New Pemex boss cements finance ministry oversight
OREANDA-NEWS. February 11, 2016. The surprise appointment of industry outsider Jose Antonio Gonzalez Anaya as the new chief executive of state-run Pemex reinforces finance ministry oversight at a time of sharp budget cuts and unprecedented layoffs.
With no direct experience in the oil and gas industry, president Enrique Pea Nieto appears to have selected Gonzalez for his managerial and political prowess, and he is not expected to veer too far from his predecessor Emilio Lozoya?s technocratic course.
Gonzalez joins Pemex as it adjusts to a groundbreaking energy reform that is intended to transform it into a more autonomous public-sector company groomed for a competitive landscape.
He spent the last three years restructuring Mexico unwieldy social security institute (IMSS) and is considered an expert in the sensitive labor-related issues of pensions and retirement.
Pemex?s pension liabilities reached 1.54 trillion pesos (\\$82bn) in the third quarter of 2015. Including debt, the firm's total liabilities amounted to nearly \\$200bn.
In a radio interview today, Gonzalez said he will extend the overhaul of Pemex corporate and cost structures.
"It won't be easy," conceded Gonzalez, acknowledging his lack of experience, while stressing his engineering background. "Clearly the health sector is not the same as the oil sector, but I will learn a lot."
With degrees in engineering and economics from the Massachusetts Institute of Technology (MIT) and a doctorate in economics from Harvard, Gonzalez has close ties to the finance ministry, where he served as chief of staff and undersecretary of income in 2002-12.
Gonzalez takes the helm of the company at a time of austerity wrought by a prolonged oil price rout. Pemex has already weathered a 73bn peso cut in its budget for this year.
After lengthy and low-key negotiations between Pemex and Mexico's powerful oil workers union, an agreement was eventually found to lay off 16,000 employees – a process that is already underway.
Yesterday, on the recommendation of Mexican central bank president Agust?n Carstens Carstens, Mexico's finance ministry Luis Videgaray said the government would make another adjustment to this year's federal budget, "starting with Pemex".
Today, about 20pc of Mexico's public spending depends on Pemex revenue.
Echoing earlier finance ministry assertions, Gonzalez said some of Pemex's most costly exploration projects would be postponed.
"The exploration projects that had been calculated on a basis of \\$100/bl are not profitable. We need to prioritize investment," he said. "And the fundamental priority is: how to implement this [new] budget cut."
Over the years, Mexico has focused on stemming a long decline in crude production, persisting in spite of a sharp decline in oil prices since 2014. Critics say the strategy should be revisited.
"There is a conflict between the interest of the finance ministry, which is focused on maximizing profitability in the short-term, and the natural long-term strategy [of a director]," a senior Pemex executive told Argus. "The question is: does it benefit Pemex to produce more?"
In 2015, Pemex produced an average of 2.267mn b/d of crude, 6.6pc less than the 2.429mn b/d average in 2014.
In 2004, Mexico reached a peak of 3.4mn b/d.