UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM20-F
FORM 20-F
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
for the fiscal year ended December 31, 2013 2016
Commission File Number0-99
PETRÓLEOS MEXICANOS
(Exact name of registrant as specified in its charter)
Mexican Petroleum | United Mexican States | |
(Translation of registrant’s name into English) | (Jurisdiction of incorporation or organization) |
Avenida Marina Nacional No. 329
Colonia Petróleos MexicanosVerónica Anzures
1131111300 Ciudad de México, D.F., México
(Address of principal executive offices)
Rolando Galindo GálvezJaime José del Río Castillo
(5255) 1944 9700
ri@pemex.com
Avenida Marina Nacional No. 329
Torre Ejecutiva, Piso 38 Colonia Petróleos MexicanosVerónica Anzures
1131111300 Ciudad de México, D.F., México
(Name, telephone,e-mail and/or facsimile number
and address of company contact person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.None
Securities registered or to be registered pursuant to Section 12(g) of the Act.None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
Title of Each Class
9.50% Global Guaranteed Bonds due 2027
9 1⁄4% Global Guaranteed Bonds due 2018
8.625% Bonds due 2022
7.375% Notes due 2014
5.75% Notes due 2015
5.75% Guaranteed Notes due 2018
9 1⁄4% Guaranteed Bonds due 2018
8.625% Guaranteed Bonds due 2023
9.50% Guaranteed Bonds due 2027
6.625% Guaranteed Bonds due 2035
6.625% Guaranteed Bonds due 2038
8.00% Guaranteed Notes due 2019
4.875% Notes due 2015
6.000% Notes due 2020
5.50% Notes due 2021
6.500% Bonds due 2041
4.875% Notes due 2022
5.50% Bonds due 2044
3.500% Notes due 2018
Floating Rate Notes due 2018
3.500% Notes due 2023
4.875% Notes due 2024
3.500% Notes due 2018 |
Floating Rate Notes due 2018 |
9 1⁄4% Guaranteed Bonds due 2018 |
8.00% Guaranteed Notes due 2019 |
3.500% Notes due 2020 |
6.375% Notes due 2021 |
4.875% Notes due 2022 |
3.500% Notes due 2023 |
4.625% Notes due 2023 |
4.250% Notes due 2025 |
4.500% Notes due 2026 |
9.50% Guaranteed Bonds due 2027 |
6.625% Guaranteed Bonds due 2038 |
5.50% Bonds due 2044 |
5.625% Bonds due 2046 |
9 1⁄4% Global Guaranteed Bonds due 2018 |
5.75% Guaranteed Notes due 2018 |
3.125% Notes due 2019 |
5.500% Notes due 2019 |
6.000% Notes due 2020 |
5.50% Notes due 2021 |
8.625% Bonds due 2022 |
8.625% Guaranteed Bonds due 2023 |
4.875% Notes due 2024 |
6.875% Notes due 2026 |
9.50% Global Guaranteed Bonds due 2027 |
6.625% Guaranteed Bonds due 2035 |
6.500% Bonds due 2041 |
6.375% Bonds due 2045 |
6.750% Bonds due 2047 |
Indicate by check mark if the registrant is awell-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ¨☐ No No x☒
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ¨☐ No No x☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x☒ No No ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
N/A
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a non-accelerated filer.an emerging growth company. See definitionthe definitions of “large accelerated filer,” “accelerated filer,” and large accelerated filer”“emerging growth company” in Rule12b-2 of the Exchange Act. (Check one):
Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||||||
Non-accelerated filer | ☒ | Emerging growth company | ☐ |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† | The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP¨☐ IFRS as issued by the IASB x☒ Other ¨☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
Item 17 ¨☐ Item 18¨☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).
Yes ¨☐ No No x☒
i
Petróleos Mexicanos and its fourseven subsidiary entities, which we refer to as the subsidiary entities,Pemex-ExploracióPemex Exploración y Producción (Pemex-Exploration(Pemex Exploration and Production),Pemex-RefinacióPemex Transformación Industrial (Pemex-Refining)(Pemex Industrial Transformation),Pemex-GasPemex Perforación y Petroquímica BásicaServicios (Pemex-Gas(Pemex Drilling and Basic Petrochemicals)Services),Pemex Logística (Pemex Logistics),Pemex Cogeneración y Servicios (Pemex Cogeneration and Services),Pemex-PetroquímicaPemex Fertilizantes (Pemex-Petrochemicals(Pemex Fertilizers) and together with Pemex-Exploration and Production, Pemex-Refining and Pemex-Gas and Basic Petrochemicals, collectively referred to as the subsidiary entities)Pemex Etileno (Pemex Ethylene), comprise the state oil and gas company of the United Mexican States, which we refer to as Mexico. Each of Petróleos Mexicanos and the subsidiary entities is a decentralized public entityproductivestate-owned company of the Federal Government of Mexico, which we refer to as the Mexican Government, and each of the subsidiary entities is a productivestate-owned subsidiary of Mexico. Each of Petróleos Mexicanos and the subsidiary entities is a legal entity empowered to own property and carry on business in its own name. In addition, a number of subsidiary companies that are defined in Note 1 and listed in Note 3(a)4 to our consolidated financial statements incorporated in Item 18, including the Pemex Project Funding Master Trust (whichwhich we refer to as the Master Trust) andFideicomiso Irrevocable de Administración No. F/163 (which we refer to as Fideicomiso F/163) (which are described below under “Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Commitments for Capital Expenditures and Sources of Funding”),our subsidiary companies, are incorporated into the consolidated financial statements; these subsidiary companies are also identified with thetheir corresponding ownership percentages in “—Consolidated Structure of PEMEX” on page 4. As further described under “Item 4—Information on the Company—History and Development—Corporate Reorganization,” the seven new subsidiary entities assumed, on or prior to, November 1, 2015, all of the rights and obligations of the prior subsidiary entities of Petróleos Mexicanos—Pemex-Exploración y Producción(Pemex-Exploration and Production),Pemex-Refinación(Pemex-Refining),Pemex-Gas y Petroquímica Básica(Pemex-Gas and Basic Petrochemicals) andPemex-Petroquímica(Pemex-Petrochemicals). References to the subsidiary entities prior to this corporate reorganization refer toPemex-Exploration and Production,Pemex-Refining,Pemex-Gas and Basic Petrochemicals andPemex-Petrochemicals. Petróleos Mexicanos, the subsidiary entities and the subsidiary companies are collectively referred to as “PEMEX” or “we.” See “Item 4—Information on the Company—History and Development—Energy Reform” for more details.
References herein to “U.S. $,” “$,” “U.S. dollars” or “dollars” are to United States dollars. References herein to “pesos” or “Ps.” are to the legal currency of Mexico. References herein to “euros” or “€” are to the legal currency of the European Economic and Monetary Union. References herein to “pounds” or “£” are to the legal currency of the United Kingdom. References herein to “Swiss francs” or “CHF” are to the legal currency of the Swiss Confederation. References herein to “Japanese yen” or “¥” are to the legal currency of Japan. References herein to “Australian dollars” or “AUD” are to the legal currency of Australia. The term “billion” as used herein means one thousand million.
Our consolidated financial statements included in this annual report were prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. We refer in this report to “International Financial Reporting Standards as issued by the International Accounting Standards Board” as IFRS. In addition, these financial statements were audited in accordance with the International Standards on Auditing, as required by theLey del Mercado de Valores (Securities Market Law) and theDisposiciones de carácter general aplicables a las emisoras de valores y a otros participantes del mercado de valores(General Provisions applicable to issuers of securities and other participants in the securities market) in each case, of Mexico, for purposes of filing with theComisiónNacional Bancaria y de Valores (National Banking and Securities Commission, which we refer to asor the CNBV) for purposes of filing withand theBolsa Mexicana de Valores, S.A.B. de C.V. (which we refer to as BMV(Mexican Stock Exchange, or the Mexican Stock Exchange) and with the CNBV,BMV), and in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB, for purposes of filings with the U.S. Securities and Exchange Commission, or the SEC.
The regulations of the SEC do not require foreign private issuers that prepare their financial statements on the basis of IFRS to reconcile such financial statements to United States Generally Accepted Accounting Principles, (whichwhich we refer to as U.S. GAAP).GAAP. Accordingly, while we have in the past reconciled our consolidated financial statements prepared in accordance withNormas de Información Financiera Mexicanas (Mexican(Mexican Financial Reporting Standards, or Mexican FRS) to U.S. GAAP, those reconciliations are no longer presented in our filings with the SEC. We do, however, continue to provide the disclosure required under the U.S. Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 932 “Extractive Activities—Oil and Gas” (which we refer to as ASC Topic 932), as this is required regardless of the basis of accounting on which we prepare our financial statements.
We maintain our consolidated financial statements and accounting records in pesos. Unless otherwise indicated, we have translated all peso amounts to U.S. dollars in this Form20-F, including all convenience translations of our consolidated financial statements included herein, at an exchange rate of Ps. 13.076520.6640 = U.S. $1.00, which is the exchange rate that theSecretaría de Hacienda y Crédito Público (Ministry of Finance and Public Credit, or the SHCP)Credit) instructed us to use on December 31, 2013.2016. You should not construe these translations from pesos into dollars as actually representing such U.S. dollar amounts or meaning that you could convert such amounts into U.S. dollars at the rates indicated. Mexico has a free market for foreign exchange, and
the Mexican Government allows the peso to float freely against the U.S. dollar. There can be no assurance that the Mexican Government will maintain its current policies with regard to the peso or that the peso will not depreciate or appreciate significantly in the future. Due to the volatility of the peso/U.S. dollar exchange rate, the exchange rate on any date subsequent to the date hereof could be materially different from the rate indicated above. See “Item 3—Key Information—Exchange Rates” for information regarding the rates of exchange between pesos and U.S. dollars.
SPECIAL NOTE REGARDING MEXICAN ENERGY REFORM
On December 12, 2013, the Permanent Commission of the Mexican Congress approved amendments to Articles 25, 27 and 28 of theConstitución Política de los Estados Unidos Mexicanos (Political Constitution of the United Mexican States, or the Mexican Constitution), which were subsequently approved by a majority of Mexico’s state legislatures and signed into law by the President of Mexico, Enrique Peña Nieto. On December 20, 2013, these amendments were published as theDecreto por el que se reforman y adicionan diversas disposiciones de la Constitución Política de los Estados Unidos Mexicanos, en Materia de Energía (Decree that amends and supplements various provisions of the Mexican Constitution relating to energy matters, which we refer to as the Energy Reform Decree) in theDiario Oficial de la Federación(Official Gazette of the Federation) and took effect on December 21, 2013.
The Energy Reform Decree includes transitional articles (orartículos transitorios) that set forth the general framework for the secondary legislation or implementing laws, which have not been enacted as of the date of this report. See “Item 4—Information on the Company—History and Development—Energy Reform” for more details regarding the Energy Reform Decree, transitional articles and secondary legislation.
The transitional articles of the Energy Reform Decree outline a process, commonly referred to as Round Zero, for the determination of our initial allocation of rights to continue to carry out exploration and production activities in Mexico. Round Zero is being administered by theSecretaría de Energía (the Ministry of Energy), with technical assistance from theComisión Nacional de Hidrocarburos (National Hydrocarbons Commission, which we refer to as the NHC). In connection with Round Zero, we have submitted to the Ministry of Energy a request that we be assigned the right to explore and develop areas in which we currently operate based on our technical, financial and operational capabilities. As of the date of this report, the Round Zero process has not yet been completed. See “Item 4—Information on the Company—History and Development—Energy Reform—Round Zero” for more details regarding the Round Zero process and our submission.
PRESENTATION OF INFORMATION CONCERNING RESERVES
The proved hydrocarbon reserves included in this report for the year ended December 31, 2016 are those that we have the right to extract and sell based on assignments granted by the Mexican Government to us in August 2014 through the process commonly referred to as Round Zero. See “Item 4—Information on the Company—History and Development—Energy Reform” for a description of the Round Zero process.
The estimates of Mexico’sour proved reserves of crude oil and natural gas for the five years ended December 31, 20132016 included in this report have been calculated according to the technical definitions required by the SEC. Although DeGolyer and MacNaughton, Netherland, Sewell International, S. de R.L. de C.V. (which we refer to as Netherland Sewell) and Ryder Scott Company, L.P. (which we refer to as Ryder Scott) conducted reserves audits of our estimates of theour proved hydrocarbon reserves of Mexico as of December 31, 20132016 or January 1, 2014,2017, as applicable, allapplicable. All reserves estimates involve some degree of uncertainty. SeeFor a description of the risks relating to reserves and reserves estimates, see “Item 3—Key Information—Risk Factors—Risk Factors Related to Ourour Relationship with the Mexican Government—Information on Mexico’s hydrocarbon reserves in this report is based on estimates, which are uncertain and subject to revision” andrevisions,” “—Our abilityWe must make significant capital expenditures to maintain and increase our oilcurrent production levels, depends on our abilityand to successfully developmaintain, as well as increase, the proved hydrocarbon reserves assigned to us by the Mexican Government. Reductions in our income, adjustments to our capital expenditures budget and failureour inability to do soobtain financing may limit our ability to maintainmake capital investments” and increase our production” for a description of the risks relating to reserves and reserves estimates.
We include these estimates of Mexico’s proved reserves in this report and describe the reserves replacement rate by reference to these proved reserves because, as of December 31, 2013, Pemex-Exploration and Production
had the right to extract, but not own, these reserves, and to sell the resulting production under theLey de Petróleos Mexicanos (Petróleos Mexicanos Law). Following the adoption of the Energy Reform Decree, our ability in the future to extract these reserves, and to sell the resulting production, will be determined by Round Zero, as described above. See “Item 3—Key Information—Risk Factors—Risk Factors Related to Our Relationship with the Mexican Government—“—The Mexican nation, not us, owns the hydrocarbon reserves located in the subsoil ofin Mexico and our right to continue to exploitextract these reserves is subject to the approval of the Ministry of Energy.”
FORWARD-LOOKING STATEMENTS
This Form20-F contains words, such as “believe,” “expect,” “anticipate” and similar expressions that identifyforward-looking statements, which reflect our views about future events and financial performance. We have madeforward-looking statements that address, among other things, our:
Actual results could differ materially from those projected in suchforward-looking statements as a result of various factors that may be beyond our control. These factors include, but are not limited to:
Accordingly, you should not place undue reliance on theseforward-looking statements. In any event, these statements speak only as of their dates, and we undertake no obligation to update or revise any of them, whether as a result of new information, future events or otherwise.
For a discussion of important factors that could cause actual results to differ materially from those contained in anyforward-looking statement, you should see “Item 3—Key Information—Risk Factors.”
PART I
Item 1. | Identity of Directors, Senior Management and Advisers |
Not applicable.
Item 2. | Offer Statistics and Expected Timetable |
Not applicable.
Item 3. | Key Information |
SELECTED FINANCIAL DATA
The selected statement of comprehensive income (loss), statement of financial position and cash flows data set forth below as of and for the threefive years ended December 31, 20132016 have been derived from, and should be read in conjunction with, our consolidated financial statements as of December 31, 20122015 and 20132016 and for the years ended December 31, 2011, 20122014, 2015 and 2013,2016, which are included in Item 18 of this report. Our consolidated financial statements for each of the two fiscal yearsyear ended December 31, 2012 were audited by KPMG Cárdenas Dosal, S.C., an independent registered public accounting firm. Our consolidated financial statements for each of the fiscal yearyears ended December 31, 2013, 2014, 2015 and 2016 were audited by Castillo Miranda y Compañía, S.C. (which we refer to as BDO Mexico), an independent registered public accounting firm. Certain amounts in the consolidated financial statements for the years ended December 31, 2012, 2013, 2014 and 2015 have been reclassified to conform the presentation of the amounts in the consolidated financial statements for the year ended December 31, 2016. These reclassifications are not significant to the consolidated financial statements and had no impact on our consolidated net income (loss).
As detailed below, for the years ended December 31, 2016 and 2015, we recognized net losses of Ps. 191.1 billion and Ps. 712.6 billion, respectively. In addition, we had negative equity as of December 31, 2016 and 2015 of Ps. 1,233.0 billion and Ps. 1,331.7 billion, respectively, which resulted in a negative working capital of Ps. 70.8 billion and Ps. 176.2 billion, respectively, and negative cash flows from operating activities of Ps. 41.5 billion for the year ended December 31, 2016. This has led our independent auditors to state in their most recent audit report that there is important uncertainty and significant doubt about our ability to continue as a going concern. We have disclosed the circumstances that have caused these negative trends and the actions we are taking to face them and have concluded that we continue to operate as a going concern. Accordingly, we have prepared our consolidated financial statements on a going concern basis, which assumes that we can meet our payment obligations. For more information on the actions that we are taking to face these negative trends, see “Item 5—Operating and Financial Review and Prospects—Overview” and “Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources.”
Selected Financial Data of PEMEX
Year ended December 31,(1)(2) | Year ended December 31, (1) | |||||||||||||||||||||||||||||||||||||||
2011 | 2012 | 2013 | 2013(3) | 2012 | 2013 | 2014 | 2015 | 2016 | 2016(2) | |||||||||||||||||||||||||||||||
(in millions of pesos, except ratios) | (in millions of U.S. dollars) | (in millions of pesos, except ratios) | (in millions of U.S. dollars) | |||||||||||||||||||||||||||||||||||||
Statement of Comprehensive Income Data | ||||||||||||||||||||||||||||||||||||||||
Statement of Comprehensive Income (Loss) Data | ||||||||||||||||||||||||||||||||||||||||
Net sales | Ps. | 1,558,454 | Ps. | 1,646,912 | Ps. | 1,608,205 | U.S. $ | 122,984 | Ps. 1,646,912 | Ps. 1,608,205 | Ps. 1,586,728 | Ps. 1,166,362 | Ps. 1,079,546 | U.S.$ | 52,243 | |||||||||||||||||||||||||
Operating income | 861,311 | 905,339 | 727,622 | 55,644 | 905,339 | 727,622 | 615,480 | (154,387 | ) | 424,350 | 20,536 | |||||||||||||||||||||||||||||
Financing income | 30,584 | 23,215 | 24,527 | 1,876 | 2,532 | 8,736 | 3,014 | 14,991 | 13,749 | 665 | ||||||||||||||||||||||||||||||
Financing cost | (63,236 | ) | (72,951 | ) | (54,067 | ) | (4,135 | ) | (46,011 | ) | (39,586 | ) | (51,559 | ) | (67,774 | ) | (98,844 | ) | (4,783 | ) | ||||||||||||||||||||
Derivative financial instruments (cost) income—Net | (6,258 | ) | 1,311 | (9,439 | ) | (21,450 | ) | (14,000 | ) | (678 | ) | |||||||||||||||||||||||||||||
Exchange (loss) gain—Net | (60,143 | ) | 44,846 | (3,951 | ) | (302 | ) | 44,846 | (3,951 | ) | (76,999 | ) | (154,766 | ) | (254,012 | ) | (12,292 | ) | ||||||||||||||||||||||
Net (loss) income for the period | (106,942 | ) | 2,600 | (170,058 | ) | (13,005 | ) | 2,600 | (170,058 | ) | (265,543 | ) | (712,567 | ) | (191,144 | ) | (9,250 | ) | ||||||||||||||||||||||
Statement of Financial Position Data (end of period) | ||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | 114,977 | 119,235 | 80,746 | 6,175 | 119,235 | 80,746 | 117,989 | 109,369 | 163,532 | 7,914 | ||||||||||||||||||||||||||||||
Total assets | 1,981,374 | 2,024,183 | 2,047,390 | 156,570 | 2,024,183 | 2,047,390 | 2,128,368 | 1,775,654 | 2,329,886 | 112,751 | ||||||||||||||||||||||||||||||
Long-term debt | 672,657 | 672,618 | 750,563 | 57,398 | 672,618 | 750,563 | 997,384 | 1,300,873 | 1,807,004 | 87,447 | ||||||||||||||||||||||||||||||
Total long-term liabilities | 1,624,752 | 2,059,445 | 1,973,446 | 150,915 | 2,059,445 | 1,973,446 | 2,561,930 | 2,663,922 | 3,136,704 | 151,793 | ||||||||||||||||||||||||||||||
Total equity (deficit) | 103,177 | (271,066 | ) | (185,247 | ) | (14,166 | ) | (271,066 | ) | (185,247 | ) | (767,721 | ) | (1,331,676 | ) | (1,233,008 | ) | (59,669 | ) | |||||||||||||||||||||
Statement of Cash Flows | ||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 127,380 | 140,538 | 148,492 | 11,356 | 140,538 | 148,492 | 143,075 | 167,951 | 150,439 | 7,280 | ||||||||||||||||||||||||||||||
Acquisition of wells, pipelines, properties, plant and equipment(4) | 167,014 | 197,509 | 245,628 | 18,784 | ||||||||||||||||||||||||||||||||||||
Acquisition of wells, pipelines, properties, plant and equipment(3) | 197,509 | 245,628 | 230,679 | 253,514 | 188,389 | 9,117 | ||||||||||||||||||||||||||||||||||
Other Financial Data | ||||||||||||||||||||||||||||||||||||||||
Ratio of earnings to fixed charges(5)(6) | — | 1.14 | — | — | ||||||||||||||||||||||||||||||||||||
Ratio of earnings to fixed charges(4)(5) | 1.01 | — | — | — | — | — |
(1) |
Includes Petróleos Mexicanos, the subsidiary entities and the subsidiary companies listed in Note |
Translations into U.S. dollars of amounts in pesos have been made at the exchange rate established by the |
Includes capitalized financing cost. See Note |
Earnings, for this purpose, consist ofpre-tax income (loss) from continuing operations before income from equity investees, plus fixed charges, minus interest capitalized during the period, plus the amortization of capitalized interest during the period and plus dividends received on equity investments.Pre-tax income (loss) is calculated after the deduction of hydrocarbon duties, but before the deduction of the hydrocarbon income tax and other income taxes. Fixed charges for this purpose consist of the sum of interest expense plus interest capitalized during the |
Earnings for the years ended December 31, |
Source: PEMEX’s consolidated financial statements, prepared in accordance with IFRS, as it relates to the Selected Statementsselected statements of Comprehensive Income, Statementcomprehensive income, statement of Financial Positionfinancial position and Statementstatement of Cash Flows Data;cash flows data; and Petróleos Mexicanos, as it relates to Other Financial Data.other financial data.
EXCHANGE RATES
The following table sets forth, for the periods indicated, the high, low, average andperiod-end exchange rates for the purchase of U.S. dollars, expressed in pesos per U.S. dollar. These rates have not been restated in constant currency units.
Period | Exchange Rate | |||||||||||||||
High | Low | Average(1) | Period End | |||||||||||||
Year Ended December 31, | ||||||||||||||||
2009 | 15.406 | 12.632 | 13.578 | 13.058 | ||||||||||||
2010 | 13.194 | 12.156 | 12.635 | 12.383 | ||||||||||||
2011 | 14.254 | 11.505 | 12.464 | 13.951 | ||||||||||||
2012 | 14.365 | 12.625 | 13.140 | 12.964 | ||||||||||||
2013 | 13.433 | 11.976 | 12.857 | 13.098 | ||||||||||||
November 2013 | 13.243 | 12.871 | 13.060 | 13.111 | ||||||||||||
December 2013 | 13.217 | 12.851 | 13.010 | 13.098 | ||||||||||||
2014 | ||||||||||||||||
January 2014 | 13.456 | 12.997 | 13.222 | 13.359 | ||||||||||||
February 2014 | 13.509 | 13.204 | 13.293 | 13.226 | ||||||||||||
March 2014 | 13.332 | 13.056 | 13.193 | 13.056 | ||||||||||||
April 2014 | 13.143 | 12.950 | 13.067 | 13.084 | ||||||||||||
May 2014(2) | 13.053 | 12.946 | 12.996 | 12.986 |
Period | Exchange Rate | |||||||||||||||
High | Low | Average(1) | Period End | |||||||||||||
Year Ended December 31, | ||||||||||||||||
2011 | 14.254 | 11.505 | 12.464 | 13.951 | ||||||||||||
2012 | 14.365 | 12.625 | 13.140 | 12.964 | ||||||||||||
2013 | 13.433 | 11.976 | 12.857 | 13.098 | ||||||||||||
2014 | 14.794 | 12.846 | 13.370 | 14.750 | ||||||||||||
2015 | 17.358 | 14.564 | 15.873 | 17.195 | ||||||||||||
2016 | 20.842 | 17.190 | 18.667 | 20.617 | ||||||||||||
November 2016 | 20.842 | 18.435 | 20.009 | 20.457 | ||||||||||||
December 2016 | 20.738 | 20.223 | 20.499 | 20.617 | ||||||||||||
2017 | ||||||||||||||||
January 2017 | 21.891 | 20.753 | 21.391 | 20.836 | ||||||||||||
February 2017 | 20.816 | 19.735 | 20.301 | 19.998 | ||||||||||||
March 2017 | 19.927 | 18.665 | 19.280 | 18.829 | ||||||||||||
April 2017(2) | 18.868 | 18.478 | 18.701 | 18.843 |
(1) | Average ofmonth-end rates, except for |
(2) | For the period from |
Source: Noon buying rate for cable transfers in New York reported by the Federal Reserve.
The noon buying rate for cable transfers in New York reported by the Federal Reserve on May 9, 2014April 21, 2017 was Ps. 12.98618.8425 = U.S. $1.00.
RISK FACTORS
Considerations Related to Mexico
The effects of the Energy Reform Decree and its implementation are uncertain but likely to be material.
The Energy Reform Decree, which was enacted in December 2013, included transitional articles that set forth the framework for the implementation of secondary legislation and provided for certain transitional steps, including the Round Zero process described below. We expect that the effects of these developments on our business and operations will be material. Among the features of the Energy Reform Decree that could have an effect on our operations are the following:
As of the date of this report and until the secondary legislation related to the Energy Reform Decree becomes effective and private sector companies enter into contractual agreements to operate in the Mexican energy sector, we are the only entity that conducts the petroleum industry in Mexico on behalf of Mexico.
As of the date of this report, one key aspect of the Energy Reform Decree—our initial allocation of oil and gas exploration and extraction rights—is being implemented pursuant to a process outlined in the transitional articles and referred to as Round Zero. As part of Round Zero, we have submitted a request that the Ministry of Energy assign to us certain oil and gas exploration and extraction rights. The Ministry of Energy has a deadline of September 17, 2014 to respond to our request. See “—Risk Factors Related to Our Relationship with the Mexican Government—The Mexican nation, not us, owns the hydrocarbon reserves located in the subsoil of Mexico and our right to continue to exploit these reserves is subject to the approval of the Ministry of Energy” below in this Item 3.
The secondary legislation implementing the Energy Reform Decree is expected to include, among other things, additional details regarding the contractual and fiscal regime that will be applicable to us and changes to our corporate structure as part of Petróleos Mexicanos’ conversion from a decentralized public entity to a “productive state-owned company” by December 2015. As of the date of this report, this secondary legislation has not been adopted. The impact of the Energy Reform Decree on us will largely depend on how it is implemented by the secondary legislation and on the outcome of Round Zero. It would therefore be premature to predict the long-term effects of the Energy Reform Decree and the new framework it contemplates, but these effects could be adverse to our interests in significant respects. In addition, as a result of longstanding restrictions included in certain of our financing agreements that were based on the legal framework in effect before the Energy Reform Decree was enacted, these effects may cause us to default on these agreements in the event that we are unable to obtain waivers from our lenders or bondholders, as applicable. For more information, see “Item 4—Information on the Company—History and Development—Energy Reform.”
Economic conditions and government policies in Mexico and elsewhere may have a material impact on our operations.
A deterioration in Mexico’s economic condition, social instability, political unrest or other adverse social developments in Mexico could adversely affect our business and financial condition. Those events could also
lead to increased volatility in the foreign exchange and financial markets, thereby affecting our ability to obtain new financing and service our debt. Additionally, the Mexican Government may cut spending in the future. These cuts could adversely affect our business, financial condition and prospects. In the past, Mexico has experienced several periods of slow or negative economic growth, high inflation, high interest rates, currency devaluation and other economic problems. These problems may worsen or reemerge, as applicable, in the future, and could adversely affect our business and our ability to service our debt. A worsening of international financial or economic conditions, including a slowdown in growth or recessionary conditions in Mexico’s trading partners, including the United States, or the emergence of a new financial crisis, could have adverse effects on the Mexican economy, our financial condition and our ability to service our debt.
Changes in exchange rates or in Mexico’s exchange control laws may hamper our ability to service our foreign currency debt.
The Mexican Government does not currently restrict the ability of Mexican companies or individuals to convert pesos into U.S. dollars or other currencies, and Mexico has not had a fixed exchange rate control policy since 1982. However, in the future, the Mexican Government could impose a restrictive exchange control policy, as it has done in the past. We cannot provide assurances that the Mexican Government will maintain its current policies with regard to the peso or that the peso’s value will not fluctuate significantly in the future. The peso has been subject to significant devaluations against the U.S. dollar in the past and may be subject to significant fluctuations in the future. Mexican Government policies affecting the value of the peso or preventing us from exchanging pesos into U.S. dollars could prevent us from paying our foreign currency obligations.
Most of our debt is denominated in U.S. dollars. In the future, we may incur additional indebtedness denominated in U.S. dollars or other currencies. Declines in the value of the peso relative to the U.S. dollar or other currencies may increase our interest costs in pesos and result in foreign exchange losses to the extent that we have not hedged our exposure with derivative financial instruments, which we refer to as DFIs.
For information on historical peso/U.S. dollar exchange rates, see “—Key Information—Exchange Rates” in this Item 3.
Political conditions in Mexico could materially and adversely affect Mexican economic policy and, in turn, our operations.
Political events in Mexico may significantly affect Mexican economic policy and, consequently, our operations. On December 1, 2012, Enrique Peña Nieto, a member of thePartido Revolucionario Institucional(Institutional Revolutionary Party, or PRI), formally assumed office for a six-year term as the President of Mexico. As of the date of this report, no political party holds a simple majority in either house of the Mexican Congress.
Mexico has experienced a period of increasing criminal violence and such activities could affect our operations.
Recently, Mexico has experienced a period of increasing criminal violence, primarily due to the activities of drug cartels and related criminal organizations. In response, the Mexican Government has implemented various security measures and has strengthened its military and police forces. Despite these efforts, drug-related crime continues to exist in Mexico. These activities, their possible escalation and the violence associated with them, in an extreme case, may have a negative impact on our financial condition and results of operations.
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.
Each of Petróleos Mexicanos and the subsidiary entities is a decentralized public entity of the Mexican Government, and therefore the Mexican Government controls us, as well as, as of the date of this report, our
annual budget, which is approved by the Cámara de Diputados (Chamber of Deputies). The Energy Reform Decree provides that by December 2015, Petróleos Mexicanos will be converted from a decentralized public entity to a productive state-owned company. Moreover, the proposed secondary legislation implementing the Energy Reform Decree provides us with, among other things, additional technical, managerial and budgetary autonomy designed to increase our production and allow us to compete effectively with other oil and gas companies that enter the Mexican energy sector. See “Item 4—Information on the Company—History and Development—Energy Reform.” Notwithstanding this increased autonomy and our conversion to a productive state-owned company, Petróleos Mexicanos will continue to remain under the Mexican Government’s control, as the Mexican Government has (and, following the implementation of the Energy Reform Decree and related proposed secondary legislation, will continue to have, albeit to a lesser extent) the power to intervene directly or indirectly in our commercial and operational affairs. Intervention by the Mexican Government could adversely affect our ability to make payments under any securities issued by us. Although Petróleos Mexicanos is (and following its conversion to a productive state-owned company will remain) under the Mexican Government’s control, its financing obligations do not constitute obligations of and are not guaranteed by the Mexican Government.
The Mexican Government’s agreements with international creditors may affect our external debt obligations. In certain past debt restructurings of the Mexican Government, Petróleos Mexicanos’ external indebtedness was treated on the same terms as the debt of the Mexican Government and other public sector entities. In addition, Mexico has entered into agreements with official bilateral creditors to reschedule public sector external debt. Mexico has not requested restructuring of bonds or debt owed to multilateral agencies.
The Energy Reform Decree contemplates the transfer of certain of Pemex-Gas and Basic Petrochemicals’ assets to another decentralized public entity of the Mexican Government that will be created in the future. The Mexican Government has the power, in connection with the implementation of the secondary legislation relating to the Energy Reform Decree or if the Mexican Constitution and federal law were further amended, to reorganize us, including a transfer of all or a portion of Petróleos Mexicanos and the subsidiary entities or their assets to an entity not controlled by the Mexican Government. The reorganization and transfer of assets contemplated by the Energy Reform Decree or any other reorganization or transfer that the Mexican Government may effect, could adversely affect our production, cause a disruption in our workforce and our operations and cause us to default on certain obligations. See “—Considerations Related to Mexico” above in this Item 3.
Petróleos Mexicanos and the subsidiary entities pay special taxes and duties to the Mexican Government, which may limit our capacity to expand our investment program.
We pay a substantial amount of taxes and duties to the Mexican Government, particularly on the revenues of Pemex-Exploration and Production, which may limit our ability to make capital investments. In 2013, approximately 53.8% of our sales revenues was used to pay taxes and duties to the Mexican Government. These special taxes and duties constitute a substantial portion of the Mexican Government’s revenues. For further information, see “Item 4—Information on the Company—Taxes and Duties” and “Item 5—Operating and Financial Review and Prospects—IEPS Tax, Hydrocarbon Duties and Other Taxes.” The Energy Reform Decree contemplates that the secondary legislation implementing it will include a new fiscal regime applicable to us. See “—Considerations Related to Mexico—The effects of the Energy Reform Decree and its implementation are uncertain but likely to be material” above in this Item 3.
The Mexican Government has imposed price controls in the domestic market on our products.
The Mexican Government has from time to time imposed price controls on the sales of natural gas, liquefied petroleum gas (LPG), gasoline, diesel, gas oil intended for domestic use, fuel oil and other products. As a result of these price controls, we have not been able to pass on all of the increases in the prices of our product purchases to our customers in the domestic market. We do not control the Mexican Government’s domestic policies and the Mexican Government could impose additional price controls on the domestic market in the future. The imposition of such price controls would adversely affect our results of operations. For more information, see
“Item 4—Information on the Company—Business Overview—Refining—Pricing Decrees” and “Item 4—Information on the Company—Business Overview—Gas and Basic Petrochemicals—Pricing Decrees.”
The Mexican nation, not us, owns the hydrocarbon reserves located in the subsoil of Mexico and our right to continue to exploit these reserves is subject to the approval of the Ministry of Energy.
The Mexican Constitution provides that the Mexican nation, not us, owns all petroleum and other hydrocarbon reserves located in the subsoil of Mexico.
Following the adoption of the Energy Reform Decree, Article 27 of the Mexican Constitution provides that the Mexican Government will carry out exploration and extraction activities through agreements with private sector companies and through assignments to and agreements with us. Once the secondary legislation related to the Energy Reform Decree is fully implemented, we and other oil and gas companies will have the right to exploit the petroleum and other hydrocarbon reserves located in the subsoil of Mexico, subject to assignment of these rights by the Ministry of Energy and entry into agreements pursuant to a competitive bidding process.
On March 21, 2014, as part of Round Zero, we submitted to the Ministry of Energy a request that we be assigned the right to continue to explore and develop areas that together contain 96% of Mexico’s estimated proved reserves of crude oil and natural gas as of December 31, 2013. The transitional articles of the Energy Reform Decree provide that the Ministry of Energy will take the following factors into consideration when determining whether to grant us an assignment:
The Ministry of Energy has a deadline of September 17, 2014 to respond to our request. The Ministry of Energy may not approve the assignment of certain of the proved oil and gas reserves we requested.
Access to crude oil and natural gas reserves is essential to an oil and gas company’s sustained production and generation of income, and our ability to generate income would be materially and adversely affected if we do not receive a significant percentage of the proved oil and gas reserves that we have requested pursuant to Round Zero or if the Mexican Government were to restrict or prevent us from exploiting any crude oil and natural gas reserves that it assigns to us. For more information, see “Item 4—Information on the Company—History and Development—Energy Reform—Round Zero.”
Information on Mexico’s hydrocarbon reserves in this report is based on estimates, which are uncertain and subject to revisions.
The information on oil, gas and other reserves set forth in this report is based on estimates. Reserves valuation is a subjective process of estimating underground accumulations of crude oil and natural gas that cannot be measured in an exact manner; the accuracy of any reserves estimate depends on the quality and reliability of available data, engineering and geological interpretation and subjective judgment. Additionally, estimates may be revised based on subsequent results of drilling, testing and production. These estimates are also subject to certain adjustments based on changes in variables, including crude oil prices. Therefore, proved reserves estimates may differ materially from the ultimately recoverable quantities of crude oil and natural gas. See “—Risk Factors Related to Our Operations—Crude oil and natural gas prices are volatile and low crude oil and natural gas prices adversely affect our income and cash flows and the amount of Mexico’s hydrocarbon reserves that we have the right to extract and sell.” Pemex-Exploration and Production revises its estimates of Mexico’s hydrocarbon reserves that it is entitled to extract and sell annually, which may result in material
revisions to our estimates of Mexico’s hydrocarbon reserves it is entitled to extract and sell. Our ability to maintain our long-term growth objectives for oil production depends on our ability to successfully develop our reserves, and failure to do so could prevent us from achieving our long-term goals for growth in production.
We must make significant capital expenditures to maintain our current production levels, and to maintain, as well as increase, any proved hydrocarbon reserves that may be assigned to us pursuant to Round Zero. Mexican Government budget cuts, reductions in our income and inability to obtain financing may limit our ability to make capital investments.
Our ability to maintain, as well as increase, our oil production levels is highly dependent upon our ability to successfully develop existing hydrocarbon reserves and, in the long term, upon our ability to obtain the right to develop additional reserves.
We continually invest capital to enhance our hydrocarbon recovery ratio and improve the reliability and productivity of our infrastructure. Despite these investments, the replacement rate for proved hydrocarbon reserves decreased to 67.8% in 2013, representing a significant decline in proved hydrocarbon reserves. Pemex-Exploration and Production’s crude oil production decreased by 1.0% from 2010 to 2011, by 0.2% from 2011 to 2012 and by 1.0% from 2012 to 2013, primarily as a result of the decline of production in the Cantarell and Delta del Grijalva projects.
The development of the reserves that are assigned to us pursuant to Round Zero, particularly any reserves in the deep waters of the Gulf of Mexico and in shale oil and gas fields in the Burgos basin, will demand significant capital investments and will pose significant operational challenges. We cannot guarantee that we will have or will be able to obtain, in the time frame that we expect, sufficient resources necessary to exploit the reserves that the Mexican Government assigns to us as part of Round Zero, or that it may grant to us in the future. In addition, increased competition in the oil and gas sector in Mexico may increase the costs of obtaining additional acreage in bidding rounds for the rights to new reserves.
Our ability to make capital expenditures is limited by the substantial taxes and duties that we pay to the Mexican Government and cyclical decreases in our revenues primarily related to lower oil prices. Budget cuts imposed by the Mexican Government and the availability of financing may limit our ability to make capital investments that are necessary to maintain current production levels and increase the proved hydrocarbon reserves we are entitled to exploit. For more information, see “Item 4—Information on the Company—History and Development—Capital Expenditures and Investments” and “—Energy Reform.”
Increased competition in the Mexican energy sector may have a negative impact on our results of operations and financial conditions.
Once the secondary legislation related to the Energy Reform Decree is fully implemented, we and other oil and gas companies will have the right to carry out certain activities related to the energy sector in Mexico, including exploration and extraction activities. The Mexican Government will carry out exploration and extraction activities through agreements with private sector companies and through allocations to or agreements with us. Any oil and gas fields that we do not request or are not assigned to us pursuant to Round Zero will be subject to a competitive bidding process open to participation by private sector companies in which we will not have a preferential right. We will also likely face competition for the right to develop new oil and gas fields in Mexico, as well as in connection with certain refining, transportation and processing activities. For more information, see “Item 4—Information on the Company—History and Development—Energy Reform.” If we are unable to compete successfully with private sector companies in the energy sector in Mexico, our results of operations and financial condition may be adversely affected.
We may claim some immunities under the Foreign Sovereign Immunities Act and Mexican law, and your ability to sue or recover may be limited.
Petróleos Mexicanos and the subsidiary entities are decentralized public entities of the Mexican Government. Accordingly, you may not be able to obtain a judgment in a U.S. court against us unless the U.S.
court determines that we are not entitled to sovereign immunity with respect to that action. In addition, Mexican law does not allow attachment prior to judgment or attachment in aid of execution upon a judgment by Mexican courts upon the assets of Petróleos Mexicanos or the subsidiary entities. As a result, your ability to enforce judgments against us in the courts of Mexico may be limited. We also do not know whether Mexican courts would enforce judgments of U.S. courts based on the civil liability provisions of the U.S. federal securities laws. Therefore, even if you were able to obtain a U.S. judgment against us, you might not be able to obtain a judgment in Mexico that is based on that U.S. judgment. Moreover, you may not be able to enforce a judgment against our property in the United States except under the limited circumstances specified in the Foreign Sovereign Immunities Act of 1976, as amended. Finally, if you were to bring an action in Mexico seeking to enforce our obligations under any of our securities, satisfaction of those obligations may be made in pesos, pursuant to the laws of Mexico.
Our directors and officers, as well as some of the experts named in this Form 20-F, reside outside the United States. Substantially all of our assets and those of most of our directors, officers and experts are located outside the United States. As a result, you may not be able to effect service of process on our directors or officers or those experts within the United States.
Risk Factors Related to Our Operations
Crude oil and natural gas prices are volatile and low crude oil and natural gas prices adversely affect our income and cash flows and the amount of Mexico’s hydrocarbon reserves.reserves that we have the right to extract and sell.
International crude oil and natural gas prices are subject to global supply and demand and fluctuate due to many factors beyond our control. These factors include competition within the oil and natural gas industry, the prices and availability of alternative sources of energy, international economic trends, exchange rate fluctuations, expectations of inflation, domestic and foreign laws and government regulations, or international laws, political and other events in major oil and natural gas producing and consuming nations and actions taken by Organization of the Petroleum Exporting Countries (OPEC) members and other oil exporting countries, trading activity in oil and natural gas and transactions in DFIsderivative financial instruments (which we refer to as DFIs) related to oil and gas.
When international crude oil, andpetroleum product and/or natural gas prices are low, we generally earn less export sales revenue and, therefore, generate lower cash flows and earn less income before taxes and duties because our costs remain roughly constant. Conversely, when crude oil, petroleum product and natural gas prices are high, we earn more export sales revenue and our income before taxes and duties increases. Crude oil export prices, which had generally traded above U.S. $75.00 per barrel since October 2009 and traded above U.S. $100.00 per barrel as of July 30, 2014, began to fall in August 2014. After a gradual decline that resulted in per barrel prices falling to U.S. $91.16 at September 30, 2014, this decline sharply accelerated in October 2014 and prices fell to U.S. $53.27 per barrel at the end of 2014, with a weighted average price for the year of 2014 of U.S. $86.00 per barrel. During 2015, the weighted average Mexican crude oil export price was approximately U.S. $44.17 per barrel and fell to U.S. $26.54 per barrel by the end of December 2015. In 2016, the weighted average Mexican crude oil export price was approximately U.S. $35.63 per barrel, falling to U.S. $18.90 per barrel on January 20, 2016, the lowest in twelve years, before rebounding to U.S. $46.53 per barrel on December 28, 2016. This decline in crude oil prices had a direct effect on our results of operations and financial condition for the year ended December 31, 2016. During the first three months of 2017, the weighted average Mexican crude oil price was U.S. $44.11 per barrel, an increase of U.S. $8.48 per barrel as compared to the 2016 weighted average Mexican crude oil export price. As of April 27, 2017, the weighted average Mexican crude oil export price was U.S. $42.25 per barrel, a result, future fluctuationsslight decrease from the first three months of 2017, but an increase of U.S. $6.62 per barrel as compared to the 2016 weighted average Mexican crude oil export price. Future declines in international crude oil and natural gas prices will have a direct effectsimilar negative impact on our results of operations and financial condition, andcondition. These fluctuations may also affect estimates of the amount of Mexico’s hydrocarbon reserves estimates.that we have the right to extract and sell. See “—Risk Factors Related to Ourour Relationship with the Mexican Government—Information on Mexico’s hydrocarbon reserves in this report is based on estimates, which are uncertain and subject to revisions” above in this Item 3below and “Item 11—Quantitative and Qualitative Disclosures about About Market Risk—Changes in Exposure to Main Risks—Market Risk—Hydrocarbon Price Risk.”
We have a substantial amount of indebtedness and other liabilities and are exposed to liquidity constraints, which could make it difficult for us to obtain financing on favorable terms and could adversely affect our financial condition, results of operations and ability to repay our debt and, ultimately, our ability to operate as a going concern.
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. 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 and our working capital has decreased. The sharp decline in oil prices that began in late 2014 has had a negative impact on our ability to generate positive cash flows, which, together with our continued heavy tax burden and increased competition from the private sector, has further exacerbated our ability to fund our capital expenditures and other expenses from cash flow from operations. Therefore, in order to develop our hydrocarbon reserves and amortize scheduled debt maturities, we will need to raise significant amounts of financing from a broad range of funding sources.
As of December 31, 2016, our total indebtedness, including accrued interest, was approximately U.S. $96.0 billion (Ps. 1,983.1 billion), in nominal terms, which represents a 10.6% increase (a 32.8% increase in peso terms) compared to our total indebtedness, including accrued interest, of approximately U.S. $86.8 billion (Ps. 1,493.4 billion) as of December 31, 2015. 23.5% of our existing debt as of December 31, 2016, or U.S. $22.5 billion, is scheduled to mature in the next three years. As of December 31, 2016, we had negative working capital of U.S. $3.4 billion. Our level of debt may increase further in the short or medium term and may have an adverse effect on our financial condition, results of operations and liquidity position. To service our debt and to raise funds for our capital expenditures, we have relied and may continue to rely on a combination of cash flows provided by our operations, the divestment ofnon-strategic assets, drawdowns under our available credit facilities and the incurrence of additional indebtedness. See “Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Overview—Changes to Our Business Plan.”
Certain rating agencies have expressed concerns regarding: (1) our heavy tax burden, (2) the total amount of our debt; (3) the significant increase in our indebtedness over the last several years; (4) our negative free cash flow during 2016, primarily resulting from our significant capital investment projects and the low price of oil; (5) the natural decline of certain of our oil fields and lower quality of crude oil; (6) our substantial unfunded reserve for retirement pensions and seniority premiums, which was equal to U.S. $59.1 billion as of December 31, 2016; and (7) the resilience of our operating expenses notwithstanding the sharp decline in oil prices that began in late 2014. On January 29, 2016, Standard & Poor’s (S&P) rating agency downgraded ourstand-alone credit profile from “BB+” to “BB,” and on August 23, 2016 downgraded our credit outlook from stable to negative. On December 23, 2016, S&P affirmed our global foreign currency rating of “BBB+.” On March 31, 2016, Moody’s Investors Service announced the revision of our global foreign currency and local currency credit ratings from “Baa1” to “Baa3” and changed the outlook for our credit ratings to negative. On December 9, 2016, Fitch Ratings affirmed our “BBB+” global credit rating, but revised the outlook for our credit ratings from stable to negative.
Any further lowering of our credit ratings may have adverse consequences on our ability to access the financial markets and/or our cost of financing. If we were unable to obtain financing on favorable terms, this could hamper our ability to obtain further financing, invest in projects financed through debt and meet our principal and interest payment 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 required to maintain our current production levels and to maintain, and increase, the proved hydrocarbon reserves assigned to us by the Mexican Government, which may adversely affect our financial condition and results of operations. See “—Risk Factors Related to our Relationship with the Mexican Government—We must make significant capital expenditures to maintain our current production levels, and to maintain, as well as increase, the proved hydrocarbon reserves assigned to us by the Mexican Government. Reductions in our income, adjustments to our capital expenditures budget and our inability to obtain financing may limit our ability to make capital investments” below.
If such constraints occur at a time when our cash flow from operations is less than the resources necessary to fund our capital expenditures or 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. A reduction in our capital expenditure program could adversely affect our financial condition and results of operations. Additionally, such measures may not be sufficient to permit us to meet our obligations.
Our consolidated financial statements have been prepared under the assumption that we will continue as a going concern. However, our independent auditors have stated in their most recent report that there is important uncertainty and significant doubt concerning our ability to continue operating as a result of recurring net losses, negative working capital, negative equity and negative cash flows from operating activities for the year ended December 31, 2016. Our consolidated financial statements do not include any adjustments that might result from the outcome of that uncertainty. If the actions we are taking to improve our financial condition, which are described in detail under “Item 5—Operating and Financial Review and Prospects—Liquidity and Capital
Resources—Overview—Changes to Our Business Plan,” are not successful, we may not be able to continue operating as a going concern.
We are an integrated oil and gas company and are exposed to production, equipment and transportation risks, blockades to our facilities and criminal acts and deliberate acts of terror.
We are subject to several risks that are common among oil and gas companies. These risks include production risks (fluctuations in production due to operational hazards, natural disasters or weather, accidents, etc.), equipment risks (relating to the adequacy and condition of our facilities and equipment) and transportation risks (relating to the condition and vulnerability of pipelines and other modes of transportation). More specifically, our business is subject to the risks of explosions in pipelines, refineries, plants, drilling wells and other facilities, oil spills, hurricanes in the Gulf of Mexico and other natural or geological disasters and accidents, fires and mechanical failures. Criminal attempts to divert our crude oil, natural gas or refined products from our pipeline network and facilities for illegal sale have resulted in explosions, property and environmental damage, injuries and loss of life.
Our facilities are also subject to the risk of sabotage, terrorism, blockades and cyber attacks. In July 2007, twocyber-attacks. For example, widespread demonstrations, including blockades, as a result of the Mexican Government’s recent increase in fuel prices, have prevented us from accessing certain of our pipelines were attacked. In September 2007, six different sites were attackedrefined products supply terminals and 12 of our pipelines were affected.caused critical gasoline shortages at retail service stations in at least three Mexican states. The occurrence of any of these events or of accidents connected withincidents related to the production, processing and transportingtransportation of oil and oilgas products could result in personal injuries, loss of life, environmental damage with resultingfrom the subsequent containment,clean-up and repair expenses, equipment damage and damage to our facilities. A shutdown of the affected facilities could disrupt our production and increase our production costs. As of the date of this report, there have been no similar occurrences since 2007. Although we have established an information security program, which includes cybersecurity systems and procedures to protect our information technology, and have not yet suffered a cyber attack,cyber-attack, if the integrity of our information technology were ever compromised due to a cyber attack,cyber-attack, or due to the negligence or misconduct of our employees, our business operations could be disrupted and our proprietary information could be lost or stolen. As a result of these risks, we could face, among other things, regulatory action, legal liability, damage to our reputation, a significant reduction in revenues, an increase in costs, a shutdown of operations, or loss of our investments in affected areas.
We purchase comprehensive insurance policies covering most of these risks; however, these policies may not cover all liabilities, and insurance may not be available for some of the consequential risks. There can be no assurance that accidents, sabotage or acts of terror will not occur in the future, that insurance will adequately cover the entire scope or extent of our losses or that we may not be found directly liable in connection with claims arising from theseaccidents or other similar events. See “Item 4—Information on the Company—Business Overview—PEMEX Corporate Matters—Insurance.”
We have aDevelopments in the oil and gas industry and other factors may result in substantialwrite-downs of the carrying amount of liabilities thatcertain of our assets, which could adversely affect our operating results and financial condition.
We evaluate on an annual basis, or more frequently where the circumstances require, the carrying amount of our assets for possible impairment. Our impairment tests are performed by a comparison of the carrying amount of an individual asset or acash-generating unit with its recoverable amount. Whenever the recoverable amount of an individual asset orcash-generating unit is less than its carrying amount, an impairment loss is recognized to reduce the carrying amount to the recoverable amount.
Changes in the economic, regulatory, business or political environment in Mexico or other markets where we operate, such as the gradual liberalization of fuel prices pursuant to energy reform and the significant decline in international crude oil and gas prices, among other factors, may result in the recognition of impairment charges in certain of our assets. Due to the decline in oil prices, we have performed impairment tests of ournon-financial assets (other than inventories and deferred taxes) at the end of each quarter. As of December 31, 2015, we recognized an impairment charge of Ps. 477,945 million. As of December 31, 2016, we recognized a net reversal of impairment in the amount of Ps. 331,314 million. See Note 12(d) to our consolidated financial
statements for further information about the impairment of certain of our assets. Future developments in the economic environment, in the oil and gas industry and other factors could result in further substantial impairment charges, adversely affecting our operating results and financial condition.
Increased competition in the energy sector due to the current legal framework in Mexico could adversely affect our business and financial performance.
The Political Constitution of the United Mexican States (the “Mexican Constitution”) and theLey de Hidrocarburos (Hydrocarbons Law) allows other oil and gas companies, in addition to us, to carry out certain activities related to the energy sector in Mexico, including exploration and extraction activities, and the import and sale of gasoline. As a result, we face competition for the right to explore and develop new oil and gas reserves in Mexico. We will also likely face competition in connection with certain refining, transportation and processing activities. In addition, increased competition could make it difficult for us to hire and retain skilled personnel. For more information, see “Item 4—Information on the Company—History and Development—Energy Reform.” If we are unable to compete successfully with other oil and gas companies in the energy sector in Mexico, our results of operations and financial condition may be adversely affected.
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.
We are subject to Mexican and internationalanti-corruption,anti-bribery andanti-money laundering laws. See “Item 4—Information on the Company—General Regulatory Framework.” Although we maintain policies and processes intended to comply with these laws, including the review of our internal control over financial reporting, we are subject to the risk that our 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 or business advantage to our detriment. We have in place a number of systems for identifying, monitoring and mitigating these risks, but our systems may not be effective and we cannot ensure that these compliance policies and processes will prevent intentional, reckless or negligent acts committed by our officers or employees.
If we fail to comply with any applicableanti-corruption,anti-bribery oranti-money laundering laws, we and our officers and employees may be subject to criminal, administrative or civil penalties and other remedial measures, which could have material adverse effects on our business, financial condition and results of operations.
We have Any investigation of potential violations ofanti-corruption,anti-bribery oranti-money laundering laws by governmental authorities in Mexico or other jurisdictions could result in an inability to prepare our consolidated financial statements in a substantial amount of debt. As of December 31, 2013,timely manner. This could adversely impact our total indebtedness, excluding accrued interest, was approximately U.S. $63.6 billion, in nominal terms, which is a 6.4% increase as compared to our total indebtedness, excluding accrued interest, of approximately U.S. $59.8 billion at December 31, 2012. Our level of debt may increase further in the near or medium term and may have an adverse effect on our financial condition and results of operations.
To service our debt, we have relied and may continue to rely on a combination of cash flows provided by operations, drawdowns under our available credit facilities and the incurrence of additional indebtedness. Certain rating agencies have expressed concerns regarding the total amount of our debt, our increase in indebtedness over the last several years and our substantial unfunded reserve for retirement pensions and seniority premiums, which as of December 31, 2013 was equal to approximately U.S. $85.6 billion. Due to our heavy tax burden, we have resorted to financings to fund our capital investment projects. Any lowering of our credit ratings may have adverse consequences on ourreputation, ability to access the financial markets and/or our cost of financing. If we were unable to obtain financing on favorable terms, this could hamper ourand ability to obtain further financing as well as hamper investmentcontracts, assignments, permits and other government authorizations necessary to participate in projects financed through debt. As a result, we may not be able to make the capital expenditures needed to maintain our current production levels and to maintain, as well as increase, Mexico’s proved hydrocarbon reserves,industry, which, may adversely affectin turn, could have adverse effects on our financial condition andbusiness, results of operations. See “—Risk Factors Related to Our Relationship with the Mexican Government—We must make significant capital expenditures to maintain our current production levels,operations and to maintain, as well as increase, any proved hydrocarbon reserves that may be assigned to us pursuant to Round Zero. Mexican Government budget cuts, reductions in our income and inability to obtain financing may limit our ability to make capital investments.”financial condition.
Our compliance with environmental regulations in Mexico could result in material adverse effects on our results of operations.
A wide range of general andindustry-specific Mexican federal and state environmental laws and regulations apply to our operations; these laws and regulations are often difficult and costly to comply with and carry substantial penalties fornon-compliance. This regulatory burden increases our costs because it requires us to make significant capital expenditures and limits our ability to extract hydrocarbons, resulting in lower revenues. For an estimate of our accrued environmental liabilities, see “Item 4—Information on the Company—Environmental Regulation—Environmental Liabilities.” Growing international concern over greenhouse gas emissions and climate change could result in new laws and regulations that could adversely affect our results of
operations and financial condition. International agreements, including the Paris Agreement approved by the Mexican Government, contemplate coordinated efforts to combat climate change. We may become subject to market changes, including carbon taxes, efficiency standards,cap-and-trade and emission allowances and credits. These measures could increase our operating and maintenance costs, increase the price of our hydrocarbon products and possibly shift consumer demand tolower-carbon sources. See “Item 4—Environmental Regulation—Climate Change” for more information on the Mexican Government’s current legal and regulatory framework for combatting climate change.
Risk Factors Related to Mexico
Economic conditions and government policies in Mexico and elsewhere may have a material impact on our operations.
A deterioration in Mexico’s economic condition, social instability, political unrest or other adverse social developments in Mexico could adversely affect our business and financial condition. Those events could also lead to increased volatility in the foreign exchange and financial markets, thereby affecting our ability to obtain new financing and service our debt. Additionally, the Mexican Government announced budget cuts in November 2015, February 2016, and September 2016 in response to declines in international crude oil prices, and it may cut spending in the future. See “—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” below. These cuts could adversely affect the Mexican economy and, consequently, our business, financial condition, operating results and prospects.
In the past, Mexico has experienced several periods of slow or negative economic growth, high inflation, high interest rates, currency devaluation and other economic problems. These problems may worsen or reemerge, as applicable, in the future and could adversely affect our business and ability to service our debt. A worsening of international financial or economic conditions, such as a slowdown in growth or recessionary conditions in Mexico’s trading partners, including the United States, or the emergence of a new financial crisis, could have adverse effects on the Mexican economy, our financial condition and our ability to service our debt.
Changes in Mexico’s exchange control laws may hamper our ability to service our foreign currency debt.
The Mexican Government does not currently restrict the ability of Mexican companies or individuals to convert pesos into other currencies. However, we cannot provide assurances that the Mexican Government will maintain its current policies with regard to the peso. In the future, the Mexican Government could impose a restrictive exchange control policy, as it has done in the past. Mexican Government policies preventing us from exchanging pesos into U.S. dollars could hamper our ability to service our foreign currency obligations, including our debt, the majority of which is denominated in currencies other than pesos.
Political conditions in Mexico could materially and adversely affect Mexican economic policy and, in turn, our operations.
Political events in Mexico may significantly affect Mexican economic policy and, consequently, our operations. Enrique Peña Nieto, a member of thePartido Revolucionario Institucional(Institutional Revolutionary Party or PRI), was elected President of Mexico and took office on December 1, 2012. As of the date of this annual report, no political party holds a simple majority in either house of the Mexican Congress.
Presidential and federal congressional elections in Mexico will be held in July 2018. The Mexican presidential election will result in a change in administration, as presidential reelection is not permitted in Mexico. As a result, we cannot predict whether changes in Mexican governmental policy will result from the change in administration. Political events in Mexico could adversely affect economic conditions and/or the oil and gas industry and, by extension, our results of operations and financial position.
Mexico has experienced a period of increasing criminal activity, which could affect our operations.
In recent years, Mexico has experienced a period of increasing criminal activity, primarily due to the activities of drug cartels and related criminal organizations. In addition, the development of the illicit market in fuels in Mexico has led to increases in theft and illegal trade in the fuels that we produce. In response, the Mexican Government has implemented various security measures and has strengthened its military and police forces, and we have agreedalso established various strategic measures aimed at decreasing incidents of theft and other criminal activity directed at our facilities and products. See “Item 8—Financial Information—Legal Proceedings—Actions Against the Illicit Market in Fuels.” Despite these efforts, criminal activity continues to exist in Mexico, some of which may target our facilities and products. These activities, their possible escalation and the violence associated with third partiesthem, in an extreme case, may have a negative impact on our financial condition and results of operations.
Economic and political developments in the United States may adversely affect PEMEX.
Changes in economic, political and regulatory conditions in the United States or in U.S. laws and policies governing foreign trade and foreign relations could create uncertainty in the international markets and could have a negative impact on the Mexican economy. Economic conditions in Mexico are highly correlated with economic conditions in the United States due to the high degree of economic activity between the two countries generally, including the trade facilitated by the North American Free Trade Agreement (“NAFTA”). In addition, political developments in the United States, including changes in the administration and governmental policies, can also have an impact on the exchange rate between the U.S. dollar and the Mexican peso, economic conditions in Mexico and the global capital markets.
Following the U.S. elections in November 2016 and the change in the U.S. administration, there is uncertainty regarding future U.S. policies with respect to matters of importance to Mexico and its economy. In particular, the U.S. administration has raised the possibility ofre-negotiating, or withdrawing from, NAFTA and taking actions related to trade, tariffs, immigration and taxation that could affect Mexico.
Since 2003, exports of petrochemical products from Mexico to the United States have enjoyed azero-tariff rate under NAFTA and, subject to limited exceptions, exports of crude oil and petroleum products have also been free or exempt from tariffs. During 2016, our export sales to the United States amounted to Ps. 138.2 billion, representing 12.8% of total sales and 35.0% of export sales for the year. Any increase of import tariffs could make investmentsit economically unsustainable for U.S. companies to reduceimport our carbon dioxide emissions.petrochemical, crude oil and petroleum products if they are unable to transfer those additional costs onto consumers, which would increase our expenses and decrease our revenues, even if domestic and international prices for our products remain constant. Higher tariffs on products that we export to the United States could also require us to renegotiate our contracts or lose business resulting in a material adverse impact on our business and results of operations.
Because the Mexican economy is heavily influenced by the U.S. economy, there-negotiation, or even termination, of NAFTA and/or other U.S. government policies that may be adopted by the U.S. administration may adversely affect economic conditions in Mexico. These developments could in turn have an adverse effect on our financial condition, results of operations and ability to repay our debt.
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.
We are controlled by the Mexican Government and our annual budget may be adjusted by the Mexican Government in certain respects. Pursuant to the Petróleos Mexicanos Law, Petróleos Mexicanos was transformed from a decentralized public entity to a productivestate-owned company on October 7, 2014. The Petróleos Mexicanos Law establishes a special regime governing, among other things, our budget, debt levels,
administrative liabilities, acquisitions, leases, services and public works. This special regime provides Petróleos Mexicanos with additional technical and managerial autonomy and, subject to certain restrictions, with additional autonomy with respect to our budget. Notwithstanding this increased autonomy, the Mexican Government still controls us and has the power to adjust our financial balance goal, which represents our targeted net cash flow for the fiscal year based on our projected revenues and expenses, and our annual wage and salary expenditures, subject to the approval of theCámara de Diputados (Chamber of Deputies).
The adjustments to our annual budget mentioned above may compromise our ability to develop the reserves assigned to us by the Mexican Government and to successfully compete with other oil and gas companies that enter the Mexican energy sector. See “Item 4—Information on the Company—Environmental Regulation—Global Climate ChangeHistory and Carbon Dioxide Emissions Reduction.Development—Capital Expenditures” for more information about our February 2016 budget adjustment and “—General Regulatory Framework” for more information about the Mexican Government’s authority with respect to our budget. In addition, the Mexican Government’s control over us could adversely affect our ability to make payments under any securities issued by Petróleos Mexicanos. Although Petróleos Mexicanos is wholly owned by the Mexican Government, our financing obligations do not constitute obligations of and are not guaranteed by the Mexican Government.
The Mexican Government’s agreements with international creditors may affect our external debt obligations. In certain past debt restructurings of the Mexican Government, Petróleos Mexicanos’ external indebtedness was treated on the same terms as the debt of the Mexican Government and other public sector entities, and it may be treated on similar terms in any future debt restructuring. In addition, Mexico has entered into agreements with official bilateral creditors to reschedule public sector external debt. Mexico has not requested restructuring of bonds or debt owed to multilateral agencies.
The Mexican Government has the power, if the Mexican Constitution and federal law were further amended, to further reorganize our corporate structure, including a transfer of all or a portion of our assets to an entity not controlled, directly or indirectly, by the Mexican Government. See “—Risk Factors Related to Mexico” above.
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.
We are required to make significant payments to the Mexican Government, including in the form of taxes and duties, which may limit our ability to make capital investments. In 2016, approximately 32.0% of our sales revenues was used for payments to the Mexican Government in the form of taxes and duties, which constituted a substantial portion of the Mexican Government’s revenues.
The Secondary Legislation includes changes to the fiscal regime applicable to us, particularly with respect to the exploration and extraction activities that we carry out in Mexico. As of 2016, we have the obligation, subject to the conditions set forth in the Petróleos Mexicanos Law, to pay a state dividend to the Mexican Government. We were not required to pay a state dividend in 2016 and are not required to do so in 2017. See “Item 8—Financial Information—Dividends” for more information. Although the changes to the fiscal regime applicable to us are designed in part to reduce the Mexican Government’s reliance on payments made by us, we cannot provide assurances that we will not be required to continue to pay a large proportion of our sales revenue to the Mexican Government. See “Item 4—Information on the Company—Taxes, Duties and Other Payments to the Mexican Government—Fiscal Regime.” In addition, the Mexican Government may change the applicable rules in the future.
The Mexican Government has historically imposed price controls in the domestic market on our products.
The Mexican Government has from time to time imposed price controls on the sales of natural gas, liquefied petroleum gas, gasoline, diesel, gas oil intended for domestic use, fuel oil and other products. As a result of these
price controls, we have not been able to pass on all of the increases in the prices of our product purchases to our customers in the domestic market when the peso depreciates in relation to the U.S. dollar. A depreciation of the peso increases our cost of imported oil and petroleum products, without a corresponding increase in our revenues unless we are able to increase the price at which we sell products in Mexico. In accordance with theLey de Ingresos de la Federación para el Ejerecicio Fiscal de 2017 (2017 Federal Revenue Law), the Mexican Government 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 maximum gasoline and diesel prices to be applied in each of the regions of Mexico where prices are not determined based on market conditions. For more information, see “Item 4—Information on the Company—Business Overview—Industrial Transformation.”
We do not control the Mexican Government’s domestic policies and the Mexican Government could impose additional price controls on the domestic market in the future. The imposition of such price controls would adversely affect our results of operations. For more information, see “Item 4—Information on the Company—Business Overview—Refining—Pricing” and “Item 4—Information on the Company—Business Overview—Gas and Basic Petrochemicals—Pricing.”
The Mexican nation, not us, owns the hydrocarbon reserves located in the subsoil in Mexico and our right to continue to extract these reserves is subject to the approval of the Ministry of Energy.
The Mexican Constitution provides that the Mexican nation, not us, owns all petroleum and other hydrocarbon reserves located in the subsoil in Mexico.
Article 27 of the Mexican Constitution provides that the Mexican Government will carry out exploration and production activities through agreements with third parties and through assignments to and agreements with us. The Secondary Legislation allows us and other oil and gas companies to explore and extract the petroleum and other hydrocarbon reserves located in Mexico, subject to assignment of rights by the Ministry of Energy and entry into agreements pursuant to a competitive bidding process.
Access to crude oil and natural gas reserves is essential to an oil and gas company’s sustained production and generation of income, and our ability to generate income would be materially and adversely affected if the Mexican Government were to restrict or prevent us from exploring or extracting any of the crude oil and natural gas reserves that it has assigned to us or if we are unable to compete effectively with other oil and gas companies in future bidding rounds for additional exploration and production rights in Mexico. For more information, see “—We must make significant capital expenditures to maintain our current production levels, and to maintain, as well as increase, the proved hydrocarbon reserves assigned to us by the Mexican Government. Reductions in our income, adjustments to our capital expenditures budget and our inability to obtain financing may limit our ability to make capital investments” below.
Information on Mexico’s hydrocarbon reserves is based on estimates, which are uncertain and subject to revisions.
The information on oil, gas and other reserves set forth in this annual report is based on estimates. Reserves valuation is a subjective process of estimating underground accumulations of crude oil and natural gas that cannot be measured in an exact manner; the accuracy of any reserves estimate depends on the quality and reliability of available data, engineering and geological interpretation and subjective judgment. Additionally, estimates may be revised based on subsequent results of drilling, testing and production. These estimates are also subject to certain adjustments based on changes in variables, including crude oil prices. Therefore, proved reserves estimates may differ materially from the ultimately recoverable quantities of crude oil and natural gas. Downward revisions in our reserve estimates could lead to lower future production, which could have an adverse effect on our results of operations and financial condition. See “—Risk Factors Related to Our Operations—Crude oil and natural gas prices are volatile and low crude oil and natural gas prices adversely affect our income
and cash flows and the amount of hydrocarbon reserves that we have the right to extract and sell” above. We revise annually our estimates of hydrocarbon reserves that we are entitled to extract and sell, which may result in material revisions to these estimates. Our ability to maintain ourlong-term growth objectives for oil production depends on our ability to successfully develop our reserves, and failure to do so could prevent us from achieving ourlong-term goals for growth in production.
We must make significant capital expenditures to maintain our current production levels, and to maintain, as well as increase, the proved hydrocarbon reserves assigned to us by the Mexican Government. Reductions in our income, adjustments to our capital expenditures budget and our inability to obtain financing may limit our ability to make capital investments.
Because our ability to maintain, as well as increase, our oil production levels is highly dependent upon our ability to successfully develop existing hydrocarbon reserves and, in the long term, upon our ability to obtain the right to develop additional reserves, we continually invest capital to enhance our hydrocarbon recovery ratio and improve the reliability and productivity of our infrastructure. During 2016, our total proved reserves had a net increase of 40 million barrels of oil equivalent after accounting for discoveries, extensions, revisions, and delimitations. This amount, however, was less than production in 2016. Accordingly, our total proved reserves decreased by 11.1%, from 9,632 million barrels of crude oil equivalent as of December 31, 2015 to 8,562.8 million barrels of crude oil as of December 31, 2016. See “Item 4—Information on the Company—Business Overview—Exploration and Production—Reserves” for more information about the factors leading to this decline, including the results of Round Zero. Our crude oil production decreased by 1.0% from 2012 to 2013, by 3.7% from 2013 to 2014 and by 6.7% from 2014 to 2015 and by 5.0% from 2015 to 2016 primarily as a result of the decline of the Cantarell,Tsimín-Xux, Antonio J. Bermúdez, Chuc and Crudo Ligero projects.
Pursuant to energy reform in Mexico, the Mexican Government outlined a process, commonly referred to as Round Zero, for the determination of our initial allocation of rights to continue to carry out exploration and production activities in Mexico. On August 13, 2014, the Ministry of Energy granted us the right to continue to explore and develop areas that together contain 95.9% of Mexico’s estimated proved reserves of crude oil and natural gas. The development of the reserves that were assigned to us pursuant to Round Zero, particularly the reserves in the deep waters of the Gulf of Mexico and in shale oil and gas fields in the Burgos basin, will demand significant capital investments and will pose significant operational challenges. Our right to develop the reserves assigned to us through Round Zero is conditioned on our ability to develop such reserves in accordance with our development plans, which were based on our technical, financial and operational capabilities at the time. We cannot provide assurances that we will have or will be able to obtain, in the time frame that we expect, sufficient resources or the technical capacity necessary to explore and extract the reserves that the Mexican Government assigned to us as part of Round Zero, or that it may grant to us in the future. The decline in oil prices has forced us to make adjustments to our budget, including a significant reduction of our capital expenditures. Unless we are able to increase our capital expenditures, we may not be able to develop the reserves assigned to us in accordance with our development plans. We would lose the right to continue to extract these reserves if we fail to develop them in accordance with our development plans, which could adversely affect our operating results and financial condition. In addition, increased competition in the oil and gas sector in Mexico may increase the costs of obtaining additional acreage in bidding rounds for the rights to new reserves.
Our ability to make capital expenditures is limited by the substantial taxes and duties that we pay to the Mexican Government, the ability of the Mexican Government to adjust certain aspects of our annual budget, cyclical decreases in our revenues primarily related to lower oil prices and any constraints on our liquidity. The availability of financing may limit our ability to make capital investments that are necessary to maintain current production levels and increase the proved hydrocarbon reserves that we are entitled to extract. The energy reform has provided us with opportunities to enter into strategic alliances and partnerships, which may reduce our capital commitments and allow us to participate in projects for which we are more competitive. However, no assurance can be provided that these strategic alliances and partnerships will be successful or reduce our capital commitments. For more information, see “Item 4—Information on the Company—History and Development—
Capital Expenditures” and “—Energy Reform.” For more information on the liquidity constraints we are exposed to, see “—We have a substantial amount of indebtedness and other liabilities and are exposed to liquidity constraints, which could make it difficult for us to obtain financing on favorable terms and could adversely affect our financial condition, results of operations and ability to repay our debt and, ultimately, our ability to operate as a going concern” above.
We may claim some immunities under the Foreign Sovereign Immunities Act and Mexican law, and your ability to sue or recover may be limited.
We arepublic-sector entities of the Mexican Government. Accordingly, you may not be able to obtain a judgment in a U.S. court against us unless the U.S. court determines that we are not entitled to sovereign immunity with respect to that action. Under certain circumstances, Mexican law may limit your ability to enforce judgments against us in the courts of Mexico. We also do not know whether Mexican courts would enforce judgments of U.S. courts based on the civil liability provisions of the U.S. federal securities laws. Therefore, even if you were able to obtain a U.S. judgment against us, you might not be able to obtain a judgment in Mexico that is based on that U.S. judgment. Moreover, you may not be able to enforce a judgment against our property in the United States except under the limited circumstances specified in the Foreign Sovereign Immunities Act of 1976, as amended. Finally, if you were to bring an action in Mexico seeking to enforce our obligations under any securities issued by Petróleos Mexicanos, satisfaction of those obligations may be made in pesos, pursuant to the laws of Mexico.
Our directors and officers, as well as some of the experts named in this annual report, reside outside the United States. Substantially all of our assets and those of most of our directors, officers and experts are located outside the United States. As a result, investors may not be able to effect service of process on our directors or officers or those experts within the United States.
Item 4. | Information on the Company |
HISTORY AND DEVELOPMENT
We are the largest company in Mexico according to the June 2016 special edition ofExpansiónmagazine, and according to the November 18, 201321, 2016 issue ofPetroleum Intelligence Weekly,, we were the seventh largesteighthlargest crude oil producer and the eleventh largest oileighteenth largestoil and gas company in the world based on data from the year 2012. In 1938, President Lázaro Cárdenas del Río nationalized the foreign-owned oil companies which were then operating in Mexico, and the Mexican Congress established Petróleos Mexicanos by a decree effective on July 20, 1938. Since 1938, Mexican federal laws and regulations have entrusted Petróleos Mexicanos with a central role in the planning and management of Mexico’s petroleum industry. On July 17, 1992, the Mexican Congress created the subsidiary entities out of operations that had previously been directly managed by Petróleos Mexicanos. Petróleos Mexicanos and its four subsidiary entities, Pemex-Exploration and Production, Pemex-Refining, Pemex-Gas and Basic Petrochemicals andPemex-Petrochemicals, are decentralized public entities of the Mexican Government, and each is a legal entity empowered to own property and carry on business in its own name.2015.
Our executive offices are located at Avenida Marina Nacional No. 329, Colonia Petróleos Mexicanos,Verónica Anzures, Ciudad de México D.F. 11311,11300, México. Our telephone number is(52-55) 1944-2500.
As ofIn March 1938, President Lázaro Cárdenas del Río nationalized the date of this report,foreign-owned oil companies that were then operating in Mexico, and the activities ofMexican Congress established Petróleos Mexicanos and its subsidiary entities are regulated primarily by:
We anticipate (Decree that creates the regulatory regime applicable to the activities ofentity Petróleos Mexicanos and its subsidiary entities will be modified significantly pursuant to the changes contemplated by the Energy Reform Decree. See “—Information on the Company—History and Development—Energy Reform” below in this Item 4.
The Regulatory Law and the Petróleos Mexicanos Law grant Petróleos Mexicanos and certain of its subsidiary entities the right to:
The operating activities of Petróleos Mexicanos are allocated among the four subsidiary entities, each of which has the characteristics of a subsidiary of Petróleos Mexicanos. The principal business linesOfficial Gazette of the subsidiary entities are as follows:Federation and took effect on July 20, 1938.
Under the Petróleos Mexicanos Law, which replacedIn July 1992, theLey Orgánica de Petróleos Mexicanos y Organismos Subsidiarios (Organic Law of Petróleos Mexicanos and the Subsidiary Entities), took effect and, among other things, created Pemex-Exploration and Production, Pemex-Refining,Pemex-Gas and Basic Petrochemicals and Pemex-Petrochemicals as decentralized public entities of the Mexican Government with the legal authority to own property and conduct business in their own names. Each of the subsidiary entities were to continue to conduct business in accordance with their mandates under existing law untilhad the Presidentcharacteristics of Mexico issued a reorganization decree, based on a proposal by the Board of Directorssubsidiary of Petróleos Mexicanos. The Boardprincipal lines of Directorsbusiness of Petróleos Mexicanos submitted a proposalthose subsidiary entities were as follows:
In 1995, the Mexican Congress amended the Regulatory Law to allow private and social sector companies, which include labor-controlled organizations and industries, to participate, with the Mexican Government’s approval, in the storage, distribution and transportation of natural gas. Pursuant to the Regulatory Law, as amended, these types of companies may construct, own and operate pipelines, installations and equipment. Since 1997, the Mexican Government has required that we divest our existing natural gas distribution assets, retaining authority over the exploration, exploitation, production and first-hand sale of natural gas, as well as the transportation and storage inextricably linked with this type of exploitation and production. See “Item 4—Information on the Company—Business Overview—Gas and Basic Petrochemicals—Private Sector Participation in Natural Gas Distribution.”
The Regulatory Law and the Petróleos Mexicanos Law have allowed us to co-generate electric energy and to enter into agreements with theComisión Federal de Electricidad (Federal Electricity Commission) to sell our excess production to this entity. The funds and the public investment projects required to carry out these co-generation works and the acquisition of any excess production by the Federal Electricity Commission must be included in the annualPresupuesto de Egresos de la Federación (Federal Expenditure Budget), which is subject to discussion by and approval of the Chamber of Deputies.
On November 13, 2008, amendments to theLey Federal de Presupuesto y Responsabilidad Hacendaria(Federal Law of Budget and Fiscal Accountability) were published in the Official Gazette of the Federation, which became effective on November 14, 2008. Under these amendments:
In November 2008, the Petróleos Mexicanos Law was adopted by the Mexican Congressstored, distributed and severalmarketed other laws were adopted or amended, as part of what we refer to as the 2008 Energy Reform. None of these laws included any amendment to the Mexican Constitution.
As a result of the 2008 Energy Reform, we are authorized to offer cash incentives to contractors that provide us with access to new technologies, faster execution or greater profits, subject to the requirements that our payment obligations under construction and services contracts must always be satisfied in cash and that in no case may we grant ownership rights over hydrocarbons to our contractors. See “Item 4—Information on the Company—Business Overview—Exploration and Production—Integrated Exploration and Production Contracts.”
Energy Reform
Energy Reform Decree
On December 12,20, 2013, the Permanent Commission of the Mexican Congress approved amendments to Articles 25, 27 and 28 of the Mexican Constitution which were subsequently approved by a majority of Mexico’s state legislatures and signed into law by President Enrique Peña Nieto. On December 20, 2013, the Energy Reform Decree wasNieto and published in the Official Gazette of the FederationFederation. We refer to this as the Energy Reform Decree. The Energy Reform Decree, which includes transitional articles setting forth the general framework and timeline for the related secondary legislation, took effect on December 21, 2013. The Energy Reform Decree includes transitional articles that set forth the general framework for
Secondary Legislation
On August 11, 2014, the secondary legislation or implementing laws, which have not been enacted as of the date of this report.
We describe below the key features ofwas published pursuant to the Energy Reform Decree that relatein the Official Gazette of the Federation. We refer in this annual report to this legislation as the hydrocarbons sector in Mexico andSecondary Legislation. The Secondary Legislation includes nine new laws, of which the following are most relevant to our operations:
• |
• |
Together, the Hydrocarbons Law and the Hydrocarbons Revenue Law establish the legal framework for the exploration and production of oil and gas through assignments and contracts, as well as the new fiscal regime through which the Mexican Government will collect revenues from participants in the Mexican oil and gas industry. The Hydrocarbons Law empowers the Ministry of Energy to determine the appropriate contract model for each area that is subject to a competitive bidding process, while the Ministry of Finance and Public Credit is responsible for determining the economic and fiscal terms of each contract. The following arrangements comprise the new contractual regime established by the Secondary Legislation for upstream activities:
The Mexican Government will havefiscal terms of each contract for exploration and production are to be established in accordance with the flexibility to combine elements of these contractual frameworks in order to maximize the income attributableHydrocarbons Revenue Law. See “—Taxes, Duties and Other Payments to the Mexican nationGovernment—Fiscal Regime” below in this Item 4.
For midstream and thereby help ensure its long-term development. In addition, the Energy Reform Decree specifies the process by which the Mexican Government grants any such contract will be governed by rules that ensure its transparency, and information about payments made or taxes paid under any such contract will be made publicly available.
|
|
Legal Regime for Petróleos Mexicanos
As part of energy reform, Petróleos Mexicanos was transformed from a decentralized public entity into a productive state-owned company on October 7, 2014—the day on which the new Petróleos Mexicanos Law took effect, with their own legal statusthe exception of certain provisions. As a productive state-owned company, Petróleos Mexicanos remains wholly owned by the Mexican Government and technicalhas the corporate purpose of generating economic value and administrative autonomy. In addition,increasing the SHCP,income of the Mexican nation while adhering to principles of equity, as well as other government entities, will be entrusted with establishingsocial and environmental responsibility.
On December 2, 2014, upon its determination that the economic terms for contracts assigned pursuant to the public bidding process.
|
|
The impactnew Board of the Energy Reform Decree on us will largely depend on how it is implemented by the secondary legislation. On April 30, 2014, President Enrique Peña Nieto submitted to the Mexican Congress bills proposing secondary legislation intended to implement certain provisionsDirectors of the Energy Reform Decree. Among other things, these proposed bills provide us with additional technical, managerial and budgetary autonomy designed to increase our production and allow us to compete effectively with other oil and gas companies that enter the Mexican energy sector.
As of the date of this report, the proposed bills are subject to review, debate and revision by the Mexican Congress, and therefore we do not know what the final scope and terms of any approved bill will be. Accordingly, we cannot currently predict the effects of the Energy Reform DecreePetróleos Mexicanos was performing its duties and the new framework it contemplates, although such effects are likely to be materialmechanisms for our oversight, transparency and impact our structure, results of operations and financial position.
Round Zero
Transitional article six of the Energy Reform Decree, which outlines the Round Zero process, required us to submit a proposal toaccountability had been implemented, the Ministry of Energy requesting that we be assigned the right to explore and develop areas in which we currently operate based on our technical, financial and operational capabilities. Accordingly, on March 21, 2014, we submitted to the Ministry of Energy a request that we retain rights that we believe will allow us to maintain our current production and provide sufficient exploration opportunities to increase our productionformally announced in the future. Together,Official Gazette of the areasFederation that we requested contain 96% of Mexico’s estimated proved reserves of crude oil and natural gas as of December 31, 2013.the
Exploration Areas. With respect to our exploration activities, we requested rights that we believe will allow our oil and gas production to continue to grow. Our submission sought to ensure that we maintain a number of areas that would allow us to continue our investment program in exploratory activities. Specifically, we requested to retain the right to explore offshore and onshore areas
special regime provided for in the Southeastern basins inPetróleos Mexicanos Law, which we have identified opportunities that would allow usgoverns Petróleos Mexicanos’ activities relating to increase productionproductive state-owned subsidiaries, affiliates, compensation, assets, administrative liabilities, budget, debt levels and the state dividend, had taken effect. On June 10, 2015, theDisposiciones Generales de Contratación para Petróleos Mexicanos y Sus Empresas Productivas Subsidiarias (General Provisions for Contracting for Petróleos Mexicanos and its Productive State-Owned Subsidiaries) were published in the short-term. We also requested the right to continue to explore certain deepwater areas and areas containing unconventional deposits that we believe will allow us to increase production in the medium and long-term. The primary consideration used to determine which exploration areas to request was the continuity of our exploration strategy. Other factors that we considered included the potential hydrocarbons content and expected monetary valueOfficial Gazette of the area, as well asFederation, and on June 11, 2015, the risks (both technicalspecial regime for acquisitions, leases, services and geological) involved.
Our proposal grouped the exploration areas that we requested according to the following criteria:Corporate Reorganization
Production Fields. With respect to our production activities, we requested the right to continue operating our most profitable fields in order to help ensure the maintenance of our production. We also requested the right to continue developing complex and capital-intensive areas, such as deepwater fields, that we believe we can successfully operate by entering into strategic partnerships with the private sector. Altogether, we requested the right to continue operating all of the fields that are currently in production, as well as many of the fields that are being developed or are close to being developed.
Our proposal grouped the production fields that we requested according to the following criteria:
Initial Assignments. The Ministry of Energy will take the following factors into consideration when determining whether to grant us an assignment:
Although the Ministry of Energy has, inIn accordance with the transitional articles of the Energy Reform Decree, until September 17,Petróleos Mexicanos Law, on November 18, 2014, the Board of Directors of Petróleos Mexicanos approved the Director General’s proposal for our corporate reorganization. In our corporate reorganization, the four existing subsidiary entities of Petróleos Mexicanos were transformed into two new productive state-owned subsidiaries—Pemex Exploration and Production and Pemex Industrial Transformation—and five new productive state-owned subsidiaries—Pemex Drilling and Services, Pemex Logistics, Pemex Cogeneration and Services, Pemex Fertilizers and Pemex Ethylene—were created. Each of these productive state-owned subsidiaries is a legal entity empowered to respondown property and carry on business in its own name and has technical and operational autonomy, subject to the central coordination and strategic direction of Petróleos Mexicanos.
On March 27, 2015, the Board of Directors of Petróleos Mexicanos adoptedacuerdos de creación (creation resolutions) for each of the new productive state-owned subsidiaries, all of which were subsequently published in the Official Gazette of the Federation on April 28, 2015.
The principal lines of business of the new productive state-owned subsidiaries are as follows:
it is possible that its responses may be issued in multiple stages, beginning with areas in which we currently operate. Any areas that we do not request or are not assigned
Once a particular area is assigned to us, we may request that the Ministry of Energy permit us to convert the assignment into one of the contractual frameworks described above. If, in connection with the conversion of an assignment, we decide to enter into an agreement with a private sector company, the NHC will conduct a public tender in a manner similar to the bidding process described above to determine who will be our partner.
Capital Expenditures and Investments
The following table shows our capital expenditures, excludingnon-capitalizable maintenance, for each of the fivethree years ended December 31, 2013,2016, and the budget for suchthese expenditures for 2014 and 2015.2017. Capital expenditure amounts are derived from our budgetary records, which record such amountsare 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. The following table presents our capital expenditures by subsidiary. For the year ended December 31, 2015, we have included capital expenditures made by the subsidiary entities prior to our recent corporate reorganization, and for the new productive state-owned subsidiaries, capital expenditures made after their creation. For the year ended December 31, 2016 and for the 2017 budget, we have included capital expenditures made by, or expected to be made by, the new productive state-owned subsidiaries.
