these contracts was as follows: | Maturity | | 2016 | | | 2015 | | | 2019 | | | 2018 | | Up to 1 year | | Ps. | 7,366,247 | | | | Ps. 3,484,630 | | | Ps. | 1,251,543 | | | Ps. | 4,461,048 | | 1 to 3 years | | | 2,518,207 | | | | 1,191,247 | | | | 1,610,152 | | | | 1,525,043 | | 4 to 5 years | | | 2,470,878 | | | | 1,168,858 | | | | 426,886 | | | | 1,496,380 | | More than 5 years | | | 4,157,843 | | | | 1,966,882 | | | | — | | | | 2,518,017 | | | | | | | | | | | | | | | Total | | Ps. | 16,513,175 | | | | Ps. 7,811,617 | | | Ps. | 3,288,581 | | | Ps. | 10,000,488 | | | | | | | | | | | | | | |
d.D. | In 2016 and 2015, Pemex-Exploration and Production, entered into integrated exploration and production contracts (“Integrated E&P Contracts”) for the development of mature fields in the Altamira, Ébano, Nejo, Pánuco and San Andrés blocks in the Northern region of Mexico and Magallanes, Santuario and Carrizo blocks in the Southern region of Mexico, respectively. Each contract has a term of up to 25 years. Payments to the contractors pursuant to the Integrated E&P Contracts will be made on aper-barrel basis, plus recovery of certain costs, provided that the payments to the contractor may not exceed PEMEX’s cash flow from the particular block subject to each contract. During 2016, PEMEX made payments pursuant to the Integrated E&P Contracts in the Northern region of Ps. 7,026,822 and in the Southern region of Ps. 524,475. During 2015, PEMEX made payments pursuant to the Integrated E&P Contracts in the Northern region of Ps. 12,908,720 and in the Southern region of Ps. 1,359,802. As of December 31, 2016 there is no outstanding liability due to the fact that the available cash flow has an annual maturity2019 and has not yet matured, additionally, these contracts are in process to migrate to a new exploration and production integral contract. |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
e. | As of December 31, 2016 and 2015,2018, the estimated value of the contracts that PEMEX has entered into with several contractors for the development of various infrastructure and services works was as follows: |
| Maturity | | 2016 | | | 2015 | | | 2019 | | | 2018 | | Up to 1 year | | | Ps. 347,606,848 | | | | Ps. 388,047,435 | | | Ps. | 104,584,602 | | | Ps. | 105,856,669 | | 1 to 3 years | | | 281,563,607 | | | | 294,020,900 | | | | 325,674,623 | | | | 192,105,937 | | 4 to 5 years | | | 69,541,826 | | | | 127,885,086 | | | | 43,984,437 | | | | 15,811,930 | | More than 5 years | | | 119,281,849 | | | | 177,720,692 | | | | 147,488,082 | | | | 65,810,305 | | | | | | | | | | | | | | | Total | | | Ps. 817,994,130 | | | | Ps. 987,674,113 | | | Ps. | 621,731,744 | | | Ps. | 379,584,841 | | | | | | | | | | | | | | |
NOTE 25.
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 assesses the likely outcome. PEMEX has not recorded provisions related to ongoing legal proceedings due to the fact that an unfavorable resolution is not expected in such proceedings, with the exception of the proceeding described in further detail in this Note. PEMEX is involved in various civil, tax, criminal, administrative, labor and commercial lawsuits and arbitration proceedings. The results of these proceedings are uncertain as of the date of these consolidated financial statements. As of December 31, 20162019, and 2015,December 31, 2018, PEMEX had accrued a reserve of Ps. 15,119,6928,075,031, and Ps. 12,775,263,Ps.6,483,078, respectively, for these contingent liabilities. As of December 31, 2016,2019, the current status of the principal lawsuits in which PEMEX is involved is as follows: In December 2004, Corporación Mexicana de Mantenimiento Integral, S. de R. L. de C. V. (“COMMISA”) filed an arbitration claim (No. 13613/CCO/JRF) before the International Court of Arbitration of the International Chamber of Commerce against Pemex-Exploration and Production for, among other things, the breach of a construction agreement in connection with two platforms in the Cantarell project (Project No. IPC01). On December 16, 2009, the International Court of Arbitration issued an arbitration award requiring Pemex-Exploration and Production to pay U.S. $293,646 and Ps. 34,459, plus interest. COMMISA requested | • | | On April 4, 2011, Pemex Exploration and Production was summoned before theSéptima Sala Regional Metropolitana (“Seventh Regional Metropolitan Court”) of theTribunal Federal de Justicia Fiscal y Administrativa (“Tax and Administrative Federal Court”) in connection with an administrative claim (No.4957/11-17-07-1) filed by EMS Energy Services de México, S. de R.L. de C.V. and Energy Maintenance Services Group I. LLC requesting that the U.S. District Court for the Southern District of New York recognize and execute the arbitration award. Pemex-Exploration and Production requested that the award be declared null and void by the Mexican courts, which was granted. On September 25, 2013, the U.S. District Court for the Southern District of New York issued a final judgment confirming the arbitration award. Pemex-Exploration and Production was ordered to pay COMMISA U.S. $465,060, which included Pemex-Exploration and Production’s U.S. $106,828 guarantee. Each party is to pay its value added taxes, and interest relating to the award is to be paid in accordance with applicable law. In November 2013, Pemex-Exploration and Production deposited this amount in a bank account in New York as a condition to filing its appeal with the U.S. Second Circuit Court of Appeals, which it did on January 28, 2014. On August 2, 2016, the U.S. Second Circuit Court of Appeals denied the appeal and confirmed the arbitration award in favor of COMMISA. On September 14, 2016, Pemex Exploration and Production appealed the decision, which was denied on November 3, 2016. Pemex Exploration and Production is evaluating different alternatives in connection with this claim. On January 22, 2013 COMMISA requested from the authorities in Luxembourg an execution of the arbitration award and an attachment of assets of Pemex-Exploration and Production and Petróleos Mexicanos located in several financial institutions. On November 15, 2013, Pemex-Exploration and
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Production filed a motion against the execution of the arbitration award before the Supreme Court of Justice of Luxembourg. On January 15, 2014 COMMISA also filed a motion before this Supreme Court. On March 25, 2014, Pemex-Exploration and Production filed its pleadings. In connection with the attachment of assets, COMMISA filed a motion before the Court of Appeals of Luxembourg seeking that the Court recognizes the arbitration award without considering that it was declared null and void by the Mexican courts. On June 25, 2016, the Court of Appeals of Luxembourg issued a new procedural timeline. A final judgment is still pending.
In February 2010, the Servicio de Administración Tributaria (the Tax Management Service) notified Pemex-Exploration and Production of the results of its review of Pemex-Exploration and Production’s financial statements for the fiscal year ended December 31, 2006 with respect to federal taxes, the value added tax and the Ordinary Duty on Hydrocarbons payable by it. On September 20, 2010, the Tax Management Service determined that Pemex-Exploration and Production owed additional taxes totaling Ps. 4,575,208 (of which Pemex-Exploration and Production was notified on September 22, 2010). On November 30, 2010, Pemex-Exploration and Production filed an administrative claim before the Tercera Sala Regional Metropolitana (Third Regional Metropolitan Court) of the Tribunal Federal de Justicia Fiscal y Administrativa (Tax and Administrative Federal Court) challenging the assessment (fileNo. 28733/10-17-03-7).
On March 31, 2016, a judgment was issued by the First Section of the Superior Court confirming the resolution issued by the Tax Management Service. Pemex-Exploration and Production filed anamparo against this resolution (file No. 402/2016) before the Segundo Tribunal Colegiado en Materia Administrativa del Primer Circuito (Second Administrative Joint Court of the First Circuit), which was admitted on June 1, 2016. On December 1, 2016, anamparo was granted in favor of Pemex Exploration and Production ordering a new resolution to be issued by the Tax Management Service.
In February 2011, EMS Energy Services de México, S. de R.L. de C.V. and Energy Maintenance Services Group I. LLC filed a civil claim against Pemex-Exploration and Production before the Juzgado Tercero de Distrito (Third District Court) in Villahermosa, Tabasco (No. 227/2010). The plaintiffs are seeking, among other things, damages totaling U.S. $193,713 related to the termination of a public works contract and nonpayment by Pemex-Exploration and Production under the contract. On December 31, 2014, a final judgment was issued in favor of Pemex-Exploration and Production. The plaintiff subsequently filed an appeal, which was denied on May 11, 2015. On June 3, 2015, the plaintiff filed an amparo (02/2015) against this resolution, which was denied. The plaintiff filed a motion to review this resolution before the Suprema Corte de Justicia de la Nación (the Mexican Supreme Court of Justice), which was denied. Therefore this claim has concluded.
On April 4, 2011, Pemex-Exploration and Production was summoned before theSéptima Sala Regional Metropolitana (Seventh Regional Metropolitan Court) of the Tax and Administrative Federal Court in connection with an administrative claim (No. 4957/1117071) filed by the plaintiffs seeking that Pemex-Exploration and Production’s termination of the public works contract be declared null and void. In a concurrent proceeding, the plaintiffs also filed an administrative claim (No.13620/15-17-06) against Pemex Exploration and Production before theSexta Sala Regional Metropolitana (Sixth(“Sixth Regional Metropolitan Court)Court”) of the Tax and Administrative Federal Court in Mexico City seeking damages totaling U.S. $193,713 related to the above mentionedabove-mentioned contract. Pemex-ExplorationPemex Exploration and Production filed a response requesting the two administrative claims be joined in a single proceeding, which was granted on May 10, 2016granted. On April 30, 2019 a judgment was issued by the Seventh Regional Metropolitan Court. ASecond Section of the Superior Court in favor of Pemex Exploration and Production. On June 25, 2019, the plaintiffs filed an amparo (D.A. 397/2019) before theTercer Tribunal Colegiado en Materia Administrativa del Primer Circuito (Third Administrative Joint Court of the First Circuit). As of the date of these financial statements, a final resolution is still pending.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
In June 2016, Pemex Exploration and Production was summoned before the Juzgado Octavo de Distrito en materia Civil (Eighth Civil District Court) in Mexico City, in connection with a claim filed by Drake Mesa, S. de R.L. (file No.200/2016-II), seeking approximately U.S. $120,856 related to expenses and damages, in connection with, among other things, a public work agreement executed between them. The trial is in the evidentiary stage.
On July 10, 2015, the Local Treasury of Minatitlán, Veracruz determined that Pemex-Refining owed Ps. 2,531,040 for property taxes from 2010 to 2015 related to the “General Lázaro Cárdenas” refinery. Pemex-Refining filed an amparo against this determination (no.863/2015-V) before the Juzgado Décimo de Distrito (Tenth District Court) in Veracruz, which was granted. On April 26, 2016, a dismissal of this action was filed due to the suspension granted under the administrative claim mentioned below. Pemex-Refining also filed an administrative claim against this determination, which was admitted by the Court on August 6, 2015, and the trial was suspended. On September 2, 2016, a resolution dated August 31, 2016 was notified, declaring the property tax resolution null and void. On September 13, 2016, both parties filed motions to appeal this resolution. A final resolution is still pending.
| • | | On June 11, 2015, theSegunda Sala Regional del Noreste (Second Regional Northeast Court) notified Pemex-Refining of an administrative claim (file no.2383/15-06-02-4) filed by Severo Granados Mendoza, Luciano Machorro Olvera and Hilario Martínez Cerda, as President, Secretary and Treasurer of the Ejido Tepehuaje, seeking Ps. 2,094,232 in damages due to a hydrocarbons spill on their land. Pemex-Refining filed a response to this claim and the plaintiffs were given time to amend their claim. The defendant filed a motion against this resolution. A final judgment is still pending. |
| • | | 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 contributions, the value added tax and the Hydrocarbons Income Tax. On September 20, 2010, the Tax Management Service notified Pemex-Refining that it owed approximately Ps. 1,553,372 (including penalties and interest). On November 30, 2010, Pemex-Refining filed an administrative claim before the Third Regional Metropolitan Court of the Tax and Administrative Federal Court challenging the assessment. On November 20, 2013, theSala Superior (Superior Court) of the Tax and Administrative Federal Court attracted the documentation related to this trial (file No. 28733/1017037/1838/13S10504). The First Section of the Superior Court ordered the file to be sent back to the Third Regional Metropolitan Court to correct any procedural errors in order to issue a final judgment, which was sent back to the First Section of the Superior Court when the procedural errors were corrected. On March 31, 2016, a judgment was issued confirming the resolution issued by the Tax Management Service. Pemex Industrial Transformation filed anamparo against the decision with the Second Administrative Joint Court of the First Circuit which was admitted on June 1, 2016. On December 1, 2016, anamparo was granted in favor of Pemex Industrial Transformation ordering a new resolution to be issued by the Tax Management Service. |
On July 8, 2011, Pemex-ExplorationPemex Exploration and Production was summoned in connection with an administrative claim (No. (no.4334/1111026)11-11-02-6) filed by Compañía Petrolera La Norma, S.A., against the Director GeneralChief Executive Officer of Petróleos Mexicanos and the Director GeneralChief Executive Officer of Pemex-Exploration and Production before theSegunda Sala RegionalHidalgo-México (Hidalgo-Mexico (“Hidalgo-Mexico Second Regional Court)Court”) of the Tax and Administrative Federal Court in Tlalnepantla, State of Mexico.Estado de México. The plaintiff is seeking compensation in connection withfor the cancellation of its alleged petroleum rights concessions and damages for up to Ps. 1,552,730.Ps.1,552,730. On August 20, 2014, the proceeding was sent to theSegunda PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
Sección de la Sala Superior (“Second Section of the Superior Court”) of the Tax and Administrative Federal Court(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED) | Sección de la Sala Superior (Second Section of the Superior Court) of the Tax and Administrative Federal Court(4334/11-11-02-6/1337/14-S2-07-04), which will issue a final judgment. On October 29, 2014, the proceeding was returned to the Second Regional Court to correct a procedural error. On May 31, 2016, the parties were convened for the final judgment. A final resolution is still pending.
|
4334/11-11-02-6/1337/14-S2-07-04). On September 20, 2018, the Superior Court ruled that the plaintiff did not provide evidence to support its claim. The resultsplaintiff filed anamparo(D.A. 731/2018) against this resolution and Pemex Exploration and Production filed its response. On May 17, 2019, theDécimo Noveno Tribunal Colegiado en Materia Administrativa del Primer Circuito (Nineteenth Administrative Joint Court of these proceedings are uncertain until their final resolutions arethe First Circuit) issued bya judgment requesting the appropriate authorities. PEMEX has recorded liabilities for loss contingencies when it is probable that a liability has been incurredSupreme Court to attract this claim, which was denied on September 4, 2019 and the amount thereof can be reasonably estimated. When a reasonable estimation could not be made, qualitative disclosureclaim was provided insent back to the notes to these consolidated financial statements. PEMEX does not disclose amounts accrued for each individual claim because such disclosure could adversely affect PEMEX’s legal strategy, as well asJoint Court. On December 12, 2019, the outcome of the related litigation.
NOTE 26. BUSINESS COMBINATION
On January 28, 2016, PMX Fertilizantes Pacífico, S.A. de C.V., a PEMEX subsidiary company, acquired 99.99% of the outstanding shares of Fertinal, for a total purchase price of Ps. 4,322,826. This amountamparo was paid through credit lines under a simple credit agreement. Additionally, within the same credit line, PMX Fertilizantes obtained U.S. $425,800 for the liquidation of Fertinal’s debt. These loans will mature in 16 years.
The net fair value of Fertinal’s assets and liabilities asdenied. As of the date of acquisition is:these financial statements, a final resolution is still pending.
| | | | | | | Fair value | | Cash and cash equivalents
| | | Ps. (6,943 | ) | Accounts receivable
| | | 102,121 | | Inventories
| | | 762,254 | | Properties, plant and equipment
| | | 9,811,928 | | Other assets
| | | 1,671,718 | | | | |
On December 12, 2017, Pemex Exploration and Production was summoned in connection with an arbitration claim (no. 23217/JPA) filed by SUBSEA 7 de México, S. de R. L. de C.V. (“SUBSEA 7”) seeking U.S. $153,000 related to additional expenses in connection with pipelines construction contracts (No. 420832856 and 420833820). On January 5, 2018 Pemex Exploration and Production filed a response to the arbitration request and its counterclaim. On September 14, 2018, the defendant received the claim briefs including documentation and related evidence and the amount sought under this claim was increased to U.S. $310,484. On January 4, 2019, Pemex Exploration and Production file a response to the claim. On February 14, 2019, SUBSEA 7 filed its reply. In June 2019, a hearing was held and on October 4, 2019 the parties filed their pleadings. As of the date of these financial statements a final resolution is still pending. | | | Total assets
| • | | | 12,341,078 | | | | Accounts payable
| | | Ps. 2,331,540 | | Debt
| | | 9,365,152 | | Deferred taxes
| | | 328,578 | | | | | | | Total liabilities
| | | 12,025,270 | | | | | | | Total assets, net
| | | Ps. 315,808 | | | | | | | Transaction value
| | | Ps. 4,322,826 | | Goodwill
| | | Ps. 4,007,018 | |
PMX FP, carried outOn August 1, 2017, Pemex Exploration and Production was summoned in connection with an administrative claim (no.11590/17-17-06-2) filed by Proyectos y Cimentaciones Industriales, S.A. de C.V. before the purchase price allocation (PPA)Sixth Regional Metropolitan Court seeking Ps. 800,000 and U.S. $12.82 and to have the settlement certificate dated March 22, 2017 related to services agreement declared null and void. On May 16, 2019, the Second Section of the Fertinal acquisitionSuperior Court issued a judgment in accordance with International Financial Reporting Standard 3 “Business Combination”. It was determined that net assets acquired amounted to Ps. 315,808favor of Pemex Exploration and a goodwill of Ps. 4,007,018.Production. On July 1, 2019, theDécimo Primer Tribunal Colegiado en Materia Administrativa(Eleventh Administrative Joint Court) admitted an amparo (no. 399/2019) filed by the plaintiffs. On August 8, 2019, the defendant filed its pleadings. As of December 31, 2016,the date of these financial statements, a calculation of the impairment of goodwill resulted in the complete cancellation of that amount. The impairment of goodwillfinal resolution is recognized in the consolidated statement of comprehensive income in other income (expenses), net. See Note 22.still pending.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
PEMEX intends to incorporate Fertinal into thegas-ammonia solid fertilizers value chain in order to strengthen its ability to offer a wide range of fertilizers and to cover approximately 50% of the domestic market, and is also assessing the possibility of selling the integrated business in the future.