Capital Expenditures and Budget by Subsidiary
Year ended December 31,(1) | Budget 2014 | Budget 2015 | Year ended December 31, | Budget 2017(1) | ||||||||||||||||||||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||||
(in millions of pesos)(2) | (in millions of pesos)(2) | |||||||||||||||||||||||||||||||||||||||||||
Pemex-Exploration and Production | Ps. | 180,507 | Ps. | 194,838 | Ps. | 177,059 | Ps. | 193,801 | Ps. | 212,556 | Ps. | 230,879 | Ps. | 229,982 | Ps. | 222,069 | Ps. | 153,110 | Ps. | 137,242 | Ps. | 73,927 | ||||||||||||||||||||||
Pemex Industrial Transformation(4) | — | 4,952 | 33,947 | 21,369 | ||||||||||||||||||||||||||||||||||||||||
Pemex Logistics(5) | — | 631 | 7,015 | 4,449 | ||||||||||||||||||||||||||||||||||||||||
Pemex Drilling and Services(6) | — | — | 2,688 | 1,580 | ||||||||||||||||||||||||||||||||||||||||
Pemex Ethylene(7) | — | 426 | 746 | 1,786 | ||||||||||||||||||||||||||||||||||||||||
Pemex Fertilizers(8) | — | 205 | 379 | 444 | ||||||||||||||||||||||||||||||||||||||||
Pemex-Refining | 18,526 | 22,636 | 25,157 | 28,944 | 29,794 | 40,699 | 77,744 | 39,767 | 34,152 | n.a. | — | |||||||||||||||||||||||||||||||||
Pemex-Gas and Basic Petrochemicals | 3,941 | 3,887 | 3,019 | 4,468 | 5,405 | 7,548 | 8,234 | 7,549 | 5,070 | n.a. | — | |||||||||||||||||||||||||||||||||
Pemex-Petrochemicals | 2,053 | 2,462 | 2,426 | 2,892 | 4,003 | 5,396 | 6,109 | 4,765 | 2,604 | n.a. | — | |||||||||||||||||||||||||||||||||
Pemex Cogeneration and Services | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Petróleos Mexicanos | 560 | 206 | 717 | 943 | 1,707 | 2,189 | 5,554 | 3,006 | 2,157 | 1,004 | 5,422 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||
Total capital expenditures | Ps. | 205,587 | Ps. | 224,029 | Ps. | 208,378 | Ps. | 231,048 | Ps. | 253,465 | Ps. | 286,711 | Ps. | 327,623 | Ps. | 277,156 | Ps. | 203,307 | Ps. | 183,021 | Ps. | 108,977 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Note: Numbers may not total due to rounding.
(1) |
(2) | Figures for |
(3) | For the year ended December 31, 2015, this includes capital expenditures made by Pemex-Exploration and Production and the new productive state-owned subsidiary Pemex Exploration and Production. |
(4) | Figures for the year ended December 31, 2015 include capital expenditures after November 1, 2015, when Pemex Industrial Transformation was formed. |
(5) | Figures for the year ended December 31, 2015 include capital expenditures after October 1, 2015, when Pemex Logistics was formed. |
(6) | For the year ended December 31, 2015, capital expenditures for Pemex Drilling and Services were allocated under Pemex Exploration and Production. |
(7) | Figures for the year ended December 31, 2015 include capital expenditures after October 1, 2015, when Pemex Ethylene was formed. |
(8) | Figures for the year ended December 31, 2015 include capital expenditures after October 1, 2015, when Pemex Fertilizers was formed. |
Source: Petróleos Mexicanos.
Total Capital Expenditures
The following table sets forthshows our total capital expenditures, excludingnon-capitalizable maintenance, by project, excluding maintenance,segment for the five years ended December 31, 2013, as well as2015 and 2016 and the budget for suchthese expenditures for 2014.in 2017.
Capital Expenditures by Segment
Year ended December 31,(1)(2) | Budget 2014(3) | |||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||||||
(in millions of pesos)(4) | ||||||||||||||||||||||||
Pemex-Exploration and Production | ||||||||||||||||||||||||
Ku-Maloob-Zaap | Ps. | 20,894 | Ps. | 18,350 | Ps. | 21,554 | Ps. | 22,720 | Ps. | 29,738 | Ps. | 34,292 | ||||||||||||
Cantarell(5) | 41,002 | 38,437 | 36,303 | 42,139 | 28,171 | 24,375 | ||||||||||||||||||
Aceite Terciario del Golfo | 20,607 | 28,262 | 21,919 | 20,864 | 20,049 | 5,242 | ||||||||||||||||||
Tsimin-Xux(6) | — | — | — | — | 13,312 | 20,179 | ||||||||||||||||||
Antonio J. Bermúdez(5)(7) | 10,442 | 9,853 | 11,218 | 13,126 | 11,489 | 10,751 | ||||||||||||||||||
Burgos | 19,410 | 29,704 | 19,564 | 17,324 | 10,316 | 9,935 | ||||||||||||||||||
Crudo Ligero Marino(6)(8) | — | — | — | — | 10,000 | 13,402 | ||||||||||||||||||
Chuc(9) | 3,469 | 2,619 | 3,730 | 7,870 | 9,897 | 12,245 | ||||||||||||||||||
Ogarrio-Magallanes(7) | — | — | — | — | 6,693 | 5,229 | ||||||||||||||||||
Delta del Grijalva | 4,571 | 5,904 | 6,501 | 5,671 | 6,169 | 6,934 | ||||||||||||||||||
Cactus-Sitio Grande(6)(10) | 1,127 | 1,384 | 1,995 | 2,544 | 4,208 | 3,526 | ||||||||||||||||||
Integral Yaxché | 4,552 | 3,963 | 1,986 | 2,485 | 3,858 | 8,173 | ||||||||||||||||||
El Golpe-Puerto Ceiba | 1,706 | 847 | 1,274 | 2,691 | 3,708 | 1,438 | ||||||||||||||||||
Veracruz Basin(6) | — | — | — | — | 3,703 | 5,102 | ||||||||||||||||||
Bellota-Chinchorro(11) | 4,496 | 5,518 | 4,912 | 3,101 | 3,607 | 3,356 | ||||||||||||||||||
Jujo-Tecominoacán(5) | 5,419 | 6,584 | 3,658 | 3,555 | 3,336 | 2,576 | ||||||||||||||||||
Tamaulipas-Constituciones | 987 | 1,967 | 3,800 | 3,313 | 2,736 | 847 | ||||||||||||||||||
Ek-Balam | 4,143 | 2,766 | 725 | 1,023 | 2,549 | 4,752 | ||||||||||||||||||
Lakach | 43 | 1,032 | 128 | 194 | 1,829 | 11,824 | ||||||||||||||||||
Integral Poza Rica | 2,122 | 2,936 | 4,687 | 4,948 | 1,721 | 3,738 | ||||||||||||||||||
Arenque(5) | 1,829 | 1,155 | 1,159 | 1,241 | 1,696 | 1,501 | ||||||||||||||||||
Ixtal-Manik(6) | — | — | — | — | 1,631 | 3,312 | ||||||||||||||||||
Strategic Gas Program(5)(6) | 28,626 | 27,944 | 27,790 | 29,870 | 1,394 | — | ||||||||||||||||||
Cuenca de Macuspana(6) | — | — | — | — | 614 | 1,088 | ||||||||||||||||||
Costero Terrestre(6) | — | — | — | — | 516 | 903 | ||||||||||||||||||
Och-Uech-Kax(8) | 324 | 1,160 | 1,084 | 964 | 80 | — | ||||||||||||||||||
Lankahuasa(6) | — | — | — | — | 37 | 1,866 | ||||||||||||||||||
Ayín-Alux | 1,116 | 1,212 | 591 | 56 | 34 | 438 | ||||||||||||||||||
Carmito-Artesa(10) | 160 | 452 | 319 | 611 | 30 | — | ||||||||||||||||||
Caan(9) | 1,654 | 1,112 | 658 | 1,093 | 27 | — | ||||||||||||||||||
Cárdenas(11) | 1,111 | 1,062 | 226 | 4 | — | — | ||||||||||||||||||
Other Exploratory Projects(5)(12)(13) | — | — | — | 4,208 | 28,070 | 31,698 | ||||||||||||||||||
Other Development Projects | — | — | — | — | — | 463 | ||||||||||||||||||
Administrative and Technical Support | 695 | 613 | 1,280 | 2,188 | 1,338 | 1,694 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | 180,507 | 194,838 | 177,059 | 193,801 | 212,556 | 230,879 | ||||||||||||||||||
Pemex-Refining | ||||||||||||||||||||||||
New Refinery at Tula | 39 | 139 | 60 | 446 | 5,204 | 3,714 | ||||||||||||||||||
Fuel Quality Investments | 429 | 3,313 | 6,571 | 6,558 | 2,801 | 5,894 | ||||||||||||||||||
Residual Conversion from Salamanca Refinery | 104 | 64 | 78 | 155 | 909 | 4,480 | ||||||||||||||||||
Tuxpan Pipeline and Storage and Distribution Terminals | 650 | 823 | 770 | 597 | 255 | 347 | ||||||||||||||||||
Minatitlán Refinery Reconfiguration | 5,159 | 4,633 | 2,850 | 5,366 | — | — | ||||||||||||||||||
Others | 12,145 | 13,664 | 14,827 | 15,822 | 20,625 | 26,264 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | 18,526 | 22,636 | 25,157 | 28,944 | 29,794 | 40,699 | ||||||||||||||||||
Pemex-Gas and Basic Petrochemicals | ||||||||||||||||||||||||
Rehabilitation of Fire Protection Network at GPCs | 292 | 162 | 125 | 156 | 545 | 180 | ||||||||||||||||||
Cryogenic Plant at Poza Rica GPC | 640 | 1,767 | 1,103 | 801 | 498 | 34 | ||||||||||||||||||
Refurbishment, Modification and Modernization of Nationwide Pumping and Compression Stations | 67 | 39 | 47 | 134 | 255 | 376 | ||||||||||||||||||
Preservation of Processing Capacity at the Nuevo Pemex GPC | 2 | 280 | 228 | 268 | 237 | 253 | ||||||||||||||||||
Modernization of Areas of Transportation Products of GPCs | — | — | — | — | 155 | 156 | ||||||||||||||||||
Project of Rehabilitation and Integration of Burners Venting System at Ciudad Pemex GPC | 252 | 205 | 31 | 60 | 120 | 1 |
Year ended December 31, | Budget 2017(1) | |||||||||||
2015 | 2016 | |||||||||||
(millions of pesos) | ||||||||||||
Exploration and Production(2) | Ps. | 151,546 | Ps. | 137,242 | Ps. | 73,927 | ||||||
Industrial Transformation | ||||||||||||
Refining | 29,646 | 30,501 | 18,919 | |||||||||
Gas and Aromatics(3) | 5,654 | 3,446 | 2,450 | |||||||||
|
|
|
|
|
| |||||||
Total | 35,300 | 33,947 | 21,369 | |||||||||
Logistics(4) | 9,827 | 7,015 | 4,449 | |||||||||
Drilling and Services(5) | 1,564 | 2,688 | 1,580 | |||||||||
Ethylene(6) | 1,869 | 746 | 1,786 | |||||||||
Fertilizers(7) | 1,044 | 379 | 444 | |||||||||
Cogeneration and Services | — | — | — | |||||||||
Corporate and other Subsidiaries | 2,157 | 1,004 | 5,422 | |||||||||
|
|
|
|
|
| |||||||
Total Capital Expenditures | Ps. | 203,307 | Ps. | 183,021 | Ps. | 108,977 | ||||||
|
|
|
|
|
|
Conservation of Operational Reliability at Poza Rica GPC Modernization of Systems for Monitoring, Control and Supervision of Transportation by Pipeline Integral Maintenance of Pipeline Systems for Ethane, Basic Petrochemicals and Secondary Petrochemicals Integral Project of Electric Reliability at GPCs Refurbishment and Modernization of Natural Gas Turbocompressors of the Cryogenic Plants at the Nuevo Pemex GPC Integral Maintenance of Pipeline Systems for Natural Gas and LPG Stage II Operational Reliability of the Pipeline Division Assets Refurbishment and Modernization of the Processing Systems and Equipment of La Venta GPC Petrochemical Pipelines via Agave 2004 Infrastructure for Transportation of Petrochemical Products from Nuevo Pemex-Cactus to Coatzacoalcos Modular Cryogenic Plants in Station 19 in Reynosa GPC Others Total Pemex-Petrochemicals Modernization and Expansion of Production Capacity of Aromatics Train I at Cangrejera PC Maintaining Production Capacity of Ethylene Plant at Cangrejera PC Maintaining Production Capacity of Ethane Derivatives Chain IV at Morelos PC Modernization and Expansion of Production Capacity of Ethane Derivatives Chain I at Morelos PC Maintaining Production Capacity of Ethane Derivatives Chain II at Morelos PC Maintaining Production Capacity of Ethane Derivatives Chain II at Cangrejera PC Modernization and Optimization of Auxiliary Services Infrastructure I at Morelos PC Maintaining Production Capacity, Storage and Distribution of Ammonia at the Cosoleacaque PC Maintaining Production Capacity of Auxiliary Services Infrastructure I at Pajaritos PC Rehabilitation of Facilities for Physical Security at Morelos PC Maintaining Production Capacity of Aromatics Train II at Cangrejera PC Expansion of Styrene Plant at Cangrejera PC Others Total Petróleos Mexicanos Total Total capital expenditures Year ended December 31,(1)(2) Budget
2014(3) 2009 2010 2011 2012 2013 (in millions of pesos)(4) 294 166 92 126 56 22 — — 24 79 36 352 — — — — 13 311 — — — — — 226 — — — — — 195 — — — — — 174 — — — — — 57 — — — — — 41 — 2 — — — — — 2 — — — — 275 — — — — — 2,119 1,264 1,369 2,845 3,490 5,170 3,941 3,887 3,019 4,468 5,405 7,548 442 1,354 941 777 495 10 — — — 20 375 125 — 4 78 206 288 34 284 56 86 5 208 318 218 224 78 125 163 131 16 3 50 65 98 — 57 57 45 — 85 — — — 110 441 65 18 3 7 41 125 64 — — 6 1 73 51 1 73 53 30 29 16 10 1 — — — — — 958 698 966 1,025 2,095 4,749 2,053 2,462 2,426 2,892 4,003 5,396 560 206 717 943 1,707 2,189 Ps. 205,587 Ps. 224,029 Ps. 208,378 Ps. 231,048 Ps. 253,465 Ps. 286,711
Note: Numbers may not total due to rounding.
GPC = Gas Processing Complex.
PC = Petrochemical Complex.
(1) |
(2) |
(3) |
(4) | Figures for |
(5) |
(6) |
(7) |
Source: Petróleos Mexicanos.
Capital Expenditures Budgetexpenditures and budget by project are described under each segment below in this Item 4.
The following table sets forthSincemid-2014, the international reference prices of crude oil have fluctuated significantly. During January 2016, the Mexican crude oil export price fell to U.S. $18.90 per barrel and the weighted average price for the year was U.S. $35.63 per barrel. Based on its estimate that the weighted average Mexican crude oil export price would be U.S. $42.00 per barrel, the Mexican Congress approved our approvedPs. 204.6 billion capital expenditures budget, including maintenance, for 20142017.
In light of the oil and estimates forgas market and global economic conditions, on December 14, 2016 the years 2015 through 2017. These figures are subjectChamber of Deputies approved a 2017 budget of Ps. 391.9 billion, which included a financial balance goal (which we define as sales after deducting costs and expenses, investment expenses, taxes and duties, and financial debt service) of Ps. 93.8 billion. On December 14, 2016, the budget was presented to change in accordance with our future investment plans and the provisionsBoard of subsequent budgetary approvals.
Approved Capital Expenditures Budget
Year ended December 31,(1) | ||||||||||||||||
2014 | 2015 | 2016 | 2017 | |||||||||||||
(in millions of constant 2014 pesos) | ||||||||||||||||
Pemex-Exploration and Production | ||||||||||||||||
Ku-Maloob-Zaap | Ps. | 34,292 | Ps. | 34,338 | Ps. | 31,663 | Ps. | 22,403 | ||||||||
Cantarell | 24,375 | 26,713 | 23,525 | 20,601 | ||||||||||||
Tsimin-Xux(2)(3) | 20,179 | 14,711 | 12,827 | 16,417 | ||||||||||||
Crudo Ligero Marino(2)(3) | 13,402 | 12,539 | 10,317 | 10,588 | ||||||||||||
Chuc | 12,245 | 12,577 | 13,825 | 13,998 | ||||||||||||
Lakach | 11,824 | 7,538 | 602 | 526 | ||||||||||||
Antonio J. Bermúdez(4) | 10,751 | 8,427 | 8,762 | 7,016 | ||||||||||||
Burgos | 9,935 | 3,746 | 3,862 | 8,105 | ||||||||||||
Integral Yaxché | 8,173 | 15,041 | 8,238 | 4,929 | ||||||||||||
Delta del Grijalva | 6,934 | 4,166 | 2,656 | 1,729 | ||||||||||||
Aceite Terciario del Golfo | 5,242 | 4,287 | 7,860 | 6,615 | ||||||||||||
Ogarrio-Magallanes(4) | 5,229 | 5,470 | 6,380 | 6,642 | ||||||||||||
Veracruz Basin(2)(3) | 5,102 | 4,449 | 4,513 | 4,859 | ||||||||||||
Ek-Balam | 4,752 | 4,053 | 4,810 | 4,259 | ||||||||||||
Integral Poza Rica | 3,738 | 2,720 | 1,893 | 1,487 | ||||||||||||
Cactus-Sitio Grande(2) | 3,526 | 3,133 | 2,914 | 1,758 | ||||||||||||
Bellota Chinchorro | 3,356 | 2,916 | 3,637 | 2,782 | ||||||||||||
Ixtal-Manik(2)(3) | 3,312 | 3,986 | 2,557 | 2,194 | ||||||||||||
Jujo-Tecominoacán | 2,576 | 1,713 | 1,204 | 2,287 | ||||||||||||
Lankahuasa(2)(3) | 1,866 | 418 | 41 | 22 | ||||||||||||
Arenque | 1,501 | 1,712 | 2,515 | 1,187 | ||||||||||||
El Golpe-Puerto Ceiba | 1,438 | 1,112 | 1,238 | 1,274 | ||||||||||||
Cuenca de Macuspana(2)(3) | 1,088 | 825 | 635 | 193 | ||||||||||||
Costero Terrestre(2)(3) | 903 | 1,357 | 517 | 261 | ||||||||||||
Tamaulipas-Constituciones | 847 | 661 | 551 | 474 | ||||||||||||
Ayín-Alux | 438 | 120 | 1,626 | 3,192 | ||||||||||||
Other Exploratory Projects(5) | 31,698 | 46,832 | 56,853 | 54,049 | ||||||||||||
Other Development Projects | 463 | 2,385 | 1,707 | 143 | ||||||||||||
Administrative and Technical Support | 1,694 | 2,307 | 2,344 | 3,125 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 230,879 | 229,982 | 220,075 | 203,114 | ||||||||||||
Pemex-Refining | ||||||||||||||||
Fuel Quality Investments | 5,894 | 5,649 | — | — | ||||||||||||
Residual Conversion from Salamanca Refinery | 4,480 | 9,407 | 8,561 | 8,531 | ||||||||||||
New Refinery at Tula (pre-investment study) | 3,714 | 5,109 | 889 | 457 | ||||||||||||
Tuxpan Pipeline and Storage and Distribution Terminals | 347 | 472 | — | — | ||||||||||||
Others | 26,264 | 57,107 | 42,428 | 21,734 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 40,699 | 77,744 | 51,878 | 30,722 |
Pemex-Gas and Basic Petrochemicals Refurbishment, Modification and Modernization of Nationwide Pumping and Compression Stations Modernization of Systems for Monitoring, Control and Supervision of Transportation by Pipeline Integral Maintenance of Pipeline Systems for Ethane, Basic Petrochemicals and Secondary Petrochemicals Preservation of Processing Capacity at the Nuevo Pemex GPC Integral Project of Electric Reliability at GPCs Refurbishment and Modernization of Natural Gas Turbocompressors of the Cryogenic Plants at the Nuevo Pemex GPC Rehabilitation of Fire Protection Network at GPCs Integral Maintenance of Pipeline Systems for Natural Gas and LPG Stage II Modernization of Areas of Transportation Products of GPCs Operational Reliability of the Pipeline Division Assets Refurbishment and Modernization of the Processing Systems and Equipment of La Venta GPC Cryogenic Plant at Poza Rica GPC Conservation of Operational Reliability at the Poza Rica GPC Project of Rehabilitation and Integration of Burners Venting System in Ciudad Pemex GPC Others Total Pemex-Petrochemicals Modernization and Expansion of Production Capacity of Ethane Derivatives Chain I at Morelos PC Maintaining Production Capacity of Ethane Derivatives Chain II at Morelos PC Maintaining Production Capacity of Ethylene Plant at Cangrejera PC Maintaining Production Capacity of Ethane Derivatives Chain IV at Morelos PC Maintaining Production Capacity, Storage and Distribution of Ammonia at the Cosoleacaque PC Modernization and Expansion of Production Capacity of the Aromatics Train I at Cangrejera PC Maintaining Production Capacity of Aromatics Train II at Cangrejera PC Refurbishing of Facilities for Physical Security at Morelos PC Others Total Petróleos Mexicanos Total Total Capital Expenditures Budget Year ended December 31,(1) 2014 2015 2016 2017 (in millions of constant 2014 pesos) 376 536 — — 352 13 — — 311 205 319 102 253 375 — — 226 212 382 — 195 240 292 — 180 — — — 174 276 256 255 156 472 582 588 57 170 170 153 41 158 188 110 34 — — — 22 3 — — 1 — — — 5,170 5,574 2,935 317 7,548 8,234 5,124 1,526 318 799 1,249 519 131 — — 68 125 201 199 — 34 — — 83 18 205 150 — 10 132 224 144 10 — — — 1 103 — — 4,749 4,669 4,709 6,566 5,396 6,109 6,532 7,380 2,189 5,554 782 148 Ps. 286,711 Ps. 327,623 Ps. 284,391 Ps. 242,890
GPC = Gas Processing Complex.
PC = Petrochemical Complex.
Source: Petróleos Mexicanos.Mexicanos along with detailed capital expenditure allocations by subsidiary entity. On April 7, 2017, the Board
We have budgeted
of Directors of Petróleos Mexicanos was presented with an amended budget with capital expenditure allocations presented by subsidiary entity and by project. With this budget, our management expects that we will be able to maintain our medium- and long-term growth plans without the need to incur more indebtedness than the amount included in our approved financing program for 2017. The budget approved by the Board of Directors of Petróleos Mexicanos was based on the guiding principles of: maintaining the industrial safety and reliability of our facilities; taking advantage of the new contractual models provided by the energy reform in order to attract third-party investment; meeting our labor and financial obligations; and stabilizing our crude oil and gas production levels in the medium and long-term.
Our budget for 2017 includes a total of Ps. 286.7109.0 billion in constant 2014 pesos for capital expenditures in 2014.expenditures. We expect to direct Ps. 230.973.9 billion (or 80.5%67.8% of our total capital expenditures) to exploration and production programs in 2014.2017. This significant investment in exploration and production activities reflects our focus on maximizing the potential of Mexico’s hydrocarbon reserves asand our most productive projects, the promotion of ourfarm-out program, which we begin operating underbelieve will allow us to sustain and increase our production levels while decreasing our corresponding capital expenditures, and our intention to take advantage of the new framework establishedopportunities provided by the Energy Reform Decree.energy reform. The allocation of capital expenditures may be impacted by the Mexican Congress’ enactment of secondary legislation implementing the Energy Reform Decree.
energy reform provides us with opportunities to form new strategic partnerships in order to enhance our financial, technical and operational capabilities along our entire value chain. See “—Information on the Company—History and Development—Energy Reform” above in this Item 4. In addition, weWe continuously review our capital expenditures portfolio in accordance with our current and future business plans and upcoming opportunities. In the upcoming years, we expect to receive financial resources from third parties who may partner with us on certain projects, a collaboration made possible following the implementation of the Secondary Legislation. See “—Energy Reform” above in this Item 4 for more information about these new opportunities.
Our main objectives for upstream investment are to maximize theour long-term economic value, and to increase and improve the quality of Mexico’sthe oil and gas reserves assigned to us, enhance Pemex-ExplorationPemex Exploration and Production’s reserves recovery ratio, improve the reliability of its production and transportation infrastructure for crude oil and natural gas operations and continue to emphasize industrial safety and compliance with environmental compliance.regulations. Our 20142017 budget objectives include increasingmaintaining crude oil production from the 2013 production levelat levels sufficient to satisfy domestic demand and increasing the supply ofhave a surplus available for export and maintaining natural gas for theproduction levels in order to attempt to satisfy domestic market in the medium to long term.demand.
Our downstream investment program seeks to improve the quality of our product selection and the reliability of our logistics and distribution services, to achieve a level of efficiency similar to that of our international competitors and to continue to emphasize industrial safety and environmental compliance.
To this end, we are currently developing a new refinery in Tula, in the state of Hidalgo, which is expected to have a processing capacity of 250 thousand barrels per day of Maya crude oil, 163 thousand barrels per day of gasoline and 117 thousand barrels per day of diesel. See “—Business Overview—Refining—New Refinery at Tula” in this Item 4. In addition, we announced in June 2013 that the Miguel Hidalgo refinery in Tula will be reconfigured to process its vacuum residue for conversion into high value fuels such as gasoline and diesel. See “—Business Overview—Refining—Vacuum Residue Processing at Miguel Hidalgo Refinery” in this Item 4.
BUSINESS OVERVIEW
Overview by Business Segment
Exploration and Production
Pemex-ExplorationOur exploration and Production’s primary objectives for 2014 include: (1) increasing current crude oil production levels in order to satisfy domestic demand and have surpluses available for export; (2) maintaining natural gas production levels in order to attempt to satisfy domestic demand and avoid increasing our dependence on natural gas imports; (3) continuing to increasesegment operates through the replacement rate of proved and total reserves; (4) maintaining discovery and development costs similar to those of our international competitors; and (5) improving performance in terms of industrial security and environmental protection, as well as continuing to build relationships with the communities in which we operate. Our upstream investment program seeks to meet these objectives by: maximizing the value of produced reserves; improving the quality of our product selection; and improving the reliability of our logistics and distribution services to achieve an optimal level of efficiency, while continuing to emphasize industrial safety and environmental compliance.
Pemex-Explorationproductive state-owned subsidiary Pemex Exploration and Production and explores for and produces crude oil and natural gas, primarily in the northeastern and southeastern regions of Mexico and offshore in the Gulf of Mexico. In nominal peso terms, our capital investmentexpenditures in exploration and production activities increaseddecreased by 9.7%9.4% in 2013.2016. As a result of our investments in previous years, our total hydrocarbon production reached a level of approximately 3,671 thousand1,115.7 million barrels of oil equivalent per day in 2013. Pemex-Exploration and Production’s2016. Despite these investments, our crude oil production decreased by 1.0%5.0% from 20122015 to 2013,2016, averaging 2,5222,153.5 thousand barrels per day in 2013,2016, primarily as a result of the decline of the Cantarell, Delta del Grijalva, Jujo-Tecominoacán, Ixtal-Manik and Crudo Ligero Marino, El Golpe-Puerto Ceiba, Bellota-Chinchorro, Antonio J. Bermúdez, Cactus-Sitio Grande, Ixtal-Manik, Chuc, Costero Terrestre, andTsimín-Xux projects, which was partially offset by increased crude oildevelopment of the Integral Yaxché project’s Xanab field and by repairs, stimulations and diversification of artificial systems at our onshore fields that helped maintain production in the following projects: Ku-Maloob-Zaap, Tsimin-Xux, Chuc, Ek-Balam, El Golpe-Puerto Ceiba, Burgos and Veracruz. Pemex-Exploration and Production’slevels.
Our natural gas production (excluding natural gas liquids) decreased by 0.2%9.5% from 20122015 to 2013,2016, averaging 6,370.35,792.5 million cubic feet per day in 2013.2016. This decrease in natural gas production was a result of lowerresulted primarily from decreased volumes fromin the Veracruz, Delta del Grijalva,Burgos, Crudo Ligero Marino, Ixtal-Manik, Integral Veracruz Basin, Cactus-Sitio Grande, Integral Macuspana Basin and Costero TerrestreOgarrio-Sánchez Magallanes projects. Exploration drilling activity increaseddecreased by 2.7%19.2% from 20122015 to 2013,2016, from 3726 exploratory wells completed in 20122015 to 3821 exploratory wells completed in 2013.2016. Development drilling activity decreased by 34.6%55.2% from 20122015 to 2013,2016, from 1,201286 development wells completed in 20122015 to 785128 development wells completed in 2013.2016. In 2013,2016, we completed the drilling of 823149 wells in total. Our drilling activity in 20132016 was focused on increasing the production of non-associatedcrude oil and associated gas in the Ayatsil-Tekel, Chuc, Crudo Ligero Marino, El Golpe-Puerto Ceiba,Ku-Maloob-Zaap andTsimín-Xux, Aceite Terciario del Golfo (or ATG)andOgarrio-Sánchez Magallanes projects.
Our primary objectives in 2017 include: (i) generating economic value and Ogarrio-Magallanesprofitability to ensure the sustainability of the company; (ii) improving our performance in industrial safety and environmental protection; and (iii) increasing productivity and efficiency. We aim to meet these objectives through the following: (1) exploration and extraction of oil and solid, liquid or gaseous hydrocarbons in Mexico, its exclusive economic zone and abroad, in a profitable and sustainable manner; (2) acceleration of the development of shale; (3) use of farm-outs to develop complex fields and leverage resources from third parties; (4) containment of production decline and increase of profitability of assignments migrated without third-party participation; (5) increase of the production of oil and gas to meet demands in the southeast of Mexico; (6) optimal allocation of resources for our projects and continuous performance evaluation; (7) increase of heavyefficiency levels above international standards in our gas utilization and production costs; and (8) efficient use of our investments and logistics capacity and minimization of operating costs. Our production goals for 2017 include producing crude oil at a level of approximately 1,925.2 thousand barrels per day and maintaining natural gas production above 4,729.0 million cubic feet per day. We aim to meet these production goals through exploration and development activities, increasing inventory reserves through new discoveries and reclassifications, managing the decline in field production by applying primary, secondary and enhanced oil recovery processes and continuing to develop extra-heavy crude oil fields.
Industrial Transformation
Our industrial transformation segment is comprised of two principal activities: (i) refining and (ii) gas and aromatics:
Refining
Our refining business, which formerly operated as Pemex-Refining and operates through the productive state-owned subsidiary Pemex Industrial Transformation, converts crude oil into gasoline, jet fuel, diesel, fuel
oil, asphalts and lubricants. We also distribute and market most of these products throughout Mexico, where we experience significant demand for our refined products. At the end of 2016, atmospheric distillation refining capacity reached 1,602 thousand barrels per day. In 2016, we produced 977 thousand barrels per day of refined products as compared to 1,114 thousand barrels per day of refined products in 2015. This decrease in refined products production was mainly due to a decrease in crude oil processing and to operational issues inEl Sistema Nacional de Refinación (the National Refining System). As the result of operational problems, processing of crude oil by the National Refining System decreased 12.3%, from 1,064 million barrels per day in 2015 to 933 million barrels per day in 2016. Our primary goal for 2017 is to increase production of petroleum products, which we expect will result from an increase in distillate production and a decrease in fuel oil production.
Gas and Aromatics
Our gas and aromatics business processes wet natural gas to produce dry natural gas, liquefied petroleum gas (LPG) and other natural gas liquids, along with aromatic chain products such as styrene, toluene, benzene and xylene. In 2016, our total sour natural gas processing capacity remained at 2015 levels of 4,523 cubic feet per day. We processed 3,672 million cubic feet of wet natural gas per day in 2016, a 9.8% decrease from the 4,073 million cubic feet per day of wet natural gas processed in 2015. We produced 308 thousand barrels per day of natural gas liquids in 2016, a 5.8% decrease from the 364 thousand barrels per day of natural gas liquids production in 2015. We also produced 3,074 million cubic feet of dry gas (which is natural gas with a methane content of more than 90.0%) per day in 2015, 11.0% less than the 3,454 cubic feet of dry gas per day produced in 2015. We produced 940 thousand tons of aromatics and derivatives, an 8.0% decrease from 2015.
In 2017, we expect to have a lower supply of natural gas from our fields, which would require us to import higher volumes of natural gas to satisfy domestic demand.
Fertilizers
Our fertilizers segment operates through the productive state-owned subsidiary Pemex Fertilizers and integrates the ammonia production chain up to the point of sale of fertilizers.
Our strategies focus on: (1) increasing the economic value of our segment by generating diverse investment opportunities in the Cantarellagricultural sector in Mexico and Ku-Maloob-Zaap projects.(2) ensuring a reliable supply of raw materials for our plants through a long-term contract that sustains operations at our four ammonia plants.
In 2013, the reserves replacement rate (which we refer to as the RRR) was 67.8%, which was 36.5 percentage points lower than the RRR in 2012, which was 104.3%.Ethylene
Our well-drillingethylene segment operates through the productive state-owned subsidiary Pemex Ethylene and takes advantage of the integration of the ethylene production chain. In 2016, we produced a total of 2,528.7 thousand tons of petrochemical products, a 14.8% decrease from the 2,969.7 thousand tons of petrochemical products produced in 2015.
We have two primary goals for our ethylene segment in 2017. The first is to better market our products and services to certain customers, mainly by (1) becoming a reliable supplier, adopting competitive business practices, focusing on profitable and abandoning unprofitable markets; and (2) evaluating strategic business relationships and partnerships to increase the profitability of our petrochemical processes. The second is to streamline our activities and operations in Pemex Ethylene’s value chain by following the best operational and maintenance practices.
Drilling and Services
Our drilling and services segment operates through the productive state-owned subsidiary Pemex Drilling and Services and provides drilling, completion, work-over and other services for wells in offshore and onshore fields. In 2016, this segment mainly provided drilling services to Pemex Exploration and Production, but also provided services to external clients such asComisión Nacional del Agua (CONAGUA) and the Armada Company.
Our well drilling activities during 20132016 led to significant onshore discoveries. TheOur main discoveries included lightwere of crude oil reserves located in the Southeastern and Veracruz basins, specifically in the Northern and Southern regions. In addition, exploration activitiesExploration activity in the Northern region also led to the discovery of additionalnon-associated gas reserves in the Burgos basin. We are currently working on development plans for these new reserves.
Logistics
Our current challenge with respectlogistics segment operates through the productive state-owned subsidiary Pemex Logistics and provides land, maritime and pipeline transportation, storage and distribution services to these discoveries is their immediate development in order to increase current production levels.us and other companies, including theComisión Federal de Electricidad (Federal Electricity Commission or CFE),Aeropuertos y Servicios Auxiliares, CENAGAS, local gas stations and distributors.
Pemex-Exploration and Production’s production goals for 2014 include increasing itsDuring 2016, we transported 58,016 millionton-kilometers of crude oil production to approximately 2.55 million barrels per day and maintaining natural gas production above 6.7 billion cubic feet per day, in order to better satisfy domestic demand for natural gas, and thus lower the rate of increase of imports of natural gas and natural gas derivatives. We aim to meet these production goals by managing the decline in field production through the application of primary, secondary and enhanced oil recovery processes, developing extra-heavy crude oil fields and accelerating production at new fields.
Refining
Pemex-Refining converts crude oil into gasoline, jet fuel, diesel, fuel oil, asphalts and lubricants. It also distributes and markets most of thesepetroleum products, throughout Mexico, where it experiences significant demand for its refined products. At the end of 2013, Pemex-Refining’s atmospheric distillation refining capacity reached 1,690 thousand barrels per day. In 2013, Pemex-Refining produced 1,276 thousand barrels per day of refined productsan 11.3% decrease as compared to 1,226 thousand barrels per day of refined products in 2012. The 4.1% increase in refined products production was mainly2015, due to decreased production in our exploration and production segment, decreased processing of crude oil in our refineries and the startup of new plants following the reconfiguration of the Minatitlán refinery andillicit market in fuels which can lead to the improved performance of the national refining system.temporary pipeline closures.
Gas and Basic Petrochemicals
Pemex-Gas and Basic Petrochemicals processes wet natural gas in order to obtain dry natural gas, LPG and other natural gas liquids. Additionally, it transports, distributes and sells natural gas and LPG throughout Mexico and produces and sells several basic petrochemical feedstocks used by Pemex-Refining and Pemex-Petrochemicals. In 2013, Pemex-Gas and Basic Petrochemicals’ total sour natural gas processing capacity remained constant at 4,503 million cubic feet per day. Pemex-Gas and Basic Petrochemicals processed 4,404During 2016, we transported approximately 5,440 million cubic feet per day of wet natural gas, in 2013, a 0.5%5.8% increase fromas compared to the 4,3825,142 million cubic feet per day transported in 2015, partially due to the transportation of wetan estimated 655 million cubic feet per day for the CFE as agreed among the Ministry of Energy, the Energy Regulatory Commission and Pemex Industrial Transformation. On January 1, 2016, we began providing operation, maintenance and information technology services to, among others, CENAGAS in connection with its natural gas processed in 2012. It produced 362transportation infrastructure.
During 2016, we also transported 140 thousand barrels per day of natural gas liquids in 2013, a 0.8% decrease from the 365LPG and 2,589 thousand barrels per day of natural gas liquids productioncrude oil and petroleum products to be processed in 2012. It also produced 3,693 million cubic feet of dry gas (which is natural gas with a methane content of more than 90.5%)our refining system and to satisfy domestic demand for petroleum products, as compared to 174 thousand barrels per day in 2013, 1.8% more than the 3,628 million cubic feet of dry gasLPG and 3,181 thousand barrels per day producedof crude oil and petroleum products transported in 2012.
Petrochemicals
Pemex-Petrochemicals manufactures different petrochemical products, including: (1) methane derivatives, such as ammonia and methanol; (2) ethane derivatives, such as ethylene, polyethylene, vinyl chloride monomer, ethylene oxide and glycols; (3) aromatics and their derivatives, such as styrene, toluene, benzene and xylene; (4)2015. Of the propylene chain and its derivatives, such as acrylonitrile and propylene; (5)total amount we transported in 2016, we carried 77% of the petroleum derivatives chain, such as octane base gasoline and heavy naphtha; and (6) other products such as oxygen, nitrogen and pentanes. As of September 12, 2013, the vinyl chloride and ethylene plants at the Pajaritos petrochemical complex were divested from Pemex-Petrochemicals to become part of a joint venture between Pemex-Petrochemicalstransported volumes in 2016 through pipelines, 12% by vessels and the Mexican chemical company Mexichem S.A.B. de C.V. (which we referremaining 11% by train tank cars and trucks.
Our logistics segment will continue to provide services to our other segments and to third parties throughout Mexico. It hopes to meet its customers’ needs by providing its services in an efficient manner.
Cogeneration and Services
Our cogeneration and services segment operates through the productive state-owned subsidiary Pemex Cogeneration and Services and uses thermal heat and steam from our industrial processes to produce the electricity required by us, as Mexichem). See “—Petrochemicals—Joint Venturewell as to generate surplus electricity to sell to third parties in Mexico. Our cogeneration and services segment designs construction, financing and development structures for cogeneration through alliances with Mexichem”third parties in this Item 4.
Pemex-Petrochemicals’ total annual production (excluding ethane and butane gases) increased by 15.3% in 2013, from 6,367 thousand tons in 2012close geographic proximity to 7,339 thousand tons in 2013, mainly due to the startup of the new continuous catalytic regeneration reactor at the Cangrejera petrochemical complex, which increased production of gasolines and aromatics.our productive work centers.
International Trading
In 2013, our crude oil exports decreased by 5.3%, from 1,255.5 thousand barrels per day in 2012 to 1,188.8 thousand barrels per day in 2013. Natural gas imports increased by 18.4% in 2013, from 1,089.3 million cubic feet per day in 2012 to 1,289.7 million cubic feet per day in 2013. In 2013, exports of petrochemical products by volume decreased by 0.6%, from 1,344.7 thousand metric tons in 2012 to 1,336.9 thousand metric tons in 2013, while imports of petrochemical products by volume also decreased by 35.3%, from 445.1 thousand metric tons in 2012 to 287.8 thousand metric tons in 2013. In 2013, exports of petroleum products by volume increased by 7.8%, from 152.6 thousand barrels per day in 2012 to 164.5 thousand barrels per day in 2013, while imports of petroleum products by volume decreased by 9.6%, from 570.9 thousand barrels per day in 2012 to 516.2 thousand barrels per day in 2013.
We are a major supplier of crude oil to the United States.The international trading segment, which operates through P.M.I. Comercio Internacional, S.A. de C.V. (which we refer to as PMI), P.M.I. Trading, Ltd. and their affiliates, P.M.I. Norteamérica, S.A. de C.V., (which, together with PMI, we collectively
refer to as the “PMI Subsidiaries”) and Mex Gas International, Ltd., (which, together with the PMI Group) make up our international trading arm, whichSubsidiaries, we collectively refer to as the “Trading Companies”) provides us and a number of independent customers with international trading, distribution, risk management, insurance and transportation services. The PMI Group sells, buysTrading Companies sell, buy and transportstransport crude oil, refined products and petrochemicals in world markets. The PMI Group also provides us withmarkets, and provide related risk management, insurance, transportation and storage services. The PMI Group hasTrading Companies have offices in Mexico City, Houston, Amsterdam, Singapore and Madrid. Our trading volume of exports and imports totaled U.S. $75,511.6 millionExport sales are made through PMI to approximately 34 major customers in 2013 and U.S. $81,703.1 million in 2012, including U.S. $42,723.2 million invarious foreign markets.
In 2016, our crude oil exports increased in 2013volume by 1.9%, from 1,172.4 thousand barrels per day in 2015 to 1,194.4 thousand barrels per day in 2016. Natural gas imports increased by 36.6% in 2016, from 1,415.8 million cubic feet per day in 2015 to 1,933.9 million cubic feet per day in 2016. In 2016, exports of petrochemical products decreased 62.6%, from 333.8 thousand metric tons in 2015 to 124.7 thousand metric tons in 2016, while imports of petrochemical products increased 159.3%, from 107.3 thousand metric tons in 2015 to 278.2 thousand metric tons in 2016. In 2016, exports of petroleum products increased 1.6%, from 130.8 thousand barrels per day in 2015 to 132.9 thousand barrels per day in 2016, while imports of other petroleum products and liquefied petroleum gas increased 8.1%, from 739.8 thousand barrels per day in 2015 to 799.5 thousand barrels per day in 2016. As a major supplier of crude oil to the United States, our international trading segment’s crude oil exports to the U.S. $46,786.2 milliontotaled U.S. $7.5 billion in 2012.2016, a decrease of U.S. $3.4 billion from 2015.
In addition to being our international trading arm, our trading segment is also active in the Mexican market. The PMI Subsidiaries are party to multiple long-term contracts that we expect will generate business during 2017, including a long-term contract with Petróleos Mexicanos for sulfur sales and a long-term agreement with Mex Gas, one of our affiliates, for naphtha sales.
Infrastructure of PEMEX
Exploration and Production
Following our 2015 corporate reorganization, 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. For the year ended December 31, 2015, we have not presented separately the operating results of our drilling and services segment in this Item 4 and, accordingly, the results of
our exploration and production segment include the results of that segment for this period. Operating results for both the exploration and production and drilling and services segments are presented separately for periods beginning January 1, 2016. For a detailed description of the financial results of each segment, see our consolidated financial statements included herein.
Exploration and Drilling
We seek to identify new oil reservoirs through our exploration program in order to increase the future replacement rate of proved reserves. From 1990 to 2013,2016, we completed 12,15413,186 exploration and development wells. During 2013,2016, our average success rate for exploratory wells was 61%28.6% and our average success rate for development wells was 96%85.9%. From 20092011 to 2013,2016, we discovered 1918 new crude oil fields and 2614 new natural gas fields, bringing the total number of our crude oil and natural gas producing fields to 454405 at the end of 2013.2016.
Our 20132016 exploration program was comprised of exploration in both onshore and offshore regions, including the deep waters of the Gulf of Mexico. These exploratory activities yielded 101.857 million barrels of oil equivalent of proved reserves in 2013. A totalresulting from the discovery of ten fields were discovered, five of which contain non-associated gas and five of which contain crude oil. In addition, within the currentlyone oil producing fields, one reservoir was discovered, which contains non-associated gas.field. We continued our main seismic data acquisition activities, in particular, those related to three-dimensional seismic data. We acquired 15,063 square kilometers of three-dimensional seismic data in 2013, of which 10,111 square kilometers or 67% was in the deep waters of the Gulf
of Mexico. During 2013, no fields were delineated, a process that involves the drilling of several wells to determine the extent of the reserves found at each field.
The following table summarizes our drilling activity for the five years ended December 31, 2013,2016, all of which occurred in Mexican territory.
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||
Wells initiated(1) | 1,490 | 994 | 1,000 | 1,290 | 705 | 1,290 | 705 | 474 | 274 | 93 | ||||||||||||||||||||||||||||||
Exploratory wells initiated(1) | 71 | 40 | 32 | 36 | 40 | 36 | 40 | 20 | 22 | 23 | ||||||||||||||||||||||||||||||
Development wells initiated(1) | 1,419 | 954 | 968 | 1,254 | 665 | 1,254 | 665 | 454 | 252 | 70 | ||||||||||||||||||||||||||||||
Wells drilled(2) | 1,150 | 1,303 | 1,034 | 1,238 | 823 | 1,238 | 817 | 535 | 312 | 149 | ||||||||||||||||||||||||||||||
Exploratory wells | 75 | 39 | 33 | 37 | 38 | 37 | 38 | 24 | 26 | 21 | ||||||||||||||||||||||||||||||
Productive exploratory wells(3) | 29 | 23 | 16 | 21 | 23 | 21 | 23 | 8 | 13 | 6 | ||||||||||||||||||||||||||||||
Dry exploratory wells | 46 | 16 | 17 | 16 | 15 | 16 | 15 | 16 | 13 | 15 | ||||||||||||||||||||||||||||||
Success rate % | 39 | 59 | 48 | 57 | 61 | 57 | 61 | 33 | 50 | 29 | ||||||||||||||||||||||||||||||
Development wells | 1,075 | 1,264 | 1,001 | 1,201 | 785 | 1,201 | 779 | 511 | 286 | 128 | ||||||||||||||||||||||||||||||
Productive development wells | 1,014 | 1,200 | 955 | 1,159 | 747 | 1,159 | 747 | 484 | 266 | 110 | ||||||||||||||||||||||||||||||
Dry development wells | 61 | 64 | 46 | 42 | 32 | 42 | 32 | 26 | 20 | 18 | ||||||||||||||||||||||||||||||
Success rate %(4) | 94 | 95 | 95 | 97 | 96 | 97 | 96 | 95 | 93 | 86 | ||||||||||||||||||||||||||||||
Producing wells (annual averages) | 6,890 | 7,476 | 8,315 | 9,439 | 9,836 | 9,439 | 9,836 | 9,558 | 9,363 | 8,750 | ||||||||||||||||||||||||||||||
Marine region | 469 | 477 | 500 | 537 | 559 | 537 | 559 | 581 | 544 | 539 | ||||||||||||||||||||||||||||||
Southern region | 1,005 | 1,067 | 1,136 | 1,230 | 1,340 | 1,230 | 1,340 | 1,420 | 1,403 | 1,244 | ||||||||||||||||||||||||||||||
Northern region | 5,416 | 5,932 | 6,679 | 7,672 | 7,937 | 7,672 | 7,937 | 7,557 | 7,416 | 6,966 | ||||||||||||||||||||||||||||||
Producing wells (at year end)(5) | 6,814 | 7,414 | 8,271 | 9,476 | 9,379 | 9,476 | 9,379 | 9,077 | 8,826 | 8,073 | ||||||||||||||||||||||||||||||
Crude oil | 3,713 | 4,406 | 5,193 | 6,188 | 6,164 | 6,188 | 6,164 | 5,598 | 5,374 | 4,912 | ||||||||||||||||||||||||||||||
Natural gas | 3,101 | 3,008 | 3,078 | 3,288 | 3,215 | 3,288 | 3,215 | 3,479 | 3,452 | 3,161 | ||||||||||||||||||||||||||||||
Producing fields | 394 | 405 | 416 | 449 | 454 | 449 | 454 | 428 | 434 | 405 | ||||||||||||||||||||||||||||||
Marine region | 33 | 34 | 36 | 38 | 42 | 38 | 42 | 45 | 41 | 43 | ||||||||||||||||||||||||||||||
Southern region | 97 | 98 | 99 | 101 | 102 | 101 | 102 | 97 | 97 | 88 | ||||||||||||||||||||||||||||||
Northern region | 264 | 273 | 281 | 310 | 310 | 310 | 310 | 286 | 296 | 274 | ||||||||||||||||||||||||||||||
Drilling rigs | 176 | 130 | 128 | 136 | 139 | 136 | 139 | 136 | 113 | 110 | ||||||||||||||||||||||||||||||
Kilometers drilled | 3,770 | 2,532 | 2,494 | 3,007 | 1,627 | 3,007 | 1,627 | 1,413 | 815 | 330 | ||||||||||||||||||||||||||||||
Average depth by well (meters) | 2,494 | 2,605 | 2,418 | 2,429 | 2,710 | 2,429 | 2,710 | 2,738 | 3,038 | 3,655 | ||||||||||||||||||||||||||||||
Discovered fields(6) | 13 | 5 | 8 | 9 | 10 | 9 | 10 | 2 | 6 | 1 | ||||||||||||||||||||||||||||||
Crude oil | 6 | 2 | 4 | 2 | 5 | 2 | 5 | — | 6 | 1 | ||||||||||||||||||||||||||||||
Natural gas | 7 | 3 | 4 | 7 | 5 | 7 | 5 | 2 | — | — | ||||||||||||||||||||||||||||||
Crude oil and natural gas output by well (barrels of oil equivalent per day) | 548 | 508 | 448 | 392 | 371 | 392 | 371 | 370 | 349 | 348 | ||||||||||||||||||||||||||||||
Total developed acreage (km2)(7) | 8,376 | 8,463 | 8,536 | 8,652 | 8,706 | 8,652 | 8,706 | 8,339 | 8,654 | 7,017 | (8) | |||||||||||||||||||||||||||||
Total undeveloped acreage (km2)(7) | 953 | 828 | 987 | 1,040 | 977 | 1,040 | 977 | 1,278 | 1,000 | 712 | (8) |
Note: Numbers may not total due to rounding.
(1) | “Wells initiated” refers to the number of wells the drilling of which commenced in a given year, regardless of when the well was or will be completed. |
(2) | “Wells drilled” refers to the number of wells the drilling of which was completed in a given year, regardless of when the drilling of the well commenced. |
(3) | Excludesnon-commercial productive wells. |
(4) | Excludes injector wells. |
(5) | All productive wells, and all other wells referred to in this table, are “net,” because we do not grant others any fractional working interests in any wells that we own; we also have not acquired any fractional working interest in wells owned by others. |
(6) | Includes only fields with proved reserves. |
(7) | All acreage is net because we neither grant others fractional interests nor enter into other types of production sharing arrangements. |
(8) | These values relate only to our current assignments. |
Source: Pemex-ExplorationPemex Exploration and Production.
Extensions and Discoveries
During 2013, we discovered new sources of crude oil and natural gas reserves in ten fields, all of which were discovered onshore, eight2016, our exploratory activity in the Northern region and two inshallow waters of the Southern region. These discoveries, along with revisions, resulted in increases in Mexico’s proved reserves. During 2013, in the Northeastern Marine region, revisions and the completionGulf of 23 wellsMexico led to an increasethe incorporation of 405.7approximately 57 million barrels of oil equivalent ofin one field. We have also increased exploratory work in shallow waters to incorporate proved reserves. In the Southwestern Marine region, revisions and the development of the Kuil, Kab and Yaxché fields through the drilling of 12 wells led to an increase of 313.1 million barrels of oil equivalent of proved reserves. In the Northern region’s Burgos, ATG, Poza Rica-Altamira and Veracruz business units, the drilling of 460 development wells, as well as the discovery of eight fields, led to the addition of 88.6 million barrels of oil equivalent of proved reserves. In the Burgos basin, the drilling and completion of three wells led to the discovery of a shale oil field and two shale gas fields. We plan to continue to drill additional wells in this basin in order to continue assessing the potential for shale oil and gas resources in this area. Finally, in the Southern region, the drilling of 286 development wells and revisions resulted in an increase of 96.0 million barrels of oil equivalent of proved reserves.
During 2013, Pemex-Exploration and Production launched a call for bids for Integrated E&P Contracts relating to 12 fields in the ATG project in order to develop and exploit their hydrocarbon reserves. In July 2013, Pemex entered into Integrated E&P Contracts with three companies for the development of the Humapa, Miquetla and Soledad blocks. In connection with the awarding of these contracts, four field laboratories in the ATG project were dismantled, which resulted in a decrease in the number of completed wells in 2013, as compared to 2012. As of the date of this report, the only field laboratory that remains in operation is the Coyotes Laboratory, which continues to conduct development activities aimed at optimizing well productivity. The Integrated E&P Contracts entered into during 2013 are expected to significantly increase the number of wells drilled and completed at the ATG project in the near future. For more information, see “—Integrated Exploration and Production Contracts” in this Item 4.
Reserves
Under the Mexican Constitution, and the Regulatory Law, all oil and other hydrocarbon reserves located in the subsoil of Mexico are owned by the Mexican nation and not by us. As of December 31, 2014, Pemex-Exploration and Production was assigned rights through Round Zero corresponding to areas that together contained 95.2% of Mexico’s total proved reserves. Pemex Exploration and Production, as the date of this report,successor to Pemex-Exploration and Production, has the right to extract, but not own, these reserves, and to sell the resulting production. TheAs of the date of this report, 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, 20132016 were prepared by Pemex-Explorationour exploration and Productionproduction segment and were reviewed by the Independent Engineering Firms (as defined below), which audit Pemex-Explorationits estimates of our oil and Production’s hydrocarbongas reserves. In addition, pursuant to theReglamento de la Ley Reglamentaria del Artículo 27 Constitucional en el Ramo del Petróleode Hidrocarburos (Regulations to the Regulatory Law to Article 27 of the Political Constitution of the United Mexican States Concerning Petroleum Affairs, which we refer to as the (Regulations to the RegulatoryHydrocarbons Law), the NHC reviewed and approved the proved reserves reports estimates as of December 31, 20132016 that we provided by Pemex-Exploration and Production on March 11, 2014. These reserves estimates were then registered and published by the Ministry of Energy on March 18, 2014.31, 2017.
Pemex-Exploration and Production estimates Mexico’sWe estimate reserves based on generally accepted petroleum engineering and evaluation methods and procedures, which are based primarily on applicable SEC regulations and, as necessary, the Society of Petroleum Engineers’ (which we refer to as the SPE) publication entitled
Standards Pertaining to the Estimating and Auditingof Oil and Gas Reserves Information, dated February 19, 2007 and other SPE publications, including the SPE’s publication entitledPetroleum Resources Management System, as well as other technical sources, includingEstimation and Classification of Reserves of Crude Oil, Natural Gas, and Condensate, by Chapman Cronquist, andDetermination of Oil and Gas Reserves, Petroleum Society Monograph Number 1, published by the Canadian Institute of Mining and Metallurgy & Petroleum. The choice of method or combination of methods employed in the analysis of each reservoir is determined by:
Reserves data set forth herein represent only estimates. Reserves valuation is a subjective process of estimating underground accumulations of crude oil and natural gas that cannot be measured in an exact manner. The accuracy of any reserves estimate depends on the quality of available data, engineering and geological interpretation and professional judgment. As a result, estimates of different engineers may vary. In addition, the results of drilling, testing and producing subsequent to the date of an estimate may lead to the revision of an estimate.
During 2013,2016, we did not record any material increase in Mexico’s hydrocarbonsour proved oil and gas reserves as a result of the use of new technologies.
In order to ensure the reliability of our reserves estimation efforts, we have undertaken the internal certification of our estimates of Mexico’s reserves since 1996. We have established certain internal controls in connection with the preparation of our proved reserves estimates. Initially, teams of geoscientists fromPemex-Exploration and Production’s our exploration and exploitationproduction 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 theGerencia de Recursos y Certificación de Reservas (Office of Resources and Certification of Reserves), the central hydrocarbon reserves management body of Pemex Exploration and Production, review and certification ofcertify such valuations and the booking of the related reserves from theGerencia de Recursos y Reservas (Office of Resources and Reserves), the central hydrocarbon reserves management body of Pemex-Exploration and Production.reserves. This internal certification process is undertaken in accordance with internal guidelines for estimating and classifying proved reserves, which are based on the SEC’s rules and definitions. The HydrocarbonsOffice of Resources and Certification of Reserves, and Resources Management Office, which additionally oversees and conducts an internal audit of the process described above, process, consists entirely of professionals with geological, geophysical, petrophysical and reservoir engineering backgrounds. The engineers who participate in our reserves estimation process are experienced in: reservoir numerical simulation; well drilling and completion; pressure, volume and temperature (PVT) analysis; NODALTM(anand analytical tooltools used in forecasting the performance of the various elements comprising the production system) analysis;system; and design strategies in petroleum field development. Furthermore, all of our personnel have been certified by theSecretaría de Educación Pública(Ministry of Public Education), most have earned master’s degrees in areas of study such as petroleum engineering, geology and geophysical engineering and they possess an average of over tenfifteen years of professional experience.
In addition to the abovethis internal review process, Pemex-Explorationour exploration and Production’sproduction segment’s final reserves estimates are audited by independent engineering firms. Three independent engineering firms auditedPemex-Exploration and Production’s our estimates of Mexico’s proved reserves as of December 31, 2013:2016: Netherland Sewell; DeGolyer and MacNaughton; and Ryder Scott (we refer to these firms together as the Independent Engineering Firms). The reserves estimates reviewed by the Independent Engineering Firms totaled 99.3%97.6% of Mexico’sour estimated proved reserves. The remaining 0.7%2.4% of our estimated proved reserves consisted of reserves located in certain areas in which third parties provide us with drilling services to Pemex-Exploration and Production.services. Under such agreements, the corresponding third party is responsible for assessing the volume of reserves. Netherland Sewell audited the
reserves in the Northeastern Marine regionAceite Terciario de Golfo, Poza Rica-Altamira and Southern region,the Litoral de Tabasco business units. DeGolyer and MacNaughton audited the reserves in the Southwestern Marine regionBurgos and Veracruz business units and Ryder Scott audited the reserves in the Northern region.Bellota-Jujo, Cinco Presidentes, Macuspana-Muspac, Samaria-Luna,Abkatún-Pol-Chuc, Cantarell andKu-Maloob-Zaap 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;that we have provided; (2) construction or updating of the Independent Engineering Firms’ own static and dynamic reservoir characterization models of Mexican oilsome of our fields; (3) economic analysis of selected fields; and (4) review ofPemex-Exploration and Production’s our 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’sour reserves estimates so that they could express an opinion as to whether, in the aggregate, the reserves estimates we furnished were reasonable and had been estimated and presented in conformity with generally accepted petroleum engineering and evaluation methods and procedures.
All questions, including any suggested modifications to proved reserves estimates, that arose during the Independent Engineering Firms’ review process were resolved by Pemex-Explorationour exploration and Productionproduction segment to the satisfaction of the Independent Engineering Firms. The Independent Engineering Firms have concluded that our estimated total proved oil and natural gas reserve volumes set forth in this report are, in the aggregate, reasonable and have been prepared in accordance with RuleRule 4-10(a) of RegulationRegulation S-X of the SEC, as amended (which we refer to as RuleRule 4-10(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.
Mexico’sOur total proved developed and undeveloped reserves of crude oil, condensates and liquefiable hydrocarbons recoverable from field processing plants decreased by 3.0%9.5% in 2013,2016, from 11,4247,977 million barrels at
December 31, 2015 to 7,219 million barrels at December 31, 2012 to 11,079 million barrels at December 31, 2013. Mexico’s2016. Our proved developed reserves of crude oil, condensates and liquefiable hydrocarbons recoverable from processing plants decreased by 5.5%14.7% in 2013,2016, from 7,7905,725 million barrels at December 31, 20122015 to 7,3604,886 million barrels at December 31, 2013. These2016.These decreases were principally due to fewer positive revisions to our reserves estimates in 2013, as well as a decrease in extensions and discoveries, particularlyoil production in connection with the2016, lower prices of hydrocarbons, a decrease in field development activities at the ATG project, where the dismantling of fourand field laboratories resulted in a decrease in the number of wells completed, and the decrease in the number of exploratory activities carried out in the deep waters of the Gulf of Mexico.behavior. The amount of crude oil, condensate and liquefiable hydrocarbon reserves added in 20132016 was insufficient to offset the level of production in 2013,2016, which amounted to 1,037891 million barrels of crude oil, condensates and liquefiable hydrocarbons.
Mexico’sOur total proved developed and undeveloped dry gas reserves decreased by 3.5%18.9% in 2013,2016, from 12,7138,610 billion cubic feet at December 31, 20122015 to 12,2736,984 billion cubic feet at December 31, 2013. Mexico’s2016. Our proved developed dry gas reserves decreased by 6.2%24.9% in 2013,2016, from 7,9516,012 billion cubic feet at December 31, 20122015 to 7,4614,513 billion cubic feet at December 31, 2013.2016. These decreases were principally due to fewer positive revisions to our reserves estimates in 2013, as well as a decrease in extensionsoil production in 2016, lower prices of oil and discoveries.gas, a decrease in field development activities and field behavior. The amount of dry gas reserves added in 20132016 was insufficient to offset the level of production in 2013,2016, which amounted to 1,5391,134 billion cubic feet of dry gas. Mexico’sOur proved undeveloped dry gas reserves increaseddecreased by 1.0%4.9% in 2013,2016, from 4,7622,598 billion cubic feet at December 31, 20122015 to 4,8112,471 billion cubic feet at December 31, 2013. This increase was primarily due to field development activities in the Burgos and Veracruz basins.2016.
During 2013, 903.42016, proved reserves increased by 40 million barrels of oil equivalent were reclassified from proved undeveloped, probabledue to reclassifications, development, revisions and possible reserves to proved developed reserves, at a cost of Ps. 181,670 million. Field development activities, including well drilling and completion, contributed most significantly to the reclassification of proved undeveloped, probable and possible reserves to proved developed reserves, accounting for 655.4discoveries.
During 2016, exploratory activity in shallow waters incorporated approximately 57 million barrels of oil equivalent or 72.5%, of the total amount of reclassified reserves in 2013. The only fields containing material volumes of Mexico’sone new field located close to our existing facilities. We also maintained exploratory work in shallow waters in order to incorporate proved reserves that have remained undeveloped for five years or more are the Ayatsil, Ayín and Alux fields, which are all located offshore. These fields remain undeveloped due to delays in
construction related to certain unique field characteristics. In particular, the design of the development plan for the Ayatsil field, the largest of the three, has required additional time due to the complexity of this project, which is expected to represent Pemex-Exploration and Production’s first offshore project producing extra-heavy crude oil. As of the date of this report, three drilling platforms have been installed at the Ayatsil field and drilling activity is expected to beginsupport future new production in the near future. We also expect to continue to develop the Ayín and Alux fields during 2014.short term.
The following three tables of crude oil and dry gas reserves set forth our estimates of Mexico’sour proved reserves determined in accordance with Rule4-10(a).
Summary of Oil and Gas(1) Proved Reserves as of December 31, 2013
2016 Based on Average Fiscal Year Prices
Crude Oil and Condensates(2) | Dry Gas(3) | Crude Oil and Condensates(2) | Dry Gas(3) | |||||||||||||
(in millions of barrels) | (in billions of cubic feet) | (in millions of barrels) | (in billions of cubic feet) | |||||||||||||
Proved developed and undeveloped reserves | ||||||||||||||||
Proved developed and undeveloped reserves | ||||||||||||||||
Proved developed reserves | 7,360 | 7,461 | 4,886 | 4,513 | ||||||||||||
Proved undeveloped reserves | 3,719 | 4,811 | 2,233 | 2,471 | ||||||||||||
|
|
|
| |||||||||||||
Total proved reserves | 11,079 | 12,273 | 7,219 | 6,984 | ||||||||||||
|
|
|
|
Note: | Numbers may not total due to rounding. |
(1) | We do not currently produce synthetic oil or synthetic gas, or other natural resources from which synthetic oil or synthetic gas can be produced. |
(2) | Crude oil and condensate reserves include the fraction of liquefiable hydrocarbons recoverable in natural gas processing plants located at fields. |
(3) | Reserve volumes reported in this table are volumes of dry gas, although natural gas production reported in other tables refers to sour wet gas. There is a shrinkage in volume when natural gas liquids and impurities are extracted to obtain dry gas. Therefore, reported natural gas volumes are greater than dry gas volumes. |
Source: | Pemex Exploration and Production. |
Source: Pemex-Exploration and Production.
Crude Oil and Condensate Reserves
(including natural gas liquids)(1)
2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||||||||||||||||||||||
(in millions of barrels) | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||
Proved developed and undeveloped reserves | (in millions of barrels) | |||||||||||||||||||||||||||||||||||||||
At January 1 | 11,865 | 11,691 | 11,394 | 11,362 | 11,424 | 11,362 | 11,424 | 11,079 | 10,292 | 7,977 | ||||||||||||||||||||||||||||||
Revisions(2) | 577 | 515 | 824 | 1,012 | 630 | 1,012 | 630 | 95 | (1,491 | ) | 189 | |||||||||||||||||||||||||||||
Extensions and discoveries | 311 | 246 | 194 | 103 | 62 | 103 | 62 | 119 | 111 | (55 | ) | |||||||||||||||||||||||||||||
Production | (1,062 | ) | (1,059 | ) | (1,050 | ) | (1,053 | ) | (1,037 | ) | (1,053 | ) | (1,037 | ) | (1,001 | ) | (935 | ) | (891 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
At December 31 | 11,691 | 11,394 | 11,362 | 11,424 | 11,079 | 11,424 | 11,079 | 10,292 | 7,977 | 7,219 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Proved developed reserves at December 31 | 8,167 | 7,793 | 7,618 | 7,790 | 7,360 | 7,790 | 7,360 | 7,141 | 5,725 | 4,886 | ||||||||||||||||||||||||||||||
Proved undeveloped reserves at December 31 | 3,524 | 3,601 | 3,744 | 3,634 | 3,719 | 3,634 | 3,719 | 3,151 | 2,252 | 2,333 |
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, |
Source: Pemex-ExplorationPemex Exploration and Production.
Dry Gas Reserves
2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||||||||||||||||||||||
(in billions of cubic feet) | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||
Proved developed and undeveloped reserves | (in billions of cubic feet) | |||||||||||||||||||||||||||||||||||||||
At January 1 | 12,702 | 11,966 | 12,494 | 12,734 | 12,713 | 12,734 | 12,713 | 12,273 | 10,859 | 8,610 | ||||||||||||||||||||||||||||||
Revisions(1) | 504 | 1,449 | 1,592 | 1,377 | 1,010 | 1,377 | 1,010 | 4 | (955 | ) | (183 | ) | ||||||||||||||||||||||||||||
Extensions and discoveries | 404 | 770 | 249 | 162 | 89 | 162 | 89 | 93 | 47 | (308 | ) | |||||||||||||||||||||||||||||
Production(2) | (1,644 | ) | (1,691 | ) | (1,601 | ) | (1,560 | ) | (1,539 | ) | (1,560 | ) | (1,539 | ) | (1,511 | ) | (1,341 | ) | 1,134 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
At December 31 | 11,966 | 12,494 | 12,734 | 12,713 | 12,273 | 12,713 | 12,273 | 10,859 | 8,610 | 6,984 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Proved developed reserves at December 31 | 7,586 | 7,941 | 7,958 | 7,951 | 7,461 | 7,951 | 7,461 | 6,740 | 6,012 | 4,513 | ||||||||||||||||||||||||||||||
Proved undeveloped reserves at December 31 | 4,380 | 4,553 | 4,776 | 4,762 | 4,811 | 4,762 | 4,811 | 4,119 | 2,598 | 2,471 |
Note: Numbers may not total due to rounding.
(1) | Revisions include positive and negative changes due to new data from well drilling, |
(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-ExplorationPemex Exploration and Production.
The following table sets forth, as of December 31, 2013,2016, the volumes of proved developed and undeveloped reserves, the number of producing wells and the number of proved undeveloped locations for the fields that contained 89%95.1% of Mexico’sour proved reserves.
Reserves | ||||||||||||||||||||||||||||||||||||||||
Number of Producing Wells | Number of Undeveloped Locations(2) | Reserves | ||||||||||||||||||||||||||||||||||||||
Field | Proved(1) | Developed(1) | Undeveloped(1) | Proved(1) | Developed(1) | Undeveloped(1) | Number of Producing Wells | Number of Undeveloped Locations(2) | ||||||||||||||||||||||||||||||||
(in millions of barrels of oil equivalent) | (in millions of barrels of oil equivalent) | |||||||||||||||||||||||||||||||||||||||
Ku-Maloob-Zaap | 3,115.8 | 2,660.6 | 455.2 | 172 | 22 | 2,586.1 | 2,166.4 | 419.6 | 173 | 41 | ||||||||||||||||||||||||||||||
Akal | 1,666.2 | 1,666.2 | 0.0 | 140 | 0 | 822.4 | 822.4 | — | 98 | — | ||||||||||||||||||||||||||||||
Antonio J. Bermúdez(3) | 1,323.8 | 599.6 | 724.2 | 264 | 150 | |||||||||||||||||||||||||||||||||||
Aceite Terciario del Golfo | 806.3 | 260.6 | 545.7 | 2,675 | 5,545 | |||||||||||||||||||||||||||||||||||
Aceite Terciario del Golfo(3) | 730.5 | 130.1 | 600.4 | 1,978 | 4,202 | |||||||||||||||||||||||||||||||||||
Ayatsil | 639.5 | 147.1 | 492.4 | 6 | 14 | |||||||||||||||||||||||||||||||||||
Antonio J.Bermúdez(4) | 396.4 | 262.3 | 134 | 221 | 45 | |||||||||||||||||||||||||||||||||||
Jujo-Tecominoacán | 636.2 | 436.5 | 199.7 | 42 | 22 | 223.7 | 128.8 | 94.9 | 34 | 17 | ||||||||||||||||||||||||||||||
Tsimin | 498.1 | 186.0 | 312.1 | 7 | 19 | |||||||||||||||||||||||||||||||||||
Ayatsil | 316.7 | 0.0 | 316.7 | 0 | 17 | |||||||||||||||||||||||||||||||||||
Kayab | 184.3 | 0.0 | 184.3 | 0 | 8 | |||||||||||||||||||||||||||||||||||
Xux | 140.9 | 119.4 | 21.5 | 12 | 3 | |||||||||||||||||||||||||||||||||||
Xanab | 130.6 | 75.8 | 54.8 | 10 | 11 | |||||||||||||||||||||||||||||||||||
Onel | 130.5 | 89.3 | 41.1 | 6 | 8 | |||||||||||||||||||||||||||||||||||
Santuario | 108 | 33.7 | 74.3 | 29 | 32 | |||||||||||||||||||||||||||||||||||
Ek | 92.8 | 92.8 | — | 14 | — | |||||||||||||||||||||||||||||||||||
Balam | 87.8 | 87.8 | — | 7 | — | |||||||||||||||||||||||||||||||||||
Homol | 79.7 | 30.4 | 49.3 | 9 | 5 | |||||||||||||||||||||||||||||||||||
Tsimín | 72.2 | 72.2 | — | 16 | — | |||||||||||||||||||||||||||||||||||
Ebano-Pánuco-Cacalilao | 64.6 | 41.5 | 23 | 323 | 310 | |||||||||||||||||||||||||||||||||||
Lakach | 63.5 | — | 63.5 | — | 3 | |||||||||||||||||||||||||||||||||||
Tamaulipas Constituciones | 63.3 | 32.7 | 30.6 | 244 | 133 | |||||||||||||||||||||||||||||||||||
Tekel | 60.8 | — | 60.8 | — | 8 | |||||||||||||||||||||||||||||||||||
Pokche | 57.1 | — | 57.1 | — | 4 | |||||||||||||||||||||||||||||||||||
Xikin | 55.9 | — | 55.9 | — | 4 | |||||||||||||||||||||||||||||||||||
Sihil | 177.9 | 124.2 | 53.7 | 21 | 8 | 51.9 | 51.9 | — | 15 | — | ||||||||||||||||||||||||||||||
Arenque | 50.1 | 15.9 | 34.3 | 14 | 10 | |||||||||||||||||||||||||||||||||||
Kambesah | 48 | 48 | — | 5 | — | |||||||||||||||||||||||||||||||||||
Kab | 48 | 14.3 | 33.7 | 4 | 5 | |||||||||||||||||||||||||||||||||||
Kuil | 45.8 | 21.9 | 23.9 | 9 | 2 | |||||||||||||||||||||||||||||||||||
Puerto Ceiba | 45.1 | 29.9 | 15.2 | 14 | 10 | |||||||||||||||||||||||||||||||||||
Eltreinta | 44 | 21 | 23 | 8 | 16 | |||||||||||||||||||||||||||||||||||
Costero | 44 | 44 | — | 12 | — | |||||||||||||||||||||||||||||||||||
Giraldas | 43.2 | 34.7 | 8.5 | 9 | 1 | |||||||||||||||||||||||||||||||||||
Ixtal | 167.8 | 104.7 | 63.0 | 11 | 6 | 42 | 36.8 | 5.3 | 10 | — | ||||||||||||||||||||||||||||||
Pit | 151.5 | 0.0 | 151.5 | 0 | 12 | |||||||||||||||||||||||||||||||||||
Ayín | 38.8 | — | 38.8 | — | 4 | |||||||||||||||||||||||||||||||||||
Tizón | 37 | 37 | — | 11 | — | |||||||||||||||||||||||||||||||||||
Yaxché | 35.1 | 13 | 22.1 | 8 | 5 | |||||||||||||||||||||||||||||||||||
Gasífero | 34.9 | 23.5 | 11.4 | 22 | 9 | |||||||||||||||||||||||||||||||||||
Ogarrio | 34.7 | 33.8 | 0.9 | 108 | 2 | |||||||||||||||||||||||||||||||||||
Cuervito | 34.6 | 15.5 | 19.2 | 89 | 59 | |||||||||||||||||||||||||||||||||||
Utsil | 34.3 | — | 34.3 | — | 3 | |||||||||||||||||||||||||||||||||||
Terra | 31.8 | 15.6 | 16.2 | 11 | 4 | |||||||||||||||||||||||||||||||||||
Chuc | 29.9 | 26.8 | 3.1 | 13 | 1 | |||||||||||||||||||||||||||||||||||
Poza Rica | 29.6 | 25.1 | 4.5 | 93 | 19 | |||||||||||||||||||||||||||||||||||
Kax | 29.4 | 29.4 | — | 2 | — | |||||||||||||||||||||||||||||||||||
May | 132.4 | 105.8 | 26.6 | 16 | 6 | 29.2 | 29.2 | — | 12 | — | ||||||||||||||||||||||||||||||
Ek | 127.2 | 63.9 | 63.4 | 15 | 14 | |||||||||||||||||||||||||||||||||||
Kuil | 117.2 | 86.4 | 30.8 | 6 | 3 | |||||||||||||||||||||||||||||||||||
Xux | 112.5 | 0.0 | 112.5 | 0 | 12 | |||||||||||||||||||||||||||||||||||
Lakach | 103.2 | 0.0 | 103.2 | 0 | 5 | |||||||||||||||||||||||||||||||||||
Costero | 102.0 | 86.1 | 16.0 | 12 | 3 | |||||||||||||||||||||||||||||||||||
Sinán | 99.9 | 68.1 | 31.9 | 14 | 8 | |||||||||||||||||||||||||||||||||||
Caparroso-Pijije-Escuintle | 94.3 | 69.3 | 25.0 | 14 | 4 | |||||||||||||||||||||||||||||||||||
Terra | 88.8 | 50.3 | 38.5 | 7 | 11 | |||||||||||||||||||||||||||||||||||
Sen | 85.6 | 58.7 | 26.9 | 14 | 6 | |||||||||||||||||||||||||||||||||||
Xanab | 84.9 | 48.1 | 36.9 | 5 | 9 | |||||||||||||||||||||||||||||||||||
Arenque | 78.2 | 30.5 | 47.6 | 15 | 10 | |||||||||||||||||||||||||||||||||||
Homol | 74.2 | 46.4 | 27.8 | 6 | 4 | |||||||||||||||||||||||||||||||||||
Cárdenas | 71.7 | 57.3 | 14.4 | 12 | 4 | |||||||||||||||||||||||||||||||||||
Chinchorro | 29.1 | 22.4 | 6.7 | 5 | 2 |
Field Bricol Onel Chuc Balam Abkatún Mora Puerto Ceiba Pareto Ogarrio Bellota Teotleco Tizón Bolontikú Ébano Pánuco Cacalilao Edén-Jolote Tamaulipas Constituciones Yaxché Kab Gasífero Madrefil Cuervito Poza Rica Eltreinta Sunuapa San Ramón Caan Chinchorro Santuario Cuitláhuac Lum Nejo Arcabuz-Culebra Yagual Cinco Presidentes Rodador Magallanes-Tucán-Pajonal Tekel Tintal Paredón Papán Cauchy Total Mexico’s proved reserves Percentage Field Rabasa Teotleco Bellota Sen Madrefil Lum Cárdenas Etkal Cuitláhuac Tetl Caparroso-Pijije-Escuintle Cinco Presidentes Tupilco Nejo Ixtoc Edén-Jolote Cauchy Los Soldados Jaatsul Magallanes-Tucán-Pajonal Paredón San Ramón Nohoch Ayocote Taratunich Guaricho Uech Jacinto Sinán Mora Bacab Tintal Takín Sunuapa Esah Bedel Sini Total Our proved reserves Percentage Reserves Number of
Producing
Wells Number of
Undeveloped
Locations(2) Proved(1) Developed(1) Undeveloped(1) (in millions of barrels of oil equivalent) 71.7 30.2 41.5 7 7 67.4 31.3 36.1 2 5 62.4 59.3 3.2 16 0 59.7 31.5 28.2 7 1 58.0 57.7 0.2 13 0 56.8 46.6 10.2 7 4 56.6 33.1 23.5 21 20 54.8 33.2 21.6 4 5 54.2 47.4 6.8 115 17 52.3 34.0 18.4 7 5 51.3 41.1 10.2 11 3 50.8 39.7 11.1 9 4 49.4 32.0 17.4 7 4 49.2 19.2 30.1 389 356 48.3 26.8 21.5 8 9 45.3 20.2 25.0 353 110 43.5 27.1 16.5 10 7 41.5 20.5 20.9 7 8 39.6 16.9 22.7 14 20 36.7 17.8 18.9 2 1 36.6 16.6 20.0 89 65 35.4 32.3 3.1 120 15 34.2 1.3 32.9 1 16 33.9 30.9 2.9 13 1 30.9 25.0 5.9 62 15 30.3 30.3 0.0 14 0 29.9 21.0 8.9 4 4 29.5 24.6 4.9 20 20 29.0 17.6 11.3 209 26 27.0 14.4 12.6 2 4 24.1 22.5 1.6 235 14 22.7 16.9 5.8 607 51 22.7 14.0 8.7 5 4 19.5 16.5 3.0 50 9 19.2 18.0 1.2 38 8 18.9 10.8 8.1 62 8 16.5 0.0 16.5 0 1 15.5 4.1 11.4 6 10 15.2 11.7 3.5 4 1 14.8 13.8 1.0 18 1 14.7 14.5 0.2 31 1 11,986.8 7,831.8 4,155.0 6,067.0 6,768.0 13,438.5 8,794.9 4,643.6 89 % 89 % 89 % Reserves Proved(1) Developed(1) Undeveloped(1) Number of
Producing
Wells Number of
Undeveloped
Locations(2) (in millions of barrels of oil equivalent) 27.2 25.4 1.8 48 1 25.3 25.3 — 6 — 24.7 18.7 6 5 2 24.5 18.9 5.6 12 1 24.2 21.4 2.8 5 1 23.1 17.6 5.5 3 3 22.9 11.2 11.7 8 4 22.6 10.5 12.1 1 2 22.3 13 9.3 182 54 20.4 — 20.4 — 3 20.1 16.4 3.8 16 1 19.8 18.3 1.5 34 3 19.8 17.9 1.9 30 1 19.5 14.6 4.9 198 35 19.1 19.1 — 10 — 19.1 14.1 5 7 2 18.6 18.6 — 23 — 17.6 16 1.6 22 1 17.1 — 17.1 — 2 15.3 12.8 2.4 42 5 15 15 — 2 — 15 13.9 1 50 3 14.4 14.4 — 7 — 14.4 10.1 4.3 15 2 13.7 13.7 — 7 — 13.5 13.1 0.4 14 1 13.5 13.5 — 2 — 13.4 13.4 — 3 — 13 13 — 7 — 12.8 9.4 3.4 5 2 12.8 12.8 — 6 — 12.4 8.5 3.9 6 8 12.3 12.3 — 4 — 12.2 10.2 2.1 10 2 11.6 — 11.6 — 2 11.3 5.6 5.6 6 8 11.1 8.3 2.8 6 1 8,142.3 5,419.7 2,722.6 4,456 5,142 8,562.8 5,753.4 2,808.4 95.1 % 94.2 % 96.9 %
Note: Numbers may not total due to rounding.
(1) | Proved reserves, developed reserves and undeveloped reserves are expressed in millions of barrels of oil equivalent. To convert dry gas to barrels of oil equivalent, a factor of 5.201 thousand cubic feet of dry gas per barrel of oil equivalent is used. |
(2) | Undeveloped Locations refers to the number of geographic sites or locations where a well will be drilled to produce undeveloped proved reserves. |
(3) | Includes extraction assignments and temporary assignments. |
(4) | Includes the Cunduacán, Iride, Oxiacaque, Platanal and Samaria fields. |
Source: Pemex-ExplorationPemex Exploration and Production.
Pemex-Exploration and Production’sOur 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. In 2013, the RRR was 67.8%, which was 36.5 percentage points lower than the 2012 RRRDuring 2016, we obtained 40 million barrels of 104.3%. The fact that the RRR was less than 100% in 2013 represents a decline in Mexico’s proved reserves during this period. This decrease in the RRR was mainly due to a significant decrease in the amountoil equivalent of proved reserves, that were added aswhich represents a resultRRR of discoveries, extensions and positive revisions in 20134%. While low, our 2016 RRR is an improvement as compared to 2012. Specifically, lower levels2015, where there was no replacement of field development activitiesproved reserves. We expect continued improvements in the ATG project as well as the decrease in the number of exploratory activities carried out in the deep waters of the Gulf of Mexico, where the lack of infrastructure precluded us from booking proved reserves, contributed to the decrease inour RRR in 2013.
Our goal is to increase the RRR during 2014, in part by increasing Mexico’s proved reserves over the comingsubsequent years. We aim to accomplish this primarily through development of the Ku-Maloob-Zaap, Crudo Ligero Marino and ATG projects, as well as through the performance of delineation activities. We have developed these objectives based on reserves estimates, which are subject to the uncertainty and risks associated with hydrocarbon exploration and production activities. Additionally, future decisions regarding authorized exploration and exploitation investment levels may lead to related changes.
Our reserves production ratio, which is presented in terms of years, is calculated by dividing the estimated remaining reserves at the end of the relevant year by the total production of hydrocarbons for that year. As of December 31, 2013,2016, this ratio was equal to 10.17.7 years for proved reserves of crude oil equivalent, which represents a decrease of 1.0%4.9% as compared to the 20122015 reserves production ratio of 10.28.1 years for proved reserves. For more information, see Note 2629 to our consolidated financial statements included herein.
Sales Prices and Production Costs
The following table sets forth our average sales price per unit of oil and gas produced and our average production cost per unit of production, in the aggregate and for each field containing 15%10% or more of Mexico’sour proved reserves.
Unit Sales Prices and Production Costs(1)
Ku-Maloob-Zaap | Akal | Other Fields | All Fields | Ku-Maloob- Zaap | Akal | Other Fields | All Fields | |||||||||||||||||||||||||
(in U.S. dollars) | (in U.S. dollars) | |||||||||||||||||||||||||||||||
Year ended December 31, 2013 | ||||||||||||||||||||||||||||||||
Year ended December 31, 2016 | ||||||||||||||||||||||||||||||||
Average sales prices | ||||||||||||||||||||||||||||||||
Crude oil, per barrel | U.S. $ | 92.50 | U.S. $ | 98.72 | U.S. $ | 104.62 | U.S. $ | 99.92 | U.S. $ | 30.11 | U.S. $ | 36.67 | U.S. $ | 40.21 | U.S. $ | 36.55 | ||||||||||||||||
Natural gas, per thousand cubic feet | U.S. $ | 5.03 | U.S. $ | 4.95 | U.S. $ | 5.00 | U.S. $ | 4.93 | U.S. $ | 3.40 | U.S. $ | 2.86 | U.S. $ | 3.16 | U.S. $ | 3.01 | ||||||||||||||||
Average production costs, per barrel of oil equivalent | U.S. $ | 4.88 | U.S. $ | 11.01 | U.S. $ | 10.79 | U.S. $ | 7.91 | U.S. $ | 5.34 | U.S. $ | 16.53 | U.S. $ | 8.08 | U.S. $ | 7.78 | ||||||||||||||||
Year ended December 31, 2012 | ||||||||||||||||||||||||||||||||
Average sale prices | ||||||||||||||||||||||||||||||||
Year ended December 31, 2015 | ||||||||||||||||||||||||||||||||
Average sales prices | ||||||||||||||||||||||||||||||||
Crude oil, per barrel | U.S. $ | 95.53 | U.S. $ | 100.96 | U.S. $ | 106.55 | U.S. $ | 102.36 | U.S. $ | 41.21 | U.S. $ | 47.79 | U.S. $ | 51.51 | U.S. $ | 48.22 | ||||||||||||||||
Natural gas, per thousand cubic feet | U.S. $ | 4.18 | U.S. $ | 4.11 | U.S. $ | 4.18 | U.S. $ | 4.03 | U.S. $ | 4.59 | U.S. $ | 3.59 | U.S. $ | 3.79 | U.S. $ | 3.78 | ||||||||||||||||
Average production costs, per barrel of oil equivalent | U.S. $ | 4.86 | U.S. $ | 9.11 | U.S. $ | 6.88 | U.S. $ | 6.84 | U.S. $ | 6.93 | U.S. $ | 15.97 | U.S. $ | 9.69 | U.S. $ | 9.40 | ||||||||||||||||
Year ended December 31, 2011 | ||||||||||||||||||||||||||||||||
Average sale prices | ||||||||||||||||||||||||||||||||
Year ended December 31, 2014 | ||||||||||||||||||||||||||||||||
Average sales prices | ||||||||||||||||||||||||||||||||
Crude oil, per barrel | U.S. $ | 92.71 | U.S. $ | 97.69 | U.S. $ | 105.45 | U.S. $ | 100.01 | U.S. $ | 80.58 | U.S. $ | 90.67 | U.S. $ | 95.14 | U.S. $ | 90.37 | ||||||||||||||||
Natural gas, per thousand cubic feet | U.S. $ | 4.78 | U.S. $ | 4.47 | U.S. $ | 4.72 | U.S. $ | 4.68 | U.S. $ | 6.96 | U.S. $ | 5.36 | U.S. $ | 5.74 | U.S. $ | 5.71 | ||||||||||||||||
Average production costs, per barrel of oil equivalent | U.S. $ | 4.59 | U.S. $ | 6.70 | U.S. $ | 6.32 | U.S. $ | 6.12 | U.S.$ | 5.05 | U.S. $ | 10.79 | U.S. $ | 9.16 | U.S. $ | 8.22 |
(1) | Average of sales prices as of the last day of each month of the year. |
Source: Pemex-ExplorationPemex Exploration and Production.
In 2013,2016, our average production cost was U.S. $7.91$7.78 per barrel of oil equivalent, and represented an increasea decrease of 15.6%17.2%, as compared to our average production cost of U.S. $6.84$9.40 per barrel in 2012.2015. This increasedecrease resulted primarily from a 19.4% net increasedecrease in the costs associated withexpenses in the maintenance of wells, and related equipment and production facilities and other costs, including fees for general serviceslowernon-income related taxes and a 1.5% decrease in total hydrocarbons production in 2013 as compared to 2012, from 1,353 million barrels of oil equivalent in 2012 to 1,333 million barrels of oil equivalent in 2013.duties.
Pemex-ExplorationWe calculate and Production calculates and disclosesdisclose our production costs pursuant to international practices, which are based on U.S. GAAP under ASC Topic 932. In accordance with ASC Topic 932, the production cost per barrel of oil equivalent is calculated by dividing total production expenses (in U.S. dollars) by total production of hydrocarbonsoil and gas (in barrels of oil equivalent) for the relevant period.
Our total production cost consists of all direct and indirect costs incurred to produce crude oil and gas, including costs associated with the operation and maintenance of wells and related equipment and facilities. In addition, it includes costs of labor to operate the wells and facilities, the costs of materials, supplies and fuel consumed, including gas used for gas lifting, nitrogen and other chemicals, repair andnon-capitalized maintenance costs, and other costs, such as fees for general services, a labor fund for active personnel, corporate services, indirect overhead and indirect overhead.applicable taxes and duties. However, it excludesnon-cash expenses such as amortization of capitalized well expenses, the depreciation of fixed assets, expenses associated with the distribution and handling of hydrocarbonsoil and gas and other expenses that are related to exploration and drilling activities.
Crude Oil and Natural Gas Production
In 2013,2016, we produced an average of 2,5222,153.5 thousand barrels per day of crude oil, 1.0%5.0% less than our average production in 20122015 of 2,5482,266.8 thousand barrels per day of crude oil. The decrease in 2013 was greater than the decrease in 2012, and2016 resulted primarily from the decrease of production in the Cantarell, Delta del Grijalva, Jujo-Tecominoacán, Ixtal-Manik and Crudo Ligero Marino, El Golpe-Puerto Ceiba, Bellota-Chinchorro, Complejo Antonio J. Bermúdez, Cactus Sitio Grande, Ixtal-Manik, Chuc, Costero Terrestre, andTsimín-Xux projects. Accordingly, our average production of heavy crude oil decreased by 19.949.7 thousand barrels per day, or 1.4%4.3% less than the average daily production in 2012; additionally,2015, primarily due to a decrease in our drilling activities, the natural decline in field production, an increase in fractional flow water production and an increase in the gas production cap of reservoirs, particularly for reservoirs past the saturation stage. In 2016, the average production of light and extra-light crude oil production during 2013 decreased by 5.863.6 thousand barrels per day, or a 0.5% decrease5.7%, as compared to 2012.2015. This decrease occurred mainly due to a natural decline in production in the Chuhuk, Caan, and Ixtal fields of theAbkatún-Pol-Chuc business unit; the Tsimín, Sinán, Bolontikú, and Yaxché fields of the Litoral de Tabasco business unit; the Costero, Sitio Grande, Teotleco fields of the Macuspana-Muspac business unit and the Samaria, ��ride, Cunduacán and Sini fields of the Samaria-Luna business unit.
Crude oil can be classified by its sulfur content. “Sour” or heavy crude oil contains 3.4% or greater sulfur content by weight and “sweet” or light crude oil contains less than 1.0% sulfur content by weight. Most of our production is classified as sour or heavy crude oil.
Pemex-ExplorationOur exploration and Productionproduction segment primarily produces four types of crude oil:
Most of Pemex-Exploration and Production’sour production consists of Isthmus and Maya crude oil. In 2013, 54.1%2016, 51.2% of Pemex-Exploration and Production’sour total production of crude oil consisted of heavy crude oil and 45.9%48.8% consisted of light and extra-light crude oil. The Marine regions yield mostly heavy crude oil (66.4%(59.9% of these regions’ production in 2013)2016), although significant volumes of light crude oil are also produced there (33.6%(40.1% of these regions’ production in 2013)2016). The Southern region yields mainly light and extra-light crude oil (together, 94.5%93.5% of this region’s production in 2013)2016), and the Northern region yields both heavylight and extra-light crude oil (55.3%(42.8% of this region’s production in 2013)2016) and light and extra-lightheavy crude oil (44.7%(57.2% of this region’s production in 2013)2016).
The most productive crude oil and natural gas fields in the Gulf of Mexico are located in the Ku-Maloob-Zaap, Litoral de Tabasco,Abkatún-Pol-Chucand Cantarell business units in the Northeastern Marine region,regions and the Sarmaria Luna and Bellota-Jujo business units in the Ixtal, Xanab, Yaxché, Chuc and Homol fields in the Southwestern MarineSouthern region. In particular, theKu-Maloob-Zaap business unit was the most important crude oil producer in 2013,2016, producing an average of 863.8866.6 thousand barrels per day of crude oil per day in 2013,2016, or 34.2%40.2% of our total crude oil production for the year, and 405.1589.3 million cubic feet per day of natural gas, or 6.4%10.2% of our total natural gas production for the year. Our second most important business unit, the Cantarell business unit,crude oil producer was Litoral de Tabasco which produced an average of 439.8359.9 thousand barrels per day of crude oil per day in 2013,
2016, or 17.4%16.7% of our total crude oil production for the year, and an average of 1,007.1950.0 million cubic feet per day of natural gas, or 15.8%16.4% of our total natural gas production for the year.
The following table sets forth our annual crude oil production rates by type of oil for the five years ended December 31, 2013.2016.
Crude Oil Production
|
|
|
|
| 2013 vs. 2012 |
| 2016 vs. 2015 | |||||||||||||||||||||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||||||
(in thousands of barrels per day) | (%) | (in thousands of barrels per day) | (%) | |||||||||||||||||||||||||||||||||||||||||||||
Marine regions | ||||||||||||||||||||||||||||||||||||||||||||||||
Heavy crude oil | 1,446.1 | 1,380.5 | 1,322.8 | 1,280.2 | 1,258.3 | (1.7 | ) | 1,280.2 | 1,258.3 | 1,160.1 | 1,054.9 | 1,018.3 | (3.5 | ) | ||||||||||||||||||||||||||||||||||
Light crude oil(1) | 564.4 | 561.2 | 580.5 | 614.5 | 638.1 | 3.8 | 614.5 | 638.1 | 691.3 | 705.4 | 682.7 | (3.2 | ) | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total | 2,010.4 | 1,941.6 | 1,903.3 | 1,894.6 | 1,896.4 | 0.1 | 1,894.6 | 1,896.4 | 1,851.4 | 1,760.3 | 1,700.9 | (3.4 | ) | |||||||||||||||||||||||||||||||||||
Southern region | ||||||||||||||||||||||||||||||||||||||||||||||||
Heavy crude oil | 13.3 | 16.8 | 16.7 | 18.5 | 26.5 | 43.2 | 18.5 | 26.5 | 35.0 | 31.7 | 22.3 | (29.7 | ) | |||||||||||||||||||||||||||||||||||
Light crude oil(1) | 484.5 | 515.1 | 513.9 | 489.6 | 454.3 | (7.2 | ) | 489.6 | 454.3 | 417.4 | 362.1 | 321.8 | (11.1 | ) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total | 497.7 | 531.9 | 530.6 | 508.2 | 480.8 | (5.4 | ) | 508.2 | 480.8 | 452.4 | 393.8 | 344.1 | (12.6 | ) | ||||||||||||||||||||||||||||||||||
Northern region | ||||||||||||||||||||||||||||||||||||||||||||||||
Heavy crude oil | 60.7 | 66.7 | 77.6 | 86.3 | 80.2 | (7.1 | ) | 86.3 | 80.2 | 70.4 | 65.7 | 62.0 | (5.6 | ) | ||||||||||||||||||||||||||||||||||
Light crude oil(1)(2) | 32.7 | 36.8 | 41.2 | 58.8 | 64.7 | 10.0 | ||||||||||||||||||||||||||||||||||||||||||
Light crude oil(1) | 58.8 | 64.7 | 54.6 | 47.0 | 46.5 | (1.1 | ) | |||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total | 93.3 | 103.6 | 118.8 | 145.1 | 144.9 | (0.1 | ) | 145.1 | 144.9 | 125.0 | 112.7 | 108.5 | (3.7 | ) | ||||||||||||||||||||||||||||||||||
Total heavy crude oil | 1,520.0 | 1,464.0 | 1,417.1 | 1,385.0 | 1,365.1 | (1.4 | ) | 1,385.0 | 1,365.1 | 1,265.5 | 1,152.3 | 1,102.6 | (4.3 | ) | ||||||||||||||||||||||||||||||||||
Total light crude oil(1) | 1,081.5 | 1,113.0 | 1,135.5 | 1,162.9 | 1,157.1 | (0.5 | ) | 1,162.9 | 1,157.1 | 1,163.3 | 1,114.5 | 1,050.9 | (5.7 | ) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total crude oil | 2,601.5 | 2,577.0 | 2,552.6 | 2,547.9 | 2,522.1 | (1.0 | ) | 2,547.9 | 2,522.1 | 2,428.8 | 2,266.8 | 2,153.5 | (5.0 | ) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Note: Numbers may not total due to rounding.
(1) | Includes extra-light crude oil. |
Source:Pemex-ExplorationSource: Pemex Exploration and Production.
The following table sets forth our annual crude oil production by region and business unit for the five years ended December 31, 2013.2016.
Crude Oil Production
|
|
|
|
| 2013 vs. 2012 |
| 2016 vs. 2015 | |||||||||||||||||||||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||||||
(in thousands of barrels per day) | (%) | (in thousands of barrels per day) | (%) | |||||||||||||||||||||||||||||||||||||||||||||
Marine regions | ||||||||||||||||||||||||||||||||||||||||||||||||
Ku-Maloob-Zaap | 808.0 | 839.2 | 842.1 | 855.1 | 863.8 | 1.0 | 855.1 | 863.8 | 856.7 | 853.1 | 866.6 | 1.6 | ||||||||||||||||||||||||||||||||||||
Cantarell | 684.8 | 558.0 | 500.7 | 454.1 | 439.8 | (3.1 | ) | 454.1 | 439.8 | 374.9 | 273.4 | 215.8 | (21.1 | ) | ||||||||||||||||||||||||||||||||||
Litoral de Tabasco | 212.3 | 248.1 | 284.4 | 319.2 | 299.2 | (6.3 | ) | 319.2 | 299.2 | 320.4 | 347.2 | 359.9 | 3.7 | |||||||||||||||||||||||||||||||||||
Abkatún-Pol-Chuc | 305.4 | 296.3 | 276.2 | 266.3 | 293.6 | 10.3 | 266.3 | 293.6 | 299.3 | 286.7 | 258.7 | (9.8 | ) | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total | 2,010.4 | 1,941.6 | 1,903.3 | 1,894.6 | 1,896.4 | 0.1 | 1,894.6 | 1,896.4 | 1,851.4 | 1,760.3 | 1,701.0 | (3.4 | ) | |||||||||||||||||||||||||||||||||||
Southern region | ||||||||||||||||||||||||||||||||||||||||||||||||
Samaria-Luna | 199.9 | 217.5 | 222.7 | 205.1 | 172.5 | (15.9 | ) | 205.1 | 172.5 | 161.4 | 145.4 | 127.0 | (12.7 | ) | ||||||||||||||||||||||||||||||||||
Bellota-Jujo | 172.2 | 160.2 | 143.4 | 130.3 | 134.3 | 3.1 | 130.3 | 134.3 | 124.8 | 101.7 | 90.3 | (11.2 | ) | |||||||||||||||||||||||||||||||||||
Cinco Presidentes | 56.6 | 71.7 | 83.5 | 96.0 | 93.1 | (3.0 | ) | 96.0 | 93.1 | 89.1 | 87.6 | 80.0 | (8.7 | ) | ||||||||||||||||||||||||||||||||||
Macuspana-Muspac | 69.1 | 82.4 | 81.1 | 76.8 | 80.9 | 5.3 | 76.8 | 80.9 | 77.0 | 59.0 | 46.8 | (20.7 | ) | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total | 497.7 | 531.9 | 530.6 | 508.2 | 480.8 | (5.4 | ) | 508.2 | 480.8 | 452.4 | 393.8 | 344.1 | (12.6 | ) | ||||||||||||||||||||||||||||||||||
Northern region | ||||||||||||||||||||||||||||||||||||||||||||||||
Aceite Terciario del Golfo | 29.5 | 41.0 | 52.8 | 68.6 | 66.2 | (3.5 | ) | 68.6 | 66.2 | 48.8 | 42.0 | 39.8 | (5.2 | ) | ||||||||||||||||||||||||||||||||||
Poza Rica-Altamira | 59.1 | 56.5 | 60.2 | 67.8 | 61.5 | (9.3 | ) | 67.8 | 61.5 | 59.8 | 58.7 | 53.9 | (8.0 | ) | ||||||||||||||||||||||||||||||||||
Burgos | n.a. | 1.2 | 2.5 | 4.8 | 8.0 | 66.7 | 4.8 | 8.0 | 5.0 | 0.0 | — | �� | ||||||||||||||||||||||||||||||||||||
Veracruz | 4.6 | 4.9 | 3.2 | 4.0 | 9.3 | 132.5 | 4.0 | 9.3 | 11.4 | 12.1 | 14.8 | 22.3 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total | 93.3 | 103.6 | 118.8 | 145.1 | 144.9 | (0.1 | ) | 145.1 | 144.9 | 125.0 | 112.7 | 108.5 | (3.7 | ) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total crude oil | 2,601.5 | 2,577.0 | 2,552.6 | 2,547.9 | 2,522.1 | (1.0 | ) | 2,547.9 | 2,522.1 | 2,428.8 | 2,266.8 | 2,153.5 | (5.0 | ) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Note: Numbers may not total due to rounding.
Source: Pemex-ExplorationPemex Exploration and Production.
The Marine regions, which are comprised of the Northeastern Marine region and the Southwestern Marine region, are located on the continental shelf and its slope in the Gulf of Mexico. They cover a surface area of approximately 550,000 square kilometers, located entirely within Mexican territorial waters, along the coast of the states of Tabasco, Campeche, Yucatán, Quintana Roo and the southern coast of the state of Veracruz. In 2013,2016, the average crude oil production from the 4243 fields located in these regions was 1,896.41,701.0 thousand barrels per day.
The Southern region covers an area of approximately 392,000 square kilometers, including the states of Guerrero, Oaxaca, Chiapas, Tabasco, Yucatán, Quintana Roo, Campeche and Veracruz. In 2013,2016, the average crude oil production from the 10288 fields located in this region was 480.8344.1 thousand barrels per day.
The Northern region, including its offshore area, is located on the continental shelf in the Gulf of Mexico along the coast of the state of Tamaulipas and the northern coast of the state of Veracruz. It covers an area of approximately 1.8 million square kilometers. Our production area in the onshore portion of this region is located in, among others, the states of Veracruz, Tamaulipas, Nuevo León, Coahuila, San Luis Potosí and Puebla; we also produce offshore on the continental shelf in the Gulf of Mexico. In 2013,2016, the average crude oil and natural gas production in the Northern region totaled 144.9108.5 thousand barrels of crude oil per day and 2,060.61,427.8 million cubic feet of natural gas per day, respectively, from the 310274 oil and gas fields in this region.
The following table sets forth our annual natural gas production by region and business unit for the five years ended December 31, 2013.2016.
Natural Gas Production
| 2013 vs. 2012 |
| 2016 vs. 2015 | |||||||||||||||||||||||||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||||||
(in millions of cubic feet per day) | (%) | (in millions of cubic feet per day) | (%) | |||||||||||||||||||||||||||||||||||||||||||||
Marine regions | ||||||||||||||||||||||||||||||||||||||||||||||||
Cantarell | 1,455.3 | 1,251.9 | 1,074.7 | 1,004.2 | 1,007.1 | 0.3 | 1,004.2 | 1,007.1 | 1,120.9 | 1,277.1 | 1,184.9 | (7.2 | ) | |||||||||||||||||||||||||||||||||||
Litoral de Tabasco | 531.3 | 577.6 | 649.3 | 735.6 | 747.6 | 1.6 | 735.6 | 747.6 | 842.6 | 993.5 | 950.0 | (4.4 | ) | |||||||||||||||||||||||||||||||||||
Abkatún-Pol-Chuc | 580.2 | 594.2 | 559.0 | 523.6 | 579.4 | 10.7 | 523.6 | 579.4 | 553.4 | 455.9 | 390.5 | (14.3 | ) | |||||||||||||||||||||||||||||||||||
Ku-Maloob-Zaap | 327.2 | 331.8 | 330.9 | 329.7 | 405.1 | 22.9 | 329.7 | 405.1 | 571.0 | 556.5 | 589.3 | 5.9 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total | 2,894.0 | 2,755.4 | 2,613.9 | 2,593.1 | 2,739.2 | 5.6 | 2,593.1 | 2,739.2 | 3,087.9 | 3,283.0 | 3,114.6 | (5.1 | ) | |||||||||||||||||||||||||||||||||||
Southern region | ||||||||||||||||||||||||||||||||||||||||||||||||
Samaria-Luna | 678.6 | 773.9 | 715.7 | 695.9 | 606.3 | (12.9 | ) | 695.9 | 606.3 | 583.1 | 500.3 | 498.7 | (0.3 | ) | ||||||||||||||||||||||||||||||||||
Macuspana-Muspac | 591.0 | 580.0 | 571.5 | 542.9 | 515.1 | (5.1 | ) | 542.9 | 515.1 | 490.5 | 455.3 | 382.2 | (16.1 | ) | ||||||||||||||||||||||||||||||||||
Bellota-Jujo | 260.8 | 305.9 | 288.2 | 297.4 | 319.7 | 7.5 | 297.4 | 319.7 | 288.9 | 264.5 | 231.5 | (12.5 | ) | |||||||||||||||||||||||||||||||||||
Cinco Presidentes | 69.2 | 104.9 | 116.9 | 116.3 | 129.4 | 11.3 | 116.3 | 129.4 | 152.8 | 160.1 | 137.7 | (14.0 | ) | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total | 1,599.6 | 1,764.7 | 1,692.3 | 1,652.4 | 1,570.5 | (5.0 | ) | 1,652.4 | 1,570.5 | 1,515.4 | 1,380.1 | 1,250.0 | (9.4 | ) | ||||||||||||||||||||||||||||||||||
Northern region | ||||||||||||||||||||||||||||||||||||||||||||||||
Burgos | 1,515.2 | 1,478.4 | 1,344.1 | 1,269.3 | 1,286.6 | 1.4 | 1,269.3 | 1,286.6 | 1,221.0 | 1,099.0 | 864.6 | (21.3 | ) | |||||||||||||||||||||||||||||||||||
Veracruz | 809.6 | 818.9 | 716.7 | 601.2 | 494.5 | (17.7 | ) | 601.2 | 494.5 | 455.3 | 392.2 | 322.8 | (17.7 | ) | ||||||||||||||||||||||||||||||||||
Aceite Terciario del | ||||||||||||||||||||||||||||||||||||||||||||||||
Golfo | 78.7 | 85.3 | 111.9 | 148.8 | 167.0 | 12.2 | 148.8 | 167.0 | 149.5 | 145.2 | 142.5 | (1.9 | ) | |||||||||||||||||||||||||||||||||||
Poza Rica-Altamira | 133.5 | 117.3 | 115.2 | 120.0 | 112.4 | (6.3 | ) | 120.0 | 112.4 | 102.8 | 101.5 | 97.9 | (3.5 | ) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total | 2,537.1 | 2,499.9 | 2,287.8 | 2,139.3 | 2,060.6 | (3.7 | ) | 2,139.3 | 2,060.6 | 1,928.6 | 1,737.9 | 1,427.8 | (17.8 | ) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total natural gas | 7,030.7 | 7,020.0 | 6,594.1 | 6,384.7 | 6,370.3 | (0.2 | ) | 6,384.9 | 6,370.3 | 6,531.9 | 6,401.0 | 5,792.5 | (9.5 | ) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Note: Numbers may not total due to rounding.
Source: Pemex-ExplorationPemex Exploration and Production.
In 2013,2016, the Marine regions produced 2,739.23,114.6 million cubic feet per day of natural gas, or 43.0%53.8% of our total natural gas production, an increasea decrease of 5.6%5.1% as compared to the regions’ 20122015 production of 2,593.13,283.0 million cubic feet per day. In 2013,2016, the Southern region produced 1,570.51,250.0 million cubic feet per day of natural gas, or 24.7%21.6% of our total natural gas production, a decrease of 5.0%9.4% as compared to the region’s 20122015 production of 1,652.41,380.1 million cubic feet per day. In 2013,2016, the Northern region produced 2,060.61,427.8 million cubic feet per day of natural gas, or 32.3%24.6% of our total natural gas production, a decrease of 3.7%17.8% as compared to the region’s 20122015 production of 2,139.31,737.9 million cubic feet per day.
Pemex-Exploration and Production’sOur average natural gas production decreased by 0.2%9.5% in 2013,2016, from 6,3856,401.0 million cubic feet per day in 20122015 to 6,3705,792.5 million cubic feet per day in 2013.2016. Natural gas production associated with crude oil production accounted for 72.3%78.4% of total natural gas production in 2013,2016, with the remainder of natural gas production consisting of extraction from fields holding natural gas reserves. Although naturalAs of December 31, 2016, 170 of our 405 gas production is more geographically diverse than crude oil production, 182producing fields, (or 40.1% of the 454 producing fields)or 42.0%, producednon-associated gas. Thesenon-associated gas fields accounted for 27.7%21.6% of all natural gas production in 2013. Of total natural gas production, 43.0% originated in the Marine regions, 24.7% in the Southern region and the remainder, 32.3%, originated in the Northern region.
Investments in Exploration and Production
In nominal peso terms, our capital expenditures for exploration and production were Ps. 212,556137,242 million in 2013,2016, as compared to Ps. 193,801151,546 million in 2012,2015, representing a 9.7% increasedecrease of 9.4% in nominal terms. Of our total
capital expenditures, Ps. 29,73825,468 million was directed to theKu-Maloob-Zaap fields, Ps. 28,17113,802 million was directed to theTsimin-Xux project, Ps. 10,024 million was directed to the Chuc project, Ps. 8,179 million was directed to the Cantarell fields, Ps. 20,0494,931 million was directed to the ATGCrudo Ligero Marino project, Ps. 13,3123,543 million was directed to the Tsimin-XuxOgarrio-Sánchez Magallanes project, Ps. 11,4892,859 million was directed to the Delta del Gijalva fields, Ps. 2,562 million was directed to the Antonio J. Bermúdez fields, Ps. 10,3162,032 million was used for development of the Burgos natural gas fields (including Ps. 3,042146 million of investments made through the Financed Public Works Contracts Program, see “—Business Overview—Exploration and Production—Integrated Exploration and Production Contracts and Financed Public Works Contracts” in this Item 4), and Ps. 10,0001,487 million was directed to the Crudo Ligero Marino project, Ps. 9,897 million was directed to the Chuc project, Ps. 6,693 million was directed to the Ogarrio-Magallanes project, Ps. 6,169 million was directed to the Delta del Grijalva fields and Ps. 4,208 million was directed to the Cactus-Sitio GrandeATG project. During 2013,2016, expenditures for these 11ten projects amounted to 70.6%54.6% of all our capital expenditures for exploration and production. The remaining 29.4%45.4% amounted to Ps. 62,51462,355 million in nominal terms, which was directed to the 1916 remaining projects, as well as to other exploratory projects, other development projects and administrative and technical support.
20142017 Exploration and Production Capital Expenditures Budget.Budget
For 2014, Pemex-Exploration and Production has a2017, our total capital expenditures budget ofis Ps. 230,87973,927 million, as compared to Ps. 212,556137,242 million of capital expenditures made in 2013,2016, representing an increasea decrease of 8.6%.46.1%, largely due to our strategic focus on our most profitable projects. The 20142017 budget includes all of the 26 ongoing strategic exploration and production projects, and Ps. 31,69820,344 million in other exploratory projects.projects and Ps. 103 million in administrative and technical support. Approximately Ps. 197,28153,480 million, or 85.4%72% of our 20142017 capital expenditures budget, is to be allocated to projects relating to field development and pipelines. Approximately Ps. 33,59820,344 million, or 14.6%28% of the total budget, will be allocated to exploration activities.
The 20142017 exploration and production budget includes Ps. 34,29216,944 million for investments in theKu-Maloob-Zaap project, Ps. 24,375Ps. 7,804 million for the Integral Yaxché project, 6,730 million for the Chuc project, Ps. 4,744 million for theTsimin-Xux project, Ps. 2,031 million for the Cantarell project, Ps. 20,1791,990 million for the Tsimin-XuxDelta del Grijalva project, Ps. 13,4021,455 million for the Crudo Ligero Marino project, Ps. 12,245 million for the Chuc project, Ps. 11,824 million for the Lakach project, Ps. 10,7511,445 million for the Antonio J. Bermúdez project, Ps. 9,9351,307 million for theOgarrio-Sánchez Magallanes project, Ps. 904 million for the Burgos project, Ps. 8,173484 million for the Integral Yaxché project, Ps. 6,934 million for the Delta del Grijalva project, Ps. 5,242 million for the ATGBellota Chinchorro project, and Ps. 73,52728,089 million for the remaining projects, as well as for other exploratory and development projects and administrative and technical support.
Exploration and Production Investment Trends.Trends
In 2013,2016, we invested Ps. 32,17932,441 million in nominal terms, or 15.1%24% of the total capital expenditures of Pemex-Explorationour exploration and Production,production segment, in exploration activities, which represents a 3.0% decrease4% increase from the Ps. 33,16131,146 million invested in exploration activities in 2012.2015. In 2013,2016, we invested Ps. 180,377104,801 million in nominal terms, or 84.9%76% of theour total capital expenditures for Pemex-Exploration and Production, in development activities, which represents a 12.3% increase13% decrease from the Ps. 160,640120,398 million invested in development activities in 2012.2015.
In 2014,2017, we have budgeted Ps. 33,59820,885 million, or 14.6%28% of total capital expenditures, for exploration activities of Pemex-Explorationour exploration and Production,production segment, which represents a 4.4% increase37% decrease in nominal terms from the amount invested in exploration activities in 2013.2016. For development activities in 2017, we have budgeted Ps. 197,28153,045 million, or 85.4%72% of total capital expenditures, which represents a 9.4% increase49% decrease in nominal terms from the amount that Pemex-Exploration and Productionwe invested in development activities in 2013. In 2015, we expect to invest Ps. 37,835 million, or 16.5% of total2016.
Our projected exploration and development capital expenditures correspond to the areas assigned to us through Round Zero, which represent the areas in which we are exploring, operating or have an interest in developing based on our operational capabilities. The Ministry of Pemex-ExplorationEnergy granted us the right to explore and Production,develop these areas with the aim of maintaining our production levels in the short term, while providing us with sufficient exploration activities, which representsopportunities to increase our production in the future. Given that a 12.6% increase in nominal terms fromsignificant number of exploration areas were reserved by the amount budgetedMexican Government for 2014. In 2016,future competitive bidding rounds, we expectintend to invest Ps. 33,741 million, or 15.3%carry out our strategy of totalincreasing production and improving our RRR over time by entering into strategic joint
ventures with other oil and gas companies. Through these joint ventures, we hope to gain access to new technology and international best practices, while sharing the costs associated with security, occupational health and environmental protection and minimizing our operational risks. Over time, the allocation of our capital expenditures budget may change according to the results of Pemex-Exploration and Production,subsequent bidding rounds in exploration activities, which represents a 10.8% decrease in nominal terms from the amount projected for 2015. In 2017, we expect to invest Ps. 28,578 million, or 14.1% of total capital expenditures of Pemex-Exploration and Production, in exploration activities, which represents a 15.3% decrease in nominal terms from the amount projected for 2016.participate.
The capital expenditures of Pemex-Explorationour exploration and Productionproduction segment have constituted 83.9%74.5% or more of our total capital expenditures in each of the last five years. In 2014, Pemex-Exploration and Production’s2017, the budgeted capital expenditures of our exploration and production segment constitute 80.5%67.8% of our total.
The following table sets forth our capital expenditures related to exploration and development during the fivethree years ended December 31, 2013.
Exploration2016 and Development Capital Expenditures for 2009-2013
Year ended December 31,(1) | ||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||
(in millions of nominal pesos) | ||||||||||||||||||||
Exploration | Ps. | 30,372 | Ps. | 29,474 | Ps. | 31,133 | Ps. | 33,161 | Ps. | 32,179 | ||||||||||
Development | 150,135 | 165,364 | 145,926 | 160,640 | 180,377 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | Ps. | 180,507 | Ps. | 194,838 | Ps. | 177,059 | Ps. | 193,801 | Ps. | 212,556 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Source: Pemex-Exploration and Production.
The following table sets forth our estimated capital expenditures budget for exploration and development for 2014 through 2017.
Estimated Exploration and Development Capital Expenditures for 2014-2017
Year ended December 31,(1) | Year ended December 31,(1) | Budget 2017(2) | ||||||||||||||||||||||||||||||
2014(2) | 2015 | 2016 | 2017 | 2014 | 2015 | 2016 | ||||||||||||||||||||||||||
(in millions of constant 2014 pesos) | (in millions of nominal pesos) | |||||||||||||||||||||||||||||||
Exploration | Ps. | 33,598 | Ps. | 37,835 | Ps. | 33,741 | Ps. | 28,578 | Ps. | 35,082 | Ps. | 31,146 | Ps. | 32,441 | Ps. | 20,885 | ||||||||||||||||
Development | 197,281 | 192,147 | 186,333 | 174,536 | 186,986 | 120,398 | 104,801 | 53,042 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Total | Ps. | 230,879 | Ps. | 229,982 | Ps. | 220,075 | Ps. | 203,114 | Ps. | 222,069 | Ps. | 151,544 | Ps. | 137,242 | Ps. | 73,927 | ||||||||||||||||
|
|
|
|
|
|
|
|
Note: Numbers may not total due to rounding.
(1) | Amounts based on cash basis method of accounting. |
(2) |
Source: Pemex-ExplorationPemex Exploration and Production.
Investments and Production by Project
We conduct exploration, production and development activities in fields throughout Mexico. Our 11 main projects areKu-Maloob-Zaap,Tsimin-Xux, ATG, Cantarell, ATG, Tsimin-Xux,Crudo Ligero Marino, Burgos, Chuc, Antonio J. Bermúdez, Burgos, Crudo Ligero Marino, Chuc, OgarrioOgarrio-Sánchez Magallanes and Delta del Grijalva and Cactus-Sitio Grande.Grijalva. These projects are described below.
Exploration and Production’s Capital Expenditures
Year ended December 31,(1) | Budget 2017(2) | |||||||||||||||
2014 | 2015 | 2016 | ||||||||||||||
(in millions of pesos)(3) | ||||||||||||||||
Exploration and Production | ||||||||||||||||
Ku-Maloob-Zaap | Ps. | 34,232 | Ps. | 23,507 | Ps. | 25,468 | Ps. | 16,944 | ||||||||
Tsimin-Xux | 19,638 | 13,950 | 13,802 | 4,744 | ||||||||||||
Integral Yaxché | 4,695 | 6,649 | 10,116 | 7,804 | ||||||||||||
Chuc | 10,618 | 10,037 | 10,024 | 6,730 | ||||||||||||
Cantarell | 18,276 | 11,217 | 8,179 | 2,031 | ||||||||||||
Lakach | 6,141 | 3,079 | 5,683 | 1,635 | ||||||||||||
Crudo Ligero Marino | 12,829 | 9,275 | 4,931 | 1,455 | ||||||||||||
Ogarrio-Sánchez Magallanes | 7,020 | 4,626 | 3,543 | 1,307 | ||||||||||||
Delta del Grijalva | 5,348 | 4,687 | 2,859 | 1,990 | ||||||||||||
Ek-Balam | 5,304 | 2,722 | 2,687 | 433 | ||||||||||||
Antonio J. Bermúdez | 8,840 | 5,352 | 2,562 | 1,445 | ||||||||||||
Burgos | 11,695 | 5,855 | 2,032 | 904 | ||||||||||||
Bellota-Chinchorro | 3,739 | 4,070 | 1,978 | 484 | ||||||||||||
Ixtal-Manik | 1,815 | 1,439 | 1,740 | 265 | ||||||||||||
Cactus-Sitio Grande | 3,928 | 2,671 | 1,555 | 739 | ||||||||||||
Aceite Terciario del Golfo | 18,943 | 2,817 | 1,487 | 871 | ||||||||||||
El Golpe-Puerto Ceiba | 4,148 | 2,605 | 1,375 | 277 | ||||||||||||
Jujo-Tecominoacán | 1,680 | 847 | 997 | 938 | ||||||||||||
Veracruz Basin | 4,262 | 1,538 | 884 | 1,517 | ||||||||||||
Integral Poza Rica | 1,695 | 438 | 521 | 227 | ||||||||||||
Tamaulipas-Constituciones | 1,205 | 459 | 501 | 149 | ||||||||||||
Ayín-Alux | 789 | 1,161 | 443 | 1 | ||||||||||||
Costero Terrestre | 1,110 | 321 | 380 | 76 | ||||||||||||
Cuenca de Macuspana | 874 | 476 | 368 | 221 | ||||||||||||
Lankahuasa | 33 | — | 22 | 4 | ||||||||||||
Arenque | 708 | 26 | 16 | 6 | ||||||||||||
Other Exploratory Projects | 31,403 | 31,146 | 32,410 | 20,344 | ||||||||||||
Other Development Projects | 21 | 17 | 172 | 282 | ||||||||||||
Administrative and Technical Support | 1,078 | 557 | 507 | 103 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 222,069 | 151,546 | 137,242 | 73,927 | ||||||||||||
|
|
|
|
|
|
|
|
Notes: Numbers may not total due to rounding.
(1) | Amounts based on cash basis method of accounting. |
(2) | Budget authorized on December 14, 2016 and presented to the Board of Directors of Petróleos Mexicanos on April 7, 2017. |
(3) | Figures for 2014, 2015 and 2016 are stated in nominal pesos. Figures for 2017 are stated in constant 2017 pesos. |
Source: Petróleos Mexicanos.
Ku-Maloob-Zaap Project.TheKu-Maloob-Zaap project was our most important producer of heavy crude oil and plays an important part in the production of the Maya crude oil mix. It is the most important project in Mexico in terms of total proved hydrocarbon reserves and crude oil production. It is composed of the Ayatsil,
Bacab, Lum, Ku, Maloob, Tekel, Utsil and Zaap fields, and extends over an area of 149.5305.7 square kilometers. As of December 31, 2013,2016, there werewas a total of 217253 wells completed, 177189 of which were producing. The project produced an average of 863.8866.6 thousand barrels of crude oil per day, 34.2%40.2% of our total production, and 405.1589.3 million cubic feet of natural gas per day in
2013. 2016. As of December 31, 2013,2016, cumulative production was 4.25.1 billion barrels of crude oil and 2.02.6 trillion cubic feet of natural gas. As of December 31, 2013,2016, proved hydrocarbon reserves totaled 3.33.0 billion barrels of crude oil and 1.41.5 trillion cubic feet of natural gas. Total proved reserves were 3.63.4 billion barrels of oil equivalent, of which 2.72.3 billion barrels of oil equivalent were developed.proved developed reserves.
In nominal peso terms, Pemex-Explorationour exploration and Production’sproduction segment’s capital expenditures for this project were Ps. 21,55434,232 million in 2011,2014, Ps. 22,72023,507 million in 20122015 and Ps. 29,73825,468 million in 2013.2016. For 2014,2017, we anticipate that our capital expenditures will be Ps. 34,29216,944 million and that total accumulated capital expenditures for this project will reach approximately U.S. $20.1 billion.$359,951 million. In 2013, Pemex-Exploration and Production2016, we paid approximately U.S. $36.2$80.8 million to acquire approximately 106.5193.7 billion cubic feet of nitrogen for the pressure maintenance project in the fifth module of the Cantarell nitrogen cryogenic plant, which began operations in November 2006. In 2014,2017, we expect to spend approximately U.S. $35.9$102.9 million to acquire approximately 108.6255.4 billion cubic feet of nitrogen for injection into theKu-Maloob-Zaap fields.
CantarellTsimin-Xux Project. The Cantarell project is located on the continental shelf of the Gulf of Mexico. It consists of the Akal, Chac, Ixtoc, Kutz, Nohoch, Sihil and Takin fields, which extend over an area of 185.5 square kilometers. As of December 31, 2013, there were a total of 543 wells drilled in the Cantarell project, 198 of which were producing. During 2013, the Cantarell business unit, of which the Cantarell project is part, was the second most important producer of crude oil in Mexico, averaging 439.8 thousand barrels per day of crude oil. This was 3.1% less than 2012 production, which was 454.1 thousand barrels per day, as a result of the decline of these fields. Natural gas production from the Cantarell business unit during 2013 averaged 1,007.1 million cubic feet per day. This was 0.3% more than the 2012 average natural gas production, which was 1,004.2 million cubic feet per day, due to the higher gas-to-oil ratio of the producing wells located close to the secondary gas-cap of the Cantarell reservoir.
The Cantarell project averaged 379.6 thousand barrels per day of crude oil production during 2013. This was 6.2% less than production in 2012, which was 404.5 thousand barrels per day. Natural gas production from the Cantarell project during 2013 averaged 1,001.5 million cubic feet per day. This was 0.01% more than the 2012 average natural gas production, which was 1,001.4 million cubic feet per day.
As of December 31, 2013, cumulative production of the Cantarell project was 14.0 billion barrels of crude oil and 8.0 trillion cubic feet of natural gas. As of December 31, 2013, proved hydrocarbon reserves of the Cantarell project totaled 1.8 billion barrels of crude oil and 1.2 trillion cubic feet of natural gas. As of December 31, 2013, total proved reserves were 2.0 billion barrels of oil equivalent, 1.9 billion of which were developed.
The Akal field, which is the most important field in the Cantarell project, averaged 203.3 thousand barrels per day of crude oil production during 2013. This was 13.2% less than the average production in 2012, which was 234.1 thousand barrels per day.
In nominal peso terms, Pemex-Exploration and Production’s capital expenditures for the Cantarell project totaled Ps. 36,303 million in 2011, Ps. 42,139 million in 2012 and Ps. 28,171 million in 2013. For 2014, we have budgeted Ps. 24,375 million for capital expenditures for the Cantarell project. By the end of 2014, we expect our capital expenditures to total approximately U.S. $40.1 billion for this project.
On October 10, 1997, we awarded a build-own-operate contract for a nitrogen cryogenic plant at the Cantarell project to a consortium formed by BOC Holdings, Linde, Marubeni, West Coast Energy and ICA Fluor Daniel. Under this contract, the consortium is responsible for the financing, design, construction and operation of the plant. The plant began operations in 2000 and cost approximately Ps. 10,131 million in nominal terms. Pursuant to the terms of the agreement, Pemex-Exploration and Production has the right to acquire the nitrogen plant in the case of a default by the consortium. Pemex-Exploration and Production has the obligation to acquire the nitrogen plant if it defaults under the contract. Under the terms of the contract, Pemex-Exploration and
Production has committed to purchase 1.2 billion cubic feet per day of nitrogen from the consortium for a period of 15 years. Because less pressure will be necessary as the Cantarell fields decline, the volume of nitrogen needed for injection into these fields will decrease over time. We therefore plan to direct an increasing amount of this nitrogen to the Ku-Maloob-Zaap project.
During 2013, Pemex-Exploration and Production paid approximately U.S. $66.5 million under this contract for an approximate total volume of 418.2 billion cubic feet of nitrogen, which was injected into the Cantarell fields. In 2014, Pemex-Exploration and Production expects to pay approximately U.S. $66.2 million under this contract for an approximate total volume of 426.4 billion cubic feet of nitrogen to be injected into the fields.
Aceite Terciario del Golfo Project (formerly Paleocanal de Chicontepec). The ATG project is located in the Northern region and covers an area of 4,243 square kilometers. This project is comprised of 29 fields, which are divided among eight sectors. As of December 31, 2013, there were a total of 4,427 wells completed, of which 2,790 were producing. The project produced an average of 66.2 thousand barrels per day of crude oil in 2013 as compared to 68.6 thousand barrels per day of crude oil in 2012, which represented a 3.5% decrease, and 167.0 million cubic feet of natural gas per day in 2013 as compared to 148.8 million cubic feet of natural gas per day in 2012, which represented a 12.2% increase. The decrease in crude oil production was primarily due to the decline in pressure in certain reservoirs, whereas the increase in natural gas production was primarily due to the use of unconventional wells and artificial lift systems. As of December 31, 2013, cumulative production was254.1 million barrels of crude oil and 485.3 billion cubic feet of natural gas. As of December 31, 2013, proved hydrocarbon reserves totaled 606.7 million barrels of crude oil and 948.8 billion cubic feet of natural gas. Total proved reserves were 806.3 million barrels of oil equivalent, of which 260.6 million were developed. During 2013, field development activities at the project included the drilling of 102 wells, and the completion of 205 wells. All 205 completed wells were classified as producing, reflecting a success factor of 100%. As of December 31, 2013, 72% of the total producing wells were operating with artificial lift systems, such as beam pumps and gas lifts, while the remaining 28% were “flowing wells” that are classified accordingly because they did not require any means of artificial lift.
In nominal peso terms, our capital expenditures for the ATG project were Ps. 21,919 in 2011, Ps. 20,864 million in 2012 and Ps. 20,049 million in 2013. For 2014, we anticipate that capital expenditures for this project will be Ps. 5,242 million and that total accumulated investments in this project will be approximately U.S. $11.7 billion.
Tsimin-Xux Project.This project consists of the Tsimin and Xux fields, which include volatile oil and gas condensate reservoirs in the shallow waters of the Gulf of Mexico. The Tsimin field is located 62 kilometers from the Dos Bocas Marine Terminal in Paraíso, Tabasco, while the Xux field is located on the continental shelf of the Gulf of Mexico, approximately ten kilometers off the coast of Tabasco. This project is geographically bounded by a 500-meter isobath to the north and the coast of Tabasco. During 2013, four new wells were completed at the Tsimin field and2016, one new well was completed at the Tsimin field and two new wells were completed at the Xux field. During 2013,2016, average daily production at theTsimin-Xux project totaled 40.0114.0 thousand barrels of crude oil and 160.0 million cubic feet of natural gas. The development plan for this project estimates that average daily production will peak at 144 thousand barrels of crude oil and 663552.5 million cubic feet of natural gas. During 2013,2016, the sales prices of the light and extra-light crude oil produced at this field averaged more thanapproximately U.S. $90.00$44.87 per barrel, making this one of our most important projects in terms of revenue generation.
As of December 31, 2013,2016, cumulative production totaled 12.10.1 billion barrels of crude oil and 53.40.6 trillion cubic feet of natural gas. Proved oil and gas reserves totaled 102.6 million barrels of crude oil and 0.6 trillion cubic feet of natural gas. Total proved reserves were 213.1 million barrels of oil equivalent, of which 191.6 million barrels of oil equivalent were proved developed reserves.
In nominal peso terms, our exploration and production segment’s capital expenditures for theTsimin-Xux project were Ps. 13,802 million in 2016. In 2017, we expect capital expenditures for this project to total Ps. 4,744 million.
Chuc Project.The Chuc project is the second largest producer of light crude oil in the Southwestern Marine region, and includes the operation and maintenance of thePol-A facility and water injection complexes. In 2013, the Ministry of Finance and Public Credit approved the integration of the Caan project into the Chuc project. This project covers an area of 213 square kilometers and has been exploited by our exploration and production segment since 1981. The fields of this project are located on the continental shelf of the Gulf of Mexico, off the coast of the states of Tabasco and Campeche, at a depth of between the20- and100-meter isobaths, approximately 132 kilometers from the Dos Bocas Marine Terminal in Paraíso, Tabasco, and 79 kilometers northeast of Ciudad del Carmen, Campeche. The fields in the project include Abkatún, Batab, Caan, Ché, Chuc, Chuhuk, Etkal, Homol, Kanaab, Kuil, Onel, Pol, Taratunich and Tumut. In January 2007, the Pol and Batab projects were merged into the Chuc project. As of December 31, 2016, 113 wells had been completed, of which 77 were producing. During 2016, average production totaled 220.4 thousand barrels per day of crude oil and 329.9 million cubic feet per day of natural gas. As of December 31, 2016, cumulative production totaled 5.7 billion barrels of crude oil and 6.6 trillion cubic feet of natural gas. As of December 31, 2016, proved hydrocarbon reserves totaled 297.1 million barrels of oil and 518.7 billion cubic feet of natural gas, or 377.8 million barrels of oil equivalent. As of December 31, 2016, total proved developed reserves were 240.2 million barrels of oil equivalent.
In nominal peso terms, our exploration and production segment’s capital expenditures for the Chuc project were Ps. 10,618 million in 2014, Ps. 10,037 million in 2015 and Ps. 10,024 million in 2016. In 2017, we expect our capital expenditures to be Ps. 6,730 million and anticipate that our total accumulated capital expenditures for this project will reach approximately U.S. $142,969 million.
Cantarell Project.The Cantarell project is located on the continental shelf of the Gulf of Mexico. It consists of the Akal, Chac, Ixtoc, Kambesah, Kutz, Nohoch, Sihil and Takin fields, which extend over an area of 294.4 square kilometers. As of December 31, 2016, there was a total of 561 wells drilled in the Cantarell project, 151 of which were producing. During 2016, the Cantarell business unit, of which the Cantarell project is part, was the fourth most important producer of crude oil in Mexico, averaging 215.8 thousand barrels per day of crude oil. This was 21.1% less than 2015 production, which was 273.4 thousand barrels per day, as a result of the decline of crude oil reserves remaining in these fields. Natural gas production from the Cantarell business unit during 2016 averaged 1,184.9 million cubic feet per day. This was 7.2% less than the 2015 average natural gas production, which was 1,277.1 million cubic feet per day, due to the natural decline of field production and an increase in the fractional water flow of wells in highly fractured deposits.
As of December 31, 2016, cumulative production of the Cantarell project was 14.2 billion barrels of crude oil and 9.3 trillion cubic feet of natural gas. As of December 31, 2016, proved oil and gas reserves of the Cantarell project totaled 769.8 billion barrels of crude oil and 959.3 trillion cubic feet of natural gas. As of December 31, 2016, total proved reserves were 977.9 million barrels of oil equivalent, all of which were proved developed reserves.
The Akal field, which is the most important field in the Cantarell project, averaged 69.5 thousand barrels per day of crude oil production during 2016. This was 30.0% less than the average production in 2015, which was 99.4 thousand barrels per day.
In nominal peso terms, our exploration and production segment’s capital expenditures for the Cantarell project totaled Ps. 18,276 million in 2014, Ps. 11,217 million in 2015 and Ps. 8,179 million in 2016. For 2017, we budgeted Ps. 2,031 million for capital expenditures for the Cantarell project. By the end of 2017, we expect our capital expenditures to total approximately U.S. $43,146 million for this project.
On October 10, 1997, we awarded abuild-own-operate contract for a nitrogen cryogenic plant at the Cantarell project to a consortium formed by BOC Holdings, Linde, Marubeni, West Coast Energy and ICA Fluor Daniel. Under this contract, the consortium is responsible for the financing, design, construction and operation of the plant. The plant began operations in 2000 and cost approximately Ps. 10,131 million. Pursuant to the terms of the agreement, Pemex Exploration and Production has the right to acquire the nitrogen plant in the case of a default by the consortium. Pemex Exploration and Production has the obligation to acquire the nitrogen plant if it defaults under the contract. Under the terms of the contract, Pemex Exploration and Production committed to purchasing 1.2 billion cubic feet per day of nitrogen from the consortium and to continue to supply service through June 2027.
During 2016, we paid approximately U.S. $108.5 million under this contract for an approximate total volume of 250.1 billion cubic feet of nitrogen, which was injected into the Cantarell fields. In 2017, our exploration and production segment expects to pay approximately U.S. $152.6 million under this contract for an approximate total volume of 438.0 billion cubic feet of nitrogen to be injected into the fields.
Crudo Ligero Marino Project.In 2013, the Ministry of Finance and Public Credit approved the designation of the Crudo Ligero Marino project as a stand-alone project, thereby separating it from the Strategic Gas Program of which it formed part from 2001 through 2012. In 2013, theOch-Uech-Kax project was integrated into this project. The main objectives for the Crudo Ligero Marino project during the years 2015 to 2037 are to continue constructing six marine structures, in addition to the marine structure completed during 2014, drill additional wells, implement secondary recovery, as well as intervention, optimization and maintenance techniques to its
facilities, particularly in the Sinan, Kab and May fields. As of December 31, 2016, a total of 99 wells had been completed at this project, of which 41 were producing. During 2016, average daily production totaled 86.4 thousand barrels of crude oil and 280.9 million cubic feet of natural gas. As of December 31, 2016, cumulative production was 885.9 million barrels of crude oil and 2,409.4 billion cubic feet of natural gas. Proved oil and gas reserves totaled 91.2 million barrels of crude oil and 268.3 billion cubic feet of natural gas. Total proved reserves were 147.9 million barrels of oil equivalent, of which 114.2 million barrels were proved developed reserves.
In nominal peso terms, our exploration and production segment’s capital expenditures for the Crudo Ligero Marino project totaled Ps. 4,931 million in 2016. For 2017, we anticipate our capital expenditures to total Ps. 1,455 million.
Ogarrio-Sánchez Magallanes Project.TheOgarrio-Sánchez Magallanes project is composed of 21 crude oil and natural gas producing fields and forms part of the Cinco Presidentes business unit. This project is located between the state borders of Veracruz and Tabasco and covers an area of 10,820 square kilometers. From a geological standpoint, this project pertains to the Isthmus Saline basin, specifically the southeastern basins at the Tertiary level. TheOgarrio-Sánchez Magallanes project is geographically bounded by the Gulf of Mexico to the north, the geological folds of the Sierra Madre of Chiapas to the south, the Tertiary basin of Veracruz to the west and the Comalcalco Tertiary basin to the east. The primary objective of this project is to increase production levels through the drilling of development wells and infill wells, which are drilled between producing wells to more efficiently recover oil and gas reserves, the execution of workovers of wells and the implementation of secondary and enhanced oil recovery processes. In addition, we aim to optimize the infrastructure of this project in order to counteract the decreases in production levels that result from the natural depletion of its reservoirs.
As of December 31, 2016, theOgarrio-Sánchez Magallanes project had 524 producing wells and 27 new wells had been completed during 2016. Average daily production totaled 80.0 thousand barrels of crude oil and 137.7 million cubic feet of natural gas during 2016. As of December 31, 2016, cumulative production was 1.3 billion barrels of crude oil and 1.9 trillion cubic feet of natural gas. Proved hydrocarbon reserves totaled 278.2149.9 million barrels of crude oil and 1.6 trillion268.1 billion cubic feet of natural gas. Total proved reserves were 610.6196.8 million barrels of oil equivalent, of which 186.0175.5 million barrels were developed.proved developed reserves.
In nominal peso terms, our capital expenditures for the Tsimin-XuxOgarrio-Sánchez Magallanes project were Ps. 13,3123,543 million in 2013. 2016. For 2017, we anticipate that our capital expenditures will total Ps. 1,307 million.
Delta del Grijalva Project.The Delta del Grijalva project is the most important project in the Southern region in terms of both oil and gas production. The project covers an area of 1,343 square kilometers and has been exploited by our exploration and production segment since 1982. As of December 31, 2016, there was a total of 196 wells drilled, of which 60 were producing. During 2016, the project produced an average of 81.6 thousand barrels per day of crude oil and 325.4 million cubic feet per day of natural gas. The most important fields are Terra, Tizón, Sen and Caparroso-Pijije-Escuintle.
• | Terra.This field covers an area of 13.7 square kilometers. As of December 31, 2016, a total of 13 wells had been completed, 11 of which were producing. During 2016, the field produced an average of 21.7 thousand barrels per day of crude oil and 65.2 million cubic feet per day of natural gas. As of December 31, 2016, cumulative production was 43.6 million barrels of crude oil and 137.5 billion cubic feet of natural gas. Proved hydrocarbon reserves totaled 18.4 million barrels of crude oil and 56.9 billion cubic feet of natural gas. As of December 31, 2016, total proved reserves were 31.8 million barrels of oil equivalent, 15.6 million of which were proved developed reserves. |
• | Sen.This field covers an area of 45.1 square kilometers. As of December 31, 2016, a total of 49 wells had been completed, 13 of which were producing. During 2016, the field produced an average of 5.1 thousand barrels per day of crude oil and 20.7 million cubic feet per day of natural gas. As of December 31, 2016, cumulative production was 312.8 million barrels of crude oil and 858.0 billion |
cubic feet of natural gas. Proved hydrocarbon reserves totaled 13.3 million barrels of crude oil and 48.0 billion cubic feet of natural gas. As of December 31, 2016, total proved reserves were 24.5 million barrels of oil equivalent, 18.9 million of which were proved developed reserves. |
• | Caparroso-Pijije-Escuintle.This field covers an area of 28.2 square kilometers. As of December 31, 2016, a total of 53 wells had been completed, 14 of which were producing. During 2016, the field produced an average of 12.8 thousand barrels per day of crude oil and 35.9 million cubic feet per day of natural gas. As of December 31, 2016, cumulative production was 231.3 million barrels of crude oil and 648.8 billion cubic feet of natural gas. Proved hydrocarbon reserves totaled 11.7 million barrels of crude oil and 35.9 billion cubic feet of natural gas. As of December 31, 2016, total proved reserves were 20.1 million barrels of oil equivalent, 16.4 million of which were proved developed reserves. |
• | Tizón.This field covers an area of 17.8 square kilometers. As of December 31, 2016, a total of 17 wells had been completed, 11 of which were producing. During 2016, the field produced an average of 28.5 thousand barrels per day of crude oil and 162.5 million cubic feet per day of natural gas. As of December 31, 2016, cumulative production was 76.4 million barrels of crude oil and 437.7 billion cubic feet of natural gas. Proved hydrocarbon reserves totaled 16.3 million barrels of crude oil and 88.1 billion cubic feet of natural gas. As of December 31, 2016, total proved reserves were 37.0 million barrels of oil equivalent, 37.0 million of which were proved developed reserves. |
As of December 31, 2016, cumulative production in the Delta del Grijalva project was 0.8 billion barrels of crude oil and 2.9 trillion cubic feet of natural gas. Proved oil and gas reserves as of December 31, 2016 totaled 67.8 million barrels of crude oil and 259.0 billion cubic feet of natural gas. As of December 31, 2016, total proved reserves were 128.6 million barrels of oil equivalent, 100.3 million of which were proved developed reserves.
In 2014, we expectnominal peso terms, our exploration and production segment’s capital expenditures for thisthe Delta del Grijalva project were Ps. 5,348 million in 2014, Ps. 4,687 million in 2015 and Ps. 2,859 million in 2016. In 2017, we expect our capital expenditures to be Ps. 1,990 million, bringing our total capital expenditures for the project to total Ps. 20,179 million.approximately U.S. $42,275 billion.
Antonio J. Bermúdez Project.In 2002, we began investing in the Antonio J. Bermúdez project, the main investment project in the Southern region and the fifth largest in Mexico. This project is designed to accelerate reserves recovery, as well as increase the recovery factor by drilling additional wells and implementing a system of pressure maintenance through nitrogen injection. It consists of the Samaria, Cunduacán, Oxiacaque, Iride and Platanal fields, and covers an area of 163 square kilometers. As of December 31, 2013,2016, a total of 789845 wells had been completed, of which 244239 were producing. During 2013,2016, the project produced an average of 67.345.4 thousand barrels per day of crude oil and 223.8173.3 million cubic feet per day of natural gas per day.gas. As of December 31, 2013,2016, cumulative production was 2.93.0 billion barrels of crude oil and 4.44.6 trillion cubic feet of natural gas. As of December 31, 2013,2016, proved hydrocarbon reserves in this field totaled 0.8 billion256.2 million barrels of crude oil and 2.0 trillion601 billion cubic feet of natural gas. As of December 31, 2013,2016, total proved reserves were 1.3 billion396.4 million barrels of oil equivalent, of which 0.6 billion262.3 million were developed.proved developed reserves.
In nominal peso terms, our exploration and production segment’s capital expenditures for the Antonio J. Bermúdez project were Ps. 11,2188,840 million in 2011,2014, Ps. 13,1265,352 million in 20122015 and Ps. 11,4892,562 million in 2013.2016. For 2014,2017, we anticipate that our capital expenditures for this project will be Ps. 10,7511,445 million and that our total accumulated investments in the project will reach approximately U.S. $8.5$30,697 billion. In March 2005, we entered into a contract with Praxair México, S. de R.L. de C.V. to build, own and operate a nitrogen cryogenic plant. Construction of this plant, which was completed in June 2008. After completing testing in July 2008, we began injecting 190 million cubic feet per day of nitrogen into the project. In 2013,2016, we paid approximately Ps. 68.3808.5 million to acquire nitrogen from this plant, that enabled uswhich we used to inject approximately 187.1131.7 million cubic feet per day during 20132016 for pressure maintenance in connection with the project. From 2014 toBetween 2016 and 2022, we plan to continue to inject the same volume of nitrogen.
Burgos Project.The Burgos project is the largest producer ofnon-associated gas in Mexico. In 1997, our exploration and production segment, through Pemex-Exploration and Production, initiated a development program for the Burgos natural gas fields. The purpose of the Burgos project is to enable us to meet increasing domestic demand for natural gas. The fields inBurgosin Burgos accounted for 20.2%14.9% of our total natural gas production in 2013.2016. The project is located in northeastern Mexico.
During 2013,2016, the Burgos project produced an average of 1.3864.6 billion cubic feet per day of natural gas per day.gas. As of December 31, 2013,2016, the drilling of 7,7627,977 wells had been completed, 3,1703,042 of which were producing. The most important fields are the Nejo, Arcabuz-Culebra, Cuitláhuac, Cuervito, Topo,Velero, Comitas and Santa Anita Nejo and Palmito fields, which together produced 43.6%54.0% of the total production of the Burgos project in 2013.2016.
Main Fields of the Burgos Project
(as of December 31, 2013)2016)
Arcabuz- Culebra | Cuitláhuac | Cuervito | Topo | Santa Anita | Nejo | Palmito | Nejo | Arcabuz- Culebra | Cuitláhuac | Velero | Cuervito | Santa Anita | Comitas | |||||||||||||||||||||||||||||||||||||||||||
Total acreage (square kilometers) | 380 | 221 | 50 | 41 | 53 | 164 | 64 | |||||||||||||||||||||||||||||||||||||||||||||||||
Developed acreage | 361 | 208 | 33 | 32 | 40 | 157 | 60 | |||||||||||||||||||||||||||||||||||||||||||||||||
Undeveloped acreage | 19 | 13 | 17 | 9 | 13 | 7 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||
Wells completed | 943 | 431 | 128 | 71 | 73 | 312 | 134 | 407 | 968 | 443 | 219 | 135 | 79 | 137 | ||||||||||||||||||||||||||||||||||||||||||
Producing wells | 603 | 209 | 89 | 37 | 56 | 235 | 88 | 261 | 575 | 196 | 134 | 92 | 59 | 92 | ||||||||||||||||||||||||||||||||||||||||||
2013 production of natural gas (million cubic feet per day) | 130.4 | 92.8 | 48.9 | 33.8 | 37.5 | 180.6 | 37.0 | |||||||||||||||||||||||||||||||||||||||||||||||||
2016 production of natural gas (million cubic feet per day) | 176 | 101 | 64 | 36 | 29 | 29 | 32 | |||||||||||||||||||||||||||||||||||||||||||||||||
Cumulative production of natural gas (billion cubic feet) | 1,914.7 | 705.3 | 155.5 | 121.1 | 216.2 | 269.1 | 85.4 | 489.5 | 2,043.0 | 788.3 | 337.5 | 198.4 | 254.4 | 212.0 | ||||||||||||||||||||||||||||||||||||||||||
Proved reserves of natural gas (billion cubic feet) | 117.0 | 137.2 | 163.2 | 41.6 | 66.3 | 99.7 | 55.0 | 82.5 | 47.6 | 107.8 | 16 | 140.4 | 49.6 | 34.6 | ||||||||||||||||||||||||||||||||||||||||||
Proved developed reserves | 86.2 | 83.6 | 74.0 | 25.0 | 40.1 | 92.9 | 45.7 | 62.3 | 45.9 | 62.8 | 16 | 62.7 | 31.4 | 32.5 | ||||||||||||||||||||||||||||||||||||||||||
Proved undeveloped reserves | 30.8 | 53.6 | 89.2 | 16.6 | 26.2 | 6.8 | 9.3 | 20.2 | 1.7 | 45 | 0 | 77.7 | 18.2 | 2.1 |
From 2009 to 2013, exploration activitiesSource: Pemex Exploration and the reclassification of reserves increased estimated proved reserves in Burgos by 465.2 million barrels of oil equivalent. Production during this period totaled 510.6 million barrels of oil equivalent. Production.
During 2013,2016, proved reserves decreased by 36.431.7 million barrels of oil equivalent, from 382.2210.5 million barrels of oil equivalent in 20122015 to 345.8178.8 million barrels of oil equivalent in 2013.2016, primarily due to reduced oil production in 2016, lower prices of hydrocarbons and a decrease in development activities.
In nominal peso terms, our exploration and production segment’s capital expenditures (including capital expenditures made pursuant to Financed Public Works Contracts, or FPWC)FPWCs) for the Burgos project were Ps. 19,56411,695 million in 2011,2014, Ps. 17,3245,855 million in 20122015 and Ps. 10,3162,032 million in 2013.2016. For 2014,2017, we anticipate that our capital expenditures for this project will amount to Ps. 9,935904 million and that our total accumulated capital expenditures will reach approximately U.S. $19.3$19,204 billion.
Crudo Ligero Marino Project.Aceite Terciario del Golfo Project (formerly Paleocanal de Chicontepec). In 2013,The ATG project is located in the SHCP approved designating the Crudo Ligero MarinoNorthern region and covers an area of 4,243 square kilometers. This project as a stand-alone project, thereby separating it from the Strategic Gas Program ofcomprises 29 fields, which it formed part from 2001 through 2012. In 2013, the Och-Uech-Kax project was integrated into this project. The main objectives for the Crudo Ligero Marino project during the years 2013 to 2037 are to continue constructing seven ships, implement secondary recovery techniques at the May and Bolontiku fields and carry out optimization and maintenance activities at its facilities.divided among eight sectors. As of December 31, 2013,2016, there was a total of 894,544 wells had been completed, at this project, of which 562,224 were producing. During 2013,The project produced an average daily production totaled 159.0of 39.8 thousand barrels of crude oil and 546.8 million cubic feet of natural gas. As of December 31, 2013, cumulative production was 0.8 billionper day in 2016 as compared to 42.0 thousand barrels of crude oil and 2.0 trillion cubic feet of natural gas. Proved hydrocarbon reserves totaled 259.9 million barrels of crude oil and 0.9 trillion cubic feet of natural gas. Total proved reserves were 428.8 million barrels of oil equivalent, of which 300.5 million barrels were developed.
In nominal peso terms, our capital expenditures for the Crudo Ligero Marino project totaled Ps. 10,000 million in 2013. For 2014, we anticipate our capital expenditures to total Ps. 13,402 million.
Chuc Project. The Chuc project is the third-largest producer of light crude oil in the Southwestern Marine region, and includes the operation and maintenance of the Pol-A facility and water injection complexes. In 2013, the SHCP approved the integration of the Caan project into the Chuc project. This project covers an area of 213 square kilometers and has been exploited by Pemex-Exploration and Production since 1981. The fields of this project are located on the continental shelf of the Gulf of Mexico, off the coast of the states of Tabasco and Campeche, at a depth of between the 20- and 100-meter isobaths, approximately 132 kilometers from the Dos Bocas Marine Terminal in Paraíso, Tabasco, and 79 kilometers northeast of Ciudad del Carmen, Campeche. The fields in the project include Batab, Ché, Chuc, Chuhuk, Etkal, Homol, Kuil, Onel, Pokoch, Pol, Tumut, Uchak and Wayil. In January 2007, the Pol and Batab projects were merged into the Chuc project. As of December 31, 2013, 99 wells had been completed, of which 80 were producing. During 2013, average production totaled 220.9 thousand barrels per day of crude oilin 2015, which represents a 5.3% decrease, and 410.7142.5 million cubic feet of natural gas per day. As of December 31, 2013, cumulative production totaled 5.5 billion barrels of crude oil and 6.2 trillion cubic feet of natural gas. As of December 31, 2013, proved hydrocarbon reserves totaled 422.5 million barrels of oil and 818.8 billion cubic feet of natural gas, or 573.1 million barrels of oil equivalent. As of December 31, 2013, total proved developed reserves were 411.8 million barrels of oil equivalent.
In nominal peso terms, our capital expenditures for the Chuc project were Ps. 3,730 millionday in 2011, Ps. 7,870 million in 2012 and Ps. 9,897 million in 2013. In 2014, we expect our capital expenditures2016 as compared to be Ps. 12,245 million and anticipate that our total accumulated capital expenditures for this project will reach approximately U.S. $4.4 billion.
Ogarrio-Magallanes Project. The Ogarrio-Magallanes project is composed of 20 crude oil and natural gas producing fields and forms part of the Cinco Presidentes business unit. This project is located between the state borders of Veracruz and Tabasco and covers an area of 10,820 square kilometers. From a geological standpoint, this project pertains to the Isthmus Saline basin, specifically the southeastern basins at the Tertiary level. The Ogarrio-Magallanes project is geographically bounded by the Gulf of Mexico to the north, the geological folds of
the Sierra Madre of Chiapas to the south, the Tertiary basin of Veracruz to the west and the Comalcalco Tertiary basin to the east. The primary objective of this project is to increase production levels through the drilling of development wells and infill wells, which are drilled between producing wells to more efficiently recover hydrocarbon reserves, the execution of workovers of wells and the implementation of secondary and enhanced oil recovery processes. In addition, we aim to optimize the infrastructure of this project in order to counteract the decreases in production levels that result from the natural depletion of its reservoirs.
As of December 31, 2013, the Ogarrio-Magallanes project had 582 producing wells and 117 new wells had been completed during 2013. Average daily production totaled 93.1 thousand barrels of crude oil and 129.4 million cubic feet of natural gas during 2013. As of December 31, 2013, cumulative production was 1.9 billion barrels of crude oil and 2.3 trillion cubic feet of natural gas. Proved hydrocarbon reserves totaled 193.7 million barrels of crude oil and 305.6 billion cubic feet of natural gas. Total proved reserves were 259.1 million barrels of oil equivalent, of which 216.0 million barrels were developed.
In nominal peso terms, our capital expenditures for the Ogarrio-Magallanes project were Ps. 6,693 million in 2013. For 2014, we anticipate that our capital expenditures will total Ps. 5,229 million.
Delta del Grijalva Project. The Delta del Grijalva project is the most important project in the Southern region in terms of both oil and gas production. The project covers an area of 1,343 square kilometers and has been exploited by Pemex-Exploration and Production since 1982. As of December 31, 2013, there were a total of 175 wells drilled, of which 54 were producing. During 2013, the project produced an average of 105.2 thousand barrels per day of crude oil and 382.5145.2 million cubic feet of natural gas per day.day in 2015, which represents a 1.9% decrease. The most important fields are Sen, Caparroso-Pijije-Escuintledecrease in crude oil and Tizón.
natural gas production was primarily due to the decline in pressure in certain reservoirs. As of December 31, 2013,2016, cumulative production in the Delta del Grijalva project was 0.7 billion barrels of crude oil and 2.6 trillion cubic feet of natural gas. Proved hydrocarbon reserves as of December 31, 2013 totaled 184.1301.8 million barrels of crude oil and 662.4644.9 billion cubic feet of natural gas. As of December 31, 2013, total2016, proved reserves were 344.9 million barrels of oil equivalent, 241.4 million of which were developed.
In nominal peso terms, our capital expenditures for the Delta del Grijalva project were Ps. 6,501 million in 2011, Ps. 5,671 million in 2012 and Ps. 6,169 million in 2013. In 2014, we expect our capital expenditures to be Ps. 6,934 million, bringing our total capital expenditures for the project to approximately U.S. $3.3 billion.
Cactus-Sitio Grande Project. The Cactus-Sitio Grande project forms part of the Macuspana-Muspac business unit and is located in the northern region of the state of Chiapas, 32 kilometers southwest of Villahermosa in the state of Tabasco. This project covers an area of 33,747 square kilometers and is geographically bounded by the coastal plain of the Gulf of Mexico to the north and the Sierra Madre of Chiapas to the south, east and west. The primary objective for this project is to increase production levels through the development of the Teotleco, Juspí, Artesa, Gaucho and Chintul fields, in part through the drilling of new high-angle wells and the recovery of the remaining hydrocarbon reserves. To this end, we additionally plan to carry out major workovers of producing wells to extend their productive lifespans, strengthen and stabilize production levels by means of cleaning and stimulation services based on the nature of the natural gas liquids produced and reopen wells that have been out of operation.
As of December 31, 2013, there were 133 producing wells at the Cactus-Sitio Grande project and 18 new wells had been completed during 2013. Average daily production totaled 52.4 thousand barrels of crude oil and 275.9 million cubic feet of natural gas during 2013. As of December 31, 2013, cumulative production in the Cactus-Sitio Grande project was 1.8 billion barrels of crude oil and 9.7 trillion cubic feet of natural gas. Proved hydrocarbon reserves totaled 93.1513.1 million barrels of crude oil and 707.11,063.8 billion cubic feet of natural gas. Total proved hydrocarbon reserves were 257.8730.5 million barrels of oil equivalent, of which 227.9130.1 million barrels of oil equivalent were developed.proved developed reserves. During 2016, field development activities at the project included the drilling of 11 wells and the completion of 16 wells, all of which were classified as producing, reflecting a 100%
success rate. As of December 31, 2016, 75% of the total producing wells were operating with artificial systems such as mechanical, pneumatic, hydraulic and electric pumping, while the remaining 25% were “flowing wells” that are classified accordingly because they did not require any means of artificial lift.
In nominal peso terms, our exploration and production segment’s capital expenditures for the Cactus-Sitio GrandeATG project were Ps. 4,20818,943 million in 2013.2014, Ps. 2,817 million in 2015 and Ps. 1,487 million in 2016. For 2014,2017, we anticipate that our capital expenditures tofor this project will be Ps. 871 million and that total Ps. 3,526 million.accumulated investments in this project will be approximately U.S. $18.5 billion.
Crude Oil Sales
During 2013,2016, domestic consumption of crude oil amounted to approximately 1,229.1935 thousand barrels per day, which represented 48.7%43.4% of our total crude oil production. Through PMI’s activities, we sold the remainder of our crude oil production abroad. Maya crude oil accounted for 81.4%78.2% of exported crude oil volume sold by PMI in 2013.2016. See “—Business Overview—International Trading” in this Item 4.
The following table sets forth crude oil distribution for the past five years.
Crude Oil Distribution
At December 31, | 2013 vs. 2012 | At December 31, | 2016 vs. 2015 | |||||||||||||||||||||||||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||||||
(in thousands of barrels per day) | (%) | (in thousands of barrels per day) | (%) | |||||||||||||||||||||||||||||||||||||||||||||
Production | 2,601.5 | 2,577.0 | 2,552.6 | 2,547.9 | 2,522.1 | (1.0 | ) | 2,547.9 | 2,522.1 | 2,428.8 | 2,266.8 | 2,153.5 | (5.0 | ) | ||||||||||||||||||||||||||||||||||
Distribution | ||||||||||||||||||||||||||||||||||||||||||||||||
Refineries | 1,264.4 | 1,190.7 | 1,172.3 | 1,211.0 | 1,229.1 | 1.5 | 1,211.0 | 1,229.1 | 1,161.1 | 1,064.0 | 935.0 | (12.1 | ) | |||||||||||||||||||||||||||||||||||
Petrochemicals(1) | 97.4 | 0.0 | 0.0 | 0.0 | 0.0 | — | ||||||||||||||||||||||||||||||||||||||||||
Export terminals | 1,231.7 | 1,358.0 | 1,342.9 | 1,268.3 | 1,190.4 | (6.1 | ) | 1,268.3 | 1,190.4 | 1,148.6 | 1,177.7 | 1,198.7 | 1.8 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total | 2,593.5 | 2,548.7 | 2,515.2 | 2,479.3 | 2,419.5 | (2.4 | ) | 2,479.3 | 2,419.5 | 2,309.7 | 2,241.7 | 2,133.7 | (4.8 | ) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Statistical differences in stock measurements(2) | 8.0 | 28.3 | 37.4 | 68.6 | 102.6 | 49.6 | ||||||||||||||||||||||||||||||||||||||||||
Statistical differences in stock measurements(1) | 68.6 | 102.6 | 119.1 | 25.2 | 19.8 | (21.4 | ) |
Note: Numbers may not total due to rounding.
(1) |
Includes measurement inconsistencies, shrinkage and leakage, naphthas and condensates added to crude oil. |
Source: Pemex-ExplorationPemex Exploration and Production.
Differences between the volume of crude oil measured at the wellhead and the volume distributed reflect customary adjustments due to, among other things, shifting inventories, evaporation, shrinkage and product segregation. In August 2014, we identified increases in the difference between the volumes of crude oil production and distribution. Based on an analysis conducted in coordination with the NHC, we implemented various corrective measures to improve our measurement methodology and management system, including continuously monitoring our wells, calibrating our measurement equipment and installing additional crude oil dehydration systems. To this end, sediment tanks have also been installed at marine terminals in order to accelerate water evaporation and crude oil stabilization in accordance with industry standards. In addition, crude oil barrels undergo a stabilization process in preparation for export, which involves certification by us, the buyer and a third party to verify that the contents meet international standards and contain no more than 0.5% water.
Gas Flaring
The flaring of produced gas, which consists of the burning off of surplus combustible vapors from a well, usually occurs as a result of operational adjustments to carry out maintenance at production facilities, and in some cases is due to limitations in the ability to handle, process or transport natural gas. In addition, the flaring of
produced gas is also used as a safety measure to relieve well pressure. Gas flaring is considered to be one of the most significant sources of air emissions from offshore oil and gas installations. In 2013,2016, gas flaring represented 1.9%8.8% of total natural gas production, which represents a decrease from 2012, whenas compared to 6.8% in 2015, primarily due to an explosion that occurred at theAbkatún-A platform in February 2016, management of oils with highgas-oil ratio and failures in gas flaring represented 2.0% of total natural gas production. This decrease reflects a lower frequency of operational problemscompression equipment on offshore platforms. For more information on the explosion at theAbkatún-A platform, see “—Health, Safety and the resulting decreased need for maintenance of platforms equipment. Pemex-Exploration and Production’s goal is to reduce gas flaring to 1.3% of total natural gas production by the end of 2014. To achieveEnvironmental Performance” in this goal, we willItem 4. We continue to implement programs to reduce gas flaring and improve gas extraction efficiency, including strategies to optimize the exploitation of wells with high associated gas content at the Cantarell project. In addition, in March 2017, we agreed to certain programs with the NHC, including five projects for U.S. $3.0 billion, which may allow us to improve our gas utilization rate to up to 98.0% at ourKu-Maloob-Zaap business unit by 2020.
Pipelines
The crude oil and natural gas pipeline network owned by Pemex-Explorationour exploration and Productionproduction segment connects crude oil and natural gas producing centers with refineries and petrochemical plants. At the end of 2013,2016, this pipeline network consisted of approximately 40,24042,260 kilometers of pipelines, of which 3,5811,200 kilometers were located in the Northeast Marine region, 11,2351,061 kilometers were located in the Southeast Marine region, 9,193 kilometers were located in the Southern region, and 25,42426,244 kilometers were located in the Northern region.region and 4,562 kilometers are distribution and commercial pipelines. For a description of products transported by the pipeline network, see “—Business Overview—Transportation and Distribution”Logistics” in this Item 4.
Integrated Exploration and Production Contracts and Financed Public Works Contracts
Our FPWC program, previously known as the Multiple Services Contracts program, was first announced in December 2001. The objective of the program iswas to provide a contractual framework that promotes an efficient execution of public works in order to increase Mexico’s hydrocarbonsoil and gas production. The FPWC arewere public works contracts based on unit prices that aggregate a number of different services into a single contract. Under the FPWC framework, Pemex-Exploration and Production retainsretained the rights and title to all hydrocarbonsoil and gas produced and works performed under each FPWC.
Our Integrated E&P Contracts program was established as part of reforms to the Mexican energy sector enacted in 2008. The following table summarizes Pemex-Explorationobjective of these Integrated E&P Contracts was to increase our execution and Production’sproduction capabilities. The oil and gas reserves located in and extracted from the areas to which we have a legal right, continue to be owned exclusively by the Mexican Government. Under this program, payments to the contractors were made on aper-barrel basis, plus recovery costs, provided that the payments did not exceed our cash flow from the particular block.
We may amend our Integrated E&P Contracts and FPWCs in order to align these contracts, which were entered into prior to the enactment of the Secondary Legislation, that are required to give effect to the Energy Reform Decree, with the new contractual framework established under the Hydrocarbons Law. Accordingly, an existing FPWCs asIntegrated E&P Contract or FPWC may be migrated into a contract for exploration and production upon agreement by the contract parties to the technical guidelines established by the Ministry of December 31, 2013.
|
| |||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
Source: Pemex-ExplorationEnergy (after seeking our favorable opinion) and Production.the financial terms determined by the Ministry of Finance and Public Credit. Upon approval by the contract parties, the existing Integrated E&P Contract or FPWC will be replaced by the new contract for exploration and production without the need for a bidding process. If the contract parties do not agree to the proposed technical guidelines and contractual and financial terms, the original Integrated E&P Contract or FPWC will remain in effect.
On March 1, 2013,December 19, 2014, we and the contractrelevant counterparties requested that the Ministry of Energy migrate the Integrated E&P Contracts governing the Santuario, Magallanes, Altamira, Arenque, Ébano, Miquetla and Pánuco blocks, and the FPWC governing the Misión and Olmos blocks, into new contracts for exploration and production. Parties to the Integrated E&P contracts governing the Nejo block,and San Andrés blocks made similar
requests on November 24, 2015 and December 1, 2015. As part of the migration process, the Ministry of Energy, Ministry of Finance and Public Credit and the NHC requested further information on the proposed fiscal and technical terms of the new contracts, which was previously an FPWC, was modifiedPemex Exploration and Production provided. On December 7, 2015, January 29, 2016 and May 11, 2016, the parties to adopt a structure similar to thatthe Altamira, San Andrés and Nejo blocks, respectively, withdrew their request for migration.
The migration of our Integrated E&P Contracts.Contracts and FPWCs into contracts for exploration and production has taken longer than expected. As a result, the contract was removed from the
FPWC program as of the date of its modification. The contractor Iberoamericana de Hidrocarburos, S.A. de C.V. has committedthis annual report, we have not yet migrated any of the Integrated E&P contracts or FPWCs. Nonetheless, we plan to invest approximately U.S. $400 millionmigrate the Integrated E&P Contract corresponding to develop the NejoSantuario block under this new scheme.in the Southern region of Mexico and the FPWC corresponding to the Misión block of the Burgos business unit in the Northern region into contracts for exploration and production in the first six months of 2017.
Among otherthe FPWC works during 2013, 17 wells2016, maintenance activities were drilledcarried out in the Burgos project under the FPWC program, which represents approximately 13% of all wells drilled in Burgos. Also in 2013, 37 wells were completed, consisting of 33 development wells and four exploratory wells. All but six of these completed wells were productive.program. The workswork carried out in 20132016 represented an investment of approximately U.S. $234$189.3 million. By the end of 2013,2016, natural gas production in the existing FPWC blocks reached 233305.4 million cubic feet per day, which represents approximately 20%35.3% of all natural gas production from Burgos during 2013.2016.
On January 8, 2014, the contract corresponding to the Reynosa-Monterrey block expired and Pemex-Exploration and Production became solely responsible for the activities carried outDuring 2016, contractors expended approximately U.S $323.3 million in connection with this block.Integrated E&P Contracts. By the end of 2016, production in the existing Integrated E&P blocks reached 31.5 thousand barrels per day of crude oil and 22.3 million cubic feet per day of natural gas, for a total of 34.3 thousand barrels of oil equivalent per day.
IntegratedNew Exploration and Production Contracts and Farm-Outs
Our Integrated E&P Contracts program is based on the various laws and amendments enactedWe have pursued farm-outs as part of the 2008 Energy Reform. See “—Historyopportunities made available to us by energy reform. Through these agreements, we may enter into partnerships with third parties who, in exchange for an interest in the fields that have been granted to us, make financial contributions to the partnership and Development”provide field services. On July 28, 2016, the NHC published the tender offer and bidding package to select a partner for Pemex Exploration and Production to carry out exploration and production activities in this Item 4. The objective of these Integrated E&P Contracts is to increase our execution capabilities, as well as our production. The hydrocarbons reservesthe Trión block field assignments located in and extracted from the contractual areas will continue to be exclusively owned by Mexico. Payments to the contractors pursuant to the Integrated E&P Contracts will be made on a per-barrel basis, plus recovery costs, provided that the payments to the contractor may not exceed our cash flow from the particular block.
Pemex-Exploration and Production awarded its first round of Integrated E&P Contracts, relating to the Santuario, Carrizo and Magallanes fieldsPerdido Fold Belt in the Southern region in Mexico, in August 2011. In JulyGulf of Mexico. Since the Trión block has a depth greater than 2,500 meters, it requires a high level of technical expertise and August of 2012, Pemex-Exploration and Production awarded its second round of Integrated E&P Contracts relatingfinancial investment to Mexico’s Northern region, including four onshore (Altamira, Pánuco, San Andrés and Tierra Blanca) and one offshore (Arenque) block, to Petrofac, Schlumberger, Cheiron (Pico Petroleum) and Monclova Pirineos Gas/Alfacid del Norte. Under these first eight Integrated E&P Contracts, contractors have committed to invest at least U.S. $425 million to develop proved reserves of around 393 million barrels of oil equivalent.develop.
On December 14, 2012, Pemex-Exploration and Production signed an Integrated E&P Contract for5, 2016, the Ébano block with Grupo Diavaz, S.A. de C.V., a contractor developing this block. This contract replaced the previous contract, thereby modifying the framework under which Grupo Diavaz, S.A. de C.V. carries out activities in the area.
On December 20, 2012, Pemex-Exploration and Production launched a call for bids for the third round of Integrated E&P Contracts relating to six blocks (Soledad, Amatitlán, Humapa, Pitepec, Miquetla and Miahuapan) located onshore in the Chicontepec basin. On July 11, 2013, Pemex-Exploration and Production awarded Integrated E&P Contracts for the Humapa, Miquetla and Soledad blocks to HalliburtonNHC announced that BHP Billiton Petróleo Operaciones de México, S. de R.L. de C.V., Operadora de Campos DWF (partor BHP Billiton Mexico, an affiliate of Grupo Diavaz, S.A. de C.V.)BHP Billiton Limited and Petrolite de México (part of Baker Hughes Inc.), respectively. In January 2014, following a new callBHP Billiton Plc, had been selected as the partner for bids for the three remaining blocks that did not receive bids, Pemex-ExplorationPemex Exploration and Production for activities in the Trión block. Pursuant to the terms of its bid, BHP Billiton Mexico will make a U.S. $789.6 million contribution to the partnership in exchange for a 60% participating interest in the Trión Block, BHP Billiton Mexico will be the operator of the Trión block. BHP Billiton Mexico must invest U.S. $1.9 billion in the Trión Project before we are required to invest in the project, which, depending on the timeline set by the consortium, will likely be in four to five years. The corresponding exploration and production contract, joint operating agreement and other relevant agreements were executed on March 3, 2017.
On October 17, 2016, Petróleos Mexicanos’ Board of Directors approved the request to the Ministry of Energy for farm-outs related to the Ayín Batsil shallow water fields in the Campeche Basin. These fields are located at water depths of 160 meters. This shallow-waterfarm-out is to be included in the first bidding round of Round Two, which is expected to consist of 15 blocks to be awarded Integrated E&P Contractsin June 2017. A secondfarm-out related to Consorcio Sinopa, S.A.the Ogarrio and Cárdenas-Mora onshore fields located in the Southern Region is also scheduled for Round Two bidding in July 2017.
Competitive Bidding Rounds
On December 5, 2016, the Miahuapan block, AndesNHC published the results of the bidding process referred to as Round 1.4, through which a consortium consisting of Pemex Exploration and Production, Chevron Energía Argentina, S.A., together with GAIA Ecológica, S.A.de Mexico, S. de R.L. de C.V., or Chevron Energía, a subsidiary of Chevron Corporation and Integra Oil & Gas S.A.S.INPEX Corporation was awarded an exploration contract for a field located in the Amatitlán block and Constructora y Perforadora Latina, S.A. de C.V. forPerdido Fold Belt in the Pitepec block. Together, these six blocks encompassGulf of Mexico. The field covers an area of 953approximately 1,686.9 square kilometers and represent combined investment commitmentsis located approximately 117 kilometers off the coast of more than U.S. $769 million duringMexico in water depths ranging between 500 meters and 1,700 meters. Chevron Energía will be the first two years of their terms.operator and holds 33.3334% interest in the consortium, while Pemex Exploration and Production and INPEX Corporation each holds 33.3333% interest. The corresponding exploration and production contract, joint operating agreement and other relevant agreements were executed on February 28, 2017.
Collaboration and Other Agreements
Pemex Exploration and Production, or its predecessor Pemex-Exploration and Production, hashave entered intonon-commercial scientific and technology agreements with the following parties, which remain in effect as of the date of this report remain in effect:annual report:
Pemex Exploration and Production did not enter into any collaboration agreements in 2016.
Through these agreements, we seek to increase our technical and scientific knowledge in areas including deepwater subsalt exploration and drilling; enhanced oil recovery processes, such as air injection; and reservoir characterization of complex structures. These broad agreements of technological and scientific collaboration are strictlynon-commercial,i.e., there is no transfer of resources and they do not establish a binding relationship among the parties.
Industrial Transformation
Our industrial transformation segment is comprised of two principal activities: (i) refining and (ii) gas and aromatics.
Refining
Refining Processes and Capacity
Pemex-Refining’sOur refining production processes include the following:
• | Atmospheric |
• | Vacuum |
• |
• |
• | Reforming |
• | Hydrotreatment or residual |
• | Alkylation and |
• |
These production processes together constitute Pemex-Refining’sour production capacity as set forth in the table below.