NOTE 27. SUBSEQUENT EVENTS
During the period from January 1 to April 27, 2017, PEMEX participated in the following financing activities:
On February 14, 2017, Petróleos Mexicanos issued, under its Medium-Term Notes program, Series C, € 4,250,000 in the international capital markets through three benchmark bonds at 4.5, 7 and 11 years:
| i. | € 1,750,000 of its 2.50% Notes due in August 2021, bearing interest rate at 2.51%; |
| ii. | € 1,250,000 of its 3.75% Notes due in February 2024, bearing interest rate at 3.84%;In March 2018, Pemex Drilling and Services (now Pemex Exploration and Production) was summoned before the International Centre for Dispute Resolution of the American Arbitration Association in connection with an arbitration claim (No.01-18-0001-1499) filed by Loadmaster Universal Rigs, Inc., Loadmaster Drilling Technologies, LLC, Ulterra Drilling Technologies Mexico, S.A. de C.V. and Kennedy Fabricating, LLC seeking U.S. $139,870 in connection with the construction and acquisition of two modular drilling equipment for approximately U.S. $139,870. On June 6, 2018, the plaintiffs responded to the counterclaim filed by Pemex Drilling and Services. On September 28, 2018, Pemex Drilling and Services filed a motion rejecting the arbitration jurisdiction. On December 19, 2018, the parties exchanged documentation. On February 11, 2019 the plaintiffs filed their first brief. On March 29, 2019 the defendants filed its response. On April 29, 2019 the plaintiffs filed their second brief. On June 17, 2019, the defendants filed their rejoinders. A hearing was held in September in Mexico City. On October 23, 2019, the parties filed their final pleadings. As of the date of these financial statements, a final resolution is still pending. | • | | On February 6, 2019, theSala Regional del Golfo Norte (North Gulf Regional Court) of Federal Court of Justice for Tax and Administrative Matters summoned Pemex Drilling and Services (now Pemex Exploration and Production) in connection with a claim(752/17-18-01-7) filed by Micro Smart System of Mexico, S. de R.L. de C.V., challenging a settlement statement dated March 14, 2017 related to a works contract number 424049831 dated December 9, 2009, seeking the payment of: U.S. $240,448 for work performed and U.S. $284 for work estimates. On May 18, 2019, a response to this claim was admitted and evidence was filed by the defendant (Pemex Exploration and Production), which were rejected by the plaintiff on May 24, 2019. On July 1, 2019, the Superior Court was instructed to review the claim. On September 24, 2019, the plaintiff flied its pleadings. On October 22, 2019, the complete file of this claim was sent to the Superior Court for its review. As of the date of these financial statements, a final resolution is still pending. |
| iii. | € 1,250,000 of its 4.875% Notes due in February 2028, bearing interest rate at 4.98%.On October 18, 2019, the Sala Regional Peninsular (Regional Peninsular Court) of the Tribunal Federal de Justicia Administrativa (Federal Justice Administrative Court) in Mérida, Yucatán summoned Pemex Exploration and Production in connection with a claim(91/19-16-01-9) filed by PICO México Servicios Petroleros, S. de R.L. de C.V. requesting that Pemex Exploration and Production’s termination of the public works contract be declared null and void and seeking U.S. $137.3 for among others, expenses and related damages. On December 12, 2019, Pemex Exploration and Production filed a response to this claim. As of the date of these financial statements, a resolution from the Court admitting this response is still pending. Tech Man Group, S.A. de C.V. filed an administrative claim(7804/18-17-09-8) against Pemex Industrial Transformation seeking Ps. 2,009,598 for, among other things, payment of expenses and penalties in connection with a public works contract(CO-OF-019-4008699-11) before the Federal Justice Administrative Court. On June 25, 2019, a response was filed by the defendant (Pemex Industrial Transformation) as well as a motion against the admission of the claim, which was accepted. On October 2, 2019, the opinion of the accounting and construction experts submitted by the defendant was filed. As of the date of these financial statements, an accounting opinion to be issued by an independent expert, requested on December 11, 2019, is still pending. The results of these proceedings are uncertain until their final resolutions are issued by the appropriate authorities. PEMEX has recorded liabilities for loss contingencies when it is probable that a liability has been incurred and the amount thereof can be reasonably estimated. When a reasonable estimation could not be made, qualitative disclosure was provided in the notes to these consolidated financial statements. 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. Pursuant to an ordinary session held by the Board of Directors on August 23, 2013, Petróleos Mexicanos established policies for the granting of mutual guarantees, loans or any type of credit in favor of the Subsidiary Entities and Subsidiary Companies; in accordance with these policies, the Corporate Finance Department issues an opinion with its risk analysis, financial valuation, budget sufficiency, accounting treatment and conclusions. Additionally, Pemex Logistics has granted the following corporate guarantees in connection with the exploration and extraction contracts entered into Pemex Exploration and Production, as required by the NHC: Exploration and extraction of hydrocarbons under the deep-water license modality, Trión field (TenderCNH-A1-TRION / 2016), of U.S. $4,000,000. Exploration and extraction of the contract area 3 Cinturón plegado perdido (Tender CNHR01- L04 / 2015), of U.S. $3,333,000. Extraction of hydrocarbons under shared production contract of theEk-Balam fields, of U.S. $5,000,000. Extraction of hydrocarbons in contractual area Santuario and El Golpe 3 field, of U.S. $320,000. Exploration and extraction of hydrocarbons under shared production contract, contractual area 2 Tampico-Misantla, of U.S. $1,250,000. Exploration and extraction of hydrocarbons under shared production contract, contractual area 8 Cuencas del Sureste, of U.S. $1,250,000. Exploration and extraction of hydrocarbons shared production contract, assignmentAE-0398-Mission of U.S. $255,000. Extraction of hydrocarbons under license agreement, Ogarrio field of U.S. $250,000. Extraction of hydrocarbons under license agreement, Cárdenas and Mora fields, of U.S. $250,000. Exploration and extraction of hydrocarbons under the deep-water license modality, contractual area 2 Perdido, of U.S. $2,500,000. Exploration and extraction of hydrocarbons under the deep-water license modality, contractual area 5 Perdido, of U.S. $5,000,000. Exploration and extraction of hydrocarbons under the deep-water license modality, contractual area 18 Cordilleras Mexicanas, of U.S. $5,000,000. Exploration and extraction of hydrocarbons under shared production contract contractual area 22 Cuenca Salina, of U.S. $1,375,000. Contractual area 16 Tampico-Misantla, Veracruz, of U.S. $1,000,000. Contractual area 17 Tampico-Misantla, Veracruz, of U.S. $1,000,000. Contractual area 18 Tampico-Misantla, Veracruz, of U.S. $2,000,000. Contractual area 29 Cuencas del Sureste, of U.S. $2,500,000. Contractual area 32 Cuencas del Sureste, of U.S. $1,250,000. Contractual area 33 Cuencas del Sureste, of U.S. $1,250,000. Contractual area 35 Cuencas del Sureste, of U.S. $1,250,000. Contractual area Ébano, of U.S. $225,000. Contractual areaAE-0388-M-Miquetla (for conventional andnon-conventionalon-shore license en zonas) of U.S. $245,000. Certain other Subsidiary Entities have also granted guarantees and other contingencies. Total guarantees granted to Pemex Exploration and Production amounted to U.S. $40,503,000, equivalent to Ps. 763,287,136 as of December 31, 2019. PEMEX considers the probability it needs to make a disbursement of cash, for the guarantees granted and in effect as of December 31, 2019 remote. NOTE 28. SUBSEQUENT EVENTS During the period from January 1 to May 6, 2020, the following subsequent events have occurred. A. | Decline in international crude oil prices |
On March 6, 2020, The Organization of the Petroleum Exporting Countries (“OPEC”), led by Saudi Arabia, Russia and other group of petroleum producers, did not come to an agreement to reduce crude oil production in order to support crude oil prices, which resulted in a significant drop in global crude oil prices. On March 11, 2020, the World Health Organization declared theCovid-19 outbreak a pandemic. Governments across the world have instituted measures to address the pandemic, including mandatory quarantines, social distancing guidelines, travel restrictions and declaration of health emergencies. The effects of theCovid-19 virus have led to a worldwide economic slowdown, and as a result there has been a decrease in global demand for crude oil and derivatives. On April 12, 2020, OPEC and other non-OPEC oil exporting countries, including, among others, Mexico and Russia, reached an agreement to reduce world crude oil supply. Pursuant to this agreement, these countries, which are known as OPEC+, agreed to reduce their overall crude oil production by 9.7 million barrels per day from May 1, 2020 through June 30, 2020, by 7.7 million barrels per day from July 1, 2020 through December 31, 2020 and by 5.8 million barrels per day from January 1, 2021 through April 30, 2022. In particular, Mexico has agreed to reduce its crude oil production by 100,000 barrels per day for a period of two months beginning on May 1, 2020. PEMEX prepared its budget for 2020 based on a Mexican crude oil basket price of U.S. $49.00 per barrel and contracted financial derivative instruments to hedge PEMEX’s risk exposure to declines in the price of Mexican crude oil price, when it falls below the average price of U.S. $49.00, up to a floor of U.S. $44.00 per barrel. Taking into consideration the conditions described above, PEMEX’s budget deficit may increase for the year 2020. PEMEX is taking certain actions to face this deficit, such as reducing its capital expenditures by Ps. 40,500,000, decreasing operating expenses that do not hazard its operating capabilities by Ps. 5,000,000, decreasing non-strategic projects and focusing instead on more profitable ones, as well as the implementation and development of alternative financing mechanisms that do not constitute public debt. On April 21, 2020, the Mexican Government granted through a President’s decree a tax benefit for PEMEX equal to Ps. 65,000,000 for 2020, consistent on a fiscal credit applicable to the DUC up to such amount. B. | Decrease in the demand of petroleum products |
As a result of theCovid-19 pandemic, on March 24, 2020 the Mexican Government, through theSecretaría de Salud (Mexican Ministry of Health), implemented actions to protect againstCovid-19. Some of these actions consist of, among others, issuing directives to avoid places of work, crowded areas, public places or unnecessary social activities during this time. These preventative measures have caused a decrease in demand of certain goods and services, including petroleum products. As of the date of issuance of these financial statements, PEMEX cannot predict what effect these measures will have on PEMEX’s operations or financial position. As a result of the worldwide economic slowdown and, in particular, the decrease in fuel demand, PEMEX estimates a 34% decrease in its domestic sales of petroleum products in the period from January 1 to April 28, 2020. C. | Depreciation of Mexican peso against U.S. dollar |
As a consequence of the economic situation described above, beginning in March 2020, the Mexican peso has experienced a significant depreciation with respect to the U.S. dollar. As of May 6, 2020, the Mexicanpeso-U.S. dollar exchange rate was Ps. 24.3812 per U.S. dollar, which represents a 29.4% depreciation of the value of the peso in U.S. dollar terms as compared to the exchange rate as of December 31, 2019, which was Ps. 18.8452 per U.S. dollar. A substantial portion of PEMEX’s indebtedness is denominated in foreign currencies. PEMEX estimates a foreign currency exchange rate loss of Ps. 550,526,000 for the period from January 1, to May 6, 2020, of which 95% relates to unrealized exchange loss, which is a non-cash item and 5% relates to realized exchange loss, since PEMEX’s debt profile is mostly long-term. This exchange rate loss is partially offset by Ps. 75,000,000 in revenue from PEMEX’s currency swaps which hedge variations between U.S. dollars and other currencies. PEMEX estimates that factors described above may impact impairment and/or reversal of long-lived assets during and at year end 2020, upon the behavior of the markets and the several economic and financial variables. A long period of low crude oil prices may greatly impact PEMEX´s impairment of long-lived assets, depending on changes in the remaining assumptions and economic and financial conditions. Reduction in hydrocarbon prices has had a 35% decrease in the value of PEMEX´s inventories as of March 31, 2020, as compared to book value as of December 31, 2019. F. | Ratings agencies’ downgrade of PEMEX’s credit rating |
On March 26, 2020, Standard & Poor’s (“S&P”) downgraded PEMEX’s credit ratings for foreign currency long term issues and for local currency long term issues from BBB+ andA- to BBB and BBB+, respectively, maintaining a negative credit outlook on global scale. This ratings action followed a similar ratings action taken by S&P in relation to the United Mexican States. In accordance with S&P ratings, BBB+ and BBB are still considered investment grade ratings; however, a decrease of the rating to BB+ would indicate a speculative rating. On April 1, 2020, HR Ratings affirmed PEMEX’s local credit rating at HR AAA with a stable outlook and downgraded PEMEX’s global credit ratings to HR BBB+(G) with a negative outlook. This ratings action followed a similar ratings action taken by S&P in relation to the United Mexican States. On April 3, 2020, Fitch Ratings downgraded PEMEX’s ratings of its bonds from BB+ to BB with a negative outlook amid fears that PEMEX’s stand-alone credit profile may deteriorate further due to low oil prices. The downgrade reflects PEMEX’s limited flexibility to navigate the downturn in the oil and gas industry, given PEMEX’s elevated tax burden, high leverage, rising per barrel lifting costs and high investment needs to maintain production and replenish reserves. On April 17, 2020, Fitch Ratings further downgraded PEMEX’s international foreign and local currency long-term ratings from BB toBB-, as a consequence of the downgrades of the Mexican Government ratings. Fitch Ratings also revised the outlook from negative to stable. The downgrade of PEMEX’s credit rating reflects the direct link to the credit rating of the sovereign United Mexican States, in accordance with Fitch Rating´s methodology, On April 17, 2020, Moody’s downgraded PEMEX’s credit ratings from Baa3 to Ba2, maintaining a negative credit outlook, citing PEMEX’s higher liquidity and business risk. This ratings action followed a similar ratings action taken by Moddy’s in relation to the United Mexican States. According to Fitch and Moody’s credit rating scales, theBB- and Ba2 ratings, respectively are considerednon-investment grade. Therefore, PEMEX’s debt instruments are considered speculative, pursuant to these credit rating scales. On April 21, 2020, Moody’s downgraded PEMEX’s senior unsecured credit ratings of its outstanding notes, as well as credit ratings based on Petróleos Mexicanos’ guarantee to A2.mx/Ba2 from Aa3.mx/Baa3. Moody’s also downgraded Petróleos Mexicanos´ short-term local scale rating toMX-2 fromMX-1. This rating action followed a similar ratings action taken by Moody’s Investors Services of withdrawing Petróleos Mexicanos investor rating from Baa3 and assigning it a corporate family rating of Ba2 and maintaining negative credit outlook. The rapid and growing spread of theCovid-19 virus, combined with the impairment of world economic outlook, the drop in crude oil prices and the decrease in asset prices is creating a severe and extensive credit crisis in several sectors, regions and markets. The effect on credit is without any precedent. The oil and gas sector has been one of the most affected sectors, due to its sensitivity to demand and consumers´ confidence. These downgrades in PEMEX’s ratings could hinder or make PEMEX’s access to financial markets more difficult. G. | Recent financing activities |
During the period from January 1 to May 6, 2020, Petróleos Mexicanos participated in the following activities: On January 21, 2020 Petróleos Mexicanos increased its Medium-Term Notes Program from U.S. $102,000,000 to U.S. $112,000,000. On January 30, 2020, Petróleos Mexicanos issued U.S. $ 5,000,000 of debt securities under its U.S. $112,000,000 Medium-Term Notes Program, Series C, in two tranches: (1) U.S. $2,500,000 5.950% Notes due 2031, (2) U.S. $2,500,000 6.950% Notes due 2060. All debt securities issued under this program are jointly and severally guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics and their respective successors and assignees. On January 30, 2020, Petróleos Mexicanos repurchased a total of U.S. $61,922 notes due 2020. On February 6, 2020, Petróleos Mexicanos consummated the early settlement of its waterfall exchange offer pursuant to which it exchanged: A) a total of U.S. $1,252,303 of notes and bonds with maturity dates between 2021 and 2026 as follows: (1) U.S. $264,752 aggregate principal amount of its outstanding 5.500% Notes due 2021, (2) U.S. $171,662 aggregate principal amount of its outstanding 6.375% Bonds due 2021, (3) U.S. $148,535 aggregate principal amount of its outstanding 4.875% Notes due 2022, U.S. $63,854 aggregate principal amount of its outstanding Floating Rate Notes due 2022, (4) U.S. $157,487 aggregate principal amount of its outstanding 5.375% Notes due 2022, (5) U.S. $216,727 aggregate principal amount of its outstanding 3.500% Notes due 2023, (6) U.S. $117,333 aggregate principal amount of its outstanding 4.625% Notes due 2023 and (7) U.S. $111,953 aggregate principal amount of its outstanding 4.500 % Notes due 2026, for U.S. $1,300,000 aggregate principal amount of its new 5.950% Notes due 2031, B) a total of U.S. $1,374,426 of notes and bonds with maturity dates between 2044 and 2048 as follows: (8) U.S. $179,332 aggregate principal amount of its outstanding 5.500% Notes due 2044, (9) U.S. $750,969 aggregate principal amount of its outstanding 5.625% Bonds due 2046 and (10) U.S. $444,125 aggregate principal amount of its outstanding 6.350% Notes due 2048, for U.S. $1,300,000 aggregate principal amount of its new 6.950% Bonds due 2060. The 5.950% Notes due 2031 and 6.950% Bonds due 2060 are jointly and severally guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics and their respective successors and assignees and represent reopenings of the 5.950% Notes due 2031 and 6.950% Bonds due 2060, respectively, originally issued on January 29, 2020. Between January 1 to May 6, 2020, PMI HHS obtained U.S. $7,762,000 and repaid U.S. $8,953,000 in financing from its revolving credit lines. As of January 1, 2020, the outstanding amount was U.S. $1,556,000. As of May 6, 2020, the outstanding amount under these revolving credit lines was U.S. $365,000. As of May 6, 2020, Petróleos Mexicanos had U.S. $7,450,000 and Ps. 37,000,000 in available revolving credit lines in order to ensure liquidity, with U.S. $5,800,000 and Ps. 0 remaining available. H. | Government contributions to PEMEX |
The Federal Budget for 2020, considers an equity contribution for Ps. 46,256,000 that the Mexican Government would make to PEMEX through the Ministry of Energy. On April 2, 2020, Petróleos Mexicanos received in advance the payment of the promissory Note No. 4, which was issued by the Mexican Government and matured on March 31, 2020 in the amount of Ps. 4,983,670. Between January 1, and May 6, 2020, PEMEX received a payment of Ps. 16,063,000, corresponding to this contribution. I. | Exchange rates and crude oil prices |
As of May 6, 2020, the Mexicanpeso-U.S. dollar exchange rate was Ps. 24.3812 per U.S. dollar, which represents a 29.4% depreciation of the value of the peso in U.S. dollar terms as compared to the exchange rate as of December 31, 2019, which was Ps. 18.8452 per U.S. dollar. As of May 6, 2020, the weighted average price of the crude oil exported by PEMEX was U.S. $21.10 per barrel. This represents a price decrease of approximately 63.4% as compared to the average price as of December 31, 2019, which was U.S. $57.68 per barrel. NOTE 29. NEW STANDARDS RECENTLY ISSUED A number of new standards are effective for annual periods beginning after January 1, 2020 and earlier application is permitted; however, PEMEX has not early adopted the new or amended standards in preparing these consolidated financial statements. The following amended standards and interpretations are not expected to have a significant impact on the PEMEX’s consolidated financial statements. Amendments to References to Conceptual Framework in IFRS Standards. Definition of a Business (Amendments to IFRS 3). Definition of Material (Amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors). NOTE 30. SUBSIDIARY GUARANTOR INFORMATION The following consolidating information presents: (i) condensed consolidated statements of financial position at December 31, 2019 and 2018 and condensed consolidated statements of comprehensive income and cash flows for the years ended December 31, 2019, 2018 and 2017 of Petróleos Mexicanos, the Subsidiary Guarantors and theNon-Guarantor Subsidiaries (as defined below). These condensed consolidated statements were prepared in conformity with IFRS, with one exception: for the purposes of the presentation of the subsidiary guarantor information, the Subsidiary Entities and Subsidiary Companies have been accounted for as investments under the equity method by Petróleos Mexicanos. Earnings of subsidiaries are therefore reflected in Petróleos Mexicanos’ investment account and earnings. The principal elimination entries eliminate Petróleos Mexicanos’ investment in subsidiaries and inter-company balances and transactions. Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services (in the case of Pemex Drilling and Services, until June 30, 2019 (see Note 1), Pemex Logistics and Pemex Cogeneration and Services (in the case of Pemex Cogeneration and Services, until July 27, 2018, see Note 1) (collectively, the “Subsidiary Guarantors”) and Pemex Ethylene (in the case of Pemex Ethylene, until June 30, 2019, see Note 1) and Pemex Fertilizers are 100%-owned subsidiaries of the Mexican Government. The guarantees by the Subsidiary Guarantors of Petróleos Mexicanos’ payment obligations under this indebtedness are full, unconditional, joint and several. Pemex Ethylene, Pemex Fertilizers, Pemex Finance, Ltd. and the Subsidiary Companies collectively comprise thenon-guarantor subsidiaries (the“Non-Guarantor Subsidiaries”). The Pemex Project Funding Master Trust (the “Master Trust”), which was a trust formed for the purpose of financing PEMEX’s projects, was dissolved effective December 20, 2011 and is no longer consolidated in the financial statements of PEMEX as of December 31, 2011 and thereafter. The following table sets forth, as of December 31, 2019, the principal amount outstanding of the registered debt securities originally issued by the Master Trust. As noted above, Petróleos Mexicanos has assumed, as primary obligor, all of the obligations of the Master Trust under these debt securities. The obligations of Petróleos Mexicanos are guaranteed by the Subsidiary Guarantors: Table 1: Registered Debt Securities originally issued by the Master Trust and Assumed by Petróleos Mexicanos | | | | | | | | | Security | | Primary obligor | | Guarantors | | Principal amount outstanding (U.S. $) | | 6.625% Guaranteed Bonds due 2035 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 1,750,000 | | 6.625% Guaranteed Bonds due 2038 Between January 1 to April 27, 2017, PMI HBV obtained and repaid U.S. $2,201,659 in financing from its revolving credit lines.