Refining Capacity by Production Process
At December 31, | At December 31, | |||||||||||||||||||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||
(in thousands of barrels per day) | (in thousands of barrels per day) | |||||||||||||||||||||||||||||||||||||||
Production Process | ||||||||||||||||||||||||||||||||||||||||
Atmospheric distillation | 1,540.0 | 1,540.0 | 1,690.0 | 1,690.0 | 1,690.0 | 1,690.0 | 1,690.0 | 1,602.0 | 1,640.0 | 1,602.0 | ||||||||||||||||||||||||||||||
Vacuum distillation | 754.0 | 754.0 | 832.0 | 832.0 | 832.0 | 832.0 | 832.0 | 767.5 | 772.4 | 767.5 | ||||||||||||||||||||||||||||||
Cracking | 380.5 | 380.5 | 422.5 | 422.5 | 422.5 | 422.5 | 422.5 | 422.5 | 422.5 | 422.5 | ||||||||||||||||||||||||||||||
Visbreaking | 91.0 | 91.0 | 91.0 | 91.0 | 91.0 | 91.0 | 91.0 | 91.0 | 91.0 | 91.0 | ||||||||||||||||||||||||||||||
Reforming | 279.3 | 279.3 | 279.3 | 279.3 | 279.3 | 279.3 | 279.3 | 279.3 | 279.3 | 279.3 | ||||||||||||||||||||||||||||||
Hydrotreatment | 926.1 | 1,010.1 | 1,067.5 | 1,067.5 | 1,067.5 | 1,067.5 | 1,067.5 | 1,067.5 | 1,099.9 | 1,230.0 | ||||||||||||||||||||||||||||||
Alkylation and isomerization | 128.5 | 128.5 | 141.9 | 155.3 | 155.3 | 155.3 | 155.3 | 154.3 | 154.8 | 154.3 | ||||||||||||||||||||||||||||||
Coking | 100.0 | 100.0 | 155.8 | 155.8 | 155.8 | 155.8 | 155.8 | 155.8 | 155.8 | 155.8 |
Source: Base de Datos Institucional (Pemex Institutional Database, or Pemex BDI).
At the endAs of 2013, Pemex-RefiningDecember 31, 2016, we owned and operated six refineries: Cadereyta, Madero, Minatitlán, Salamanca, Salina Cruz and Tula. Our refineries are comprisedconsist of atmospheric and vacuum distillation units, where the bulk of crude oil input is processed. Secondary processing facilities include desulfurization units and facilities for catalytic cracking, reforming and hydrotreating. During 2013,2016, our refineries processed 1,224933.1 thousand barrels per day of crude oil (189(122 thousand barrels per day at Cadereyta, 13087.4 thousand barrels per day at Madero, 183112.5 thousand barrels per day at Minatitlán, 195170.9 thousand barrels per day at Salamanca, 282238.7 thousand barrels per day at Salina Cruz and 246201.6 thousand barrels per day at Tula), which in total consisted of 730532.8 thousand barrels per day of Olmeca and Isthmus crude oil and 495400.3 thousand barrels per day of Maya crude oil. In recent years, we have been affected by operational difficulties at our auxiliary services facilities. In order to increase the processing of crude oil at our refineries and the production of petroleum products, we have included certain actions in our 2017-2021 Business Plan to increase safety and reliability at our auxiliary services facilities.
Since 1993, through our subsidiary company, P.M.I. Norteamérica, S.A. de C.V., we have participated in a limited partnership with Shell Oil Company in a refinery located in Deer Park, Texas, which has the capacity to
process 340 thousand barrels per day of crude oil. Under the Deer Park Limited Partnership agreement, P.M.I. Norteamérica, S.A. de C.V. and Shell Oil Company each provide 50% of the refinery’s crude oil input and own 50% of the refinery’s output. This agreement is limited to the specific purpose of operating the Deer Park refinery.
Production
Pemex-Refining producesWe produce a wide range of products derived from crude oil and natural gas, including LPG, gasoline, jet fuel, diesel, fuel oil, asphalts, lubricants and other refined products. Pemex-RefiningIn 2016, we produced 1,276977.2 thousand barrels per day of refined products (including dry gasby-products of the refining process), as compared to 1,114.3 thousand barrels per day in 2013, an increase2015, representing a decrease of 4.1% from 2012 levels.12.3%. This increasedecrease in refined products production was mainly due to the startup of new plants following the reconfiguration of thean increase in corrective maintenance and auxiliary services failures and to low performance at our Tula, Madero, Minatitlán refinery and to the improved performance of the national refining system.Cadereyta refineries.
The following table sets forth, by category, Pemex-Refining’sour production of petroleum products from 20092012 through 2013.2016.
Pemex-RefiningRefining Production
Year ended December 31, | 2013 vs. 2012 | Year ended December 31, | 2016 vs. 2015 | |||||||||||||||||||||||||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||||||
(in thousands of barrels per day) | (%) | (in thousands of barrels per day) | (%) | |||||||||||||||||||||||||||||||||||||||||||||
Refinery Crude Oil Runs | 1,294.9 | 1,184.1 | 1,166.6 | 1,199.3 | 1,224.1 | 2.1 | 1,199.3 | 1,224.1 | 1,155.1 | 1,064.5 | 933.1 | (12.3 | ) | |||||||||||||||||||||||||||||||||||
Refined Products | ||||||||||||||||||||||||||||||||||||||||||||||||
Liquefied petroleum gas | 27.1 | 25.5 | 21.4 | 25.2 | 25.2 | 0 | 25.2 | 25.2 | 26.4 | 21.4 | 17.2 | (19.6 | ) | |||||||||||||||||||||||||||||||||||
Gasoline | ||||||||||||||||||||||||||||||||||||||||||||||||
Pemex Magna | 364.0 | 341.2 | 324.2 | 336.8 | 360.5 | 7.0 | 336.8 | 360.5 | 290.9 | 272.5 | 150.6 | (44.7 | ) | |||||||||||||||||||||||||||||||||||
Ultra Low Sulfur Magna(1) | 81.8 | 67.3 | 61.7 | 61.5 | 56.7 | (7.8 | ) | |||||||||||||||||||||||||||||||||||||||||
Ultra-Low Sulfur Magna | 61.5 | 56.7 | 99.1 | 88.4 | 165.5 | 87.2 | ||||||||||||||||||||||||||||||||||||||||||
Pemex Premium | 22.7 | 12.5 | 13.7 | 19.7 | 19.8 | 0.5 | 19.7 | 19.8 | 30.8 | 16.8 | 7.7 | (54.2 | ) | |||||||||||||||||||||||||||||||||||
Base | 3.0 | 3.0 | 0.7 | 0.0 | 0.2 | — | 0.0 | 0.2 | 0.8 | 3.6 | 1.6 | (55.6 | ) | |||||||||||||||||||||||||||||||||||
Others | 0.1 | 0.1 | 0.0 | 0.0 | 0.0 | 0 | ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total | 471.5 | 424.2 | 400.3 | 418.1 | 437.3 | 4.6 | 418.1 | 437.3 | 421.6 | 381.4 | 325.3 | (14.7 | ) | |||||||||||||||||||||||||||||||||||
Kerosene (Jet fuel) | 57.1 | 51.9 | 56.3 | 56.6 | 60.8 | 7.4 | 56.6 | 60.8 | 53.4 | 47.8 | 42.8 | (10.5 | ) | |||||||||||||||||||||||||||||||||||
Diesel | ||||||||||||||||||||||||||||||||||||||||||||||||
Pemex Diesel(3) | 291.4 | 221.0 | 193.6 | 225.9 | 217.7 | (3.6 | ) | |||||||||||||||||||||||||||||||||||||||||
Ultra Low Sulfur Diesel(1) | 44.5 | 67.7 | 80.1 | 72.6 | 92.1 | 26.9 | ||||||||||||||||||||||||||||||||||||||||||
Pemex Diesel(2) | 225.9 | 217.7 | 186.9 | 191.5 | 130.1 | (32.1 | ) | |||||||||||||||||||||||||||||||||||||||||
Ultra-Low Sulfur Diesel | 72.6 | 92.1 | 97.8 | 83.0 | 85.1 | 2.5 | ||||||||||||||||||||||||||||||||||||||||||
Others | 1.0 | 0.8 | 0.1 | 1.0 | 3.7 | 270.0 | 1.0 | 3.7 | 1.9 | 0.2 | 1.0 | 400 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total | 337.0 | 289.5 | 273.8 | 299.6 | 313.4 | 4.6 | 299.6 | 313.4 | 286.6 | 274.7 | 216.2 | (21.3 | ) | |||||||||||||||||||||||||||||||||||
Fuel oil | 316.2 | 322.3 | 307.5 | 273.4 | 268.8 | (1.7 | ) | |||||||||||||||||||||||||||||||||||||||||
Fuel oil(3) | 273.4 | 268.8 | 259.2 | 237.4 | 228.1 | (3.9 | ) | |||||||||||||||||||||||||||||||||||||||||
Other refined products | ||||||||||||||||||||||||||||||||||||||||||||||||
Asphalts | 31.9 | 24.9 | 26.1 | 23.1 | 18.7 | (19.0 | ) | 23.1 | 18.7 | 23.9 | 17.7 | 16.9 | (4.5 | ) | ||||||||||||||||||||||||||||||||||
Lubricants | 4.2 | 4.3 | 3.7 | 3.9 | 4.4 | 12.8 | 3.9 | 4.4 | 3.7 | 2.3 | 3.0 | 30.4 | ||||||||||||||||||||||||||||||||||||
Paraffins | 0.8 | 0.8 | 0.7 | 0.8 | 0.7 | (12.5 | ) | 0.8 | 0.7 | 0.6 | 0.5 | 0.6 | 20.0 | |||||||||||||||||||||||||||||||||||
Still gas | 54.9 | 54.2 | 62.6 | 67.8 | 70.7 | 4.3 | 67.8 | 70.7 | 63.9 | 62.2 | 61.9 | (0.5 | ) | |||||||||||||||||||||||||||||||||||
Other refined products(4) | 42.0 | 31.7 | 37.9 | 57.3 | 75.7 | 32.1 | 57.3 | 75.7 | 66.7 | 68.9 | 65.3 | (5.2 | ) | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total | 133.8 | 115.8 | 131.0 | 152.9 | 170.2 | 11.3 | 152.9 | 170.2 | 158.8 | 151.6 | 147.6 | (2.6 | ) | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total refined products | 1,342.7 | 1,229.1 | 1,190.2 | 1,225.9 | 1,275.8 | 4.1 | 1,225.9 | 1,275.8 | 1,206.1 | 1,114.3 | 977.2 | (12.3 | ) | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Note: Numbers may not total due to rounding.
(1) |
Pemex Premium is an |
Pemex Diesel is sold in the northern border market with 0.0015% sulfur content. |
(3) | Includes heavy fuel oil and intermediate 15. |
(4) | Includes |
Source:Source: Pemex BDI.
Fuel oil, automotive gasoline and diesels represent the bulk of Pemex-Refining’sour production. In 2013,2016, gasoline represented 33.3%, diesel fuel represented 22.1% and fuel oil represented 21.1%, gasoline represented 34.3% and diesel fuel represented 24.6%23.3% of total petroleum products production. Jet fuel represented 4.8%4.4% and LPG represented 2.0%1.8% of total production of petroleum products in 2013.2016. The remainder, 15.1%, of Pemex-Refining’sour production consisted of a variety of other refined products.
As a result of our strategy of investing in technology to improve the quality of our fuels, all of our automotive gasoline production now consists of unleaded gasoline. In addition, we have introduced new environmentally sound products such as Ultra Low Sulfurultra-low sulfur gasoline (or ULSG) andultra-low sulfur diesel (or ULSD).
In recent years, including 2016, our production has been affected by operational problems in our auxiliary services facilities. In order to improve production, our 2017-2021 Business Plan includes measures to ensure the supply of auxiliary services through partnerships with third parties. On February 23, 2017, we entered into a contract with Air Liquide for the supply of hydrogen to our Miguel Hidalgo refinery in Tula in order to decrease unscheduled stoppages and diesel. We also promote LPGincrease gasoline production.
Variable Refining Margin
During 2016, the National Refining System recorded a variable refining margin of U.S. $4.48 per barrel, an increase of U.S. $1.13 per barrel as an environmentally sound substitute fuelcompared to 2015. This is broadly the result of the recovery in prices for gasolinerefined products in motor vehicles.
Variable Refining Margin
Year ended December 31, | 2016 vs. 2015 | |||||||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2016 | ||||||||||||||||||||
(U.S dollars per barrel) | (%) | |||||||||||||||||||||||
Variable margin | 0.01 | (1.84 | ) | 1.76 | 3.35 | 4.48 | 33.7 |
Domestic Sales
We market a full range of refined products, including gasoline, jet fuel, diesel, fuel oil and petrochemicals. We are one of a few major producers of crude oil worldwide that experiences significant domestic demand for our refined products.
For the five years ended December 31, 2013,2016, the value of Pemex-Refining’sour domestic sales of refined products and petrochemicals was as follows:
Value of Refining’s Domestic Sales of Pemex-Refining(1)
Year ended December 31, | 2013 vs. 2012 | Year ended December 31, | 2016 vs. 2015 | |||||||||||||||||||||||||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||||||
(in millions of pesos)(2) | (%) | (in millions of pesos)(2) | (%) | |||||||||||||||||||||||||||||||||||||||||||||
Refined Products | ||||||||||||||||||||||||||||||||||||||||||||||||
Gasoline | ||||||||||||||||||||||||||||||||||||||||||||||||
Pemex Magna | Ps. | 233,307.2 | Ps. | 270,121.9 | Ps. | 300,936.8 | Ps. | 326,187.2 | Ps. | 340,751.9 | 4.5 | Ps. | 326,187.2 | Ps. | 340,750.7 | Ps. | 347,952.4 | Ps. | 274,006.9 | Ps. | 248,595.2 | (9.3 | ) | |||||||||||||||||||||||||
Pemex Premium | 25,180.3 | 24,987.2 | 27,520.1 | 42,486.0 | 63,723.4 | 50.0 | 42,486.0 | 63,723.1 | 80,058.9 | 81,813.5 | 87,422.8 | 6.9 | ||||||||||||||||||||||||||||||||||||
Aviation fuels | 240.9 | 247.1 | 353.4 | 396.2 | 370.8 | (6.4 | ) | 396.2 | 370.8 | 358.1 | 323.7 | 328.0 | 1.3 | |||||||||||||||||||||||||||||||||||
Others | 49.6 | 74.4 | 59.9 | 95.6 | 43.4 | (54.6 | ) | 95.6 | 43.4 | 29.5 | 16.1 | 14.5 | (9.9 | ) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
Total | 258,778.0 | 295,430.7 | 328,870.2 | 369,165.1 | 404,889.5 | 9.7 | 369,165.1 | 404,887.9 | 428,398.8 | 356,160.2 | 336,360.4 | (5.6 | ) | |||||||||||||||||||||||||||||||||||
Kerosene | ||||||||||||||||||||||||||||||||||||||||||||||||
Jet fuel | 18,320.7 | 22,935.3 | 31,560.2 | 36,336.5 | 35,417.9 | (2.5 | ) | |||||||||||||||||||||||||||||||||||||||||
Other kerosenes | 119.2 | 179.0 | 215.9 | 224.0 | 275.4 | 22.9 | ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||
Total | 18,439.9 | 23,114.3 | 31,776.1 | 36,560.5 | 35,693.3 | (2.4 | ) | |||||||||||||||||||||||||||||||||||||||||
Kerosene (Jet fuel) | 36,336.5 | 35,417.9 | 36,449.3 | 27,077.2 | 28,945.2 | 6.9 | ||||||||||||||||||||||||||||||||||||||||||
Diesel | ||||||||||||||||||||||||||||||||||||||||||||||||
Pemex Diesel | 106,129.0 | 125,556.4 | 142,559.8 | 163,113.6 | 178,929.4 | 9.7 | 163,113.6 | 178,929.4 | 194,545.6 | 139,796.2 | 117,556.3 | (15.9 | ) | |||||||||||||||||||||||||||||||||||
Others | 15,392.4 | 18,453.2 | 23,681.4 | 30,609.0 | 32,542.0 | 6.3 | 30,609.0 | 32,542.0 | 31,156.7 | 22,930.4 | 19,236.4 | (16.1 | ) | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
Total | 121,521.5 | 144,009.6 | 166,241.2 | 193,722.6 | 211,471.4 | 9.2 | 193,722.6 | 211,471.4 | 225,702.4 | 162,726.7 | 136,792.7 | (15.9 | ) | |||||||||||||||||||||||||||||||||||
Fuel oil | ||||||||||||||||||||||||||||||||||||||||||||||||
Total | 51,907.6 | 56,766.7 | 80,265.5 | 99,839.9 | 78,001.8 | (21.9 | ) | 99,839.9 | 78,001.8 | 46,838.3 | 25,906.0 | 16,436.3 | (36.6 | ) | ||||||||||||||||||||||||||||||||||
Other refined products | ||||||||||||||||||||||||||||||||||||||||||||||||
Asphalts | 10,277.1 | 8,814.1 | 10,539.1 | 11,165.0 | 7,865.4 | (29.6 | ) | 11,165.0 | 7,865.4 | 10,788.0 | 7,575.5 | 5,468.7 | (27.8 | ) | ||||||||||||||||||||||||||||||||||
Lubricants | 2,000.5 | 2,429.8 | 3,153.8 | 3,097.7 | 2,991.2 | (3.4 | ) | 3,097.7 | 2,991.2 | 2,618.9 | 1,297.5 | 1,473.0 | 13.5 | |||||||||||||||||||||||||||||||||||
Paraffins | 235.3 | 297.5 | 304.2 | 377.1 | 339.4 | (10.0 | ) | 377.1 | 339.4 | 319.2 | 257.9 | 267.0 | 3.5 | |||||||||||||||||||||||||||||||||||
Coke | 99.0 | 106.4 | 104.5 | 346.3 | 473.4 | 36.7 | 346.3 | 473.4 | 763.3 | 669.5 | 501.9 | (25.0 | ) | |||||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||
Citroline | 6.4 | 2.3 | 0.4 | 0.9 | 4.6 | 401.8 | ||||||||||||||||||||||||||||||||||||||||||
Gas oil for domestic use | 217.6 | 275.4 | 432.5 | 588.3 | 428.8 | (27.1 | ) | |||||||||||||||||||||||||||||||||||||||||
Total | Ps. | 12,611.9 | Ps. | 11,647.7 | Ps. | 14,101.6 | Ps. | 14,986.1 | Ps. | 11,669.4 | (22.1 | ) | Ps. | 15,210.0 | Ps. | 11,947.0 | Ps. | 14,922.3 | Ps. | 10,389.6 | Ps. | 8,143.9 | (21.6 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
Total Refined Products | Ps. | 463,258.8 | Ps. | 530,969.0 | Ps. | 621,254.5 | Ps. | 714,274.2 | Ps. | 741,725.4 | 3.8 | Ps. | 714,274.1 | Ps. | 741,726.1 | Ps. | 752,311.1 | Ps. | 582,259.8 | Ps. | 526,678.5 | (9.5 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
Petrochemicals(3) | Ps. | 2,859.0 | Ps. | 4,089.7 | Ps. | 4,424.3 | Ps. | 6,544.9 | Ps. | 6,957.7 | 6.3 | Ps. 6,494.6 | Ps. | 6,882.8 | Ps. | 7,582.2 | Ps. | 3,930.9 | Ps. | 3,117.9 | (20.7 | ) |
Note: Numbers may not total due to rounding.
(1) | Excludes IEPS tax and value added tax. See “—Taxes, Duties and |
(2) | Figures are stated in nominal pesos. See “Item 3—Key Information—Selected Financial Data.” |
(3) |
Source:Source: Pemex BDI.
In 2016, our domestic sales of refined products decreased by Ps. 55,581.3 million, or 9.5% in value, as compared to 2015 levels (excluding IEPS tax and value added tax). This was primarily due to a 10.8% decrease in the average prices for our refined products, a 15.9% decrease in the value of diesel sales, a 5.6% decrease in the value of gasoline sales and 36.6% decrease in the value of fuel oil sales.
The volume of our domestic sales of refined products for the five-year period ended December 31, 2016 was distributed as follows:
Volume of Refining’s Domestic Sales
Year ended December 31, | 2016 vs. 2015 | |||||||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2016 | ||||||||||||||||||||
(in thousands of barrels per day, except where otherwise indicated) | (%) | |||||||||||||||||||||||
Refined Products | ||||||||||||||||||||||||
Gasoline | ||||||||||||||||||||||||
Pemex Magna | 715.3 | 667.6 | 639.1 | 638.0 | 637.5 | (0.1 | ) | |||||||||||||||||
Pemex Premium | 87.7 | 119.2 | 137.1 | 154.8 | 185.1 | 19.6 | ||||||||||||||||||
Aviation fuels | 0.5 | 0.5 | 0.4 | 0.5 | 0.5 | (1.0 | ) | |||||||||||||||||
Others | 0.2 | 0.1 | — | — | — | 1.2 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | 803.7 | 787.3 | 776.7 | 793.3 | 823.1 | 3.8 | ||||||||||||||||||
Kerosenes (jet fuel) | 59.3 | 62.2 | 66.5 | 70.8 | 76.2 | 7.6 | ||||||||||||||||||
Diesel | ||||||||||||||||||||||||
Pemex Diesel | 339.4 | 333.2 | 336.4 | 330.6 | 335.5 | 1.5 | ||||||||||||||||||
Others | 61.1 | 58.5 | 53.0 | 54.2 | 51.8 | (4.4 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | 400.5 | 391.7 | 389.4 | 384.7 | 387.2 | 0.6 | ||||||||||||||||||
Fuel oil | ||||||||||||||||||||||||
Total | 214.4 | 189.3 | 121.7 | 111.7 | 102.6 | (8.1 | ) | |||||||||||||||||
Other refined products | ||||||||||||||||||||||||
Asphalts | 22.3 | 17.3 | 21.7 | 15.9 | 15.9 | — | ||||||||||||||||||
Lubricants | 4.1 | 4.7 | 4.0 | 2.6 | 3.1 | 19.2 | ||||||||||||||||||
Paraffins | 0.8 | 0.7 | 0.6 | 0.6 | 0.6 | — | ||||||||||||||||||
Coke | 49.8 | 47.8 | 46.0 | 45.9 | 36.3 | (20.9 | ) | |||||||||||||||||
Citroline | 0.01 | — | — | — | 0.01 | — | ||||||||||||||||||
Gas oil for domestic use | 0.6 | 0.7 | 0.9 | 1.2 | 0.9 | (25.0 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | 77.7 | 71.2 | 73.3 | 66.2 | 56.9 | (14.0 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total refined products | 1,555.5 | 1,501.8 | 1,427.6 | 1,426.7 | 1,446.0 | 1.4 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Petrochemicals(1)(2) | 653.3 | 738.8 | 703.8 | 620.9 | 543.5 | (12.5 | ) |
Note: Numbers may not total due to rounding.
(1) | In thousands of metric tons. |
(2) | Petrochemical products produced at refineries operated by our refining business (black carbon feedstocks and propylene). |
Source: Pemex BDI.
The volume of our domestic gasoline sales increased by 3.8% in 2016, from 793.3 thousand barrels per day in 2015 to 823.1 thousand barrels per day in 2016. The volume of our diesel sales increased by 0.6%, from 384.7 thousand barrels per day in 2015 to 387.2 thousand barrels per day in 2016. The increase in the volume of our domestic gasoline and diesel sales is mainly due to an increase in demand resulting from an increase in the number of vehicles operated in Mexico. The volume of our domestic sales of fuel oil decreased by 8.1%, from 111.7 thousand barrels per day in 2015 to 102.6 thousand barrels per day in 2016, primarily due to a decrease in CFE’s demand for fuel oil based on its substitution of fuel oil with natural gas.
Sales of Pemex Premium gasoline increased 19.6% in 2016, while those of Pemex Magna decreased slightly from the previous year. This change in consumption patterns is the result of a decrease in the price differential between the two kinds of gasolines.
We have also made concerted efforts to build and enhance our brands. As a result of energy reform, beginning in April 2016, the Mexican government has allowed private companies, including third-party
franchises, to participate as retailers in the Mexican gasoline market and purchase gasoline products from us or import these same products from abroad. Pursuant to this regulatory change, on June 5, 2016, we announced that a joint branding program had been established with various entities that own and operate retail service stations in Mexico. The joint branding program allows our franchisees to rename their retail service stations while continuing to sell our products under our brand. In addition, we will continue to provide technical and operational assistance to such franchisees. We believe that this program will strengthen our relationship with entities that own and operate retail service stations in Mexico as we continue to adapt to the new competitive pressures in the Mexican fuel market.
At the end of 2016, there were 11,578 retail service stations in Mexico, of which 11,531 were privately owned and operated as franchises, while the remaining 47 were owned by Pemex Industrial Transformation. This total number of retail service stations represents an increase of 3.3% from the 11,210 service stations as of December 31, 2015.
The largest consumers of fuelsfuel oils in Mexico are the Federal Electricity CommissionCFE and our subsidiary entities. The Federal Electricity Commissionproductive state-owned subsidiaries. CFE consumed approximately 92%86.0% of our fuel oil production during 2013,2016, pursuant to a fuel oil supply contract entered into in November 1995 and amended effective January 1, 2005. Pursuant to this amendment, the2004. The minimum amount of fuel oil that we agreed to supply to the Federal Electricity CommissionCFE during 20132015 was 155,70058.1 thousand barrels per day, in accordance with theour supply capacity of
Pemex-Refining and the requirements of the Federal Electricity CommissionCFE under its official program of substitution of fuel oil with natural gas. In 2016, we actually supplied 88 thousand barrels per day. The price per cubic meter of the fuel oil supplied to the Federal Electricity CommissionCFE is based on the three-month average spot price per cubic meter of Fuel Oil No. 6 (3% sulfur)sulfur at Houston, Texas, as quoted in Platt’s U.S. Marketscan and adjusted for quality and transportation cost differentials. In addition, the price of the fuel oil is discounted by a commercial marginthen revised, either upwards or downwards, depending on each cubic meterwhether the amount of fuel oil. In 2013, this volume discount amountedoil requested exceeds the minimum amount agreed to approximately 0.4% of our total fuel oil sales toin the Federal Electricity Commission.supply contract. The contract can be terminated by either party upon six months’ notice. The total amount paid to us by the Federal Electricity CommissionCFE under this contract in 20132016 was Ps. 72,09914,013 million, which represented 9.7%2.4% of our total revenues from domestic sales of refined products.
In 2013, our domestic sales of refined products increased by Ps. 27,451.2 million, or 3.8% in value, as compared to 2012 levels. This increase was primarily due to a 9.7% increase in domestic sales of gasoline and a 9.2% increase in domestic sales of diesel. This increase was partially offset by a 21.9% decrease in the sales of fuel oil, a 1.8% decrease in the volume of domestic distillates sales and lower international prices of refined products in 2013.
The volume of Pemex-Refining’s domestic sales of refined products for the five-year period ended December 31, 2013 was distributed as follows:
Volume of Domestic Sales of Pemex-Refining
Year ended December 31, | 2013 vs. 2012 | |||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||||||
(in thousands of barrels per day, except where otherwise indicated) | (%) | |||||||||||||||||||||||
Refined Products | ||||||||||||||||||||||||
Gasoline | ||||||||||||||||||||||||
Pemex Magna | 727.7 | 743.7 | 738.6 | 715.3 | 667.6 | (6.7 | ) | |||||||||||||||||
Pemex Premium | 64.1 | 57.8 | 60.5 | 87.7 | 119.2 | 35.9 | ||||||||||||||||||
Aviation fuels | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 | 0.0 | ||||||||||||||||||
Others | 0.1 | 0.2 | 0.1 | 0.2 | 0.1 | (50.0 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 792.4 | 802.2 | 799.7 | 803.7 | 787.3 | (2.0 | ) | |||||||||||||||||
Kerosenes | ||||||||||||||||||||||||
Jet fuel | 55.0 | 55.8 | 56.1 | 59.3 | 62.2 | 4.9 | ||||||||||||||||||
Other kerosenes | 0.4 | 0.6 | 0.6 | 0.6 | 0.7 | 16.7 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 55.4 | 56.4 | 56.8 | 59.9 | 62.9 | 5.0 | ||||||||||||||||||
Diesel | ||||||||||||||||||||||||
Pemex Diesel | 314.5 | 325.1 | 330.6 | 339.4 | 333.2 | (1.8 | ) | |||||||||||||||||
Others | 44.5 | 46.0 | 52.9 | 61.1 | 58.5 | (4.3 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 359.0 | 371.1 | 383.6 | 400.5 | 391.7 | (2.2 | ) | |||||||||||||||||
Fuel oil | ||||||||||||||||||||||||
Total | 209.0 | 184.9 | 200.6 | 214.4 | 189.3 | (11.7 | ) | |||||||||||||||||
Other refined products | ||||||||||||||||||||||||
Asphalts | 30.7 | 23.6 | 24.6 | 22.3 | 17.3 | (22.4 | ) | |||||||||||||||||
Lubricants | 4.5 | 4.7 | 4.2 | 4.1 | 4.7 | 14.6 | ||||||||||||||||||
Paraffins | 0.8 | 0.8 | 0.8 | 0.8 | 0.7 | (12.5 | ) | |||||||||||||||||
Coke | 38.0 | 30.0 | 31.0 | 49.8 | 47.8 | (4.0 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 73.9 | 59.1 | 60.6 | 77.1 | 70.6 | (8.4 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total refined products | 1,489.7 | 1,473.6 | 1,501.2 | 1,555.5 | 1,501.8 | (3.5 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Petrochemicals(1) | 365.4 | 325.0 | 292.0 | 656.3 | 743.4 | 13.3 |
Note: Numbers may not total due to rounding.
Source:Pemex BDI.
The volume of our domestic gasoline sales decreased by 2.0% in 2013, from 803.7 thousand barrels per day in 2012 to 787.3 thousand barrels per day in 2013. The volume of our domestic diesel sales decreased by 2.2%, from 400.5 thousand barrels per day in 2012 to 391.7 thousand barrels per day in 2013. The volume of our domestic sales of fuel oil decreased by 11.7%, from 214.4 thousand barrels per day in 2012 to 189.3 thousand barrels per day in 2013, primarily due to a decrease in the Federal Electricity Commission’s demand for fuel oil.
Since 1998, at the retail level, we have offered standard and premium grades of unleaded gasoline throughout Mexico. Since October 2006, all Pemex Premium gasoline has had an ultra-low sulfur content of 0.003%. Since January 2007, diesel sold at the northern border of Mexico has had a sulfur content of 0.0015%. Our efforts to build and enhance our brands have also progressed during the past five years. All of Mexico’s independent gasoline service stations now participate in our franchise program, which provides financial assistance to upgrade equipment and facilities, as well as technical assistance in the development of marketing and customer service programs. At the end of 2013, there were 10,416 retail service stations franchised or owned by Pemex-Refining, of which 10,368 were privately owned and operated as franchises and 48 were owned by Pemex-Refining. This total number of retail service stations represented an increase of 3.7% from the 10,042 service stations as of December 31, 2012.
Pricing Decrees
From February 6, 2010The energy reform provides for fuel price liberalization, which began in January 2017. Our sales will continue to December 9, 2011,be regulated by the Energy Regulatory Commission until COFECE determines that there is effective competition in the wholesale market.
Historically, the Mexican Government has established periodic increases on the price increases, which ranged from four to eight Mexican cents per liter per month. From December 10, 2011 to January 4, 2013, the increases ranged from five to nine Mexican cents per liter per month. From January 5 to December 31, 2013, the increases continued in increments of eleven Mexican cents per liter per month.gasoline. On January 1, 2014, pursuant to theImpuesto a los Combustibles Fósiles (IEPS(IEPS Tax on Fossil Fuels) approved under theLey del Impuesto Especial sobre Producción y Servicios(Special Tax on Production and Services Law, which we refer to asor the IEPS Law), unleaded gasoline became subject to aone-time price increase of tenMexicanten Mexican cents per liter. See “—Information on the Company—Taxes, Duties and Duties”Other Payments to the Mexican Government” in this Item 4. FromFor the period from January 1 to April 30, 2014,December 31, 2015, the Mexican Government eliminated these periodic price increases ranged from nine to elevenin favor of aone-time price increase of 26 Mexican cents per liter of magna gasoline and 27 Mexican cents per month. Seeliter of premium gasoline. From January 1, 2016 to July 31, 2016, prices were 44 Mexican cents lower per liter as compared to 2015 and from August 1, 2016 to December 31, 2016, prices were 43 Mexican cents higher per liter as compared to 2015. The sale of gasoline began to be liberalized on January 1, 2017 and the Ministry of Finance and Public Credit established a flexible mechanism to reflect international market prices. As a result, in January 2017, magna gasoline prices were between Ps. 1.35 and Ps. 2.61 per liter higher than in December 2016. For more information, see “Item 5—Operating and Financial Review and Prospects—IEPS Tax, Hydrocarbon Duties and Other Taxes.”
From December 26, 2009 to December 9, 2011, theThe Mexican Government has also established periodic increases on the price increases in increments of eight Mexican cents per liter per month. From December 10, 2011 to January 4, 2013, these periodic price increases continued in increments of nine Mexican cents per liter per month. From January 5 to December 31, 2013 the increases continued in increments of eleven Mexican cents per liter per month.diesel. On January 1, 2014, pursuant to the IEPS Tax on Fossil Fuels, diesel became subject to aone-time price increase of thirteen Mexican
cents per liter. From January 1 to April 30,December 31, 2014, periodic increases continued at a rate of eleven Mexican cents per liter per month. DespiteFor the period January 1 to December 31, 2015, the Mexican Government eliminated these periodic price increases in favor of aone-time price increase of 26 Mexican cents per liter. From January 1, 2016, the Mexican Government established a mechanism to determine prices that takes into account international market prices, subject to minimum and maximum prices, and adds a flat IEPS Tax. As a result, from January 1, 2016 to August 31, 2016 prices decreased by 43 Mexican cents per liter as compared to the same period in 2015 and from September 1, 2016 to December 31, 2016, this amounted to a 43 Mexican cent increase per liter as compared to the same period in 2015. The sale of diesel began to be liberalized on January 1, 2017 and the Ministry of Finance and Public Credit established a flexible mechanism to reflect international market prices. As a result, in January 2017, diesel prices were between Ps. 1.78 and Ps. 3.05 per liter higher than in Mexico have remained below most international diesel reference prices.December 2016.
Since the early 1980s, the Mexican Government has also established a discount of 30% on the price at which we sell gas oil intended for domestic use to the state of Chihuahua during the months of January, February and December of each year. On January 1, 2014, pursuant to the IEPS Tax on Fossil Fuels, such gas oil became subject to aone-time price increase of 10.857 Mexican cents per liter. Gas oil became subject to aone-time price increase of 11.307 Mexican cents per liter in 2015, 11.558 Mexican cents per liter as of January 1, 2016 and 11.94 Mexican cents per liter as of January 1, 2017. Notably, the discount on the price of gas oil in the state of Chihuahua was suspended in December 2016.
Since December 2008, the price at which we sell fuel oil to the Federal Electricity CommissionCFE has been linked to international market prices in accordance with a pricing methodology established by the Mexican Government. This methodology is based on the price of fuel oil in the U.S. Gulf of Mexico coastal region, and is then adjusted for quality as well as expenses related to distribution.
In addition, during 2009, pursuant to the National Agreement in Favor of Family Economy and Employment, the international reference price we use in sales of fuel oil to the Federal Electricity Commission was changed from a three-month daily average to a one-month daily average in an effort to reduce the cost of electricity to end users. On January 8, 2009, and also under the National Agreement in Favor of Family Economy and Employment, a resolution was issued establishing terms and conditions applicable to the transportation, storage, distribution and first-hand sale of fuel oil and basic petrochemicals, as well as related pricing methodologies.
On January 1, 2014, pursuant to2015, the IEPS Tax on Fossil Fuels periodic prices increases in fuel oil of 13.4514.00 Mexican cents per liter per month became effective.
On February 13, 2014, the Energy Regulatory Commission authorized Pemex-Refining to decrease the prices at which it sells wholesaleof fuel oil tobecame effective through the Federal Electricity Commission from February to August 2014. This period may be modified by the Energy Regulatory Commission. Pemex-Refining requested this price decrease with the aimfiscal year ended December 31, 2015. As of increasing the Federal Electricity Commission’s demand forJanuary 1, 2016, fuel oil processed atbecame subject to a premium of 14.31 Mexican cents per liter and as of January 1, 2017, the Miguel Hidalgo refinery in Tula.IEPS Tax on Fossil Fuels is 14.78 Mexican cents per liter.
The Mexican Government could modify these price controls or impose additional price controls in the future. See “Item 3—Key Information—Risk Factors—Risk Factors Related to Ourour Relationship with the Mexican Government—The Mexican Government has historically imposed price controls in the domestic market on our products.”
We withhold IEPS Tax. While it is included in the price to our customers, it is not calculated as part of our revenue. For more information, see “Item 4—Taxes, Duties and Other Payments to the Mexican Government—Fiscal Regime for PEMEX.”
Investments
Over the past several years, Pemex-Refining haswe have focused itsour investment program on enhancing the quality of the gasoline and diesel it produceswe produce to meet Mexico’s new environmental standards in Mexico, improving itsstandards. Our aim is to improve our ability to process heavy crude oilsoil in order to optimize the crude oil blend in itsour refineries and increasing theto increase production of unleaded gasoline and diesel to supply growing demand at lowa lower cost, as opposed to increasing itsour overall crude oil processing capacity. This focus is primarily the result of the abundance of heavy crude oils in Mexico. In addition,
Our refining business invested Ps. 30,501 million in capital expenditures in 2016 and, due to budget cuts, has budgeted Ps. 18,919 million in capital expenditures for 2017. We hope to complement our capital expenditures in 2017 through strategic alliances.
The following table sets forth our refining business’ capital expenditures, excludingnon-capitalizable maintenance, for each of the reduced availabilitythree years ended December 31, 2016, and the budget for 2017. 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.
Refining’s Capital Expenditures
Year ended December 31,(1) | Budget 2017(2) | |||||||||||||||
2014 | 2015 | 2016 | ||||||||||||||
(in millions of pesos)(3) | ||||||||||||||||
Refining | ||||||||||||||||
Fuel Quality Investments(4) | Ps.7,814 | Ps.9,045 | Ps.10,702 | Ps.4,990 | ||||||||||||
Reconfiguration of Miguel Hidalgo Refinery in Tula | 1,077 | 4,674 | 8,610 | 1,821 | ||||||||||||
New Refinery in Tula(5) | 1,128 | 561 | 1,849 | 0 | ||||||||||||
Minatitlán Refinery Energy Train | — | — | 1,100 | 28 | ||||||||||||
Cadereyta Refinery Energy Train | — | — | 872 | 7 | ||||||||||||
Residual Conversion from Salamanca Refinery | 1,310 | 913 | 749 | 4,900 | ||||||||||||
Tuxpan Pipeline and Storage and Distribution Terminals | 275 | 100 | 15 | 132 | ||||||||||||
Others | 28,163 | 14,353 | 6,604 | 7,040 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | Ps.39,767 | Ps.29,646 | Ps.30,501 | Ps.18,919 | ||||||||||||
|
|
|
|
|
|
|
|
Notes: Numbers may not total due to rounding.(1) Amounts based on cash basis method of heavy crude oil in the export markets, the lower cost of raw materials in Mexico leads to higher profit margins on the heavy crude oil we do export. accounting.
(2) | Budget authorized on December 14, 2016 and presented to the Board of Directors of Petróleos Mexicanos on April 7, 2017. |
(3) | Figures for 2014, 2015 and 2016 are stated in nominal pesos. Figures for 2017 are stated in constant 2017 pesos. |
(4) | Includes clean fuels investments for gasoline and diesel in our six refineries. |
(5) | Includespre-investments studies,on-site preparation and other expenses related to this project. |
Source: Petróleos Mexicanos.
In the medium term, Pemex-Refiningwe will continue to import unleaded gasoline to satisfy domestic demand. During 2013, Pemex-Refining2016, we imported approximately 357505 thousand barrels per day of unleaded gasoline, which represented approximately 45%61.4% of total domestic demand for unleaded gasoline in that year. In 2013, Pemex-Refining invested Ps. 29,794 million in capital expenditures, 2.9% more than its Ps. 28,944 million
Our projects, which will involve some private sector investments, aim to reduce greenhouse gas emissions by promoting cleaner fuels and increasingcrude-oil processing capacity. Certain of capital expenditures in 2012. Of this total investment, Pemex-Refining allocated Ps. 5,204 million tothese projects, including the new refineryFuels Quality Project (formerly known as the Clean Fuels Project), the reconfiguration of the Miguel Hidalgo Refinery in Tula Hidalgo, of which Ps. 1,639 million was for pre-investment studies and Ps. 469 million was for other expenses related to this refinery, Ps. 2,801 million to fuel quality investments, Ps. 909 million to the residual conversion fromof the Salamanca Refinery, are already part of ongoing projects developed by our industrial transformation segment. Our projects are described in further detail below.
Fuel Quality Project
Our Fuel Quality Project is being developed in our six refineries, with a first phase involving the installation of eight ULSG post-treatment units, the capacities of which are set forth below by refinery. The first phase of this project is being carried out at each of the following sets of our refineries: set 1, Tula and Salamanca (which are approximately 96.4% and 97.0% complete, respectively), with construction expected to be completed by the second quarter of 2016; set 2, Cadereyta and Madero (which are both 100% completed); and set 3, Minatitlán and Salina Cruz (which are 100% and approximately 96.4% complete, respectively), with the commencement of operations at Minatitlán in October 2015 interrupted due to lack of fuel, and the construction of Salina Cruz expected to be completed by the second quarter of 2016. We began production of ULSG at our Cadereyta refinery in February 2014 and at our Madero refinery in July 2015. In August 2016, we began producing ULSG at our Minatitlán, Tula, Salamanca and Salina Cruz refineries. In light of these projects, and as of the date of this annual report, all gasoline produced in Mexico meets international environmental standards. The consumption of cleaner fuels will allow us to reduce emissions of greenhouse compounds.
Plant Capacity
Cadereyta | Madero | Minatitlán | Salamanca | Salina Cruz | Tula | |||||||||||||||||||
ULSG units (tbpd) | 1 | (42) | 2 | (20) | 1 | (25) | 1 | (25) | 2 | (25) | 1 | (30) |
Note: tbpd = thousand barrels per day.
ULSG: Ultra Low Sulfur Gasoline.
Source: Pemex Industrial Transformation.
In addition to our ULSG post-treatment units, we have entered the following contracts for phase one of our fuel quality project:Sistema Integral de Mezcla en Línea Optimizado Automático(SIMLOA) at our Tula and Cadereyta refineries; laboratories at our Tula, Salamanca, Salina Cruz, Minatitlán and Madero refineries; rehabilitation tanks at our Tula, Salamanca and Salina Cruz refineries; parasitic gasoline at our Tula and Salamanca refineries; a steam condensation station at our Salamanca refinery; a turbogeneratorTG-204 at our Cadereyta refinery; and a turbogeneratorTG-8 at our Madero refinery. As of the date of this annual report, our overall progress on these contracts for each of the refineries is approximately: 79.9% at our Tula refinery, 94.1% at our Salamanca refinery, 100% at our Salina Cruz refinery, 100% at our Minatitlán refinery, 69.5% at our Cadereyta refinery and 75.1% at our Madero refinery. Both turbogenerator contracts have since been suspended due to budgetary constraints.
The second phase of the Fuel Quality Project involves the construction of five ULSD facilities and the reconfiguration of 17 existing units, as well as the installation of five hydrogen plants, four sulfur recovery units and five sour water treatment plants. This portion of the project will be carried out in three stages: (i) early production, (ii) Cadareyta diesel and (iii) a diesel stage for the five remaining refineries, as described below.
Early production.We initiated projects to increase efficiency at some of our processing plants and to produce ULSD through eight construction and services contracts totaling Ps. 255 million130 billion. All of these projects are complete and the respective plants are in operation.
Cadereyta diesel phase.Construction began in March 2013 and, as of the date of this annual report, is approximately 68% complete. Construction is expected to be completed by the fourth quarter of 2017. Due to the Tuxpan pipeline2016 Budget Adjustment Plan, however, two of the four relevant contracts have been suspended since April 2016. The two other contracts have been completed. We are currently investigating funding alternatives through alliances and/or strategic partnerships in order to resume work under these contracts.
Diesel phase for outstanding refineries.The Open Book Cost Estimation (OBCE) methodology is used in connection with the implementation of the diesel phase at the refineries other than Cadereyta and corresponding storageis divided into two stages: (i) the development of detailed engineering plans and distribution terminalsthe placement of purchase orders for equipment requiring significant delivery time, which was completed with the execution of the Final Works Agreement on December 17, 2015; and Ps. 20,625 million(ii) the execution of detailed engineering, procurement and construction, which commenced in January 2016. Due to investments relatedthe 2016 Budget Adjustment Plan, however, the project was suspended in October 2016 with only a small portion completed. Until construction is completed, we plan to other projects. The following sections provide a descriptionimportultra-low sulfur fuels in order to meet domestic demand. We are currently investigating funding alternatives through alliances and/or strategic partnerships in order to resume work under the contracts.
As of eachthe date of these projects.this annual report, we also have 15 contracts for complementary facilities, which integrate the total scope of the Fuel Quality Project. Of those 15, five have been completed, eight are in development and two have been suspended as the result of budgetary constraints.
NewReconfiguration of the Miguel Hidalgo Refinery atin Tula.
On August 12, 2009, we announced the construction of a new refinery in Tula. TheTula on land that was donated by the state government of Hidalgo. Upon completion of ourpre-investment studies relating to the new refinery is expectedin
Tula, we determined that it would be more cost-effective to have a Maya crude oil processing capacity of 250 thousand barrels per day, and to produce approximately 163 thousand barrels per day of gasoline and 117 thousand barrels per day of diesel. All distilled products processed at the refinery will meet ultra-low sulfur content specifications and no fuel oil will be produced. During 2013, we spent a total amount of Ps. 5,204 million on this project, of which Ps. 1,639 million was spent on pre-investment studies and Ps. 469.0 million on other investments at this new refinery. In June 2013, we announced a change in the scope of the project. See “—Vacuum Residue Processing at Miguel Hidalgo Refinery” below in this Item 4. As of the date of this report, we are conducting engineering studies that are necessary to complete prior to beginningforgo construction of thea new refinery and are ininstead direct our investments to the basic engineering design phase. These studies consistreconfiguration of conceptual studies related to material balances and process flowsheets, a
preliminary plot plan, preliminary piping and instrument diagrams, definition and sizing of main equipment resulting in process specifications, specification of effluents and definition of control and safety devices.
During 2013, the following contracts were awarded in connection with the construction of the refinery at Tula:
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
|
As of December 31, 2013, the total estimated cost of the refinery at Tula was Ps. 149.8 billion (equivalent to U.S. $11,610.0 million).
Vacuum Residue Processing at Miguel Hidalgo Refinery. The new refinery at Tula was originally slated to process vacuum residue from the existing Miguel Hidalgo refinery for conversion into high value fuels. However, in June 2013,refinery. Accordingly, on December 3, 2014, we announced that the Miguelcommencement of renovations to upgrade the refinery as part of theAprovechamiento de Residuales en la Refinería de Tula Hidalgo (Residue Use at the Tula Hidalgo Refinery, which we refer to as the Tula refinery would instead be reconfigured to process its vacuum residue on site.reconfiguration project). The reconfigured refinery is expectedintended to process 76 thousand barrels per day of(i) generally modernize processing; (ii) increase the efficiency with which vacuum residue in order to convert itis converted into high value fuels such as gasolinefuels; (iii) produce higher value products; (iv) increase refining margins; and diesel. All distilled products processed at the refinery will meet ultra-low sulfur content specifications and no(v) reduce fuel oil will be produced. In addition,handling problems.
Pemex Industrial Transformation plans to implement the reconfigured refinery is expected to have a crude oil processing capacity of 315 thousand barrels per day, of which 35% will be Maya crude oil and 65% will be Isthmus crude oil, and to produce approximately 161 thousand barrels per day of gasoline and 101 thousand barrels per day of diesel. During 2013, we spent Ps. 26.0 million on pre-investment studiesreconfiguration project in two phases: (i) phase one for the Miguel Hidalgo reconfiguration project. Asdevelopment of the date of this report, we are in the process of evaluating the natureengineering plans and timing of this project.
(ii) phase two for detailed engineering, procurement and construction. In September 2013, ICA Fluor Daniel, S. de R.L. de C.V. (ICA Fluor) was awarded a U.S. $94.8 million contract to carry out studies and to provide engineering services for phase one. Site conditioning work began in February 2014 and construction of the first phase of the reconfiguration of the Miguel Hidalgo refinery.processing unit began in October 2014.
As of December 2013, the total estimated cost of the reconfiguration of the Miguel Hidalgo refinery for vacuum residue processing was Ps. 53.4 billion (equivalent to U.S. $4,140.0 million) and the project is scheduled to be completed by the beginning of 2018.
Clean Fuels Project.This project is being developed in our six refineries, with a first phase involving the installation of eight ultra-low sulfur gasoline (ULSG) post-treatment units, the capacities of which are set forth below by refinery. This phase of the project is being carried out among three groups of our refineries, as follows: group 1, Tula and Salamanca (73.3% and 76.7% complete, respectively), with construction expected to be completed by 2015; group 2, Cadereyta and Madero (98.5% and 92.1% complete, respectively), with construction completed at Cadereyta in December 2013 and construction at Madero expected to be completed byAt the end of 2014;2016, the integral project was approximately 27.0% complete and group 3, Minatitlánbasic and Salina Cruz (81.2%detailed engineering plans were 100% complete. The project is now advancing to phase two, however, due to budgetary restrictions, some tasks have been rescheduled and 84.7% complete, respectively), with construction expected to be completedproject completion has slowed. In light of continued budgetary constraints, we have developed a new strategy which engages a third party for technical and financial assistance. See “—Investments” below for more information regarding capital expenditures by 2015.
Cadereyta | Madero | Minatitlán | Salamanca | Salina Cruz | Tula | |||||||
ULSG units (tbpd) | 1(42) | 2(20) | 1(25) | 1(25) | 2(25) | 1(30) |
Note: tbpd = thousand barrels per day.project.
Source: Pemex-Refining.
The second phase of the Clean Fuels Project involves the construction of five new ultra-low sulfur diesel facilities and the reconfiguration of 17 existing units. This portion of the project will be carried out in two phases: (i) a Cadereyta diesel phase and (ii) a diesel phase for the five remaining refineries. The engineering development for the Cadereyta diesel phase was completed in 2010 and an independent expert delivered his final due diligence report on the project in February 2012. Construction began in March 2013 and is expected to be completed in 2016. Basic engineering for the facilities associated with the diesel phase in the five remaining refineries was completed in December 2013, and construction is expected to begin in the second quarter of 2014 and end in 2017. Until construction is completed, we will import ultra-low sulfur fuels in order to meet local demand.
The following table sets forth, by refinery, the number of new as well as reconfigured units under the Clean Fuels Project diesel phase.
Clean Fuels Project New and Reconfigured Units
Refineries | ||||||||||||||||||||||||||||
Processing plants | Cadereyta | Madero | Minatitlán | Salamanca | Salina Cruz | Tula | Total | |||||||||||||||||||||
New gasoline post-treatment units | 1 | 2 | 1 | 1 | 2 | 1 | 8 | |||||||||||||||||||||
New diesel units | 1 | 2 | 1 | 1 | — | — | 5 | |||||||||||||||||||||
Reconfigured diesel units | 3 | 1 | 1 | 3 | 4 | 5 | 17 |
Source: Pemex-Refining.
ReconfigurationResidual Conversion of the Salamanca Refinery.
The reconfiguration of the “Ingeniero Antonio M. Amor” refinery in Salamanca, Guanajuato focuses on the conversion of residuals into high-valuehigh-steam distillates (without a need for increased crude oil processing), as well as on upgrading thea new lubricants train to produce group II lubricants (which contain almost no impurities and therefore have superior anti-oxidation properties).lubricants. As part of the reconfiguration, Pemex-Refiningwe will construct new plants which will includeand refurnish existing plants. This project also involves the following:construction of a perimeter wall surrounding the refinery with two security entrances, the relocation of CFE’s electric transmission lines, site improvements, as well as the construction of a delayed coker unit, a catalytic cracking unit, a hydrogen plant, a coker naphtha hydrotreater, a gas oil hydrotreater, a lubricantsnaphthas hydro-desulfurization plant, a gasoil hydro-desulfurization plant, a new lubricants train, a naphtha reformer,reforming plant, a sulfur plant,recovery unit, an amine regeneration unit and a sour water treatment facility, utilitiesfacility. In addition, this project involves the construction of storage tanks, effluent treatment plants (at which industrial wastewater is treated for reuse) and outside battery limits infrastructure which includes water treatment facilities, feed tanks(including roads and street lights) in the areas surrounding the refinery, as well as services, electric power supply, high burner areas, buildings and other utilitiesservice and support facilities required to maintain a plant.facilities. Other units, including certain distillation vacuum units, (including the AA, AS and AI units) will undergo renovations. renovations designed to efficiently transport residuals to the coker plant for processing and to maximize the conversion of residuals into distillates. Finally, the project includes the integration of pipelines, pumping equipment and electrical substations from existing facilities.
In addition,accordance with the reconfiguration will involve site preparation,OBCE methodology, Pemex Industrial Transformation plans to implement the project in two phases as part of a strategy to increase efficiency, mitigate technical and economic risks, define the project’s scope and reduce uncertainty. Phase one includes the development of temporary infrastructureengineering plans, while phase two includes engineering plans, together with procurement and construction. At the erectionend of a perimeter wall surrounding the refinery. The timeline for2016, the project was approximately 12.7% complete and phase one was approximately 98% complete. The project, however, has been suspended due to budgetary constraints. See “—Investments” below for more information regarding capital expenditures by project.
Pemex Industrial Transformation, together with the Department of Corporate Alliances and New Business, is as follows:
project.
Tuxpan PipelineMaritime Terminal. This
The Tuxpan Maritime Terminal project is intended to help meet the increasing demand for refined products in the metropolitan area of the Mexico Valley. The total cost of the project is approximately Ps. 3,5644,777 million,
which includes the construction of a pipeline measuring 18 inches in diameter and 109 kilometers in length from Cima de Togo to Venta de Carpio, five storage tanks located at the Tuxpan Maritime Terminal with a capacity of 100,000 barrels each, and a research study to determine the best option for the discharge of refined products from tankers and pipelines to these storage tanks. ARB Arendal, S. de R.L. de C.V. began constructiontanks and auxiliary and integration services.
By the end of 2016, two of the pipeline in June 2009.three relevant phases of this project, thepre-investment studies and transportation on the Tuxpan-Mexico pipelines, were complete. The pipeline was completed in October 2012 and started full operations in November 2012. Tradeco Infraestructura, Tradeco Industrial, ITECSA and Grupo OLRAM were, in association, awarded the contract for constructionthird phase, storage, is 91.3% complete. As of the storage tanks, which they began in October 2009. Twodate of this annual report, four of the project’s five storage tanks have been delivered to the Tuxpan Maritime Terminal and are in operation and one tank is 87% complete.
Hydrogen Supply for Refineries
Pursuant to energy reform and 2017-2021 Business Plan, we aim to partner with third parties for issues related to auxiliary services, such as the three remaining tanks are expectedsupply of hydrogen to begin operating during the first half of 2014. The Federal Electricity Commission conducted the research study, the results ofrefineries, which were deliveredwill permit us to us in April 2010. The Federal Electricity Commission concluded that we do not need to invest in additional discharge systems, due to our having a sufficient amount of monobuoys already in operation.
Minatitlán Project. This refining project is intended to increase production of high quality gasolinespecialize, maximize value, and middle distillates and to increase Maya crude oil processing to 70% of all crude oil processing performed. The work associated with the Minatitlán project was subdivided into six contracts awarded through competitive bidding from 2003 to 2005. The original and final contract amount and date of commencement of operations of the facilities comprising each contract package are as follows:
Package | Contractor(s) & facilities | Contract Date | Original Contract Amount (in millions of U.S. dollars) | Final Contract Amount (in millions of U.S. dollars)(1) | Startup Date | |||||||||
1 | Tradeco Infraestructura, S.A. de C.V. and Pager de Tabasco, S.A. de C.V. | November 2003 | U.S. $ | 40.0 | U.S. $ | 43.8 | July 2005 | |||||||
2 | ICA Fluor Daniel, S. de R.L. de C.V. | October 2004 | U.S. $ | 692.6 | U.S. $ | 1,170.4 | ||||||||
Utilities | September 2009 | |||||||||||||
Outside Battery Limits | May 2009 | |||||||||||||
Sour water treatment facility | August 2010 | |||||||||||||
3 | Dragados Proyectos Industriales de México, S.A. de C.V. and Dragados Industrial, S.A. | October 2004 | U.S. $ | 534.1 | U.S. $ | 867.3 | ||||||||
Atmospheric and vacuum unit to process 100% Maya crude oil |
September 2011 | |||||||||||||
Catalytic cracking unit | October 2011 | |||||||||||||
Diesel hydrotreatment unit | August 2010 | |||||||||||||
4 | Mina-Trico, S. de R.L. de C.V. | February 2005 | U.S. $ | 317.0 | U.S. $ | 538.8 | ||||||||
Gas oil hydrotreatment plant | November 2011 | |||||||||||||
Hydrogen unit | August 2010 | |||||||||||||
Sulfur Recovery unit | October 2010 | |||||||||||||
5 | Proyectos Ebramex, S. de R.L. de C.V. | February 2005 | U.S. $ | 317.9 | U.S. $ | 516.4 | ||||||||
Delayed coker unit |
December 2011 | |||||||||||||
Amine regenerator plant | December 2011 | |||||||||||||
Coker naphtha hydrotreatment unit | July 2011 | |||||||||||||
6 | Samsung Ingeniería Minatitlán, S.A. de C.V. and Samsung Engineering Co. Ltd. | February 2005 | U.S. $ | 154.1 | U.S. $ | 190.9 | ||||||||
Alkylation unit—U-18000 | November 2011 | |||||||||||||
Alkylation unit—U-19000 | January 2012 |
As of January 2012, all units and facilities of the Minatitlán project have been completed and are in operation. Accordingly, all contracts awarded in connection with the Minatitlán project were completed in 2013. The estimated total cost of the project was U.S. $4,044 million.
2014 Refining Investment Budget. For 2014, Pemex-Refining has budgeted Ps. 40,699 million of capital expenditures. Pemex-Refining will invest 24% of this amount to expand and upgrade refineries and related installations, 6%focus on the planningprocessing of the new refinery in Tula, 24% on environmental and industrial safety projects, 35% on rehabilitation projects and 11% on other projects and acquisitions.crude oil.
Gas and Basic PetrochemicalsAromatics
Natural Gas and Condensates
Pemex-Exploration and Production’sOur average natural gas production decreased by 0.2%11.0 % in 2013,2016, from 6,3853,454.4 million cubic feet per day in 20122015 to 6,3703,074.2 million cubic feet per day in 2013,2016, while the average wet natural gas processed decreased by Pemex-Gas and Basic Petrochemicals increased by 0.5%9.8%, from 4,3824,072.8 million cubic feet per day in 20122015 to 4,4043,671.5 million cubic feet per day in 2013.2016.
All wet natural gas production is directed to Pemex-Gas and Basic Petrochemicals’our gas processing facilities. At the end of 2013, Pemex-Gas and Basic Petrochemicals2016, we owned nine facilities.
The following facilities are located in the Southern region:
• | Nuevo Pemex. This facility contains 13 plants that together in |
• | Cactus. This facility contains 22 plants that together in |
• | Ciudad Pemex. This facility contains eight plants that together in |
• | La Venta. This facility contains one plant that in 2016 produced |
• | Matapionche.This facility contains five plants that together in |
• | Morelos. This facility contains one plant that in |
• | Cangrejera. This facility contains two plants that together in |
• | Pajaritos. This facility contains one plant that produced |
The following facilities are located in the Northern region:
• | Burgos.This facility contains nine plants that together in |
• | Poza Rica. This facility contains five plants that together in |
• | Arenque.This facility contains three plants that together in |
The following tables set forth Pemex-Gas and Basic Petrochemicals’our processing capacity, as well as our total natural gas processing and production, as well as processing capacity, for the five years ended December 31, 2013.2016.
Gas and Aromatics’ Processing and Production Capacity(1)
Year ended December 31, | ||||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2016 | ||||||||||||||||
(in millions of cubic feet per day, except where otherwise indicated) | ||||||||||||||||||||
Sweetening plants | ||||||||||||||||||||
Sour condensates(1) | 144 | 144 | 144 | 144 | 144 | |||||||||||||||
Sour natural gas(2)(3) | 4,503 | 4,503 | 4,523 | 4,523 | 4,523 | |||||||||||||||
Natural gas liquids recovery plants | ||||||||||||||||||||
Cryogenics | 5,912 | 5,912 | 5,912 | 5,912 | 5,912 | |||||||||||||||
Natural gas liquids fractionating(2)(4) | 569 | 569 | 569 | 569 | 591 | |||||||||||||||
Processing of hydrosulfuric acid | 219 | 219 | 219 | 219 | 219 | |||||||||||||||
Aromatic compounds and derivates(Cangrejera and Independencia)(5)(6) | — | — | — | 1,694 | 1,694 |
(1) | Production capacity refers to aromatic compounds and derivatives. |
(2) | In thousands of barrels per day. |
(3) | In 2014, following a review of the sour natural gas processing capacity of the Poza Rica Complex reflecting an increase in capacity from 230 to 250 million cubic feet per day, the total installed sour natural gas processing capacity of thePemex-Gas and Basic Petrochemicals increased from 4,503 to 4,523 million cubic feet per day. |
(4) | The liquids fractionating plant at the Reynosa complex has been out of service since August 31, 2009. |
(5) | Thousand tons per year. |
(6) | Since November 2015, the operation of the Methanol I and II plants, the CPQ Independencia petrochemical specialties plant and the CPQ Cangrejera aromatic compounds plants have been assigned to Pemex Industrial Transformation. |
Source: Pemex BDI.
Natural Gas, Condensates and CondensatesAromatics’ Processing and Production(1)
Year ended December 31, | 2013 vs. 2012 | Year ended December 31, | 2016 vs. 2015 | |||||||||||||||||||||||||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||||||
(in millions of cubic feet per day, except where otherwise indicated) | (%) | (in millions of cubic feet per day, except where otherwise indicated) | (%) | |||||||||||||||||||||||||||||||||||||||||||||
Processing | ||||||||||||||||||||||||||||||||||||||||||||||||
Wet gas | 4,436 | 4,472 | 4,527 | 4,382 | 4,404 | 0.5 | 4,382 | 4,404 | 4,343 | 4,073 | 3,672 | (9.8 | ) | |||||||||||||||||||||||||||||||||||
Sour gas | 3,381 | 3,422 | 3,445 | 3,395 | �� | 3,330 | (1.9 | ) | 3,395 | 3,330 | 3,356 | 3,225 | 2,997 | (7.1 | ) | |||||||||||||||||||||||||||||||||
Sweet gas(2) | 1,055 | 1,050 | 1,082 | 987 | 1,074 | 8.8 | 987 | 1,074 | 986 | 847 | 675 | (20.3 | ) | |||||||||||||||||||||||||||||||||||
Condensates | 51 | 53 | 57 | 46 | 46 | 0.0 | 46 | 46 | 49 | 45 | 41 | (8.9 | ) | |||||||||||||||||||||||||||||||||||
Gas to natural gas liquids extraction | 4,399 | 4,458 | 4,483 | 4,346 | 4,381 | 0.8 | 4,346 | 4,381 | 4,303 | 3,904 | 3,450 | (11.6 | ) | |||||||||||||||||||||||||||||||||||
Wet gas | 4,252 | 4,304 | 4,347 | 4,206 | 4,234 | 0.7 | 4,206 | 4,234 | 4,172 | 3,745 | 3,394 | (9.4 | ) | |||||||||||||||||||||||||||||||||||
Reprocessing streams(4) | 146 | 154 | 136 | 140 | 147 | 5.0 | 140 | 147 | 131 | 159 | 56 | (64.8 | ) | |||||||||||||||||||||||||||||||||||
Production | ||||||||||||||||||||||||||||||||||||||||||||||||
Dry gas(5) | 3,572 | 3,618 | 3,692 | 3,628 | 3,693 | 1.8 | 3,692 | 3,755 | 3,699 | 3,454 | 3,074 | (11.0 | ) | |||||||||||||||||||||||||||||||||||
Natural gas liquids(6)(7) | 378 | 383 | 389 | 365 | 362 | (0.8 | ) | 365 | 362 | 364 | 327 | 308 | (5.8 | ) | ||||||||||||||||||||||||||||||||||
Liquefied petroleum gas | 181 | 184 | 185 | 176 | 178 | 1.1 | 204 | 206 | 205 | 174 | 159 | (8.6 | ) | |||||||||||||||||||||||||||||||||||
Ethane(6) | 121 | 119 | 121 | 115 | 109 | (5.2 | ) | 115 | 109 | 110 | 107 | 106 | (0.9 | ) | ||||||||||||||||||||||||||||||||||
Naphtha | 76 | 79 | 82 | 72 | 73 | 1.4 | 72 | 73 | 77 | 69 | 62 | (10.1 | ) | |||||||||||||||||||||||||||||||||||
Sulfur(9) | 712 | 670 | 636 | 592 | 620 | 4.7 | ||||||||||||||||||||||||||||||||||||||||||
Sulfur(9)(11) | 1,011 | 1,029 | 962 | 858 | 673 | (21.6 | ) | |||||||||||||||||||||||||||||||||||||||||
Methanol(9) | 151 | 157 | 168 | 161 | 145 | (9.9 | ) | |||||||||||||||||||||||||||||||||||||||||
Aromatic compounds and derivatives(9)(10) | 166 | 799 | 1,017 | 1,022 | 940 | (8.0 | ) | |||||||||||||||||||||||||||||||||||||||||
Others(9)(12) | 31 | 588 | 899 | 535 | 507 | (5.2 | ) |
Note: Numbers may not total due to rounding.
GPC = Gas Processing Complex
(1) | Excludes operations of |
(2) | Includes sweet vapor from condensates. |
(3) | Includes internal streams. |
(4) | Reprocessing of pipeline dry gas at the Pajaritos cryogenic plant. |
(5) |
(6) | In thousands of barrels per day. |
(7) | Includes stabilized condensates, reprocessing streams from the Cangrejera petrochemical complex and other streams for fractionating. |
(8) | Includes |
(9) | In thousands of tons. |
Source:Pemex BDI.
Processing Capacity
Year ended December 31, | ||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||
(in millions of cubic feet per day, except where otherwise indicated) | ||||||||||||||||||||
Sweetening plants | ||||||||||||||||||||
Sour condensates(1) | 144 | 144 | 144 | 144 | 144 | |||||||||||||||
Sour natural gas | 4,503 | 4,503 | 4,503 | 4,503 | 4,503 | |||||||||||||||
Natural gas liquids recovery plants | ||||||||||||||||||||
Cryogenics(2) | 5,792 | 5,792 | 5,712 | 5,912 | 5,912 | |||||||||||||||
Absorption(3) | — | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 5,792 | 5,792 | 5,712 | 5,912 | 5,912 | |||||||||||||||
Natural gas liquids fractionating(1)(4) | 569 | 569 | 569 | 569 | 569 | |||||||||||||||
Processing of hydrosulfuric acid | 219 | 219 | 219 | 219 | 219 |
Source:Source: Pemex BDI.
Domestic consumption of dry gas totaled 5,735.73,347.3 million cubic feet per day in 2013,2016, a 1.3%3.1% increase from the 20122015 domestic consumption of 5,660.83,246.8 million cubic feet per day. The subsidiary entities consumed approximately 39.6% of the total domestic dry gas consumed in 2013, while the industrial-distributor sector consumed 19.8%, the electrical sector consumed 33.5%, the electrical autogeneration sector consumed 2.5% and the trading sector consumed 4.6%.
We import dry gas to satisfy shortfalls in our production and to meet demand in areas of northern Mexico that, due to their distance from the fields, can be supplied more efficiently by importing natural gas from the United States. In addition, in August 2013, we announced a natural gas supply strategy developed in partnership with the Mexican Government to address the domestic natural gas shortages. Under this strategy, we will increase our liquefied natural gas imports in the short-term.short term. See “—Business Overview—Industrial Transformation—Gas and Basic Petrochemicals—Aromatics—Natural Gas Supply Strategy” in this Item 4. In 2013,2016, we imported 1,289.71,933.9 million cubic feet per day of natural gas, an increase of 18.4%36.6% from the 1,089.31,415.8 million cubic feet per day imported in 2012,2015, due to lower availability of sour wet natural gas and dry gas from Pemex-Explorationour exploration and Production’sproduction segment’s fields. The total amount of natural gas imported per day in 20132016 included 114.3103.2 million cubic feet of liquefied natural gas imported through Manzanillo.
Pemex-Gas and Basic Petrochemicals processesWe process sour and sweet condensates from our exploration and production segment in order to obtain stabilized natural gas liquids and also recoversrecover liquid hydrocarbons obtained from the processing of sweet natural
gas. In addition, we obtain natural gas liquids from internal streams and liquid hydrocarbons condensed in sour wet gas pipelines. Our production of natural gas liquids, including stabilized condensates, reprocessing and other fractionating streams, decreased by 0.8%5.8% from 365327 thousand barrels per day in 20122015 to 362308 thousand barrels per day in 2013.2016.
Pemex-Gas and Basic Petrochemicals processesWe process sour condensates, which have a higher sulfur content, to produce stabilized sweet condensates. The volume of sour condensates we processed from Pemex-Explorationour exploration and Productionproduction segment and internal streams of Pemex-Gasour gas and Basic Petrochemicals amounted to 35.0aromatic compoundsub-segment totaled 41 thousand barrels per day in 2013, a 2.8%2016, an 8.8% decrease from the 36.045 thousand barrels per day processed in 2012. Pemex-Gas and Basic Petrochemicals2015. We also processesprocess sweet condensates at itsour Burgos facilities to produce light and heavy natural gasoline.
In January 2009, Pemex-GasThe production of aromatic compounds and Basic Petrochemicals began the construction of a cryogenic plant at the Poza Rica GPC, which has a processing capacity of 200 million cubic feet per day of sweet wet gas. The project also includes, among others installations, the construction of two storage tanks for liquid gas, each with a capacity of 20derivatives decreased 8.0%, from 1,021.7 thousand barrels. This cryogenic plant began operatingtons in November 2012.
The Regulatory Law currently limits basic petrochemicals2015 to the following nine products that are used940.2 thousand tons in 2016 due to operational challenges in the petrochemical production process: ethane, propane, butane, pentanes, hexane, heptane, carbon black feedstocks, natural gasolinecontinuous catalyst regeneration and methane, when obtained from hydrocarbon reservoirs in Mexico and used as raw material for petrochemical industrial processes. All other petrochemical products may be produced by Pemex-Petrochemicals, byPemex-Refining or by private sector companies. However,styrene plants throughout the Regulatory Law also allows companies that produce basic petrochemicals, as by-products of non-basic petrochemical production, to sell them either internally, within plants in the same unit or complex, or to sell them to Petróleos Mexicanos and the subsidiary entities.year.
Natural Gas Supply Strategy
On August 13, 2013, we and the Mexican Government presented a strategy to address domestic natural gas shortages in the short, mediumshort-, medium- and long term.long-term. In the short-term, we will increasehave increased our liquefied natural gas
imports, and switchwhich increased by 36.3% in 2016, from using1,418.4 million cubic feet per day in 2015 to 1,933.9 million cubic feet per day in 2016, including imports of natural gas to using fuel oil at our facilities. In the medium-term, we plan to construct additional pipelines and compression stations. Finally, we expect to continue to increase oil and shale gas reserves in order to satisfy domestic demand for natural gas in the long-term. The specific components of this strategy, including our role, may be impacted by the changes contemplatedthrough Manzanillo. On January 1, 2016, as part of the Energy Reform Decree. See “—Information onopening of the Company—History and Development—Energy Reform”natural gas market, we transferred certain of our transportation assets to CENAGAS in this Item 4.a step towards that goal.
Over the five years ended December 31, 2013,2016, the value of Pemex-Gas and Basic Petrochemicals’our domestic sales was distributed as follows:
Value of Gas and Aromatics’ Domestic Sales of Pemex-Gas and Basic Petrochemicals(1)
Year ended December 31, | 2013 vs. 2012 | |||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||||||
(in millions of pesos)(2) | (%) | |||||||||||||||||||||||
Natural gas | Ps. | 58,102.1 | Ps. | 67,141.3 | Ps. | 64,466.3 | Ps. | 50,233.0 | Ps. | 68,128.7 | 35.6 | |||||||||||||
Liquefied petroleum gas | 49,461.3 | 53,385.9 | 57,981.0 | 64,966.5 | 71,728.9 | 10.4 | ||||||||||||||||||
Petrochemicals | ||||||||||||||||||||||||
Hexane | 367.5 | 278.5 | 408.2 | 4.8 | 44.3 | 822.9 | ||||||||||||||||||
Ethane(3) | — | — | — | — | 32.3 | — | ||||||||||||||||||
Solvent agents | 18.2 | 56.0 | 29.2 | 85.7 | 28.0 | (67.3 | ) | |||||||||||||||||
Sulfur | 32.4 | 662.8 | 1,354.7 | 1,167.2 | 659.6 | (43.5 | ) | |||||||||||||||||
Carbon black(4) | 1,149.9 | 1,808.9 | 2,368.2 | 1,115.7 | — | — | ||||||||||||||||||
Pentanes | 73.6 | 144.4 | 232.0 | 46.9 | 165.8 | 253.5 | ||||||||||||||||||
Heptane | 55.1 | 60.6 | 105.7 | 8.6 | 62.7 | 629.1 | ||||||||||||||||||
Butane | 119.2 | 188.7 | 240.7 | 264.9 | 259.1 | (2.2 | ) | |||||||||||||||||
Propane | 49.3 | 74.2 | 93.5 | 69.6 | 70.3 | 1.0 | ||||||||||||||||||
Others | 0.2 | — | — | — | 4.4 | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total Petrochemicals | 1,865.3 | 3,274.2 | 4,832.2 | 2,763.4 | 1,326.5 | (52.0 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | Ps. | 109,428.7 | Ps. | 123,801.4 | Ps. | 127,279.6 | Ps. | 117,962.8 | Ps. | 141,184.1 | 19.7 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
Year ended December 31, | 2016 vs. 2015 | |||||||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2016 | ||||||||||||||||||||
(in millions of pesos)(2) | (%) | |||||||||||||||||||||||
Natural gas | Ps.50,233.0 | Ps.68,128.7 | Ps.78,666.4 | Ps.53,037.3 | Ps.67,536.5 | 27.3 | ||||||||||||||||||
Liquefied petroleum gas | 64,966.5 | 71,728.9 | 78,258.9 | 78,194.0 | 50,179.8 | (35.8 | ) | |||||||||||||||||
Ethane(3) | — | 32.3 | 283.6 | 310.7 | 1,284.7 | 313.5 | ||||||||||||||||||
Heptane | 8.6 | 62.7 | 39.1 | 1.0 | — | (100.0 | ) | |||||||||||||||||
Propane | 69.6 | 70.3 | 92.4 | 57.6 | 73.8 | 28.1 | ||||||||||||||||||
Light naphtha | — | — | 2.8 | 39.7 | 84.5 | 112.9 | ||||||||||||||||||
Heavy naphtha | — | 4.4 | 15.7 | 191.0 | 404.8 | 111.9 | ||||||||||||||||||
Sulfur | 1,167.2 | 659.6 | 795.9 | 926.1 | 585.7 | (36.8 | ) | |||||||||||||||||
Methanol | 665.3 | 733.9 | 775.5 | 748.4 | 625.1 | (16.5 | ) | |||||||||||||||||
Aromatic compounds and derivatives(4) | 2,979.4 | 3,641.4 | 4,427.5 | 3,479.4 | 2,122.1 | (39.0 | ) | |||||||||||||||||
Others(5) | 192.4 | 347.7 | 658.9 | 400.2 | 261.5 | (34.7 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | Ps.120,282.0 | Ps.145,409.9 | Ps.164,016.7 | Ps.137,385.4 | Ps.123,158.5 | (10.4 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Note: Numbers may not total due to rounding.
(1) | Excludes value added tax. |
(2) | Figures are stated in nominal pesos. |
(3) | Ethane sales to Petroquímica Mexicana de Vinilo S.A. de C.V. |
(4) |
(5) | Includes petrochemical specialties, hydrogen, isopropane, heptane, hexane, pentane and naphtha gas. |
Source:Source: Pemex BDI.
The volume of Pemex-Gasour domestic sales of gas and Basic Petrochemicals’ domestic salesaromatics for the five-year period ended December 31, 20132016 was distributed as follows:
Volume of Gas and Aromatics’ Domestic Sales of Pemex-Gas and Basic Petrochemicals
Year ended December 31, | 2013 vs. 2012 | |||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||||||
(in thousands of barrels per day, except where otherwise indicated) | (%) | |||||||||||||||||||||||
Natural gas(1) | 3,118.8 | 3,254.9 | 3,382.7 | 3,387.7 | 3,463.5 | 2.2 | ||||||||||||||||||
Liquefied petroleum gas(2) | 281.0 | 287.9 | 284.8 | 285.5 | 282.8 | (0.9 | ) | |||||||||||||||||
Petrochemicals(3) | ||||||||||||||||||||||||
Hexane | 33.6 | 23.0 | 29.3 | 0.3 | 2.9 | 866.7 | ||||||||||||||||||
Ethane(4) | — | — | — | — | 16.7 | — | ||||||||||||||||||
Solvent agents | 5.1 | 5.7 | 2.7 | 7.2 | 2.1 | 70.8 | ||||||||||||||||||
Sulfur | 593.3 | 582.1 | 647.8 | 649.1 | 520.7 | (19.8 | ) | |||||||||||||||||
Carbon black(5) | 330.7 | 419.1 | 429.6 | 167.1 | — | — | ||||||||||||||||||
Pentanes | 10.7 | 15.0 | 19.1 | 3.9 | 14.6 | 274.4 | ||||||||||||||||||
Heptane | 4.9 | 4.9 | 7.1 | 0.5 | 3.9 | 680.0 | ||||||||||||||||||
Butane | 17.2 | 19.7 | 20.6 | 23.0 | 26.4 | 14.8 | ||||||||||||||||||
Propane | 7.7 | 8.6 | 8.7 | 8.2 | 9.3 | 13.4 | ||||||||||||||||||
Others | — | — | — | — | 0.4 | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total petrochemicals | 1,003.2 | 1,078.1 | 1,164.9 | 859.2 | 597.0 | (30.5 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Year ended December 31, | 2016 vs. 2015 | |||||||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2016 | ||||||||||||||||||||
(in thousands of barrels per day, except where otherwise indicated) | (%) | |||||||||||||||||||||||
Natural gas(1) | 3,387.7 | 3,463.5 | 3,451.2 | 3,246.8 | 3,347.3 | 3.1 | ||||||||||||||||||
Liquefied petroleum gas(2) | 286.5 | 284.3 | 282.1 | 278.8 | 202.1 | (27.5 | ) | |||||||||||||||||
Ethane (3) | — | 0.8 | 5.8 | 8.8 | 30.5 | 246.6 | ||||||||||||||||||
Heptane | 0.5 | 3.9 | 3.0 | 0.1 | — | (100.0 | ) | |||||||||||||||||
Propane | 8.2 | 9.3 | 9.7 | 10.1 | 11.3 | 11.9 | ||||||||||||||||||
Heavy naphtha(4) | — | 0.4 | 1.5 | 29.9 | 64.3 | 115.1 | ||||||||||||||||||
Light naphtha(4) | — | — | 0.3 | 6.2 | 13.3 | 114.5 | ||||||||||||||||||
Sulfur(4) | 649.1 | 520.7 | 655.3 | 572.7 | 580.5 | 1.4 | ||||||||||||||||||
Methanol(4) | 107.7 | 100.1 | 110.9 | 112.0 | 111.3 | (0.6 | ) | |||||||||||||||||
Aromatic compounds and derivatives(4)(5) | 161.4 | 197.4 | 246.8 | 240.0 | 155.1 | (35.4 | ) | |||||||||||||||||
Others(4)(6) | 12.5 | 25.9 | 51.3 | 40.6 | 29.7 | (26.8 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 4,613.6 | 4,606.3 | 4,817.9 | 4,546.0 | 4,545.4 | (0.01 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Note: Numbers may not total due to rounding.
(1) | In millions of cubic feet per day. |
(2) | In thousands of barrels per day. |
(3) |
(4) |
(5) |
(6) | Includes petrochemical specialties, hydrogen, isopropane, heptane, hexane, pentane and naphtha gas. |
Source:Pemex BDI.
TheIn 2016, the value of theour domestic sales of Pemex-Gas and Basic Petrochemicals increaseddecreased by 19.7%10.4%, or Ps. 23,221.3 million, as compared to 2012, primarily as a result of a 35.6% increase in domestic sales of natural gas and a 10.4% increase in domestic sales of LPG, each due2015, to price increases. This increase was partially offset by a 52.0% decrease in total petrochemicals sales of Pemex-Gas and Basic Petrochemicals,Ps. 123,158.4 million, primarily as a result of a decrease in domestic sales of LPG. Domestic sales of LPG decreased by 27.5%, as compared to 2015, to 202.1 thousand barrels per day due to price decreases driven by competition from private companies able to import LPG as of March 2016 pursuant to the volumeenergy reform. Domestic sales of natural gas increased by 3.1%, as compared to 2015, to 3,347.3 million cubic feet per day due to increasing domestic demand in the industrial sector, which accounts for 29.7% of total domestic sales. Demand in the electric sector decreased by 7.5%. Domestic sales of sulfur increased by 1.4%, as compared to 2015, to 580.5 thousand tons due to a greater than expected demand from private chemical companies. Domestic sales of aromatic compounds and prices of certain products sold, including sulfur, in additionderivatives decreased by 35.4%, as compared to carbon black being sold by Pemex-Refining since May 2012.2015, to 155.1 thousand tons due to decreased production resulting from operational difficulties at the CRR and styrene plants.
Subsidiaries of Pemex-Gas and Basic PetrochemicalsPemex Industrial Transformation
Pemex-Gas and Basic PetrochemicalsPemex Industrial Transformation conducts certain management, real estate and distribution activities through its subsidiaries and through certain joint ventures. The following table lists Pemex-Gas and Basic Petrochemicals’its subsidiaries, their principal operating activities and Pemex-Gas and Basic Petrochemicals’Pemex Industrial Transformation’s ownership interest as of December 31, 2013.2016.
Subsidiaries of Pemex-Gas and Basic PetrochemicalsPemex Industrial Transformation(1)
Subsidiary | Principal Activity | Ownership Interest (%) | ||||
Mex Gas | Holding company | 100.00 | ||||
Pasco International, Ltd. | Holding company | |||||
| ||||||
| 100.00 | |||||
Terrenos para Industrias, S.A. | Real estate holding company | 100.00 |
(1) | As of December 31, |
(2) | Mex Gas |
Source: Pemex-Gas and Basic Petrochemicals.Pemex Industrial Transformation
The following table lists Pemex-Gas and Basic Petrochemicals’Pemex Industrial Transformation’s joint ventures, theirits principal operating activities and Pemex-Gas and Basic Petrochemicals’Pemex Industrial Transformation’s ownership interestinterests as of December 31, 2013.2016.
Joint Ventures of Pemex-Gas and Basic PetrochemicalsPemex Industrial Transformation(1)
Subsidiary | Principal Activity | Ownership Interest (%) | ||||
| Gas | 50.00 | ||||
| Holding company | 50.00 |
(1) | As of December 31, |
Source: Pemex-Gas and Basic Petrochemicals.Pemex Industrial Transformation
PipelinesDivestitures
Private Sector ParticipationOn July 31, 2015, we announced the divestiture of our 50% ownership interest in Natural Gas Distributionthe Gasoductos de Chihuahua, S. de R.L. de C.V. (Gasoductos de Chihuahua) joint venture with Infraestructura Energética Nova, S.A.B. de C.V. (IEnova). The Regulatory Law provides that private and “social sector” companies may, with governmental authorization, store, distribute and transport natural gas, and may construct, own and operate natural gas pipelines, facilities and equipment.
Since 1997, the Regulatory Law has required us to provide the private sector with open access to our transportation system for distribution, ending our prior exclusive rights over the distribution lines. We continue to market natural gas and may develop natural gas storage systems.
In 1996, the Energy Regulatory CommissionIEnova shareholders approved the Gradual Access Program for 1996-1997,transaction in September 2015. On September 15, 2016, Mexico’sComisión Federal de Competencia Económica (Federal Economic Competition Commission or COFECE) approved the proposed direct sale to IEnova as it was structured, which required that we open access to our natural gas distribution system to the private sector and prohibited vertical integration between transportation and distribution. Asincluded a result, Pemex-Gas and Basic Petrochemicals’ distribution assets located within the following official distribution zones have been privatized: Chihuahua, Toluca, Saltillo, Nuevo Laredo, Río Pánuco, Northern Tamaulipas, Distrito Federal, Valle de Cuautitlán-Texcoco-Hidalgo, Hermosillo, Monterrey, Mexicali, El Bajío, Cananea, Querétaro, La Laguna, Bajío Norte, Puebla, Tlaxcala,
Guadalajara, Piedras Negras and Ciudad Juárez. Most recently, Pemex-Gas and Basic Petrochemicals’ distribution assets located within Altamira and Morelos were privatized in 2012 and the distribution assets located within Veracruz were privatized in 2013.
In addition,competitive bidding process with respect to first-hand salesGasoducto San Fernando and LPG Ducto TDF. The initial divestiture did not include Gasoductos de Chihuahua’s subsidiary company, Ductos y Energéticos del Norte, S. de R.L. de C.V., so Pemex Industrial Transformation retained a 50% share participation. On September 28, 2016, we announced the divestiture of natural gas, Pemex-Gas and Basic Petrochemicals submittedour interest in Gasoductos de Chihuahua. IEnova’s interest in the company increased from 50% to the Energy Regulatory Commission its proposal for a new payment system, which would provide customers with the option to reserve transportation capacity of natural gas and make payments based on the volume consumed. This new payment system would allow customers to better estimate their consumption of natural gas, as well as enhance our ability to manage costs and capacity related to the transportation of natural gas. Pemex-Gas and Basic Petrochemicals is prepared to operate under the new system once the Energy Regulatory Commission approves the new system and issues final regulations to govern natural gas sales under it.100%. The transaction was valued at US$ 1,143.8 million.
Los Ramones Gas Pipeline. On January 16, 2013, the Board of Directors of Petróleos Mexicanos was informed of modifications to the
The Los Ramones pipeline project, which is being implemented in two phases, is part of a strategy to supply central Mexico with natural gas imported from the United States. TheWhen complete, the Los Ramones pipeline project will be implemented in two phases.is projected to have a transportation capacity of 3,530 million cubic feet per day and an approximate length of 859.4 km. Phase one consistsof the pipeline project is complete and currently serves to address the natural gas deficit in the country with a maximum capacity of 2,100 million cubic feet per day. Phase two of this project, with a total capacity of 1,430 million cubic feet per day and consisting of the construction of a pipeline from the U.S. border near Ciudad Camargo, Tamaulipas to Los Ramones, Nuevo León, which will be developed and owned by Gasoductos de Chihuahua, S. de R.L. de C.V., a joint venture between Pemex-Gas and Basic Petrochemicals and Sempra Gasoductos Holding, S. de R.L. de C.V. The phase one pipeline is expected to begin operating in December 2014 with an initial capacity of 1.0 billion cubic feet per day and will have its capacity increased to 2.1 billion cubic feet per day by late 2015. Phase one will require an estimated U.S. $688 million investment. Phase two of the project consists of a pipelinerunning from Los Ramones, Nuevo León to Apaseo el Alto, Guanajuato, which is expected to begin operating in December 2015 with a capacity of 1.43 billion cubic feet per day. On October 15, 2013, Pemex-Gas and Basic Petrochemicals voided the tender process for the construction of the second phase of the project, after the bid received from the consortium formed by Enagás and GDF Suez was rejected due to its failure to meet the project’s technical and economic requirements. Phase two of the project has since beenfurther subdivided into two stages,stages: Ramones Norte totaling 452 km in length and Ramones Sur and was directly awarded to the selected contractors based on their experience with projects of this nature. Ramones Norte, which consists of a 447 kilometer portion of the pipeline from Los Ramones to San Luis Potosí, will require an estimated U.S. $1,052 million investment and will be constructed by a joint venture betweentotaling 291 km in length. TAG Pipelines, S. de R.L. de C.V. (an indirect subsidiary of Pemex-Gas and Basic Petrochemicals) and Gasoductos de Chihuahua, S. de R.L. de C.V. (or anyPemex Industrial Transformation, which we refer to as TAG Pipelines) developed the project through partnerships for each of its subsidiaries). Ramones Sur consists of a 291 kilometer portionthese stages. In 2016, commercial operations for this pipeline project commenced. On January 1, 2016, the transport service contract was transferred to CENAGAS, which is now responsible for monitoring the operations of the pipeline from San Luis Potosí to Apaseo el Alto, Guanajuato, will require an estimated U.S. $795 million investmentLos Ramones system and will be constructed by a joint venture between GDF Suez and TAG Pipelines.for payment of transportation services.
Energy Reform. The Energy Reform Decree contemplates the transfer of certain of Pemex-Gas and Basic Petrochemicals’ assets related to the national gas pipeline system to another decentralized public entity of the Mexican Government that will be created in the future. The secondary legislation implementing the Energy Reform Decree is expected to include, among other things, additional details regarding this transfer of assets. See “—Information on the Company—History and Development—Energy Reform” in this Item 4.
Pricing Decrees
NaturalThe energy reform provides for fuel price liberalization, which began in January 2017. Our sales will continue to be regulated by the Energy Regulatory Commission until COFECE determines that there is effective competition in the wholesale market.
The Mexican Government currently determines natural gas prices for domestic salesales, which are calculated in accordance with directives issued by the Energy Regulatory Commission on July 20, 2009 and the related Resolutions of December 20, 2010, March 3, 2011, December 20, 2012, January 17, 2013, and March 21, 2013.2013 and December 3, 2013, by which the Energy Regulatory Commission approved and issued a temporary methodology for determining the maximum prices of natural gas of first-hand sales. On February 15, 2016, the Energy Regulatory Commission issued a new methodology which, effective March 1, 2016, determines the maximum first-hand sales price of natural gas. These prices aim to reflect natural gas opportunity costs and competitive conditions in international markets and at the point of sale.
Since 2003, price control mechanisms for LPG have been implemented through governmental decrees. On December 28, 2007, the Mexican Government issued a decree establishing the maximum LPG price for first-hand and end-user sales. The decree became effective in January 2008, and established a monthly price increase from January 2008 to May 2008 of Ps. 0.0317 per kilogram over the weighted average end-user price of LPG after taxes. From June 2008 to December 2008, the amount of these price increases varied from month to month.
On December 29, 2008, the Mexican Government issued a decree establishing a national weighted average end-user price of LPG before taxes of Ps. 8.92 per kilogram, effective January 2009. Subsequently, on January 9, 2009, the Mexican Government issued a decree modifying the national weighted average end-user price of LPG before taxes to Ps. 8.03 per kilogram, representing a discount of almost 10%. This decree also suspended the periodic increases in the retail price of LPG, beginning on January 12, 2009 and effective through December 31, 2009.
In January 2010, the Mexican Government issued a decree establishing the maximum weighted averageend-user price of LPG before taxes of Ps. 8.08 per kilogram. Subsequently, as of February 2010, the Mexican Government established monthly maximum price increases in cents per kilogram before taxes, as follows:
Period | Mexican Cents per Kilogram | |||
February 2010 to July 2011 | 5 | |||
August to November 2011 | 7 | |||
December 2011 | 8 | |||
January 2012 to October 2013 | 7 | |||
November to December | 9 | |||
January to | 9 | * | ||
January 2015 | 23 | * | ||
January 2016 | 34 | ** |
* | On January 1, 2014 and 2015, pursuant to the IEPS Tax on Fossil Fuels, a |
** | The 34 Mexican cent per kilogram increase in January 2016 was aone-time increase for the year, and no further monthly increases were established for the remainder of 2016. |
Beginning in August 2014, the methodology for calculatingend-user price was modified from weighted average prices to simple average prices.
On January 1, 2016, the Mexican Government issued a decree establishing aone-time price increase of 34 Mexican cents per kilogram, which was effective until August 16, 2016. On August 17, 2016, the Mexican Government authorized an end user discount of 9.97%, which was effective until December 31, 2016. Since January 1, 2017, we have sold natural gas in accordance with the new methodology for determining first-hand sales, and all end user prices have been freely determined by the market.
The Mexican Government could modify these price controls or impose additional price controls in the future. See “Item 3—Key Information—Risk Factors—Risk Factors Related to Ourour Relationship with the Mexican Government—The Mexican Government has historically imposed price controls in the domestic market on our products.”
Natural Gas Hedging Operations
Pemex-Gas and Basic Petrochemicals offers,We offer, as a value addedvalue-added service, various hedging contracts to itsour domestic customers to protect them against fluctuations in the prices of natural gas. For information on hedging contracts offered to natural gas domestic customers, see “Item 11—Quantitative and Qualitative Disclosures about Market Risk—Instruments Entered into for Trading Purposes.Risk.”
InvestmentsGas and Aromatics Capital Expenditures
In nominal peso terms, Pemex-GasOur gas and Basic Petrochemicalsaromatics business invested Ps. 5,4053,446 million in 2013, as compared tocapital expenditures in 2016 and has budgeted Ps. 4,4682,450 million in 2012, in projects primarily related to natural gas and condensates processing, as well as for the transportation and storage of other products. For 2014, the Mexican Government has approved Ps. 7,548 million in nominal terms of capital expenditures for Pemex-Gas2017.
The following table sets forth our gas and Basic Petrochemicals, including Ps. 1,536 million to reconditionaromatics business’ capital expenditures, excludingnon-capitalizable maintenance, for each of the infrastructure used to supply ethane to the Etileno XXI projectthree years ended December 31, 2016, and the remaining Ps. 6,012 millionbudget for 2017. 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 ensure the safe and reliable operation of its facilities.capital expenditure amounts included in our consolidated financial statements prepared in accordance with IFRS.
Cryogenic Plant at the Poza Rica GPC
During 2013, Pemex-Gas and Basic Petrochemicals completed the construction of a new cryogenic plant at the Poza Rica GPC, which was built to provide the infrastructure necessary to process the wet natural gas produced by the ATG project. The new cryogenic plant has a processing capacity of 200 million cubic feet of sweet wet gas per day. This project also included, among other things, the construction of two storage tanks for liquid gas, each with a capacity of 20 thousand barrels, an ecological burner, an effluent treatment plant and supporting infrastructure. During 2013, operations at the new cryogenic plant were normal.
Electric Energy Cogeneration Program
As part of ourPrograma de Cogeneración de Energía Eléctrica (Electric Energy Cogeneration Program), we launched an international tender for the construction of our first large-scale cogeneration plant at the Nuevo Pemex GPC in the state of Tabasco on August 28, 2008. This plant began operating on April 1, 2013. Power generated by the plant is supplied to the Nuevo Pemex GPC and other Petróleos Mexicanos facilities.
The Electric Energy Cogeneration Program is a two-stage program. In the short term, the program is intended to permit us to reduce our reliance on energy supplied by the Federal Electricity Commission. Over the medium and long term, we expect that this large-scale cogeneration project will permit us to replace inefficient equipment at the end of its useful life and to sell excess energy production to the Federal Electricity Commission. See “—Information on the Company—History and Development” in this Item 4.
Collaboration Agreements
On March 15, 2012, Pemex-Gas and Basic Petrochemicals and the state of Zacatecas signed a collaboration agreement to develop a pipeline to deliver natural gas to that state. On October 26, 2012, Pemex-Gas and Basic Petrochemicals, Compañía Cervecera de Zacatecas, S.A. de C.V. (part of Grupo Modelo) and Gas Natural Industrial de Colombia S.A. E.S.P., signed an agreement to develop this pipeline, which will be 12 inches in diameter and 172 kilometers long. During the first stage of this project, the pipeline is expected to have a transportation capacity of 20 million cubic feet of natural gas per day. Following the construction of a new compression station during the second stage, the pipeline’s transportation capacity is expected to increase to 40 million cubic feet per day. In December 2013, the Energy Regulatory Commission authorized Transportadora de Gas Natural de Zacatecas, S.A. de C.V., the company created by Gas Natural Industrial de Colombia S.A. E.S.P. to carry out this project, to transport natural gas. As of the date of this report, the pipeline remains under construction and is expected to begin operating in June 2014. Pemex-Gas and Basic Petrochemicals will be capable of supplying natural gas to customers who require it until the pipeline is completed.
On April 19, 2012, Pemex-Gas and Basic Petrochemicals and the state of San Luis Potosi signed a collaboration agreement to define and develop an infrastructure development plan concerning the supply of natural gas. During 2013, this agreement enabled us to obtain rights of way in the state, thereby facilitating the second phase of the Los Ramones pipeline project. See “—Business Overview—Gas and Basic Petrochemicals—Los RamonesAromatics’ Capital Expenditures
Year ended December 31,(1) | Budget 2017(2) | |||||||||||||||
2014 | 2015 | 2016 | ||||||||||||||
(in millions of pesos)(3) | ||||||||||||||||
Gas and Aromatics | ||||||||||||||||
Modernization of Transportation Areas of GPCs | Ps. 252 | Ps. 534 | Ps. 482 | Ps. 296 | ||||||||||||
Modernization of Measuring, Control and Security Systems of GPCs | 187 | 463 | 481 | — | ||||||||||||
Refurbishment and Modernization of Natural Gas Turbocompressors of the Cryogenic Plants at Nuevo Pemex GPC | 27 | 143 | 257 | 47 | ||||||||||||
Modernization and Rehabilitation of Facilities of the Supply and Water Treatment System at Nuevo Pemex GPC | 117 | 344 | 255 | 62 | ||||||||||||
Integral Project of Electric Reliability at GPCs | 240 | 474 | 177 | 5 | ||||||||||||
Adaptation of Fractionation Plants and Conversion of the Liquids Sweetener at Nuevo Pemex GPC | 880 | 320 | 174 | 36 | ||||||||||||
Refurbishment of Refrigerating and Ethane Turbocompressors of Fractionating Plants at Nuevo Pemex GPC | — | 199 | 119 | — | ||||||||||||
Integral Maintenance of Gas Sweetening Plants 1, 2, 3 and 12 at Cactus GPC | 30 | 109 | 116 | 117 | ||||||||||||
Conservation and Modernization of the Storage Area at Coatzacoalcos Area GPC | 286 | 208 | 88 | 35 | ||||||||||||
Security Requirements for Improvement of Operational Reliability of the GPCs | 74 | 211 | 87 | 24 | ||||||||||||
Conditioning of the Venting Systems at Cactus GPC | — | 109 | 75 | 2 | ||||||||||||
Conservation of Processing Capacity at Nuevo Pemex GPC | 504 | 180 | 70 | — | ||||||||||||
Conservation of Operational Reliability at Ciudad Pemex GPC | 352 | 196 | 31 | 21 | ||||||||||||
Efficiency in Storage and Distribution I | 142 | 102 | 27 | — |
Conditioning of Facilities for Ethane Supply at Cactus GPC Integral Facilities Maintenance at Cactus GPC Others Total Year ended December 31,(1) Budget
2017(2) 2014 2015 2016 (in millions of pesos)(3) 313 234 21 2 113 137 21 — 8,797 1,691 965 1,803 Ps. 12,314 Ps. 5,654 Ps. 3,446 Ps. 2,450
Notes: Numbers may not total due to rounding.
GPC = Gas Pipeline” in this Item 4.Processing Complex.
PC = Petrochemical Complex.
(1) | Amounts based on cash basis method of accounting. |
(2) | Budget authorized on December 14, 2016 and presented to the Board of Directors of Petróleos Mexicanos on April 7, 2017. |
(3) | Figures for 2014, 2015 and 2016 are stated in nominal pesos. Figures for 2017 are stated in constant 2017 pesos. |
Source: Petróleos Mexicanos.
Ethane Supply Contract
On February 19, 2010, Pemex-Gas and Basic Petrochemicalswe entered into a contract to supply 66,000 barrels per day of ethane per day to the Etileno XXI project, a petrochemical complex in Nanchital, Veracruz that will produce ethylene and polyethylene. The Etileno XXI project is being developed and will be owned and operated by Braskem-IDESA, a Brazilian-Mexican consortium. In order to meet itsthe obligations underof this contract, Pemex-Gas and Basic Petrochemicalswe made adjustments to the infrastructure of itsour gas processing plants in the Ciudad Pemex, Nuevo Pemex and Cactus GPCs.Cactus. Additional ethane will be transported from the GPCs located atin Tabasco, in southeastern Mexico, to Coatzacoalcos, Veracruz. This contract provides for “take or pay—delivery or pay” obligations for the parties, and thus, in case of breach of itsour supply obligation, Pemex-Gas and Basic Petrochemicals iswe are subject to the payment of liquidated damages. In the event of termination as a consequence of Pemex-Gas and Basic Petrochemicals’our material default under the ethane supply contract, Pemex-Gas and Basic Petrochemicalswe may be obligated to pay to the other parties involved in the project an amount equal to the termination value of this project (the value of which is determined pursuant to the contract and takes into consideration, among other factors, the outstanding debt of the project and the amount invested in the project at such time).
Fertilizers
PetrochemicalsOur fertilizers segment operates through the productive state-owned subsidiary Pemex Fertilizers, produces ammonia and carbon dioxide and integrates the ammonia production chain up to the point of sale of fertilizers.
Capacity
At the end of 2013, Pemex-Petrochemicals2016, we owned eightfour petrochemical complexesplants, three of which are in operation, for the production of non-basic petrochemical products. Pemex-Petrochemicalsproducts mainly those classified as“non-basic.” We had a total production capacity per unit of 480 thousand tons of petrochemicals per year in 2016. Three of these plants produce ammonia and have an installed capacity of 10,1861,440 thousand tons of petrochemical products per year in 2013.2015 and 2016.
Pemex-Petrochemicals’
The total production capacity of our operating plants for the last fivetwo years was distributed among itsour facilities as set forth below.below:
Pemex-Petrochemicals’Fertilizers’ Total Capacity
Year ended December 31, | ||||||||||||||||||||
Petrochemical Facility | 2009 | 2010(1) | 2011 | 2012 | 2013(2) | |||||||||||||||
(in thousands of tons) | ||||||||||||||||||||
Cosoleacaque | 4,975 | 2,150 | 2,150 | 2,150 | 3,225 | |||||||||||||||
Cangrejera | 4,137 | 4,438 | 4,328 | 4,328 | 3,964 | |||||||||||||||
Morelos | 2,575 | 2,261 | 2,286 | 2,286 | 2,263 | |||||||||||||||
Pajaritos | 1,244 | 1,758 | 1,180 | 1,180 | 547 | (3) | ||||||||||||||
Escolín(4) | 337 | 55 | 55 | 55 | — | |||||||||||||||
Independencia | 286 | 222 | 222 | 222 | 187 | |||||||||||||||
Camargo(4) | 333 | — | — | — | — | |||||||||||||||
Tula | 68 | 55 | 55 | 55 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 13,955 | 10,939 | 10,276 | 10,276 | 10,186 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
Year ended December 31, | ||||||||
Petrochemical Complexes | 2015 | 2016 | ||||||
(thousands of tons) | ||||||||
Cosoleacaque (ammonia) | 1,440 | 1,440 |
Source: Pemex Fertilizers.
Production
The following table summarizes the annual production of our fertilizers segment for the two years ended December 31, 2016.
Fertilizers’ Production
Year ended December 31, | ||||||||||||
2015 | 2016 | 2016 vs. 2015 | ||||||||||
(thousands of tons) | (%) | |||||||||||
Methane Derivatives | ||||||||||||
Ammonia | 575 | 533 | (7.3 | ) | ||||||||
Carbon dioxide | 830 | 786 | (5.3 | ) | ||||||||
|
|
|
| |||||||||
Total | 1,405 | 1,319 | (6.1 | ) | ||||||||
|
|
|
|
Note: Numbers may not total due to rounding.
Source:Pemex Petrochemicals.
Production
Pemex-Petrochemicals manufactures various non-basic petrochemical products, including:
The total annual production of Pemex-Petrochemicals in 2013 was 7,339 thousand tons. Our combined total annual petrochemical production (including all subsidiaries) increased by 7.3% in 2013, from 10,693 thousand
tons in 2012 to 11,470 thousand tons in 2013. Of this amount, Pemex-Petrochemicals produced 7,339 thousand tons, representing a 15.3% increase from Pemex-Petrochemicals’ production of 6,367 thousand tons of petrochemical products in 2012. The remainder of these petrochemical products was produced byPemex-Refining and Pemex-Gas and Basic Petrochemicals. The increase in petrochemical production was mainly due to the incorporation of the new continuous catalytic regeneration reactor in the plant at the Cangrejera petrochemical complex, which increased output and restored the production of petroleum aromatics as compared to 2012, when the aromatics train was out of operations for eight months to allow for the installation of the new reactor.
For information on Pemex-Gas and Basic Petrochemicals’ petrochemical production, see “—Gas and Basic Petrochemicals” above.
The following table summarizes the annual production associated with the principal petrochemical activities of Pemex-Petrochemicals for the five years ended December 31, 2013.
Pemex-Petrochemicals Production
Year ended December 31, | 2013 vs. 2012 | |||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||||||
(in thousands of tons per year) | (%) | |||||||||||||||||||||||
Liquids | ||||||||||||||||||||||||
Hexanes | 46 | 51 | 45 | 5 | 22 | 340.0 | ||||||||||||||||||
Heptanes | 20 | 20 | 19 | 3 | 8 | 166.7 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 65 | 71 | 64 | 8 | 30 | 275.0 | ||||||||||||||||||
Other inputs | ||||||||||||||||||||||||
Oxygen | 445 | 460 | 447 | 418 | 434 | 3.8 | ||||||||||||||||||
Nitrogen | 149 | 167 | 165 | 164 | 172 | 4.9 | ||||||||||||||||||
Hydrogen | 110 | 159 | 128 | 20 | 61 | 205.0 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 703 | 786 | 740 | 602 | 667 | 10.8 | ||||||||||||||||||
Petrochemicals | ||||||||||||||||||||||||
Methane derivatives | 1,962 | 2,282 | 2,306 | 2,473 | 2,460 | (0.5 | ) | |||||||||||||||||
Ethane derivatives | 2,695 | 2,831 | 2,750 | 2,775 | 2,473 | (10.9 | ) | |||||||||||||||||
Aromatics and derivatives(1) | 1,233 | 1,042 | 923 | 166 | 799 | 381.3 | ||||||||||||||||||
Propylene and derivatives | 31 | 84 | 62 | 49 | 52 | 6.1 | ||||||||||||||||||
Petroleum derivatives(1) | — | 610 | 451 | 26 | 321 | 1,134.6 | ||||||||||||||||||
Others(1) | 768 | 1,093 | 744 | 115 | 443 | 285.2 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 6,689 | 7,943 | 7,237 | 5,604 | 6,549 | 16.9 | ||||||||||||||||||
Other products | ||||||||||||||||||||||||
Hydrochloric acid | 92 | 109 | 98 | 108 | 63 | (41.7 | ) | |||||||||||||||||
Muriatic acid | 37 | 34 | 16 | 45 | 30 | (33.3 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 129 | 144 | 114 | 153 | 93 | (39.2 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 7,587 | 8,943 | 8,155 | 6,367 | 7,339 | 15.3 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Refined products(2) | 3,899 | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total(3) | 11,486 | 8,943 | 8,155 | 6,367 | 7,339 | 15.3 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Note: Numbers may not total due to rounding.
|
Source: Pemex BDI.
InvestmentsTotal annual production of methane derivatives in 2016 decreased 6.1% from 1,405 thousand tons in 2015 to 1,319 thousand tons in 2016, mainly due to low gas supply and operations failures in our ammonia plants.
Pemex-Petrochemicals invested Ps. 4,003 million on capital expendituresIn 2016 we produced 533 thousand tons of ammonia, which represents a decrease of 7.3% as compared to 575 thousand tons produced in 2013, which was allocated among the following ongoing projects as follows: Ps. 495 million for the modernization and expansion2015. In 2016, we produced 786 thousand tons of carbon dioxide, aby-product of the production capacityprocess, which represents a 5.3% decrease as compared to 2015.
Sales of the aromatics train (first phase) at the Cangrejera petrochemical complex, which involves the use of new technology in the conversion of naphthas to aromatics, such as the use of a continuous catalytic regeneration reactor; Ps. 375 million for maintaining the production capacity of the ethylene plant at the Cangrejera petrochemical complex; Ps. 288 million for maintaining the production capacity of the ethane derivatives chain IV at the Morelos petrochemical complex; Ps. 208 million for the expansion and modernization of the ethane derivatives chain I at the Morelos petrochemical complex in order to increase production of ethylene oxide from 225 thousand tons per year to 360 thousand tons per year; Ps. 163 million for maintaining the production capacity of the ethane derivatives chain II at the Morelos petrochemical complex; Ps. 98 million for maintaining the production capacity of the ethane derivatives train II at the Cangrejera petrochemical complex; Ps. 85 million for the modernization and optimization of auxiliary services infrastructure I at the Morelos petrochemical complex; Ps. 65 million for maintaining the production capacity, storage and distribution of ammonia and the refurbishing of auxiliary services equipment at the ammonia plant V at the Cosoleacaque petrochemical complex; Ps. 64 million for maintaining the production capacity of auxiliary services infrastructure I at the Pajaritos petrochemical complex; Ps. 51 million for refurbishing facilities to improve security at the Morelos petrochemical complex; Ps. 16 million for maintaining the production capacity of the aromatics train II at the Cangrejera petrochemical complex; and Ps. 2,095 million for other sustainability, safety, modernization, optimization and infrastructure projects.
Pemex-Petrochemicals’ 2014 budget includes Ps. 5,396 million in capital expenditures, of which Ps. 318 million has been allocated for the expansion and modernization of the production capacity of the ethane derivatives chain I at the Morelos petrochemical complex in order to increase production of ethylene oxide from 280 thousand tons per year to 360 thousand tons per year; Ps. 131 million for maintaining the production capacity of the ethane derivatives chain II at the Morelos petrochemical complex; Ps. 125 million for maintaining the production capacity of the ethylene plant at the Cangrejera petrochemical complex; Ps. 34 million for maintaining the production capacity of the ethane derivatives chain IV at the Morelos petrochemical complex; Ps. 18 million for maintaining the production capacity, storage and distribution of ammonia at the Cosoleacaque petrochemical complex; Ps. 10 million for maintaining the production capacity of the aromatics train I at the Cangrejera petrochemical complex; Ps. 10 million for maintaining the production capacity of the aromatics train II at the Cangrejera petrochemical complex; Ps. 1 million for refurbishing facilities to improve security at the Morelos petrochemical complex; and Ps. 4,749 million for other sustainability, safety, modernization, optimization and infrastructure projects.
Domestic SalesFertilizers
In 2013,The following table sets forth the value of theour domestic sales of Pemex-Petrochemicals decreased by 4.5%, from Ps. 27,761.0 million in 2012 to Ps. 26,525.3 million in 2013. This decrease was primarily due tofor the low supply of products, which resulted from: the low availability of raw materials such as natural gas and ethane; the unscheduled shutdown of the styrene plant and the linear polyethylene and high density polyethylene plant; operational problems at the vinyl chloride plant; and the divestment of the vinyl chloride and ethylene plants at the Pajaritos petrochemical complex from Pemex-Petrochemicals to form a joint venture with Mexichem in September 2013, thereby leading to lower revenues from vinyl sales. In addition, the decrease in toluene and
methanol sales that resulted from, among other factors, competition with imported products, contributed to the decrease in the value of domestic sales. While Pemex-Petrochemical’s overall production levels increased in 2013, this increase was primarily due to the increased production of aromatics, petroleum derivatives and other products, which did not generate a sufficient amount of sales to offset the overall decrease in the value of Pemex-Petrochemicals’ domestic sales in 2013.
During 2013, the impact of the low supply of products was partially offset by the fact that sales prices generally remained stable as compared to the sales prices of 2012, with the exception of the sales price of ammonia.
Over the fivetwo years ended December 31, 2013, the value of Pemex-Petrochemicals’ domestic sales was distributed as set forth in the table below.2016:
Value of Fertilizers Segments’ Domestic Sales of Pemex-Petrochemicals(1)
Year ended December 31, | 2013 vs. 2012 | |||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||||||
(in millions of pesos)(2) | (%) | |||||||||||||||||||||||
Petrochemical Product | ||||||||||||||||||||||||
Ethane and derivatives | Ps. | 11,983.9 | Ps. | 15,814.8 | Ps. | 16,539.6 | Ps. | 16,945.1 | Ps. | 15,566.0 | (8.1 | ) | ||||||||||||
Aromatics and derivatives | 2,704.0 | 2,718.8 | 4,387.0 | 2,979.4 | 3,641.4 | 22.2 | ||||||||||||||||||
Methane and derivatives | 3,895.0 | 4,454.9 | 5,956.0 | 6,562.6 | 6,059.9 | (7.7 | ) | |||||||||||||||||
Propylene and derivatives | 400.5 | 1,384.4 | 1,467.1 | 1,134.8 | 1,212.1 | 6.8 | ||||||||||||||||||
Others(3) | 345.9 | 365.6 | 503.9 | 139.1 | 45.9 | (67.0 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | Ps. | 19,329.3 | Ps. | 24,738.4 | Ps. | 28,853.7 | Ps. | 27,761.0 | Ps. | 26,525.3 | (4.5 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
Year ended December 31, | ||||||||||||
2015 | 2016 | 2016 vs. 2015 | ||||||||||
(in millions of pesos)(2) | (%) | |||||||||||
Methane Derivatives | ||||||||||||
Ammonia | Ps. 4,414.6 | Ps. 4,593.1 | 4.0 | |||||||||
Carbon dioxide | 69.9 | 90.2 | 29.0 | |||||||||
Urea (resale) | 46.5 | 6.9 | (85.2 | ) | ||||||||
|
|
|
| |||||||||
Total | Ps. 4,531.0 | Ps. 4,690.2 | 3.5 | |||||||||
|
|
|
|
Note: Numbers may not total due to rounding.
Note: | Numbers may not total due to rounding. |
(1) | Excludes value added tax. |
(2) | Figures are stated in nominal pesos. |
Source:Pemex BDI.
In 2016 the value of domestic sales in our fertilizers segment increased by 3.5%, from Ps. 4,531.0 million in 2015 to Ps. 4,690.2 million in 2016, primarily due to an increase in the volume of sales of ammonia, as presented in more detail below.
Volume of sales
The following table sets forth the value of our domestic sales for the two years ended December 31, 2016:
Volume of Fertilizers Segment’s Domestic Sales
Year ended December 31, | ||||||||||||
2015 | 2016 | 2016 vs. 2015 | ||||||||||
(thousands of tons) | (%) | |||||||||||
Methane Derivatives | ||||||||||||
Ammonia | 643.4 | 752.8 | 17.0 | |||||||||
Carbon dioxide | 166.0 | 179.7 | 8.3 | |||||||||
Urea (resale) | 10.0 | 1.7 | (83.0 | ) | ||||||||
|
|
|
| |||||||||
Total | 819.4 | 934.2 | 14.0 | |||||||||
|
|
|
|
Note: Numbers may not total due to rounding.
Source:Pemex BDI.
Joint VentureFertilizers Capital Expenditures
Our fertilizers segment invested Ps. 379 million in capital expenditures in 2016 and has budgeted Ps. 444 million in capital expenditures for 2017. The following table sets forth our fertilizers segment’s capital expenditures, excludingnon-capitalizable maintenance, for each of the two years ended December 1, 2016, and the budget for 2017. 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 MexichemIFRS.
Fertilizers Segments’ Capital Expenditures
Year ended December 31,(1) | Budget 2017(2) | |||||||||||
2015 | 2016 | |||||||||||
(in millions of pesos)(3) | ||||||||||||
Fertilizers | ||||||||||||
Rehabilitation of Ammonia Plant IV and Integration and Auxiliary Services for Cosoleacaque PC | Ps. 791 | Ps. 295 | Ps. 225 | |||||||||
Efficiency in Storage and Distribution of Pemex-Petrochemicals | — | 45 | 68 | |||||||||
Maintaining the Production Capacity of Ammonia Plant VII and its Auxiliary Services at Cosoleacaque PC | 101 | 18 | — | |||||||||
Maintaining the Production Capacity of Ammonia Plant VI at Cosoleacaque PC | 97 | 16 | — | |||||||||
Safety and Environmental Protection, Derived from Observations and Regulations II in Cosoleacaque PC | 43 | 5 | — | |||||||||
Rehabilitation of Primary Reformers and Auxiliary Ammonia Plant VI and VII of Cosoleacaque PC | — | — | 126 | |||||||||
Others | 12 | — | 24 | |||||||||
|
|
|
|
|
| |||||||
Total | Ps. 1,044 | Ps. 379 | Ps. 444 | |||||||||
|
|
|
|
|
|
Notes: Numbers may not total due to rounding.
PC = Petrochemical Complex.
(1) | Amounts based on cash basis method of accounting. |
(2) | Budget authorized on December 14, 2016 and presented to the Board of Directors of Petróleos Mexicanos on April 7, 2017. |
(3) | Figures for 2015 and 2016 are stated in nominal pesos. Figures for 2017 are stated in constant 2017 pesos. |
Source: Petróleos Mexicanos.
In September 2013, Pemex-Petrochemicals entered into a joint venture with Mexichem through an investment2016, we invested Ps. 379 million in Petroquímica Mexicana de Vinilo, S.A. de C.V., (which we referour fertilizers segment and expect to as PMV), a Mexican entity incorporated by Mexicheminvest Ps. 444 million to our fertilizers segment in 2011. In connection with this joint venture, we increased our investment in PPQ Cadena Productiva, S.L. by Ps. 2,993.5 million, which allowed this subsidiary company to acquire a 44.09% interest in PMV, and the ethylene and vinyl chloride monomer plants and related infrastructure at the Pajaritos petrochemical complex were divested from Pemex-Petrochemicals and contributed to PMV. This contribution, together with Mexichem’s contribution of its chlorine-caustic soda plant, allowed for the integration of the caustic soda-salt-chlorine-ethylene-vinyl chloride monomer production chain, which has streamlined operations and is expected to reduce manufacturing costs. Plants associated with this project began operating on September 12, 2013. In October 2013, Pemex-Gas and Basic Petrochemicals began supplying ethane to PMV pursuant to a long-term supply contract approved by the Energy Regulatory Commission.2017.
Acquisition of Fertilizer Production FacilityPajaritos Petrochemical Complex
On January 16, 2014, our subsidiary company P.M.I. Norteamérica, S.A. de C.V. signed an agreement through one of its subsidiaries to purchase the existing assets of Agro Nitrogenados, S.A. de C.V., a subsidiary of Minera del Norte, S.A. de C.V., including a closed fertilizer production facility located in Pajaritos, Veracruz, Mexico, for the purchase price of U.S. $275 million, which was subsequently lowered to U.S. $273 million. P.M.I. Norteamérica, S.A. de C.V. expects to renovateThe renovation of the facility will involve restoring operations of our rotating, static and throughmechanical equipment, building a subsidiary, subsequently operate the production facility, which is expectedcarbon dioxide compressor station, as well as other auxiliary projects. We expect to begin productionoperations in 2015the fourth quarter of 2017 and to have an annual production capacity of up to 990,000 tons of urea.
Acquisition of Fertinal
On January 28, 2016, PMX Fertilizantes Pacífico, S.A. de C.V., one of our subsidiaries, acquired 99.99% of the outstanding shares of Fertinal, for a total purchase price of Ps. 4,322.8 million. The net value of Fertinal’s assets is Ps. 315.8 million (consisting of total assets of Ps. 12,341.1 million and total liabilities of Ps. 12,025.3 million) and a goodwill of Ps. 4,007.0 million. As of December 31, 2016, a calculation of the impairment of goodwill resulted in the complete cancellation of that amount. See Note 22 to our consolidated financial statements contained herein.
Fertinal’s total production capacity for the last year is as set forth below:
Fertinal’s Total Capacity
Year ended December 31, 2016 | ||||
(thousands of tons) | ||||
Nitrate and phosphates | 1,299 |
Source: Fertinal Group.
Fertinal’s total production for the last year is set forth below:
Fertinal’s Production
Year ended December 31, 2016 | ||||
(thousands of tons) | ||||
Phosphates | 184.3 | |||
Nitrate | 136.4 | |||
Others | 80.3 | |||
Total | 401.0 | |||
Source: Fertinal Group.
The following table sets forth the value of Fertinal’s domestic sales for the year ended December 31, 2016:
Value of Fertinal’s Domestic Sales(1)
Year ended December 31, 2016 | ||||
(in millions in pesos)(2) | ||||
Phosphates | Ps. 1,265.8 | |||
Nitrogenated | 857.5 | |||
Others | 522.9 | |||
Total | Ps. 2,646.3 | |||
Note: Numbers may not total due to rounding.
(1) | Excludes value added tax. |
(2) | Figures are stated in nominal pesos. |
Source: Fertinal Group.
We intend to incorporate Fertinal into the gas ammonia solid fertilizers value chain in order to offer a wide range of fertilizers and to cover approximately 50% of the domestic market. We are also assessing the possibility of selling this integrated business in the future.
Ethylene
Our ethylene segment operates through the productive state-owned subsidiary Pemex Ethylene and takes advantage of the integration of the ethylene production chain by manufacturing various petrochemical products. Our ethylene segment manufactures various petrochemical products, including:
Capacity
Total production capacity of our operating plants for the last two years was distributed among our facilities as set forth below:
Ethylene Segments’ Production Capacity
Year ended December 31, | ||||||||
2015 | 2016 | |||||||
(in thousands of tons) | ||||||||
Petrochemical Facility | ||||||||
Cangrejera(1) | 1,321 | 1,321 | ||||||
Morelos | 2,277 | 2,277 | ||||||
|
|
|
| |||||
Total | 3,598 | 3,598 | ||||||
|
|
|
|
Notes: Numbers may not total due to rounding.
(1) | Our ethylene segment’s capacity in Cangrejera does not include products from the aromatics and derivatives chain. These products belong to Pemex Industrial Transformation. |
Source: Pemex Ethylene.
Production
The following table sets forth our ethylene segment’s production for the two years ended December 31, 2016:
Ethylene Segment’s Production(1)
Year ended December 31, | ||||||||||||
2015 | 2016 | 2016 vs. 2015 | ||||||||||
(in thousands of tons) | (%) | |||||||||||
Ethane derivatives | 1,992.8 | 1,690.7 | (15.2 | ) | ||||||||
Propylene and derivatives | 66.0 | 42.8 | (35.2 | ) | ||||||||
Others | 910.9 | 795.2 | (12.7 | ) | ||||||||
|
|
|
| |||||||||
Total(1) | 2,969.7 | 2,528.7 | (14.8 | ) | ||||||||
|
|
|
|
Note: Numbers may not total due to rounding.
(1) | Figures include petrochemical products used as raw material to produce other petrochemicals. |
Source: Pemex BDI.
In 2016, our total production in the ethylene segment decreased 14.8%, from 2,969.7 thousand tons in 2015 to 2,528.7 thousand tons in 2016, primarily due to a decrease in the production of ethylene at the Cangrejera petrochemical complex and a reduced supply of ethane gas from our third-party supplier.
Domestic Sales
The following table sets forth our ethylene segment’s domestic sales for the two years ended December 31, 2016.
Value of Ethylene Segments’ Domestic Sales(1)
Year ended December 31, | ||||||||||||
2015 | 2016 | 2016 vs. 2015 | ||||||||||
(in millions of pesos)(2) | (%) | |||||||||||
Ethane derivatives | Ps.15,580.6 | Ps. 14,539.4 | (6.7 | ) | ||||||||
Propylene and derivatives | 1,156.5 | 788.3 | (31.8 | ) | ||||||||
Others | 104.0 | 64.8 | (37.7 | ) | ||||||||
|
|
|
| |||||||||
Total | Ps. 16,841.1 | Ps. 15,392.5 | (8.6 | ) | ||||||||
|
|
|
|
Note: Numbers may not total due to rounding.
(1) | Excludes value added tax. |
(2) | Figures are stated in nominal pesos. |
Source: Pemex BDI.
In 2016, our domestic sales decreased by 8.6% in 2016, from Ps. 16,841.1 million in 2015 to Ps. 15,392.5 million in 2016. This decrease was primarily due to lower production of high density polyethylene, low density polyethylene and ethylene oxide, which was partially offset by an increase in the sales of low linear density polyethylene in 2016 as compared to 2015.
Sales to other Subsidiary Entities
The following table sets forth the intercompany sales of petrochemical products for the two years ended December 31, 2016.
Ethylene Segment’s Intercompany Sales(1)
Year ended December 31, | ||||||||||||
2015 | 2016 | 2016 vs. 2015 | ||||||||||
(in millions of pesos)(2) | (%) | |||||||||||
Ethane and derivatives | Ps. 84.7 | Ps. 109.8 | 29.6 | |||||||||
Others | 91.9 | 373.7 | 306.6 | |||||||||
|
|
|
|
|
| |||||||
Total | Ps. 176.6 | Ps. 483.5 | 173.8 | |||||||||
|
|
|
|
|
|
Note: Numbers may not total due to rounding.
(1) | Excludes value added tax. |
(2) | Figures are stated in nominal pesos. |
Source:Pemex Ethylene.
In 2016, our intercompany sales increased by 173.8%, from Ps. 176.6 million in 2015 to Ps. 483.5 million in 2016. This increase was primarily due to an increase in the sales of pyrolysis liquids and nitrogen.
Ethylene Capital Expenditures
Our ethylene segment invested Ps. 746 million in capital expenditures in 2016, and has budgeted Ps. 1,786 million for capital expenditures in 2017.
The following table sets forth our ethylene segment’s capital expenditures, excludingnon-capitalizable maintenance, for each of the two years ended December 31, 2016, and the budget for 2017. 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.
Ethylene’s Capital Expenditures
Year ended December 31,(1) | Budget 2017(2) | |||||||||||
2015 | 2016 | |||||||||||
(in millions of pesos)(3) | ||||||||||||
Ethylene | ||||||||||||
Maintaining the Production Capacity of Ethylene Plant 2013-2015 at Morelos PC | Ps. 93 | Ps. 122 | Ps.— | |||||||||
Modernization and Optimization of Auxiliary Services Infrastructure I at Morelos PC | 5 | 105 | 213 | |||||||||
Modernization of Fire Protection Network at Cangrejera PC | 102 | 71 | 118 | |||||||||
Safety and Environmental Protection Based on Observations and Regulations IV at Morelos PC | 114 | 43 | 1 | |||||||||
Maintaining Production Capacity of the Low Density Polyethylene Plant | 112 | 40 | 156 | |||||||||
Maintaining the Production Capacity of Ethane Derivatives Chain II at Morelos PC | 87 | 38 | 0 | |||||||||
Maintaining the Production Capacity of Auxiliary Services II | 78 | 27 | 32 | |||||||||
Maintaining the production capacity of ethylene oxide plant 2015-2017 at Morelos PC | 1 | 23 | 97 | |||||||||
Maintaining the Production Capacity of Auxiliary Services III | 59 | 17 | 19 | |||||||||
Maintaining the Production Capacity of Auxiliary Services at Morelos PC | 48 | 17 | 42 | |||||||||
Maintaining the Production Capacity of the Ethane Derivatives Chain III at Morelos PC | 54 | 8 | 2 | |||||||||
Maintaining the Production Capacity of the Mitsui plant 2015-2017 at Morelos PC | 4 | 8 | 24 | |||||||||
Maintaining the Production Capacity of the Swing Plant 2015-2017 at Morelos PC | 7 | 6 | 150 | |||||||||
Modernization and Expansion of Production Capacity of Ethane Derivatives Chain I at Morelos PC | 402 | 3 | 6 | |||||||||
Modernization and Optimization of Infrastructure and Auxiliary Services I at Cangrejera PC | 277 | — | — | |||||||||
Others | 426 | 219 | 927 | |||||||||
|
|
|
|
|
| |||||||
Total | Ps. 1,869 | Ps. 746 | Ps. 1,786 | |||||||||
|
| �� |
|
|
|
|
Notes: Numbers may not total due to rounding.
PC = Petrochemical Complex.
(1) | Amounts based on cash basis method of accounting. |
(2) | Budget authorized on December 14, 2016 and presented to the Board of Directors of Petróleos Mexicanos on April 7, 2017. |
(3) | Figures for 2015 and 2016 are stated in nominal pesos. Figures for 2017 are stated in constant 2017 pesos. |
Source: Petróleos Mexicanos.
Joint Venture with Mexichem
We have a 44.1% interest in a joint venture with Mexichem S.A.B. de C.V., which we refer to as Mexichem, through an investment in Petroquímica Mexicana de Vinilo S.A. de C.V. (PMV), a Mexican entity incorporated by Mexichem in 2011. This joint venture allowed for the integration of the caustic soda-salt-chlorine-ethylene-vinyl chloride monomer production chain, which has streamlined operations and is expected to reduce manufacturing costs. Plants associated with this project began operating on September 12, 2013. The ethylene and vinyl chloride monomer plants are operated by employees of Pemex Ethylene. Vinyl chloride monomer plants and related infrastructure at the Pajaritos petrochemical complex were divested from Pemex-Petrochemicals and contributed to PMV. During 2016, our petrochemicals segment supplied 2.6 thousand barrels per day of ethane to PMV, a decrease of 71.1 % as compared to 8.8 thousand barrels per day in 2015.
As a result of an accident at vinyl chloride plant III on April 20, 2016, the vinyl chloride III and ethylene plants ceased operations and the soda plant began operating at reduced capacity, which led to a decline in sales of all products in 2016. The vinyl chloride plant was the only plant affected by the accident, and we are currently evaluating plants to resume operations. To date, the cause of the accident is unknown.
Drilling and Services
Our drilling and services segment operates through the productive state-owned subsidiary Pemex Drilling and Services and provides drilling, completion, work-over and other services for wells in offshore and onshore fields. During 2016, this segment mainly provided drilling services to Pemex Exploration and Production, but also began to provide services to third-party clients such as CONAGUA and the Armada Company.
As a result of our corporate reorganization, for the year ended December 31, 2015, we have presented operating results for our drilling and services segment together with results for our exploration and production segment. We have summarized some of these results below. For additional results for this segment, please see “—Exploration and Production—Exploration and Drilling” above in this Item 4. Operating results for these segments are presented separately for periods beginning January 1, 2016. When reviewing these results, please note that our exploration and production segment receives drilling services not only from our drilling and services segment but also from third parties. Accordingly, the amounts presented above under drilling activity do not relate only to services provided by our drilling and services segment. For a detailed description of the financial results of each segment, see our consolidated financial statements included herein.
During 2016, we drilled 93 wells, 41 onshore and 52 offshore; completed 92 wells, 41 onshore and 51 offshore; and made 617 workovers, 540 onshore and 77 offshore. Of the wells completed, two were for CONAGUA. Those services were performed with an average of 54 drilling and workover rigs, 24 terrestrial and 30 marine, including both owned and leased equipment. Moreover, we conducted 24,851 well services in 2016, of which 52.7% were wireline operations, 28.2% were cementing jobs, 16.0% were logging operations and perforations and 3.1% were coiled tubing operations.
Given the current state of the oil and gas industry and the decline in global oil prices, the demand for well drilling and services decreased in 2016 by approximately 12% as compared to 2015. In 2017, we expect well interventions to decrease by approximately 37.9% and we expect to operate an average of 35 rigs—16 land and 19 marine—including both owned and leased equipment, which represents a 35.2% decrease as compared to 2016. Of these, we expect that 13 land and 3 marine will be rigs we own, which is a 42.9% decrease as compared to 2016. By the end of 2017, we expect to be operating a total of 14 rigs—11 land and 3 marine rigs.
In 2016, we acquired two 3,000 hp land rigs for Ps. 1,442.3 million. Plans to acquire two marine rigs have been postponed due to delays in construction. In 2017, in accordance with our “Programa de modernización de la infraestructura de perforación” (Drilling Infrastructure Modernization Program), we expect to acquire two 200 hp land rigs for well repairs.
Drilling and Services Capital Expenditures
Our drilling and services segment invested Ps. 2,688 million on capital expenditures in 2016 and has budgeted Ps. 1,580 million for capital expenditures in 2017.
The following table sets forth our drilling and services segment’s capital expenditures, excludingnon-capitalizable maintenance, for each of the two years ended December 31, 2016, and the budget for 2017. 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.
Drilling and Services’ Capital Expenditures
Year ended December 31, 2015(1) | Budget 2017(3) | |||||||||||
2015(2) | 2016 | |||||||||||
(in millions of pesos)(4) | ||||||||||||
Drilling and Services | ||||||||||||
Acquisition of TwoJack-Up Platforms | Ps. 553 | Ps. 772 | Ps. 838 | |||||||||
Acquisition of Nine Land-Based Drilling Rigs | 288 | 340 | 386 | |||||||||
Drilling Rig Equipment and Well Service Equipment Maintenance Program | — | 74 | 287 | |||||||||
Acquisition of Two Modular Drilling Rigs | 723 | — | 65 | |||||||||
Others | — | 1,501 | 3 | |||||||||
|
|
|
|
|
| |||||||
Total | Ps. 1,564 | Ps. 2,688 | Ps. 1,580 | |||||||||
|
|
|
|
|
|
Notes: Numbers may not total due to rounding.
(1) | Amounts based on cash basis method of accounting. |
(2) | Figures for the drilling and services segment for the year ended December 31, 2015 refer to capital expenditures since August 1, 2015, when Pemex Drilling and Services was formed. |
(3) | Budget authorized on December 14, 2016 and presented to the Board of Directors of Petróleos Mexicanos on April 7, 2017. |
(4) | Figures for 2015 and 2016 are stated in nominal pesos. Figures for 2017 are stated in constant 2017 pesos. |
Source: Petróleos Mexicanos.
Logistics
Our logistics segment operates through the productive state-owned subsidiary Pemex Logistics and provides land, maritime and pipeline transportation, storage and distribution services to some of our other subsidiary entities and to other companies, including CFE,Aeropuertos y Servicios Auxiliares, CENAGAS, local gas stations and distributors.
Transportation of Crude Oil and Refined Products
During 2016, we transported 58,016 millionton-kilometers of crude oil and petroleum products, an 11.3% decrease as compared to 2015 due to decreased production in our exploration and production segment, decreased processing of crude oil in our refineries and the illicit market in fuels which can lead to temporary pipeline closures. During 2016, we transported approximately 4,688 million cubic feet per day of natural gas, through an operation and maintenance service contract provided to CENAGAS. During 2016, we also transported 140 thousand barrels per day of LPG and 2,475 thousand barrels per day of crude oil and petroleum products to be processed in our refining system and to satisfy domestic demand for petroleum products, as compared to 174 thousand barrels per day of LPG and 3,181 thousand barrels per day of crude oil and petroleum products transported in 2015. Of the total amount we transported in 2016, we carried 79.5% of the transported volumes in 2016 through pipelines, 7.8% by vessels and the remaining 12.7% by train tank cars and trucks.
During 2016, we transported approximately 5,440 million cubic feet per day of natural gas, an increase as compared to the 5,142 million cubic feet per day transported in 2015, partially due to the transportation of an estimated 655 million cubic feet per day for the CFE as agreed among the Ministry of Energy, the Energy Regulatory Commission and Pemex Industrial Transformation. On January 1, 2016, we began providing operation, maintenance and information technology services, among others, to CENAGAS in connection with its natural gas transportation infrastructure.
Our pipelines connect crude oil and natural gas producing centers with refineries and petrochemical plants, and our refineries and petrochemical plants with Mexico’s major cities. At the end of 2016, our pipeline network measured approximately 17,696 kilometers in length, of which 17,433 kilometers are operational and 263 kilometers are temporarily out of operation. These pipelines may be temporarily out of operation because of a decline in production in a field where the pipeline is located or because transportation service is irregular, making operation of the pipeline unprofitable. Once production is restored in that field, pipelines become operational again. We are currently analyzing the 263 kilometers of pipelines temporarily out of operation to determine if and how they may be used.
Approximately 5,259 kilometers of the pipelines currently in operation transport crude oil, 8,582 kilometers transport petroleum products and petrochemicals, 1,583 kilometers transport LPG, 1,982 kilometers transport basic and secondary petrochemicals and 290 kilometers transport other products, including fuel oil, jet fuel and water.
On January 1, 2016, the 9,168 kilometers of pipelines used to transport natural gas were transferred to CENAGAS. For more information, see Note 9 to our consolidated financial statements included herein.
We have been working to implement a pipeline integrity management plan, which is based on the guidelines of API Standard RP 1160, “Managing System Integrity for Hazardous Liquid Pipelines;” the American Society of Mechanical Engineers B31.8S, “Managing System Integrity of Gas Pipelines” andNOM-027.
The pipeline integrity management plan consists of the following stages:
We have made considerable progress towards satisfying the requirements ofNOM-027. Specifically, as of December 31, 2016, we have analyzed 96% of our overall logistics pipeline network. In addition, we have implemented several measures required by our pipeline integrity management plan, including our data collection requirements.
Despite having implemented strategies to improve the integrity and operation of our transportation pipeline network, we experienced 35 leaks and spills in 2016, which represents a 45.3% decrease as compared to 64 incidents in 2015. Of the 35 incidents we experienced in transportation pipelines in 2016, 14 were due to a failure in the mechanical integrity of the pipelines, two were due to third-party incidents and 19 were due to other factors.
The transportation of crude oil, natural gas and other products through a pipeline network is subject to various risks, including risks of leaks and spills, explosions and theft. In 2016, we incurred a total of Ps. 3,891.1 million in expenditures for the remediation and maintenance of our pipeline network and we have budgeted an additional Ps. 2,987.3 million for these expenditures in 2017. For more information on recent issues with our pipeline network, see “Item 3—Key Information—Risk Factors—Risk Factors Related to our
Operations—We are an integrated oil and gas company and are exposed to production, equipment and transportation risks, criminal acts and deliberate acts of terror” and “—Environmental Regulation—Environmental Liabilities” below.
Other Transportation Equipment and Storage Facilities
As of December 31, 2016, we owned 16 refined product tankers and leased one. We also own 17 tugs, 1,485 tank trucks and 511 train tank cars, as well as 74 major wholesale storage and distribution centers, 10 liquefied gas terminals, five maritime terminals and 10 dock operation and maintenance facilities. These facilities, together with our pipeline network, constitute our oil and gas transportation and distribution infrastructure.
Our current fleet includes 17 vessels, of which we own 16 and lease one. Altogether, we have a transportation capacity of 4,618 thousand barrels. 67.5% of our vessels are located on the Pacific Coast and 32.4% are in the Gulf of Mexico. Of the vessels on the Pacific Coast, 83.7% are used to transport distillates, and 16.3% to transport fuel oil and heavy diesel. Of the vessels in the Gulf of Mexico, 82.5% are used for distillates and 17.5% for fuel oil and heavy diesel. Our vessel, BT Burgos, is currently out of operation due to an accident which occurred on September 24, 2016.
The plan for renewal and modernization of our fleet was concluded in 2014; however, we may resume renewal and modernization efforts pursuant to future demand for petroleum products or the retirement of a vessel in accordance with current international regulation.
On July 25, 2013, as part of a plan to modernize the fleet, we signed an agreement with the Secretaría de Marina—Armada de México (Mexican Navy), valued at approximately Ps. 3,212.1 million (U.S. $250.0 million), for the construction of 22 marine vessels for Pemex-Refining, now Pemex Industrial Transformation. The agreement initially included construction of 16 tugs, three multipurpose vessels and three barges, but was modified in 2016 to remove the construction of the three barges and extend the final delivery date to December 31, 2018. This transaction is now valued at approximately Ps. 4,346.4 million.
Treatment and Primary Logistics
Treatment and primary logistics systems are the pipeline systems between our oil fields and our refineries and delivery terminals. During 2016, Pemex Exploration and Production began to transfer its treatment and logistics systems to Pemex Logistics, including the transfer of the Misión, Altamira and Santuario systems on May 1, 2016, the Dos Bocas Maritime Terminal system on September 1, 2016, and the oil and gas South Terrestrial system on November 1, 2016. Altogether these systems include 1,357 kilometers of natural gas pipelines, 1,124 kilometers of crude oil pipelines and 401 kilometers of gasoline pipelines, as well as one maritime export terminal for crude oil.
During 2016, these treatment and primary logistics systems transported an average of 2,133 thousand barrels per day of crude oil, of which 935 thousand barrels per day were delivered to the National Refining System and 1,198 thousand barrels per day were delivered to export terminals. For our gas distribution, an average of 4,195 million cubic feet per day was transported in 2016, of which 3,699 million cubic feet per day were delivered to process plants, 496 million cubic feet per day were delivered directly to pipelines, and 36 million cubic feet per day of condensate were delivered to process plants.
During 2016, we experienced six leaks and spills.
Open Season
As a result of energy reform, we may offer pipeline transportation and storage services for refined products to the wider energy market. During 2017, under the guidelines issued by the Energy Regulatory Commission, Pemex Logistics will participate in an “open season,” a transparent and competitive auction procedure where any participant can compete to offer its services.
Once the capacity reserve authorized by the CRE has been allocated to Pemex Industrial Transformation in a volume sufficient to ensure that national supply is not affected, the remaining services will be offered through an auction.
Pemex Logistics will offer its services in the north of Mexico, which includes the Rosarito area, and the Guaymas area. Once the auction process is complete, we anticipate that our logistics segment will gradually extend its transportation and storage services to the rest of Mexico, until reaching full coverage before the end of 2017.
During 2016, our logistics segment earned Ps. 71,130.8 million, primarily for services rendered to our other subsidiary entities.
Logistics Capital Expenditures
Our logistics segment invested Ps. 7,015 million in capital expenditures in 2016 and has budgeted Ps. 4,449 million in capital expenditures for 2017.
The following table sets forth our logistics segment’s capital expenditures, excludingnon-capitalizable maintenance, for each of the two years ended December 31, 2016, and the budget for 2017. 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.
Logistics’ Capital Expenditures
Year ended December 31,(1) | Budget 2017(2) | |||||||||||
2015 | 2016 | |||||||||||
(in millions of pesos)(3) | ||||||||||||
Logistics | ||||||||||||
Larger Fleet Modernization | 458 | 583 | 487 | |||||||||
Renewal of Tugs, Chalanes and Multipurpose Vessels of the Smaller Fleet | 401 | 495 | 36 | |||||||||
Refurbishment, Modification and Modernization of Pumping and Compression Stations Nationwide | 221 | 476 | 97 | |||||||||
Maintenance of Safety, Measurement, Control and Automation Systems in Storage and Distribution Terminals | 460 | 452 | 332 | |||||||||
Acquisition of 5 Tankers Vessel by Cash and/or by Leasing | 363 | 427 | 309 | |||||||||
Evaluation and Rehabilitation of the Mechanical Integrity of the Pipeline’s Poza Rica-Salamanca and Nuevo Teapa- Tula-Salamanca | 461 | 347 | 388 | |||||||||
Replacement of Vessel Tanks Nuevo Pemex I, II, III and IV by Acquisition and/or Leasing | 278 | 326 | 240 | |||||||||
Implementation of the SCADA System in 47 Pipeline Transportation Systems | 520 | 270 | 106 | |||||||||
Evaluation and Rehabilitation of the Mechanical Integrity of the Pipelines in Northern and Pacific Zones | 271 | 251 | 450 | |||||||||
Evaluation and Rehabilitation of the Mechanical Integrity of the Pipelines Nuevo Teapa-Madero-Cadereyta | 574 | 193 | 41 | |||||||||
Integral Maintenance of Pipeline Systems for Natural Gas and LPG, Stage II | 293 | 172 | 176 |
Modernization of the Instrumented Security and Basic Control Systems of the Pumping Stations and Product Receipt Northern Zone Evaluation and Rehabilitation of the Mechanical Integrity of the Turbosine, Diesel, Gasoline and Fuel Oil Pipelines and Gas Pipelines in the Central Zone Natural Gas Transportation from Jáltipan to Salina Cruz Refinery Maintenance of Marine Facilities Others Total Year ended December 31,(1) Budget
2017(2) 2015 2016 (in millions of pesos)(3) 278 110 2 464 109 62 403 31 7 316 28 65 4,066 2,745 1,654 Ps. 9,827 Ps. 7,015 Ps. 4,449
Notes: Numbers may not total due to rounding.
(1) | Amounts based on cash basis method of accounting. |
(2) | Budget authorized on December 14, 2016 and presented to the Board of Directors of Petróleos Mexicanos on April 7, 2017. |
(3) | Figures for 2014, 2015 and 2016 are stated in nominal pesos. Figures for 2017 are stated in constant 2017 pesos. |
Source: Petróleos Mexicanos.
Private Sector Participation in Natural Gas Distribution
Prior to the enactment of the Hydrocarbons Law, the Regulatory Law provided that private and “social sector” companies could, with governmental authorization, store, distribute and transport natural gas and construct, own and operate natural gas pipelines, facilities and equipment.
Since 1997, the Regulatory Law has required us to provide the private sector with open access to our transportation system for distribution, ending our prior exclusive rights over the distribution lines. We continue to market natural gas and may develop natural gas storage systems.
In 1996, the Energy Regulatory Commission approved the Gradual Access Program for 1996 to 1997, which required that we open access to our natural gas distribution system to the private sector and prohibited vertical integration between transportation and distribution. As a result,Pemex-Gas and Basic Petrochemicals’ distribution assets located within the following official distribution zones were privatized: Chihuahua, Toluca, Saltillo, Nuevo Laredo, Río Pánuco, Northern Tamaulipas, Distrito Federal, Valle deCuautitlán-Texcoco-Hidalgo, Hermosillo, Monterrey, Mexicali, El Bajío, Cananea, Querétaro, La Laguna, Bajío Norte, Puebla, Tlaxcala, Guadalajara, Piedras Negras and Ciudad Juárez. Most recently,Pemex-Gas and Basic Petrochemicals’ distribution assets located within Altamira and Morelos were privatized in 2012 and the distribution assets located within Veracruz were privatized in 2013.
In addition, with respect to first-hand sales of natural gas,Pemex-Gas and Basic Petrochemicals, now Pemex Industrial Transformation, submitted to the Energy Regulatory Commission its proposal for a new payment system in 2013, which would provide customers with the option to reserve transportation capacity of natural gas and make payments based on the volume consumed. This new payment system is designed to allow customers to better estimate their consumption of natural gas, as well as enhance our ability to manage costs and capacity related to the transportation of natural gas. We continue to employ a temporary methodology for determining maximum prices of first-hand sales of natural gas. However, we are prepared to begin operating under the new system once the Energy Regulatory Commission approves it and issues final regulations to govern natural gas sales under the system. The Energy Regulatory Commission has stated that it plans to issue new regulations by July 1, 2017.
The Hydrocarbons Law, which repealed the Regulatory Law, provides for the participation of other companies in the entire natural gas value chain. The law additionally establishes a permit regime that governs all midstream and downstream activities in Mexico. In January 2015, the Energy Regulatory Commission granted Gasoducto de Aguaprieta S. de R.L. de C.V. a transportation permit corresponding to the northwestern region of Mexico, including Cajeme and Navojoa in the state of Sonora and another for Ahome, Choix, El Fuerte, Guasave and Salvador Alvarado in the state of Sinaloa.
Pursuant to the Hydrocarbons Law, on August 11, 2014, CENAGAS was created as a decentralized public entity of the Mexican Government to act as the independent administrator of the Integrated Natural Gas System. This system interconnects the infrastructure for the storage and transportation of natural gas across the nation, with the aim of expanding coverage, strengthening security measures and improving the continuity, quality and efficiency in transportation service. As an integrated system of transportation systems owned by CENAGAS or other participating companies, the Integrated Natural Gas System functions as a primary transportation service supplier in Mexico with standardized fares. Within this system, theSistema Nacional de Gasoductos (National Gas Pipelines System) acts as the commercial administrator for the total available capacity of the Integrated Natural Gas System. In order for a transportation system to become part of the Integrated Natural Gas System, its transport capacity must enhance the Integrated Natural Gas System’s flow capacity and improve the overall transportation service provided to users.
In accordance with the Energy Reform Decree, we signed a transfer agreement with CENAGAS on October 29, 2015 for the transfer to CENAGAS of assets associated with the Integrated Natural Gas System and the distribution contract for the Naco-Hermosillo pipeline system. The National Gas Pipeline System has 87 pipelines with a total length of almost 9,000 kilometers and a transport capacity over 5,000 million cubic feet per day, while the Naco-Hermosillo system is a 300 kilometers long pipeline with a transport capacity of 90 million cubic feet per day. The approximate aggregate book value of these assets, which were transferred to CENAGAS on January 1, 2016, was Ps. 35.3 billion as of December 31, 2016, as described in Note 9 to our consolidated financial statements included herein.
Cogeneration and Services
Our cogeneration and services segment operates through the productive state-owned subsidiary Pemex Cogeneration and Services and uses the thermal heat and steam from our industrial processes to produce the electricity required by us, as well as surplus electricity to sell to third parties in Mexico. Our cogeneration and services segment also provides technical and management services associated with supplying electricity.
Our cogeneration and services segment designs construction, financing and development structures for cogeneration through alliances with third parties in close geographic proximity to our productive work centers.
In 2013, we, throughPemex-Gas and Basic Petrochemicals, now Pemex Industrial Transformation, entered into a services agreement with the Cogeneration Plant of Nuevo Pemex, which we refer to as the Cogeneration Plant, owned by ACT Energy México, S. de R. L. de C. V., to convert demineralized/condensed water from liquid to steam and natural gas into electricity to supply the Nuevo Pemex gas processing complex and to transport natural gas to our other centers and productive state-owned subsidiaries. Through this services agreement, the Cogeneration Plant agrees to provide a minimum of between 550 and 800 tons per hour of steam and 277.2 megawatts of electricity to the Nuevo Pemex gas processing complex and our 191 other workplaces and productive state-owned subsidiaries throughout the country. On December 6, 2016, the services agreement with the Cogeneration Plant was amended to increase the supply of steam by 140 tons per hour beginning on December 1, 2017.
During 2016, the Cogeneration Plant generated an average of 561.3 tons per hour of steam for the Nuevo Pemex gas processing complex, a 4.5% decrease as compared to 2015, and 298 megawatts of electricity, a 2.6% decrease as compared to 2015. These decreases are primarily due to significant maintenance performed at the plant during February and March.
In November 2016, Pemex Industrial Transformation and CFE entered into a services agreement for the conversion of demineralized/condensed water from liquid to steam, pursuant to which CFE will supply 662 tons of steam per hour to the Salamanca refinery through the external cogeneration project developed by CFE. Operational and performance tests began in November 216 and will conclude in the second half of 2017. Our cogeneration and services segment will monitor and manage the services agreement between the parties.
Our cogeneration and services segment has two cogeneration projects to supply steam and electricity to Tula and Cadereyta refineries. During 2016, we carried out activities to define the scope of these projects and to develop the relevant user requirements, which we are working to formalize with the aim of commencing operations by the end of 2022. These projects will be developed through alliances with, and investment capital from, third parties. The projected total investment is U.S. $ 1,127 million, with an estimated capacity of 969 megawatts of electricity and 2,000 tons per hour of steam.
The following table sets forth a brief summary of the three projects discussed above.
Projects under Development
Electricity (Megawatts) | Steam (tons/hour) | |||||||||||
Capacity | Our Demand | |||||||||||
Tula | 444 | 267 | 1,150 | |||||||||
Cadereyta | 525 | 135 | 850 |
Source: Pemex Cogeneration and Services.
We did not have capital expenditures for our cogeneration and services segment for the year ended December 31, 2016, and do not have any capital expenditures budgeted for 2017.
International Trading
The PMI Group
The PMI Group conductsand its subsidiaries conduct international commercial activities for our crude oil, refined and petrochemical products, except forwith the exception of natural gas, which is marketed directly by Pemex-Gas and Basic Petrochemicals.our industrial transformation segment. The PMI Group’ssubsidiaries’ main objectives are to assist in maximizing our profitability and optimizing our operations through the use of international trade, facilitating our link with the international markets and pursuing new business opportunities in marketing our products. The PMI Group managesand its subsidiaries manage the international sales of our crude oil and petroleum products and acquiresacquire in the international markets those petroleum products that we import to satisfy domestic demand. Sales of crude oil are carried out through PMI. Sales and purchases of petroleum products in the international markets are carried out through P.M.I. Trading, Ltd., which also performs third-party trading, transportation and risk management activities.
Exports and Imports
PMI purchases crude oil from Pemex-Explorationour exploration and Productionproduction segment and then sells it to PMI’s customers. PMI sold an average of 1,188.8 thousand1.2 million barrels per day of crude oil per day in 2013,2016, which represented 47.1%55.5% of our total crude oil production.
The following tables set forth the composition and average prices of our crude oil exports for the periods indicated.
Year ended December 31, | ||||||||||||||||||||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||||||||||||||||||||||
(tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | |||||||||||||||||||||||||||||||
Crude oil exports (by volume) | ||||||||||||||||||||||||||||||||||||||||
Olmeca (API gravity of 38°-39°) | 143 | 12 | 212 | 16 | 203 | 15 | 194 | 15 | 99 | 8 | ||||||||||||||||||||||||||||||
Isthmus (API gravity of 32°-33°) | 14 | 1 | 75 | 6 | 99 | 7 | 99 | 8 | 103 | 9 | ||||||||||||||||||||||||||||||
Maya (API gravity of 21°-22°) | 1,052 | 86 | 1,065 | 78 | 1,022 | 76 | 944 | 75 | 968 | 81 | ||||||||||||||||||||||||||||||
Altamira (API gravity of15.0°-16.5°) | 13 | 1 | 9 | 1 | 14 | 1 | 19 | 2 | 20 | 2 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total | 1,222 | 100 | 1,361 | 100 | 1,338 | 100 | 1,256 | 100 | 1,189 | 100 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, | ||||||||||||||||||||||||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2016 | ||||||||||||||||||||||||||||||||||||
(tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | |||||||||||||||||||||||||||||||
Crude Oil Exports (by Volume) | ||||||||||||||||||||||||||||||||||||||||
Olmeca (API gravity of38°-39°) | 194 | 15 | 99 | 8 | 91 | 8 | 124 | 11 | 108 | 9 | ||||||||||||||||||||||||||||||
Isthmus (API gravity of32°-33°) | 99 | 8 | 103 | 9 | 134 | 12 | 194 | 17 | 153 | 13 | ||||||||||||||||||||||||||||||
Maya (API gravity of21°-22°) | 944 | 75 | 968 | 81 | 887 | 78 | 743 | 63 | 865 | 72 | ||||||||||||||||||||||||||||||
Altamira (API gravity of15.0°-16.5°) | 19 | 2 | 20 | 2 | 27 | 2 | 28 | 2 | 23 | 2 | ||||||||||||||||||||||||||||||
Talam (API gravity of-15.8º) | 3 | 0.3 | 83 | 7 | 45 | 4 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total | 1,256 | 100 | % | 1,189 | 100 | % | 1,142 | 100 | % | 1,172 | 100 | % | 1,194 | 100 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
Notes: | Numbers may not total due to rounding. |
tbpd = thousand barrels per day. |
API gravity refers to the specific gravity or density of liquid petroleum products, measured in degrees on the American Petroleum Institute (API) scale. On the API scale, oil with the lowest specific gravity has the highest API gravity. In addition, holding all other factors constant, the higher the API gravity, the greater the value of the crude oil. |
Source: PMI operating statistics as of January 10, 2014.27, 2017.
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||
(U.S. dollars per barrel) | (U.S. dollars per barrel) | |||||||||||||||||||||||||||||||||||||||
Crude Oil Prices | ||||||||||||||||||||||||||||||||||||||||
Olmeca | U.S. $ | 65.79 | U.S. $ | 79.58 | U.S. $ | 109.83 | U.S. $ | 109.38 | U.S. $ | 107.92 | U.S.$ | 109.39 | U.S.$ | 107.92 | U.S.$ | 93.54 | U.S.$ | 51.46 | U.S.$ | 39.71 | ||||||||||||||||||||
Isthmus | 63.38 | 78.63 | 106.22 | 107.25 | 104.76 | 107.28 | 104.69 | 93.39 | 49.28 | 37.72 | ||||||||||||||||||||||||||||||
Maya | 56.22 | 70.65 | 98.97 | 99.98 | 96.91 | 99.99 | 96.89 | 83.75 | 41.12 | 35.28 | ||||||||||||||||||||||||||||||
Altamira | 53.50 | 68.80 | 96.60 | 96.29 | 94.35 | 96.40 | 94.35 | 81.30 | 36.19 | 30.35 | ||||||||||||||||||||||||||||||
Talam | 36.74 | 36.40 | 28.26 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
Weighted average realized price | U.S. $ | 57.42 | U.S. $ | 72.46 | U.S. $ | 101.13 | U.S. $ | 101.82 | U.S. $ | 98.46 | U.S. $ | 101.96 | U.S. $ | 98.44 | U.S. $ | 85.48 | U.S. $ | 43.12 | U.S. $ | 35.63 | ||||||||||||||||||||
|
|
|
|
|
Source: PMI operating statistics as of January 10, 201427, 2017..
Geographic Distribution of Export Sales
As of December 31, 2016, PMI had 34 customers in 18 countries. Among these countries, the largest proportion of our exports has consistently been to customers in the United States, Spain, India, 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 2013, 72.1% of PMI’s sales2016, 47.8% of our crude oil exports were to customers located in the United States, which represents a 4.1%an 11% decrease as compared to 2012.2015. The decrease in our crude oil exports to the United States can be attributed mainly to a decrease in the availabilitysteady increase of crude oil for export due to increased crude oil processing in our own refineries. During 2013, domestic production of light and extra-light crude oil in the United States, steadily rose, primarily as a result of shale discoveries and advances in technology that have made extraction of oil from shale rock commercially viable. However, this increase did not materially affect our exports becauseIn response to the majorityincreased availability of our exports are classified as heavylight crude oil.
As of December 31, 2013, PMI had 26 customers in nine countries. Among these countries, the largest proportion of our exports has consistently been to customersoil in the United States, Spain, India, CanadaU.S. Gulf of Mexico and China. During 2014, in response to theother developing trends in international demand for imported crude oil, we have expanded the scope of its geographic distribution and renewed our geographic distribution.strategy to diversify and strengthen the presence of Mexican crude oil in the international market. In January 2014, PMI began exporting Olmeca crude oil to European countries other than Spain, asSpain. As part of a renewed strategyour initiative to diversify and strengthen the presenceincrease export sales of Mexican crude oil to East Asia, PMI also began exporting Isthmus and Maya crude oil to South Korea in the international market.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, 2013.2016.
Crude Oil Exports byCountry
Percentage of Exports | Percentage of Exports | |||||||||||||||||||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||
United States | 86.8 | % | 83.8 | % | 81.8 | % | 76.2 | % | 72.1 | % | 76.2 | % | 72.1 | % | 69.4 | % | 58.8 | % | 47.8 | % | ||||||||||||||||||||
Spain | 6.6 | 8.9 | 8.3 | 13.2 | 14.4 | 13.2 | 14.4 | 14.2 | 13.8 | 14.9 | ||||||||||||||||||||||||||||||
India | 2.5 | 1.7 | 2.8 | 6.0 | 8.2 | 6.0 | 8.2 | 7.0 | 9.1 | 10.4 | ||||||||||||||||||||||||||||||
Canada | 1.7 | 1.8 | 1.5 | 1.8 | 1.9 | 1.8 | 1.9 | 1.8 | 0.0 | 0.0 | ||||||||||||||||||||||||||||||
China | — | 1.9 | 2.7 | 0.8 | 1.6 | 0.8 | 1.6 | 1.2 | 1.3 | 1.7 | ||||||||||||||||||||||||||||||
Others | 2.4 | 2.0 | 2.8 | 1.9 | 1.9 | 2.0 | 1.8 | 6.3 | 16.9 | 25.3 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100 | % | 100 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Note: Numbers may not total due to rounding.
Source: PMI operating statistics as of January 10, 2014.27, 2017.
The following table sets forth the geographic distribution of PMI’s sales of crude oil exports for the five years ended December 31, 2013.2016. The table also presents the distribution of exports among PMI’s crude oil types for those years.
Composition and Geographic Distribution of Crude Oil Export Sales
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PMI Crude Oil Export Sales to: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
United States and Canada | 1,071 | 88 | 1,163 | 86 | 1,116 | 83 | 980 | 78 | 879 | 74 | 980 | 78 | 879 | 74 | 813 | 71 | 690 | 59 | 570 | 48 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Europe | 104 | 9 | 132 | 10 | 131 | 10 | 176 | 14 | 184 | 15 | 176 | 14 | 179 | 15 | 215 | 18 | 248 | 21 | 272 | 23 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Far East | 35 | 3 | 49 | 4 | 74 | 6 | 85 | 7 | 111 | 9 | 85 | 7 | 116 | 10 | 100 | 9 | 219 | 19 | 318 | 26 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Central and South America | 12 | 1 | 15 | 1 | 18 | 1 | 14 | 1 | 15 | 1 | 14 | 1 | 15 | 1 | 15 | 1 | 15 | 1 | 34 | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 1,222 | 100 | 1,361 | 100 | 1,338 | 100 | 1,256 | 100 | 1,189 | 100 | 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 | 136 | 11 | 200 | 15 | 192 | 14 | 184 | 15 | 90 | 8 | 184 | 15 | 90 | 8 | 35 | 3 | 40 | 4 | 4 | 0.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Others | 7 | 1 | 12 | 1 | 11 | 1 | 9 | 1 | 8 | 1 | 9 | 1 | 8 | 1 | 56 | 5 | 84 | 7 | 104 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 143 | 12 | 212 | 16 | 203 | 15 | 194 | 15 | 99 | 8 | 194 | 15 | 99 | 8 | 91 | 8 | 124 | 11 | 108 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Isthmus (API gravity of 32°-33°) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
United States and Canada | 8 | 1 | 53 | 4 | 80 | 6 | 58 | 5 | 62 | 5 | 58 | 5 | 62 | 5 | 89 | 8 | 78 | 7 | 3 | 0.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Others | 7 | — | 22 | 2 | 20 | 1 | 41 | 3 | 41 | 3 | 41 | 3 | 41 | 3 | 45 | 4 | 116 | 10 | 150 | 13 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 14 | 1 | 75 | 6 | 100 | 7 | 99 | 8 | 103 | 9 | 99 | 8 | 103 | 9 | 134 | 12 | 194 | 17 | 153 | 13 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maya (API gravity of 21°-22°) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
United States and Canada | 917 | 75 | 903 | 66 | 830 | 62 | 719 | 57 | 707 | 60 | 719 | 57 | 707 | 59 | 662 | 58 | 513 | 44 | 540 | 45 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Others | 135 | 11 | 162 | 12 | 192 | 14 | 224 | 18 | 260 | 22 | 224 | 18 | 260 | 22 | 225 | 20 | 230 | 20 | 325 | 27 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 1,052 | 86 | 1,065 | 78 | 1,022 | 76 | 944 | 75 | 968 | 81 | 944 | 75 | 968 | 81 | 887 | 78 | 743 | 63 | 865 | 72 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Altamira (API gravity of15.0°-16.5°) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
United States and Canada | 11 | 1 | 9 | 1 | 14 | 1 | 18 | 1 | 20 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Others | 2 | — | — | — | — | — | 1 | 1 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 13 | 1 | 9 | 1 | 14 | 1 | 19 | 2 | 20 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Altamira (API gravity of15.0°-16.5°) United States and Canada Others Total Talam (API gravity of 15.8°) United States and Canada Others Total Year ended December 31, 2012 2013 2014 2015 2016 (tbpd) (%) (tbpd) (%) (tbpd) (%) (tbpd) (%) (tbpd) (%) 18 1 20 2 27 2 28 2 22 2 1 1 — — 0.4 0.4 — — 2 0.2 19 2 20 2 27 2 28 2 24 2 — — — — — — 31 3 1 0.1 — — — — 3 0.3 52 4 44 4 — — — — 3 0.3 83 7 45 4
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.
Source: PMI operating statistics as of January 10, 2014.27, 2017.
PMI sells a significant percentage of its crude oil under evergreen contracts, which can be terminated by either party pursuant to a three month 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.
Beginning in 1998, PMI entered into several long-term Maya crude oil supply agreements pursuant to which the purchasers agreed to undertake projects to expand the capacity of their respective refineries in order to upgrade residue from Maya crude oil. Under these agreements, PMI provided purchasers with certain support mechanisms that would protect, in certain adverse market conditions, the purchasers’ investments. In addition, these long-term Maya crude oil supply agreements promoted our strategy of increasing the export value of
Mexican heavy crude oil in relation to the value of other grades of oil by creating incentives for refiners to invest in new high-conversion refineries, which are capable of upgrading a significant proportion of the residue produced from processing Maya and Altamira crude oils.
These support mechanisms ceased upon the expiration of these long-term Maya crude oil supply agreements, which occurred between July 2005 and March 2009. In order to continue taking advantage of the created high-conversion capacity, the commercial relationships have continued under evergreen contracts that do not contain support mechanisms.
As of the date of this report, there are only two long-term heavy crude oil supply agreements that are still in force (none of which currently has an effective support mechanism):
We expect to fulfill the majority of these supply commitments with both proved developed and proved undeveloped reserves.
In total, we exported 1.1891.2 million barrels of crude oil per day in 2013.2016. In 2014,2017, we expect to export approximately 1.2 million869 thousand barrels of crude oil per day.
The following table sets forth the average volume of our exports and imports of crude oil, natural gas and petroleum products for the five years ended December 31, 2013.2016.
Volume of Exports and Imports
Year ended December 31, | 2013 vs. 2012 | Year ended December 31, | 2016 vs. 2015 | |||||||||||||||||||||||||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||||||
(in thousands of barrels per day, except as noted) | (%) | (in thousands of barrels per day, except as noted) | (%) | |||||||||||||||||||||||||||||||||||||||||||||
Exports | ||||||||||||||||||||||||||||||||||||||||||||||||
Crude Oil: | ||||||||||||||||||||||||||||||||||||||||||||||||
Olmeca | 143.5 | 211.7 | 202.9 | 193.7 | 98.6 | (49.1 | ) | 193.7 | 98.6 | 91.2 | 124.2 | 108.0 | (13.0 | ) | ||||||||||||||||||||||||||||||||||
Isthmus | 14.2 | 74.9 | 99.3 | 99.4 | 102.7 | 3.3 | 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 | 12.5 | 8.6 | 14.0 | 18.8 | 19.9 | 5.9 | 18.8 | 19.9 | 27.2 | 27.8 | 23.6 | (15.1 | ) | |||||||||||||||||||||||||||||||||||
Maya | 1,052.0 | 1,065.3 | 1,021.6 | 943.7 | 967.6 | 2.5 | ||||||||||||||||||||||||||||||||||||||||||
Talam | — | — | 3.0 | 83.1 | 45.2 | (45.6 | ) | |||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
Total crude oil | 1,222.1 | 1,360.5 | 1,337.8 | 1,255.5 | 1,188.8 | (5.3 | ) | 1,255.5 | 1,188.8 | 1,142.2 | 1,172.4 | 1,194.4 | 1.9 | |||||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||
Natural gas(1) | 66.5 | 19.3 | 1.3 | 0.9 | 3.1 | 244.4 | 0.9 | 3.1 | 4.1 | 2.8 | 2.2 | (21.4 | ) | |||||||||||||||||||||||||||||||||||
Petroleum products | 244.8 | 194.5 | 175.9 | 152.6 | 164.5 | 7.8 | ||||||||||||||||||||||||||||||||||||||||||
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) | 779.4 | 697.6 | 442.9 | 1,344.7 | 1,336.9 | (0.6 | ) | 1,344.7 | 1,336.9 | 488.0 | 333.8 | 124.7 | (62.6 | ) | ||||||||||||||||||||||||||||||||||
Imports | ||||||||||||||||||||||||||||||||||||||||||||||||
Natural gas: | ||||||||||||||||||||||||||||||||||||||||||||||||
Natural gas(1) | 422.0 | 535.8 | 790.8 | 1,089.3 | 1,175.4 | 7.9 | 1,089.3 | 1,175.4 | 1,250.4 | 1,415.8 | 1,933.9 | 36.6 | ||||||||||||||||||||||||||||||||||||
Liquefied natural gas(1)(4) | — | — | — | — | 114.3 | — | ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||
Total natural gas | 422.0 | 535.8 | 790.8 | 1,089.3 | 1,289.7 | 18.4 | ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||
Petroleum products | 506.4 | 627.9 | 631.9 | 570.9 | 516.2 | (9.6 | ) | |||||||||||||||||||||||||||||||||||||||||
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) | 568.3 | 394.9 | 224.9 | 445.1 | 287.8 | (35.3 | ) | 445.1 | 287.8 | 332.7 | 107.3 | 278.2 | 159.3 |
Note: Numbers subject to adjustment because crude oil exports may be adjusted to reflect the percentage of water in each shipment.
(1) | Numbers expressed in millions of cubic feet per day. |
(2) | Thousands of metric tons. |
(3) | Includes propylene. |
(4) | In 2013, we began importing liquefied natural gas through Manzanillo. |
(5) | Includes isobutane, butane andN-butane. |
Source: PMI operating statistics as of January 27, 2017, and Pemex Industrial Transformation.
Crude oil exports decreasedincreased by 5.3%1.9% in 2013,2016, from 1,255.51,172.4 thousand barrels per day in 20122015 to 1,188.81,194.4 thousand barrels per day in 2013,2016, mainly due to a 1.0%16.3% increase of exports of Maya crude oil, which was partially offset by a 21.3% decrease in exports of Isthmus crude oil production and a 13.0% decrease in the availability ofOlmeca crude oil for export due to increased crude oil processing in our own refineries.during 2016.
Natural gas imports increased by 18.4%36.6% in 2013,2016, from 1,089.31,415.8 million cubic feet per day in 20122015 to 1,289.71,933.9 million cubic feet per day in 2013,2016, which includes imports of liquefied natural gas through Manzanillo. The lowerdecreased availability of wet gas and natural gas from Pemex-Explorationour exploration and Production’sproduction segment’s fields made it necessary to increase natural gas imports. We exported 3.12.2 million cubic feet per day of natural gas per day in 2013, an increase2016, a decrease of 244.4%21.4% as compared to natural gas exports in 20122015 of 0.92.8 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 barrels per day in 2015 to 185.5 thousand barrels per day in 2016, mainly due to higher compressiona 16.2% decrease in the volume of exports of gasoline and an 8.6% decrease in the natural gas pipeline.
In 2013, exportsvolume of sales of fuel oil. Imports of petroleum products increased by 7.8%,8.1% in 2016, from 152.6739.8 thousand barrels per day in 20122015 to 164.5799.5 thousand barrels per day in 2013,2016, primarily due to increased sales of fuel oil and cutter stock. Imports of petroleum products decreased by 9.6%an 18.6% increase in 2013, from 570.9 thousand barrels per day in 2012 to 516.2 thousand barrels per day in 2013, due to decreased domestic demand for regular gasoline, diesel, fuel oil and liquid petroleum products. As of January 2007, clean fuels specifications for gasoline and diesela 29.3% increase in domestic demand for transportation were established in Mexico. Since that time, imports of ultra-low sulfur diesel and ultra-low sulfur premium gasoline have been required to meet domestic demand.
During 2014, imports of petroleum products, specifically gasoline, aviation gasoline, low and ultra-low sulfur diesel and low-sulfur fuel oil, are expected to continue to decrease because the Minatitlán refinery began operating a coker unit in 2012, which transforms residual heavy oil by-products into high-quality gasolines and diesel. As a result, we also expect exports of most petroleum products to decrease during 2014, since the coker unit reduces the amount of residual products such as fuel oil available for export.
P.M.I. Trading, Ltd. sells refined and petrochemical products on anFOB,DeliveredEx-ship andCost and Freight basis and buys refined and petrochemical products on anFOB,Cost and Freight andDelivered ExEx-ship-ship orDelivery at Frontier basis.
The following table sets forth the value of exports and imports of crude oil, natural gas and petroleum products for the five years ended December 31, 2013.2016.
Value of Exports and Imports(1)
Year ended December 31, | 2013 vs. 2012 | Year ended December 31, | 2016 vs. 2015 | |||||||||||||||||||||||||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||||||
(in millions of U.S. dollars) | (%) | (in millions of U.S. dollars) | (%) | |||||||||||||||||||||||||||||||||||||||||||||
Exports | ||||||||||||||||||||||||||||||||||||||||||||||||
Olmeca | U.S. $ | 3,444.8 | U.S. $ | 6,149.2 | U.S. $ | 8,133.0 | U.S. $ | 7,753.7 | U.S. $ | 3,883.9 | (49.9 | ) | 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 | 327.4 | 2,148.9 | 3,849.1 | 3,904.4 | 3,928.1 | 0.6 | 3,904.4 | 3,925.7 | 4,557.1 | 3,489.0 | 2,107.6 | (39.6 | ) | |||||||||||||||||||||||||||||||||||
Altamira | 244.3 | 216.3 | 492.7 | 661.6 | 683.7 | 3.3 | 661.6 | 683.7 | 806.8 | 366.8 | 262.7 | (28.4 | ) | |||||||||||||||||||||||||||||||||||
Maya | 21,588.9 | 27,471.1 | 36,904.9 | 34,466.5 | 34,227.4 | (0.7 | ) | 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. $ | 25,605.4 | U.S. $ | 35,985.4 | U.S. $ | 49,379.6 | U.S. $ | 46,786.2 | U.S. $ | 42,723.2 | (8.7 | ) | 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 | 103.5 | 31.9 | 1.6 | 0.6 | 2.8 | 366.7 | 0.6 | 2.8 | 4.8 | 1.6 | 1.1 | (31.3 | ) | |||||||||||||||||||||||||||||||||||
Petroleum products | 4,891.8 | 5,133.3 | 6,277.5 | 5,538.0 | 5,817.2 | 5.0 | ||||||||||||||||||||||||||||||||||||||||||
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 | 175.7 | 272.1 | 298.6 | 362.9 | 234.0 | (35.5 | ) | 362.9 | 234.0 | 166.9 | 63.5 | 20.5 | (67.7 | ) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
Total natural gas and products | U.S. $ | 5,171.0 | U.S. $ | 5,437.3 | U.S. $ | 6, 577.7 | U.S. $ | 5,901.5 | U.S. $ | 6,054.0 | 2.6 | |||||||||||||||||||||||||||||||||||||
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. $ | 30,776.4 | U.S. $ | 41,422.7 | U.S. $ | 55,957.3 | U.S. $ | 52,687.7 | U.S. $ | 48,777.2 | (7.4 | ) | 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 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
Imports | ||||||||||||||||||||||||||||||||||||||||||||||||
Natural gas | U.S. $ | 632.8 | U.S. $ | 939.2 | U.S. $ | 1,272.2 | U.S. $ | 1,216.2 | U.S. $ | 1,728.7 | 42.1 | |||||||||||||||||||||||||||||||||||||
Liquefied natural gas(3) | — | — | — | — | 766.6 | — | ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||
Total natural gas | U.S. $ | 632.8 | U.S. $ | 939.2 | U.S. $ | 1,272.2 | U.S. $ | 1,216.2 | U.S. $ | 2,495.3 | 105.2 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||
Petroleum products | 12,884.9 | 20,317.3 | 28,019.1 | 27,272.4 | 23,916.8 | (12.3 | ) | |||||||||||||||||||||||||||||||||||||||||
Petrochemical products | 301.4 | 302.5 | 277.5 | 526.9 | 322.3 | (38.8 | ) | |||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||
Total imports | U.S. $ | 13,819.0 | U.S. $ | 21,559.0 | U.S. $ | 29,568.9 | U.S. $ | 29,015.4 | U.S. $ | 26,734.4 | (7.9 | ) | ||||||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||
Net exports | U.S. $ | 16,957.4 | U.S. $ | 19,863.7 | U.S. $ | 26,388.5 | U.S. $ | 23,672.3 | U.S. $ | 22,042.8 | (6.9 | ) | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
Imports Natural gas Gasoline Other petroleum products and LPG Petrochemical products Total imports Net exports (imports) Year ended December 31, 2016
vs. 2015 2012 2013 2014 2015 2016 (in millions of U.S. dollars) (%) 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 19,144.0 17,485.9 16,691.2 12,805.2 11,994.8 (6.3 ) 10,486.9 8,220.3 8,775.8 6,178.6 5,689.5 (7.9 ) 526.9 322.3 373.3 196.3 85.5 (56.4 ) 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.$ 21,379.8 U.S.$ 20,241.5 U.S.$ 13,022.2 U.S.$ 654.8 U.S.$ (2,375.8 ) (2.6 )
Note: Numbers may not total due to rounding.