As of December 31, 2016, PEMEX has valued and recorded 22,221,893 Repsol shares acquired through PMI HBV, of which 1,497,562 are presented as available for sale current financial assets and 20,724,331 as available for salenon-current financial assets. As of April 27, 2017, PEMEX has valued and recorded the 22,221,893 Repsol shares. The market value of Repsol shares has increased approximately 8.49%, from € 13.42 per share as of December 31, 2016 to € 14.56 per share as of April 27, 2017.
As of April 27, 2017, the Mexicanpeso-U.S. dollar exchange rate was Ps. 18.9225 per U.S. dollar, which represents a 8.43% appreciation of the value of the peso in U.S. dollar terms as compared to the exchange rate as of December 31, 2016, which was Ps. 20.6640 per U.S. dollar.
As of April 27, 2017, the weighted average price of the crude oil exported by PEMEX was U.S. $42.25 per barrel. This represents a price decrease of approximately 8.75% as compared to the average price as of December 31, 2016, which was U.S. $46.30 per barrel.
On March 8, 2017, PEMEX obtained U.S.$ 693,000 to settle the claim of the fire at the Abkatun Permanente Platform occurred last April 2015, as a result of negotiations and other actions taken by Kot Insurance Company AG in the international reinsurance markets.
In connection with the arbitration proceeding filed by COMMISA in December 2004 before the International Court of Arbitration of the International Chamber of Commerce against Pemex-Exploration and Production (13613/CCO/JRF), prior authorization from the Director General of Pemex Exploration and Production and the Delegate of the Liabilities Unit in that Subsidiary Entity, exhausting the authorization and feasibility procedure established in the applicable regulations, on April 6, 2017, Pemex Exploration and Production and
| | Petróleos Mexicanos executed a settlement agreement with COMMISA and agreed to pay toPETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
COMMISA U.S.$ 435,000 plus the applicable value added tax, with the funds deposited by Pemex Exploration and Production in a bank account as a guarantee before the U.S. District Court for the Southern District of New York. The remaining U.S.$.30,800 in this account will be refunded to Pemex Exploration and Production, once the corresponding value added tax is paid to COMMISA according to the criteria determined by the Tax Management Service.
As of the date of these consolidated annual financial statements, the activities needed for the due compliance of the settlement agreement are being implemented in order to resolve all disputes arising from the construction agreementPEP-0-129/97, including this arbitration proceeding and other related proceedings. (See Note 25).
In April 2017, PEMEX entered into a crude oil hedge to partially protect its cash flows from decreases in the Mexican crude oil basket price below the price established in the Federal Revenue Law. Through this hedge, PEMEX hedged 409 thousand barrels per day from May to December 2017 for U.S.$133.5 million. This hedging strategy provides PEMEX with full protection when the monthly average price of the Mexican crude oil basket is between U.S.$42 and U.S.$37 per barrel, which is the price range with a higher probability among adverse scenarios, and partial protection when the price is below U.S.$37 per barrel.
NOTE 28. SUBSIDIARY GUARANTOR INFORMATION
The following consolidating information presents: (i) condensed consolidated statements of financial position at December 31, 2016 and 2015 and condensed consolidated statements of comprehensive income and cash flows for the years ended December 31, 2016, 2015 and 2014 of Petróleos Mexicanos, the Subsidiary Guarantors and theNon-Guarantor Subsidiaries (as defined below).
These condensed consolidated statements were prepared in conformity with IFRS, with one exception: for the purposes of the presentation of the subsidiary guarantor information, the Subsidiary Entities and Subsidiary Companies have been accounted for as investments under the equity method by Petróleos Mexicanos. Earnings of subsidiaries are therefore reflected in Petróleos Mexicanos’ investment account and earnings. The principal elimination entries eliminate Petróleos Mexicanos’ investment in subsidiaries and inter-company balances and transactions.
| | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services (collectively, the “Subsidiary Guarantors”) and Pemex Ethylene and Pemex Fertilizers are 100%-owned subsidiaries of Mexican Government. The guaranties by the Subsidiary Guarantors of Petróleos Mexicanos’ payment obligations under this indebtedness are full, unconditional, joint and several. Pemex Ethylene, Pemex Fertilizers, Pemex Finance, Ltd. and the Subsidiary Companies collectively comprise thenon-guarantor subsidiaries (the“Non-Guarantor Subsidiaries”).The Pemex Project Funding Master Trust (the “Master Trust”), which was a trust formed for the purpose of financing PEMEX’s projects, was dissolved effective December 20, 2011 and is no longer consolidated in the financial statements of PEMEX as of December 31, 2011 and thereafter.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The following table sets forth, as of December 31, 2016, the principal amount outstanding of the registered debt securities originally issued by the Master Trust. As noted above, Petróleos Mexicanos has assumed, as primary obligor, all of the obligations of the Master Trust under these debt securities. The obligations of Petróleos Mexicanos are guaranteed by the Subsidiary Guarantors:
Table 1: Registered Debt Securities originally issued by the Master Trust and Assumed by Petróleos Mexicanos
| | | | | | | | | Security
| | Primary
obligor | | Guarantors
| | Principal
amount
outstanding
(U.S. $) | | 5.75% Guaranteed Notes due 2018
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 1,775,616 | | | | | | 6.625% Guaranteed Bonds due 2035
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 1,750,000 | | | | | | 6.625% Guaranteed Bonds due 2038
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 491,175 | |
| | | | | | | | | 8.625% Bonds due 2022 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 160,245 | | | | | | 8.625% Guaranteed Bonds due 2023
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 106,507 | | | | | | 9 1⁄4% Guaranteed Bonds due 2018
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 107,109 | | | | | | 9.50% Guaranteed Bonds due 2027
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 219,217 | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The following table sets forth, as of December 31, 2016, the principal amount outstanding of the registered debt securities issued by Petróleos Mexicanos, and guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics
| | | 89,609 | | 8.625% Guaranteed Bonds due 2023 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex CogenerationLogistics | | | 63,705 | | 9.50% Guaranteed Bonds due 2027 | | Petróleos Mexicanos | | Pemex Exploration and Services.Table 2: Registered Debt Securities originally issued by Petróleos Mexicanos
| | | | | | | | | Security
| | Issuer | | Guarantors
| | Principal amount
outstanding
(U.S. $)Production, Pemex Industrial Transformation and Pemex Logistics | | | 219,217 | | 8.00% Notes due 2019
| | Petróleos
|
The following table sets forth, as of December 31, 2019, the principal amount outstanding of the registered debt securities issued by Petróleos Mexicanos, and guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics. Table 2: Registered Debt Securities originally issued by Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 1,312,015 | | | | | | 9 1⁄4% Global Guaranteed Bonds due 2018
| | Petróleos
Mexicanos
| | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services
| | | 9,296
| | | | | | 9.50% Global Guaranteed Bonds due 2027
| | Petróleos
Mexicanos
| | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services
| | | 102,149
| | | | | | 3.500% Notes due 2018
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 999,590 | | | | | | Floating Rate Notes due 2018
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 498,570 | | | | | | 6.000% Notes due 2020
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 995,364 | | | | | | | | | Security | | Issuer | | Guarantors | | Principal amount outstanding (U.S. $) | | Floating Rate Notes due 2022 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 563,702 | | 9.50% Global Guaranteed Bonds due 2027 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 102,149 | | 6.000% Notes due 2020 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 322,564 | | 5.50% Notes due 2021 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 1,071,292 | | 3.500% Notes due 2023 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 1,360,645 | | 4.875% Notes due 2024 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 1,031,954 | | 6.625% Notes due 2035 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 999,000 | |
| | | | | | | | | PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESSecurity
| | Issuer | | AND SUBSIDIARY COMPANIESGuarantors
| | Principal amount outstanding (U.S. $) | | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS6.500% Bonds due 2041
| | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 1,560,521 | | FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 20144.875% Notes due 2022
| | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 787,806 | | (FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)5.375% Notes due 2022
| | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 604,657 | | 3.500% Notes due 2020 | | | | | | | | | Security
| | Issuer | | Guarantors
| | Principal amount
outstanding
(U.S. $) | | 5.50% Notes due 2021
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 2,961,947 | | | | | | 3.500% Notes due 2023
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 2,099,730 | | | | | | 4.875% Notes due 2024
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 1,499,136 | | | | | | 6.625% Notes due 2035
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 2,748,500 | | | | | | 6.500% Bonds due 2041
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 3,000,000 | | | | | | 4.875% Bonds 2022
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 2,097,055 | | | | | | 3.125% Notes due 2019
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 497,278 | | | | | | 3.500% Notes due 2020
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 1,454,967 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 437,022 | | 5.50% Bonds due 2044 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 972,970 | |
| | | | | | | | | PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESSecurity
| | Issuer | | AND SUBSIDIARY COMPANIESGuarantors
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | Security
| | Issuer | | Guarantors
| | Principal amount outstanding
Principal amount
outstanding (U.S. $) | | 5.50% Bonds due 2044
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 2,657,962 | | | | | | 6.375% Bonds due en 2045 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 2,999,980 | | | | | | 5.625% Bonds due 2046
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 2,992,876 | | | | | | 4.500% Notes due 2026
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 1,486,725 | | | | | | 4.250% Notes due 2025
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 998,153 | |
Petróleos Mexicanos is the only PEMEX entity that had debt securities registered with the SEC outstanding as of December 31, 2016 and as of the date of these consolidated financial statements, and all guaranteed debt is issued by Petróleos Mexicanos. The guaranties of the Subsidiary Guarantors are full and unconditional and joint and several. PEMEX’s management has not presented separate financial statements for the Subsidiary Guarantors, because it has determined that such information is not material to investors.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF FINANCIAL POSITION
As of December 31, 2016
| | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Assets | | | | | | | | | | | | | | | | | | | | | Current assets | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | Ps. | 92,503,607 | | | Ps. | 9,732,503 | | | Ps. | 61,296,403 | | | Ps. | — | | | Ps. | 163,532,513 | | Accounts receivable and other, net, and derivative financial instruments | | | 6,604,595 | | | | 75,760,079 | | | | 55,713,323 | | | | — | | | | 138,077,997 | | Accounts receivable—inter-company | | | 440,645,367 | | | | 1,684,782,235 | | | | 70,268,246 | | | | (2,195,695,848 | ) | | | — | | Inventories | | | 446,954 | | | | 29,270,943 | | | | 16,174,163 | | | | — | | | | 45,892,060 | | Available-for-sale financial assets | | | — | | | | — | | | | 435,556 | | | | — | | | | 435,556 | | Held-for-salenon-financial assets | | | — | | | | 7,460,674 | | | | — | | | | — | | | | 7,460,674 | | | | | | | | | | | | | | | | | | | | | | | Total current assets | | | 540,200,523 | | | | 1,807,006,434 | | | | 203,887,691 | | | | (2,195,695,848 | ) | | | 355,398,800 | | Available-for-sale financial assets | | | — | | | | — | | | | 6,027,540 | | | | — | | | | 6,027,540 | | Long-term receivables—intercompany | | | 1,740,519,399 | | | | 289 | | | | 6,384,944 | | | | (1,746,904,632 | ) | | | — | | Permanent investments in associates and other | | | (250,108,630 | ) | | | 396,681 | | | | 22,744,936 | | | | 250,121,645 | | | | 23,154,632 | | Wells, pipelines, properties, plant andequipment-net | | | 12,596,722 | | | | 1,595,655,580 | | | | 59,489,946 | | | | — | | | | 1,667,742,248 | | Long-term notes receivables | | | 140,579,974 | | | | 8,027,628 | | | | — | | | | — | | | | 148,607,602 | | Deferred taxes | | | 59,162,878 | | | | 40,341,615 | | | | 820,196 | | | | — | | | | 100,324,689 | | Restricted cash | | | — | | | | 9,624,804 | | | | 853,822 | | | | — | | | | 10,478,626 | | Intangible assets | | | — | | | | 8,639,242 | | | | — | | | | — | | | | 8,639,242 | | Other assets | | | 1,824,104 | | | | 2,707,788 | | | | 4,980,753 | | | | — | | | | 9,512,645 | | | | | | | | | | | | | | | | | | | | | | | Total assets | | Ps. | 2,244,774,970 | | | Ps. | 3,472,400,061 | | | $ | 305,189,828 | | | $ | (3,692,478,835 | ) | | $ | 2,329,886,024 | | | | | | | | | | | | | | | | | | | | | | | Liabilities | | | | | | | | | | | | | | | | | | | | | Current liabilities | | | | | | | | | | | | | | | | | | | | | Current portion of long-term debt | | | 157,937,631 | | | | 7,381,095 | | | | 10,847,462 | | | | — | | | | 176,166,188 | | Accounts payable—inter-company | | | 1,265,244,986 | | | | 854,106,939 | | | | 68,510,835 | | | | (2,187,862,760 | ) | | | — | | Other current liabilities | | | 34,913,773 | | | | 169,182,239 | | | | 45,927,686 | | | | — | | | | 250,023,698 | | | | | | | | | | | | | | | | | | | | | | | Total current liabilities | | | 1,458,096,390 | | | | 1,030,670,273 | | | | 125,285,983 | | | | (2,187,862,760 | ) | | | 426,189,886 | | Long-term debt | | | 1,737,332,174 | | | | 46,090,919 | | | | 23,581,449 | | | | — | | | | 1,807,004,542 | | Long-term payables—inter-company | | | — | | | | 1,746,433,870 | | | | 8,303,850 | | | | (1,754,737,720 | ) | | | — | | Employee benefits, provisions for sundry creditors, other liabilities and deferred taxes | | | 282,902,667 | | | | 1,035,019,339 | | | | 11,777,737 | | | | — | | | | 1,329,699,743 | | | | | | | | | | | | | | | | | | | | | | | Total liabilities | | | 3,478,331,231 | | | | 3,858,214,401 | | | | 168,949,019 | | | | (3,942,600,480 | ) | | | 3,562,894,171 | | Equity (deficit), net | | | (1,233,556,261 | ) | | | (385,814,340 | ) | | | 136,240,809 | | | | 250,121,645 | | | | (1,233,008,147 | ) | | | | | | | | | | | | | | | | | | | | | | Total liabilities and equity | | Ps. | 2,244,774,970 | | | Ps. | 3,472,400,061 | | | Ps. | 305,189,828 | | | Ps. | (3,692,478,835 | ) | | Ps. | 2,329,886,024 | | | | | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF FINANCIAL POSITION
As of December 31, 2015
| | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Assets | | | | | | | | | | | | | | | | | | | | | Current assets | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | Ps. | 58,461,012 | | | Ps. | 6,630,670 | | | Ps. | 44,277,198 | | | Ps. | — | | | Ps. | 109,368,880 | | Accounts receivable and other, net, and derivative financial instruments | | | 37,238,854 | | | | (34,341,755 | ) | | | 77,949,828 | | | | — | | | | 80,846,927 | | Accounts receivable—inter-company | | | 125,742,649 | | | | 900,153,311 | | | | 137,229,202 | | | | (1,163,125,162 | ) | | | — | | Inventories | | | 530,271 | | | | 31,959,005 | | | | 11,281,652 | | | | — | | | | 43,770,928 | | Held-for-salenon-financial assets | | | — | | | | 33,213,762 | | | | — | | | | — | | | | 33,213,762 | | | | | | | | | | | | | | | | | | | | | | | Total current assets | | | 221,972,786 | | | | 937,614,993 | | | | 270,737,880 | | | | (1,163,125,162 | ) | | | 267,200,497 | | Available-for-sale financial assets | | | — | | | | — | | | | 3,944,696 | | | | — | | | | 3,944,696 | | Long-term receivables—intercompany | | | 1,274,568,094 | | | | 313 | | | | 6,061,687 | | | | (1,280,630,094 | ) | | | — | | Permanent investments in associates and other | | | (246,924,369 | ) | | | 7,607,632 | | | | 16,544,953 | | | | 246,937,383 | | | | 24,165,599 | | Wells, pipelines, properties, plant andequipment-net | | | 11,810,768 | | | | 1,280,347,602 | | | | 52,325,261 | | | | — | | | | 1,344,483,631 | | Long-term notes receivable | | | 50,000,000 | | | | — | | | | — | | | | — | | | | 50,000,000 | | Deferred taxes | | | 52,242,786 | | | | 2,168,657 | | | | 488,941 | | | | — | | | | 54,900,384 | | Restricted cash | | | — | | | | 8,010,298 | | | | 1,236,474 | | | | — | | | | 9,246,772 | | Intangible assets | | | — | | | | 14,304,961 | | | | — | | | | — | | | | 14,304,961 | | Other assets | | | 1,559,055 | | | | 2,528,699 | | | | 3,319,906 | | | | — | | | | 7,407,660 | | | | | | | | | | | | | | | | | | | | | | | Total assets | | PS. | 1,365,229,120 | | | Ps. | 2,252,583,155 | | | Ps. | 354,659,798 | | | Ps. | (2,196,817,873 | ) | | Ps. | 1,775,654,200 | | | | | | | | | | | | | | | | | | | | | | | Liabilities | | | | | | | | | | | | | | | | | | | | | Current liabilities | | | | | | | | | | | | | | | | | | | | | Current portion of long-term debt | | Ps. | 183,985,562 | | | Ps. | 5,933,027 | | | Ps. | 2,590,079 | | | Ps. | — | | | Ps. | 192,508,668 | | Accounts payable—inter-company | | | 915,533,239 | | | | 162,455,837 | | | | 76,784,232 | | | | (1,154,773,308 | ) | | | — | | Other current liabilities | | | 35,189,773 | | | | 195,646,938 | | | | 20,062,342 | | | | — | | | | 250,899,053 | | | | | | | | | | | | | | | | | | | | | | | Total current liabilities | | | 1,134,708,574 | | | | 364,035,802 | | | | 99,436,653 | | | | (1,154,773,308 | ) | | | 443,407,721 | | Long-term debt | | | 1,271,921,360 | | | | 11,589,261 | | | | 17,362,546 | | | | — | | | | 1,300,873,167 | | Long-term payables—inter-company | | | — | | | | 1,281,683,849 | | | | 7,298,100 | | | | (1,288,981,949 | ) | | | — | | Employee benefits, provisions for sundrycreditors, other liabilities and deferred taxes | | | 290,528,362 | | | | 944,461,253 | | | | 128,059,595 | | | | — | | | | 1,363,049,210 | | | | | | | | | | | | | | | | | | | | | | | Total liabilities | | | 2,697,158,296 | | | | 2,601,770,165 | | | | 252,156,894 | | | | (2,443,755,257 | ) | | | 3,107,330,098 | | Equity (deficit), net | | | (1,331,929,176 | ) | | | (349,187,010 | ) | | | 102,502,904 | | | | 246,937,384 | | | | (1,331,675,898 | ) | | | | | | | | | | | | | | | | | | | | | | Total liabilities and equity | | Ps. | 1,365,229,120 | | | Ps. | 2,252,583,155 | | | Ps. | 354,659,798 | | | Ps. | (2,196,817,873 | ) | | Ps. | 1,775,654,200 | | | | | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF COMPREHENSIVE INCOME