(1) | Does not include crude oil, refined products and petrochemicals purchased by P.M.I. Trading, Ltd. or P.M.I. Norteamérica, S.A. de C.V. from third parties outside of Mexico and resold in the international markets. The figures expressed in this table differ from the amounts contained under the line item “Net Sales” in our financial statements because of differences in methodology associated with the calculation of the exchange rates and other minor adjustments. |
(2) | Crude oil exports are subject to adjustment to reflect the percentage of water in each shipment. |
Source: PMI operating statistics as of January 10, 2014,27, 2017, which are based on information in bills of lading, and Pemex-Gas and Basic Petrochemicals.Pemex Industrial Transformation.
Imports of natural gas increased in value by 105.2%25.4% during 2013, mainly2016, primarily as a result of increasedan increase in domestic demand for natural gas and higheran increase in natural gas prices. Imports of gasoline decreased in value by 6.3%, despite a 16.1% increase in volume of domestic gasoline sales, due to a decrease in the average sales price of gasoline.
The following table describes the composition of our exports and imports of selected refined products in 2011, 20122014, 2015 and 2013.2016.
Exports and Imports of Selected Petroleum Products
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||||||||||
(tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | (tbpd) | (%) | |||||||||||||||||||||||||||||||||||||
Exports | ||||||||||||||||||||||||||||||||||||||||||||||||
Gasoline(1) | 74.1 | 42.0 | 76.8 | 50.3 | 71.8 | 43.6 | ||||||||||||||||||||||||||||||||||||||||||
Liquefied petroleum gas(2) | 1.5 | 0.9 | 0.1 | 0.1 | 0.2 | 0.1 | 1.3 | 0.7 | — | — | 4.5 | 2.4 | ||||||||||||||||||||||||||||||||||||
Jet fuel | 1.8 | 1.0 | 0.0 | 0.0 | 1.2 | 0.7 | ||||||||||||||||||||||||||||||||||||||||||
Fuel oil | 95.6 | 54.2 | 73.2 | 48.0 | 82.9 | 50.3 | 123.6 | 63.9 | 123.9 | 64.0 | 113.3 | 61.1 | ||||||||||||||||||||||||||||||||||||
Gasoline | 66.0 | 34.1 | 62.9 | 32.5 | 52.7 | 28.4 | ||||||||||||||||||||||||||||||||||||||||||
Others | 3.4 | 1.9 | 2.5 | 1.6 | 8.6 | 5.2 | 3.2 | 1.3 | 6.9 | 3.6 | 15.0 | 8.1 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||
Total | 176.4 | 100.0 | % | 152.6 | 100.0 | % | 164.7 | 100.0 | % | 193.5 | 100.0 | % | 193.7 | 100.0 | % | 185.5 | 100.0 | % | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||
Imports | ||||||||||||||||||||||||||||||||||||||||||||||||
Gasoline(3) | 430.0 | 63.7 | 390.7 | 59.7 | 370.4 | 62.2 | 389.7 | 57.8 | 440.1 | 59.5 | 510.8 | 63.9 | ||||||||||||||||||||||||||||||||||||
Fuel oil | 25.0 | 3.7 | 41.4 | 6.3 | 34.1 | 5.7 | 13.0 | 2.0 | 17.0 | 2.3 | 10.7 | 1.3 | ||||||||||||||||||||||||||||||||||||
Liquefied petroleum gas(2) | 82.4 | 12.2 | 85.6 | 13.1 | 79.5 | 13.3 | 84.6 | 13.2 | 105.2 | 14.2 | 50.6 | 6.3 | ||||||||||||||||||||||||||||||||||||
Diesel | 135.6 | 20.1 | 133.4 | 20.4 | 108.0 | 18.1 | 132.9 | 20.8 | 145.3 | 19.6 | 187.8 | 23.5 | ||||||||||||||||||||||||||||||||||||
Others | 1.6 | 0.2 | 3.7 | 0.6 | 3.7 | 0.6 | 39.7 | 6.2 | 32.4 | 4.4 | 39.6 | 5.0 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||
Total | 674.6 | 100.0 | % | 654.8 | 100.0 | % | 595.7 | 100.0 | % | 633.1 | 100.0 | % | 739.8 | 100.0 | % | 799.5 | 100.0 | % | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Notes: | Numbers may not total due to rounding. |
tbpd | = thousand barrels per day. |
(1) | Includes gasoline and blendstock. |
(2) | Includes butanes. |
(3) | Includes |
Source: PMI operating statistics as of January 10, 2014, based on INCOTERMS (International Commercial Terms).Pemex BDI.
Exports of petroleum products increaseddecreased in value by 5.0%36.7% in 2013,2016, primarily due to increaseda 33.4% decrease in sales of fuel oil.oil and decreases in the prices of petroleum products. In 2013,2016, imports of petroleum products decreased both in value, by 12.3%7.9%, anddespite an 8.1% increase in volume, by 9.6%. These decreases wereprimarily due to decreasedincreased domestic demand for regular gasoline, which resulted fromdecreased the national refining system’s increased production of this typeaverage price of gasoline as compared to previousprior years. Our net imports of petroleum products for 20132016 totaled U.S. $18,099.6$3,794.4 million, which represents a decrease19.1% increase from our net imports of petroleum products of U.S. $21,734.4$3,186.4 million in 2012.2015.
For the three years ended December 31, 2013,2016, our exports and imports of selected petrochemicals were as follows:
Exports and Imports of Selected Petrochemicals
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||||||||||
(tmt) | (%) | (tmt) | (%) | (tmt) | (%) | (tmt) | (%) | (tmt) | (%) | (tmt) | (%) | |||||||||||||||||||||||||||||||||||||
Exports | ||||||||||||||||||||||||||||||||||||||||||||||||
Sulfur | 268.5 | 60.6 | 401.0 | 29.8 | 473.7 | 35.4 | 335.6 | 68.8 | 270.6 | 81.1 | 86.5 | 69.4 | ||||||||||||||||||||||||||||||||||||
Ammonia | 31.0 | 7.0 | 105.8 | 7.9 | 39.0 | 2.9 | ||||||||||||||||||||||||||||||||||||||||||
Butadien | 41.8 | 8.6 | 41.1 | 12.3 | 35.9 | 28.8 | ||||||||||||||||||||||||||||||||||||||||||
Ethylene | 8.9 | 2.0 | 50.9 | 3.8 | 6.1 | 0.5 | 15.6 | 3.2 | 1.5 | 0.4 | — | — | ||||||||||||||||||||||||||||||||||||
Polyethylenes | 71.9 | 16.2 | 42.7 | 3.2 | 29.8 | 2.2 | 23.9 | 4.9 | 11.0 | 3.3 | 1.7 | 1.3 | ||||||||||||||||||||||||||||||||||||
Others | 62.6 | 14.1 | 744.3 | 55.4 | 788.4 | 59.0 | 71.1 | 14.6 | 9.6 | 2.9 | 0.6 | 1.3 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||
Total | 442.9 | 100.0 | % | 1,344.7 | 100.0 | % | 1,336.9 | 100.0 | % | 488.0 | 100.0 | % | 333.8 | 100.0 | % | 124.7 | 100.0 | % | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||
Imports | ||||||||||||||||||||||||||||||||||||||||||||||||
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 | 106.3 | 47.2 | 228.2 | 51.3 | 199.7 | 69.4 | 228.7 | 68.7 | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Methanol | 54.1 | 24.0 | 45.6 | 10.2 | 35.1 | 12.2 | ||||||||||||||||||||||||||||||||||||||||||
Xylenes | 6.3 | 2.8 | 66.0 | 14.8 | 18.0 | 6.3 | 3.0 | 0.9 | 3.0 | 2.8 | — | — | ||||||||||||||||||||||||||||||||||||
Toluene | 0.0 | 0.0 | 61.5 | 13.8 | 8.4 | 2.9 | 10.5 | 3.2 | 25.0 | 23.3 | — | — | ||||||||||||||||||||||||||||||||||||
Propylene | 31.3 | 13.9 | 6.9 | 1.6 | 0.0 | 0.0 | ||||||||||||||||||||||||||||||||||||||||||
Others | 27.0 | 12.0 | 36.8 | 8.3 | 26.6 | 9.3 | 40.4 | 12.1 | 21.3 | 19.8 | — | — | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||
Total | 225.0 | 100.0 | % | 445.1 | 100.0 | % | 287.8 | 100.0 | % | 332.7 | 100.0 | % | 107.3 | 100. | % | 278.2 | 100.0 | % | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Notes: | Numbers may not total due to rounding. |
tmt = thousand metric tons.
Exports include propylene. Imports include isobutane, butane and N-butane.
tmt | = thousand metric tons. |
(1) | Exports include propylene. |
(2) | Imports include isobutane, butane andN-butane. |
Source: PMI operating statistics as of January 10, 2014, based on INCOTERMS.Pemex BDl.
In 2013,2016, our exports of petrochemical products remained relatively constant, decreasingdecreased by 0.6%,209.9 thousand metric tons, from 1,344.7333.8 thousand metric tons in 20122015 to 1,336.9124.7 thousand metric tons in 2013.2016. Our imports of petrochemical products decreasedincreased by 35.3%,170.9 thousand metric tons, from 445.1107.3 thousand metric tons in 20122015 to 287.8278.2 thousand metric tons in 2013.2016. Petrochemical exports decreased in 20132016, mainly due to lowera 68.0% decrease in sales of ethylene, ammoniasulfur and 9.4% decrease in sales of polyethylenes. Imports of petrochemical products also decreasedincreased in 2013,2016, primarily due to lowerhigher demand for toluenemethanol.
Supply Commitments
We sell crude oil through a variety of contracts, some of which specify the delivery of a fixed and xylenes.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. |
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.
The Secretary of Energy has entered into certain agreements to reduce or increase crude oil exports. See “Item 4—Information on the Company—Trade Regulation and Export Agreements” below in this Item 4.
Hedging Operations
P.M.I. Trading, Ltd. engages in hedging operations to cover its price exposure in the trading of petroleum products, as well as to protect the revenues of other companies within the PMI Group and to ensure the fulfillment of contractual obligations.products. The internal policies and procedures of P.M.I. Trading, Ltd. establishestablish: (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 losslosses for each business unit.unit; and (3) the segregation of risk-taking and
risk measurement. Capital at risk is calculated on a daily basis in order to compare the actual figures with the aforementioned limit. Internal controls include segregation of duties, position tracking by key personnel, regular stress testing andP.M.I. Trading, Ltd. has a risk management subcommittee.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.”
Transportation and Distribution
During 2013, we transported approximately 4,831 million cubic feet of natural gas per day, 287 thousand barrels of LPG per day and 3,500 thousand barrels of crude oil per day to be processed in our refining system and to satisfy domestic demand for petroleum products, as compared to 4,859 million cubic feet of natural gas per
day, 180 thousand barrels of LPG per day and 3,025 thousand barrels of crude oil per day transported in 2012. Of the total amount we transported in 2013, we carried 82% through pipelines, 9% by vessels and the remaining 9% by train tank cars as well as tank trucks.
Our pipelines connect crude oil and natural gas producing centers with refineries and petrochemical plants, and our refineries and petrochemical plants with Mexico’s major cities. At the end of 2013, our pipeline network measured approximately 63,636 kilometers in length. Of these pipelines, 50,542 kilometers are currently operational and 13,094 kilometers are out of operation. Pipelines out of operation are classified as being in “stand-by” status, which occurs when there is a decline in production in a field where the pipeline is located or when transportation service is irregular, making operation of the pipeline unprofitable. Once production is restored in such field, we change the status of the pipelines back to “operational.” Approximately 7,181 kilometers of the pipelines currently in operation transport crude oil, 8,496 kilometers transport petroleum products and petrochemicals, 11,152 kilometers transport natural gas, 1,538 kilometers transport LPG, 1,253 kilometers transport basic and secondary petrochemicals, 19,327 kilometers are production lines (discharge lines) and 1,595 kilometers correspond to other services, including oil and gas pipelines. Ownership of the pipelines is distributed among the subsidiary entities according to the products they transport.
Petróleos Mexicanos has been working to implement a pipeline integrity management plan, which is based on the guidelines of API Standard 1160, “Managing System Integrity for Hazardous Liquid Pipelines,” the American Society of Mechanical Engineers B31.8S, “Managing System Integrity of Gas Pipelines” and theNorma Oficial de México(Official Mexican Standard)NOM-027-SESH-2010, “Integrity Management of Hydrocarbons Collection and Transportation Pipelines” (which we refer to asNOM-027).
The pipeline integrity management plan consists of the following stages:
We have made considerable progress in satisfying the requirements of NOM-027, which became effective in June 2010, concerning risk assessment and the evaluation of pipeline integrity. Specifically, as ofOn December 31, 2013,3, 2015, we have analyzed 100% ofannounced our overall pipeline network and 60% of our gathering pipelines, in length terms. In addition, we have implemented several of the measures relatinginitiative to the other stages of the pipeline integrity management plan, including the data collection requirements of this standard.
As a result of the implementation of strategies focused on improving the integrity and operation of our transportation pipeline network, there was a 6% decreaseopen gas stations in the number of leaksUnited States by opening five gas stations that will be owned and spillsoperated by franchisees in our pipelines arising from our day-to-day operations from 2012 to 2013. Of the 58 oil spills we experienced in transportation pipelines in 2013, 39 were due to a failure in the mechanical integrity of the pipelines, four due to third-party incidents and 15 due to other factors. During 2013, we experienced 95 oil spills in production pipelines, of which 46 were due to a failure in the mechanical integrity of the pipelines, five due to third-party incidents and 44 due to other factors. The number of spills in these pipelines decreased by 49.7% from 2012 to 2013. Petróleos Mexicanos did not experience any major oil spills that had significant environmental consequences during 2013.
The transportation of crude oil, natural gas and other products through a pipeline network is subject to various risks, including the risks of leaks and spills, explosions and theft. In 2013, we incurred a total of Ps. 11,223 million in expenditures for the remediation and maintenance of our pipeline network and we have budgeted an additional
Ps. 9,502 million for these expenditures in 2014. For more information on recent problems with our pipeline network, see “Item 3—Key Information—Risk Factors—Risk Factors Related to Our Operations—We are an integrated oil and gas company and are exposed to production, equipment and transportation risks, criminal acts and deliberate acts of terror” and “—Environmental Regulation—Environmental Liabilities” below.
At the end of 2013, we owned 14 refined product tankers and leased another five. We also owned 77 major wholesale storage and distribution centers, 12 liquefied gas terminals, six maritime terminals and nine dock operation and maintenance facilities. These facilities, together with our pipeline network, constitute our hydrocarbon transportation and distribution infrastructure. We are in the process of implementing a plan for the renewal and modernization of our fleet.Houston, Texas. This plan is part of aour strategy to improveexpand our operations to the efficiency of our fleet and comply with safety and environmental standards. In 2011, we spent approximately U.S. $184 million to acquire five refined product tankers. We acquired an additional refined product tanker in 2012 for approximately U.S. $38.3 million. These tankers were acquired under leases with options to purchase, and are currently in operation. During 2013, we acquired four additional refined product tankers for approximately U.S. 34.5 million each. We plan to continue to renew our fleet in accordance with the future demand for petroleum products.
Fleet Developments
On July 25, 2013, Petróleos Mexicanos signed an agreement with theSecretaría de Marina- Armada de México (Mexican Navy) for the construction of 25 marine vessels for Pemex-Refining, which includes tugs, barges and shallow-draft product tankers, as part of a plan to modernize the fleet. This transaction is valued at U.S. $250 million. Pemex-Refining will provide the Mexican Navy with the technical specifications for the vessels and will supervise their construction.
On October 4, 2013, Petróleos Mexicanos signed a memorandum of understanding with Keppel Offshore & MarineUnited States in order to build a shipyardfulfill the energy reform mandate to generate economic value in Altamira, Tamaulipas, specializing ininternational markets. Further, it will allow us to measure the construction, maintenanceimpact of our brand against others and repairidentify business opportunities abroad. The gas stations’ fuel supply is derived from the United States wholesale market and selling prices are subject to local market conditions. As of platforms and major marine vessels. This project is expected to involve an initial investment of U.S. $150 million.
On November 26, 2013, our subsidiary company, P.M.I. Holdings B.V., signed an agreement to purchase a 51% stake in Hijos de J. Barreras, S.A., a Spanish shipyard. This transaction closed on December 16, 2013. The purposethe date of this acquisition is to transfer specialized shipbuilding technology to Mexico in order to continue to modernize our fleet.report, all five of these gas stations have commenced operations.
PEMEX Corporate Matters
In addition to the operating activities that we undertake through the activities of our subsidiary entities and subsidiary companies, we have certain centralized corporate operations that coordinate general labor, safety, insurance and legal matters.
Industrial Safety and Environmental Protection
Petróleos Mexicanos’Our Corporate Operations Office of Planning, Coordination and Performance is responsible for planning, conducting and coordinating programs to:
We intend to develop further thedevelop industrial safety and environmental programs for each subsidiary entity. The environmental and safety division of each subsidiary entity coordinates closely with the Corporate Operations Office.Office of Planning, Coordination and Performance.
Insurance
We maintain a comprehensive property and civilgeneral liability insurance program for onshore and offshore properties and liabilities. All onshore properties, such as refineries, processing plants, pipelines and storage facilities are covered, as are all of our offshore assets, such as drilling platforms, rigs, gas gathering systems, maritime terminals and production facilities. Our insurance covers risks of sudden and accidental physical damage to or destruction of our properties, as well as against all risk of 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 wells, and any of our liabilities arising from such acts. Our offshore general and civil liability insurance also covers extraordinary costs related to the operation of offshore wells, such as control andre-drilling costs, evacuation expenses and liability costs associated with spills. We also maintain protection and indemnity insurance for our full marine fleet, as well asin addition to life insurance, automobile and heavy equipment insurance, cargo and marine hull insurance, riskas well as insurance for deep water drilling activities and onshore and offshore construction risk insurance.risks.
In accordance with Mexican law, we have entered into all of our insurance contracts with Mexican insurance carriers. These policies have limits of U.S. $2.0$1.8 billion for onshore property, U.S. $1.3 billion for offshore property, U.S. $0.3 billion for extraordinary costs related to the operation of offshore wells, U.S. $1.0
$1.0 billion for protection and indemnity for marine-related liabilities, U.S. $0.5$1.1 billion for civilonshore and offshore liabilities, U.S. $0.5 billion for offshore terrorist acts and U.S. $0.3$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.risk, and must be in compliance with local regulations enacted following the energy reform.
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-a-visvis-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 business interruption mitigation insurance coverage, which compensates us for the additional expenses necessary to recover our production capabilities in the shortest time possible.
During 2013,2016 we continued to engage in deep water exploratory and drilling activities that were covered by our existing insurance program. In August 2012, we purchased a new policy to increase the coverage available for potential property damage, third-party liability and control of well risks related to these activities. Under this new policy, we maintain coverage for each deep water well drilled, and the limits are determined based on the risk profile of the corresponding well. This policy has an aggregatea limit of U.S. $3.2$3.3 billion, including U.S. $1.1 billion for casualty, U.S. $0.8 billion for property damage and U.S. $1.3 billion for control of well risks, which represents the maximum amount of coverage we have been able to secure in the international reinsurance markets. The newU.S. $1.1 billion for casualty and U.S. $0.9 billion for property damage. This policy also 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(which we refer to as Kot AG.AG). Kot AG is a wholly owned subsidiary company organized under the laws of Switzerland (previously organizedthat was originally formed in 1993 under the laws of Bermuda as Kot Insurance Company, Ltd.), which 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 of theheld through our local insurance carriers of Petróleos Mexicanos and maintain control over the cost and quality of the insurance covering our risks. Kot AG reinsures over 98%95% 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, 2013,2016, Kot AG’s net risk
retention is capped at U.S. $140$180 million, of which U.S. $100$150 million is forcorresponds to property and liabilities, and is diversifiedspread across different reinsurance coveragescoverage to mitigate potential aggregation factors.
Investment in Repsol
We holdAs of December 31, 2016, we owned a synthetic long position on 67,969,767total of 22,221,893 shares of Repsol, S.A. (formerly known as Repsol YPF, S.A., and which we refer to as Repsol). See “Item 11—Quantitative and Qualitative Disclosures about Market Risk—Risks Relating to the Portfolio of Third-Party Shares” for a description of this position.
On February 28, 2012, we and Repsol entered into a ten-year strategic industrial alliance agreement pursuant to, which we and Repsol announced our intention to collaborate on upstream and liquefied natural gas projects in the Americas, and downstream activities in the Americas, Spain and Portugal. As part of this strategic industrial alliance agreement, we agreed to lock-up and standstill restrictions that prohibit us from owning, directly or indirectly, more than 10% or less than 5%represents approximately 1.5% of Repsol’s shares during the term of this agreement. In calculating our indirect ownership of Repsol shares pursuant to these restrictions, we include the Repsol shares on which we hold a synthetic long position as being indirectly owned by us.
On May 7, 2012, the Government of the Republic of Argentina enacted a law that provided for the expropriation of 51% of the Class D shares of Yacimientos Petrolíferos Fiscales S.A., all of which are owned, directly or indirectly, by Repsol. On February 25, 2014, Repsol’s board of directors approved an agreement with the Government of the Republic of Argentina whereby the Republic of Argentina would pay U.S. $5 billion in the form of dollar-denominated government bonds of the Republic of Argentina as compensation for the expropriation of Repsol’s stake in Yacimientos Petrolíferos Fiscales S.A. In order to become effective, the agreement must also be approved by Repsol’s shareholders and both chambers of the Congress of the Republic of Argentina. On March 27, 2014, the Senate of the Republic of Argentina voted in favor of the settlement agreement. On March 28, 2014, Repsol’s shareholders ratified the agreement. On April 24, 2014, the Chamber of Deputies of the Republic of Argentina approved the agreement, which took effect on the same date.
On June 19, 2012, Repsol approved a dividend program under which Repsol shareholders had the option to receive their pro rata portion of the dividend declared at the annual meeting in the form of either (i) new shares of Repsol or (ii) cash. On June 29, 2012, Petróleos Mexicanos opted to receive its dividend in cash, which it received on July 13, 2012, while on July 9, 2012, P.M.I. Holdings, B.V. received its dividend in the form of 2,600,191 new Repsoltotal shares. As part of the same program, on January 21 and July 16, 2013, PMI Holdings, B.V. opted to receive dividends in the form of 1,683,322 and 1,506,130 new Repsol shares, respectively.
On August 9, 2013, we divested our direct interest in 9,289,968 shares of Repsol, which resulted in a net profit of Ps. 278.8 million. On the same date, we entered into an equity swap for the same number of shares with a notional amount of Ps. 2,869.9 million through which we retain economic and voting rights in such shares. See Note 13(a)(iv) to our consolidated financial statements included herein.
As of December 31, 2013 we owned a total of 53,703,915 shares of Repsol. As described in Note 8 to our consolidated financial statements, weWe recorded the 53,703,91522,221,893 Repsol shares that we hold as“available-for-sale-non-current asset” investments in equity instruments and valued them, as of December 31, 2013,2016, at Ps. 17,728.56,463.1 million. As of December 31, 2012,2015, our investment in 59,804,43120,724,331 shares of Repsol, approximately 1.5% of Repsol’s total shares, was valued at Ps. 15,771.23,944.7 million. As described in Note 810 to our consolidated financial statements, we recorded the effect of the valuation of the investment at fair value as a gain of Ps. 3,098.4 million at December 31, 2013 and a loss of Ps. 10,125.93,206.3 million at December 31, 2012 in comprehensive income (loss) for the yearand a profit of Ps. 207,816 in the consolidated statements of changes in equity (deficit). In addition, we recorded dividend payments received from Repsol of Ps. 914.1 million and Ps. 685.7 million in for the consolidated statements of comprehensive income atyears ended December 31, 20132015 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 December 31, 2012, respectively.a rate of 1.79% and is collateralized by all of our Repsol shares. This loan is due to mature in 2018.
Explosion at HeadquartersEthics Committee
Our executive officesEthics Committee consists of members from our management team, with the head of our Institutional Internal Control Unit serving as its chairman. Among other duties, the Ethics Committee is responsible for regulating and headquarters (Centro Administrativo Pemex) are located in Mexico City. On January 31, 2013, an explosion took place atpromoting the B-2 building located at the Centro Administrativo Pemex. As a resultenforcement of the incident, 37 people died and 132 were injured. In response, we activated our financial operations contingency system, which allowed our production processescode of ethics and our responsecode of conduct, as well as promoting corporate strategies that are designed to foster a culture of ethics and execution capacityintegrity. See “Item 16B—Code of Ethics” for more information regarding our code of ethics.
Our Ethics Committee is responsible for:
Security Strategy
In March 2014, the Board of DirectorsLiabilities Unit of Petróleos Mexicanos authorized the formation of theSubdirección de Salvaguardia Estratégica (Deputy Direction of Strategic Safeguarding) with the goal of strengtheningand our security policies in orderInternal Auditing Area to protect our facilities, equipment and petroleum products. The new Deputy Direction of Strategic Safeguarding is expected to enhance our cooperation with various areas of the Mexican Government, while acting under the guiding principles of managerial autonomy, efficiency and productivity. Brigadier General Eduardo León Trauwitz, who formerly served as the Associate Managing Director of Physical Security Services, will head the new deputy direction, which will carry out its functions through three groups: Strategy and Security Monitoring Systems, Physical Security and Inter-Institutional Coordination of Safeguarding and Logistics.
These changes form part of a strategy aimed at effectively utilizing our technological systems and resources to combat the illicit market in fuels and to minimize the risks to our operations associated with criminal violence. See “Item 8—Legal Proceedings—Actions Against the Illicit Market in Fuels.” In connection with this strategy, we have invested in refurbishment projects to improve the securityexchange information regarding violations of our facilities at the Morelos petrochemical complex. See “—Business Overview—Petrochemicals—Investments” in this Item 4.
Collaboration and Other Agreements
In January 2013, Petróleos Mexicanos and China International United Petroleum & Chemicals Co., Ltd., a subsidiary of SINOPEC, entered into an agreement to strengthen commercial ties and enhance crude oil exports to China. Pursuant to this agreement, Petróleos Mexicanos will export 30 thousand barrels per day of crude oil to China for a period of two years.
On April 6, 2013, Petróleos Mexicanos signed two memoranda of understanding and cooperation with China National Petroleum Corporation, a Chinese state-owned oil and gas company, and Xinxing Cathay International Group Co. Ltd., respectively, to establish terms for future cooperation on issues related to upstream activities, as well as technical exchanges in various areas.
On April 9, 2013, Petróleos Mexicanos and Mitsui Corporation, Ltd. signed a memorandum of understanding and cooperation to discuss future collaborations in oil and gas projects, including, among others, the possibility of developing a pipeline from the U.S. to Mexico to import natural gas.
On June 4, 2013, Petróleos Mexicanos signed a framework cooperation agreement with the Export-Import Bank of China to explore financing opportunities, including export credit facilities for an aggregate amount of up to U.S. $1.0 billion. Funds provided by these export credit facilities may be used to charter or acquire vessels, offshore equipment and related products of Chinese origin.
On July 3, 2013, Petróleos Mexicanos entered into a non-commercial collaboration agreement with Nacional Financiera, S.N.C., one of Mexico’s development banks, to, among other things, cooperate in the provision by Nacional Financiera, S.N.C. of a line of credit to Petróleos Mexicanos’ domestic suppliers.
On July 30, 2013, Petróleos Mexicanos entered into a non-commercial collaboration agreement with Ecopetrol, a Colombian oil and gas company, to cooperate on technical and scientific matters relating to exploration, production, refining, petrochemicals and transportation.
On October 16, 2013, Petróleos Mexicanos signed a memorandum of understanding with the Export-Import Bank of Korea intended to help finance a range of our projects through a U.S. $2.0 billion line of credit. Funds provided under this line of credit may also be used by companies that provide services to Petróleos Mexicanos.
On January 24, 2014, Petróleos Mexicanos entered into a non-commercial cooperation agreement with Lukoil, a Russian oil and gas company, to exchange experience and knowledge of exploration and production activities in order to, among other things, strengthen their respective operational and technological capabilities.
On April 10, 2014, Petróleos Mexicanos signed a memorandum of understanding with TOTAL, a French company, to establish a framework for cooperation in the exchange of experience, knowledge and best practices related to upstream activities and scientific, administrative and technical matters, as well as the development of a sustainable energy sector.
On April 10, 2014, Petróleos Mexicanos signed a memorandum of understanding with GDF Suez, a French company, to establish terms for technical cooperation and the exchange of knowledge and experience related to energy efficiency, water treatment and natural gas projects, among others.
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, 2014, Petróleos Mexicanos and Exxon Mobil signed a memorandum of understanding with the aim of identifying business opportunities in exploration, production and industrial transformation processes with 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 understanding to identify opportunities for collaboration in exploration and production activities, hydrocarbons transportation, electricity generation 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 related 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.
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, 2015, Petróleos Mexicanos and the U.S. based global asset manager BlackRock Inc. signed a memorandum of understanding with the aim of accelerating the development and financing of energy-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 and cyber-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.
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,” “—Refining,Drilling and Services,” “Industrial Transformation,” “—GasEthylene,” “—Fertilizers,” “—Logistics” and Basic Petrochemicals,“—Cogeneration and Services.” The insurance program covering all of our properties is also described above. See “—Petrochemicals” and “—Transportation and Distribution.Insurance.”
Reserves
Under Mexican law, all crude oil and other hydrocarbonoil and gas reserves located in the subsoil of Mexico are owned by the Mexican nation and not by us. Following the adoption of the Energy Reform Decree, Article 27 of the Mexican Constitution provides that theThe Mexican Government will carry out exploration and extraction activities through agreements with private sector companies and through assignments to and agreements with us. Once the secondary legislation related to the Energy Reform Decree is fully implemented, we and other oil and gas companies will havehas granted us the right to exploit the petroleum and other hydrocarbonoil and gas reserves locatedassigned to us in connection with 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. Productive state-owned companies and other companies participating in the subsoil of Mexico, subject to assignment of these rights byMexican oil and gas industry may report assignments or contracts and the Ministry of Energy.corresponding expected benefits for accounting and financial purposes. See “Information on the Company—History and Development—Energy Reform” above in this Item 4. Our estimates of Mexico’s hydrocarbonhydrocarbons 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 a productive-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 closely regulate our operations in the oil and supervise our operations.gas sector. The Ministry of Energy monitors our activitiesoperations, 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, which was enacted as part of the Secondary Legislation and took effect on August 12, 2014) establishes mechanisms for the coordination of these entities with the Ministry of Energy and other ministries of the Mexican Government. The SHCP approvesNHC has the authority to award and execute contracts for exploration and production in connection with competitive bidding rounds. The Energy Regulatory Commission has the authority to grant permits for the storage, transportation and distribution of oil, gas, petroleum products and petrochemicals in Mexico, and to regulate the first-hand sale of these products. The regulatory powers of the NHC and the Energy Regulatory Commission extend to all oil and gas companies operating in Mexico, including Petróleos Mexicanos and our subsidiary entities.
On December 2, 2014, the Ministry of Energy 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 productive state-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 Productive State-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. 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 and financing program offor Petróleos Mexicanos and the subsidiary entities.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 Mexican Government incorporates theconsolidated 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 itsthe federal budget whichfor approval by the Chamber of Deputies must approve each year.Deputies. The Mexican Government is not, however, liable for the financial obligations that we incur.
Under In approving the Petróleos Mexicanos Law, Petróleos Mexicanos each year provides tofederal budget, the SHCP, through the MinistryChamber of Energy, its projectedDeputies authorizes our financial balance for each ofgoal and the next five years. If Petróleos Mexicanos complies with these annual balance goals, and if itsceiling on our wage and salary expenditures have not increased, thenfor the Board of Directors of Petróleos Mexicanos will be permitted to approve adjustments to its own budget and those offiscal year, which it may subsequently adjust at any time by modifying the subsidiary entities without approval from the SHCP. If these same conditions are met, the Board of Directors of Petróleos Mexicanos will also be permitted to authorize, without SHCP approval, increases in the expenditures of Petróleos Mexicanos and the subsidiary entities to the extent that their revenues exceed the amounts contemplated in the budget.applicable law.
The Ministry of the Environment and Natural Resources, in conjunction with other Mexican federal and state authorities, regulates our activities that affect the environment.
In addition to the regulatory powers that the Energy Regulatory Commission already has over natural gas and LPG activities, this Commission also has the authority to regulate: (1) first-hand sales of gas, fuel oil and basic petrochemicals; (2) pipeline transportation and distribution of gas and refined products, as well as storage of such products to the extent that this is directly linked with such pipeline transportation and distribution, or forms an integral part of the importation and distribution terminals of such products; and (3) pipeline transportation and distribution of biofuels, as well as storage of such products to the extent that this is
directly linked with such pipeline transportation and distribution, or forms an integral part of the importation and distribution terminals of such products.
TheLey de la Comisión Nacional de Hidrocarburos (National Hydrocarbons Commission Law), which became effective on November 29, 2008, provides for the establishment of the NHC, which is responsible for regulating and supervising hydrocarbons exploration and exploitation as well as the processing, transportation and storage activities directly related to exploration and exploitation projects. Our estimates of Mexico’s proved reserves are reviewed by the NHC. See “—Business Overview—Exploration and Production—Reserves” in this Item 4.
TheAuditoría Superior de la Federación (Superior Audit Office of the Federation, or the ASF)ASF, reviews annually theCuenta PúPública (Public(Public Account) of the Mexican Government entities, including Petróleos Mexicanos and theour subsidiary entities. This review focuses mainly on the entities’ compliance with budgetary benchmarks and budget and accounting laws. The ASF prepares reports of its observations based on this review. The reports are subject to our analysis and, if necessary, our clarification and explanation of any issues raised during the audit. Discrepancies in amounts spent may subject our officials to legal sanctions. However, in most instances, the observed issues are explained and clarified.
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 financial information providedFCPA 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 to anti-corruption, anti-bribery and anti-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 ASF is preparedFCPA. In addition, the Federal Law of Administrative Responsibilities of Public Officials prohibits the bribery of federal public officials in accordanceMexico, 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 Mexican Governmental Standardsapplicable 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 Mexican public sector entities, which differ in several respects from IFRS. AsPetróleos Mexicanos and the subsidiary entities. For a result, our financial statements included herein reflect different financial data than those included in the Public Account.
The transitional articlesdescription of the Energy Reform Decree contemplate the grant of additional technicalrisks relating to anti-corruption, anti-bribery and administrative authorityanti-money laundering laws and regulations, see “Item 3—Key Information—Risk Factors—Risk Factors Related to the Ministry of Energy, the NHCour Operations—We are subject to Mexican and the Energy Regulatory Commission over certain ofinternational 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 energy sector generally. See “—InformationConstitution, 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 Company—HistoryMexican Government, federal entities, states and Development—Energy Reform—Regulatory Oversightmunicipalities to prevent, investigate and Authority” in this Item 4 for information regardingpunish corrupt activities and oversee public resources, as well as determine administrative liabilities of public officials and the specific authority thatapplicable penalties. The Mexican Senate is expected to be grantedappoint the head of the Special Anti-Corruption Prosecutor’s Office, which was created to these regulatory entities.investigate and prosecute actions considered crimes of corruption.
ENVIRONMENTAL REGULATION
Legal Framework
We are subject to various laws related to the environmental protection of natural resources,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 the management of hazardous andnon-hazardous wastes. waste. In particular, Petróleos Mexicanos and the subsidiary entitieswe are subject to the provisions of theLey General del Equilibrio Ecológico y la Protección al Ambiente(General (General Law on Ecological Equilibrium and Environmental Protection),Protection, which we refer to as the Environmental Law, which was amended on January 28, 2011,Law) and therelated regulations, issued thereunder, theLey General de Cambio Climático (General Law on Climate Change), which was amended on June 6, 2012, and severalother technical environmental normsstandards issued by the SEMARNAT. 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),Ley para el Aprovechamiento de Energías Renovables y el Financiamiento de la Transición Energética (Law of Use of Renewable Energy and Financing of the Energy Transition), as well as theLey para el Aprovechamiento Sustentable de la Energía (Sustainable Use of Energy Law), each of which became effective on November 29, 2008. In addition, Petróleos Mexicanos and the subsidiary entities are subject to the environmental laws and regulations issued by the governments of each state of Mexico where our facilities are located..
Before we carry out any activity that may have an adverse impact on the environment, we are required to obtain certain authorizations from the SEMARNAT.Hydrocarbons Industrial Safety and Environmental Protection Agency, the SEMARNAT, the Ministry of Energy, the National Water Commission and the Mexican Navy, as applicable. In particular, specific environmental regulations apply to chemical, 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 SEMARNATHydrocarbons 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.
Mexico generally updates and revises its environmental regulatory framework as necessary, and we participate with the Mexican Government in developing environmental regulations that are related to our activities. The Law of Use of Renewable Energy and Financing of the Energy Transition and the Sustainable Use of Energy Law are designed to further Mexico’s transition to cleaner, more environmentally friendly fuels and renewable energy sources. On January 30, 2006, the SEMARNAT issued Official Mexican Standard NOM-086-SEMARNAT-SENER-SCFI-2005, which sets forth environmental specifications for fossil fuels. As required by this standard, we are currently developing projects at our refineries to satisfy domestic market demand for low-sulfur fossil fuels.
On March 19, 2010, the Energy Regulatory Commission issued Official Mexican Standard NOM-001-SECRE-2010, which specifies quality parameters for the transportation, storage and distribution of natural gas. In order to comply with this standard, we implemented procedures to control the nitrogen concentration in the natural gas that we process and installed equipment to monitor the quality of the natural gas that we transport, store and distribute. In addition, the cryogenic plant at the Ciudad Pemex GPC was modified to comply with the standard, and three plants began operations in 2012 in order to control the liquid content of natural gas.
On February 2, 2012, the SEMARNAT issued Official Mexican Standard NOM-085-SEMARNAT-2011 (which we refer to as NOM-085), which sets forth environmental standards regarding the maximum levels of emissions to the atmosphere allowed from stationary sources. In April 2012, NOM-085 was amended to heighten some of these standards. In order to comply with NOM-085, we continued to reduce our sulfur dioxide emissions and to gradually substitute fuel oil with natural gas in our operations. These efforts were carried out as part of the reconfiguration of the refineries at Tula and Salamanca. See “—Business Overview—Refining—Vacuum Residue Processing at Miguel Hidalgo Refinery” and “—Reconfiguration of the Salamanca Refinery” in this Item 4.
In April 1997, the SEMARNAT issued regulations governing the procedures for obtaining an environmental license, under which new industrial facilities can comply with all applicable environmental requirements by way
ofthrough a single administrative procedure. Each environmental license integrates all of the different permits, licenses and authorizations related to environmental matters for a particular facility. Since these regulations went into effect, we have been required to obtain an environmental license for any new facility, while ourfacility. Our facilities that existed prior to the effectiveness of these regulations are not subject to this obligation.requirement.
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.
Federal and state authorities in Mexico mayare authorized to inspect any facility to determine its compliance with the Environmental Law, local environmental laws, regulations and technical environmental regulations. Violations ornon-compliance with environmental standards and regulations may result in the application of substantial fines, temporary or
permanent shutdown of a facility, required capital expenditures to minimize the effect of our operations on the environment, cleanup of contaminated landsoil and water, cancellation of a concession or revocation of an authorization to carry out certain activities and, in certain cases, criminal prosecution of employees and individuals.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.”
On November 28, 2007,Mexico generally reviews and updates its environmental regulatory framework every five years, and we work with the SEMARNAT issued NOM-148-SEMARNAT-2006 (which we referMexican Government to as NOM-148), which establishes standards for sulfur recovery in all refineries. As of the date of this report, all of our refineries are in compliance with NOM-148. During 2013, compliance with NOM-148 resulted in costs to Petróleos Mexicanos and the subsidiary entities of approximately Ps. 2,500 million. Thedevelop new sulfur recovery plant at the Salamanca refinery is expected to commence operations during 2014. Amendments to NOM-148 are anticipated by the end of 2014 and are expected to establish, among other things, a sulfur emissions monitoring system applicable to our refineries.
As we increase our use of new drilling technologies, it is possible that Mexico’s environmental regulations will expandof activities related to address these developments. On January 11, 2011, the NHC issued new rules and regulations relating to our deep water drilling and exploration activities in the Gulf of Mexico. These new rules and regulations, which were promulgated in response to the Deepwater Horizon blow-out and resulting oil spill in U.S. territory in the Gulf of Mexico that began in April 2010, require us to produce a series of reports on our safety measures for deep water drilling and exploration activities over the eight months following the promulgation of the rule, and to have our procedures certified by an independent expert. We must also certify that we have adequate insurance or other financial resources available to cover any losses or compensation claims stemming from a deep water accident. As of the date of this report, we are in compliance with the above requirements for projects at depths of 500-1,500 meters and with all requirements applicable to deepwater projects, which are issued primarily by the NHC. On February 20, 2012, the United States and Mexico reached an agreement regulating oil and gas development along their maritime borderindustry.
In August 2016, theNOM-016-CRE-2016 was published in the Gulf of Mexico, which may facilitate an expansion of deep water drilling for Mexico. Mexico will retain its own regulatory system.
On May 14, 2012, we procured the services of Wild Well Control Inc., a company that specializes in controlling oil spills, in order to comply with the rules and regulations issued by the NHC. Our initial agreement with Wild Well Control Inc. expired on March 31, 2013 but was subsequently renewed and is in effect asOfficial Gazette of the dateFederation, which establishes the petroleum products quality requirements, including a maximum sulfur content for diesel fuel of this report.15 Mg/kg, to be applicable throughout Mexico by December 31, 2018.
We have also recently been producing natural gas located in shale deposits fromIn November 2016, the Emergente-1 well. Although this wellNOM-014-CRE-2016 was initially drilled through hydraulic fracturing, we have since relied on horizontal drilling to produce natural gas. Accordingly, we have produced very little waste water. However, shale well drilling could result in environmental concernspublished in the future. Mexico does not currently have any environmental regulation specific to shale gas development.
Global Climate ChangeOfficial Gazette of the Federation, which establishes the ethane and Carbon Dioxide Emissions Reduction
In May 2007, the Federal Executive Office submitted itsEstrategia Nacional de Cambio Climático (National Climate Change Strategy), which identified various opportunities to mitigate and adapt to climate change,propane quality requirements for ethylene production, as well as noted Mexico’s participation in the international community with respect to climate change awareness.
SinceDuring 2016, the National Climate Change Strategy was published, we have worked withCNH updated the various government offices that participate in theComisión Intersecretarial de Cambio Climático (Inter-Ministry Climate Change Commission) to develop thePrograma Especial de Cambio Climático 2009-2012 (Special Climate Change Program for 2009-2012, which we refer to as the PECC). We participated, with the Ministry of Energy, in the development of the portion of the PECC relating to the Energy Sector. We helped establish goalstechnical provisions for the reduction of emissions by 2012. On August 28, 2009, SEMARNAT issued the PECC, which allowed us to consolidate agreements, reinforce already negotiated commitments and identify, upon further consideration, new measures and additional changes necessary so that, progressively, Mexico’s greenhouse gas emissions levels will be reduced to acceptable levels under the National Climate Change Strategy.
We have identified several activities and projects to be undertaken in respect of issues addressed by the chapter of the PECC relating to mitigation measures, including increased energy efficiency, sour gas re-injection, co-generation and reduction in fugitive emissions, and we set a goal of reducing our annual carbon dioxide emissions by 9.94 million tons during the period from January 1, 2009 through the end of 2012. During 2011, we reduced our carbon dioxide emissions by approximately 4.0 million tons. During 2012, we reduced our carbon dioxide emissions further by approximately 1.8 million tons, which is a volume comparable to removing 0.3 million automobiles from circulation. In total, from January 1, 2009 through December 31, 2012, we reduced annual carbon dioxide emissions by an estimated 15.1 million tons, which represents progress of approximately 51.8% more than our goal for such annual reductions of 9.94 million tons by 2012, as compared to 2008 carbon dioxide emissions. These emission reductions were achieved primarily through reduced gas flaring in connection to exploration and production and the more efficient use of natural gas.gas in exploration and extraction activities and issued regulations for drilling, exploration and development. Also addressed in this chapter2016, theAgencia de Seguridad Energía y Ambiente (National Agency for Industrial Safety and Environmental Protection of the PECC isHydrocarbons Sector, better known as the goalAgency 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 increased adaptability by energy sector participants in responding to climate change’s effects by designing and implementing: contingency programs in case of extreme hydrometeorological events, strategies of territorial planning and ecological territorial planning, as well as a vulnerability map reflecting the potential effects of climate change.
Our largest sources of greenhouse gas emissions are heating systemsVeracruz and the operationsouthern part of mechanical equipment, which require the burning of fossil fuels and the creation of water vapor to generate energy. During 2013, we recorded greenhouse gas emissions of 47.1 million tons of carbon dioxide equivalent, which represented an 8.5% increase from the 43.4 million tons of carbon dioxide equivalent emitted in 2012. This increase was due to an increase in the burning of sour gas with a high nitrogen content in connection with Pemex-Exploration and Production’s operations. Despite this increase, we have continued to comply with the NHC’s rules and regulations by maintaining a level of gas usage of 98%.Tamaulipas.
As of the date of this report, the PECC for 2013 to 2018 is under development. The PECC’s greenhouse gas emissions reductions targets are expected to be based on existing greenhouse gas emissions reduction projects and will not consider possible emissions growth that may result from increases in productive activities. We are proposing a greenhouse gas emissions reductions level of approximately 5 million tons of carbon dioxide equivalent by 2018. Under the General Law on Climate Change this goal may be updated every two years.
On June 6, 2012, the General Law on Climate Change was published in the Official Gazette of the Federation, with the objectives of regulating greenhouse gas emissions and reducing the vulnerability of Mexico’s infrastructure, population and ecosystems to the adverse effects of climate change. In order to comply with the requirements of theThe General Law on Climate Change we will promote policies intendedestablishes a series of financial, regulatory and technical rules and regulations, as well as tools for strategy formation, evaluation and monitoring that form the framework for a comprehensive public policy on climate change.
Our Special Climate Change Program 2014-2018 aims to reduce
greenhouse gas emissions, such as reducingimprove energy and operational efficiency, reduce gas flaring and fugitive emissions, implementing reforestation projects and substituting liquid fuels forpromote 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 will also undertake effortsbegan the test period for a cogeneration project to minimizeincrease energy efficiency at the vulnerability ofAntonio M. Amor Refinery in Salamanca, Guanajuato. In addition, we launched our operations to climate change.
In 2011, 2012 and 2013, as part ofPEMEX Environmental Strategy 2016-2020, which incorporates our formerPlan de Acción Climática (Climate(Climate Action Plan), which embodiesto identify action items, projects and best practices to mitigate the impact of our internal strategyoperations on climate change. These actions include the construction of infrastructure for reducing the Mexican energy sector’s carbon footprinttransportation and minimizinggas 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, onwe 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 operations,Cosoleacaque Petrochemical Complex into the Brillante producing field at the Cinco Presidentes business unit.
During 2016, we implementedrecorded greenhouse gas emissions of approximately 57.9 million tons of carbon dioxide equivalent, which represented an 11.1% increase compared to 2015, mainly due to an increase in the dispatch of bitter gas into our burners 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. Our gas usage level 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. These projects were designed to counteract greenhouse gas emissionsincrease carbon capture and protect surrounding communitiespreserve the ecosystems in which we operate. Our biodiversity conservation efforts and indirect mitigation measures have been carried out through the environment. Our principal conservation projects include:following projects:
• | 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 began 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 managementof biodiversity. It includes the implementation of a new scheme that allows third party participation to maximize profits and restorationfacilitate the preservation of the Usumacinta River basin’s natural ecosystems in the state of Chiapas;
Since 2009, we have conducted studies to evaluate the risk of strategically important installations against events associated with climate change and natural phenomena, and as of the date of this report, we are updating a study of the oil and gas sector’s vulnerability to climate change.ecosystem.
Emission Reduction Purchase AgreementsClean Development Mechanism Projects
In 2000, Mexico ratified the Kyoto Protocol to the United Nations Framework Convention on Climate Change (which we refer to as the Kyoto Protocol) as anon-Annex B country. Accordingly, Mexico is not subject to emission caps under the Kyoto
Protocol, but Mexican companies, such as PEMEX, are allowed to develop Clean Development Mechanism (CDM) projects. These CDM projects generate carbon dioxide emission-reductionemission reduction certificates or credits that can be traded in international markets.
As of December 2012, we We have signed three emission reduction purchase agreements forregistered two CDM projects with the marketing of carbon dioxide emission-reduction certificates. One of these agreements is with Carbon Solutions de México, S.A. de C.V., another is with Statoil and the third is with Platinum Partners Value Arbitrage Fund L.P. Under these agreements, we will sell emission reduction certificates to be generated by the following three projects, each of which should reduce our greenhouse gas emissions: increasing thermal efficiency and recovery of combustion gasesUnited Nations Framework Convention on Climate Change: Waste Energy Recovery at the Dos Bocas Marine Terminal; undertaking a project to reduce gas flaring at the Tres Hermanos oil field; and the switch from fuel oil to natural gas at the Ing. Antonio Dovalí Jaime refinery at Salina Cruz, Oaxaca. The Dos Bocas Marine Terminal and Tres Hermanos Oil Field Gas Recovery and Utilization Project. The execution of these projects have already been registered with the United Nations, while the remaining project is subject to market conditions, including an increase in the processprice of being registered. These projects could potentially reducecertified emission reductions. In addition, we began working on the Elimination of Nitrous Oxide in Lazaro Cardenas CDM project following our greenhouse gas emissions by more than 500 thousand tonsacquisition of carbon dioxide annually.
Also in 2012, we signed the Dry Seals CDM Termination Agreement as part of Mexico’s Nationally Appropriate Mitigation Actions (which we refer to as NAMAs) program. NAMAs are a set of measurable, reportable and verifiable actions undertaken by countries to reduce emissions. NAMAs being carried out in Mexico include reducing fugitive emissions associated with the processing and transportation of natural gas, as well as mitigating the greenhouse gas emissions that result from the activities of the petroleum industry. It is estimated that this NAMA has the potential to reduce carbon dioxide emissions by 3 million tons per year. On October 21, 2013, Petróleos Mexicanos and the SEMARNAT registered this NAMA, along with the NAMA on Cogeneration in the Mexican Oil and Gas Industry, under the United Nations Framework Convention on Climate Change.
In connection with the “Bilateral Offset Credit Mechanism,” an initiative of the Japanese Ministry of Economy, Trading and Industry intended to address the issue of climate change, the Japanese government has funded feasibility studies related to the co-generation projects at the Cangrejera and Morelos petrochemical complexes. These studies were completed in May 2013.Fertinal. As of the date of this annual report, we are also cooperating with the Japanese Ministrythat CDM project is in its final stages of Foreign Relationsdevelopment and Ministry of the Environment as part of our effort to establish a bilateral emissions reduction agreement between Mexico and Japan. This proposed agreement, known as the “Joint Crediting Mechanism,” would facilitate our implementation of emissions reduction projects through mitigation actions that will be jointly developed by the governments of each country.
We have also pursued opportunities to engage in carbon emissions trading, and have developed several studies under the framework established by agreements signed with the World Bank, the Inter-American Development Bank and Sumitomo Bank in order to advance these efforts. Furthermore, the United States Agency for International Development, through the consulting firm TETRATECH, has financed the implementation of a system to record and estimate the extent to which our reductions in greenhouse gas emissions can be traded.
During 2013, pursuant to agreements with the Inter-American Development Bank, the World Bank and the Fund for Energy Transition and Sustainable Use of Energy, we began developing a methodology to measure the amount of greenhouse gases emitted by boilers and furnaces in connection with an efficiency project. This project aims to develop internationally recognized measurement instruments which meet the requirements of the General Law on Climate Change for greenhouse gas emissions reduction targets. If in the future this methodology enables us to sell Mexican carbon offsets in the California emissions trading market, it could be registered with state authorities in California.the United Nations once finalized.
PEMEX’s Internal Monitoring
HEALTH, SAFTEY 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. Weenforced and that we maintain an internalorganizational structure designed to identify and solve environmental problems and we retainrisks. We engage external consultants to perform operational audits at our industrial plants, including cost estimates for remedying any shortfall in compliance with Mexican environmental laws. Such remedies can include improving our operating efficiency, cleaning up contaminated land and water and capital expenditures to minimize the impact of our operations on the environment.processing plants. In addition, theour subsidiary entities have specialized departments depending on the size and geographic distribution of their respective sites, whichthat implement their own internal environmental programs, and conduct internal environmental audits and inspections of their sites and their immediate surroundings based on the standards of the SEMARNAT.facilities inspections. When these internal audits reveal problems or deficiencies, the subsidiary entities take the necessary remedial actionsmeasures to eliminate them. If soil or bodies of water are contaminated and the remediation requirements from these internal audits and inspection are known and estimable, then we record them in our financial statements as environmental liabilities.
In addition to our internal monitoring structure, for identifying environmental compliance issues, Petróleos Mexicanos and theits subsidiary entities’ environmental audit program is subject to review by ASEA, which is in charge of reviewing compliance with environmental regulations for the review of theProcuraduría Federal de Protección al Ambiente (Office of the Federal Attorney for Environmental Protection, which we refer to as PROFEPA). PROFEPA administers the Mexican environmental regulatory frameworkoil and gas sector and establishes acceptable standards of environmental remediation. Although PROFEPA has the authority to review and inspect our remediation efforts and our compliance with permitted contamination levels, it does not determine our environmental liabilities. We maintain proper records of all of the studies, estimates, performed works and any other information that PROFEPA may request from time to time.standards.
Since 1993, we have participated in the National Environmental Audit Program of Environmental Auditing,(NEAP), a voluntary environmental audit program,alternative to the traditional system of inspections and penalties, with PROFEPA.PROFEPA and now with ASEA. This program was created by PROFEPA in 1992 as a regulatory incentive for companies to voluntarily correct any environmental irregularityirregularities in their operations in a voluntary manner. Theoperations.
In general terms, voluntary environmental auditauditing consists of three stages: (i) an audit and compliance diagnosis; (ii) the development of an action plan to correct irregularities; and (iii) the executionimplementation of the action plan. If a company
satisfactorily completes thethese three stages, in a satisfactory manner, PROFEPA will provide them withASEA grants the audited company a clean industry certificate, which means that it complies with the applicable environmental legislation forof their industry. As each environmental audit is completed, we send the audit report (which includes the estimated costs for remedying any environmental anomalies) to PROFEPA for its review and approval. If the audit report is approved by PROFEPA, we review the audits and determine which findings can be resolved by changing current plant or drilling operations and implementing the current capital expenditures plan.
As of December 31, 2013, Petróleos Mexicanos and the subsidiary entities2016, we were in the process of completing audits of 627auditing 660 facilities with the objective of obtaining a “clean industry” certificatescertificate for each facility. In 2012, 2072015, we certified 73 facilities, were certified, while the 20132016 audits resulted in the certification of 105445 facilities, of which 77270 were re-certifiedre-certifications and 28175 were certified for the first time. In total, 312 of our facilities have obtained “clean industry” certificates. The audits of the remaining 315215 facilities have begun, but are still under review. We will continue including new facilities under this program as we expand our activities in the areas of exploration, exploitation, refining and distribution of hydrocarbons.
During 2013, Petróleos Mexicanos experienced two2016, we did not experience any major incidentsincident that had significant environmental consequences, as described below:consequences. We did, however, experience the following material blasts or hazardous events at our facilities during 2016, none of which had significant environmental consequences:
In addition, Petróleos Mexicanos experienced one major incident during 2013 that did not have significant environmental consequences. On October 1, 2013, an explosion occurred inside the Reformation ReactorDC-501C, located at the Naphtha Reformation Plant U-501-1 of the Miguel Hidalgo Refinery. At the time of the explosion, personnel were loading the catalyst inside the reactor while plant operations were suspended. Because the atmosphere had not been made inert, hydrocarbon, carbon dust and oxygen remained inside the reactor, causing the explosion.Madero Refinery when a plug valve was disassembled. As a result of thethis accident, three workers were injured. The accident was primarily caused by a lack of our employeesblanketing, pipe blinding and two contractors’ employeesexplosive gas detectors, as well as poor planning and supervision.
In order
In an effort to create a culture focused on improving industrial safety and environmental protection, we have developed the PEMEX Safety, Health and Environmental Protection System (which we refer to as the SSPA). This system, which we began to implement in January 2006, is a management tool that focuses on the identification, evaluation and continuous application of preventive measures related to industrial safety, health and environmental protection. The SSPA is based on international best practices and is designed to help us promote the continual improvement of our safety, health and environmental protection performance in order to achieve our goal of zero incidents, injuries, emissions of pollutants and illnesses in all of our operations. The specific objectivescause of the SSPA include: reinforce process safety management, with a strong emphasis on the mechanical integrity offire and explosion is under assessment by Lloyd’s Register.
In 2016, our plants and facilities; upgrade the guide to determine the root causes of incidents; improve in environmental protection and occupational health; rigorous application of internal critical safety
procedures; improve and execute preventive safety observation program (known as effective audits); upgrade emergency response plans; effective prevention tests; improve and execute preventive safety risk assessment and job-task safety analysis.
In January 2011, the Ministry of Energy issued official guidelines regarding the implementation of safety systems with which Petróleos Mexicanos and its subsidiary entities must comply. For this reason, we introduced a program to comply with these guidelines and we took a series of actions, including implementing reactive and preventive process safety management indicators. These indicators are based on the API’s Recommended Practice 754, which establishes process safety performance indicators for the refining and petroleum industries. During 2013, the preventive safety management indicators and reactive indicators were continuously monitored in order to develop effective safety strategies for our critical installations.
During 2013, our accident frequencylost time injury rate decreased by 6.6%23.4% from 20120.47 in 2015 to 2013, from 0.61 to 0.57 injuries per million man hours worked with risk exposure.0.36 in 2016. The subsidiariessegment that contributed most to this decrease were Pemex-Refining, which accounted for 39% ofwas the decrease, Pemex-Gas and Basic Petrochemicals, which accounted for 17% of the decrease, and Pemex-Exploration and Production, which accounted for 12% of the decrease. The indicator ofindustrial transformation segment. Our lost days indicator due to injuries remained unchangeddecreased 25.8% from 201231 to 2013, at 3223 lost days per million man hours worked with risk exposure.exposure from 2015 to 2016. Lost days are those missed due to medical incapacity as a result of incapacitating injuries suffered at work or those rewarded ason which compensation is paid for partial, total or permanent incapacity or death.
In order From 2015 to reduce the risk of serious accidents, we continued to direct our efforts toward the integration and operation of working groups focused on implementing an accident containment plan and a program to strengthen the efficacy of the SSPA’s risk management strategy. During 2013, the accident containment plan succeeded in decreasing the occurrence rate of serious accidents such as fatalities, amputations, fractures and burns by 30%, as compared to 2012. Additionally, in an effort to reverse the rising trend of minor and moderate accidents such as sprains, abrasions, bruises and cuts, we continued to promote our accident prevention campaigns, which specifically addressed the prevention of falls from heights and on the same level, hand safety, and lift and maneuver safety. Subsequent accident prevention campaigns will focus on working in teams, opening oil and gas lines and electrical maintenance. During the last four months of 2013, the number of falls from heights decreased by 33%, falls on the same level decreased by 20%, hand accidents decreased by 29% and accidents involving lifts and maneuvers decreased by 12%.
In addition, from 2012 to 2013,2016, our contractors’ accident frequencylost time injury rate decreased by 39.1%,40.9% from 0.460.44 to 0.280.26 injuries per million man hours worked with risk exposure.
Other than as disclosedIn 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 this report, therethe previous year to avoid entering into contracts with companies that perform poorly on the EH&S guidelines.
In 2016, our primary initiatives in industrial safety, health and environmental protection included the following:
Environmental Liabilities
AtAs of December 31, 2013,2016, our estimated and accrued environmental liabilities totaled Ps. 5,467.08,230.5 million. Of this total, Ps. 781.71,014.9 million was attributablebelong to Pemex-ExplorationPemex Exploration and Production, Ps. 4,085.12,690.7 million to Pemex-Refining,Pemex Industrial Transformation and Ps. 596.14,524.9 million to Pemex-Gas and Basic Petrochemicals and Ps. 4.2 million to Pemex-Petrochemicals. There were no environmental liabilities at the subsidiary company level.Pemex Logistics. The following tables detail our environmental liabilities by subsidiary entity and operating region at December 31, 2013.2016.
Pemex-ExplorationPemex Exploration and Production(1)
Estimated Affected Area | Estimated Liability | Estimated Affected Area | Estimated Liability | |||||||||||||
(in hectares) | (in millions of pesos) | (in hectares) | (in millions of pesos) | |||||||||||||
Northern region | 98.91 | Ps. | 532.0 | 131.39 | Ps. | 596.1 | ||||||||||
Southern region | 63.44 | 106.0 | 89.89 | 149.7 | ||||||||||||
|
|
|
| |||||||||||||
Total | 162.35 | Ps. | 637.9 | 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. |
Source: | PEMEX. |
Holding Ponds Drainage | ||||||||
Number of Holding Ponds Reported as Liabilities(1) | Estimated Liability | |||||||
(in millions of pesos) | ||||||||
Southern region | 11 | P | s.20.8 | |||||
Northern region | 69 | 248.2 | ||||||
|
|
|
| |||||
Total | 80 | 269.0 | ||||||
|
|
|
| |||||
Total estimated environmental liabilities of Pemex Exploration and Production | Ps. | 1,014.9 | ||||||
|
|
Note: Numbers may not total due to rounding.
(1) |
Source: PEMEX.Pemex Exploration and Production.
Pemex Industrial Transformation(1)
Holding Ponds Drainage | ||||||||
Number of Holding Ponds Reported as Liabilities(1) | Estimated Liability | |||||||
(in millions of pesos) | ||||||||
Northern region | 76 | Ps. | 126.4 | |||||
Southern region | 8 | 17.4 | ||||||
|
|
|
| |||||
Total | 84 | Ps. | 143.8 | |||||
|
|
|
| |||||
Total estimated environmental liabilities of Pemex-Exploration and Production | Ps. | 781.7 | ||||||
|
|
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 | |||||
|
|
|
|
Note: Numbers may not total due to rounding.
(1) |
Pemex-RefiningSource: Pemex Industrial Transformation.
Pemex Logistics
Estimated Affected Area | Estimated Liability | |||||||
(in hectares) | (in millions of pesos) | |||||||
Pipelines | 11.12 | Ps. | 103.3 | |||||
Refineries | 259.53 | 2,142.6 | ||||||
Storage and distribution terminals | 69.28 | 506.1 | ||||||
Areas affected by recent incidents(1) | 123.47 | 1,333.1 | ||||||
|
|
|
| |||||
Total(2) | 463.40 | Ps. | 4,085.1 | |||||
|
|
|
|
Estimated Affected Area | Estimated Liability | |||||||
(in hectares) | (in millions of pesos) | |||||||
Storage and Distribution Terminals | 69.58 | Ps. | 343.1 | |||||
Pipelines | 21.88 | 4,181.8 | ||||||
Total estimated environmental liabilities of Pemex Logistics | 91.46 | Ps. | 4,524.9 | |||||
|
|
|
|
Note: Numbers may not total due to rounding.
Source: PEMEXPemex Logistics..
Pemex-Gas and Basic Petrochemicals
Estimated Affected Area | Estimated Liability | |||||||
(in hectares) | (in millions of pesos) | |||||||
Gas complex processors at Reynosa | 11.50 | Ps. | 19.5 | |||||
Texistepec Mining Unit(1) | 382.00 | 576.6 | ||||||
|
|
|
| |||||
Total | 393.50 | Ps. | 596.1 | |||||
|
|
|
|
Notes: Numbers may not total due to rounding.
n.a. = not available.
Source: PEMEX.
Pemex-Petrochemicals
Estimated Affected Area | Estimated Liability | |||||||
(in hectares) | (in millions of pesos) | |||||||
Pajaritos petrochemical complex | 0.34 | Ps. | 4.2 | |||||
|
|
|
| |||||
Total(1) | 0.34 | Ps. | 4.2 | |||||
|
|
|
|
Note: Numbers may not total due to rounding.
Source: PEMEX.
Our estimates of environmental liabilities include cost estimates for site-specific evaluation studies, studies thatwhich draw upon aspects of previous evaluations for sites with comparable characteristics and the corresponding remediation. The remediation sites consist of sitesfacilities identified in the audit process described above, as well as those previously identified sites in more mature petroleum operating areas that were not cleaned up in the past. Our environmental liabilities also include the elimination of holding ponds created by abandoned petroleum wells. Additionally, our environmental liabilities include an accrual based on information requested and received periodically from field managers regarding probable environmental liabilities identified in their respective areas of responsibility. We accrue environmental liabilities when sufficient basic knowledge is available to form a preliminary estimation as to remediation cost. Although the full potential scope of the remediation cost may not be known with certainty, these accruals are made when the liability is probable and the amount ismay be reasonably estimable,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 of contamination and type of contamination. While the initial evaluation is extensive, there is a possibility that the actual scope of remediation could vary depending upon information gathered during the remediation process. For a further discussion of our environmental liabilities, see Note 3(l) to our consolidated financial statements included herein.
Unasserted or additional claims are not reflected in our identified liabilities. We are not aware of any such claims that would be of such magnitude as to materially affect our estimates of environmental liabilities. At the end of 2013,2016, 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. AsSee “—History and Development—Energy Reform” above in this Item 4 for more information regarding the participation of other companies in the date of this report, we are responsible for all production, processing, storage and distribution of petroleum and its derivatives in Mexico.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-ExplorationPemex 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-ExplorationPemex Exploration and Production’s responsibility to ensure an adequate environmental performance, and also establish the terms for compensation and repair of any new environmental impacts.
The timing of remediation or cleanup of the sites to which these environmental liabilities relate is dependent upon the annual budget assigned to usapproved by the Mexican Congress.
Environmental Projects and Expenditures
In 2016, we spent approximately Ps. 11,424.4 million on environmental projects and related expenditures, as compared to Ps. 9,917.1 million in 2015. For 2017, we have budgeted Ps. 5,707.6 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) 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
Petróleos Mexicanos hasWe have implemented various initiatives in the area of corporate social responsibility initiatives, primarily with respect to the protection and preservation of the environment, relations with communities involved in Mexico’s oil and gas industry,where we operate, ethical work practices, respect for labor rights and the general promotion of quality of life for communities and employees.
Our corporate and social responsibility goals are carried out through the following mechanisms:
• | 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 |
OurIn 2016, the total donations, contributions and mutual benefit projects in 2013 amounted to more than Ps. 3.5 billion. Ourvalue of our donations and contributions amounted to Ps. 2.8 billion, or 80.0%1,649.2 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 donations amounted to approximately 28.3 million. Contributions made through provisions of this total. The remainingour Integrated E&P Contracts, FPWCs, SD Annexes and RS KMZ sustainable development clause amounted to Ps. 0.7 billion of the total donations consisted of infrastructure investments in the states where Pemex-Exploration129.0 million, and Production operates.PACMA and mutual benefit project contributions amounted to Ps. 186.8 million and Ps. 23.2 million, respectively. Approximately 56%68.5% of our donations and contributions were directedassigned to the states principally involvedwith greater activity in the crude oil and gas industry (Campeche, Chiapas, Tabasco, Tamaulipas and Veracruz); 21%22.0% to the states with medium involvementactivity in the crude oil and gas industry (Coahuila, Guanajuato, Hidalgo, Nuevo León,Leon, Oaxaca, Puebla and San Luis Potosí); and 24%the remaining 9.5% to the remaining states.
Most importantly, we took the following specific actions in 2013:2016:
During 2013, our primary social responsibility initiatives included projects focused on biodiversity conservation, reforestation, hydrologic improvement to ensure water supply and environmental education in the states of Tamaulipas, Veracruz, Tabasco, Chiapas and Campeche.
Environmental Projects and Expenditures
In 2013, we spent approximately Ps. 7,093 million on environmental projects and related expenditures, as compared to Ps. 8,894 million in 2012. For 2014, we have budgeted Ps. 11,411 million for environmental projects and expenditures, including modernization of installations, implementation of systems and mechanisms to monitor and control atmospheric pollution, acquisition of equipment to address contingencies related to hydrocarbon spills, the expansion of water effluent systems, restoration and reforestation of affected areas, studies for environmental investigation and the conducting of environmental audits. In addition, we continue to conduct extensive research and development efforts to increase our capacity to produce gasoline, diesel and fuel oil with lower sulfur content at our refineries in Mexico.
We do not believe that the cost of complying with environmental laws or environmental requirements related to the North American Free Trade Agreement (NAFTA) among the governments of Mexico, the United States and Canada, the Vienna Convention for the Protection of the Ozone Layer, the Agreement on Environmental Cooperation between the Governments of Mexico and Canada or Mexico’s membership in the Organization for Economic Cooperation and Development, has caused or will cause a significant increase in our environmental expenditures.
TRADE REGULATION AND EXPORT AGREEMENTS
Though Mexico is not a member of OPEC,Organization of the Petroleum Exporting Countries (which we refer to as OPEC), it has periodically announced increases and decreases in our crude oil exports reflecting production revisions made by other oil producing countries, in order to contribute to crude oil prices stabilization. However, we have not changed our export goals because of announcements made by OPEC since 2004, and we believe that Mexico has no current plans to change our current level of crude oil exports.
NAFTA didhas not affectaffected Mexico’s rights, through Pemex-Exploration and Production, Pemex-Refining and Pemex Gas and Basic Petrochemicals,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 basic petrochemicals in Mexico. Since 2003, non-basic petrochemical products have enjoyed a zero tariff under NAFTA and, subject to limited exceptions, exports of crude oil and petroleum products from Mexico to the United States and Canada have been free or exempt from tariffs. Similarly, since 2003, Mexico’s imports of petroleum products from the United States and Canada have also been exempt from tariffs. In addition, in 2004, NAFTA approved lower tariffs on certain materials and equipment imported by Mexico. The zero tariff on Mexico’s imports of non-basic petrochemicals from the United States and Canada could have increased competition in the non-basic petrochemicals industry in Mexico. To the extent that domestic and international prices for our products remain constant, lower tariffs on products, materials and equipment that we import from and export to the United States and Canada, reduce our expenses and increase our revenue.
TAXES, DUTIES AND DUTIESOTHER 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 32.8%21% of the Mexican Government’s revenues in 20122015 and 32.2%8.6% in 2013.2016. In 2013,2016, we paid a number of special hydrocarbonoil 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 described below,for 2016 (which we refer to as the 2016 fiscal regime) became effective in 2006.2017 and can be subsequently modified from time to time. The Secondary 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 Mexican Congress approved the current fiscal regime for Petróleos Mexicanos and the subsidiary entities on November 10, 2005, whichHydrocarbons Revenue Law that was published in the Official Gazetteadopted as part of the Federation on December 21, 2005. The fiscal regime went into effect on January 1, 2006, but was modified in 2007, 2008, 2009, 2010, 2011 and 2013. Under the current fiscal regime, Pemex-Exploration and Production is governed by theLey Federal de Derechos (Federal Duties Law), while theSecondary Legislation sets forth, among other subsidiary entities are governed by theLey de Ingresos de la Federación(Federal Revenue Law) for the applicable fiscal year.
In 2013 and 2014, the fiscal regime for Pemex-Exploration and Production consisted ofthings, the following duties:duties applicable to us in connection with our assignments granted by the Mexican Government:
• | Derecho |
• | Derecho |
• | Derecho |
|
| 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 |
|
|
|
|
The Federal Duties Law, for purposes ofUnder the duties mentioned above, defines the deep water fields as those located in waters with an average depth of 500 meters or greater.
The Federal Duties Law defines marginal fields as those fields that are abandoned or in the process of being abandoned. In 2013 and 2014, 101 fields and 103 fields were categorized as marginal fields, respectively.
The2016 fiscal regime, for Petróleos Mexicanos and its subsidiary entities, with the exceptionsome of Pemex-Exploration and Production, consists ofour products are subject to the following taxesIEPS Taxes, which we withhold from our customers and duties:pay to the tax authorities. The IEPS tax is no longer included in our sales or expenses. of gasoline and diesel before the of eac
• |
|
IEPS |
|
|
diesel. |
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 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 Phase Contractual Fee): During the exploration phase of a project governed by a license, production-sharing contract or profit-sharing contract, the Mexican Government is entitled to collect a monthly payment of Ps. 1,150 per square kilometer ofnon-producing areas. After 60 months, this fee increases to Ps. 2,750 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. |
• |
• | 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 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 is to be madein-kind through delivery of the hydrocarbons produced. In the case of profit-sharing contracts, this payment is to be made in cash. |
• | Bono a la Firma(Signing Bonus): Upon execution of a license or migration of an |
• | 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 |
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 Ourour Relationship with the Mexican Government—Petróleos Mexicanos and the subsidiary entitiesWe pay specialsignificant 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.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 2013, we paid total taxesJuly of each year, Petróleos Mexicanos and duties inthe 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 Ps. 864.9 billion (53.8%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 is to be equal to, at minimum, 30% of the total sales), as comparedrevenues 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 and the Federal Revenue Law for 2017, Petróleos Mexicanos was not required to pay a state dividend in 2016 and will not be required to pay a state dividend in 2017.
The following table sets forth the Ps. 902.6 billion (54.8% of total sales) of taxes and duties that we paid in 2012, mainlyrecorded for each of the past three years.
Year ended December 31, | ||||||||||||
2014 | 2015 | 2016 | ||||||||||
(in millions of pesos)(1) | ||||||||||||
Hydrocarbon extraction duties and others | Ps. | 760,912 | Ps. | 377,087 | Ps. | 304,813 | ||||||
Hydrocarbons income tax | (18,735 | ) | — | — | ||||||||
Income tax | 3,898 | (45,587 | ) | (40,292 | ) | |||||||
|
|
|
|
|
| |||||||
Total | Ps. | 746,075 | Ps. | 331,500 | Ps. | 264,521 | ||||||
|
|
|
|
|
|
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 the decreaserounding.
(1) | Figures are stated in nominal pesos. |
Source: PEMEX’s audited financial statements, prepared in Mexican crude oil export prices in 2013.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.
Petróleos Mexicanos and the subsidiary entities are exempt from Mexican corporate income tax; however, some of our subsidiary companies are Mexican corporations and are subject to the tax regime applicable to all other Mexican corporations. In 2013, Mexican companies paid the higher of the two tax rates described below: The first was a corporate income tax at a rate of 30% applied to revenues, less certain deductions; the second was theImpuesto Empresarial a Tasa Única (Flat Rate Business Tax), at a minimum tax equal to 17.5% of a corporation’s sales revenues (less certain deductions and certain investment expenditures). Effective 2014, the Flat Rate Business Tax was eliminated.
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. 769.64,058.5 million in 20122014, Ps. 6,833.4 millionin 2015 and Ps. 2,660.47,200.9 million in 2013.2016.
No assurance can be given that our tax regime will not change in the future. The Energy Reform Decree contemplates that the secondary legislation implementing it will include a new fiscal regime applicable to us. See “Item 3—Key Information—Risk Factors—Considerations Related to Mexico—The effects of the Energy Reform Decree and its implementation are uncertain but likely to be material” and “—Risk Factors Related to Ourour Relationship with the Mexican Government—Petróleos MexicanosWe pay significant taxes and the subsidiary entities pay special taxes, duties and dividends 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.program or negatively impact our financial condition generally.”
UNITED MEXICAN STATES
The information in this section with regard to Mexico has been included due to Petróleos Mexicanosderived from publicly available information published by, or on the websites of, the Comisión Nacional Bancaria y de Valores (National Banking and Securities Commission), Banco de México Banco (the Mexican central bank), the Ministry of Finance and Public Credit and the subsidiary entities’ relationship with the Mexican Government and has been reviewed by the SHCP.Instituto Nacional de Estadística y Geografía (INEGI).
Form of Government
The President is the chief of the executive branch of the Mexican Government. The President is elected by the popular vote of Mexican citizens who are 18 years of age or older. The Mexican Constitution limits the President to onesix-year term; 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 FederacióFederación (Federal Electoral Court) officially validated the results of the presidential election held in Mexico on July 1, 2012, and declared Mr. Enrique Peña Nieto, a member of the PRI,Partido Revolucionario Institucional (Institutional Revolutionary Party, or PRI), President-elect. Mr. Enrique Peña 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 majority of the seats in both chambers of the Mexican Congress. UntilFrom 1929 until 1989, the PRI also won all of the state gubernatorial elections. In July 2000, the candidate from theAlianza por el Cambio (Alliance for Change), a coalition of thePartido Acción Nacional (National Action Party, or PAN), the oldest opposition party in the country, and thePartido Verde Ecologista de México (Ecological Green Party), won the presidential election. In addition, in 2006, Mr. Felipe de Jesús Calderón Hinojosa, a member of the PAN, was elected President. However, in 2012, the PRI candidate was once again elected President.
Each of Mexico’s 31 states is headed by a state governor. Mexico’s Federal District, Mexico City, is headed by an elected mayor. Local elections were most recently held on July 7, 2013. These elections were for the Baja California governorship. By forming an alliance with thePartido de la Revolución Democrática (Democratic Revolution Party, or PRD) and thePartido Nueva Alianza (New Alliance Party), the PAN was able to retain the Baja California governorship.
As a result of this election, Mexico’s state governorships are now composed as follows:
Legislative authority is vested in the Mexican Congress, which is composed of theCámara de Senadores(Senate) Senate and the Chamber of Deputies. Members of the Mexican Congress are elected either directly or through a system of proportional representation by the popular vote of Mexican citizens who are 18 years of age or older. Senators serve a six-year term, deputies serve a three-year term and neither may serve consecutive terms in the same chamber. The Senate is composed of 128 members, 96 of whom are elected directly, while the other 32 are elected through a system of proportional representation. The Chamber of Deputies is composed of 500 members, 300 of whom are elected directly by national electoral districts, while the other 200 are elected through a system of proportional representation. Under this proportional representation system, seats are allocated to political party representatives based on the proportion of the votes cast for those parties that receive at least 2.0%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.
Senators serve asix-year term and deputies serve a three-year term. Federal deputies are eligible for immediate reelection for up to four term periods and senators are eligible for immediate reelection for up to two term periods. Congressional elections for all 128 seats in the Senate and 500 seats in the Chamber of Deputies were last held on July 1, 2012.June 7, 2015. The following table provides the current distribution as of congressionalDecember 31, 2015 of Congressional seats, reflecting certainpost-election changes in the party affiliations of certain senators and deputies.
Party Representation in the Mexican Congress
Senate | Chamber of Deputies | |||||||||||||||||||||||||||||||
Senate | Chamber of Deputies | Seats | % of Total | Seats | % of Total | |||||||||||||||||||||||||||
Seats | % of Total | Seats | % of Total | |||||||||||||||||||||||||||||
Institutional Revolutionary Party | 54 | 42.2 | % | 213 | 42.6 | % | 55 | 43.0 | % | 208 | 41.6 | % | ||||||||||||||||||||
National Action Party | 38 | 29.7 | 114 | 22.8 | 38 | 29.7 | 109 | 21.8 | ||||||||||||||||||||||||
Democratic Revolution Party | 22 | 17.2 | 101 | 20.2 | 18 | 14.1 | 60 | 12.0 | ||||||||||||||||||||||||
Ecological Green Party of Mexico | 7 | 5.5 | 28 | 5.6 | 7 | 5.5 | 42 | 8.4 | ||||||||||||||||||||||||
Social Encounter Party | 0 | 0 | 9 | 1.8 | ||||||||||||||||||||||||||||
Labor Party | 5 | 3.9 | 14 | 2.8 | 7 | 5.5 | 0 | 0 | ||||||||||||||||||||||||
Citizen Movement Party | 1 | 0.8 | 20 | 4.0 | 0 | 0.0 | 24 | 4.8 | ||||||||||||||||||||||||
New Alliance | 1 | 0.8 | 10 | 2.0 | ||||||||||||||||||||||||||||
Unaffiliated | 0 | 0.0 | 0 | 0.0 | ||||||||||||||||||||||||||||
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 | 128 | 100.0 | % | 500 | 100.0 | % | 127 | 99.4 | % | 500 | 100.0 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
Note: Numbers may not total due to rounding.
Source: Senate and Chamber of Deputies.
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
National Development PlanGeneral
ThePlan Nacional de Desarrollo 2013-2018 (National Development Plan)According to World Bank data, the Mexican economy, as measured by 2015 gross domestic product (GDP) (at current prices in U.S. dollars), publishedis the 15th largest in the Official Gazetteworld. The Mexican economy had a real GDP of the Federation on May 20, 2013, establishes the basic goalsPs. 14,110.1 billion in 2015 and objectivesan increase in GDP of President Peña Nieto during his six-year term. These objectives are:Ps. 1,335.9 billion between 2011 and 2015.
In addition, the National Development Plan proposes the following three general strategies that will be incorporated in all government policies:
|
| |
| ||
|
Gross Domestic Product
The following table sets forth the percentage change in Mexico’s real gross domestic product (GDP)GDP by economic sector in constant 2008 pesospercentage terms for the periods indicated.
Real GDP Growth by Sector
(% change against prior years)(1)
2008 | 2009 | 2010(2) | 2011(2) | 2012(2) | 2013(2) | |||||||||||||||||||
GDP (constant 2008 prices) | 1.4 | % | (4.7 | )% | 5.1 | % | 4.0 | % | 3.9 | % | 1.1 | % | ||||||||||||
Primary Activities: | ||||||||||||||||||||||||
Agriculture, forestry, fishing, hunting and livestock | 1.3 | (2.5 | ) | 0.8 | (2.3 | ) | 7.3 | 0.3 | ||||||||||||||||
Secondary Activities: | ||||||||||||||||||||||||
Mining | (3.7 | ) | (4.0 | ) | 0.9 | (0.4 | ) | 0.8 | (1.7 | ) | ||||||||||||||
Utilities | 1.3 | 1.3 | 4.5 | 6.7 | 2.3 | 0.2 | ||||||||||||||||||
Construction | 3.8 | (6.1 | ) | 0.8 | 4.0 | 2.0 | (4.5 | ) | ||||||||||||||||
Manufacturing | (1.0 | ) | (8.4 | ) | 8.5 | 4.6 | 3.8 | 1.4 | ||||||||||||||||
Tertiary activities: | ||||||||||||||||||||||||
Wholesale and retail trade | 0.2 | (12.5 | ) | 11.9 | 9.4 | 4.4 | 2.8 | |||||||||||||||||
Transportation and warehousing | (0.1 | ) | (7.2 | ) | 7.7 | 4.0 | 4.4 | 1.5 | ||||||||||||||||
Information | 6.0 | 8.5 | 1.0 | 4.2 | 16.4 | 5.5 | ||||||||||||||||||
Finance and insurance | 21.9 | 3.4 | 21.0 | 7.1 | 8.5 | 3.8 | ||||||||||||||||||
Real estate, rental and leasing | 3.3 | 1.1 | 2.8 | 2.8 | 2.5 | 1.5 | ||||||||||||||||||
Professional, scientific and technical services | 3.1 | (5.0 | ) | (0.1 | ) | 5.0 | 1.1 | (1.0 | ) | |||||||||||||||
Management of companies and enterprises | 7.5 | (8.2 | ) | 5.3 | 3.4 | 6.7 | (5.7 | ) | ||||||||||||||||
Administrative support, waste management and remediation services | 2.2 | (7.0 | ) | 0.7 | 5.9 | 4.4 | 3.9 | |||||||||||||||||
Education services | 1.1 | 0.2 | 0.2 | 1.6 | 2.2 | 1.1 | ||||||||||||||||||
Health care and social assistance | 1.3 | 2.0 | (0.1 | ) | 2.1 | 2.1 | 2.0 | |||||||||||||||||
Arts, entertainment and recreation | 0.3 | (4.1 | ) | 4.1 | (0.8 | ) | 2.9 | 0.1 | ||||||||||||||||
Accommodation and food services | 0.1 | (9.6 | ) | 1.9 | 1.5 | 5.4 | 2.1 | |||||||||||||||||
Other services (except public administration) | 1.3 | (0.6 | ) | 1.0 | 1.8 | 2.8 | 1.7 | |||||||||||||||||
Public administration | 2.0 | 2.0 | 2.4 | (1.4 | ) | 3.8 | 0.8 |
GDP (constant 2008 prices) Primary activities: Agriculture, forestry, fishing, hunting and livestock(3) Secondary Activities: Mining Utilities Construction Manufacturing Tertiary Activities: Wholesale and retail trade Transportation and warehousing Information Finance and insurance Real estate, rental and leasing Professional, scientific and technical services Management of companies and enterprises Administrative support, waste management and remediation services Education services Health care and social assistance Arts, entertainment and recreation Accommodation and food services Other services (except public administration) Public administration 2011 2012 2013 2014 2015 2016(2) 4.0 % 4.0 % 1.4 % 2.2 % 2.6 % 2.4 % (2.3 ) 7.4 0.9 4.2 1.5 4.1 (0.4 ) 0.9 (0.1 ) (1.5 ) (4.6 ) (6.4 ) 6.9 2.1 0.5 8.2 2.3 3.3 4.1 2.5 (4.8 ) 2.0 2.5 1.8 4.6 4.1 1.2 4.1 2.5 1.3 9.7 4.8 2.2 3.1 4.7 2.4 4.0 4.1 2.4 3.2 4.3 2.8 4.4 16.3 5.0 0.2 7.8 10.1 7.1 7.7 10.4 (0.9 ) 4.3 7.7 2.9 2.5 1.0 2.0 2.5 1.9 5.1 1.1 1.2 1.7 4.2 7.0 3.6 8.6 (1.8 ) 7.2 3.5 4.7 6.0 4.4 4.3 (0.2 ) 1.2 4.1 1.6 2.2 0.8 0.1 0.0 1.0 2.1 2.2 0.6 (0.6 ) (2.3 ) 1.3 (0.7 ) 2.9 3.4 (1.5 ) 3.8 5.7 1.5 5.4 1.8 2.9 5.8 3.8 1.9 3.3 2.1 1.6 2.7 5.8 (1.4 ) 3.7 (0.5 ) 1.9 2.7 0.0
Note: | Numbers may not total due to rounding. |
(1) | Based on GDP calculated in constant 2008 pesos. |
(2) | Preliminary figures. |
Source: INEGI.
(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 increased by 1.1%2.4% in real terms during 2013,2016 as compared to 2012. The2015. 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 compensated for the 6.4% decrease in the growth rate of GDP, as compared tomining sector, the growth rateonly sector that contracted in prior periods, was due to a decrease in productive activity during the first half of 2013, which recovered during the second half of 2013 as Mexico’s economic activity experienced an upward trend. The economic recovery experienced since the third quarter of 2013 is a result of greater external demand and a recovery of some domestic demand components in the fourth quarter.2016.
Prices and Wages
Consumer inflation (as measured by the change in the national consumer price index, or the NCPI) for 2013 was 4.0%, 0.4 percentage points higher than during 2012. Annual inflation remained within the interval of plus/minus one percentage point around the 3 percent target in the fourth quarter of 2013. Despite this, annual inflation rebounded in November and December, mainly as a result of greater price increments of two fully identified factors: (1) unexpected increments in public transport fares in some cities in Mexico; and (2) higher prices for a reduced number of agricultural products caused by weather conditions that delayed their production over the previous months.
Consumer inflation (as measured by the change in the NCPI) for the two months ended February 28, 2014 was 1.1%, 0.2 percentage points higher than during the same period of 2013.
Employment and Labor
According to preliminary Tasa de Desocupación Abierta (open unemployment rate) figures, Mexico’s unemployment rate was 4.6% during February 2014,3.5% as of December 31, 2016, a 0.2 percentage point0.7% decrease from the rate duringregistered on December 31, 2015. As of December 31, 2016, the same periodeconomically active population in Mexico 15 years of 2013.
Interest Rates
During 2013, interest rates on 28-dayCetes (Mexican Federal Treasury Certificates) averaged 3.8%, as compared to 4.2% during 2012. Interest rates on 91-dayCetes averaged 3.8%, as compared to 4.4% during 2012.
During the first three monthsage or older consisted of 2014, interest rates on 28-dayCetes averaged 3.15%, as compared to 4.11% during the same period of 2013. Interest rates on 91-dayCetes averaged 3.37%, as compared to 4.17% during the same period of 2013.
On March 27, 2014, the 28-dayCetes rate was 3.19% and the 91-dayCetes rate was 3.30%.54.0 million individuals.
Principal Sectors of the Economy
Manufacturing
The following table sets forth the change in industrial manufacturing output by sector for the periods indicated.
Industrial Manufacturing Output Differential by Sector
(% change against prior years)(2)(1)
2009 | 2010(1) | 2011(1) | 2012(1) | 2013(1) | 2011 | 2012(2) | 2013 | 2014 | 2015(2) | 2016(2) | ||||||||||||||||||||||||||||||||||
Food | (0.3 | )% | 1.7 | % | 2.1 | % | 1.6 | % | 0.4 | % | 2.2 | % | 2.6 | % | 0.9 | % | 0.6 | % | 2.0 | % | 4.7 | % | ||||||||||||||||||||||
Beverage and tobacco products | 0.3 | 0.6 | 4.5 | 2.3 | 1.0 | 4.6 | 2.6 | (0.5 | ) | 3.1 | 9.8 | 4.1 | ||||||||||||||||||||||||||||||||
Textile mills | (7.4 | ) | 10.9 | (4.5 | ) | 3.1 | (3.2 | ) | (4.4 | ) | 3.1 | (2.7 | ) | (1.7 | ) | 3.0 | (3.1 | ) | ||||||||||||||||||||||||||
Textile product mills | (7.8 | ) | 2.5 | (2.9 | ) | (0.2 | ) | 2.9 | (2.9 | ) | (0.1 | ) | 3.5 | 7.0 | 2.3 | 7.7 | ||||||||||||||||||||||||||||
Apparel | (7.6 | ) | 4.6 | 0.1 | (0.7 | ) | 3.1 | 0.2 | (0.5 | ) | 3.3 | (2.8 | ) | 19.2 | (8.4 | ) | ||||||||||||||||||||||||||||
Leather and allied products | (4.8 | ) | 7.7 | (0.7 | ) | 2.6 | 0.8 | (0.7 | ) | 3.5 | (0.6 | ) | (1.7 | ) | 4.0 | 0.5 | ||||||||||||||||||||||||||||
Wood products | (4.7 | ) | 5.5 | 5.0 | 14.2 | (2.8 | ) | 5.1 | 13.0 | (2.2 | ) | 1.0 | 0.6 | 0.1 | ||||||||||||||||||||||||||||||
Paper | (0.6 | ) | 3.7 | (0.9 | ) | 4.6 | 2.6 | (0.8 | ) | 4.8 | 2.1 | 3.1 | 3.3 | 2.2 | ||||||||||||||||||||||||||||||
Printing and related support activities | (6.5 | ) | 10.0 | 4.1 | (4.0 | ) | (7.2 | ) | 4.2 | (4.1 | ) | (6.9 | ) | (2.7 | ) | 6.2 | (2.7 | ) | ||||||||||||||||||||||||||
Petroleum and coal products | 0.5 | (7.2 | ) | (3.7 | ) | 1.3 | 2.2 | (3.6 | ) | 1.1 | 3.3 | (4.5 | ) | 1.7 | (25.6 | ) | ||||||||||||||||||||||||||||
Chemicals | (3.1 | ) | (0.4 | ) | (0.2 | ) | (1.1 | ) | 0.6 | (0.1 | ) | (0.3 | ) | 0.8 | (1.3 | ) | (1.7 | ) | (5.8 | ) | ||||||||||||||||||||||||
Plastics and rubber products | (9.6 | ) | 13.5 | 7.2 | 10.1 | (0.5 | ) | 6.7 | 9.0 | (1.9 | ) | 6.5 | 4.5 | 1.6 | ||||||||||||||||||||||||||||||
Nonmetallic mineral products | (9.4 | ) | 4.7 | 4.7 | 2.2 | (2.7 | ) | 3.7 | 2.3 | (3.1 | ) | 2.7 | 3.3 | 4.9 | ||||||||||||||||||||||||||||||
Primary metals | (16.4 | ) | 12.4 | 4.7 | 1.2 | 0.0 | 4.3 | 3.8 | 2.3 | 8.4 | (7.6 | ) | 7.8 | |||||||||||||||||||||||||||||||
Fabricated metal products | (14.1 | ) | 8.8 | 6.9 | 5.8 | 0.6 | 7.0 | 3.9 | (3.3 | ) | 7.8 | 2.7 | 8.6 | |||||||||||||||||||||||||||||||
Machinery | (19.9 | ) | 47.2 | 13.4 | 6.1 | (1.8 | ) | 13.3 | 5.5 | 0.2 | 1.6 | (2.0 | ) | 9.4 | ||||||||||||||||||||||||||||||
Computers and electronic products | (10.2 | ) | 3.7 | 6.5 | 2.2 | 13.3 | 6.7 | 0.5 | 3.6 | 11.1 | 9.8 | 5.8 | ||||||||||||||||||||||||||||||||
Electrical equipment, appliances and components | (10.7 | ) | 10.1 | 2.0 | 1.7 | (2.2 | ) | (1.1 | ) | 1.7 | (2.0 | ) | 8.8 | 7.1 | 4.7 | |||||||||||||||||||||||||||||
Transportation equipment | (26.4 | ) | 42.2 | 16.4 | 13.2 | 5.3 | 16.6 | 13.9 | 5.8 | 12.4 | 8.9 | 3.6 | ||||||||||||||||||||||||||||||||
Furniture and related products | (6.5 | ) | 7.1 | 1.1 | 3.3 | (5.8 | ) | 1.2 | 2.8 | (5.8 | ) | (1.8 | ) | (20.6 | ) | (9.4 | ) | |||||||||||||||||||||||||||
Miscellaneous | (4.5 | ) | 1.9 | 0.8 | 2.6 | 0.9 | 5.1 | 0.4 | 0.0 | 6.4 | 6.0 | (9.4 | ) | |||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||
Total expansion/contraction | (8.4 | ) | 8.5 | 4.6 | 3.8 | 1.4 | 4.6 | 4.1 | 1.2 | 4.1 | 3.1 | 1.8 |
(1) | Percent change reflects differential in constant 2008 pesos. |
(2) | Preliminary figures. |
Source: INEGI.
According to preliminary figures, the manufacturing sector expanded by 1.4% in real terms during 2013 as compared to 2012. In total, eight manufacturing sectors contracted and thirteen sectors grew in 2013, each as compared to 2012.
Tourism
Mexico’s tourism sector expanded in 2013. As compared to 2012, this sector experienced increases in the following areas:
In total, the Mexican tourism sector recorded a U.S. $4.8 billion surplus in the balance of payments in 2013, an 11.1% increase from the U.S. $4.3 billion surplus recorded in 2012.
As compared to the first month of 2013, the tourism sector experienced increases or decreases in the following areas for the first month of 2014:
In total, the Mexican tourism sector recorded a U.S. $719.3 million surplus in the balance of payments during the first month of 2014, a 39.4% increase from the U.S. $516.0 million surplus recorded during the same period in 2013.
Financial System
2013Monetary Policy, Inflation and 2014 Monetary ProgramsInterest Rates
The principal objective of Mexico’s 2013 monetary program is to achieve an inflation rate at or below the permanent target of 3.0% (+/-1.0%), which is intended to stabilize the purchasing power of the Mexican peso. Mexico’s monetary program for 2013 is comprised of the following features:
At December 31, 2013, the monetary base totaled Ps. 917.9 billion, an 8.5% nominal increase from the level of Ps. 846.0 billion at December 31, 2012, due to a higher demand for bills and coins held by the public. At March 26, 2014, the monetary base totaled Ps. 845.6 billion, a 7.9% nominal decrease from the level of Ps. 917.9 billion at December 31, 2013, due to a higher demand for bills and coins held by the public.
The M1 money supply of Mexico is the sum of bills and coins held by the public, plus checking accounts denominated in local currency and foreign currency, plus interest-bearing deposits denominated in pesos and
operated by debit cards, plus savings and loan deposits. At January 31, 2014,The following table shows Mexico’s M1 and M4 money supply aggregates at each of the dates indicated.
Money Supply
December 31, | ||||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2016(1) | ||||||||||||||||
(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 | |||||||||||||||
Checking deposits | ||||||||||||||||||||
In domestic currency | 979,413 | 1,082,702 | 1,170,381 | 1,301,904 | 1,475,985 | |||||||||||||||
In foreign currency | 163,611 | 189,020 | 232,467 | 333,094 | 469,185 | |||||||||||||||
Interest-bearing peso deposits | 393,231 | 438,012 | 534,973 | 614,312 | 648,032 | |||||||||||||||
Savings and loan deposits | 9,760 | 11,097 | 12,598 | 14,560 | 16,614 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total M1 | Ps.2,280,049 | Ps.2,513,758 | Ps.2,879,196 | Ps.3,351,975 | Ps. 3,872,817 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
M4 | Ps.10,684,898 | Ps.11,658,729 | Ps.13,107,550 | Ps.13,858,271 | Ps.14,969,884 |
Note: | Numbers may not total due to rounding. |
(1) | Preliminary figures |
Source: | Banco de México. |
During 2016, consumer inflation was 8.1% greater in real terms3.4%, which was above the 3.0% target inflation for the year and 1.3 percentage points higher than the level at January 31, 2013. The amount of bills and coins held by the public2.1% consumer inflation for 2015. According toBanco de México, inflation was 5.8% greater in real terms than at January 31, 2013. In addition, the aggregate amount of checking account deposits denominated in pesos was 8.2% greater in real terms than at the same date in 2013.
At January 31, 2014, financial savings in Mexico—defined as the difference between the monetary aggregate M4 and bills and coins held by the public—were 3.9% greater in real terms than financial savings at January 31, 2013. Savings generated by Mexican residents increased by 4.6% and savings generated by non-residents increased by 0.9%, both in real terms, as compared to the same period of 2013.
The Securities Markets
The Mexican Stock Exchange is the only authorized stock exchange involved in the listing and trading of equity and debt securities in Mexico. Upon the consummationhigher range of the initial public offering of its shares on June 18, 2008,expected deviation(+/-1.0%) from the Mexican Stock Exchange was transformed from asociedad anónima de capital variable (private company)3.0% target due mostly to asociedad anónima bursátil de capital variable (public company). In connection with the initial public offering of shares, certain of the former stockholders of the Mexican Stock Exchange (banks and brokerage houses) created a control trust into which they deposited more than 50% of the issued and outstanding shares of the Mexican Stock Exchange, for purposes of voting such shares in the future as a single block. Both debt and equity securities are listed and traded on the Mexican Stock Exchange, including stocks and bonds of private sector corporations, equity certificates or shares issued by banks, commercial paper, bankers’ acceptances, certificates of deposit, Mexican Government debt and special hedging instruments linked to the dollar. Currently, institutional investors are the most active participants depreciation in the Mexican Stock Exchange, although retail investors also play a rolepeso given the complicated external environment after the presidential election in the market. The Mexican equity market is one of Latin America’s largestUnited States and inflation associated with the price increases in terms of market capitalization, but it remains relatively small and illiquid compared to major world markets.some agricultural products as well as in certain energy products, as was the case with gasoline in the northern border.
The Mexican Stock Exchange publishesfollowing table shows, in percentage terms, the changes in price indices and annual increases in the minimum wage for the periods indicated.
Changes 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 |
During 2016, interest rates on28-dayÍndice de Precios y CotizacionesCetes (Stock Market Index) based on a group of the 35 most actively traded shares.
At March 26, 2014, the Stock Market Index stood at 39,761 points, representing a 6.9% increase from the level at December 31, 2013.
Banking Supervision and Support
At December 31, 2013, the total loan portfolio of the banking system was 6.2% greater in real terms than the total loan portfolio at December 31, 2012.
According to preliminary figures, at December 31, 2013, the total amount of past-due commercial bank loans (excluding those banks undergoing government intervention and those in special situations) was Ps. 102.5 billion, as compared to Ps. 70.0 billion at December 31, 2012. Moreover, the past-due loan ratio of commercial banks was 3.4%averaged 4.2%, as compared to a ratio of 2.5% at December 31, 2012. The amount of loan loss reserves held by commercial banks at December 31, 2013 totaled Ps. 149.9 billion, as compared to Ps. 129.0 billion at December 31, 2012. As a result, commercial banks had reserves covering 146.3% of their past-due loans, well exceeding the minimum reserve level of 45%.
At January 31, 2014, the total loan portfolio of the banking system was 1.1% lower in real terms than the total loan portfolio at December 31, 2013.
According to preliminary figures, at January 31, 2014, the total amount of past-due commercial bank loans (excluding those banks undergoing government intervention and those in special situations) was Ps. 92.3 billion, as compared to Ps. 91.2 billion at December 31, 2013. Moreover, the past-due loan ratio of commercial banks was 3.1%3.0% during 2015. Interest rates on91-dayCetes averaged 4.4%, as compared to a ratio of 3.1% at December 31, 2013. The amount of loan loss reserves held byduring 2015.
commercial banks at January 31, 2014 totaled Ps. 127.6 billion, as compared to Ps. 127.3 billion at December 31, 2013. As a result, commercial banks had reserves covering 138.2% of their past-due loans, well exceedingOn March 9, 2017, the minimum reserve level of 45%28-dayCetes rate was 6.3% and the91-dayCetes rate was 6.5%.
External Sector of the Economy
Foreign Trade
According to preliminary figures, during 2013, Mexico registered a trade deficit of U.S. $1.0 billion, as compared to a trade deficit of U.S. $45.8 million for the same period of 2012. In particular, exports increased or decreased as follows, each as compared to 2012:
According to preliminary figures, during 2013, total imports increased by 2.8%, to U.S. $381.2 billion, as compared to U.S. $370.8 billion for 2012. In particular, imports increased as follows, each compared to 2012:
According to preliminary figures, during the first month of 2014, Mexico registered a trade deficit of U.S. $3.2 billion, as compared to a trade deficit of U.S. $2.9 billion for the same period of 2013. In particular, exports increased or decreased as follows, each as compared to the first month of 2013:
According to preliminary figures, during the first month of 2014, total imports increased by 0.3%, to U.S. $30.2 billion, as compared to U.S. $30.1 billion for the same period of 2013. In particular, imports increased or decreased as follows, each as compared to the first month of 2013:
Balance of International Payments
According to preliminary figures, during 2013, Mexico’s current account registered a deficit of 1.8% of GDP, or U.S. $22.3 billion, as compared to a deficit of U.S. $14.8 billion for 2012. The capital account registered
a surplus of U.S. $58.6 billion during 2013, as compared to a surplus of U.S. $54.2 billion during 2012. Foreign investment in Mexico totaled U.S. $56.2 billion during 2013 and was composed of direct foreign investment inflows totaling U.S. $35.2 billion and net foreign portfolio investment inflows (including securities placed abroad) totaling U.S. $21.0 billion.
At February 28, 2014,Banco de México’s international reserves totaled U.S. $180.9 billion, an increase of U.S. $1.2 billion as compared to international reserves at February 21, 2014. At February 28, 2014,Banco de México’s net international assets totaled U.S. $183.8 billion, an increase of U.S. $1.1 billion from the amount at February 21, 2014.
Exchange Controls and Foreign Exchange Rates
During 2013,On March 15, 2017, the average peso/U.S. dollar exchange rate wasclosed at Ps. 12.772419.5803 = U.S. $1.00. During$1.00, a 5.2% appreciation in dollar terms as compared to the first month of 2014, the average peso/U.S. dollar exchange rate was Ps. 13.223 = U.S. $1.00.on December 31, 2016. The peso/U.S. dollar exchange rate announced byBanco de México on March 27, 201414, 2017 (which took effect on the second business day thereafter) was Ps. 13.08419.6880 = U.S. $1.00.
Securities Markets
The BMV is the only authorized stock exchange involved in the listing and trading of equity and debt securities in Mexico. Upon the consummation of the initial public offering of its shares on June 18, 2008, the BMV was transformed from asociedad anónima de capital variable (private company) to asociedad anónima bursátil de capital variable (public company). In connection with the initial public offering of shares, certain of the former stockholders of the 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 linked to the dollar. Currently, institutional investors are the most active participants 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.
The BMV publishes theÍndice de Precios y Cotizaciones (Stock Market Index, or IPC) based on a group of the thirty-five most actively traded shares.
At March 14, 2017, the IPC stood at 47,088.0 points, representing a 3.2% increase from the level at December 30, 2016.
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) | ||||||||||||||||
(in millions of 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 | ||||||||||
Crude oil | 46,852 | 42,712 | 35,855 | 18,524 | 15,500 | |||||||||||||||
Other | 6,103 | 6,770 | 6,731 | 4,648 | 3,243 | |||||||||||||||
Non-oil products | 317,814 | 330,534 | 354,542 | 357,450 | 355,187 | |||||||||||||||
Agricultural | 10,914 | 11,246 | 12,181 | 12,971 | 14,743 | |||||||||||||||
Mining | 4,906 | 4,714 | 5,064 | 4,505 | 4,368 | |||||||||||||||
Manufactured goods(2) | 301,993 | 314,573 | 337,297 | 339,975 | 336,076 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total merchandise exports | 370,770 | 380,015 | 397,129 | 380,623 | 373,930 | |||||||||||||||
Merchandise imports (f.o.b.) | ||||||||||||||||||||
Consumer goods | 54,272 | 57,329 | 58,299 | 56,279 | 51,950 | |||||||||||||||
Intermediate goods(2) | 277,911 | 284,823 | 302,031 | 297,253 | 294,994 | |||||||||||||||
Capital goods | 38,568 | 39,057 | 39,647 | 41,700 | 40,120 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total merchandise imports | 370,752 | 381,210 | 399,977 | 395,232 | 387,065 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Trade balance | $ | 18 | $ | (1,195 | ) | $ | (2,849 | ) | $ | (14,609 | ) | $ | (13,135 | ) | ||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Average price of Mexican oil mix(3) | $ | 102.0 | $ | 98.4 | $ | 86.0 | $ | 43.1 | $ | 35.6 |
Note: | Numbers may not total due to rounding. |
(1) | Preliminary figures. |
(2) | Includes thein-bond industry. |
(3) | In U.S. dollars per barrel. |
Source: | Banco de México / PEMEX. |
During 2016, total merchandise exports decreased by 1.8% as compared to 2015 while total merchandise imports decreased by 2.1%. The trade balance for 2016 registered a deficit of U.S. $13.1 billion as compared to the U.S. $14.6 billion deficit registered in 2015. This deficit was a result of the combination of a decrease in both merchandise exports (especially oil 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).
Balance of Payments and International Payments
During 2016, Mexico’s current account registered a deficit of U.S. $27.9 billion, as compared to a deficit of U.S. $33.3 billion in 2015, which 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 compared to a surplus of U.S. $36.8 billion in 2015. Foreign direct investment in Mexico totaled U.S. $26.7 billion in 2016, as compared to U.S. $33.2 billion in 2015. This decrease was mainly due to loans 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.
The following table sets forthBanco de México’s international reserves and net international assets at the end of each period indicated.
International Reserves and Net International Assets(3)
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 |
(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. |
(4) | Preliminary figures. |
Source: | Banco de México. |
Public Finance
Fiscal Policy
ThePrograma Nacional de Financiamiento del Desarrollo 2013-2018 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 following specific objectives: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.
20132016 UMS Budget and Fiscal Results
On December 7, 2012,September 8, 2015, the President of Mexico submitted the proposed 2016 Revenue Law and the proposed 2016 Expenditure Budget to Congress for its approval. The 2016 Revenue Law and the 2016 Expenditure Budget were approved on October 29, 2015 and November 13, 2015, and were published in the Official Gazette of the Federation on November 18, 2015 and November 27, 2015, respectively. We refer to these two bills together as Mexico’s 2016 budget (the 2016 UMS Budget).
The following table illustrates the composition of public sector budgetary revenues for the fiscal years 2015 and 2016 in constant 2008 pesos.
2016 Public Sector Budgetary Revenues
First six months of 2015(1) | First six months of 2016(1) | 2016 Budget(2) | ||||||||||
(in billions of constant pesos)(3) | ||||||||||||
Budgetary revenues | 2,046.3 | 2,339.2 | 4,154.6 | |||||||||
Federal government | 1,582.5 | 1,868.5 | 3,102.4 | |||||||||
Taxes | 1,225.7 | 1,393.2 | 2,407.7 | |||||||||
Income tax | 659.2 | 763.5 | 1,244.2 | |||||||||
Value-added tax | 346.3 | 373.8 | 742.0 | |||||||||
Excise taxes | 180.5 | 211.8 | 348.9 | |||||||||
Import duties | 19.7 | 23.5 | 36.3 | |||||||||
Export duties | 0.0 | 0.0 | 0.0 | |||||||||
Luxury goods and services | 0.0 | 0.0 | 0.0 | |||||||||
Other | 18.3 | 18.3 | 36.3 | |||||||||
Non-tax revenue | 356.9 | 475.3 | 694.7 | |||||||||
Fees and tolls | 246.8 | 176.5 | 47.4 | |||||||||
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 | |||||||||
Fines and surcharges | 107.3 | 294.2 | 161.7 | |||||||||
Other | 2.8 | 4.6 | 0.0 | |||||||||
Public enterprises and agencies | 463.7 | 470.7 | 1,052.2 | |||||||||
PEMEX | 165.4 | 172.8 | 398.4 | |||||||||
Others | 298.4 | 297.9 | 653.8 |
Note: Numbers may not total due to rounding.
(1) | Preliminary figures. |
(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. |
(3) | Constant pesos with purchasing power as of December 31, 2008. |
Source: Ministry of Finance and Public Credit.
2017 UMS Budget
On September 8, 2016, the President of Mexico submitted the proposedLey de Ingresos de la Federación para el Ejercicio Fiscal de 20132017 (Federal Revenue Law for 2013,2017, or the 20132017 Revenue Law) and the proposedPresupuesto de Egresos de la Federación para el Ejercicio Fiscal de 20132017 (Federal Expenditure Budget for 2013,2017, or the 2013 Expenditure Budget) to the Mexican Congress for approval. The 2013 Revenue Law and the 2013 Expenditure Budget were approved on December 13, 2012 and December 20, 2012, respectively, and were published in the Official Gazette of the Federation on December 17, 2012 and December 27, 2012, respectively (together, the 2013 Budget).
In nominal pesos and according to preliminary figures, the public sector balance registered a deficit of Ps. 375.3 billion (including physical investment expenditures by PEMEX) during 2013, or 2.3% of GDP. This
deficit was Ps. 403.2 billion during the same period of 2012. The public sector balance registered a deficit of Ps. 46.7 billion (excluding physical investment expenditures by PEMEX), as compared to a Ps. 91.2 billion deficit registered for the same period of 2012.
In nominal pesos and according to preliminary figures, including physical investment expenditures by PEMEX, the total primary balance registered a deficit of Ps. 59.3 billion during 2013, 39.2% lower in nominal terms than 2012.
According to preliminary figures, during 2013, public sector budgetary revenues amounted to Ps. 3,803.7 billion in nominal pesos, 4.3% more in real terms as compared to 2012. During 2013, revenues have increased or decreased as follows, each in real terms and as compared to 2012:
According to preliminary figures, during 2013, net public sector budgetary expenditures increased by 2.8% in real terms as compared to 2012. Net public sector budgetary programmable expenditures (excluding physical investment by PEMEX) increased by 3.3% in real terms as compared to 2012. During 2013, the financial cost of public sector debt decreased by 2.5% in real terms as compared to the same period of 2012.
As of December 31, 2013:
2014 Budget
On September 8, 2013, the President of Mexico submitted the proposedLey de Ingresos de la Federación para el Ejercicio Fiscal de 2014 (Federal Revenue Law for 2014, or the 2014 Revenue Law) and the proposedPresupuesto de Egresos de la Federación para el Ejercicio Fiscal de 2014 (Federal Expenditure Budget for 2014, or the 20142017 Expenditure Budget) to the Mexican Congress for its approval. The 20142017 Revenue Law was approved by the Senate on October 26, 2016, and the 20142017 Expenditure Budget werewas approved by the Chamber of Deputies on October 31, 2013 and November 14, 2013, and11, 2016. They were published in the Official Gazette of the Federation on November 20, 201315, 2016, and December 3, 2013,November 30, 2016, respectively. We refer to these two bills together as Mexico’s 20142017 budget (the 20142017 UMS Budget).
The 20142017 UMS Budget allows ministries and budget-controlled agencies to request additional expenditures to the extent that oil revenues earned by PEMEX exceed the projected oil revenues set forth in the 2014 Budget. In addition, the 2014 Budget provides that the executive branch, acting through the SHCP, is authorized to approve, if certain conditions are met, additional expenditures requested by certain ministries or budget-controlled agencies in the event that these entities realize revenues greater than those projected in the 2014 Budget.
The 2014 Budget, as adopted by the Mexican Congress, provides for a public sector budget deficitsurplus excluding physical investments by PEMEXinvestment in projects of 1.5%high economic and social impact of 0.1% of GDP. Including PEMEX’s investment program, the 2014
The 2017 UMS Budget provides for a public sector budget deficit of 3.5%2.4% of GDP.GDP, including investment in projects of high economic and social impact, specifically investments by public entities and other Mexican Government projects. The 20142017 UMS Budget contemplates public sector budgetary revenues totaling Ps. 3,816.74,309.5 billion, a 2.1%0.4% increase in real terms as compared to public sector
budgetary revenues estimated for Mexico’s 2013 budget (the 2013 Budget). This isthe 2016 UMS Budget. The 2017 UMS Budget estimates are based on an assumed weighted average Mexican crude oil export price of U.S. $85.00 per barrel and an estimated volume of oil exports of 1,170 thousand775,000 barrels per day. Oil revenues are estimated at Ps. 1,256.7769.9 billion in nominal pesos, a 1.9%15.7% decrease in real terms as compared to the estimated amount for the 20132016 UMS Budget. In addition, approvednon-oil revenues are Ps. 2,551.03,539.6 billion, a 4.2%4.8% increase as compared to the estimated amount for the 20132016 UMS Budget. Finally, projectednon-oil tax revenuerevenues also increased by 3.7%9.7% in real terms as compared to the amount approved for the 20132016 UMS Budget.
Mexico’s 2014The 2017 Expenditure Budget provides for a total of Ps. 4,079.63,105.8 billion in expenditures (excluding estimated physical investment expenditures by PEMEX totaling Ps. 357.5391.9 billion), a 9.2% increase3.9% decrease in real terms as compared to the amount approved in the 20132016 Expenditure Budget.
The 20142017 UMS Budget also authorizes the Mexican Government to incur net domestic debt in the amount of Ps. 570495 billion in nominal pesos, or 3.2%2.4% of GDP. The 20142017 UMS Budget also authorizes the Mexican Government to incur an additional U.S. $10$6.0 billion in external indebtedness, which includes financing from international financial organizations.
The table below sets forth the budgetary results for 2012, as well as for 2013. It also sets forth the assumptions and targets underlying Mexico’s 2013 Budget and 2014 Budget.
2012 and 2013 Results; 2013 Budget and 2014 Budget Assumptions and Targets
2012 Results | 2013 Budget(1) | 2013 Results(1) | 2014 Budget(6) | |||||||||||||
Real GDP growth (%) | 3.9 | % | 3.5 | % | 1.1 | % | 3.9 | % | ||||||||
Increase in the national consumer price index (%) | 3.6 | % | 3.0 | % | 4.0 | % | 3.0 | % | ||||||||
Average export price of Mexican oil mix (U.S. $/barrel) | $ | 101.96 | $ | 86.00 | (3) | $ | 98.46 | $ | 85.00 | (4) | ||||||
Current account deficit as % of GDP | (1.2 | )% | n.a. | (1.8 | )% | n.a. | ||||||||||
Average exchange rate (Ps./$1.00) | 13.2 | 12.9 | 12.8 | 12.9 | ||||||||||||
Average rate on 28-dayCetes (%) | 4.2 | % | 4.6 | % | 3.8 | % | 4.0 | % | ||||||||
Public sector balance as % of GDP(5) | (2.6 | )% | (2.0 | )% | (2.3 | )% | (3.5 | )% | ||||||||
Primary balance as % of GDP(5) | (0.6 | )% | 0.1 | % | (0.4 | )% | n.a. |
Source: SHCP.
Public Debt
External Public Debt
Mexico’s external public debt policy for 2013 wasgoals 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 soughtseeks to maintain costs and risks at stable levels. Going forward, Mexico’s publicMexico primarily seeks debt policy will continue the practice of relying onfinancing through local markets, as the main source of funding for the Mexican Government, which will be supplemented by external financing from the U.S., Europe and Japan. Mexico’s principal objectives in connection with its external financing include:
Internal Public Debt
The Mexican Government’s “net internal debt” includes only the internal portion of indebtedness incurred directly by the Mexican GovernmentBanco de México’s general account balance 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), butdoes 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 (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.
According to preliminary figures, at December 31, 2013, the Mexican Government’s net internal debt totaled Ps. 3,893.9 billion, an 11.2% increase in nominal terms as compared to Ps. 3,501.1 billion outstanding at December 31, 2012. This debt figure includes the Ps. 165.5 billion liability associated with social security under the ISSSTE Law, as described under “The Economy—Employment and Labor” in the 2012 Form 18-K. The net internal debt of the public sector, on the other hand, totaled Ps. 4,231.3 billion according to preliminary figures,As a 12.2% increase in nominal terms as compared to the Ps. 3,770.0 billion outstanding at December 31, 2012.
According to preliminary figures, at December 31, 2013, the Mexican Government’s gross internal debt totaled Ps. 4,063.2 billion, a 13.6% increase in nominal terms as compared to Ps. 3,575.3 billion outstanding at December 31, 2012. Of the total gross internal debt at December 31, 2013, Ps. 480.6 billion represented short-term debt, as compared to Ps. 396.7 billion at the end of 2012, and Ps. 3,582.6 billion represented long-term debt, as compared to Ps. 3,178.6 billion at the end of 2012. The gross internal debt of the public sector, on the other hand, totaled Ps. 4,408.9 billion at December 31, 2013 according to preliminary figures, a 14.2% increase in nominal terms as compared to Ps. 3,861.1 billion outstanding at December 31, 2012. For purposesresult of this “Public Debt” section, public sector debt consists of the long-term indebtedness incurred directly by the Mexican Government, the long-term indebtedness incurred by budget-controlled agencies, the long-term indebtedness incurred directly or guaranteed by administratively controlled agencies (including, but not limited to, national development banks) and the short-term debt of the public sector. It does not include private sector debt guaranteed by the Mexican Government, unless and until the Mexican Government is called upon to make payment under its guaranty. Also for purposes of this “Public Debt” section, long-term debt is defined as all debt
with maturities of one year or more from the date of issue, while short-term debt is defined as all debt with maturities of less than one year from the date of issue.
According to preliminary figures, at December 31, 2013, the Mexican Government’s financing costs on its internal debt totaled Ps. 222.8 billion, or 1.3% of GDP, representing a 7.4% nominal increase as compared to its financing costs of Ps. 207.6 billion, or 1.4% of GDP, during the same period of 2012.
As of December 31, 2013,policy, the average maturity of the Mexican Government’s internal debt decreased to 7.9increased from 7.2 years as compared to the average maturity at December 31, 2012.2010 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)
December 31, | At December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2008 | 2009 | 2010 | 2011 | 2012 | 2013(2) | 2011 | 2012 | 2013 | 2014 | 2014 | 2016(2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in billions of pesos, except percentages) | (in billions of pesos, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross Debt | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Government Securities | Ps. | 2,021.2 | 84.2 | % | Ps. | 2,379.3 | 88.0 | % | Ps. | 2,553.9 | 88.4 | % | Ps. | 2,882.8 | 90.2 | % | Ps. | 3,257.8 | 91.1 | % | Ps. | 3,734.1 | 91.9 | % | 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 | 357.1 | 14.9 | 498.8 | 18.5 | 394.0 | 13.6 | 456.6 | 14.3 | 531.3 | 14.9 | 635.6 | 15.6 | 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 | 243.6 | 10.1 | 243.5 | 9.0 | 183.1 | 6.3 | 202.5 | 6.3 | 200.4 | 5.6 | 216.6 | 5.3 | 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 | 334.9 | 13.9 | 430.6 | 15.9 | 530.1 | 18.4 | 642.1 | 20.1 | 747.2 | 20.9 | 888.7 | 21.9 | 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 | 1,085.6 | 45.2 | 1,206.5 | 44.6 | 1,446.8 | 50.1 | 1,581.6 | 49.5 | 1,777.9 | 49.7 | 1,989.6 | 49.0 | 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 | — | — | 1.0 | 0.0 | 3.6 | 0.1 | 5.1 | 0.1 | 6.1 | 0.1 | 7.2 | 0.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other(3) | 380.1 | 15.8 | 323.4 | 12.0 | 334.4 | 11.6 | 314.9 | 9.8 | 317.6 | 8.9 | 329.1 | 8.1 | 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. | 2,401.3 | 100.0 | % | Ps. | 2,702.8 | 100.0 | % | Ps. | 2,888.3 | 100.0 | % | Ps. | 3,197.7 | 100.0 | % | Ps. | 3,575.3 | 100.0 | % | Ps. | 4,063.2 | 100.0 | % | 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) | (68.6 | ) | (231.4 | ) | (79.4 | ) | (85.6 | ) | (74.2 | ) | (169.3 | ) | (85.6 | ) | (74.2 | ) | (169.3 | ) | (222.5 | ) | (259.9 | ) | (224.0 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Net Debt | Ps. | 2,332.7 | Ps. | 2,471.3 | Ps. | 2,808.9 | Ps. | 3,112.1 | Ps. | 3,501.1 | Ps. | 3,893.9 | 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 | 19.8 | % | 21.4 | % | 21.0 | % | 20.7 | % | 22.3 | % | 23.9 | % | 20.5 | % | 22.1 | % | 24.2 | % | 25.4 | % | 26.6 | % | 27.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Internal Debt/GDP | 19.1 | % | 19.5 | % | 20.4 | % | 20.2 | % | 21.8 | % | 22.9 | % | 19.9 | % | 21.6 | % | 23.2 | % | 24.1 | % | 25.2 | % | 26.7 | % |
Note: Numbers may not total due to rounding.
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 |
(2) | Preliminary figures. |
(3) | Includes Ps. |
(4) | Includes the net balance (denominated in pesos) of the Federal Treasury’s General Account inBanco de México. |
Source: SHCP.
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 International Monetary Fund.IMF.
According to preliminary figures, at December 31, 2013,2016, outstanding gross public sector external debt totaled U.S. $134.4$181.0 billion, an approximate U.S. $8.7$18.8 billion increase from the U.S. $125.7$162.2 billion outstanding at the end of 2012.December 31, 2015. Of this amount, U.S. $130.9$177.9 billion represented long-term debt and U.S. $3.5$3.1 billion represented short-term debt. Net external indebtedness also increased by U.S. $16.1 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 31.4%48.2% of nominal GDP, an increase of 3.85.4 percentage points from the end of 2012.December 31, 2015.
The following tables set forth a summary of theMexico’s external public debt, of Mexico, as well asincluding a breakdown of such debt by currency.currency, net external public sector debt, the Mexican Government’s gross external debt, the Mexican Government’s net external debt and the Mexican Government’s net debt.
Summary of External Public Debt(1)
By Type
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, | ||||||||||||||||||||||||
2008 | U.S. $ | 39,997 | U.S. $ | 9,782 | U.S. $ | 5,885 | U.S. $ | 55,664 | U.S. $ | 1,275 | U.S. $ | 56,939 | ||||||||||||
2009 | 47,350 | 41,048 | 6,202 | 94,600 | 1,754 | 96,354 | ||||||||||||||||||
2010 | 56,168 | 45,536 | 6,385 | 108,089 | 2,339 | 110,428 | ||||||||||||||||||
2011 | 60,590 | 47,436 | 5,625 | 113,651 | 2,769 | 116,420 | ||||||||||||||||||
2012 | 66,912 | 50,063 | 5,626 | 122,601 | 3,125 | 125,726 | ||||||||||||||||||
2013(3) | 71,817 | 53,358 | 5,734 | 130,909 | 3,527 | 134,436 |
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, | ||||||||||||||||||||||||||||||||||||||||||||||||
2008 | 2009 | 2010 | 2011 | 2012 | 2013(3) | |||||||||||||||||||||||||||||||||||||||||||
(in millions of U.S. dollars, except for percentages) | ||||||||||||||||||||||||||||||||||||||||||||||||
U.S. dollars | U.S. $ | 47,851 | 84.1 | % | U.S. $ | 77,919 | 80.9 | % | U.S. $ | 90,882 | 82.3 | % | U.S. $ | 97,048 | 83.4 | % | U.S. $ | 105,836 | 84.2 | % | U.S. $ | 111,647 | 83.1 | % | ||||||||||||||||||||||||
Japanese yen | 1,095 | 1.9 | 4,541 | 4.7 | 6,864 | 6.2 | 6,793 | 5.8 | 6,847 | 5.4 | 5,519 | 4.1 | ||||||||||||||||||||||||||||||||||||
Pounds | 687 | 1.2 | 1,981 | 2.1 | 1,920 | 1.7 | 1,906 | 1.6 | 1,993 | 1.6 | 1,369 | 1.0 | ||||||||||||||||||||||||||||||||||||
Swiss francs | 410 | 0.7 | 716 | 0.7 | 953 | 0.9 | 910 | 0.8 | 961 | 0.8 | 969 | 0.7 | ||||||||||||||||||||||||||||||||||||
Others | 6,896 | 12.1 | 11,197 | 11.6 | 9,809 | 8.9 | 9,763 | 8.4 | 10,089 | 8.0 | 14,932 | 11.1 | ||||||||||||||||||||||||||||||||||||
Total | U.S. $ | 56,939 | 100.0 | % | U.S. $ | 96,354 | 100.0 | % | U.S. $ | 110,428 | 100.0 | % | U.S. $ | 116,420 | 100.0 | % | U.S. $ | 125,726 | 100.0 | % | U.S. $ | 134,436 | 100.0 | % |
At December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
2011 | 2012 | 2013 | 2014 | 2015 | 2016(3) | |||||||||||||||||||||||||||||||||||||||||||
(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 | % | ||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Swiss Francs | 910 | 0.8 | 961 | 0.8 | 969 | 0.7 | 401 | 0.3 | 1,011 | 0.6 | 1,331 | 0.7 | ||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Others | 385 | 0.3 | 558 | 0.4 | 3,443 | 2.6 | 3,445 | 2.3 | 3,113 | 1.9 | 2,393 | 1.3 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
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 | % | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 | % |
Note: Numbers may not total due to rounding.
Gross External Debt of the Mexican Government
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 Government
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) |
(2) | Includes development banks’ debt and the debt of other administratively-controlled agencies whose finances are consolidated with those of the Mexican Government. |
(3) | Preliminary figures. |
(4) | Adjusted to reflect the effect of currency swaps. |
Source: SHCP.
Source: | Ministry of Finance and Public Credit. |
Recent Securities Offerings
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.
On January 10, 2013,21, 2016, Mexico issued U.S. $1.5$2.25 billion of its 4.750%4.125% Global Notes due 2044.2026. The notes were issued under Mexico’s U.S. $110 billion Global Medium-Term Notes Program at a yield to maturity of 4.194%.
On August 8, 2013,June 16, 2016, Mexico issued ¥48.6¥45.9 billion of notes due 2016, ¥15.02019, ¥50.9 billion of notes due 2018 and ¥17.02021, ¥16.3 billion of notes due 2019.2026 and ¥21.9 billion of notes due 2036. These notes were placed in the Japanese public market and bear interest at 1.16%0.40%, 1.39%0.70%, 1.09% and 1.54%2.40%, respectively.
In 2017, Mexico has repurchased approximately $500 million in aggregate principal amount of its 3.625% Global Notes due 2029. The notes were issued under Mexico’s U.S. $110 billion Medium-Term Notes Program.
Legal and Political Reforms
Governmental AccountingAnti-Corruption
AmendmentsOn July 18, 2016, theSistema Nacional Anticorrupción (National Anti-Corruption System or NAS) went into force. The NAS is an institutional framework that seeks to combat corruption and bribery in public administration and governmental accounting.
Access to Information and Government Transparency
On May 9, 2016 theLey GeneralFederal de Contabilidad Gubernamental(General Law on Governmental Accounting) became effective on January 1, 2013. These amendments are designed to improve transparency in government spending by, among other things, includingTransparencia y Acceso a requirement that state, local and municipal governments publish periodic information regarding any received federal funds. In addition, the law provides for the creation and maintenance of web sites that grant public access to financial information for all levels of government, including the Government.
Public Administration
On January 3, 2013, amendments to theLey Orgánica de la AdministracióInformación Pública Federal (Federal Law for Transparency and Access to Public Administration Organic Law) became effective. These amendments included, among others, the following reforms:
The dissolution of the SFP and the transfer of its authority to the SHCP are subject to the approval of a bill that will amend the Mexican Constitution and create an independent entity to carry out anticorruption activities previously conducted by the SFP. The Mexican Congress will be expected to revise the internal accountability and management control systems so that they are consistent with the level of authority and responsibility conferred upon the new entity. Prior to the approval of this bill, the SFP will continue to act under its existing mandate.
Amparo Law
A new Amparo Law became effective on April 3, 2013, replacing the prior amparo statute. This Amparo Law was designed to provide Mexican Constitutional relief to individuals and corporations against various types of governmental actions, including administrative and judicial actions. This new law enables individuals to file legal challenges against such actions and provides injunctive relief in certain instances. The new Amparo Law also: (1) broadens the scope of those persons that may seek protection under the law; (2) grants general effects to rulings issued under amparo claims in certain circumstances; and (3) restricts injunctive relief where the social harm outweighs the benefit to the plaintiff. Finally, the enactment of the new law also seeks to reinforce the court system by attempting to limit judicial contradictions.
Insurance and Finance Institutions
A newLey de Instituciones de Seguros y Fianzas (Insurance and Finance Institutions Act)Information) was published in the Official Gazette 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 entities and, additionally, was expanded to include transparency obligations 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 April 4, 2013. Unlike prior legislation which regulated insuranceHydrocarbons Sector), the NHC, the Energy Regulatory Commission, theFondo Mexicano del Petróleo para la Estabilización y el Desarrollo (Mexican Petroleum Fund for Stabilization and bonding companies separately,Development) and the Insuranceproductive 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 Finance Institutions Act instead jointly governs the incorporation and operationProtection of insurance and bonding companies. In addition, this law is expected to: (1) further bring Mexican insurance legislation in line with international standards; (2) implement certain new capital requirements; and (3) provide for new insurance products.Private Data or INAI) to impose sanctions.
Tax ReformCriminal 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 eight years and went into force on June 18, 2016. Under the reforms, Mexico transitioned to an accusatory system of criminal justice, in which defendants are presumed innocent until proven guilty. Closed-door proceedings, previously conducted almost exclusively through written briefs, will be replaced with oral trials open to the public. A specific judge will be named to each criminal proceeding and will follow that proceeding through 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.
Local Government Finance
On December 11, 2013,April 27, 2016, theLey de Disciplina Financiera de las Entidades Federativas y los Municipios(Law for the Financial Discipline of the States and the Municipalities) was published 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 fiscal reformnew 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 and supplementing certainvarious provisions of theLey del Impuesto al Valor Agregado(Value Added Tax Law), Constitution, creating a new legal framework to control the IEPS Lawborrowing practices of the states and municipalities.
Economic Development
On June 1, 2016, theLey del Impuestos sobre la Rentade Zonas Económicas Especiales(the Income Tax Law), and eliminating theLey del Impuesto Empresarial a Tasa Única(the Corporate Tax Law) and theLey del Impuesto a los Depósitos en Efectivo(Cash Deposit Tax Law),Law of Special Economic Zones) was published in the Official Gazette of the Federation. This decree, which became effectivelaw is part of the National Development Plan and its purpose is to regulate the establishment and operation of the Special Economic Zones and promote sustainable economic growth in the undeveloped regions of the country, particularly the southern region of Mexico. The Special Economic Zones are designated geographic areas subject to special incentives to promote business, attract new investment and generate employment opportunities through infrastructure development projects.
Consistent with the National Development Plan, on January 1, 2014, includes, among others,9, 2017, the following features:
In addition, as part of this fiscal reform, a new Income Tax Law was approved which includes, among others, the following features:
Financial Reform
On January 9, 2014, a financial reform amending over 34 statutes and establishing a newLey para Regular a las Agrupaciones Financieras(Financial Groups Law) was published in the Official GazetteProtection of the Federation. The financial reform has four core goals: (1) to foster competition among financial services providers; (2)Economy of the Family). This agreement aims to strengthen development banks; (3) to create new productsthe domestic market in Mexico with a focus on protecting the economic well-being of Mexican families, increasing investment and services that are better suited for financial services customers;maintaining job creation, economic growth and (4) to ensure both soundness and prudence in the financial sector.competitiveness.
In order to achieve these goals, this financial reform has, among others, the following features:
Access to Information and Transparency Reform
On February 7, 2014, a reform to the Mexican Constitution intended to improve access to information and transparency was published in the Official Gazette of the Federation. This reform includes among others, the following features:
In addition to the above, on February 20, 2014, theReglamento Interior del Instituto Federal de Acceso a la Información y Protección de Datos (Internal Regulation of the Federal Institute for Access to Informationand Data Protection) was published in the Official Gazette of the Federation which aims to establish the structure, functions and operations of theInstituto Federal de Acceso a la Información y Protección de Datos (Federal Institute for Access to Information and Data Protection, or the IFAI).
Political and Electoral Reform
On February 10, 2014, a political and electoral reform to the Mexican Constitution was published in the Official Gazette of the Federation. Although secondary legislation is pending, this political and electoral reform includes, among others, the following features:
Penal System Reform
On March 5, 2014, the Código Nacional de Procedimientos Penales (the National Criminal Procedure Code) was published in the Official Gazette of the Federation. This reform includes, among others, the following features:
Item 4A. | Unresolved Staff Comments |
Not applicable.
Item 5. | Operating and Financial Review and Prospects |
General
We earn income from:from:
Our operating expenses include:
Our income is affected by a number of factors, including:
Overview
2013 was an important yearIn 2016 we focused on recovering financial stability, taking concrete steps towards implementing the opportunities presented to us by the energy reform and strengthening the relationship with our stakeholders. These actions took place against a macroeconomic landscape that continues to be challenging for us, as we witnessedus. Crude oil prices continued the approvaldecline that commenced in late 2014, albeit less sharply than before. In 2016, the weighted average price of significant changes to the Mexican Constitution pursuant to the Energy Reform Decree that will enable the Mexican Government to use a variety of contractual arrangements to carry out upstream and downstream activities, taking into account geological, geographic, economic and commercial considerations. We believe that the changes contemplated by the Energy Reform Decree will allow for a transparent and clear division of roles among participants in the Mexican hydrocarbons industry, including Petróleos Mexicanos. Petróleos Mexicanos will transform into a productive state-owned company focused on value creation that will act as the Mexican Government’s operator in the Mexican hydrocarbons industry. The Ministry of Energy, together with the NHC and the SHCP, will administer the ownership of Mexico’s hydrocarbon resources. See “Item 4—Information on the Company—History and Development—Energy Reform” for more information about the changes to be implemented in connection with the Energy Reform Decree.
With respect to our exploration and production activities, we experienced a decline in heavy and extra-light crude oil productionexport price decreased from U.S. $43.12 per barrel in 2013 due2015 to the progression into the transition zone of the oil-water contact and the natural decline in production of certain wells located in the Cantarell business unit and in the Caparroso-Pijije-Escuintle and Sen projects. This decline was offset in part by the increase in light crude oil production resulting from the addition of new fields. Most of these new fields are located in the Southeastern basins, which we expect will continue to be one of our most productive regions. Natural gas production decreased during 2013 due to lower volumes from the Veracruz, Delta del Grijalva, Crudo Ligero Marino, Ixtal-Manik and Costero Terrestre projects.
Our exploration activities in 2013 led to the discovery of additional shale formations and the drilling of successful deepwater wells, including the Maximino-1 well in the Área Perdido region, the deepest deepwater well in Mexico and one of the deepest in the world.U.S. $35.63 per barrel. In addition, we made progress in the development phase of the Lakach project, which is expected to be Mexico’s first productive deepwater field. Lakach is a non-associated natural gas field with 103.2 million barrels of oil equivalent of proved reserves. We also continued to apply technological innovation in field development, such as drilling 36 horizontal wells in the ATG business unit in 2013 in order to maximize reservoir contact. Although horizontal wells represented only 1.7% of the total number of operating wells in the ATG business unit, production from these wells represented 14.0% of the business unit’s total production. In these ways, we have continued innovating and developing new exploitation strategies in one of Mexico’s most promising, yet geologically complex, regions.
During 2013, we also made significant progress in connection with our downstream activities. We have been able to identify areas of opportunity to increase value creation and gradually improve the safety and reliability of our facilities and operational and administrative processes. With respect to our refining activities, we increased the amount of light crude oil processed in our refining system, and thereby decreased the proportion of heavy crude oil relative to total crude oil processed, in order to reduce the overproduction of residual products. In 2013, the reconfiguration of the Minatitlán refinery continued to generate positive results and contributed to the overall performance of our refining activities, which included higher production of light and medium distillates, such as gasoline, diesel and jet fuel, and lower fuel oil production. Although our refining capacity usage improved, from 71.6% in 2012 to 73.1% in 2013, our refining margins were negative primarily due to the fluctuation of prices of crude oil and its derivatives in the international markets. We will continue to work to identify and address weaknesses in our refining processes in order to generate greater value.
With respect to our petrochemicals operations, the Board of Directors of Petróleos Mexicanos approved a joint venture with Mexichem, pursuant to which Pemex-Petrochemicals contributed its vinyl chloride and ethylene plants at the Pajaritos petrochemical complex. We expect that the joint venture with Mexichem will lead to more effective integrated operations and increase production of vinyl chloride, which is used to make polyvinyl chloride (also known as PVC). In 2013, Pemex-Petrochemicals’ total annual production increased by 972 thousand tons of petrochemical products as compared to 2012, mainly driven by increased production in the aromatics chain. In addition, natural gas processing increased by 22 million cubic feet per day in 2013 due to a higher supply of natural gas from our exploration and production activities, which in turn led to a 1.8% increase in dry gas production. In these ways, we sought to strengthen our industrial processes in order to increase output and enhance value creation.
Our financial results for 2013 reflect both the individual challenges that we faced as well as those affecting the global oil and gas industry. We reported a net loss of Ps. 170.1 billion in 2013 mainly due to decreases in sales and other revenues, net, as well as the foreign exchange loss caused by the depreciation of the peso against the U.S. dollar and the euro in 2013 as compared to 2012. Lower prices of crude oil and its derivatives, combined with an increase in general expenses,2016 also had a particularly strongsignificant negative impact on our income statement due to the conversion of our financial results fordebt, which is primarily denominated in U.S. dollars, to pesos.
Going Concern
Our consolidated financial statements as of December 31, 2016 and 2015 have been prepared on a going concern basis, which assumes that we can meet our payment obligations. 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 below, and in Note 2 to our consolidated financial statements, the year.
We believecircumstances that have caused these negative trends and the changes set forth in the Energy Reform Decree will offer us an unprecedented opportunityconcrete actions we are taking to improve our operationalresults, strengthen our ability to continue operating, and achieve revenue maximization and efficiencies in an economic environment which is showing recovery and some stability. We continue operating as a going concern, and our consolidated financial results instatements do not include any adjustments that might result from the near future because the conversionoutcome of this uncertainty.
Redefinition of Petróleos Mexicanos intoas a State-Owned Productive Company
We are continuing to implement a business strategy that redefines us as a state-owned productive company, enables us to operate competitively and efficiently and takes advantage of the opportunities made available to us by the energy reform. As a productive state-owned company, is expectedour business model contemplates maximizing value for Mexico and, accordingly, we intend to allow usfocus on high-yield projects with growth potential. Every action taken under our business plan 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 ability to emphasize value creation.
Moreover, we believe that the new domestic industrial landscape will foster greater interactionacquire technology and collaboration among the participantsknowledge along the entire hydrocarbons value chain through strategic alliances and continuing the migration of certain assignments into exploration and production contracts.
We began taking certain of these actions in 2016 and will continue in 2017 as further described below:
• | 2016 Budget Adjustment Plan: For 2017, we continue to develop actions from thePlan de Ajuste Presupuestal 2016 (2016 Budget Adjustment Plan), which were also included in our 2017-2021 Business Plan, as this plan contributed to increasing our efficiency to enable us to be more competitive in the hydrocarbons sector in Mexico; focused 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. |
• | Pension Reform:As 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. 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. |
• | Assets Sales:We will continue to evaluate the sale ofnon-essential assets to obtain working capital, such as the sale of Gasoductos de Chihuahua in 2016. |
• | 2017-2021 Business Plan:On November 3, 2016, we announced our business plan for 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 establishment 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 disposal of assets. |
• | 2017 Plans:Our 2017 plans also sets out certain objectives we expect to achieve with respect to our subsidiary entities as follows: |
• | 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, which was subsequently approved by the Mexican Congress on November 10, 2016 and published in the Official Gazette of the Federation on November 30, 2016. The consolidated annual budget of Petróleos Mexicanos and the subsidiary entities for 2017 approved by the Mexican Chamber of Deputies is approximately Ps. 391.9 billion, as compared to the Ps. 378.0 billion consolidated annual budget for 2016 adjusted as of March 31, 2016. |
In addition, we foresee a more frequent exchangesstable scenario for the hydrocarbons market, which may enable an improvement in our revenues. For example, a stabilization of technologyprices 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.
Results of operations and know-howfinancial condition in 2016
For the year ended December 31, 2016, we reduced our net loss by 73.2%, from a net loss of Ps. 712.6 billion (U.S. $34.5 billion) in 2015 to a net loss of Ps. 191.1 billion (U.S. $9.3 billion) in 2016. This decrease in net loss was primarily due to:
This decrease was partially offset by:
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, 2016 Compared to the Year Ended December 31, 2015” below.
In 2016, our (deficit) equity increased by Ps. 98.7 billion from negative Ps. 1,331.7 billion as of December 31, 2015 to negative Ps. 1,233.0 billion as of December 31, 2016. For more information on our (deficit) equity increase, see “—Liquidity and Capital Resources—Equity Structure and Mexican Government Contributions” below. This increase 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 us.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.
While we continue to depend heavily on net cash flows from financing activities, 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%, from Ps. 109.4 billion as of December 31, 2015 to Ps. 163.5 billion as of December 31, 2016, mainly due to an increase in net cash flows from financing activities. Our accounts receivable, net, increased 68.2%, in 2016, from Ps. 79.2 billion as of December 31, 2015 to Ps. 133.2 billion as of December 31, 2016, mainly due to the following:
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. 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, 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.
Operating Challenges
Notwithstanding our exploration and development efforts in shallow and deep waters that we carried out in 2016 and the new techniques and strategies we applied to improve the timeline for the completion and drilling of new wells, during 2016 our crude oil production totaled 2,153.5 thousand barrels per day, a decrease of 113 thousand barrels per day, or 5.0%, as compared to 2015. This decline was primarily a result of the natural decline of some of our fields, particularly production at the fields located in the Litoral de Tabasco, AbkatúnPol-Chuc and Cantarell business units. We describe the reasons for this decline 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 total crude oil we processed decreased by 12.3% to 933 thousand barrels per day. Although we had a decrease in crude oil processing and our petroleum products output, our variable refining margin increased by 33.7% due to 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.
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. 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 immediate write-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 general provisions relating to market risk management, which are comprised of 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 Notes 8 and 13Note 16 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. While we believe that ourOur future net cash flow projections are based on the best available estimates of future cash flowsthe cash-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 the cash-generating units, which are reasonable,calculated based on different assumptions regarding projected commodity sales prices, volume of production and overhead costs, and foreign currency exchange rates and inflation, couldamong other items, that are used to quantify income and expense estimates. Any change in the assumptions upon which the forecasts for each cash-generating unit are based can materially affect the anticipated cash flows to be generated bynon-financial assets, thereby affecting the evaluations assets.
These estimated future net cash flows are discounted at present value using cash-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. See Note 3(j) to our consolidated financial statements included herein.
As of December 31, 2016, we have carried out an impairment test to assess the carrying valuesamount of those non-financial assets. assets, other than inventories and deferred taxes. The impairment test has resulted in a net reversal of impairment of Ps. 331.3 billion, 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 an impairment of fixed assets of Ps. 19.4 billion, mainly due 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.
Income Taxes
As described under “Item 4—Information on the Company—Taxes, Duties and Duties”Other Payments to the Mexican Government” above and in Note 1720 to our consolidated financial statements included herein, the current fiscal regime applicable to Petróleos Mexicanos and the subsidiary entities and certain subsidiary companies as of December 31, 2016 became effective on January 1, 20062015. Effective as of this date, the Hydrocarbons Revenue Law and amendments tothe Federal Revenue Law of the applicable year comprise the fiscal regime applicable to Pemex-Exploration and Production became effective on January 1, 2008, January 1, 2009, January 1, 2010 and January 1, 2011. In addition, PMI and P.M.I. Norteamérica, S.A. de C.V. are subject to the tax regime applicable to all other Mexican corporations. In general, Mexican companies are taxed based on pre-tax income at a statutory rate.us.
As of December 31, 2016, Petróleos Mexicanos and the subsidiary entities (except Pemex-Exploration and Production) 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%. |
• | 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. |
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. When a reasonable estimation cannot be made, qualitative disclosure is provided in the notes to the consolidated financial statements. We do not recognize contingent revenues, earnings or assets until their realization is assured. SeeWe 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 Note 23Notes 6 and 25 to our consolidated financial statements included herein.
Employee Benefits
We operateAs described under “Item 6—Directors, Senior Management and Employees—Employees” below and in Note 2(m) 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, underboth we and our employees contribute to each employee’s individual account, in contrast to the existing defined benefit plan, pursuant to which only we makecontribute. 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 fund thattrust, which is administratedmanaged separately. We recognize the cost for the defined benefit planspension plan based on independent actuarial computations applying the projected unit credit method. Actuarial gains and losses are recognized within other comprehensive resultresults 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.assets for which obligations have yet to be settled. The value of any asset is limited to the present value of availablethe economic benefit represented by the plan reimbursements and reductions in future contributions to the plan.
In addition, other long-term employee benefits include seniority premiums payable for disability, are recognized within other long-term employee benefits.death and survivors’ benefits, medical services, gas and basic food baskets for beneficiaries. Termination benefits are recognized in profit or loss for the periodyear in which they are incurred.
Benefits to employees were approximately 50.1%34.3% and 56.1%41.2% of our total liabilities as of December 31, 20132016 and 2012,2015, respectively, and any adjustments recorded will affect our net income and/or comprehensive net income during the corresponding period.
Recently Issued Accounting Standards
Notes 3(t) andNote 3(u) to our audited consolidated financial statements discusses new accounting interpretations and revisions under IFRS that apply to annual periods beginning on or after January 1, 2013.2016. 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 in this report.herein.
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-ExplorationPemex 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 following table sets forth the weighted average market price per barrel of crude oil that PMI received from exports and the average price of its benchmark, West Texas Intermediate (or WTI) crude oil, for the years indicated. Note that the average prices of West Texas Intermediate crude oil are higher thanBetween 2012 and 2013, the average prices of crude oil that we export. This is primarily due to theexported were higher cost of refining sour crude oils, which make up a majority of our exports. Since 2011,than the average prices of WTI crude oil. As of December 31, 2014, 2015 and 2016 however, the average price of crude oil that we export have been higher thanexported fell below the average price of West Texas IntermediateWTI crude oil, primarily due to the increased supplystrengthening of lightthe WTI crude oil inagainst the United States.prices of certain benchmark crudes, such as West Texas Sour, Light Louisiana Sweet and Brent
Dated, and against the price of high sulfur fuel oil, upon which the 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, | |||||||||||||||||||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||
(in dollars per barrel) | (in dollars per barrel) | |||||||||||||||||||||||||||||||||||||||
West Texas Intermediate crude oil average price | U.S. $ | 61.92 | U.S. $ | 79.45 | U.S. $ | 95.04 | U.S. $ | 94.13 | U.S. $ | 98.01 | U.S. $ | 94.13 | U.S. $ | 97.90 | U.S. $ | 93.28 | U.S. $ | 48.71 | U.S. $ | 43.34 | ||||||||||||||||||||
PEMEX crude oil weighted average export price | 57.42 | 72.46 | 101.13 | 101.82 | 98.46 | 101.82 | 98.46 | 86.00 | 43.39 | 35.63 |
Note: | The numbers in this table are daily average prices for the full year, which differ from spot prices at year end. On |
Sources: PMI operating statistics and Platt’s U.S. Marketscan (McGraw-Hill Company).
Domestic Prices
TheUntil December 31, 2016, the formulas used to determine prices for petroleum products and petrochemical products sold in the Mexican market arewere determined by the SHCPMinistry 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(Planning Law), theReglamento Interior(Internal (Internal Regulations) of the SHCPMinistry of Finance and Public Credit and theLey de la Comisión Reguladora de Energía (Energy Regulatory Commission Law). The SHCPMinistry of Finance and Public Credit and the Energy Regulatory Commission receivereceived 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 SHCP,Ministry of Finance and Public Credit, the Ministry of Energy, the SFP,Secretaría de la Función Pública (Ministry of Public Function, or the SFP) and theSecretaría de Economía (Ministry of Economy). The SHCPMinistry of Finance and Public Credit and the Energy Regulatory Commission determinedetermined 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 iswas determined based on the wholesale price plus the value added tax, the retailer’s margin and freight costs. The SHCP adjustsMinistry 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. See
As a part of the energy reform, domestic fuel prices are to be liberalized and to be determined according to market forces by 2018. During 2017 and 2018, domestic fuel prices may vary within a specific range determined by the Mexican Government based on the references points set in 2016 and taking into account international benchmarks. For further information on domestic prices see “Item 4—Information on the Company—Business Overview—Industrial Transformation—Refining—Pricing Decrees” and “—“Item 4—Business Overview—Industrial Transformation—Gas and Basic Petrochemicals—Aromatics—Pricing Decrees.”Decrees” above.
The following table compares the average prices in nominal terms of petroleum products in Mexico and in the United States for the years indicated.indicated:
2009 | 2010 | 2011 | 2012 | 2013 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mexico | U.S. | Mexico | U.S. | Mexico | U.S. | Mexico | U.S. | Mexico | U.S. | Mexico | U.S. | Mexico | U.S. | Mexico | U.S. | Mexico | U.S. | Mexico | U.S. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Petroleum Products | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unleaded regular gasoline(1) | U.S. $ | 91.02 | U.S. $ | 91.49 | U.S. $ | 104.52 | U.S. $ | 108.49 | U.S. $ | 118.55 | U.S. $ | 140.36 | U.S. $ | 131.36 | U.S. $ | 145.42 | U.S. $ | 143.36 | U.S. $ | 139.70 | 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) | 112.93 | 102.91 | 124.40 | 120.29 | 132.67 | 152.62 | 139.82 | 159.03 | 150.46 | 156.82 | 139.82 | 159.03 | 150.46 | 156.82 | 161.52 | 152.23 | 144.15 | 114.42 | 122.21 | 102.51 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Diesel(1) | 92.47 | 99.78 | 109.04 | 119.78 | 123.15 | 154.25 | 135.95 | 159.89 | 147.85 | 158.62 | 135.95 | 159.89 | 147.85 | 158.62 | 159.37 | 152.72 | 144.25 | 114.11 | 119.69 | 89.16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jet fuel(2) | 70.89 | 69.77 | 91.73 | 90.42 | 126.53 | 126.15 | 137.29 | 129.08 | 124.55 | 123.11 | 137.29 | 129.08 | 124.55 | 123.11 | 115.54 | 113.94 | 70.08 | 64.67 | 56.19 | 53.19 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kerosene(3) | 92.48 | 71.49 | 109.05 | 92.51 | 123.16 | 125.84 | 135.96 | 128.37 | 147.85 | 122.78 | 135.96 | 128.37 | 147.85 | 122.78 | 159.37 | 113.25 | 142.25 | 64.07 | 119.69 | 52.47 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Natural Gas(4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Industrial | 4.43 | 5.33 | 5.25 | 5.49 | 4.98 | 5.11 | 3.63 | 3.87 | 5.27 | 4.66 | 3.65 | 3.88 | 5.27 | 4.64 | 5.70 | 5.62 | 3.38 | 3.91 | 3.56 | 3.51 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Residential | 15.66 | 12.14 | 15.98 | 11.39 | 15.89 | 11.03 | 12.73 | 10.71 | 15.22 | 10.33 | 12.73 | 10.65 | 15.22 | 10.32 | 15.71 | 10.97 | 12.14 | 10.38 | 11.18 | 10.06 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Petrochemicals | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ammonia(5) | 265.37 | 232.61 | 350.62 | 368.97 | 496.17 | 533.62 | 530.77 | 562.83 | 453.92 | 505.16 | 530.77 | 562.83 | 453.92 | 505.16 | 451.93 | 494.33 | 397.69 | 361.48 | 297.29 | 244.81 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Polyethylene L.D.(6) | 1,226.69 | 1,058.65 | 1,774.97 | 1,550.14 | 1,834.27 | 1,624.92 | 1,667.72 | 1,447.47 | 1,701.00 | 1,493.94 | 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) | 1,107.00 | 955.40 | 1,425.04 | 1,225.04 | 1,588.15 | 1,365.56 | 1,576.48 | 1,359.29 | 1,660.18 | 1,438.83 | 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) | 1,098.36 | 1,005.90 | 1,486.17 | 1,301.93 | 1,728.37 | 1,511.64 | 1,825.91 | 1,559.16 | 1,991.57 | 1,706.27 | 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 |
In U.S. dollars per barrel. Prices to final consumers including taxes. |
Sources for data accompanying note (1): |
(2) | In U.S. dollars 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): |
(3) | In U.S. dollars per barrel. In both countries, prices to final consumers. Mexico prices include taxes, while U.S. prices exclude taxes. |
Sources for data accompanying note (3): |
(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): |
(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): |
(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): |
(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): |
(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): |
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, | |||||||||||||||||||||||
2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||
(in millions of pesos)(1) | (in millions of pesos)(1) | |||||||||||||||||||||||
Hydrocarbon extraction duties and others | Ps. | 871,686 | Ps. | 898,398 | Ps. | 857,356 | Ps. 760,912 | Ps. 377,087 | Ps. 304,813 | |||||||||||||||
Hydrocarbons income tax | (677 | ) | 2,393 | 3,788 | (18,735 | ) | — | — | ||||||||||||||||
Income tax | 3,638 | 1,855 | 3,752 | 3,898 | (45,587 | ) | (12,640 | ) | ||||||||||||||||
IEPS tax(2) | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Total | Ps. | 874,647 | Ps. | 902,646 | Ps. | 864,896 | Ps. 746,075 | Ps. 331,500 | Ps. 292,173 | |||||||||||||||
|
|
|
|
|
|
Note: | For a description of these taxes and duties, see “Item 4—Information on the Company—Taxes, Duties and |
(1) | Figures are stated in nominal pesos. |
(2) | During |
Source: PEMEX’s audited financial statements, prepared in accordance with IFRS.
The IEPS tax ensures that Pemex-Refining retains the portion of our sales revenues that represents the adjusted international reference prices of our products, and the Mexican Government receives the difference between the domestic retail prices, which are prices that are set by the Mexican Government based on target rates of inflation, and the adjusted international reference prices of diesel and gasoline. The SHCP determines retail prices of gasoline and diesel before the beginning of each fiscal year in conjunction with the preparation of the Mexican Government’s budget for that year.
Our retail prices for gasoline and diesel reflect the addition of the IEPS tax when the IEPS tax rate is positive, as well as the value added tax.
For automotive fuels, the IEPS tax is equal to (a) the retail price at which gasoline and automotive diesel are sold to retailers, less (b) value-added tax, less (c) Pemex-Refining’s wholesale price, less (d) freight to gas stations and less (e) retailer’s margin.
When international prices increase, our wholesale price will increase and, as a result, the IEPS tax that we collect from consumers and transfer to the Mexican Government will decrease, since the retail prices of gasoline and diesel are fixed.
From the end of 2005 through April 2014, the retail prices of gasoline and diesel have been less than the sum of Pemex-Refining’s wholesale price, the value-added tax, the freight to gas stations and the retailer’s margin, which has generated a “negative” IEPS tax rate, and, therefore, no IEPS tax was paid during these years. Beginning in 2006, the Federal Revenue Law established that PEMEX was permitted to credit negative IEPS taxes against its IEPS tax liability. Any remaining surplus could then be credited first toward its value added tax liability and then toward ordinary hydrocarbon duties. These IEPS tax credits are recorded in our income statement under “other revenues.” In 2013, we were permitted to credit Ps. 94.5 billion of negative IEPS tax, of
which we credited Ps. 81.4 billion against our IEPS tax and value added tax liabilities. The remaining surplus was credited against the Ordinary Hydrocarbons Duty.
Relation to the Mexican Government
Petróleos Mexicanos and the subsidiary entities were created as decentralizedare public entities of the Mexican Government, rather than as 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. The Mexican Government closely regulates and supervises our operations. However, our financing obligations do not constitute obligations of and are not guaranteed by the Mexican Government. Mexican Government secretaries control key executive decisions at PEMEX. The President of Mexico appoints sixfive of the 15ten members of the Board of Directors of Petróleos Mexicanos.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 four professionalfive independent members to the Board of Directors of Petróleos Mexicanos, whose appointments are ratified by the Senate. In addition,
Pursuant to the SFP appointsPetróleos Mexicanos Law, the external auditors of the subsidiary entities.
The Mexican Government incorporates theconsolidated annual budget and financing program of Petróleos Mexicanos and the subsidiary entities, into itsincluding 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 it submits to the Chamber of Deputies for approval.
See “Item 4—Informationmust 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 Company—History and Development—Energy Reform” for information regarding the changes that will occur with regard to our relation with the Mexican Government in the future as a resultChamber of the enactment of the Energy Reform Decree.Deputies.
Inflation
Mexico experienced high inflation during the 1980s. The annual rate of inflation (as measured by the change in the Mexican National Consumer Price Index, or 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 3.8% in 2007, 6.5% in 2008, 3.6% in 2009, 4.4% in 2010, 3.8% in 2011, 3.6% in 2012, and 4.0% in 2013.2013, 4.1% in 2014, 2.1% in 2015 and 3.4% in 2016.
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 cumulative three-year inflation rate is 100% or more. Because the economic environment in the three-year periods ended December 31, 2011, 20122014, 2015 and 20132016 did not qualify as hyperinflationary, we did not use inflation accounting to prepare our consolidated financial statements as of December 31, 2011, 20122014, 2015 and 20132016 included herein.
Consolidation
Our financial statements consolidate the results of Petróleos Mexicanos, the subsidiary entities and the subsidiary companies. Certain non-material subsidiary companies are not consolidated and are accountedFor further information about the basis for under either the cost method or the equity method.our consolidation see Note 3(a). For a list of theour consolidated subsidiary companies, see Note 3(a)4 to our consolidated financial statements included herein.
Export Agreements
Even thoughThough Mexico is not a member of OPEC, in the past, following OPEC announcements of production cuts andit has periodically announced increases of production, and in order to maintain oil market stability, Mexico has announced increases
and decreases in Mexico’sour crude oil exports, in connection with increases or decreases of crude oilreflecting production revisions made by other oil producing countries.countries in order to contribute to crude oil prices stabilization. However, since 2004, we have not changed our export levels as a resultgoals because of announcements made by OPEC since 2004, and we believe that Mexico has no plans to change our current level of crude oil exports.
Results of Operations of Petróleos Mexicanos, the Subsidiary Entities and the Subsidiary Companies—For the Year Ended December 31, 20132016 Compared to the Year Ended December 31, 20122015
Total Sales
Total sales decreased by 2.3%7.4%, or Ps. 86.9 billion, in 2013,2016, from Ps. 1,646.91,166.4 billion in 20122015 to Ps. 1,608.21,079.5 billion in 2013. This decrease resulted2015, primarily fromdue to a decrease in our domestic sales of crude oil and lowerfollowing the decrease in average sales prices of Mexican crude oilour petroleum products and the decrease in volume of sales of liquefied natural gas in Mexico, in each case, for the international markets.reasons explained in further detail below. This decrease in total sales was partially offset by a 12.7% increase in services income.
Domestic Sales
Domestic sales increaseddecreased by 5.0%10.2% in 2013,2016, from Ps. 867.0746.2 billion in 20122015 to Ps. 910.2670.0 billion in 2013,2016, primarily due to increasesa decrease in the average prices of fuel oil, diesel, gasoline and liquefied natural gas. Domestic sales of petroleum products decreased by 9.5% in 2016, from Ps. 585.0 billion in 2015 to Ps. 529.3 billion in 2016, primarily due to a 5.5% decrease in the average price of gasoline, a 15.9% decrease in the average price of diesel, and diesel.a 36.5% decrease in the average price of fuel oil as a result of decreased demand from the CFE. These price decreases were partially offset by a 4.3% increase in the volume of sales of gasoline due to an increase in demand from retail service stations and an 8.1% increase in the volume of sales of jet fuel. Domestic sales of natural gas increased by 38.3%9.2% in 2013,2016, from Ps. 51.254.5 billion in 20122015 to Ps. 70.859.5 billion in 2013, as2016, primarily due to a result of an6.4% increase in the pricevolume of sales of natural gas and a 1.8%2.9% increase in the average sales price of natural gas. Domestic sales of liquefied natural gas decreased by 34.9% in 2016, from Ps. 78.2 billion in 2015 to Ps. 50.9 billion in 2016, primarily as a result of a 27.1% decrease in the volume of domestic sales of liquefied natural gas from 3,402 million cubic feet per day in 2012 to 3,464 million cubic feet per day in 2013. Domestic sales of petroleum products increased by 3.3% in 2013, from Ps. 779.6 billion in 2012 to Ps. 805.5 billion in 2013, primarily due to higher gasoline, dieselthe market share loss that resulted from increased competition due to the liberalization of imports in 2016 and LPG prices.a 10.8% decrease in the average sales price of liquefied natural gas. Domestic petrochemical sales (including sales of certainby-products of the petrochemical production process) decreasedincreased by 6.4%6.0%, from Ps. 36.228.5 billion in 20122015 to Ps. 33.930.2 billion, primarily as a result of Ps. 2.6 billion in 2013, due to a decrease in the prices of most petrochemical products soldsales by us, despite a 173.9% increase in the volume of petrochemical product sales.Grupo Fertinal.
Export Sales
Export sales decreased by 11.0% 3.0%in peso terms in 2013,2016 (with U.S. dollar-denominated export revenues translated to pesos at the exchange rate on the date of the corresponding export sale), from Ps. 772.7407.2 billion in 20122015 to Ps. 687.7395.1 billion in 2013. 2016. This decrease was primarily due to a 7.4% decrease in the volume of petroleum product exports, a 17.4% decrease in the weighted average Mexican crude oil export price, an 18.5% decrease in the export sales of fuel oil, mainly due to a decrease in the average sales price and volume of sales of fuel oil, and a 13.7% decrease in the export sales of naphthas. This decrease in export sales was partially offset by a 2.1% increase in the volume of sales of crude oil and a Ps. 2,920.7 million increase in the volume of sales of petrochemical products.
Excluding the trading activities of the PMI GroupTrading Companies (in order to show only the amount of export sales related to the subsidiary entities), export sales by the subsidiary entities to the PMI GroupTrading Companies and third parties decreased by 9.9% 0.5%in peso terms, from Ps. 687.9329.6 billion in 20122015 to Ps. 619.8327.8 billion in 2013.2016. In U.S. dollar terms, excluding the trading activities of the PMI Group,Trading Companies, total export sales (which are U.S. dollar-denominated) decreased by 7.3%16.2% in 2013,2016, from U.S. $52.3$20.9 billion in 20122015 to U.S. $48.5$17.5 billion in 2013.2016. This decrease was primarily due to the 17.4% decrease in the weighted average Mexican crude oil export price and a 5.3% decrease2.1% increase in the volume of crude oil exports and a 3.3% decrease in prices.exports. The trading and export activities of the PMI GroupTrading Companies generated additional marginal revenues of Ps. 67.967.4 billion in 2013, 19.9%2016, 13.2% lower in peso terms than the Ps. 84.877.5 billion of additional revenues generated in 2012,2015, mainly due to lower internationala decrease in the average prices of crude oildiesel and other products traded by the PMI Group.gasoline. The weighted average price per barrel of crude oil that the PMI Group sold to third parties in 20132016 was U.S. $98.46,$35.63, or 3.3%17.4%, lower than the weighted average price of U.S. $101.82$43.12 in 2012.2015.
Crude oil and condensate export sales by Pemex-Exploration and Production to PMI accounted for 88.5%88.1% of total export sales (excluding the trading activities of the PMI Group)Trading Companies) in 2013,2016, as compared to 89.9%87.4% in 2012.2015. These crude oil and condensate sales decreasedincreased in peso terms by 11.3%0.2% in 2013,2016, from Ps. 618.1288.2 billion in 20122015 to Ps. 548.4288.6 billion in 2013,2016, and decreased in U.S. dollar terms by 8.7%14.9% in 2013,2016, from U.S. $47.0$18.2 billion in 20122015 to U.S. $42.9$15.5 billion in 2013.2016. The weighted average price per barrel of crude oil that Pemex-ExplorationPemex Exploration and Production sold to PMI for export in 20132016 was U.S. $98.54, 3.3%$35.17, 17.6% lower than the weighted average price of U.S. $101.86$42.70 in 2012.2015.
Export sales of petroleum products, including natural gas and natural gas liquids, by Pemex-Refining and Pemex-Gas and Basic Petrochemicalsour industrial transformation segment to the PMI GroupTrading Companies and third parties increaseddecreased from 9.6%12.4% of total export sales (excluding the trading activities of the PMI Group)Trading Companies) in 20122015 to 11.2%10.9% of those export sales in 2013.2016. Export sales of petroleum products, including products derived from natural gas and natural gas liquids, decreased by 13.0%, from Ps. 40.9 billion in 2015 to Ps. 35.6 billion in 2016, 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 decrease in the average sales price for both products. In U.S. dollar terms, export sales of petroleum products, including products derived from natural gas 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.
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. 2,920.7 million in 2016, from Ps. 616.8 million in 2015 to Ps. 3,537.5 million in 2016, primarily due to inclusion of export sales of Grupo 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.
Services Income
Services income increased by 11.7% in 2016, from Ps. 12.9 billion in 2015 to Ps. 14.4 billion in 2016, primarily as a result of an increase in transportation services supplied by Pemex Logistics to CENAGAS and an increase in freight services provided by Pemex Industrial Transformation to third parties.
Cost of Sales
Cost of sales decreased by 3.1%, from Ps. 895.1 billion in 2015 to Ps. 867.6 billion in 2016. This decrease was mainly due to: (1) 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. 46.9 billion increase in the purchases of imports, primarily gasoline and diesel, 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. 5.9 billion increase in the cost of unsuccessful wells.
Impairment of Wells, Pipelines, Properties, Plant and Equipment
Impairment of wells, pipelines, properties, plant and equipment decreased by Ps. 809.3 billion in 2016, from an impairment of Ps. 477.9 billion in 2015 to a net reversal of Ps. 331.3 billion in 2016, mainly due to the change in the period used to estimate long-term prices of proved reserves and the recoverable amount of fixed assets from 20 to 25 years 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 negotiation of our pension regime in 2015 as described in “Item 6—Directors, Senior Management and Employees—Employees.” Ps. 92.2 billion 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.
General Expenses
General expenses increased by Ps. 100.4 billion, from Ps. 37.5 billion in 2015 to Ps. 137.9 billion in 2016. This increase was primarily due to aone-time Ps. 103.9 billion benefit recognized in our 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.
Other Revenues/Expenses, Net
Other revenues, net, increased by Ps. 21.4 billion in 2016, from other expenses, net, of Ps. 2.4 billion in 2015 to other revenues, net, of Ps. 19.0 billion in 2016. This increase was primarily due to a Ps. 28.4 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 expense of Ps. 27.7 billion that was recognized following our transfer of pipelines 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.
Financing Income
Financing income decreased by Ps. 1.2 billion in 2016, from Ps. 15.0 billion in 2015 to Ps. 13.8 billion in 2016, primarily due to a decrease in the amount we were able to invest during the year, which was partially offset by yield derived from the promissory notes issued by the Mexican Government in connection with our pension liabilities.
Financing Cost
Financing cost increased by 45.7% in 2016, from Ps. 67.8 billion in 2015 to Ps. 98.8 billion in 2016, primarily due to an increase in interest expense in 2016 following higher levels of indebtedness and a 20.1% depreciation of the peso against the U.S. dollar in 2016 as compared to 2015.
Derivative Financial Instruments Income (Cost)
Derivative financial instruments income (cost), net, decreased by Ps. 7.4 billion, from a net cost of Ps. 21.4 billion in 2015 to a net cost of Ps. 14.0 billion in 2016, 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 instruments 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.
Exchange Loss, Net
A substantial portion of our indebtedness, 83.2% as of December 31, 2016, is denominated in foreign currencies. Our exchange loss increased by Ps. 99.2 billion, from an exchange loss of Ps. 154.8 billion in 2015 to
an exchange loss of Ps. 254.0 billion in 2016, primarily as a result of the 5.3% increase in our indebtedness that is denominated in other currencies and the higher rate of depreciation of the peso against the U.S. dollar, which depreciated by 20.1% in 2016 as compared to 16.9% in 2015. However, due to the fact that over 95.7% of our revenues from exports and domestic sales are referenced to prices denominated in U.S. dollars, and only 71.0 % 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 2016. The value of the peso in U.S. dollar terms depreciated by 20.1% in 2016, from Ps. 17.2065 = U.S. $1.00 on December 31, 2015 to Ps. 20.6640 = U.S. $1.00 on December 31, 2016, as compared to a 16.9% depreciation of the peso in U.S. dollar terms in 2015.
Taxes, Duties and Other
Hydrocarbon extraction duties and other duties and taxes paid decreased by 20.2% in 2015, from Ps. 331.5 billion in 2015 to Ps. 264.5 billion in 2016, primarily due to the 17.4% decrease in the weighted average price of the Mexican crude oil export price, from U.S. $43.12 per barrel in 2015 to U.S. $35.63 per barrel in 2016. Income related duties and taxes represented 24.9% of total sales in 2016, as compared to 24.9% of total sales in 2015.
Net Income/Loss
In 2016, we had a net loss of Ps. 191.1 billion from Ps. 1,079.5 billion in total sales revenues, as compared to a net loss of Ps. 712.6 billion from Ps. 1,166.4 billion in total sales revenues in 2015. This decrease in net loss was primarily explained by:
This decrease was partially offset by
Other Comprehensive Results
In 2016, we had a net gain of Ps. 127.9 billion in other comprehensive results, as compared to a net gain of Ps. 88.6 billion in 2015, 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% in 2015 to 8.2% 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, increased by 4.7%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. 66.069.5 billion in 20122014 to Ps. 69.139.9 billion in 2013,2015, primarily due to an increasea 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, increaseddecreased by 8.0%52.8%, from U.S. $5.0$5.3 billion in 20122014 to U.S. $5.4$2.5 billion in 2013.2015. Export sales of natural gas increaseddecreased by 300.0%50.0%, from Ps. 0.010.06 billion in 20122014 to Ps. 0.040.03 billion in 2013.2015. This increase was mainlyprimarily due to an increasea decrease in the price and volume of sales of natural gas sold as a result of higherlower demand in the international market.
Petrochemical products accounted for the remainder of export sales in 20122014 and 2013.2015. Export sales of petrochemical products (including certainby-products of the petrochemical process) decreased by 40.5%47.0% in 2013,2015, from Ps. 3.71.7 billion in 20122014 to Ps. 2.20.9 billion in 2013,2015, primarily as a result of decreases in the prices and volumes of ammonia, butadienesales of styrene, sulfur and ethylene. In U.S. dollar terms, export sales of petrochemical products (including certainby-products of the petrochemical process) decreased by 39.4%57.5% in 2013,2015, from U.S. $282.6$131.2 million in 20122014 to U.S. $171.3$55.8 million in 2013.2015.
Services Income
In 2012 and 2013, services income amounted to Ps. 7.2 billion and Ps. 10.3 billion, respectively. Services income increased by 13.2% in 2015, from Ps. 3.111.4 billion or 43.1%, during 2013,in 2014 to Ps. 12.9 billion in 2015, primarily as a result of a Ps. 2.11.0 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 AG and a Ps. 1.1 billion increase in the amount of fees collected by Pemex-Gas and Basic Petrochemicals for freight and pipeline transportation services provided to third parties.Insurance Company, AG.