For the year ended December 31, 2016
| | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Net sales | | Ps. | — | | | Ps. | 1,361,538,624 | | | Ps. | 828,143,332 | | | Ps. | (1,124,563,366 | ) | | Ps. | 1,065,118,590 | | Services income | | | 46,330,245 | | | | 98,959,131 | | | | 7,422,494 | | | | (138,284,789 | ) | | | 14,427,081 | | | | | | | | | | | | | | | | | | | | | | | Total sales revenues | | | 46,330,245 | | | | 1,460,497,755 | | | | 835,565,826 | | | | (1,262,848,155 | ) | | | 1,079,545,671 | | Impairment of wells, pipelines, properties, plant and equipment | | | — | | | | (330,037,834 | ) | | | (1,276,509 | ) | | | — | | | | (331,314,343 | ) | Cost of sales | | | 1,236,921 | | | | 1,244,388,072 | | | | 810,915,191 | | | | (1,188,959,550 | ) | | | 867,580,634 | | | | | | | | | | | | | | | | | | | | | | | Gross income | | | 45,093,324 | | | | 546,147,517 | | | | 25,927,144 | | | | (73,888,605 | ) | | | 543,279,380 | | Other (expenses) revenues, net | | | (312,611 | ) | | | 20,713,184 | | | | (778,189 | ) | | | (666,804 | ) | | | 18,955,580 | | | | | | | | | | | | | | | | | | | | | | | General expenses: | | | | | | | | | | | | | | | | | | | | | Transportation, distribution and sale expenses | | | — | | | | 50,948,771 | | | | 945,489 | | | | (26,663,020 | ) | | | 25,231,240 | | Administrative expenses | | | 57,437,455 | | | | 96,884,031 | | | | 7,050,271 | | | | (48,718,224 | ) | | | 112,653,533 | | | | | | | | | | | | | | | | | | | | | | | Total general expenses | | | 57,437,455 | | | | 147,832,802 | | | | 7,995,760 | | | | (75,381,244 | ) | | | 137,884,773 | | | | | | | | | | | | | | | | | | | | | | | Operating income | | | (12,656,742 | ) | | | 419,027,899 | | | | 17,153,195 | | | | 825,835 | | | | 424,350,187 | | Financing income | | | 123,266,281 | | | | 67,542,768 | | | | 3,526,378 | | | | (180,586,172 | ) | | | 13,749,255 | | Financing cost | | | (160,824,632 | ) | | | (114,271,762 | ) | | | (3,602,868 | ) | | | 179,854,798 | | | | (98,844,464 | ) | Derivative financial instruments (cost) income, net | | | (12,052,200 | ) | | | 3,172 | | | | (1,951,959 | ) | | | — | | | | (14,000,987 | ) | Foreign exchange loss, net | | | (20,531,005 | ) | | | (232,714,446 | ) | | | (767,292 | ) | | | — | | | | (254,012,743 | ) | Profit (loss) sharing in associates and other | | | (117,347,803 | ) | | | 628,357 | | | | 1,507,488 | | | | 117,347,803 | | | | 2,135,845 | | | | | | | | | | | | | | | | | | | | | | | Income (loss) before taxes, duties and other | | | (200,146,101 | ) | | | 140,215,988 | | | | 15,864,942 | | | | 117,442,264 | | | | 73,377,093 | | Total taxes, duties and other | | | (8,834,626 | ) | | | 266,155,181 | | | | 7,200,880 | | | | — | | | | 264,521,435 | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | | (191,311,475 | ) | | | (125,939,193 | ) | | | 8,664,062 | | | | 117,442,264 | | | | (191,144,342 | ) | Total other comprehensive result | | | 10,126,560 | | | | 96,032,433 | | | | 21,713,488 | | | | — | | | | 127,872,481 | | | | | | | | | | | | | | | | | | | | | | | Total comprehensive result for the year | | Ps. | (181,184,915 | ) | | Ps. | (29,906,760 | ) | | Ps. | 30,377,550 | | | Ps. | 117,442,264 | | | Ps. | (63,271,861 | ) | | | | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF COMPREHENSIVE INCOME
For the year ended December 31, 2015
| | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Net sales | | Ps. | 15,556 | | | Ps. | 1,523,767,800 | | | Ps. | 803,623,324 | | | Ps. | (1,173,956,323 | ) | | Ps. | 1,153,450,357 | | Services income | | | 16,897,139 | | | | 16,815,589 | | | | 7,187,694 | | | | (27,988,310 | ) | | | 12,912,112 | | | | | | | | | | | | | | | | | | | | | | | Total sales revenues | | | 16,912,695 | | | | 1,540,583,389 | | | | 810,811,018 | | | | (1,201,944,633 | ) | | | 1,166,362,469 | | Impairment of wells, pipelines, properties, plant and equipment | | | — | | | | 476,276,159 | | | | 1,668,531 | | | | — | | | | 477,944,690 | | Benefit from change in pension plan | | | | | | | (83,657,496 | ) | | | (8,519,593 | ) | | | — | | | | (92,177,089 | ) | Cost of sales | | | 2,695,423.00 | | | | 1,280,404,059 | | | | 794,252,043 | | | | (1,182,282,621 | ) | | | 895,068,904 | | | | | | | | | | | | | | | | | | | | | | | Gross income | | | 14,217,272 | | | | (132,439,333 | ) | | | 23,410,037 | | | | (19,662,012 | ) | | | (114,474,036 | ) | Other (expenses) revenues, net | | | (19,805 | ) | | | (6,073,003 | ) | | | 1,828,642 | | | | 1,890,900 | | | | (2,373,266 | ) | | | | | | | | | | | | | | | | | | | | | | General expenses: | | | | | | | | | | | | | | | | | | | | | Transportation, distribution and sale expenses | | | — | | | | 32,870,908 | | | | 2,921,430 | | | | (6,863,699 | ) | | | 28,928,639 | | Administrative expenses | | | 59,923,878 | | | | 52,832,029 | | | | 10,638,127 | | | | (10,921,939 | ) | | | 112,472,095 | | Benefit from change in pension plan | | | (46,031,780 | ) | | | (50,394,477 | ) | | | (7,434,698 | ) | | | — | | | | (103,860,955 | ) | Total general expenses | | | 13,892,098 | | | | 35,308,460 | | | | 6,124,859 | | | | (17,785,638 | ) | | | 37,539,779 | | | | | | | | | | | | | | | | | | | | | | | Operating income | | | 305,369 | | | | (173,820,796 | ) | | | 19,113,820 | | | | 14,526 | | | | (154,387,081 | ) | Financing income | | | 108,543,665 | | | | 28,639,034 | | | | 3,478,434 | | | | (125,670,274 | ) | | | 14,990,859 | | Financing cost | | | (85,544,060 | ) | | | (104,453,148 | ) | | | (3,306,776 | ) | | | 125,530,391 | | | | (67,773,593 | ) | Derivative financial instruments (cost) income, net | | | (22,803,663 | ) | | | 6,463 | | | | 1,347,323 | | | | — | | | | (21,449,877 | ) | Foreign exchange loss, net | | | (14,829,436 | ) | | | (139,623,910 | ) | | | (312,228 | ) | | | — | | | | (154,765,574 | ) | (Loss) profit sharing in associates and other | | | (749,963,960 | ) | | | 198,786 | | | | 2,119,329 | | | | 749,963,960 | | | | 2,318,115 | | | | | | | | | | | | | | | | | | | | | | | (Loss) income before taxes, duties and other | | | (764,292,085 | ) | | | (389,053,571 | ) | | | 22,439,902 | | | | 749,838,603 | | | | (381,067,151 | ) | Total taxes, duties and other | | | (51,982,560 | ) | | | 376,649,369 | | | | 6,833,438 | | | | — | | | | 331,500,247 | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | | (712,309,525 | ) | | | (765,702,940 | ) | | | 15,606,464 | | | | 749,838,603 | | | | (712,567,398 | ) | Total other comprehensive result | | | 10,980,787 | | | | 56,585,790 | | | | 21,045,777 | | | | — | | | | 88,612,354 | | | | | | | | | | | | | | | | | | | | | | | Total comprehensive result for the year | | Ps. | (701,328,738 | ) | | Ps. | (709,117,150 | ) | | Ps. | 36,652,241 | | | Ps. | 749,838,603 | | | Ps. | (623,955,044 | ) | | | | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF COMPREHENSIVE INCOME
For the year ended December 31, 2014
| | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Net sales | | Ps. | 18,998 | | | | Ps. 2,213,875,692 | | | Ps. | 1,108,487,220 | | | Ps. | (1,747,092,618 | ) | | Ps. | 1,575,289,292 | | Services income | | | 64,245,159 | | | | 6,055,328 | | | | 6,426,288 | | | | (65,288,193 | ) | | | 11,438,582 | | | | | | | | | | | | | | | | | | | | | | | Total sales revenues | | | 64,264,157 | | | | 2,219,931,020 | | | | 1,114,913,508 | | | | (1,812,380,811 | ) | | | 1,586,727,874 | | Impairment of wells, pipelines, properties, plant and equipment | | | — | | | | 21,199,704 | | | | 1,445,992 | | | | — | | | | 22,645,696 | | Cost of sales | | | 2,663,293 | | | | 1,492,165,034 | | | | 1,106,898,998 | | | | (1,759,092,541 | ) | | | 842,634,784 | | Gross income | | | 61,600,864 | | | | 706,566,282 | | | | 6,568,518 | | | | (53,288,270 | ) | | | 721,447,394 | | | | | | | | | | | | | | | | | | | | | | | Other (expenses) revenues, net | | | 514,056 | | | | 36,518,256 | | | | 778,682 | | | | (258,597 | ) | | | 37,552,397 | | | | | | | | | | | | | | | | | | | | | | | General expenses: | | | | | | | | | | | | | | | | | | | | | Transportation, distribution and sale expenses | | | — | | | | 34,095,556 | | | | 1,555,276 | | | | (3,468,166 | ) | | | 32,182,666 | | Administrative expenses | | | 57,654,464 | | | | 86,112,895 | | | | 17,701,494 | | | | (50,131,739 | ) | | | 111,337,114 | | | | | | | | | | | | | | | | | | | | | | | Total general expenses | | | 57,654,464 | | | | 120,208,451 | | | | 19,256,770 | | | | (53,599,905 | ) | | | 143,519,780 | | | | | | | | | | | | | | | | | | | | | | | Operating income | | | 4,460,456 | | | | 622,876,087 | | | | (11,909,570 | ) | | | 53,038 | | | | 615,480,011 | | Financing income | | | 85,565,363 | | | | 17,696,814 | | | | 3,106,401 | | | | (103,354,391 | ) | | | 3,014,187 | | Financing cost | | | (67,194,647 | ) | | | (84,756,651 | ) | | | (2,973,111 | ) | | | 103,365,349 | | | | (51,559,060 | ) | Derivative financial instruments (cost) income, net | | | (13,858,680 | ) | | | 8,116 | | | | 4,411,994 | | | | — | | | | (9,438,570 | ) | Foreign exchange loss, net | | | (7,859,495 | ) | | | (69,076,040 | ) | | | (63,626 | ) | | | — | | | | (76,999,161 | ) | (Loss) profit sharing in associates and other | | | (263,219,388 | ) | | | 487,365 | | | | (452,997 | ) | | | 263,219,388 | | | | 34,368 | | | | | | | | | | | | | | | | | | | | | | | (Loss) income before taxes, duties and other | | | (262,106,391 | ) | | | 487,235,691 | | | | (7,880,909 | ) | | | 263,283,384 | | | | 480,531,775 | | Total taxes, duties and other | | | 3,160,818 | | | | 738,855,418 | | | | 4,058,528 | | | | — | | | | 746,074,764 | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | | (265,267,209 | ) | | | (251,619,727 | ) | | | (11,939,437 | ) | | | 263,283,384 | | | | (265,542,989 | ) | Total other comprehensive result | | | (62,426,587 | ) | | | (189,804,290 | ) | | | (13,117,248 | ) | | | — | | | | (265,348,125 | ) | | | | | | | | | | | | | | | | | | | | | | Total comprehensive result for the year | | Ps. | (327,693,796 | ) | | Ps. | (441,424,017 | ) | | Ps. | (25,056,685 | ) | | Ps. | 263,283,384 | | | Ps. | (530,891,114 | ) | | | | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF CASH FLOWS
For the year ended December 31, 2016
| | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Operating activities: | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | Ps. | (191,311,476 | ) | | Ps. | (139,410,398 | ) | | | Ps. 22,160,755 | | | Ps. | 117,416,777 | | | Ps. | (191,144,342) | | Adjustments to reconcile net loss to cash provided by operating activities: | | | | | | | | | | | | | | | | | | | | | Depreciation and amortization | | | 1,066,033 | | | | 146,545,307 | | | | 2,828,151 | | | | — | | | | 150,439,491 | | Impairment of wells, pipelines, properties, plant and equipment | | | — | | | | (330,037,834 | ) | | | (1,276,509 | ) | | | — | | | | (331,314,343 | ) | Unsuccessful wells | | | — | | | | 29,106,084 | | | | — | | | | — | | | | 29,106,084 | | Disposal of wells, pipelines, properties, plant and equipment | | | 320,599 | | | | 2,658,625 | | | | 792,063 | | | | — | | | | 3,771,287 | | Loss in sale of fixed assets | | | — | | | | 27,882,480 | | | | — | | | | — | | | | 27,882,480 | | Gain on sale of share in associates and other | | | — | | | | (15,211,039 | ) | | | — | | | | — | | | | (15,211,039 | ) | Profit (loss) sharing in associates and other | | | 117,249,643 | | | | (628,356 | ) | | | (1,507,489 | ) | | | (117,249,643 | ) | | | (2,135,845 | ) | Impairment of goodwill | | | — | | | | — | | | | 4,007,018 | | | | — | | | | 4,007,018 | | Dividends | | | — | | | | — | | | | (293,397 | ) | | | — | | | | (293,397 | ) | Effects of net present value of reserve for well abandonment | | | — | | | | 11,968,966 | | | | — | | | | — | | | | 11,968,966 | | Amortization expenses related to debt issuance | | | (1,610,183 | ) | | | — | | | | — | | | | — | | | | (1,610,183 | ) | Unrealized foreign exchange loss (gain) | | | 231,191,646 | | | | 6,754,046 | | | | 5,237,072 | | | | — | | | | 243,182,764 | | Interest expense | | | 91,044,541 | | | | 5,687,502 | | | | 2,112,421 | | | | — | | | | 98,844,464 | | Funds (used in) from operating activities: | | | | | | | | | | | | | | | | | | | | | Accounts receivable, accounts payable and derivative financial instruments | | | 23,636,331 | | | | (158,449,370 | ) | | | 45,028,534 | | | | — | | | | (89,784,505 | ) | Inventories | | | 83,317 | | | | 3,508,494 | | | | (4,950,690 | ) | | | — | | | | (1,358,879 | ) | Other assets | | | (2,405,412 | ) | | | (22,600,504 | ) | | | (122,614 | ) | | | — | | | | (25,128,530 | ) | Employee benefits | | | 2,591,000 | | | | 136,354,337 | | | | (91,652,268 | ) | | | — | | | | 47,293,069 | | Inter-company charges and deductions | | | (393,835,932 | ) | | | (83,049,125 | ) | | | 48,435,633 | | | | 428,449,424 | | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows (used in) from operating activities | | | (121,979,893 | ) | | | (378,920,785 | ) | | | 30,798,680 | | | | 428,616,558 | | | | (41,485,440 | ) | Investing activities: | | | | | | | | | | | | | | | | | | | | | Acquisition of wells, pipelines, properties, plant and equipment | | | (2,172,586 | ) | | | (147,786,686 | ) | | | (1,449,208 | ) | | | — | | | | (151,408,480 | ) | Exploration costs | | | — | | | | (2,022,826 | ) | | | — | | | | — | | | | (2,022,826 | ) | Resources from sale on share in associates | | | — | | | | 23,050,344 | | | | (365,608 | ) | | | — | | | | 22,684,736 | | Proceeds from the sale of fixed assets | | | — | | | | — | | | | (4,329,769 | ) | | | — | | | | (4,329,769 | ) | (Increase) decrease due to Inter-company investing | | | (39,612,699 | ) | | | — | | | | — | | | | 39,612,699 | | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows used in investing activities | | | (41,785,285 | ) | | | (126,198,503 | ) | | | (6,144,585 | ) | | | 39,612,699 | | | | (134,515,674 | ) | Financing activities: | | | | | | | | | | | | | | | | | | | | | Increase in equity due to Certificates of Contributions “A” | | | 73,500,000 | | | | — | | | | — | | | | — | | | | 73,500,000 | | Loans obtained from financial institutions | | | 571,944,209 | | | | 34,483,348 | | | | 235,564,210 | | | | — | | | | 841,991,767 | | Debt payments, principal only | | | (371,198,983 | ) | | | (6,414,441 | ) | | | (235,763,722 | ) | | | — | | | | (613,377,146 | ) | Interest paid | | | (82,008,347 | ) | | | (4,706,946 | ) | | | (2,038,848 | ) | | | — | | | | (88,754,141 | ) | Inter-company increase (decrease) financing | | | — | | | | 464,488,030 | | | | 3,741227 | | | | (468,229,257 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows provided by financing activities: | | | 192,236,879 | | | | 487,849,991 | | | | 1,502,867 | | | | (468,229,257 | ) | | | 213,360,480 | | | | | | | | | | | | | | | | | | | | | | | Net (decrease) increase in cash and cash equivalents | | | 28,471,701 | | | | (17,269,297 | ) | | | 26,156,962 | | | | — | | | | 37,359,366 | | Effects of change in cash value | | | 5,570,892 | | | | 20,371,126 | | | | (9,137,751 | ) | | | — | | | | 16,804,267 | | Cash and cash equivalents at the beginning of the year | | | 58,461,014 | | | | 6,630,674 | | | | 44,277,192 | | | | — | | | | 109,368,880 | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents at the end of the year | | Ps. | 92,503,607 | | | Ps. | 9,732,503 | | | | Ps. 61,296,403 | | | Ps. | — | | | Ps. | 163,532,513 | | | | | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF CASH FLOWS
For the year ended December 31, 2015
| | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Operating activities: | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | Ps. | (712,177,124 | ) | | Ps. | (765,702,826 | ) | | Ps. | 15,738,868 | | | Ps. | 749,573,684 | | | Ps. | (712,567,398 | ) | Adjustments to reconcile net loss to cash provided by operating activities: | | | | | | | | | | | | | | | | | | | | | Depreciation and amortization | | | 789,657 | | | | 164,221,429 | | | | 2,940,164 | | | | — | | | | 167,951,250 | | Impairment of wells, pipelines, properties, plant and equipment | | | — | | | | 476,276,159 | | | | 1,668,531 | | | | — | | | | 477,944,690 | | Unsuccessful wells | | | — | | | | 23,213,519 | | | | — | | | | — | | | | 23,213,519 | | Disposal of wells, pipelines, properties, plant and equipment | | | 180,992 | | | | 21,945,266 | | | | 2,512,279 | | | | — | | | | 24,638,537 | | Profit (loss) sharing in associates and other | | | 749,963,958 | | | | (198,786 | ) | | | (2,119,329 | ) | | | (749,963,958 | ) | | | (2,318,115 | ) | Net profit (loss) onavailable-for-sale financial assets | | | — | | | | (337,675 | ) | | | (342,955 | ) | | | — | | | | (680,630 | ) | Dividends | | | — | | | | — | | | | (359,941 | ) | | | — | | | | (359,941 | ) | Effects of net present value of reserve for well abandonment | | | — | | | | (608,160 | ) | | | — | | | | — | | | | (608,160 | ) | Amortization expenses related to debt issuance | | | (2,299,657 | ) | | | — | | | | — | | | | — | | | | (2,299,657 | ) | Unrealized foreign exchange loss (gain) | | | 145,971,158 | | | | 2,996,219 | | | | 3,708,879 | | | | — | | | | 152,676,256 | | Interest expense | | | 63,460,443 | | | | 3,414,430 | | | | 898,720 | | | | — | | | | 67,773,593 | | Funds provided by (used in) operating activities: | | | | | | | | | | | | | | | | | | | | | Accounts receivable, accounts payable and derivative financial instruments | | | (58,554,144 | ) | | | 119,761,648 | | | | (27,777,939 | ) | | | — | | | | 33,429,565 | | Inventories | | | 108,568 | | | | 4,547,843 | | | | 1,511,317 | | | | — | | | | 6,167,728 | | Other assets | | | (149,819 | ) | | | (16,578,827 | ) | | | 126,281 | | | | — | | | | (16,602,365 | ) | Employee benefits | | | (10,037,444 | ) | | | (94,183,192 | ) | | | (11,801,596 | ) | | | — | | | | (116,022,232 | ) | Inter-company charges and deductions | | | (310,384,820 | ) | | | 30,044,041 | | | | 31,975,215 | | | | 248,365,564 | | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows provided by operating activities | | | (133,128,232 | ) | | | (31,188,912 | ) | | | 18,678,494 | | | | 247,975,290 | | | | 102,336,640 | | Investing activities: | | | | | | | | | | | | | | | | | | | | | Acquisition of wells, pipelines, properties, plant and equipment | | | (1,496,277 | ) | | | (239,315,507 | ) | | | (12,702,217 | ) | | | — | | | | (253,514,001 | ) | Available-for-sale financial assets | | | | | | | | | | | | | | | | | | | | | Investments in associates | | | — | | | | — | | | | (36,214 | ) | | | — | | | | (36,214 | ) | Exploration costs | | | — | | | | (5,698,511 | ) | | | — | | | | — | | | | (5,698,511 | ) | Received dividends | | | — | | | | (130,323 | ) | | | 4,547,461 | | | | — | | | | 4,417,138 | | (Increase) decrease due to Inter-company investing | | | (39,108,879 | ) | | | — | | | | — | | | | 39,108,879 | | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows used in investing activities | | | (40,605,156 | ) | | | (245,144,341 | ) | | | (8,190,970 | ) | | | 39,108,879 | | | | (254,831,588 | ) | Financing activities: | | | | | | | | | | | | | | | | | | | | | Increase in equity due to Certificates of Contributions “A” | | | 10,000,000 | | | | (1,915,922 | ) | | | 1,844,394 | | | | 71,528 | | | | 10,000,000 | | Loans obtained from financial institutions | | | 345,383,990 | | | | — | | | | 33,587,088 | | | | — | | | | 378,971,078 | | Debt payments, principal only | | | (145,628,200 | ) | | | (8,081,177 | ) | | | (37,609,464 | ) | | | — | | | | (191,318,841 | ) | Interest paid | | | (58,123,368 | ) | | | (3,443,923 | ) | | | (1,169,859 | ) | | | — | | | | (62,737,150 | ) | Inter-company increase (decrease) financing | | | (3,626,448 | ) | | | 289,859,193 | | | | 922,972 | | | | (287,155,717 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows provided by financing activities: | | | 148,005,974 | | | | 276,418,151 | | | | (2,424,869 | ) | | | (287,084,169 | ) | | | 134,915,087 | | | | | | | | | | | | | | | | | | | | | | | Net (decrease) increase in cash and cash equivalents | | | (25,727,414 | ) | | | 84,898 | | | | 8,062,655.00 | | | | — | | | | (17,579,861 | ) | Effects of change in cash value | | | 11,185,788 | | | | 1,138,356 | | | | (3,363,931 | ) | | | — | | | | 8,960,213 | | Cash and cash equivalents at the beginning of the year | | | 73,002,640 | | | | 5,407,420 | | | | 39,578,468 | | | | — | | | | 117,988,528 | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents at the end of the year | | Ps. | 58,461,014 | | | Ps. | 6,630,674 | | | Ps. | 44,277,192 | | | Ps. | — | | | Ps. | 109,368,880 | | | | | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF CASH FLOWS
For the year ended December 31, 2014
| | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Operating activities: | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | Ps. | (265,267,209 | ) | | Ps. | (251,619,727 | ) | | Ps. | (11,939,437 | ) | | Ps. | 263,283,384 | | | Ps. | (265,542,989 | ) | Adjustments to reconcile net loss to cash provided by operating activities: | | | | | | | | | | | | | | | | | | | | | Depreciation and amortization | | | 744,081 | | | | 139,522,310 | | | | 2,808,396 | | | | — | | | | 143,074,787 | | Impairment of wells, pipelines, properties, plant and equipment | | | — | | | | 21,199,704 | | | | 1,445,992 | | | | — | | | | 22,645,696 | | Unsuccessful wells | | | — | | | | 12,148,028 | | | | — | | | | — | | | | 12,148,028 | | Disposal of wells, pipelines, properties, plant and equipment | | | 211,414 | | | | 3,499,602 | | | | 2,659,921 | | | | — | | | | 6,370,937 | | Net loss (profit) onavailable-for-sale financial assets | | | — | | | | — | | | | 215,119 | | | | — | | | | 215,119 | | Profit (loss) sharing in associates and other | | | 263,559,164 | | | | (487,365 | ) | | | 452,997 | | | | (263,559,164 | ) | | | (34,368 | ) | Dividends | | | — | | | | — | | | | (736,302 | ) | | | — | | | | (736,302 | ) | Effects of net present value of reserve for well abandonment | | | — | | | | 9,169,327 | | | | — | | | | — | | | | 9,169,327 | | Amortization expenses related to debt issuance | | | 312,296 | | | | — | | | | — | | | | — | | | | 312,296 | | Unrealized foreign exchange loss (gain) | | | 75,053,801 | | | | 1,903,282 | | | | 1,927,634 | | | | — | | | | 78,884,717 | | Interest expense | | | 44,969,920 | | | | 5,084,856 | | | | 854,848 | | | | — | | | | 50,909,624 | | Funds provided by (used in) operating activities: | | | | | | | | | | | | | | | | | | | | | Accounts receivable, accounts payable and derivative financial instruments | | | 14,951,048 | | | | (19,048,441 | ) | | | 14,075,687 | | | | — | | | | 9,978,294 | | Inventories | | | 20,413 | | | | (5,046,019 | ) | | | 12,001,450 | | | | — | | | | 6,975,844 | | Other assets | | | (227,438 | ) | | | (17,819,505 | ) | | | (937,934 | ) | | | — | | | | (18,984,877 | ) | Employee benefits | | | 17,913,078 | | | | 52,988,257 | | | | 8,068,673 | | | | — | | | | 78,970,008 | | Inter-company charges and deductions | | | (274,747,392 | ) | | | 37,103,048 | | | | (13,393,984 | ) | | | 251,038,328 | | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows provided by operating activities | | | (122,506,824 | ) | | | (11,402,643 | ) | | | 17,503,050 | | | | 250,762,548 | | | | 134,356,131 | | | | | | | | | | | | | | | | | | | | | | | Investing activities: | | | | | | | | | | | | | | | | | | | | | Acquisition of wells, pipelines, properties, plant and equipment | | | (2,574,431 | ) | | | (215,531,732 | ) | | | (12,572,707 | ) | | | — | | | | (230,678,870 | ) | Available-for-sale financial assets | | | — | | | | — | | | | 12,735,337 | | | | — | | | | 12,735,337 | | (Increase) decrease due to Inter-company investing | | | — | | | | — | | | | (3,466,447 | ) | | | — | | | | (3,466,447 | ) | Exploration costs | | | — | | | | (1,593,706 | ) | | | — | | | | — | | | | (1,593,706 | ) | Received dividends | | | — | | | | — | | | | 336,095 | | | | — | | | | 336,095 | | Investments in associates | | | 7,942,930 | | | | — | | | | — | | | | (7,942,930 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows used in investing activities | | | 5,368,499 | | | | (217,125,438 | ) | | | (2,967,722 | ) | | | (7,942,930 | ) | | | (222,667,591 | ) | Financing activities: | | | | | | | | | | | | | | | | | | | | | Increase in equity due to Certificates of Contributions “A” | | | 22,000,000 | | | | — | | | | — | | | | — | | | | 22,000,000 | | Withdrawal of Mexican Government contributions | | | (73,583,100 | ) | | | — | | | | — | | | | — | | | | (73,583,100 | ) | Loans obtained from financial institutions | | | 320,893,270 | | | | — | | | | 102,506,205 | | | | — | | | | 423,399,475 | | Debt payments, principal only | | | (93,488,805 | ) | | | (7,748,079 | ) | | | (106,218,608 | ) | | | — | | | | (207,455,492 | ) | Interest paid | | | (41,091,971 | ) | | | (5,105,446 | ) | | | (1,051,061 | ) | | | — | | | | (47,248,478 | ) | Inter-company increase (decrease) financing | | | 687,961 | | | | 240,568,067 | | | | 1,563,590 | | | | (242,819,618 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows provided by financing activities: | | | 135,417,355 | | | | 227,714,542 | | | | (3,199,874 | ) | | | (242,819,618 | ) | | | 117,112,405 | | | | | | | | | | | | | | | | | | | | | | | Net (decrease) increase in cash and cash equivalents | | | 18,279,030 | | | | (813,539 | ) | | | 11,335,454 | | | | — | | | | 28,800,945 | | Effects of change in cash value | | | 4,592,205 | | | | 889,057 | | | | 2,960,602 | | | | — | | | | 8,441,864 | | Cash and cash equivalents at the beginning of the year | | | 50,131,405 | | | | 5,331,902 | | | | 25,282,412 | | | | — | | | | 80,745,719 | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents at the end of the year | | Ps. | 73,002,640 | | | Ps. | 5,407,420 | | | Ps. | 39,578,468 | | | Ps. | — | | | Ps. | 117,988,528 | | | | | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
NOTE 29. SUPPLEMENTARY INFORMATION ON OIL AND GAS EXPLORATION AND PRODUCTION ACTIVITIES (UNAUDITED)
Under the Mexican Constitution, all crude oil and other hydrocarbon reserves located in the subsoil of Mexico are owned by the Mexican nation and not by PEMEX. In August 2014, through the Round Zero process, the Mexican Government granted PEMEX the right to extract, but not own, certain petroleum and other hydrocarbon reserves in Mexico through assignment deeds.
This note provides 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) Topic 93210-5 “Extractive Activities—OilPemex Industrial Transformation and Gas” (“ASC Topic 932”) and Accounting Standards Update2010-03 (see Note 3(i)).Pemex Logistics
| | | 1,560,461 | | 5.625% Bonds due 2046 As of the date of these consolidated financial statements, all exploration and production activities of
| | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 1,698,214 | | 4.500% Notes due 2026 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 1,497,918 | | 4.250% Notes due 2025 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 790,153 | | 6.375% Notes due 2021 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 364,288 | |
| | | | | | | | | Security | | Issuer | | Guarantors | | Principal amount outstanding (U.S. $) | | 6.875% Notes due 2026 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 2,970,334 | | 4.625% Notes due 2023 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 1,012,142 | | 6.750% Bonds due 2047 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 5,997,558 | | 5.350% Notes due 2028 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 2,482,368 | |
| | | | | | | | | Security | | Issuer | | Guarantors | | Principal amount outstanding (U.S. $) | | 6.350% Bonds due 2048 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 3,326,497 | | 6.500% Notes due 2029 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 1,982,163 | | 6.500% Notes due 2027 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | | 5,478,497 | |
Petróleos Mexicanos is the only PEMEX entity that had debt securities registered with the SEC outstanding as of December 31, 2019 and as of the date of these consolidated financial statements, and all guaranteed debt is issued by Petróleos Mexicanos. The guaranties of the Subsidiary Guarantors are full and unconditional and joint and several. PEMEX’s management has not presented separate financial statements for the Subsidiary Guarantors, because it has determined that such information is not material to investors. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION STATEMENT OF FINANCIAL POSITION As of December 31, 2019 | | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Assets | | | | | | | | | | | | | | | | | | | | | Current assets | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | Ps. | 28,234,857 | | | Ps. | 4,826,057 | | | Ps. | 27,560,717 | | | Ps. | — | | | Ps. | 60,621,631 | | Trade and other accounts receivable, derivative financial instruments and other current assets | | | 21,264,604 | | | | 119,380,143 | | | | 56,613,797 | | | | — | | | | 197,258,544 | | Accounts receivable—inter-company | | | 592,503,940 | | | | 1,134,820,799 | | | | 129,911,984 | | | | (1,857,236,723 | ) | | | — | | Inventories | | | 459,131 | | | | 51,833,240 | | | | 30,379,825 | | | | — | | | | 82,672,196 | | | | | | | | | | | | | | | | | | | | | | | Total current assets | | | 642,462,532 | | | | 1,310,860,239 | | | | 244,466,323 | | | | (1,857,236,723 | ) | | | 340,552,371 | | Long-term receivables—intercompany | | | 1,692,840,909 | | | | — | | | | 1,615,441 | | | | (1,694,456,350 | ) | | | — | | Investments in joint ventures and associates | | | (980,054,315 | ) | | | 10,757,092 | | | | 73,151,606 | | | | 911,020,196 | | | | 14,874,579 | | Wells, pipelines, properties, plant andequipment-net | | | 9,706,301 | | | | 1,169,112,584 | | | | 32,930,617 | | | | — | | | | 1,211,749,502 | | Long-term notes receivables | | | 121,626,851 | | | | 938,455 | | | | — | | | | — | | | | 122,565,306 | | Right of use | | | 1,385,617 | | | | 67,564,544 | | | | 1,868,152 | | | | — | | | | 70,818,314 | | Deferred taxes | | | 81,127,820 | | | | 50,735,224 | | | | 4,303,703 | | | | — | | | | 136,166,747 | | Intangible assets | | | 130,535 | | | | 13,018,022 | | | | 1,435,967 | | | | — | | | | 14,584,524 | | Other assets | | | 21,986 | | | | 2,955,242 | | | | 4,159,450 | | | | — | | | | 7,136,677 | | | | | | | | | | | | | | | | | | | | | | | Total assets | | | 1,569,248,236 | | | | 2,625,941,402 | | | | 363,931,259 | | | | (2,640,672,877 | ) | | | 1,918,448,020 | | | | | | | | | | | | | | | | | | | | | | | Liabilities | | | | | | | | | | | | | | | | | | | | | Current liabilities | | | | | | | | | | | | | | | | | | | | | Current portion of long-term debt | | | 209,291,307 | | | | 2,942,757 | | | | 32,690,121 | | | | — | | | | 244,924,185 | | Accounts payable—inter-company | | | 1,275,967,793 | | | | 471,706,488 | | | | 106,934,283 | | | | (1,854,608,564 | ) | | | — | | Other current liabilities | | | 23,694,401 | | | | 230,345,159 | | | | 53,239,883 | | | | — | | | | 307,279,443 | | | | | | | | | | | | | | | | | | | | | | | Total current liabilities | | | 1,508,953,501 | | | | 704,994,404 | | | | 192,864,287 | | | | (1,854,608,564 | ) | | | 552,203,628 | | Long-term debt | | | 1,694,319,842 | | | | 28,300,551 | | | | 15,629,510 | | | | — | | | | 1,738,249,903 | | Long-term payables—inter-company | | | — | | | | 1,694,801,416 | | | | 2,283,093 | | | | (1,697,084,509 | ) | | | — | | Employee benefits, provisions for sundry creditors, other liabilities and deferred taxes | | | 363,041,463 | | | | 1,247,581,410 | | | | 14,579,978 | | | | — | | | | 1,625,202,851 | | | | | | | | | | | | | | | | | | | | | | | Total liabilities | | | 3,566,314,806 | | | | 3,675,677,781 | | | | 225,356,868 | | | | (3,551,693,073 | ) | | | 3,915,656,382 | | | | | | | | | | | | | | | | | | | | | | | Equity (deficit), net | | | (1,997,066,570 | ) | | | (1,049,736,379 | ) | | | 138,574,391 | | | | 911,020,196 | | | | (1,997,208,362 | ) | | | | | | | | | | | | | | | | | | | | | | Total liabilities and equity | | Ps. | 1,569,248,236 | | | Ps. | 2,625,941,402 | | | Ps. | 363,931,259 | | | Ps. | (2,640,672,877 | ) | | Ps. | 1,918,448,020 | | | | | | | | | | | | | | | | | | | | | | |
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION STATEMENT OF FINANCIAL POSITION As of December 31, 2018 | | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Assets | | | | | | | | | | | | | | | | | | | | | Current assets | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | Ps. | 25,187,488 | | | Ps. | 16,471,298 | | | Ps. | 40,253,622 | | | Ps. | — | | | Ps. | 81,912,409 | | Trade and other accounts receivable, derivative financial instruments and other current assets | | | 63,513,279 | | | | 112,579,068 | | | | 53,082,638 | | | | — | | | | 229,174,985 | | Accounts receivable—inter-company | | | 573,128,107 | | | | 1,190,513,209 | | | | 90,294,160 | | | | (1,853,935,476 | ) | | | — | | Inventories | | | 418,497 | | | | 55,152,479 | | | | 26,451,592 | | | | — | | | | 82,022,568 | | | | | | | | | | | | | | | | | | | | | | | Total current assets | | | 662,247,371 | | | | 1,374,716,054 | | | | 210,082,012 | | | | (1,853,935,476 | ) | | | 393,109,961 | | Long-term receivables—intercompany | | | 1,833,526,496 | | | | 285 | | | | 5,409,802 | | | | (1,838,936,583 | ) | | | — | | Investments in joint ventures and associates | | | (423,086,576 | ) | | | 135,726 | | | | 16,693,715 | | | | 423,098,680 | | | | 16,841,545 | | Wells, pipelines, properties, plant andequipment-net | | | 10,857,719 | | | | 1,344,851,372 | | | | 46,776,993 | | | | — | | | | 1,402,486,084 | | Long-term notes receivables | | | 118,834,477 | | | | 994,121 | | | | — | | | | — | | | | 119,828,598 | | Deferred taxes | | | 59,010,975 | | | | 61,009,660 | | | | 2,764,095 | | | | — | | | | 122,784,730 | | Intangible assets | | | 318,342 | | | | 11,865,660 | | | | 1,536,538 | | | | — | | | | 13,720,540 | | Other assets | | | 54,272 | | | | 3,174,097 | | | | 3,197,441 | | | | — | | | | 6,425,810 | | | | | | | | | | | | | | | | | | | | | | | Total assets | | Ps. | 2,261,763,076 | | | Ps. | 2,796,746,975 | | | Ps. | 286,460,596 | | | Ps. | (3,269,773,379 | ) | | Ps. | 2,075,197,268 | | | | | | | | | | | | | | | | | | | | | | | Liabilities | | | | | | | | | | | | | | | | | | | | | Current liabilities | | | | | | | | | | | | | | | | | | | | | Current portion of long-term debt | | Ps. | 171,880,315 | | | Ps. | 4,289,361 | | | Ps. | 15,626,033 | | | Ps. | — | | | Ps. | 191,795,709 | | Accounts payable—inter-company | | | 1,439,442,811 | | | | 325,901,335 | | | | 88,582,648 | | | | (1,853,926,794 | ) | | | — | | Other current liabilities | | | 20,837,163 | | | | 194,303,145 | | | | 40,840,277 | | | | — | | | | 255,980,585 | | | | | | | | | | | | | | | | | | | | | | | Total current liabilities | | | 1,632,160,289 | | | | 524,493,841 | | | | 145,048,958 | | | | (1,853,926,794 | ) | | | 447,776,294 | | Long-term debt | | | 1,835,071,170 | | | | 36,863,242 | | | | 18,555,994 | | | | — | | | | 1,890,490,407 | | Long-term payables—inter-company | | | — | | | | 1,838,285,585 | | | | 659,680 | | | | (1,838,945,265 | ) | | | — | | Employee benefits, provisions for sundry creditors, other liabilities and deferred taxes | | | 254,041,839 | | | | 929,431,425 | | | | 12,862,735 | | | | — | | | | 1,196,335,999 | | | | | | | | | | | | | | | | | | | | | | | Total liabilities | | | 3,721,273,298 | | | | 3,329,074,093 | | | | 177,127,368 | | | | (3,692,872,059 | ) | | | 3,534,602,700 | | Equity (deficit), net | | | (1,459,510,222 | ) | | | (532,327,118 | ) | | | 109,333,228 | | | | 423,098,680 | | | | (1,459,405,432 | ) | | | | | | | | | | | | | | | | | | | | | | Total liabilities and equity | | Ps. | 2,261,763,076 | | | Ps. | 2,796,746,975 | | | Ps. | 286,460,596 | | | Ps. | (3,269,773,379 | ) | | Ps. | 2,075,197,268 | | | | | | | | | | | | | | | | | | | | | | |
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION STATEMENT OF COMPREHENSIVE INCOME For the year ended December 31, 2019 | | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Net sales | | | — | | | | 1,623,118,346 | | | | 712,266,064 | | | | (942,521,905 | ) | | | 1,392,862,505 | | Services income | | | 59,915,165 | | | | 131,935,732 | | | | 9,683,190 | | | | (192,425,407 | ) | | | 9,108,680 | | | | | | | | | | | | | | | | | | | | | | | Total sales revenues | | | 59,915,165 | | | | 1,755,054,078 | | | | 721,949,254 | | | | (1,134,947,312 | ) | | | 1,401,971,185 | | Impairment of wells, pipelines, properties, plant and equipment | | | — | | | | 93,471,764 | | | | 3,610,450 | | | | — | | | | 97,082,214 | | Cost of sales | | | 989,308 | | | | 1,488,250,706 | | | | 705,101,991 | | | | (1,071,408,581 | ) | | | 1,122,933,424 | | | | | | | | | | | | | | | | | | | | | | | Gross income | | | 58,925,857 | | | | 173,331,608 | | | | 13,236,813 | | | | (63,538,731 | ) | | | 181,955,547 | | Other revenues (expenses), net | | | 139,412 | | | | 3,048,907 | | | | 4,616,272 | | | | (75,835 | ) | | | 7,728,756 | | | | | | | | | | | | | | | | | | | | | | | Total general expenses | | | 62,645,185 | | | | 141,628,000 | | | | 11,974,223 | | | | (63,592,675 | ) | | | 152,654,733 | | | | | | | | | | | | | | | | | | | | | | | Operating income | | | (3,579,916 | ) | | | 34,752,515 | | | | 5,878,862 | | | | (21,891 | ) | | | 37,029,570 | | Financing cost, net | | | (66,593,657 | ) | | | (57,364,522 | ) | | | (2,953,372 | ) | | | 21,891 | | | | (126,889,660 | ) | Foreign exchange income, net | | | 3,912,176 | | | | 82,143,830 | | | | 874,382 | | | | — | | | | 86,930,388 | | Profit (loss) sharing in joint ventures and associates | | | (292,585,923 | ) | | | 116,536 | | | | (4,297,609 | ) | | | 295,609,103 | | | | (1,157,893 | ) | | | | | | | | | | | | | | | | | | | | | | Income (loss) before taxes, duties and other | | | (358,847,320 | ) | | | 59,648,359 | | | | (497,737 | ) | | | 295,609,103 | | | | (4,087,595 | ) | Total taxes, duties and other | | | (11,557,958 | ) | | | 352,239,317 | | | | 3,142,129 | | | | — | | | | 343,823,488 | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | | (347,289,362 | ) | | | (292,590,958 | ) | | | (3,639,866 | ) | | | 295,609,103 | | | | (347,911,083 | ) | Total other comprehensive result | | | (55,495,859 | ) | | | (253,482,329 | ) | | | (375,252 | ) | | | (2,669,406 | ) | | | (312,022,846 | ) | | | | | | | | | | | | | | | | | | | | | | Total comprehensive result for the year | | Ps. | (402,785,221 | ) | | Ps. | (546,073,287 | ) | | Ps. | (4,015,118 | ) | | Ps. | 292,939,697 | | | Ps. | (659,933,929 | ) | | | | | | | | | | | | | | | | | | | | | |
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION STATEMENT OF COMPREHENSIVE INCOME For the year ended December 31, 2018 | | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Net sales | | Ps. | — | | | Ps. | 1,941,467,663 | | | Ps. | 912,726,857 | | | Ps. | (1,181,748,372 | ) | | Ps. | 1,672,446,148 | | Services income | | | 75,979,835 | | | | 113,113,024 | | | | 5,960,807 | | | | (186,380,664 | ) | | | 8,673,002 | | | | | | | | | | | | | | | | | | | | | | | Total sales revenues | | | 75,979,835 | | | | 2,054,580,687 | | | | 918,687,664 | | | | (1,368,129,036 | ) | | | 1,681,119,150 | | (Reversal) impairment of wells, pipelines, properties, plant and equipment | | | — | | | | (25,384,888 | ) | | | 3,965,891 | | | | — | | | | (21,418,997 | ) | Cost of sales | | | 1,905,865 | | | | 1,536,120,030 | | | | 910,525,715 | | | | (1,249,040,049 | ) | | | 1,199,511,561 | | | | | | | | | | | | | | | | | | | | | | | Gross income | | | 74,073,970 | | | | 543,845,545 | | | | 4,196,058 | | | | (119,088,987 | ) | | | 503,026,586 | | Other revenues (expenses), net | | | 73,183 | | | | (26,020,067 | ) | | | 8,710,216 | | | | 40,289,179 | | | | 23,052,511 | | | | | | | | | | | | | | | | | | | | | | | Total general expenses | | | 69,479,218 | | | | 158,965,537 | | | | 10,248,039 | | | | (80,014,104 | ) | | | 158,678,690 | | | | | | | | | | | | �� | | | | | | | | | | | Operating income | | | 4,667,935 | | | | 358,859,941 | | | | 2,658,235 | | | | 1,214,296 | | | | 367,400,407 | | Financing cost, net | | | (64,226,376 | ) | | | (46,203,154 | ) | | | (475,599 | ) | | | (523,384 | ) | | | (111,428,513 | ) | Foreign exchange income, net | | | (3,832,933 | ) | | | 26,526,563 | | | | 965,850 | | | | — | | | | 23,659,480 | | Profit (loss) sharing in joint ventures and associates | | | (125,246,527 | ) | | | 53,058 | | | | 2,164,868 | | | | 124,555,613 | | | | 1,527,012 | | | | | | | | | | | | | | | | | | | | | | | Income (loss) before taxes, duties and other | | | (188,637,901 | ) | | | 339,236,408 | | | | 5,313,354 | | | | 125,246,525 | | | | 281,158,386 | | Total taxes, duties and other | | | (8,272,851 | ) | | | 466,788,123 | | | | 3,062,951 | | | | — | | | | 461,578,223 | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | | (180,365,050 | ) | | | (127,551,715 | ) | | | 2,250,403 | | | | 125,246,525 | | | | (180,419,837 | ) | Total other comprehensive result | | | 47,357,316 | | | | 176,174,564 | | | | (140,133 | ) | | | — | | | | 223,391,747 | | | | | | | | | | | | | | | | | | | | | | | Total comprehensive result for the year | | Ps. | (133,007,734 | ) | | Ps. | 48,622,849 | | | Ps. | 2,110,270 | | | Ps. | 125,246,525 | | | Ps. | 42,971,910 | | | | | | | | | | | | | | | | | | | | | | |
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION STATEMENT OF COMPREHENSIVE INCOME For the year ended December 31, 2017 | | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Net sales | | Ps. | — | | | Ps. | 1,713,914,703 | | | Ps. | 1,096,752,930 | | | Ps. | (1,424,768,483 | ) | | Ps. | 1,385,899,150 | | Services income | | | 50,399,983 | | | | 140,934,022 | | | | 2,646,144 | | | | (182,849,580 | ) | | | 11,130,569 | | | | | | | | | | | | | | | | | | | | | | | Total sales revenues | | | 50,399,983 | | | | 1,854,848,725 | | | | 1,099,399,074 | | | | (1,607,618,063 | ) | | | 1,397,029,719 | | Impairment of wells, pipelines, properties, plant and equipment | | | — | | | | 145,302,407 | | | | 6,142,153 | | | | — | | | | 151,444,560 | | Cost of sales | | | 2,007,814 | | | | 1,447,640,131 | | | | 1,083,297,610 | | | | (1,528,740,675 | ) | | | 1,004,204,880 | | | | | | | | | | | | | | | | | | | | | | | Gross income | | | 48,392,169 | | | | 261,906,187 | | | | 9,959,311 | | | | (78,877,388 | ) | | | 241,380,279 | | Other revenues (expenses), net | | | (341,521 | ) | | | (12,443,660 | ) | | | (4,664,096 | ) | | | 22,623,353 | | | | 5,174,076 | | | | | | | | | | | | | | | | | | | | | | | Total general expenses | | | 59,141,391 | | | | 132,057,064 | | | | 7,180,758 | | | | (56,550,089 | ) | | | 141,829,124 | | | | | | | | | | | | | | | | | | | | | | | Operating income | | | (11,090,743 | ) | | | 117,405,463 | | | | (1,885,543 | ) | | | 296,054 | | | | 104,725,231 | | Financing cost, net | | | (65,581,677 | ) | | | (9,106,677 | ) | | | (1,155,963 | ) | | | (296,054 | ) | | | (76,140,371 | ) | Foreign exchange income , net | | | 6,837,171 | | | | 15,807,988 | | | | 538,963 | | | | — | | | | 23,184,122 | | Profit (loss) sharing in joint ventures and associates | | | (211,567,169 | ) | | | 409,955 | | | | (49,515 | ) | | | 211,567,169 | | | | 360,440 | | | | | | | | | | | | | | | | | | | | | | | Income (loss) before taxes, duties and other | | | (281,402,418 | ) | | | 124,516,729 | | | | (2,552,058 | ) | | | 211,567,169 | | | | 52,129,422 | | Total taxes, duties and other | | | (557,520 | ) | | | 331,001,261 | | | | 2,536,300 | | | | — | | | | 332,980,041 | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | | (280,844,898 | ) | | | (206,484,532 | ) | | | (5,088,358 | ) | | | 211,567,169 | | | | (280,850,619 | ) | Total other comprehensive result | | | 4,728,640 | | | | 6,841,586 | | | | (63,845 | ) | | | — | | | | 11,506,381 | | | | | | | | | | | | | | | | | | | | | | | Total comprehensive result for the year | | Ps. | (276,116,258 | ) | | Ps. | (199,642,946 | ) | | Ps. | (5,152,203 | ) | | Ps. | 211,567,169 | | | Ps. | (269,344,238 | ) | | | | | | | | | | | | | | | | | | | | | |
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION STATEMENT OF CASH FLOWS For the year ended December 31, 2019 | | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Operating activities: | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | Ps. | (347,289,363 | ) | | Ps. | (291,256,339 | ) | | Ps. | (4,974,486 | ) | | Ps. | 295,609,104 | | | Ps. | (347,911,084 | ) | Income tax and duties | | | (11,557,958 | ) | | | 352,291,238 | | | | 3,090,209 | | | | — | | | | 343,823,489 | | Depreciation and amortization | | | 1,183,741 | | | | 134,134,135 | | | | 1,869,134 | | | | — | | | | 137,187,010 | | Amortization of intangible assets | | | 373,961 | | | | 86,342 | | | | 83,069 | | | | — | | | | 543,372 | | Impairment of wells, pipelines, properties, plant and equipment | | | — | | | | 93,471,765 | | | | 3,610,449 | | | | — | | | | 97,082,214 | | Unsuccessful wells | | | — | | | | 71,604,308 | | | | — | | | | — | | | | 71,604,308 | | Exploration costs | | | — | | | | 7,990,877 | | | | — | | | | — | | | | 7,990,877 | | Disposal of wells, pipelines, properties, plant and equipment | | | 14,115 | | | | 1,492,916 | | | | 1,034,527 | | | | — | | | | 2,541,558 | | Amortization of rights of use | | | 639,877 | | | | 5,439,642 | | | | 1,349,756 | | | | — | | | | 7,429,275 | | Effects of net present value of reserve for well abandonment | | | — | | | | (258,816 | ) | | | — | | | | — | | | | (258,816 | ) | Profit (loss) sharing in investments | | | 296,230,824 | | | | (538,281 | ) | | | (1,473,955 | ) | | | (293,060,695 | ) | | | 1,157,893 | | Unrealized foreign exchange loss (gain) | | | (74,439,514 | ) | | | (2,867,091 | ) | | | (938,369 | ) | | | — | | | | (78,244,974 | ) | Interest expense | | | 118,543,971 | | | | 12,446,222 | | | | 1,871,147 | | | | — | | | | 132,861,340 | | Interest income | | | (22,964,784 | ) | | | (658,748 | ) | | | (860,174 | ) | | | — | | | | (24,483,706 | ) | Funds (used in) from operating activities: | | | | | | | | | | | | | | | | | | | | | Accounts receivable, accounts payable, derivative financial instruments and accrued liabilities | | | 11,279,402 | | | | 27,661,723 | | | | 675,345 | | | | — | | | | 39,616,470 | | Taxes | | | (10,682,007 | ) | | | (356,254,147 | ) | | | (5,737,259 | ) | | | — | | | | (372,673,413 | ) | Employee benefits | | | 52,052,212 | | | | 9,322,327 | | | | 5,580,162 | | | | — | | | | 66,954,701 | | Inter-company charges and deductions | | | (439,039,267 | ) | | | 176,676,691 | | | | 5,349,241 | | | | 257,013,335 | | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows (used in) from operating activities | | | (425,654,790 | ) | | | 240,784,764 | | | | 10,528,796 | | | | 259,561,744 | | | | 85,220,514 | | Investing activities: | | | | | | | | | | | | | | | | | | | | | Acquisition of wells, pipelines, properties, plant and equipment and intangible assets | | | (232,592 | ) | | | (132,206,201 | ) | | | 5,564,862 | | | | — | | | | (126,873,931 | ) | Other assets and other receivables | | | 14,743,694 | | | | 933,269 | | | | (101,835 | ) | | | — | | | | 15,575,128 | | (Increase) decrease due to Inter-company investing | | | 401,422,502 | | | | — | | | | — | | | | (401,422,502 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows used in investing activities | | | 415,933,604 | | | | (131,272,932 | ) | | | 5,463,027 | | | | (401,422,502 | ) | | | (111,298,803 | ) | Financing activities: | | | | | | | | | | | | | | | | | | | | | Increase in equity due to Certificates of Contribution “A” | | | 122,131,000 | | | | 41,956,917 | | | | (41,956,917 | ) | | | — | | | | 122,131,000 | | Long-terms and interest received from the Mexican Government | | | 38,704,883 | | | | — | | | | — | | | | — | | | | 38,704,883 | | Lease payments | | | (588,463 | ) | | | (8,745,025 | ) | | | (1,375,933 | ) | | | — | | | | (10,709,421 | ) | Loans obtained from financial institutions | | | 824,049,426 | | | | 46,297 | | | | 343,739,223 | | | | — | | | | 1,167,834,946 | | Debt payments, principal only | | | (851,077,341 | ) | | | (4,826,936 | ) | | | (329,138,006 | ) | | | — | | | | (1,185,042,283 | ) | Interest paid | | | (120,450,950 | ) | | | (6,104,160 | ) | | | (1,390,093 | ) | | | — | | | | (127,945,203 | ) | Inter-company increase (decrease) financing | | | — | | | | (143,484,166 | ) | | | 1,623,408 | | | | 141,860,758 | | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows provided by financing activities: | | | 12,768,555 | | | | (121,157,073 | ) | | | (28,498,318 | ) | | | 141,860,758 | | | | 4,973,922 | | Net (decrease) increase in cash and cash equivalents | | | 3,047,369 | | | | (11,645,241 | ) | | | (12,506,495 | ) | | | — | | | | (21,104,367 | ) | Effects of change in cash value | | | — | | | | — | | | | (186,411 | ) | | | — | | | | (186,411 | ) | Cash and cash equivalents at the beginning of the year | | | 25,187,488 | | | | 16,471,298 | | | | 40,253,623 | | | | — | | | | 81,912,409 | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents at the end of the year | | Ps. | 28,234,857 | | | Ps. | 4,826,057 | | | Ps. | 27,560,717 | | | Ps. | — | | | Ps. | 60,621,631 | | | | | | | | | | | | | | | | | | | | | | |
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION STATEMENT OF CASH FLOWS For the year ended December 31, 2018 | | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Operating activities: | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | Ps. | (180,365,050 | ) | | Ps. | (127,551,718 | ) | | Ps. | 2,305,189 | | | Ps. | 125,191,742 | | | Ps. | (180,419,837 | ) | Adjustments to reconcile net loss to cash provided by operating activities: | | | | | | | | | | | | | | | | | | | | | Depreciation and amortization | | | 1,274,179 | | | | 149,747,232 | | | | 2,360,629 | | | | — | | | | 153,382,040 | | Amortization of intangible assets | | | 2,446,445 | | | | 86,332 | | | | 110,549 | | | | — | | | | 2,643,326 | | Impairment of wells, pipelines, properties, plant and equipment | | | — | | | | (25,384,888 | ) | | | 3,965,891 | | | | — | | | | (21,418,997 | ) | Unsuccessful wells | | | — | | | | 15,443,086 | | | | — | | | | — | | | | 15,443,086 | | Exploration costs | | | — | | | | (2,171,218 | ) | | | — | | | | — | | | | (2,171,218 | ) | Disposal of wells, pipelines, properties, plant and equipment | | | 872,527 | | | | 12,226,128 | | | | 3,786,609 | | | | — | | | | 16,885,264 | | Gain on sale of share in joint ventures and associates | | | — | | | | (10,257 | ) | | | (690,914 | ) | | | — | | | | (701,171 | ) | Effects of net present value of reserve for well abandonment | | | — | | | | (6,953,200 | ) | | | — | | | | — | | | | (6,953,200 | ) | Profit (loss) sharing in investments | | | 125,246,527 | | | | (538,281 | ) | | | (1,473,955 | ) | | | (124,761,303 | ) | | | (1,527,012 | ) | Unrealized foreign exchange loss (gain) | | | (19,726,271 | ) | | | 446,523 | | | | (482,460 | ) | | | — | | | | (19,762,208 | ) | Interest expense | | | 109,697,028 | | | | 9,577,370 | | | | 1,452,624 | | | | — | | | | 120,727,022 | | Interest income | | | (9,520,962 | ) | | | — | | | | — | | | | — | | | | (9,520,962 | ) | Funds (used in) from operating activities: | | | | | | | | | | | | | | | | | | | | | Accounts receivable, accounts payable, derivative financial instruments and accrued liabilities | | | 51,460,407 | | | | (70,278,499 | ) | | | 26,118,293 | | | | — | | | | 7,300,201 | | Taxes | | | (8,881,300 | ) | | | 38,071,896 | | | | (157,861 | ) | | | — | | | | 29,032,735 | | Other assets and other liabilities | | | 559,449 | | | | (12,071,857 | ) | | | (3,244,955 | ) | | | — | | | | (14,757,363 | ) | Employee benefits | | | 10,519,603 | | | | 44,858,697 | | | | (1,773,416 | ) | | | — | | | | 53,604,884 | | Inter-company charges and deductions | | | (14,527,177 | ) | | | 81,240,429 | | | | (21,516,287 | ) | | | (45,196,965 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows (used in) from operating activities | | | 69,055,405 | | | | 106,737,775 | | | | 10,759,936 | | | | (44,766,526 | ) | | | 141,786,590 | | Investing activities: | | | | | | | | | | | | | | | | | | | | | Acquisition of wells, pipelines, properties, plant and equipment and intangible assets | | | (1,162,685 | ) | | | (103,408,759 | ) | | | (4,389,245 | ) | | | — | | | | (108,960,689 | ) | Proceeds from sale of assets | | | — | | | | 14,568 | | | | 4,063,776 | | | | — | | | | 4,078,344 | | Other assets | | | 3,586,010 | | | | 212,421 | | | | — | | | | — | | | | 3,798,431 | | (Increase) decrease due to Inter-company investing | | | (47,454,385 | ) | | | — | | | | — | | | | 47,454,385 | | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows used in investing activities | | | (45,031,060 | ) | | | (103,181,770 | ) | | | (325,469 | ) | | | 47,454,385 | | | | (101,083,914 | ) | Financing activities: | | | | | | | | | | | | | | | | | | | | | Loans obtained from financial institutions | | | 510,871,366 | | | | — | | | | 388,897,646 | | | | — | | | | 899,769,012 | | Debt payments, principal only | | | (450,353,531 | ) | | | (6,662,318 | ) | | | (384,017,543 | ) | | | — | | | | (841,033,392 | ) | Interest paid | | | (106,313,795 | ) | | | (7,857,926 | ) | | | (1,117,668 | ) | | | — | | | | (115,289,389 | ) | Inter-company increase (decrease) financing | | | — | | | | 8,620,192 | | | | (5,932,333 | ) | | | (2,687,859 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows provided by financing activities: | | | (45,795,960 | ) | | | (5,900,052 | ) | | | (2,169,898 | ) | | | (2,687,859 | ) | | | (56,553,769 | ) | Net (decrease) increase in cash and cash equivalents | | | (21,771,615 | ) | | | (2,344,047 | ) | | | 8,264,569 | | | | — | | | | (15,851,093 | ) | Effects of change in cash value | | | — | | | | — | | | | (88,252 | ) | | | — | | | | (88,252 | ) | Cash and cash equivalents at the beginning of the year | | | 46,959,103 | | | | 18,815,345 | | | | 32,077,306 | | | | — | | | | 97,851,754 | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents at the end of the year | | Ps. | 25,187,488 | | | Ps. | 16,471,298 | | | Ps. | 40,253,623 | | | Ps. | — | | | Ps. | 81,912,409 | | | | | | | | | | | | | | | | | | | | | | |
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION STATEMENT OF CASH FLOWS For the year ended December 31, 2017 | | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Operating activities: | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | Ps. | (280,844,898 | ) | | Ps. | (206,484,532 | ) | | Ps. | (5,082,639 | ) | | Ps. | 211,561,450 | | | Ps. | (280,850,619 | ) | Adjustments to reconcile net loss to cash provided by operating activities: | | | | | | | | | | | | | | | | | | | | | Depreciation and amortization | | | 1,155,881 | | | | 152,607,943 | | | | 2,940,689 | | | | — | | | | 156,704,513 | | Impairment of wells, pipelines, properties, plant and equipment | | | — | | | | 145,302,407 | | | | 6,142,153 | | | | — | | | | 151,444,560 | | Unsuccessful wells | | | — | | | | 6,164,624 | | | | — | | | | — | | | | 6,164,624 | | Exploration costs | | | — | | | | (1,447,761 | ) | | | — | | | | — | | | | (1,447,761 | ) | Disposal of wells, pipelines, properties, plant and equipment | | | 433,391 | | | | 14,687,229 | | | | 1,943,051 | | | | — | | | | 17,063,671 | | Gain on sale of share in joint ventures and associates | | | — | | | | (3,139,103 | ) | | | — | | | | — | | | | (3,139,103 | ) | Disposal of held-for-sale current non-financial assets | | | — | | | | 2,808,360 | | | | — | | | | — | | | | 2,808,360 | | Dividends | | | — | | | | — | | | | (180,675 | ) | | | — | | | | (180,675 | ) | Effects of net present value of reserve for well abandonment | | | — | | | | 7,774,000 | | | | — | | | | — | | | | 7,774,000 | | Profit (loss) sharing in investments | | | 211,567,169 | | | | (409,955 | ) | | | 49,515 | | | | (211,567,169 | ) | | | (360,440 | ) | Decrease onavailable-for-sale financial assets | | | — | | | | — | | | | 1,360,205 | | | | — | | | | 1,360,205 | | Net loss onavailable-for-sale financial assets | | | — | | | | — | | | | 3,523,748 | | | | — | | | | 3,523,748 | | Unrealized foreign exchange loss (gain) | | | (13,526,153 | ) | | | (1,585,910 | ) | | | (1,573,376 | ) | | | — | | | | (16,685,439 | ) | Interest expense | | | 100,545,114 | | | | 15,736,420 | | | | 1,363,014 | | | | — | | | | 117,644,548 | | Funds (used in) from operating activities: | | | | | | | | | | | | | | | | | | | | | Accounts receivable, accounts payable and derivative financial instruments | | | (88,496,967 | ) | | | (14,214,566 | ) | | | (20,789,692 | ) | | | — | | | | (123,501,225 | ) | Inventories | | | (62,421 | ) | | | (3,086,181 | ) | | | (14,818,268 | ) | | | — | | | | (17,966,870 | ) | Other assets | | | (7,091,867 | ) | | | (483,389 | ) | | | 551,233 | | | | — | | | | (7,024,023 | ) | Employee benefits | | | 18,829,768 | | | | 31,489,785 | | | | (254,157 | ) | | | — | | | | 50,065,396 | | Inter-company charges and deductions | | | 7,284,124 | | | | (114,968,213 | ) | | | 514,270 | | | | 107,169,819 | | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows (used in) from operating activities | | | (50,206,859 | ) | | | 30,751,158 | | | | (24,310,929 | ) | | | 107,164,100 | | | | 63,397,470 | | Investing activities: | | | | | | | | | | | | | | | | | | | | | Acquisition of wells, pipelines, properties, plant and equipment | | | (1,436,926 | ) | | | (87,274,561 | ) | | | (3,147,978 | ) | | | — | | | | (91,859,465 | ) | Resources from saleavailable-for-sale financial assets | | | — | | | | — | | | | 8,026,836 | | | | — | | | | 8,026,836 | | Proceeds from the sale of assets | | | — | | | | 3,863,072 | | | | (721,362 | ) | | | — | | | | 3,141,710 | | (Increase) decrease due to Inter-company investing | | | 25,611,359 | | | | — | | | | — | | | | (25,611,359 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows used in investing activities | | | 24,174,433 | | | | (83,411,489 | ) | | | 4,157,496 | | | | (25,611,359 | ) | | | (80,690,919 | ) | Financing activities: | | | | | | | | | | | | | | | | | | | | | Loans obtained from financial institutions | | | 401,947,349 | | | | — | | | | 302,768,119 | | | | — | | | | 704,715,468 | | Debt payments, principal only | | | (327,703,729 | ) | | | (7,981,937 | ) | | | (306,374,153 | ) | | | — | | | | (642,059,819 | ) | Interest paid | | | (93,755,698 | ) | | | (13,991,633 | ) | | | (1,163,086 | ) | | | — | | | | (108,910,417 | ) | Inter-company increase (decrease) financing | | | — | | | | 83,716,743 | | | | (2,164,002 | ) | | | (81,552,741 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows provided by financing activities: | | | (19,512,078 | ) | | | 61,743,173 | | | | (6,933,122 | ) | | | (81,552,741 | ) | | | (46,254,768 | ) | Net (decrease) increase in cash and cash equivalents | | | (45,544,504 | ) | | | 9,082,842 | | | | (27,086,555 | ) | | | — | | | | (63,548,217 | ) | Effects of change in cash value | | | — | | | | — | | | | (2,132,542 | ) | | | — | | | | (2,132,542 | ) | Cash and cash equivalents at the beginning of the year | | | 92,503,607 | | | | 9,732,503 | | | | 61,296,403 | | | | — | | | | 163,532,513 | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents at the end of the year | | Ps. | 46,959,103 | | | Ps. | 18,815,345 | | | Ps. | 32,077,306 | | | Ps. | — | | | Ps. | 97,851,754 | | | | | | | | | | | | | | | | | | | | | | |
NOTE 31. SUPPLEMENTARY INFORMATION ON OIL AND GAS EXPLORATION AND PRODUCTION ACTIVITIES (UNAUDITED) Under the Mexican Constitution, all crude oil and other hydrocarbon reserves located in the subsoil of Mexico are owned by the Mexican nation and not by PEMEX. In August 2014, through the Round Zero process, the Mexican Government granted PEMEX the right to extract, but not own, certain petroleum and other hydrocarbon reserves in Mexico through assignment deeds. This note provides 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) Topic 93210-5 “Extractive Activities—Oil and Gas” (“ASC Topic 932”) and Accounting Standards Update2010-03 (see Note3-G). As of the date of these consolidated financial statements, 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. A. | Capitalized costs for oil and gas producing activities.activities (unaudited): |
a. | Capitalized costs for oil and gas producing activities (unaudited): |
| | | | | | | | | | | | | | | As of December 31, | | | | 2019 | | | 2018 | | | 2017 | | Proved reserves | | Ps. | 2,306,255,209 | | | Ps. | 2,505,307,260 | | | Ps. | 2,363,336,481 | | Construction in progress | | | 50,951,279 | | | | 51,033,968 | | | | 35,381,089 | | Accumulated depreciation and amortization | | | (1,675,843,298 | ) | | | (1,572,649,381 | ) | | | (1,444,962,317 | ) | | | | | | | | | | | | | | Total costs incurred | | Ps. | 681,363,190 | | | Ps. | 983,691,846 | | | Ps. | 953,755,253 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | As of December 31, | | | | 2016 | | | 2015 | | | 2014 | | Proved reserves | | Ps. | 2,476,535,503 | | | Ps. | 2,102,971,025 | | | Ps. | 2,381,670,263 | | Construction in progress | | | 60,720,261 | | | | 88,706,330 | | | | 111,812,137 | | Accumulated depreciation and amortization | | | (1,355,402,150 | ) | | | (1,224,690,867 | ) | | | (1,122,444,895 | ) | | | | | | | | | | | | | | Net capitalized costs | | Ps. | 1,181,853,614 | | | Ps. | 966,986,487 | | | Ps. | 1,371,037,505 | | | | | | | | | | | | | | |
b.B. | Costs incurred for oil and gas property exploration and development activities (unaudited): |
| | | | | | | | | | | As of December 31, | | | | 2016 | | | 2015 | | Exploration | | Ps. | 41,661,666 | | | Ps. | 44,165,179 | | Development | | | 113,895,246 | | | | 161,433,414 | | | | | | | | | | | Total costs incurred | | Ps. | 155,556,912 | | | Ps. | 205,598,593 | | | | | | | | | | |
There are no property acquisition costs because PEMEX exploits oil reserves owned by the Mexican nation.
Exploration costs include costs for geological and geophysical studies of fields amounting to Ps. 6,804,341 and Ps. 8,119,241 for 2016 and 2015, respectively, that, in accordance with the successful efforts method of accounting, are accounted for as geological and geophysical exploration expenses.
Development costs include costs incurred in obtaining access to proved reserves and providing facilities for extracting, treating, gathering and storing oil and gas.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
c. | Results of operations for oil and gas producing activities (unaudited): |
| | | | | | | | | | | | | | | 2016 | | | 2015 | | | 2014 | | Revenues from sale of oil and gas | | Ps. | 616,380,608 | | | Ps. | 690,591,455 | | | Ps. | 1,134,448,708 | | | | | | | | | | | | | | | Hydrocarbon duties | | | 304,299,019 | | | | 376,682,705 | | | | 760,627,534 | | Production costs (excluding taxes) | | | 171,194,337 | | | | 177,774,082 | | | | 156,134,037 | | Other costs and expenses | | | 61,359,271 | | | | 20,360,540 | | | | 35,978,232 | | Exploration expenses | | | 39,693,273 | | | | 31,244,564 | | | | 22,291,247 | | Depreciation, depletion, amortization and accretion | | | (150,891,739 | ) | | | 527,014,056 | | | | 144,384,138 | | | | | | | | | | | | | | | | | | 425,654,161 | | | | 1,133,075,947 | | | | 1,119,415,188 | | | | | | | | | | | | | | | Results of operations for oil and gas producing activities | | Ps. | 190,726,447 | | | Ps. | (442,484,491 | ) | | Ps. | 15,033,520 | | | | | | | | | | | | | | |
Note: Numbers may not total due to rounding.
d. | Sales prices (unaudited) |
The following table summarizes average sales prices in U.S. dollars for each of the years ended December 31 (excluding production taxes):
| | | | | | | | | | | | | | | 2016 | | | 2015 | | | 2014 | | Weighted average sales price per barrel of oil equivalent (boe)(1) | | US$ | 29.18 | | | US$ | 37.17 | | | US$ | 71.44 | | Crude oil, per barrel | | | 36.55 | | | | 48.22 | | | | 90.37 | | Natural gas, per thousand cubic feet | | | 3.01 | | | | 3.78 | | | | 5.71 | |
(1) | 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. |
e. | Crude oil and natural gas reserves (unaudited) |
Under the Mexican Constitution, all oil and other hydrocarbon reserves located in the subsoil of Mexico are owned by the Mexican nation and not by PEMEX. Under the Petróleos Mexicanos Law, Pemex Exploration and Production has the 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.(unaudited):
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, 2016 were prepared by the exploration and production segment and were reviewed by the Independent Engineering Firms (as defined below), which audit its estimates of its hydrocarbon reserves. In addition, pursuant to the Reglamento de la Ley de Hidrocarburos (Regulations to the Hydrocarbons Law), on March 31, 2017 theComisión Nacional de Hidrocarburos reviewed and approved the proved reserves estimates as of December 31, 2016.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
|
| | | | | | | | | | | As of December 31, | | | | 2019 | | | 2018 | | Exploration | | Ps. | 31,222,023 | | | Ps. | 36,208,481 | | Development | | | 82,135,240 | | | | 56,040,685 | | | | | | | | | | | Total costs incurred | | Ps. | 113,357,263 | | | Ps. | 92,249,166 | | | | | | | | | | |
There are no property acquisition costs because PEMEX exploits oil reserves owned by the Mexican nation. Exploration costs include costs for geological and geophysical studies of fields amounting to Ps. 10,663,334 and Ps. 15,510,327, for 2019 and 2018, respectively, that, in accordance with the successful efforts method of accounting, are accounted for as geological and geophysical exploration expenses. Development costs include costs incurred in obtaining access to proved reserves and providing facilities for extracting, treating, gathering and storing oil and gas. C. | Pemex-Exploration and Production estimated reserves based on generally accepted petroleum engineering and evaluation methods and procedures, which are based primarily on applicable SEC regulations and, as necessary, the SPE’s publication entitled Standards Pertaining to the Estimating and AuditingResults of Oil and Gas Reserves Information, dated February 19, 2007 and other SPE publications, including the SPE’s publication entitled Petroleum Resources Management System, as well as other technical sources, including Estimation and Classification of Reserves of Crude Oil, Natural Gas, and Condensate, by Chapman Cronquist, and Determination 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.
Production and pressure histories.
Reserves data set forth herein represents 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 2016, PEMEX did not record any material increase in PEMEX’s hydrocarbons reserves as a result of the use of new technologies.
In order to ensure the reliability of PEMEX’s reserves estimation efforts, it has undertaken the internal certification of its estimates of reserves since 1996. PEMEX has established certain internal controls in connection with the preparation of its proved reserves estimates. Initially, teams of geoscientists fromPemex-Exploration and Production’s exploration and exploitation business units (with each of these units covering several projects) prepare the reserves estimates, using distinct estimation processesoperations for valuations relating to new discoveries and developed fields, respectively. Subsequently, the regional reserves offices collect these reserves estimates from the units and request that theGerencia de Recursos y Certificación de Reservas (Office of Resources and Reserves Certification), the central hydrocarbon reserves management body of Pemex-Exploration and Production, review and certify such valuations and the booking of the related reserves. This internal certification process is undertaken in accordance with internal guidelines for estimating and classifying hydrocarbon reserves, which are based on the SEC’s rules and definitions. The Office of Resources and Reserves Certification, 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 PEMEX’s reserves estimation process are experienced in: reservoir numerical simulation; well drilling and completion; pressure, volume and temperature (PVT) analysis; analytical tools used in forecasting the performance of the various elements comprising the production system; and design strategies in petroleum field development. Furthermore, all of PEMEX’s 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 fifteen years of professional experience.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
In addition to this internal review process, Pemex Exploration and Production’s final reserves estimates are audited by independent engineering firms. Three independent engineering firms audited Pemex Exploration and Production’s estimates of proved reserves as of December 31, 2016: Netherland Sewell International, S. de R. L. de C. V. (“Netherland Sewell”); DeGolyer and MacNaughton (“DeGolyer”); and Ryder Scott Company, L.P. (“Ryder Scott,”) and, together with Netherland Sewell and DeGolyer and MacNaughton, the “Independent Engineering Firms”). The reserves estimates reviewed by the Independent Engineering Firms totaled 97.6% of PEMEX’s estimated proved reserves. The remaining 2.4% of PEMEX’s estimated proved reserves consisted of reserves located in certain areas in which third parties provide drilling services to Pemex Exploration and Production. Under such agreements, the corresponding third party is responsible for assessing the volume of reserves. Netherland Sewell audited the reserves in the Poza Rica-Altamira, Aceite Terciario del Golfo and Litoral de Tabasco Assets, DeGolyer in Burgos and Veracruz Assets and Ryder Scott audited the reserves in the Bellota-Jujo, Cinco Presidentes, Macuspana-Muspac, Samaria-Luna,Abkatún-Pol-Chuc, Cantarell andKu-Maloob-Zaap Assets. 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 some of the fields; (3) economic analysis of the fields; and (4) review of Pemex 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 that Pemex Exploration and Production 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 PEMEX’s 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 with Rule4-10(a) are consistent with international reserves reporting practice and are in accordance with the revised oil and gas reserves disclosure provisions of ASC Topic 932.
PEMEX’s total proved developed and undeveloped reserves of crude oil, condensates and liquefiable hydrocarbons recoverable from field processing plants decreased by 9.5% in 2016, from 7,977 million barrels at December 31, 2015 to 7,219 million barrels at December 31, 2016. Its proved developed reserves of crude oil, condensates and liquefiable hydrocarbons recoverable from processing plants decreased by 14.7% in 2016, from 5,724 million barrels at December 31, 2015 to Ps. 4,886 million barrels at December 31, 2016. These decreases were principally due to the production of oil in 2016, lower prices of hydrocarbons, as well as a decrease in field development and field behavior. The amount of crude oil, condensate and liquefiable hydrocarbon reserves added in 2016 was insufficient to offset the level of production in 2016, which amounted to 891 million barrels of crude oil, condensates and liquefiable hydrocarbons.
PEMEX’s total proved developed and undeveloped dry gas reserves decreased by 18.9 % in 2016, from 8,610 billion cubic feet at December 31, 2015 to 6,984 billion cubic feet at December 31, 2016. Its proved developed dry gas reserves decreased by 24.9% in 2016, from 6,012 billion cubic feet at December 31, 2015 to
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
4,513 billion cubic feet at December 31, 2016. These decreases were principally due to the production of gas in 2016, low prices of hydrocarbons, as well as a decrease in field development and field behavior. The amount of dry gas reserves added in 2016 was insufficient to offset the level of production in 2016, which amounted to 1,134 billion cubic feet of dry gas. Its proved undeveloped dry gas reserves decreased by 4.9 % in 2016, from 2,598 billion cubic feet at December 31, 2015 to 2,471 billion cubic feet at December 31, 2016.
During 2016, the exploratory activity in shallow waters incorporated 57 million barrels of oil equivalent coming from one new field located close to existing facilities of exploitation through exploration assignments. Pemex Exploration and Production keep the exploratory jobs in shallow waters in order to incorporate proved reserves which support the future fresh production in short term.
The following three tables of crude oil and dry gas reserves set forth PEMEX’s estimates of its proved reserves determined in accordance with Rule4-10(a).
Summary of oil and gas(1) proved reserves as of December 31, 2016producing activities (unaudited):
based on average fiscal year prices
| | | | | | | | | | | Crude oil and Condensates(2) | | | Dry Gas(3) | | | | (in millions of barrels) | | | (in billions of cubic feet) | | Proved developed and undeveloped reserves: | | | | | | | | | Proved developed reserves | | | 4,886 | | | | 4,513 | | Proved undeveloped reserves | | | 2,333 | | | | 2,471 | | | | | | | | | | | Total proved reserves | | | 7,219 | | | | 6,984 | | | | | | | | | | |
|
| | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | Revenues from sale of oil and gas | | Ps. | 762,102,939 | | | Ps. | 910,433,244 | | | Ps. | 762,637,362 | | | | | | | | | | | | | | | Hydrocarbon duties | | | 343,242,436 | | | | 443,491,451 | | | | 375,156,405 | | Production costs (excluding taxes) | | | 275,090,795 | | | | 273,695,691 | | | | 248,957,950 | | Other revenues and expenses | | | (6,910,320 | ) | | | (10,109,114 | ) | | | (3,954,222 | ) | Exploration expenses | | | 90,258,519 | | | | 30,953,413 | | | | 14,993,433 | | Depreciation, depletion, amortization and accretion | | | 222,651,461 | | | | 28,845,604 | | | | 240,672,906 | | | | | | | | | | | | | | | | | | 924,332,890 | | | | 766,877,047 | | | | 875,826,472 | | | | | | | | | | | | | | | Results of operations for oil and gas producing activities | | Ps. | (162,229,951 | ) | | Ps. | 143,556,198 | | | Ps. | (113,189,111 | ) | | | | | | | | | | | | | |
Note: Numbers may not total due to rounding. | (1) | PEMEX does not currently produce synthetic oil or synthetic gas, or other natural resources from which synthetic oil or synthetic gas can be produced.D. | Sales prices (unaudited) |
| (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.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The following table summarizes average sales prices in U.S. dollars for each of the years ended December 31 (excluding production taxes): | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | Weighted average sales price per barrel of oil equivalent (boe)(1) | | U.S. $ | 43.52 | | | U.S. $ | 50.89 | | | U.S. $ | 38.63 | | Crude oil, per barrel | | | 57.13 | | | | 62.99 | | | | 48.71 | | Natural gas, per thousand cubic feet | | | 3.55 | | | | 5.57 | | | | 4.32 | |
| (1) | 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. |
E. | Crude oil and condensate reserves (including natural gas liquids)(1)reserves (unaudited)
|
Under the Mexican Constitution, all oil and other hydrocarbon reserves located in the subsoil of Mexico are owned by the Mexican nation and not by PEMEX. Under the Petróleos Mexicanos Law, Pemex Exploration and Production has the 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. 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, 2019 were prepared by the exploration and production segment and were reviewed by the Independent Engineering Firms (as defined below), which audit its estimates of its hydrocarbon reserves. As of the date of these consolidated financial statements, the proved reserves estimates as of December 31, 2019 have not been approved by the NHC. Pemex Exploration and Production estimates reserves based on generally accepted petroleum engineering and evaluation methods and procedures, which are based primarily on applicable SEC regulations and, as necessary, the SPE’s publication entitled Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information, dated February 19, 2007, as amended and other SPE publications, including the SPE’s publication entitled Petroleum Resources Management System, as well as other technical sources, including Estimation and Classification of Reserves of Crude Oil, Natural Gas, and Condensate, by Chapman Cronquist, and Determination 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: | | | | | | | | | | | | | | | 2016 | | | 2015 | | | 2014 | | | | (in millions of barrels) | | Proved developed and undeveloped reserves: | | | | | At January 1 | | | 7,977 | | | | 10,292 | | | | 11,079 | | Revisions (2) | | | 189 | | | | (1,491 | ) | | | 95 | | Extensions and discoveries | | | (55 | ) | | | 111 | | | | 119 | | Production | | | (891 | ) | | | (935 | ) | | | (1001 | ) | | | | | | | | | | | | | | At December 31 | | | 7,219 | | | | 7,977 | | | | 10,292 | | | | | | | | | | | | | | | Proved developed reserves at December 31 | | | 4,886 | | | | 5,725 | | | | 7,141 | | Proved undeveloped reserves at December 31 | | | 2,333 | | | | 2,252 | | | | 3,719 | |
Quality and completeness of basic data Production and pressure histories Reserves data set forth herein represents 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 2019, PEMEX did not record any material increase in PEMEX’s hydrocarbons reserves as a result of the use of new technologies. In order to ensure the reliability of PEMEX’s reserves estimation efforts, it has undertaken the internal certification of its estimates of reserves since 1996. PEMEX has established certain internal controls in connection with the preparation of its proved reserves estimates. Initially, teams of geoscientists from 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 that the Gerencia de Certificación de Reservas de Hidrocarburos, (Office of Resources and Reserves Certification), the central hydrocarbon reserves management body of Pemex Exploration and Production, review and certify such valuations and the booking of the related reserves. This internal certification process is undertaken in accordance with internal guidelines for estimating and classifying hydrocarbon reserves, which are based on the SEC’s rules and definitions. The Office of Resources and Reserves Certification, 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 PEMEX’s reserves estimation process are experienced in the following areas: reservoir numerical simulation; well drilling and completion; pressure, volume and temperature (PVT) analysis; analytical tools used in forecasting the performance of the various elements comprising the production system; and design strategies in petroleum field development. Furthermore, all of PEMEX’s personnel have been certified by the Secretaría 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 fifteen years of professional experience. In addition to this internal review process, Pemex Exploration and Production’s final reserves estimates are audited by independent engineering firms. Three independent engineering firms audited Pemex Exploration and Production’s estimates of proved reserves as of December 31, 2019: DeGolyer and MacNaughton (“DeGolyer”), Netherland, Sewell International, S. de R.L. de C.V. (“Netherland Sewell”) and GLJ Petroleum Consultants LTD. (“GLJ”), the “Independent Engineering Firms”. The reserves estimates reviewed by the Independent Engineering Firms totaled 96.5% of PEMEX’s estimated proved reserves. The remaining 3.5% of PEMEX’s estimated proved reserves consisted of reserves located mainly in certain areas which have been shared with third parties. Under such agreements, the corresponding third party is responsible of assessing the volume of reserves. Netherland Sewell audited the reserves in the Cantarell,Ku-Maloob-Zaap, Cinco Presidentes and Macuspana-Muspac business units, DeGolyer audited the reserves in the Aceite Terciario de Golfo, Poza Rica-Altamira,Abkatún-Pol-Chuc and Litoral de Tabasco business units and GLJ audited the reserves in the Burgos, Veracruz, Bellota-Jujo and Samaria-Luna business units. 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 some of the fields; (3) economic analysis of the fields; and (4) review of Pemex 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 that Pemex Exploration and Production 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 PEMEX’s 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 with Rule4-10(a) are consistent with international reserves reporting practice and are in accordance with the revised oil and gas reserves disclosure provisions of ASC Topic 932. PEMEX´s total proved developed and undeveloped reserves of crude oil, condensates and liquefiable hydrocarbons recoverable from field processing plants increased by 3.0% in 2019, from 5,786.0 million barrels at December 31, 2018 to 5,960.6 million barrels at December 31, 2019. PEMEX’s proved developed reserves of crude oil, condensates and liquefiable hydrocarbons recoverable from processing plants decreased by 0.1% in 2019, from 3,588 million barrels at December 31, 2018 to 3,585.0 million barrels at December 31, 2019. The amount of our proved reserves of crude oil, condensate and liquefiable hydrocarbon reserves added in 2019 was enough to offset the level of production in 2019, which amounted to 687.6 million barrels of crude oil, condensates and liquefiable hydrocarbons. PEMEX’s total proved developed and undeveloped dry gas reserves decreased by 0.3% in 2019, from 6,370 billion cubic feet at December 31, 2018 to 6,351.7 billion cubic feet at December 31, 2019. PEMEX’s proved developed dry gas reserves increased by 6.8% in 2019, from 3,380 billion cubic feet on December 31, 2018 to 3,608.5 billion cubic feet at December 31, 2019. These increases were principally due to higher proved developed dry gas reserves on fields of Poza Rica and Burgos Assets. The amount of dry gas reserves added in 2019 was close to offset the level of production in 2019, which amounted to 870.4 billion cubic feet of dry gas. PEMEX’s proved undeveloped dry gas reserves decreased by 8.3% in 2019, from 2,990.0 billion cubic feet at December 31, 2018 to 2,743.1 billion cubic feet on December 31, 2019. This decrease was primarily due to movement of undeveloped reserves to proved developed reserves on fields of Poza Rica and Burgos Assets. During 2019, our exploratory activity in the deep and shallow waters of the Gulf of Mexico and onshore regions resulted in three new discoveries of gas and condensate in the shallow waters. These discoveries, together with the successful extension activities in our Teca and Nobilis fields, led to the incorporation of 115.6 million barrels of oil equivalent of proved reserves. The following three tables of crude oil and dry gas reserves set forth PEMEX’s estimates of its proved reserves determined in accordance with Rule4-10(a). Summary of oil and gas(1) proved reserves as of December 31, 2018 based on average fiscal year prices | | | | | | | Crude oil and | | | | | Condensates (2) | | Dry Gas (3) | | | (in millions of barrels) | | (in billions of cubic feet) | Proved developed andun-developed reserves: | | | | | Proved developed reserves | | 3,585.0 | | 3,608.5 | Proved undeveloped reserves | | 2,375.6 | | 2,743.1 | | | | | | Total proved reserves | | 5,960.6 | | 6,351.7 | | | | | |
Note: Numbers may not total due to rounding. (1) | PEMEX does 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. |
(2) | Revisions include positive and negative changes due to new data from well drilling, revisions made when actual reservoir performance differs from expected performance and changes by hydrocarbon prices. |
Source: Pemex Exploration and Production.
Source: Pemex Exploration and Production. Crude oil and condensate reserves (including natural gas liquids)(1) Dry gas reserves
| | | | | | | | | | | | | | | 2016 | | | 2015 | | | 2014 | | | | (in billions of cubic feet) | | Proved developed and undeveloped reserves: | | | | | At January 1 | | | 8,610 | | | | 10,859 | | | | 12,273 | | Revisions(1) | | | (183 | ) | | | (955 | ) | | | 4 | | Extensions and discoveries | | | (308 | ) | | | 47 | | | | 93 | | Production(2) | | | (1,134 | ) | | | 1,341 | ) | | | (1,511 | ) | | | | | | | | | | | | | | At December 31 | | | 6,984 | | | | 8,610 | | | | 10,859 | | | | | | | | | | | | | | | Proved developed reserves at December 31 | | | 4,513 | | | | 6,012 | | | | 6,740 | | Proved undeveloped reserves at December 31 | | | 2,471 | | | | 2,598 | | | | 4,119 | |
| | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | (in millions of barrels) | | Proved developed and undeveloped reserves: | | | | | | | | | | | | | At December 31 | | | 5,786 | | | | 6,427 | | | | 7,219 | | Revisions(2) | | | 784 | | | | 22 | | | | (95 | ) | Extensions and discoveries | | | 78 | | | | 140 | | | | 147 | | Production | | | (688 | ) | | | (743 | ) | | | (805 | ) | Farm outs & transfer of fields due to NHC bidding process | | | — | | | | (59 | ) | | | (38 | ) | | | | | | | | | | | | | | At December 31 | | | 5,961 | | | | 5,787 | | | | 6,427 | | | | | | | | | | | | | | | Proved developed reserves at December 31 | | | 3,585 | | | | 3,488 | | | | 4,166 | | Proved undeveloped reserves at December 31 | | | 2,376 | | | | 2,198 | | | | 2,261 | |
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, revisions made when actual reservoir performance differs from expected performance and changes by hydrocarbon prices. |
| (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.
Pemex Exploration and Production’s reserve-replacement ratio, or RRR, for a given period is calculated by dividing the sum of proved reserves additions due to discoveries, developments, delineationsnew data from well drilling, revisions made when actual reservoir performance differs from expected performance and revisions by that period’s total production. During 2016, PEMEX obtained an increase of 40 million barrels of oil equivalent of proved reserves as aggregated from discoveries, revisions, delimitations, development and productionchanges in 2016, that represents a RRR of 4 %. While low, 2016 RRR is an improvement as compared to 2015, where there washydrocarbon prices.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
no replacement of proved reserves. PEMEX believes there will be continued improvements in its RRR in subsequent years.
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, 2016, this ratio was equal to 7.7 years for proved reserves in oil equivalent, which represents a decrease of 4.9 % as compared to the 2015 reserves production ratio of 8.1 years for proved
|
Source: Pemex Exploration and Production. Dry gas reserves f. | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | (in billions of cubic feet) | | Proved developed and undeveloped reserves: | | | | | | | | | | | | | At December 31 | | | 6,370 | | | | 6,593 | | | | 6,984 | | Revisions(1) | | | 656 | | | | 3 | | | | 169 | | Extensions and discoveries | | | 196 | | | | 809 | | | | 468 | | Production(2) | | | (870 | ) | | | (887 | ) | | | (999 | ) | Farm outs & transfer of fields due to NHC bidding process | | | — | | | | (148 | ) | | | (29 | ) | | | | | | | | | | | | | | At December 31 | | | 6,352 | | | | 6,370 | | | | 6,593 | | | | | | | | | | | | | | | Proved developed reserves at December 31 | | | 3,609 | | | | 3,380 | | | | 4,026 | | Proved undeveloped reserves at December 31 | | | 2,743 | | | | 2,990 | | | | 2,567 | |
Note: Numbers may not total due to rounding. | (1) | Revisions include positive and negative changes due to new data from well drilling, revisions made when actual reservoir performance differs from expected performance and changes in hydrocarbon prices. |
| (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. Pemex Exploration and Production’s reserve-replacement ratio, or 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. During 2019, we obtained an increase of 1,026.5million barrels of oil equivalent of proved reserves as aggregated from discoveries, revisions, delimitations and development and production, which represents a RRR of 120.1%. PEMEX’s 2019 RRR is an improvement as compared to 2018, when the RRR was 34.7%. PEMEX expects continued improvements in its RRR in subsequent years. 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, 2019, this ratio is 8.4 years for proved reserves which is higher than RPR of 2018. F. | Standardized measure of discounted future net cash flowsrelated to proved oil and gas reserves (unaudited) |
The standardized measure tables presented below relate to proved oil and gas reserves excluding proved reserves scheduled to be produced after the year 2042. This measure is presented in accordance with ASC Topic 932. The computation includes production profiles and maintenance and operating expenses of assignments received by Pemex Exploration and Production on escrow on a temporary basis.
Estimated future cash inflows from production are computed by applying average prices of oil and gas on the first day of each month of 2016. Future development and production costs are those estimated future expenditures needed to develop and produce theyear-end estimated proved reserves after a net cash flows discount factor of 10%, assuming constantyear-end economic conditions.
Future tax expenses are computed by applying the appropriateyear-end statutory tax rates with consideration of the tax rates of the new fiscal regime for Pemex Exploration and Production already legislated for 2016 to the futurepre-tax net cash flows related to proved oil and gas reserves.
The estimated future payment of taxes was calculated based on fiscal regime applicable by decree to Pemex Exploration and Production effective January 1, 2015 and by the tax benefits published in the Official Gazette of the Federation on April 18, 2016.
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.(unaudited)
|
The standardized measure tables presented below relate to proved oil and gas reserves excluding proved reserves scheduled to be produced after the year 2045. This measure is presented in accordance with ASC Topic 932. Estimated future cash inflows from production are computed by applying average prices of oil and gas on the first day of each month of 2019. Future development and production costs are those estimated future expenditures needed to develop and produce theyear-end estimated proved reserves after a net cash flows discount factor of 10%, assuming constantyear-end economic conditions. Future tax expenses are computed by applying the appropriateyear-end statutory tax rates with consideration of the tax rates of the new fiscal regime for Pemex Exploration and Production already legislated for 2019 to the futurepre-tax net cash flows related to PEMEX’s proved oil and gas reserves. The estimated future payment of taxes was calculated based on fiscal regime applicable by decree to Pemex Exploration and Production effective January 1, 2015 and by the tax benefits published in the Official Gazette of the Federation on April 18, 2016. 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. Standardized measure of discounted future net cash flows as of December 31 | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | (in millions of U.S. dollars) | | Future cash inflows | | U.S. $ | 330,286 | | | U.S. $ | 321,065 | | | U.S. $ | 269,489 | | Future production costs (excluding profit taxes) | | | (114,782 | ) | | | (103,498 | ) | | | (114,369 | ) | Future development costs | | | (37,540 | ) | | | (22,224 | ) | | | (26,229 | ) | | | | | | | | | | | | | | Future cash flows before tax | | | 177,964 | | | | 195,343 | | | | 128,891 | | Future production and excess gains taxes | | | (134,175 | ) | | | (156,691 | ) | | | (129,377 | ) | | | | | | | | | | | | | | Future net cash flows | | | 43,790 | | | | 38,652 | | | | (487 | ) | Effect of discounting net cash flows by 10% | | | (18,807 | ) | | | (12,434 | ) | | | (4,600 | ) | | | | | | | | | | | | | | Standardized measure of discounted future net cash flows | | U.S. $ | 24,983 | | | U.S. $ | 26,218 | | | U.S. $ | 4,113 | | | | | | | | | | | | | | |
Note: Table amounts may not total due to rounding. To comply with ASC Topic 932, the following table presents the aggregate standardized measure changes for each of the last three years and significant sources of variance: Changes in standardized measure of discounted future net cash flows | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | (in millions of U.S. dollars) | | Sales of oil and gas produced, net of production costs | | U.S. $ | (29,530 | ) | | U.S. $ | (31,279 | ) | | U.S. $ | (25,076 | ) | Net changes in prices and production costs | | | 73,278 | | | | 62,902 | | | | 26,355 | | Extensions and discoveries | | | 1,658 | | | | 4,323 | | | | 3,639 | | Development cost incurred during the year | | | 4,281 | | | | 2,984 | | | | 2,699 | | Changes in estimated development costs | | | 3,341 | | | | (2,146 | ) | | | 2,744 | | Reserves revisions and timing changes | | | (19,615 | ) | | | 1,511 | | | | (1,353 | ) | Accretion of discount ofpre-tax net cash flows | | | (9,305 | ) | | | 6,628 | | | | 5,891 | | Net changes in production and excess gains taxes | | | (25,343 | ) | | | (22,817 | ) | | | (15,628 | ) | | | | | | | | | | | | | | Aggregate change in standardized measure of discounted future net cash flows | | U.S. $ | (1,235 | ) | | U.S. $ | 22,106 | | | U.S. $ | (729 | ) | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | (in millions of U.S. dollars) | | Standardized measure: | | | | | | | | | | | | | As of January 1 | | U.S. $ | 26,218 | | | U.S. $ | 4,113 | | | U.S. $ | 4,841 | | As of December 31 | | | 24,983 | | | | 26,218 | | | | 4,113 | | | | | | | | | | | | | | | Change | | U.S. $ | (1,235 | ) | | U.S. $ | 22,105 | | | U.S. $ | (728 | ) | | | | | | | | | | | | | |
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. F-173 PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Standardized measure of discounted future net cash flows as of December 31
| | | | | | | | | | | | | | | 2016 | | | 2015 | | | 2014 | | | | (in millions of dollars) | | Future cash inflows | | US$ | 228,196 | | | US$ | 325,052 | | | US$ | 757,794 | | Future production costs (excluding profit taxes) | | | (87,942 | ) | | | (99,948 | ) | | | (112,421 | ) | Future development costs | | | (25,515 | ) | | | (32,560 | ) | | | (37,019 | ) | | | | | | | | | | | | | | Future cash flows before tax | | | 114,738 | | | | 192,544 | | | | 608,353 | | Future production and excess gains taxes | | | (108,960 | ) | | | (167,056 | ) | | | (543,743 | ) | | | | | | | | | | | | | | Future net cash flows | | | 5,779 | | | | 25,488 | | | | 64,610 | | Effect of discounting net cash flows by 10% | | | (937 | ) | | | (9,946 | ) | | | (19,949 | ) | | | | | | | | | | | | | | Standardized measure of discounted future net cash flows | | US$ | 4,841 | | | US$ | 15,541 | | | US$ | 44,661 | | | | | | | | | | | | | | |
Note: Table amounts may not total due to rounding.
To comply with ASC Topic 932, the following table presents the aggregate standardized measure changes for each of the last three years and significant sources of variance:
Changes in standardized measure of discounted future net cash flows:
| | | | | | | | | | | | | | | 2016 | | | 2015 | | | 2014 | | Sales of oil and gas produced, net of production costs | | | US$(19,411) | | | US$ | (28,371 | ) | | US$ | (69,582 | ) | Net changes in prices and production costs | | | (53,278 | ) | | | (327,865 | ) | | | (79,617 | ) | Extensions and discoveries | | | 1,105 | | | | 3,086 | | | | 3,022 | | Development cost incurred during the year | | | 4,124 | | | | 10,172 | | | | 14,215 | | Changes in estimated development costs | | | 1,763 | | | | (2,171 | ) | | | (7,086 | ) | Reserves revisions and timing changes | | | 6,366 | | | | (22,801 | ) | | | (13,432 | ) | Accretion of discount ofpre-tax net cash flows | | | 11,094 | | | | 43,394 | | | | 51,504 | | Net changes in production and excess gains taxes | | | 37,537 | | | | 295,437 | | | | 64,678 | | | | | | | | | | | | | | | Aggregate change in standardized measure of discounted future net cash flows | | | US$(10,700) | | | US$ | (29,119 | ) | | US$ | (36,296 | ) | | | | | | | | | | | | | | Standardized measure: | | | | | | | | | | | | | As of January 1 | | US$ | 15,541 | | | US$ | 44,661 | | | US$ | 80,957 | | As of December 31 | | | 4,841 | | | | 15,541 | | | | 44,661 | | | | | | | | | | | | | | | Change | | US$ | (10,700 | ) | | US$ | (29,119 | ) | | US$ | (36,296 | ) | | | | | | | | | | | | | |
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.
F-146
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