Cost of Sales, Impairment of Wells, Pipelines, Properties, Plant and Equipment, Cost of Employee Benefits and General Expenses
Cost of sales decreasedincreased by 2.2%6.2%, from Ps. 832.5842.6 billion in 20122014 to Ps. 814.0895.1 billion in 2013.2015. This decreaseincrease was mainly due to a decreaseto: (1) the recognition of Ps. 39.353.9 billion in purchases of imported gasolinenew hydrocarbon extraction and diesel, a Ps. 1.8 billion decrease in costs associated with exploration activitiesduties and a Ps. 1.3 billion decrease in expenses incurredtaxes 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 exploratory well projects.wells. This decreaseincrease was partially offset by a Ps. 13.654.5 billion increasedecrease in operational expenses,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. 5.0103.9 billion increasedecrease in net periodic cost of employee wages and 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. 4.82.5 billion increase in provisions and a Ps. 11.5 billion increasedecrease in the net periodic cost of employee benefits in 2013, which was primarilyrecognized under general expenses due to the change in the applicable discount rate from 6.90% in 2012modifications to 8.45% in 2013 and the expected rate of return on plan assets for retirement benefits.
General expenses increased by 11.0%, from Ps. 118.1 billion in 2012 to Ps. 131.1 billion in 2013. This increase was primarily due to a Ps. 7.2 billion increase in the net cost of employee benefits for the period and a Ps. 5.1 billion increase in operating expenses, which was primarily composed of a Ps. 3.4 billion increase in employee wages and benefits, a Ps. 539.3 million increase in the purchase of materials, a Ps. 225.4 million increase in freight services and a Ps. 523.7 million increase in taxes and duties.our pension regime.
Other Revenues (Principally IEPS Benefit),Revenues/Expenses, Net
Other revenues, net, decreased by 69.1%106.4% in 2013,2015, from other revenues, net, of Ps. 209.037.6 billion in 20122014 to other expenses, net, of Ps. 64.52.4 billion in 2013,2015. This decrease was primarily due to a lowerPs. 40.0 billion decrease in the credit attributable to the negative IEPS tax rate in 20132015 as compared to 2012, which2014. 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. As a result, weWe recognized revenues from IEPS tax credits of Ps. 214.12.5 billion in 2012 and2015, as compared to Ps. 94.543.1 billion in 2013.2014.
Financing Income
Financing income increased by 5.6%Ps. 12.0 billion in 2013,2015, from Ps. 23.23.0 billion in 20122014 to Ps. 24.515.0 billion in 2013,2015, primarily due to a Ps. 6.2 billion increasethe effect of changes to the discount rate used in interest income, which was partially offset by a Ps. 4.9 billion decrease in net income associated with certain DFIs.the computation of the provision for the plugging of wells.
Financing Cost
Financing cost decreasedincreased by 25.9%31.4% in 2013,2015, from Ps. 73.051.6 billion in 20122014 to Ps. 54.167.8 billion in 2013,2015, 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. 12.59.4 billion decreasein 2014 to a net cost of Ps. 21.4 billion in 2015, primarily due to an increase in costs associated with certain DFIs andderivative financial instruments as a Ps. 6.4 billion decrease in interest expense.result of the appreciation of the U.S. dollar relative to other foreign currencies that we hedge.
Foreign Exchange Loss, Net
A substantial portion of our indebtedness, 80.2% at77.9% as of December 31, 2013,2015, is denominated in foreign currencies. TheOur 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 2013 therefore resulted2015 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 Ps. 48.8 billion, or 108.8%, decreasesignificant effect on our ability to meet U.S. dollar-denominated financial obligations and improved our ability to meet peso-denominated financial obligations in our foreign exchange, net, from approximately Ps. 44.8 billion in 2012 to a loss of approximately Ps. 4.0 billion in 2013.2015. The value of the peso in U.S. dollar terms depreciated by 0.5%16.9% in 2013,2015, from Ps. 13.010114.7180 = U.S. $1.00 on December 31, 20122014 to Ps. 13.076517.2065 = U.S. $1.00 on December 31, 2013,2015, as compared to a 7.5% appreciation12.6% depreciation of the peso in U.S. dollar terms in 2012.2014.
Taxes, Duties and DutiesOther
Hydrocarbon extraction duties and other duties and taxes (including the IEPS tax)paid decreased by 4.2%55.6% in 2013,2015, from Ps. 902.6746.1 billion in 20122014 to Ps. 864.9331.5 billion in 2013, largely2015, primarily due to lowerthe 50.3% decrease in the weighted average price of the Mexican crude oil prices. In 2013,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 53.8%28.4% of total sales whereas in 2012 they represented 54.8%2015, as compared to 47.0% of total sales in 2014, partly because certain hydrocarbon extraction and exploration duties and taxes under the decrease innew tax regime are recognized under cost of sales, as described above. Prior to January 1, 2015, all of our sales in 2013 directly impacted the amount ofduties and taxes were income-based taxes and were therefore recognized under the “taxes, duties owed.and other” line item.
Net Income/Loss
In 2013,2015, we had a net loss of Ps. 170.1712.6 billion (U.S. $41.4 billion) from Ps. 1,608.21,166.4 billion in total sales revenues, as compared to a net incomeloss of Ps. 2.6265.5 billion (U.S. $15.4 billion) from Ps. 1,646.91,586.7 billion in total sales revenues in 2012.2014. 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 net incomefuture cash flows as a result of lower hydrocarbon prices; (2) a Ps. 420.4 billion decrease in 2013 issales mainly explained bydue to a decrease in the Mexican crude oil export price and decrease in our crude oil production and domestic sales ofprices; (3) a Ps. 38.777.8 billion increase in foreign exchange loss; (4) a Ps. 39.9 billion decrease in other revenues, net ofnet; and (5) a Ps. 144.516.2 billion which was primarily due to a lower credit attributable to the negative IEPS tax rateincrease in 2013 as compared to 2012, and the foreign exchange loss caused by the depreciation of the peso against the U.S. dollar and the euro in 2013 as compared to 2012.
financing costs, net. This decreaseincrease was partially offset by a Ps. 18.5 billion decrease in cost of sales, a Ps. 18.9 billion decrease in financing cost, a Ps. 1.3 billion increase in financing income and a Ps. 37.7414.6 billion decrease in taxes and duties.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 2013,2015, we had an incomea net gain of Ps. 254.388.6 billion in other comprehensive results, as compared to a net loss of Ps. 376.8265.3 billion in 2012,2014, 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.
Changes in Statement of Financial Position of Petróleos Mexicanos, the Subsidiary Entities and the Subsidiary Companies—from December 31, 2015 to December 31, 2016
Assets
Cash and cash equivalents increased by Ps. 54.2 billion, or 49.5%, in 2016, from Ps. 109.4 billion as of December 31, 2015 to Ps. 163.5 billion as of December 31, 2016. This increase was mainly due to an increase in net cash flows from financing activities, and was partially offset by tax and debt payments and operating and investment commitments.
Accounts receivable, net, increased by Ps. 54.0 billion, or 68.1%, in 2016, from Ps. 79.2 billion as of December 31, 2015 to Ps. 133.2 billion as of December 31, 2016, primarily explained by: (1) a Ps. 18.7 billion increase in accounts receivable from tax credits associated with hydrocarbon extraction duties; (2) a Ps. 17.7 billion increase in accounts receivable from sales to our international customers, mainly due to the rate20.1% 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 portion of the promissory notes issued by the Mexican Government bonds, which is usedin relation to determineour 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 discount rate appliedtransfer 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 partof 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 actuarial computation method.fair value of derivative financial instruments, such as exchange rates, foreign currency interest rates and our counterparties’ credit spread.
Wells, pipelines, properties, plant and equipment increased by Ps. 323.3 billion in 2016, primarily due to a net reversal of impairment in the amount of Ps. 331.3 billion. See “—Results of Operations of Petróleos Mexicanos, the Subsidiary Entities and the Subsidiary Companies—For the Year Ended December 31, 20122016 Compared to the Year Ended December 31, 20112015—Impairment of Wells, Pipelines, Properties, Plant and Equipment” above in this Item 5 for more information.
Sales
Total salesLong-term notes receivable increased by 5.7%Ps. 98.6 billion, or 197.2%, in 2012,2016, from Ps. 1,558.550.0 billion as of December 31, 2015 to Ps. 148.6 billion as of December 31, 2016, mainly due to the Ps. 184.2 billion in 2011promissory notes issued by the Mexican Government, which replaced the Ps. 50.0 billion promissory note issued to us in 2015 in connection with our pension liabilities.
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. 1,646.98.6 billion in 2012. This increase resulted primarily from higher crude oil and petroleum products prices, which were partially offset by a lower volumeas of crude oil exports.
Domestic Sales
Domestic sales increased by 11.3% in 2012, from Ps. 779.2 billion in 2011 to Ps. 867.0 billion in 2012, primarily due to increases in the prices and volume of sales of petroleum products and petrochemicals sold by us.
Domestic sales of natural gas decreased by 22.2% in 2012, from Ps. 65.8 billion in 2011 to Ps. 51.2 billion in 2012, as a result of a decrease in the price of natural gas, which was partially offset by a 0.5% increase in the volume of domestic sales of natural gas, from 3,385 million cubic feet per day in 2011 to 3,402 million cubic feet per day in 2012. Domestic sales of petroleum products increased by 15.3% in 2012, from Ps. 676.4 billion in 2011 to Ps. 779.6 billion in 2012, primarily due to higher gasoline, diesel, fuel oil and jet fuel prices. Domestic petrochemical sales (including sales of certain by-products of the petrochemical production process) decreased by 1.9%, from Ps. 36.9 billion in 2011 to Ps. 36.2 billion in 2012,December 31, 2016, mainly due to a decrease in the prices of most petrochemical products soldwells under construction but not allocated to a reserve.
Liabilities
Total debt, including accrued interest, increased by us and a 3.0% decreasePs. 489.8 billion, or 32.8%, in the volume of petrochemical product sales.
Export Sales
Export sales decreased by 0.04% in peso terms in 2012,2016, from Ps. 773.01,493.4 billion in 2011as of December 31, 2015 to Ps. 772.71,983.2 billion in 2012. Excluding the trading activitiesas of the PMI Group (in order to show only the amount of export sales related to the subsidiary entities), export sales by the subsidiary entities to the PMI Group and third parties decreased by 0.4% in peso terms, from Ps. 690.4 billion in 2011 to Ps. 687.9 billion in 2012. In dollar terms, excluding the trading activities of the PMI Group, export sales (which are U.S. dollar-denominated) decreased by 5.8% in 2012, from U.S. $55.5 billion in 2011 to U.S. $52.3 billion in 2012. This decrease was primarily due to a decrease in the volume of crude oil exports. The trading and export activities of the PMI Group generated additional marginal revenues of Ps. 84.8 billion in 2012, 2.8% greater in peso terms than the Ps. 82.5 billion of additional revenues generated in 2011,December 31, 2016, mainly due to higher international priceslevels of crude oil and other products traded by the PMI Group. The weighted average price per barrel of crude oil that the PMI Group sold to third parties in 2012 was U.S. $101.82, 0.7% higher than the weighted average price of U.S. $101.13 in 2011.
Crude oil export sales by Pemex-Exploration and Production to PMI accounted for 89.9% of total export sales (excluding the trading activities of the PMI Group) in 2012, as compared to 89.0% in 2011. These crude oil sales increased in peso terms by 0.6% in 2012, from Ps. 614.2 billion in 2011 to Ps. 618.1 billion in 2012, and decreased in dollar terms by 4.9% in 2012, from U.S. $49.4 billion in 2011 to U.S. $47.0 billion in 2012. The weighted average price per barrel of crude oil that Pemex-Exploration and Production sold to PMI for export in 2012 was U.S. $101.86, 0.8% higher than the weighted average price of U.S. $101.09 in 2011.
Export sales of petroleum products, including natural gas and natural gas liquids, by Pemex-Refining and Pemex-Gas and Basic Petrochemicals to the PMI Group and third parties decreased from 10.6% of total export sales (excluding the trading activities of the PMI Group) in 2011 to 9.6% of those export sales in 2012. Export sales of petroleum products, including natural gas and natural gas liquids, decreased by 9.6%, from Ps. 73.0 billion in 2011 to Ps. 66.0 billion in 2012, primarily due to decreases in the volume and prices of fuel oil and naphtha. In dollar terms, export sales of petroleum products, including natural gas and natural gas liquids, decreased by 15.3%, from U.S. $5.9 billion in 2011 to U.S. $5.0 billion in 2012. Export sales of natural gas decreased by 50.0%, from Ps. 0.02 billion in 2011 to Ps. 0.01 billion in 2012. This decrease was mainly due to reduced availability of natural gas for export, as a result of higher demand in the domestic market.
Petrochemical products accounted for the remainder of export sales in 2011 and 2012. Export sales of petrochemical products (including certain by-products of the petrochemical process) increased by 15.6% in 2012, from Ps. 3.2 billion in 2011 to Ps. 3.7 billion in 2012, primarily as a result of increases in ammonia, butadiene, ethylene and polyethylene prices. In dollar terms, export sales of petrochemical products (including certain by-products of the petrochemical process) increased by 8.0% in 2012, from U.S. $261.7 million in 2011 to U.S. $282.6 million in 2012.
Services Income
In 2011 and 2012, services income amounted to Ps. 6.3 billion and Ps. 7.2 billion, respectively. Services income consists primarily of fees charged by Pemex-Refining for freight services provided to third parties.
Cost of Sales and General Expenses
Cost of sales increased by 6.9%, from Ps. 778.8 billion in 2011 to Ps. 832.5 billion in 2012. This increase was mainly due to an increase of Ps. 20.1 billion in gasoline, fuel oil and diesel purchases, operational expenses of Ps. 11.4 billion and conservation and maintenance expenses of Ps. 10.5 billion.
General expenses increased by 9.9%, from Ps. 107.5 billion in 2011 to Ps. 118.1 billion in 2012. This increase was primarily due to an increase of Ps. 8.8 billion in administrative expenses, which was composed of a Ps. 5.5 billion increase in the net cost of employee benefits for the periodindebtedness and a Ps. 2.8 billion increase in operating expenses. The increase in general expenses was also due to an increase of Ps. 1.8 billion in transportation and distribution expenses, which was composed of a Ps. 976.8 million increase in the net cost of employee benefits for the period and a Ps. 684.8 million increase in operating expenses.
Other Revenues (Principally IEPS Benefit), Net
Other revenues, net, increased by 10.5% in 2012, from Ps. 189.1 billion in 2011 to Ps. 209.0 billion in 2012, primarily due to higher profits resulting from the negative IEPS tax rate in 2012 as compared to 2011, due to the fact that international prices rose faster than domestic prices for products subject to the IEPS tax. As a result, we recognized revenues from IEPS tax credits of Ps. 178.9 billion in 2011 and Ps. 214.1 billion in 2012.
Financing Income
Financing income decreased by 24.2% in 2012, from Ps. 30.6 billion in 2011 to Ps. 23.2 billion in 2012, primarily due to a Ps. 1.7 billion decrease in interest income, as well as a Ps. 5.7 billion decrease in net income associated with certain DFIs.
Financing Cost
Financing cost increased by 15.5% in 2012, from Ps. 63.2 billion in 2011 to Ps. 73.0 billion in 2012, primarily due to a Ps. 10.9 billion increase in interest expense, which was partially offset by a Ps. 1.1 billion decrease in costs associated with certain DFIs.
Foreign Exchange, Net
A substantial portion of our indebtedness, 80.5% at December 31, 2012, is denominated in foreign currencies. The appreciation of the peso in 2012 therefore resulted in a Ps. 104.9 billion, or 174.5%, increase in our foreign exchange, net, from a foreign exchange loss of Ps. 60.1 billion in 2011 to a Ps. 44.8 billion foreign exchange gain in 2012. The value of the peso in dollar terms appreciated by 7.5% in 2012, from Ps. 13.9904 = U.S. $1.00 on December 31, 2011 to Ps. 13.0101 = U.S. $1.00 on December 31, 2012, as compared to a 13.2%20.1% depreciation of the peso in dollar terms in 2011.
Taxes and Duties
Hydrocarbon extraction duties and other duties and taxes (including the IEPS tax) increased by 3.2% in 2012, from Ps. 874.6 billion in 2011 to Ps. 902.6 billion in 2012, largely due to higher average crude oil prices. In 2012, duties and taxes represented 54.8% of total sales, whereas in 2011 they represented 56.1% of total sales, because the growth rate of our sales was greater in 2012 than the growth rate of taxes and duties.
Net Income/Loss
In 2012, we had a net income of Ps. 2.6 billion from Ps. 1,646.9 billion in total sales revenues, as compared to a net loss of Ps. 106.9 billion from Ps. 1,558.5 billion in total sales revenues in 2011. This increase in net income in 2012 is primarily explained by the Ps. 104.9 billion increase in our foreign exchange, net, due to the
appreciation of the peso against the U.S. dollar and the euro during 2012in 2016 as compared to 2011.2015.
Line items related to suppliers and contractors decreased by Ps. 15.7 billion, or 9.4%, in 2016, from Ps. 167.3 billion as of December 31, 2015 to Ps. 151.6 billion as of December 31, 2016, primarily due to the payment programs established during 2016 to address the total outstanding balance of payments due to suppliers and contractors at year end.
Taxes and duties payable increased by Ps. 5.8 billion, or 13.5%, in 2016, from Ps. 43.0 billion as of December 31, 2015 to Ps. 48.8 billion as of December 31, 2016, primarily due to (1) a Ps. 8.9 billion increase in the value added tax payable and the Profit-Sharing Duty and (2) a Ps. 2.0 billion decrease in the provision for income tax.
Derivative financial instruments liabilities increased by Ps. 3.6 billion, or 13.1%, in 2016, from Ps. 27.3 billion as of December 31, 2015 to Ps. 30.9 billion as of December 31, 2016. This increase was onlymainly due to the negotiation of new derivative financial instruments 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, foreign currency interest rates and our counterparties’ credit spread.
Employee benefits liabilities decreased by Ps. 59.0 billion, or 4.6%, in 2016, from Ps. 1,279.4 billion as of December 31, 2015 to Ps. 1,220.4 billion as of December 31, 2016. This decrease was primarily due to (1) the effect of changes to 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; (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 anthe recognition of net cost of the period of employee benefits.
Equity (Deficit), Net
Equity (deficit), net, increased by Ps. 104.1 billion, or 7.8 %, in 2016, from negative Ps. 1,331.7 billion as of December 31, 2015 to negative Ps. 1,233.0 billion as of December 31, 2016. This increase 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. 108.2 billion increase in cost of sales as a result of higher gasoline prices, anactuarial gains on employee benefits, resulting from the increase in financing cost, a decreasethe discount rate used in financing incomethe actuarial computation method from 7.4% in 2015 to 8.2% in 2016 and an increase in general expenses.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.
Other Comprehensive Results
In 2012, we had a Ps. 376.8 billion loss in other comprehensive results, as compared to a Ps. 6.4 billion loss in 2011, due to an increase in the reserve for employee benefits that resulted from a decrease in the rate of Mexican Government bonds, which is used to determine the discount rate applied as part of the actuarial computation method.
Liquidity and Capital Resources
Overview
During 2016, we were able to strengthen our liquidity position despite a 7.5% decrease in total sales, from Ps. 1,166.4 billion 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 our accounts payable to suppliers and increasing our borrowing base under lines of credit.
Our principal uses of funds in 2016 were primarily 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. 842.0 billion. During 2016, our net cash flow from operating activities was less than the resources needed to fund our capital expenditures and other expenses. See “—Overview—Redefinition of Petróleos Mexicanos as a State-Owned Productive Company” above for more information and a discussion of actions being taken in response to this imbalance of resources.
For 2016, our capital expenditures decreased by approximately 22.9% 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. 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, 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. The average number of days outstanding of our accounts payable decreased from 90 days as of December 31, 2015 to 81 days as of December 31, 2016. Despite these obligations, we believe net cash flows from our operating and financing activities will be sufficient to meet our working capital, debt service and capital expenditure requirements in 2017 because, since early 2015, we and the Mexican Government have adjusted investment, taxation and financing plans to address declining oil prices and maintain our financial strength and flexibility as described above under “Redefinition of Petróleos Mexicanos as a State-Owned Productive Company” and as further described below:
• | Changes to Our Business Plan.We have implemented certain measures intended to improve our financial situation, including the reduction of our budget in February 2015 and in February 2016, the implementation of a plan to reduce costs and the establishment of lines of credit with Mexican development banks. |
• | Modifying Our Funding Strategy.We have adjusted our financing strategy to diversify our sources of funding. Specifically, we have undertaken the following transactions, based on this strategy, as of the date of this annual report: |
• | Changes to Employee Benefits Plans.For more information, see “—Critical Accounting Policies—Employee Benefits” above. |
• | Asset Sales.We have sold certain of ournon-essential assets to obtain working capital, including the sale of our stake in Gasoductos de Chihuahua. |
• | Reduction in Taxes.As described below, we expect that the Mexican Government’s modification to the fiscal regime applicable to us enabled us to deduct more of our exploration and production costs. |
• | 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.The Mexican Government announced that Petróleos Mexicanos was not required to pay a state dividend in 2016 and will not be required to pay one in 2017. 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 CertificatesMexican Government Contributions” below.
Furthermore, the Mexican Government modified the fiscal regime applicable to us to enable us to deduct more of Contribution “A”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), provides for the incurrence of up to U.S. $15.7 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. 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 in oil prices that began in late 2014 has 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 from cash flow from operations. Therefore, in order to develop our hydrocarbon reserves and amortize scheduled debt maturities, we will need to raise significant amounts of financing from a broad range of funding sources, in addition to the efficiency and cost-cutting initiatives described in this annual report.
As of December 31, 2016, our total indebtedness, including accrued interest, was approximately Ps. 1,983.2 billion (U.S. $96.0 billion), in nominal terms, which represents a 32.8% increase compared to our total indebtedness, including accrued interest, of approximately Ps. 1,493.4 billion (U.S. $86.8 billion) as of December 31, 2015. Approximately 23.5% of our existing debt as of December 31, 2016, or Ps. 465.7 billion (U.S. $22.5 billion), is scheduled to mature in the next three years. Our working capital increased from a negative working capital of Ps. 176.2 billion (U.S. $10.2 billion) as of December 31, 2015 to a negative working capital of Ps. 70.8 million (U.S. $3.4 million) as of December 31, 2016. 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 of existing indebtedness). In addition, we are taking actions to improve our financial position, such as those discussed above, particularly through our 2017-2021 Business Plan.
Certain rating agencies have expressed concerns regarding: (1) the total amount of our debt; (2) the significant increase in our indebtedness over the last several years; (3) our negative free cash flow during 2015, primarily resulting from our significant capital investment projects and the declining price of oil; (4) our substantial unfunded reserve for retirement pensions and seniority premiums, which was equal to Ps. 1,220.4 billion (U.S. $59.1 billion) as of December 31, 2016, and (5) the resilience of our operating expenses notwithstanding the sharp decline in oil prices that began in late 2014. On January 29, 2016, Standard & Poor’s announced the downgrade of ourstand-alone credit profile from “BB+” to “BB,” and affirmed its global foreign currency rating of “BBB+.” On March 31, 2016, Moody’s Investors Service announced the revision of our global foreign currency and local currency credit ratings from “Baa1” to “Baa3” and changed the outlook for its credit ratings to negative. On July 26, 2016, Fitch Ratings announced the downgrade of our global local currency credit ratings from“A-“ 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 lowering of our credit ratings may have adverse consequences on our ability to access the financial markets and/or our cost of financing. If we were unable to obtain financing on favorable terms or at all, this could hamper our ability to obtain further financing on favorable terms as well as investment in projects financed through debt and impair our ability to meet our principal and interest payment 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 or 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. A reduction in our capital expenditure program could adversely affect our financial condition and results of operations. Such measures may not be sufficient to permit us to meet our obligations.
Going Concern
Our consolidated financial statements have been prepared under the assumption that we will 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 2 to our consolidated financial statements included herein. 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 as of December 31, 20132016 was negative Ps. 185.21,233.0 billion, and our total capitalization (long-term debt plus equity) amountedtotaled Ps. 574.0 billion. During 2016, our total equity increased by Ps. 98.7 billion from negative Ps. 1,331.7 billion as of December 31, 2015, primarily due to (1) the equity contributions in the total
amount of Ps. 565.3161.9 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. Under the CommercialLey deConcursos Mercantiles (Commercial Bankruptcy Law of Mexico, decentralized public entities such asMexico), 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.
In March 1990,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 exchanged U.S. $7.58would assume Ps. 184.2 billion worthin payment liabilities related to our pensions and retirement plans, following the review performed by an independent expert. In accordance with 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 Federal Government of external debtthe payment obligations related to pensions and retirement plans of Petróleos Mexicanos with international commercial banks for 30-year Collateralized Fixed Rate Bonds Due 2019 and Collateralized Floating Rate Bonds Due 2019 (also called Brady Bonds)its productive state-owned subsidiaries) published in the Official Gazette of the Federation on December 24, 2015, we received Ps. 184.2 billion in promissory notes issued by the Mexican Government. In exchange forGovernment, which replaced the cancellationPs. 50.0 billion promissory note issued to us on December 24, 2015 and was recognized as an increase in equity in the amount of this external debt, Petróleos Mexicanos’ indebtedness toPs. 135.4 billion in the Mexican Government increased by an amount equal to U.S. $7.58 billion. The new indebtedness was denominated in currencies other than pesos. In December 1990, the Mexican Government and Petróleos Mexicanos agreed to capitalize the indebtedness incurred in March 1990 into Petróleos Mexicanos’ equity asform of Certificates of Contribution “A.” AsThe Ps. 135.4 billion increase in equity was the result of the Ps. 184.2 billion value of the promissory notes as of June 29, 2016, minus the Ps. 50.0 billion promissory note we received on December 24, 2015, plus a conditionPs. 1.2 billion increase in the value of the promissory notes from June 29, 2016 to this capitalization,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 agreed to payin accordance with the Federal Law of Budget and Fiscal Accountability, as amended. This payment was recognized as a minimum guaranteed dividend to thePs. 10.0 billion increase in Mexican Government equalcontributions to Petróleos Mexicanos.
As of December 31, 2015 and 2016, the debt service onbalance of Mexican Government contributions to Petróleos Mexicanos was Ps. 140.6 billion. As of December 31, 2015 and 2016, the capitalized debt attotal amount of contributions in the exchange rates in effect at the date the payments were made. The total dividend on theform of Certificates of Contribution “A” was approved annually by the Board of Directors of Petróleos Mexicanos after the close of each fiscal year. In each quarter until January 2007, Petróleos Mexicanos made advance payments to the Mexican Government that totaled a prorated portion of the minimum guaranteed dividend. Following a payment of Ps. 4,270 million in January 2007,194.6 billion and because our obligation to pay minimum guaranteed dividends was fully performed in 2007, no further advance payments on the minimum guaranteed dividend are payable to the Mexican Government.
However, the Mexican Government may still require Petróleos Mexicanos to declare and pay dividends to it at any time.
In December 2009, Petróleos Mexicanos capitalized interest on funds provided by the Mexican Government in the amount of Ps. 467.2 million. In December 2010, Petróleos Mexicanos capitalized interest in the amount of Ps. 0.122 million, corresponding to interest earned at the end of 2010 on funds provided by the Mexican Government for use in infrastructure works. During 2012 and 2013, there was no capitalization of interest.356.5 billion, respectively.
Cash Flows from Operating, Financing and Investing Activities
During 2013,2016, net funds provided by operating activities totaled negative Ps. 190.341.5 billion, as compared to Ps. 213.3102.3 billion in 2012.2015. Net loss was Ps. 170.1191.1 billion in 2016, as compared to net incomeloss of Ps. 2.6712.6 billion in 2012.2015. Our net cash flows from financing activities totaled Ps. 10.3213.4 billion in 2013,2016, as compared to negative net cash flows from financing activities of Ps. 10.6134.9 billion in 2012.2015. During 2013,2016, we applied net cash flows of Ps. 244.2134.5 billion for net investments at cost in fixed assets, including exploration expenses, as compared to our application of cash flows of Ps. 199.3254.8 billion in 20122015 for net investments at cost in fixed assets, including exploration expenses.expenses.
At December 31, 2013,2016, our cash and cash equivalents totaled Ps. 80.7163.5 billion, as compared to Ps. 119.2109.4 billion at December 31, 2012.2015.
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, 2015 and 2016.
As of December 31, | ||||||||
2016 | 2015 | |||||||
(millions of pesos) | ||||||||
Borrowing base under lines of credit | Ps. 99,174 | Ps 11,337 | ||||||
Cash and cash equivalents | 163,533 | 109,369 | ||||||
|
|
|
| |||||
Liquidity | Ps. 262,707 | Ps 120,706 | ||||||
|
|
|
|
The following table summarizes our sources and uses of cash for the years ended December 31, 2015 and 2016:
For the years ended December 31, | ||||||||
2016 | 2015 | |||||||
(millions of pesos) | ||||||||
Net cash flows (used in) from operating activities | Ps. (41,485) | Ps. 102,337 | ||||||
Net cash flows used in investing activities | (134,536) | (254,832) | ||||||
Net cash flows from financing activities | 213,360 | 134,915 | ||||||
Effect of change in cash value | 16,804 | 8,960 | ||||||
|
|
|
| |||||
Net increase (decrease) in cash and cash equivalents | Ps. 54,143 | Ps. (8,620) | ||||||
|
|
|
|
Note: Numbers may not total due to rounding.
Investment Policies
Our Finance and Treasury Department requires that we maintainmaintains 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.
We also develop mechanisms for theOur investment of our financial resources aimed at allowing uspolicies attempt to take advantage of favorable market conditions and to accessby accessing the most favorable contracting terms offered to us by financial institutions.
Investments of financial resources by our Finance and Treasury Department in both pesos and dollars, are made in accordance with the following policies:
Investments of Amounts inMexican Pesos
WeIn 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 applicableinvestment guidelines issuedfor resources in pesos that were approved by the Mexican Government. These include theLineamientos para el manejo de las disponibilidades financieras de las entidades paraestatales de la Administración Pública Federal(Guidelines to Manageour Financial Resources of the Public Sector Entities of the Federal Public Administration), issued by the SHCP, which provide that Petróleos MexicanosCommittee on December 21, 2006, as modified from time to time. We may only invest in the following:
In addition to the above limits, repurchase agreements (which are sometimes called repo transactions) may onlytime deposits must be entered intotraded 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 |
Investments of Financial Resources in Dollars
Investments of amountsfinancial resources in dollars must comply withmeet 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 in which Cash and Temporary Investments are Maintained
We generally maintainThe main currencies for investing cash and cash equivalents inare pesos and in dollars—the two currencies in whichdollars. Similarly, we generate revenues from the domestic and international sales of our products. Similarly, most ofproducts 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 20142017 total approximately Ps. 286.7109.0 billion. For a general description of our current commitments for capital expenditures, see “Item 4—Information on the Company—History and Development—Capital Expenditures and Investments.Expenditures.”
In 2013, in nominal peso terms, Pemex-Exploration and Production invested a total The amount of Ps. 212.6 billion inour aggregate capital expenditures on explorationcommitments for 2017 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 production. In 2014, Pemex-Exploration and Production has 26 projects in itsit 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 by segment for the year ended December 31, 2016, and the budget for which Ps. 230.9 billion has been budgeted.these expenditures for 2017. For more detail on the expenditures for and purpose of these investments,information see “Item 4—Information on the Company—Business Overview—ExplorationHistory and Production—Investments in Exploration and Production.Development—Capital Expenditures.”
Pemex-Refining invested in four infrastructure projects in 2013 and invested in other general operating projects, strategic planning, acquisition of equipment, research and development and complementary investments for a
Year ended December 31, 2016 | Budget 2017(1) | |||||||
(millions of pesos) | ||||||||
Exploration and Production | Ps. 137,242 | Ps. 73,927 | ||||||
Industrial Transformation(2) | 33,947 | 21,369 | ||||||
Drilling and Services | 2,688 | 1,580 | ||||||
Logistics | 7,015 | 4,449 | ||||||
Fertilizers | 379 | 444 | ||||||
Ethylene | 746 | 1,786 | ||||||
Cogeneration and Services | — | — | ||||||
Corporate and other Subsidiaries | 1,004 | 5,422 | ||||||
|
|
|
| |||||
Total | Ps. 183,021 | Ps. 108,977 | ||||||
|
|
|
|
Note: Numbers may not total of Ps. 29.8 billion in capital expenditures in nominal peso terms. In 2014, Pemex-Refining expectsdue to invest Ps. 40.7 billion in capital expenditures. For more detail on the expenditures for and purpose of Pemex-Refining’s investments, see “Item 4—Information on the Company—Business Overview—Refining—Investments.”rounding.
(1) | Budget authorized on December 14, 2016 and presented to the Board of Directors of Petróleos Mexicanos on April 7, 2017. |
(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. |
Pemex-Gas and Basic Petrochemicals invests in projects primarily related to natural gas and condensates processing, transportation and storage. In 2014, Pemex-Gas and Basic Petrochemicals expects to invest Ps. 7.5 billion in capital expenditures, as compared to Ps. 5.4 billion of capital expenditures in 2013. For more detail on the expenditures for and purpose of Pemex-Gas and Basic Petrochemicals’ investments, see “Item 4—Information on the Company—Business Overview—Gas and Basic Petrochemicals—Investments.”
In 2014, Pemex-Petrochemicals expects to invest Ps. 5.4 billion in capital expenditures for eight projects, as compared to Ps. 4.0 billion of capital expenditures in 2013. For more detail on the expenditures for and purpose of Pemex-Petrochemicals’ investments, see “Item 4—Information on the Company—Business Overview—Petrochemicals—Investments.”
Our current commitments for capital expenditures have increasedfluctuated 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:
• | the issuance ofcertificados bursátiles (peso-denominated publicly traded notes) in the Mexican market; |
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, 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.
As of December 31, 2013, Petróleos Mexicanos had U.S. $3.3 billion in lines of credit in order to ensure liquidity, of which U.S. $3.1 billion was available.
A number of our financing agreements contain restrictions on (a) our ability to create liens on our assets to secure external indebtedness, subject to certain exceptions, (b) our ability to enter into forward sales of crude oil or natural gas, receivables financings and advance payment arrangements, subject to certain baskets, and (c) our ability to merge or consolidate with other entities or to sell all or substantially all of our assets. In addition, a number of our financing agreements contain longstanding event of default provisions based on the legal framework in effect before the Energy Reform Decree was enacted, including an event of default if the Mexican Government ceases to control Petróleos Mexicanos, or if Petróleos Mexicanos or any of Pemex-Exploration and Production, Pemex-Refining or Pemex-Gas and Basic Petrochemicals ceases to have the exclusive right and authority to conduct the petroleum industry on behalf of Mexico. We plan to request waivers or consents from our lenders and bondholders, as necessary, with respect to these provisions once the secondary legislation implementing the Energy Reform Decree becomes effective. The secondary legislation implementing the Energy Reform Decree is, however, expected to include, among other things, additional details regarding the contractual regime that will be applicable to us and changes to our corporate structure as part of Petróleos Mexicanos’ conversion to a productive state-owned company. These changes could cause us to default on certain financing agreements in the event that we are unable to obtain waivers from our lenders or bondholders, as applicable. For more information, see “Item 3—Key Information—Risk Factors—Considerations Related to Mexico—The effects of the Energy Reform Decree and its implementation are uncertain but likely to be material.”
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
20142017 Financing Activities.Activity.During the period from January 1 to May 14, 2014,April 25, 2017, we participated in the following activity:
2016 Financing Activities.During 2016 we participated in the following activities:
2013 Financing Activities. During the period from January 1 to December 31, 2013, we participated in the following activities:
• | On March |
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. |
As of December 31, 2016, Petróleos Mexicanos had U.S. $4,750,000,000 and Ps. 23,500,000,000 in available revolving credit lines in order to ensure liquidity, with U.S. $4,630,000,000 and Ps. 3,500,000,000 remaining available.
2015 Financing Activities.During 2015 we participated in the following activities:
• | On |
• | 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 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 |
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. |
• | On |
On December 27, 2013, Petróleos Mexicanos borrowed U.S. $135,000,000 from its revolving credit facility with Credit Agricole CIB, which it repaid on January 27, 2014.
2012 Financing Activities. During the period from January 1 to December 31, 2012, we participated in the following activities:
Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services. |
• |
Indebtedness
During 2016, our total debt increased by 32.8%, from Ps. 1,493.4 billion at December 31, 2015 to Ps. 1,983.2 billion at December 31, 2016, primarily due to the financing activities undertaken during this period, as described in Note 15 to our consolidated financial statements included herein and to the 20.1% appreciation of the U.S. dollar relative to the peso in 2016.
As of December 31, 2012, the amount outstanding under this facility was U.S. $900,000,000.
In 2009, 20102016 and 2011, Petróleos Mexicanos undertook the following activities to comply with the amendments to the Federal Law of Budget and Fiscal Accountability, which became effective in November 2008:
financing agreements.
The following table sets forth the analysis of our total indebtedness (not including accrued interest) as of December 31, 20132016 based on short-andshort- and long-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. $ | |||
Lines of credit with variable interest rates established under committed credit facilities with various international commercial banks | ||||
Lines of credit with fixed interest rates | ||||
|
| |||
Total short-term debt(1) | U.S. $ | |||
|
| |||
Long-term debt | ||||
Fixed rate instruments | ||||
Instruments with fixed annual interest rates ranging from | U.S. $ | |||
Variable rate instruments | ||||
Drawings under lines of credit based on LIBOR and other variable rates with maturities ranging from | ||||
Floating rate notes with maturities ranging from | ||||
|
| |||
Total variable rate instruments | ||||
|
| |||
Total long-term debt | ||||
|
| |||
Total indebtedness(1) | U.S. $ | |||
|
|
Note: Numbers may not total due to rounding.
(1) | Excludes U.S. |
The table below sets forth our total indebtedness as of December 31 for each of the three years from 2011-2013.2014 to 2016.
Total Indebtedness of PEMEX
As of December 31,(1) | As of December 31,(1) | |||||||||||||||||||||||
2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||
(in millions of U.S. dollars)(2) | (in millions of U.S. dollars)(2) | |||||||||||||||||||||||
Domestic debt in various currencies | U.S. $ | 10,093 | U.S. $ | 11,749 | U.S. $ | 12,709 | U.S. $ | 19,856 | U.S. $ | 19,415 | U.S. $ | 16,651 | ||||||||||||
External debt in various currencies(3) | ||||||||||||||||||||||||
Bonds(4) | 26,925 | 32,831 | 39,654 | 44,445 | 52,981 | 67,523 | ||||||||||||||||||
Direct loans | 7,197 | 5,792 | 3,848 | 6,473 | 7,486 | 3,808 | ||||||||||||||||||
Project financing | 9,032 | 7,583 | 5,977 | 4,916 | 4,816 | 4,125 | ||||||||||||||||||
Financial leases | 243 | 178 | 302 | 263 | 536 | 2,181 | ||||||||||||||||||
Notes payable to contractors | 1,872 | 1,656 | 1,092 | 795 | 483 | 338 | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Total external debt | U.S. $ | 45,269 | U.S. $ | 48,040 | U.S. $ | 50,873 | U.S. $ | 56,892 | U.S. $ | 66,302 | U.S. $ | 77,975 | ||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Total indebtedness | U.S. $ | 55,362 | U.S. $ | 59,789 | U.S. $ | 63,582 | U.S. $ | 76,748 | U.S. $ | 85,717 | U.S. $ | 94,626 | ||||||||||||
|
|
|
|
|
|
Note: Numbers may not total due to rounding.
(1) | Figures do not include accrued interest. Accrued interest was U.S. |
(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. |
(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, |
(5) |
All credits included in this line are insured or guaranteed by export credit agencies. |
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-ExplorationPemex Exploration and Production, which assumed all of the rights and obligations ofPemex-Exploration 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. $490.8$162.5 million in aggregate principal amount as of December 31, 2013,2016, has been redeemed.
As of December 31, 2013,2016, the outstanding debt of Pemex Finance, Ltd. was composed of U.S. $437.5$162.5 million aggregate principal amount of fixed rate notes with maturities inranging from 2017 andto 2018 and interest rates between 9.15% and 10.61%, and U.S. $53.3 million aggregate principal amount of floating rate notes maturing in 2014 and accrued interest of U.S. $5.6$0.7 million.
20142017 Financing Activities.During the first four months of 2014,2017, Pemex Finance, Ltd. made payments of U.S. $43.3$28.1 million in principal of its notes. Pemex Finance, Ltd. did not incur any additional indebtedness during the first four months of 2014.2017.
20132016 Financing Activities.During 2013,2016, Pemex Finance, Ltd. made payments of U.S. $90.8$28.1 million in principal of its notes. Pemex Finance, Ltd. did not incur any additional indebtedness during 2013.2016.
20122015 Financing Activities.During 2012,2015, Pemex Finance, Ltd. made payments of U.S. $33.3$112.5 million in principal of its notes. Pemex Finance, Ltd. did not incur any additional indebtedness during 2012.2015.
Contractual Obligations andOff-Balance Sheet Arrangements
Information about our long-term contractual obligations andoff-balance sheet arrangements outstanding as of December 31, 20132016 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, 20132016(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. $ | 62,938 | U.S. $ | 6,251 | U.S. $ | 10,830 | U.S. $ | 10,167 | U.S. $ | 35,690 | U.S.$ | 93,453 | U.S.$ | 8,174 | U.S.$ | 13,666 | U.S.$ | 16,485 | U.S.$ | 55,128 | ||||||||||||||||||||
Notes payable to contractors(3) | 1,092 | 643 | 305 | 51 | 93 | 338 | 202 | 68 | 51 | 17 | ||||||||||||||||||||||||||||||
Capital lease obligations(4) | 302 | 40 | 86 | 95 | 81 | 2,181 | 149 | 279 | 273 | 1,480 | ||||||||||||||||||||||||||||||
Other long-term liabilities: | ||||||||||||||||||||||||||||||||||||||||
Dismantlement and abandonment costs obligations(5) | 3,527 | 91 | 555 | 798 | 2,083 | 3,144 | 13 | 478 | 543 | 2,110 | ||||||||||||||||||||||||||||||
Employee benefits plan(6) | 85,589 | 3,921 | 8,126 | 9,637 | 63,905 | 59,060 | 2,945 | 6,061 | 6,776 | 43,278 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total contractual obligations recognized in balance sheet | 153,448 | 10,946 | 19,902 | 20,748 | 101,852 | 158,226 | 11,483 | 20,552 | 24,128 | 102,013 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Other contractual obligations not recognized in liabilities: | ||||||||||||||||||||||||||||||||||||||||
Infrastructure works contracts(7) | 48,236 | 21,939 | 17,047 | 4,518 | 4,732 | 39,585 | 16,822 | 13,626 | 3,365 | 5,572 | ||||||||||||||||||||||||||||||
Financed Public Works Contracts (FPWC)(8) | 2,202 | 982 | 336 | 330 | 554 | 799 | 356 | 122 | 120 | 201 | ||||||||||||||||||||||||||||||
Nitrogen supply contracts(9) | 796 | 112 | 195 | 101 | 388 | 419 | 39 | 79 | 80 | 221 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total contractual obligations not recognized in liabilities(10) | 51,234 | 23,033 | 17,578 | 4,949 | 5,674 | 40,803 | 17,217 | 13,827 | 3,565 | 5,994 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total contractual obligations | U.S. $ | 204,682 | U.S. $ | 33,979 | U.S. $ | 37,480 | U.S. $ | 25,697 | U.S. $ | 107,526 | U.S. $ | 199,029 | U.S. $ | 28,700 | U.S. $ | 34,379 | U.S. $ | 27,693 | U.S. $ | 108,007 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Note: Numbers may not total due to rounding.
(1) | All amounts calculated in accordance with IFRS. |
(2) | See Note |
(3) | See Note |
(4) | See Note |
(5) | See Notes 3(l) and |
(6) | See Note |
(7) | See Note |
(8) | The amounts presented for Financed Public Works Contracts 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— |
(9) | See Notes |
(10) | 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— |
Source: PEMEX’s consolidated financial statements, prepared in accordance with IFRS.
As of December 31, 2013,2016, 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—Instruments Entered into for Trading Purposes” for more information regarding the fair value of our derivative contracts in connection with natural gas trading activities as of December 31, 2013.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, 2011, 20122014, 2015 and 20132016 as well as the percentage change in sales revenues for those years.
Year Ended December 31, | 2012 vs. 2011 | 2013 vs. 2012 | Year Ended December 31, | 2015 | 2016 | ||||||||||||||||||||||||||||||||||||||||||
2011 | 2012 | 2013 | 2014 | 2015 | 2016 | vs. 2014 | vs. 2015 | ||||||||||||||||||||||||||||||||||||||||
(in millions of pesos)(1) | (%) | (%) | (in millions of pesos)(1) | (%) | (%) | ||||||||||||||||||||||||||||||||||||||||||
Exploration and Production | Exploration and Production |
| Exploration and Production | ||||||||||||||||||||||||||||||||||||||||||||
Trade sales(2) | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Intersegment sales | Ps. | 1,270,840 | Ps. | 1,333,286 | Ps. | 1,250,772 | 4.9 | (6.2 | ) | Ps.1,134,520 | Ps.690,642 | Ps.616,381 | (39.1 | ) | (10.8 | ) | |||||||||||||||||||||||||||||||
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||
Total net sales | 1,270,840 | 1,333,286 | 1,250,772 | 4.9 | (6.2 | ) | 1,134,520 | 690,642 | 616,381 | (39.1 | ) | (10.8 | ) | ||||||||||||||||||||||||||||||||||
Refining | |||||||||||||||||||||||||||||||||||||||||||||||
Industrial Transformation(5) | |||||||||||||||||||||||||||||||||||||||||||||||
Refining(6) | |||||||||||||||||||||||||||||||||||||||||||||||
Trade sales(2)(3) | 625,297 | 725,235 | 744,497 | 16.0 | 2.7 | 763,005 | 589,548 | n.a. | (22.7 | ) | n.a. | ||||||||||||||||||||||||||||||||||||
Intersegment sales | 75,155 | 61,480 | 74,894 | (18.2 | ) | 21.8 | 78,453 | 54,876 | n.a. | (30.0 | ) | n.a. | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||
Total net sales | 700,452 | 786,715 | 819,391 | 12.3 | 4.2 | 841,458 | 644,424 | n.a. | (23.4 | ) | n.a. | ||||||||||||||||||||||||||||||||||||
Gas and Basic Petrochemicals | |||||||||||||||||||||||||||||||||||||||||||||||
Gas and Basic Petrochemicals(7) | |||||||||||||||||||||||||||||||||||||||||||||||
Trade sales(2)(3) | 129,773 | 119,490 | 145,471 | (7.9 | ) | 21.7 | 159,754 | 137,456 | n.a. | (14.0 | ) | n.a. | |||||||||||||||||||||||||||||||||||
Intersegment sales | 77,480 | 66,227 | 73,998 | (14.5 | ) | 11.7 | 84,198 | 55,594 | n.a. | (34.0 | ) | n.a. | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||
Total net sales | 207,253 | 185,717 | 219,469 | (10.4 | ) | 18.2 | 243,952 | 193,050 | n.a. | (20.9 | ) | n.a. | |||||||||||||||||||||||||||||||||||
Petrochemicals | |||||||||||||||||||||||||||||||||||||||||||||||
Petrochemicals(8) | |||||||||||||||||||||||||||||||||||||||||||||||
Trade sales(2) | 28,855 | 27,760 | 26,525 | (3.8 | ) | (4.4 | ) | 29,074 | 20,735 | n.a. | (28.7 | ) | n.a. | ||||||||||||||||||||||||||||||||||
Intersegment sales | 14,583 | 7,650 | 13,840 | (47.5 | ) | 80.9 | 15,182 | 15,824 | n.a. | 4.2 | n.a. | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||
Total net sales | 43,438 | 35,411 | 40,365 | (18.5 | ) | 14.0 | 44,256 | 36,559 | n.a. | (17.4 | ) | n.a. | |||||||||||||||||||||||||||||||||||
Trading Companies | |||||||||||||||||||||||||||||||||||||||||||||||
Trade sales(2)(3) | 773,907 | 773,426 | 688,464 | (0.1 | ) | (11.0 | ) | ||||||||||||||||||||||||||||||||||||||||
Intersegment sales | 424,018 | 448,732 | 407,664 | 5.8 | (9.2 | ) | |||||||||||||||||||||||||||||||||||||||||
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 | 1,197,926 | 1,222,158 | 1,096,129 | 2.0 | (10.3 | ) | n.a. | 874,033 | 770,750 | n.a. | (11.8 | ) | |||||||||||||||||||||||||||||||||||
Corporate and other subsidiary companies | |||||||||||||||||||||||||||||||||||||||||||||||
Trade sales(2)(3) | 621 | 1,000 | 3,247 | 61.0 | 224.7 | ||||||||||||||||||||||||||||||||||||||||||
Intersegment sales and eliminations | (1,862,076 | ) | (1,917,374 | ) | (1,821,168 | ) | (3.0 | ) | 5.0 | ||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||
Total net sales | (1,861,455 | ) | (1,916,374 | ) | (1,817,921 | ) | (3.0 | ) | 5.1 | ||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||
Total net sales | Ps. | 1,558,454 | Ps. | 1,646,912 | Ps. | 1,608,205 | 5.7 | (2.4 | ) | ||||||||||||||||||||||||||||||||||||||
|
|
|
Drilling and Services(9) Trade sales(2) Intersegment sales Total net sales Logistics(10) Trade sales(2) Intersegment sales Total net sales Cogeneration and Services(11) Trade sales(2) Intersegment sales Total net sales Fertilizers(12) Trade sales(2) Intersegment sales Total net sales Ethylene(13) Trade sales(2) Intersegment sales Total net sales Trading Companies Trade sales(2)(3) Intersegment sales Total net sales Corporate and other subsidiary companies Trade sales(2)(3) Intersegment sales and eliminations Total net sales Total net sales Year Ended December 31, 2015 2016 2014 2015 2016 vs. 2014 vs. 2015 (in millions of pesos)(1) (%) (%) n.a n.a 70 n.a 100.0 n.a 1,512 1,982 100.0 31.1 1,512 2,052 100.0 35.7 n.a 10,356 2,814 100.0 (72.8 ) n.a 599 68,317 100.0 11,305.2 10,955 71,131 100.0 549.3 n.a 0 133 n.a 100.0 n.a 0 52 n.a 100.0 0 184 n.a 100.0 n.a 1,496 3,875 100.0 159.0 n.a 209 900 100.0 330.8 1,705 4,776 100.0 180.1 n.a 4,569 15,453 100.0 238.2 n.a 474 1,764 100.0 272.2 5,043 17,217 100.0 241.4 631,069 407,876 395,354 (35.4 ) (3.1 ) 433,732 353,137 405,293 (18.6 ) 14.8 1,064,801 761,013 800,648 (28.5 ) 5.2 3,826 (5,673 ) 8,193 (248.3 ) (244.4 ) (1,746,085 ) (1,172,868 ) (1,211,786 ) (32.8 ) 3.3 (1,742,259 ) (1,178,541 ) (1,203,593 ) (32.4 ) 2.1 Ps. 1,586,728 Ps. 1,166,362 Ps.1,079,546 (26.5 ) (7.4 )
Note: Numbers may not total due to rounding.
n.a. | not available. |
(1) | Figures for |
(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 related to the drilling and services segment until the formation of Pemex Drilling and Services on August 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 when Pemex Drilling and Services was formed. |
(10) | Figures for the logistics segment for the year ended December 31, 2015 refer to net sales revenue since October 1, 2015 when Pemex Logistics was formed. |
(11) | Figures for the cogeneration and services segment year ended December 31, 2015 refer to net sales revenue since June 1, 2015 when Pemex Cogeneration and Services was formed. |
(12) | Figures for the fertilizers segment for the year ended December 31, 2015 refer to net sales revenue since October 1, 2015 when Pemex Fertilizers was formed. |
(13) | Figures for the ethylene segment for the year ended December 31, 2015 refer to net sales revenue since October 1, 2015 when Pemex Ethylene was formed. |
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 the three-year period ended December 31, 2013,2016, as well as the percentage change in income for the years 20112014 to 2013.2016.
Year Ended December 31, | 2012 vs. 2011 | 2013 vs. 2012 | Year Ended December 31, | 2015 vs. 2014 | 2016 vs. 2015 | |||||||||||||||||||||||||||||||||||
2011 | 2012 | 2013 | (%) | (%) | 2014 | 2015 | 2016 | (%) | (%) | |||||||||||||||||||||||||||||||
(in millions of pesos)(1) | (in millions of pesos)(1) | |||||||||||||||||||||||||||||||||||||||
Business Segment | ||||||||||||||||||||||||||||||||||||||||
Exploration and Production | Ps. | 28,813 | Ps. | 93,982 | Ps. | (42,084 | ) | 226.2 | (144.8 | ) | Ps. (153,377 | ) | Ps. (667,394 | ) | Ps. (45,879 | ) | (335.1 | ) | (93.1 | ) | ||||||||||||||||||||
Refining | (131,873 | ) | (102,098 | ) | (123,015 | ) | 22.6 | (20.5 | ) | |||||||||||||||||||||||||||||||
Gas and Basic Petrochemicals | (3,347 | ) | 1,613 | 3,909 | 148.2 | 142.3 | ||||||||||||||||||||||||||||||||||
Petrochemicals | (6,256 | ) | (11,270 | ) | (14,936 | ) | (80.1 | ) | (32.5 | ) | ||||||||||||||||||||||||||||||
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 | 3,821 | 7,108 | 2,973 | 86.0 | (58.2 | ) | 4,085 | 8,697 | 11,167 | 112.9 | 28.4 | |||||||||||||||||||||||||||||
Corporate and other subsidiary companies(2) | 1,900 | 13,265 | 3,094 | 598.2 | (76.7 | ) | ||||||||||||||||||||||||||||||||||
Corporate and other subsidiary companies(12) | 886 | 38,526 | (76,809 | ) | 4,245.3 | (299.4 | ) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total net income (loss) | Ps. | (106,942 | ) | Ps. | 2,600 | Ps. | (170,058 | ) | 102.4 | (6,640.7 | ) | Ps. (265,543 | ) | Ps. (712,567 | ) | Ps. (191,144 | ) | (168.3 | ) | (73.2 | ) | |||||||||||||||||||
|
|
|
|
|
|
Note: Numbers may not total due to rounding.
n.a. | not available. |
(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) related to the drilling and services segment until the formation of Pemex Drilling and Services on August 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 when Pemex Drilling and Services was formed. |
(8) | Figures for the logistics segment for the year ended December 31, 2015 refer to net income (loss) since October 1, 2015 when Pemex Logistics was formed. |
(9) | Figures for the cogeneration and services segment year ended December 31, 2015 refer to net income (loss) since June 1, 2015 when Pemex Cogeneration and Services was formed. |
(10) | 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.
20132016 Compared to 20122015
Certain business units and assets that were operated by 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.” 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” 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.
Exploration and Production
In 2013, Pemex-Exploration2016, total intersegment sales, which include sales to our industrial transformation segment and Production’sthe Trading Companies, decreased by 10.8%, 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 PMI GroupTrading Companies in 2016 decreased by 11.3%0.5% in peso terms and decreased by 8.7%16.2% in U.S. dollar terms, each as compared to 2012, mainlyprimarily due to a decrease in the volume of crude oil exports.export prices. The weighted average price of crude oil sold byPemex-Exploration our exploration and Productionproduction segment to the PMI GroupTrading Companies for export was U.S. $98.54$35.17 in 2013,2016, as compared to U.S. $101.86$42.70 in 2012.2015. Net loss related to exploration and production activities decreased by 91.3%, or Ps. 621,515 million, from a Ps. 667,394 million loss in 2015 to a Ps. 45,879 million loss in 2016, primarily due to a net reversal of impairment of our fixed assets in this segment.
Industrial Transformation
In 2016, trade sales related to industrial transformation activities decreased by 12.6%, from Ps. 747,739 million in 2015 to Ps. 653,654 million in 2016, primarily due to a decrease in the average sales prices of petroleum products. Intersegment sales decreased by 7.3%, from Ps. 126,264 million in 2015 to Ps. 117,096 million in 2016, primarily due to a decrease in the prices of petroleum products sold. In 2016, our net loss related to industrial transformation activities was Ps. 69,865 million, 19.9% lower than the loss of Ps. 87,209 million in 2015. The decrease 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.
Drilling and Services
In 2016, total sales related to the drilling and services segment increased by 35.7%, from Ps. 1,512 million in 2015 to Ps. 2,052 million in 2016. This increase was primarily due to an increase in services provided to Pemex Exploration and Production. Net loss related to drilling and services increased by Ps. 597 million, from an income of Ps. 455 million in 2015 to a net loss of Ps. 142 million in 2016, primarily due to an increase 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.
Logistics
In 2016, total sales related to the logistics segment increased by Ps. 60,176 million, from Ps. 10,955 million in 2015 to Ps. 71,131 million in 2016, primarily due to an increase in the services provided to Pemex Industrial
Transformation. In 2016, our net loss related to logistics activities was Ps. 10,018 million, 171.9% higher than the loss of Ps. 3,685 million in 2015. The increase in net loss was primarily due to the transfer of certain of our assets to CENAGAS, higher operating expenses, an increase in financing cost, and a foreign exchange loss.
Fertilizers
In 2016, total sales related to the fertilizers segment increased by Ps. 3,071 million, from Ps. 1,705 million in 2015 to Ps. 4,776 million in 2016. This increase was primarily due to an increase in the trade sales of ammonia. In 2016, our net loss related to our fertilizers activities increased by Ps. 1,514 million, from a net loss of Ps. 145 million in 2015 to a net loss of Ps. 1,659 million in 2016, primarily due to costs related to the acquisition 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..
Trading Companies
In 2016, 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. 407,876 million in 2015 to Ps. 395,354 million in 2016, primarily as a result of a decrease in the prices of crude oil exports. In 2016, net income related to the Trading Companies increased by 28.4%, from Ps. 8,697 million in 2015 to Ps. 11,167 million, primarily due to an increase in the permanent investment in associates that was recognized at fair value.
Corporate and Other Subsidiary Companies
In 2016, the total sales relating to corporate and other subsidiary companies after inter-company eliminations increased from Ps. 1,178,541 million in 2015 to Ps. 1,203,593 million in 2016, primarily due to an increase in total intercompany sales as a result of an increase in the import of products. Net loss related to corporate and other subsidiary companies after inter-company eliminations increased by Ps. 115,335 million, from a net income of Ps. 38,526 million in 2015 to a net loss of Ps. 76,809 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 Pemex-Refining, Pemex-Gasour refining segment, our gas and Basic Petrochemicalsbasic petrochemicals segment and the PMI Group,Trading Companies, decreased by 6.2%39.1%, principally as a result ofprimarily due to the decrease in crude oil export prices. Net incomeloss related to exploration and production activities decreasedincreased by 144.8%335.1%, or Ps. 136,066514,017 million, from a Ps. 93,982153,377 million loss in 20122014 to a Ps. 667,394 million loss of Ps. 42,084 million in 2013,2015, primarily as a result ofdue to a decrease in the average price of crude oil.
Refining
In 2013,2015, trade sales related to refining activities (including services income) increaseddecreased by 2.7%22.7%, from Ps. 725,235763,005 million in 20122014 to Ps. 744,497589,548 million in 2013,2015, primarily due to an increasea decrease in the average sales prices of petroleum products. Intersegment sales increaseddecreased by Ps. 13,41423,577 million, or 21.8%30.0%, from Ps. 61,48078,453 million in 20122014 to Ps. 74,89454,876 million in 2013, mainly2015, primarily due to an increasea decrease in the volumeprices of petroleum products sold. In 2013,2015, our total loss related to refining activities was Ps. 123,015113,148 million, 20.5% higher0.6% lower than the loss of Ps. 102,098113,826 million in 2012.2014. The increasedecrease in loss was primarily due to higher prices of petroleum products during 2015, which was partially offset by a decrease in other revenues, net, during 2013 primarilyincome due to a lower credit attributable to the negative IEPS tax rate in 2013 as compared to 2012.tax.
Gas and Basic Petrochemicals
In 2013,2015, trade sales related to the natural gas and basic petrochemical business segment (including services income) increaseddecreased by 21.7%14.0%, from Ps. 119,490159,754 million in 20122014 to Ps. 145,471137,456 million in 2013.2015. LPG sales increased by 10.4%0.1%, from Ps. 64,42478,084 million in 20122014 to Ps. 71,14878,194 million in 2013, principally2015, primarily due to an increase in LPG prices. Natural gas sales increaseddecreased by 38.1%30.0%, from Ps. 51,25077,813 million in 20122014 to Ps. 70,78154,498 million in 2013, mainly2015, primarily due to an increasea decrease in the volume and prices of natural gas. Net income related to natural gas and basic petrochemicals increased by 142.3%16.3%, orfrom Ps. 2,296 million, from a gain of Ps. 1,61315,584 million in 20122014 to Ps. 18,126 million in 2015, primarily due to a gaindecrease in purchases of Ps. 3,909 million in 2013, mainly due to an increase in domestic sales.imported LPG and cost of employee benefits.
Petrochemicals
In 2013,2015, trade sales related to the petrochemicals business segment decreased by 4.4%28.7%, from Ps. 27,76029,074 million in 20122014 to Ps. 26,52520,735 million in 2013.2015. Prices for petrochemicals sold domestically decreased for a majority of our
petrochemical products. In 2013,2015, the volume of petrochemical exports increaseddecreased by 0.5%40.4%, from 602.1527.1 thousand tons in 20122014 to 605.4313.9 thousand tons in 2013.2015. Losses related to petrochemical activities increaseddecreased by 32.5%141.3%, from Ps. 11,27018,895 million in 20122014 to profit Ps. 14,9367,812 million in 2013, mainly2015, primarily due toto: (1) a 35.5% increase24.9% decrease in the cost of sales in 2013, an increase2015; (2) a decrease in the prices of raw materialsmaterials; and an increase(3) a decrease in the volumecost of raw materials used in connection with the reopening of the aromatics plant at the Cangrejera petrochemical complex and higher prices of raw materials.employee benefits.
Trading Companies
In 2013,2015, trade sales relating to the PMI Group’sTrading Companies’ exports of crude oil and petroleum products to third parties (including services income) decreased in peso terms, from Ps. 773,426631,069 million in 20122014 to Ps. 688,464407,876 million in 2013,2015, primarily as a result of a decrease in the volume and prices of crude oil exports. In 2013,2015, net income related to the PMI Group decreasedTrading Companies increased by 58.2%112.9%, from Ps. 7,1084,085 million in 20122014 to Ps. 2,9738,697 million, in 2013, primarily due to an increase in its income taxlower taxes and lower sales.sale.
Corporate and Other Subsidiary Companies
In 2013,2015, the trade sales relating to corporate and other subsidiary companies after inter-company eliminations decreased, from Ps. 1,916,3741,742,259 million in 20122014 to Ps. 1,817,9211,178,541 million in 2013,2015, primarily due to higher revenues from services. Net income related to corporate and other subsidiary companies after inter-company eliminations decreased from Ps. 13,265 million in 2012 to Ps. 3,094 million in 2013, due to the unfavorable results of the subsidiary companies as well as a loss on foreign exchange, net.
2012 Compared to 2011
Exploration and Production
In 2012, Pemex-Exploration and Production’s sales of crude oil to the PMI Group increased by 0.6% in peso terms and decreased by 4.8% in U.S. dollar terms, each as compared to 2011, mainly due to an increase in the average sales prices of our principal petroleum products. The weighted average price of crude oil sold byPemex-Exploration and Production to the PMI Group for export was U.S. $101.86 in 2012, as compared to U.S. $101.09 in 2011. Total intersegment sales, which include sales to Pemex-Refining, Pemex-Gas and Basic Petrochemicals and the PMI Group, increased by 4.9%, principally as a result of the increase in crude oil export prices. Net income related to exploration and production activities increased by 226.2%, or Ps. 65,169 million, from Ps. 28,813 million in 2011 to Ps. 93,982 million in 2012, primarily as a result of an increase in the average price of crude oil.
Refining
In 2012, trade sales related to refining activities (including services income) increased by 16.0%, from Ps. 625,297 million in 2011 to Ps. 725,235 million in 2012, due to an increase in the average sales prices of petroleum products. Intersegment sales decreased by Ps. 13,675 million, or 18.2%, from Ps. 75,155 million in 2011 to Ps. 61,480 million in 2012, mainly due to a decrease in the volume of petroleum products sales. In 2012, our total loss related to refining activities was Ps. 102,098 million, 22.6% less than the loss of Ps. 131,873 million in 2011. The decrease in loss was primarily due to higher trade sales and a gain on our foreign exchange, net, during 2012. For the full year, refining margins were negative.
Gas and Basic Petrochemicals
In 2012, trade sales related to the natural gas and basic petrochemical business segment (including services income) decreased by 7.9%, from Ps. 129,773 million in 2011 to Ps. 119,490 million in 2012. LPG sales increased by 11.1%, from Ps. 57,983 million in 2011 to Ps. 64,424 million in 2012, principally due to an increase in LPG prices. Natural gas sales decreased by 22.2%, from Ps. 65,848 million in 2011 to Ps. 51,250 million in 2012, mainly due to a decrease in natural gas prices. Net income related to natural gas and basic petrochemicals increased by 148.2%, or Ps. 4,960 million, from a loss of Ps. 3,347 million in 2011 to a gain of Ps. 1,613 million in 2012, mainly due to a decrease in costs and expenses and an increase in the income of Pemex-Gas and Basic Petrochemicals’ subsidiaries.
Petrochemicals
In 2012, trade sales related to the petrochemicals business segment decreased by 3.8%, from Ps. 28,855 million in 2011 to Ps. 27,760 million in 2012. Prices for petrochemicals sold domestically decreased for a majority of our petrochemical products. In 2012, the volume of petrochemical exports increased by 40.2%, from 429.4 thousand tons in 2011 to 602.1 thousand tons in 2012. Losses related to petrochemical activities increased by 80.1%, from Ps. 6,256 million in 2011 to Ps. 11,270 million in 2012, mainly due to lower sales of aromatics due to the temporary suspension of operations in the aromatics plants, a decrease in other revenues and increased labor costs.
Trading Companies
In 2012, trade sales relating to the PMI Group’s exports of crude oil and petroleum products to third parties (including services income) decreased slightly in peso terms, from Ps. 773,908 million in 2011 to Ps. 773,426 million in 2012, as a result of a decrease in the volume of crude oil exports. In 2012, net income related to the PMI Group increased from Ps. 3,821 million in 2011 to Ps. 7,108 million in 2012, primarily due to a decrease in its income tax.
Corporate and Other Subsidiary Companies
In 2012, the trade sales relating to corporate and other subsidiary companies after inter-company eliminations increased from Ps. 1,861,454 million in 2011 to Ps. 1,916,374 million in 2012, primarily due to higher revenues from services. Net income related to corporate and other subsidiary companies after inter-company eliminations increased, from Ps. 1,900886 million in 20112014 to Ps. 13,26538,526 million in 2012,2015, primarily due to the favorable performance of theresults from subsidiary companies as well as a gain on our foreign exchange, net.companies.
Item 6. | Directors, Senior Management and Employees |
Under the Petróleos Mexicanos Law, Petróleos Mexicanos is governed by a 15 memberten-member Board of Directors composed as follows:
• |
Except in the case of the professional members, who cannot designate alternates,an alternate directors are authorized to serve onin 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 in placeand otherwise assume the duties of those who are unable to attend meetings or otherwise participate in the activitiesdirector, except that the Chairperson’s designated alternate may not cast atie-breaking vote. In addition, any ministry-level secretary serving as a member of the Board of Directors of Petróleos Mexicanos. Budgetary actions can only be approved byMexicanos may designate an alternate to attend meetings on his or her behalf, provided that such alternate is a public official at the directors whoundersecretary level, at minimum.
Under the Petróleos Mexicanos Law, all public officials serving as members of the Board of Directors of Petróleos Mexicanos are Mexican Government representatives.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.
In addition, exceptExcept in the case of the professionalindependent members first appointed under the Petróleos Mexicanos Law, the four professionalfive independent members will be appointed to six yearstaggered five-year terms, and may be appointed for an additional term of the same length. Non-professionalThe remaining members of the BoardsBoard of Directors of Petróleos Mexicanos and the subsidiary entities are not appointed for a specific term.
In 2009,2014, the following individuals named below were appointed to serve as professionalindependent members of the Board of Directors of Petróleos Mexicanos for the initial terms set forth below:
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 professionalMinistry of Energy and the Ministry of Finance and Public Credit may also appoint members have served or will serve initial terms as set forth below.
Followingto each board of directors of the expiration of Mr. Fluvio César Ruíz Alarcón’s initial term as a professional director in March 2012, Mr. Ruíz Alarcón was appointedsubsidiary entities, subject to an additional six-year term. On April 12, 2013, the President of Mexico appointed Mr. Jorge José Borja Navarrete to serve as a professional member ofapproval by the Board of Directors of Petróleos Mexicanos, following the expiration of Mr. Rogelio Gasca Neri’s term. Mr. Jorge José Borja Navarrete’s appointment was ratified by the Senate on April 18, 2013. Following the expiration of Mr. Héctor Moreira Rodríguez’s initial term as a professional director, he was appointed on May 7, 2014 to an additional six-year term and his appointment was ratified by the Senate on May 13, 2014.
Each of the boards of directors of the subsidiary entities is composed of:
Professional members of the boards of directors of the subsidiary entities are appointed to six year terms and may be appointed for an additional term on the same length.Mexicanos.
TheEstatuto Orgánico(Organic Statute) of Petróleos Mexicanos was published in the Official Gazette of the Federation on September 24, 2009 and has since been modified on August 9, 2010, August 2, 2011, February 23, 2012, March 27, 2013, September 30, 2013, February 4, 2014 and February 7, 2014. On MarchApril 28, 2013, the2015. This Organic Statute of each of the subsidiary entities was published in the Official Gazette of the Federation. These Organic Statutes establishestablishes the structure, organizational basis and functions of the administrative units of Petróleos Mexicanos and of each of the subsidiary entities, and also delineatedelineates the duties and internal regulations of their respectiveits Board of Directors.
On January 17, 2014, During 2016 and through the first quarter of 2017, the Board of Directors of Petróleos Mexicanos approved the creation of a new division within the organizational structure of Petróleos Mexicanos—theDirección Corporativa de Procura y Abastecimiento (Corporate Office of Procurement and Supply)—and appointed Mr. Arturo Henríquez Autrey as director of this department. This division was establishedseveral amendments to centralize purchases related to goods, services and operating and public works leases.
On March 14, 2014, the Board of Directorsour organic structure. The management of Petróleos Mexicanos approvedwill task applicable areas with carrying out all of the creation ofnecessary actions to implement these changes until a new division within the organizational structure of Petróleos Mexicanos—the Deputy Direction of Strategic Safeguarding—Organic Statute is authorized and appointed Mr. Eduardo León Trauwitz as deputy director of this area. This area was established to strengthen our security policies and protect our products and facilities and remains part of theDirección Corporativa de Administración (Corporate Office of Management of Petróleos Mexicanos. For more information, see “Item 4—Information on the Company—Business Overview—PEMEX Corporate Matters—Security Strategy.”becomes effective.
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 4, 2014.3, 2017.
Petróleos Mexicanos—Directors and Executive Officers
Name | Position with Petróleos Mexicanos | Year Appointed | ||||
Mr. Pedro Joaquín Coldwell | Chairman of the Board of Directors of Petróleos Mexicanos and Secretary of Energy Born: 1950 Business experience: Chairman of the National Executive Committee of the PRI; Senator of the LXth and LXIst Legislatures; and Chairman of the National Executive Commission of Internal Procedures of the PRI. Other board memberships: Chairman of CFE;Chairman of the | 2012 | ||||
Mr. Ildefonso Guajardo Villarreal | Board 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 Other board memberships: 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. | 2013 |
Petróleos Mexicanos—Directors and Executive Officers
Name | Position with Petróleos Mexicanos | Year Appointed | ||
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 the Consejo Nacional para la Competitividad de la Micro, Pequeña y Mediana Empresa; Consejo |
Petróleos Mexicanos—Directors and Executive Officers
|
| |||||
Nacional para la Prevención y Control de las Enfermedades Crónicas no Transmisibles; Coordinación Nacional de Prospera, Programa de Inclusión Social; 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 | ||||||
y Consolidación 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 | ||||||
|
|
Petróleos Mexicanos—Directors and Executive Officers
Name | Position with Petróleos Mexicanos | Year Appointed | ||||
Mr. Aldo Ricardo Flores Quiroga | Board Member of Petróleos Mexicanos and Undersecretary of Hydrocarbons 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. | Board Member of Petróleos Mexicanos and Secretary of Finance and Public Credit Born: Business experience: Other board memberships: Aeropuertos y Servicios Auxiliares; Chairman of 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; | |||||
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; | ||||
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 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 | 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 | 2013 | ||
Mr. David Ruelas Rodríguez | Deputy Director of Risk Management and Insurance Born: 1977 | 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 | Deputy Director of Labor Relations and Services for Personnel Born: 1959 | 2005 | ||
Mr. Antonio Eduardo Carrillo Liceaga | Deputy Director of Corporate Services Born: 1965 | 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 | 2015 | ||
Mr. Eduardo León Trauwitz | Deputy Director of Strategic Safeguarding Born: 1966 | 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 | 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 | Deputy Director of Sustainable Development and Safety, Health and Environmental Protection Born: 1967 | 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 | 2015 | ||
Mr. Rodrigo Becerra Mizuno | Chief Information Officer/ Corporate Director of Information Technology (before Corporate Officer of Business Processes and Information Technology) Born: 1975 | 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 | 2015 | ||
Mr. Armando García Espinosa | Deputy Director of Businesses Development of Industrial Transformation Born: 1967 | 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 | 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 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 | 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 Born: 1972 Business experience: Head of the Economic Planning Unit of Public Finance of the Other board memberships: | 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); Comisión Intersecretarial de la Industria Automotriz; Comisión de Cambios; CENAGAS; Centro Nacional de Control de Energía; Mexican Petroleum Fund for Stabilization and Development (Alternate); Instituto Nacional para el Federalismo y el Desarrollo Municipal; 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; and Consejo Nacional de Armonización | ||||||
Mr. | Board Member of Pemex Exploration and Production (refer to Petróleos Mexicanos) | 2016 | ||||
Mr. Carlos Rafael Murrieta Cummings | Board Member of Born: Business experience: | 2016 | ||||
Mr. Miguel Ángel Servín Diago | Board Member of Pemex Exploration and | 2016 | ||||
| Board Member of Pemex Exploration and Production Born: 1958 Business experience: Executive Director of Pemex Exploration and Production; Director of Development and Production of Pemex Exploration and Production; and Chief of Staff of the Director General of Pemex-Exploration and Production. |
| 2015 |
Petróleos Mexicanos—Pemex Industrial Transformation—Directors and Executive Officers
Name | Position with | Year Appointed | ||
Mr. José Antonio González Anaya | 2016 | |||
Mr. | Board Member of Pemex Industrial Transformation (refer to Petróleos Mexicanos) | 2016 | ||
Mr. Claudio César de la Cerda Negrete | Board Member of Born: Business experience: | |||
Mr. | Board Member of
| |||
Mr. | Board Member of Pemex Industrial Transformation (refer to Petróleos
| |||
Mr. | Board Member of
| |||
Mr. | Board Member of
| |||
|
|
Petróleos Mexicanos—Pemex Cogeneration and Services—Directors and Executive Officers
Name | Position with | 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 | 2015 | ||||||
Mr. Leonardo Cornejo Serrano |
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. |
| 2016 | ||||||
Mr. |
| 2015 | ||||||
Mr. |
| 2017 | ||||||
Ms. Raquel Buenrostro Sánchez . | Acting Director 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
| |||||||
|
| 2017 |
Petróleos Mexicanos—Pemex Drilling and Services—Directors and Executive Officers
Name | Position with | Year Appointed | ||||
Mr. José Antonio González Anaya | Chairman of the Board of Pemex Drilling and Services (refer to Petróleos Mexicanos) | 2016 | ||||
Mr. |
| 2016 | ||||
Mr. |
| 2016 | ||||
Mr. |
| 2016 | ||||
|
| 2015 | ||||
Mr. | 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 Born: Business experience: Associate Managing Director of | 2017 |
Petróleos Mexicanos—Pemex Logistics—Directors and Executive Officers
Name | Position with | Year Appointed | ||||
Mr. José Antonio González Anaya | Chairman of the Board of Pemex Logistics (refer to Petróleos Mexicanos) | 2016 | ||||
Mr. |
| 2016 | ||||
Mr. |
| 2016 | ||||
Ms. Guadalupe Merino Bañuelos | Board Member of Pemex Logistics (refer to Petróleos Mexicanos) | 2016 | ||||
Mr. Luis Ignacio Rayón Llerandi | Board Member of Pemex Logistics (refer to Petróleos Mexicanos) | 2016 | ||||
Mr. José Luis Antonio | Board Member of Pemex Logistics and Coordinator of Procurement and Supply for Industrial Transformation of Petroleos Mexicanos Born: 1957 Business experience: Deputy Director of
| 2015 | ||||
Mr. David Ruelas Rodriguez | Board Member of Pemex Logistics (refer to Petróleos Mexicanos) | 2016 | ||||
Mr. José Ignacio Aguilar Álvarez Greaves | Director General Born: 1970 Business experience: Vice President of Administration of Petróleos Ebano; Deputy Director of Hartree Consultores, S. de R.L. de C.V.; and Deputy Director of Hydrocarbons and Derivatives Logistics of Petróleos Mexicanos. | |||||
|
| |||||
|
| 2017 |
Petróleos Mexicanos—Pemex Fertilizers—Directors and Executive Officers
Name | Position with | Year Appointed | ||||||
Mr. José Antonio González Anaya | Chairman of the Board of Pemex Fertilizers (refer to Petróleos Mexicanos) | 2016 | ||||||
Mr. |
| |||||||
|
Born:
| |||||||
|
| |||||||
|
Business experience: Associate Managing Director of |
| 2015 | |||||
|
| 2015 | ||||||
Mr. | Board Member of Pemex Fertilizers (refer to Petróleos Mexicanos) | 2016 | ||||||
Mr. José Ignacio Aguilar Álvarez Greaves | Board Member of Pemex Fertilizers (refer to Pemex Logistics) | 2017 | ||||||
Mr. Jorge Collard de la Rocha | Board Member of Pemex Fertilizers (refer to Petróleos Mexicanos) | 2015 | ||||||
Mr. Juan Alfredo Lozano Tovar | Director General of Pemex Fertilizers Born: 1968 Business experience: Director of Economic and Social Benefits of the Instituto Mexicano del Seguro Social; General Secretary of the Conferencia Interamericana de Seguridad Social; and Head of the Liaisons of the Instituto Mexicano del Seguro Social. |
| 2016 |
Petróleos Mexicanos—Pemex Ethylene—Directors and Executive Officers
Name | Position with | Year Appointed | ||||
Mr. José Antonio González Anaya | Chairman of the Board of Pemex Ethylene (refer to Petróleos Mexicanos) | 2016 | ||||
Mr. Luis Ignacio Rayón Llerandi | 2016 | |||||
Mr. |
Born: Business experience: Deputy Director of 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 Other board memberships: | 2016 | ||||
Mr. |
| |||||
|
| |||||
|
| |||||
|
Born: 1969 Business experience: | 2016 |
Petróleos Mexicanos—Directors and Executive Officers
Name | Position with | Year Appointed | ||||
|
| |||||
|
| |||||
|
| |||||
|
|
| ||||
|
|
|
Petróleos Mexicanos—Directors and Executive Officers
|
| |||||
|
| |||||
|
| |||||
|
| |||||
| ||||||
|
|
Pemex-Exploration and Production—Directors and Executive Officers
|
| |||||
| ||||||
| ||||||
|
|
| ||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
|
| |||||
|
| |||||
|
|
Pemex-Exploration and Production—Directors and Executive Officers
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
|
Pemex-Exploration and Production—Directors and Executive Officers
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
|
Pemex-Exploration and Production—Directors and Executive Officers
|
| |||||
|
| |||||
|
| |||||
|
|
Pemex-Refining—Directors and Executive Officers
|
| |||||
| ||||||
| ||||||
|
|
| ||||
| ||||||
| ||||||
| ||||||
| ||||||
|
| |||||
|
| |||||
|
| |||||
|
|
Pemex-Refining—Directors and Executive Officers
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
|
Pemex-Refining—Directors and Executive Officers
|
| |||||
|
|
Pemex-Gas and Basic Petrochemicals—Directors and Executive Officers
|
| |||||
| ||||||
| ||||||
|
|
| ||||
| ||||||
| ||||||
| ||||||
|
| |||||
|
| |||||
|
|
Pemex-Gas and Basic Petrochemicals—Directors and Executive Officers
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
|
|
Pemex-Gas and Basic Petrochemicals—Directors and Executive Officers
|
| |||||
|
| |||||
|
|
Pemex-Petrochemicals—Directors and Executive Officers
|
| |||||
| ||||||
| ||||||
|
|
| ||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
|
Other board memberships: Petroquímica Mexicana de Vinilo, S.A. de C.V. | |||||
|
| |||||
|
|
Pemex-Petrochemicals—Directors and Executive Officers
|
| |||||
|
| |||||
|
|
Compensation of Directors and Officers
For the year ended December 31, 2013,2016, the aggregate compensation of executive officers of Petróleos Mexicanos and the existing subsidiary entities (79 persons)(49 people) paid or accrued in that year for services in all capacities was approximately Ps. 174.8111.5 million. Except in the case of the professionalindependent members, members ofwith respect to the Boardsprevious 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 20132016 to the professional members of the Boardsprevious Board of Directors of Petróleos Mexicanos and boards of directors of the existing subsidiary entities was approximately Ps. 13.67.7 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 professionalindependent members with respect to the Board of Directors of Petróleos Mexicanos, neither the members of the Boardsboards of Directorsdirectors nor the executive officers of Petróleos Mexicanos or the subsidiary entitiesproductive state-owned subsidiaries are appointed for a specific term. Except for those selectedThe length of the terms of the Secretary of Energy and the Secretary of Finance and Public Credit is, however, limited by the Petroleum Workers’ Union andlength of their respective positions in the professional members, the members of the Boards of Directors of Petróleos Mexicanos and each of the subsidiary entities, and the Directors General of Petróleos Mexicanos and each of the subsidiary entities, serve subject to the discretion of the President of Mexico.Mexican Government. Except in the case of the professionalindependent members first appointed under the Petróleos Mexicanos Law, the four professionalfive independent members of the Board of Directors of Petróleos Mexicanos will be appointed for six-yearfive-year terms, and may be appointed for an additional term of the same length.
On June 17, 2009,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 first time,duties and obligations set forth in the Petróleos Mexicanos Law, by the President of Mexico upon Senate approval.
On October 14, 2014, the Board of Directors of Petróleos Mexicanos appointed members to and convened the sevenfour committees established inby the new Petróleos Mexicanos Law to support its work. TheUnless 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 Mexican Government representatives who act as 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 any ministry-level secretary serving as a member of the professional board membersBoard of Directors of Petróleos Mexicanos. See “Item 6—Directors, Senior Management and Employees.”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 and Performance Evaluation Committee
The Audit and Performance Evaluation Committee of the Board of Directors of Petróleos Mexicanos (which we refer to as the Audit and Performance Evaluation Committee) is required to, among other duties, to oversee our management, and evaluate our financial and operational performance, monitor the status of our internal control systems, as well as to appoint and evaluatenominate our external auditors, set their compensation and make determinations as to whether to select other auditors.whose appointments are approved by the Board of Directors of Petróleos Mexicanos. See “Item 16C—Principal Accountant Fees and Services.”
Each memberof the three members of the Audit and Performance Evaluation 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 and Performance Evaluation Committee consists of the following members:
A permanent representative of the SFP attendsDirector 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 may speak atappropriate given the committee’s sessions, but has no voting power.subject matter to be discussed.
Human Resources and Compensation Committee
The Human Resources and Compensation Committee is chaired by a professionalan 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 other duties, proposesothers, proposing the compensation of the Director General and other members of senior management of Petróleos Mexicanos up towithin three levels belowof the Director General, based on theiras well as proposing hiring policies, performance management guidelines and measurable results.the compensation of all other employees of Petróleos Mexicanos.
The Human Resources and Compensation Committee of Petróleos Mexicanos consists of the following members:
Strategy and Investment Committee
The Strategy and Investment Committee is chaired by a professionalan independent member of the Board of Directors of Petróleos Mexicanos on a rotating annual basis and is required to, among other duties, analyzesanalyze our business plan
and assist the business plan and investment portfolioBoard of Directors of Petróleos Mexicanos in the approval of guidelines, priorities and its subsidiary entities. This committee also supervises and evaluatesgeneral policies related to investments made by Petróleos Mexicanos.
The Strategy and Investment Committee of Petróleos Mexicanos consists of the following members:
Transparency and Accountability Committee
This committee, among other duties, proposes to the Board of Directors of Petróleos Mexicanos criteria for the disclosure of information. The Transparency and Accountability Committee of Petróleos Mexicanos consists of the following members:
DevelopmentAcquisitions, Leasing, Public Works and Technological ResearchServices Committee
This committee, among other duties, proposes to the Board of Directors of Petróleos Mexicanos technological researchThe Acquisitions, Leasing, Public Works and development plans related to the petroleum industry. The Development and Technological ResearchServices Committee of Petróleos Mexicanos consists of the following members:
Environmental and Sustainability Committee
This committee, among other duties, is responsible for promoting the development by PEMEX of environmental protection policies and the achievement of sustainable development. The Environmental and Sustainability Committee of Petróleos Mexicanos consists of the following members:
A permanent representative of the Ministry of the Environment and Natural Resources attends and may speak at the committee’s sessions, but has no voting power.
Acquisitions, Leasing, Works and Services Committee
This committee, among other duties, reviews, evaluates, monitors and develops recommendations regarding the annual programs of Petróleos Mexicanos for acquisition, construction and services contracts, and determines
whether an exception to the public bidding process is applicable in specific cases.
The Acquisitions, Leasing, Public Works and Services Committee of Petróleos Mexicanos consists of the following members:
A permanent representative of the SFP attends and may speak at the committee’s sessions, but has no voting power.
Employees
Excluding employees of the PMI Group and including those employed by us on a temporary basis, at December 31, 2013,2016, Petróleos Mexicanos, its subsidiary entities and subsidiary companies had 130,333 employees, as compared to 139,183 at December 31, 2015. During 2016, Petróleos Mexicanos and the subsidiary entities had 154,774 employees, as compared to 150,697 at December 31, 2012. During 2013, Petróleos Mexicanos and the subsidiary entitiesproductive state-owned subsidiaries employed an average of 18,4179,289 temporary employees.
The following table sets forth the number of employees of Petróleos Mexicanos, the subsidiary entities and the PMI Group at year-endour employee numbers for the past five years.years ended December 31, 2016:
At December 31, | 2013 % of Total | |||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||||||
Pemex-Exploration and Production | 50,544 | 49,802 | 51,713 | 51,998 | 53,404 | 34.4 | % | |||||||||||||||||
Pemex-Refining | 43,706 | 45,306 | 46,909 | 46,236 | 47,980 | 30.9 | ||||||||||||||||||
Pemex-Petrochemicals | 13,447 | 13,542 | 13,541 | 13,487 | 13,758 | 8.9 | ||||||||||||||||||
Pemex-Gas and Basic Petrochemicals | 12,550 | 12,327 | 11,918 | 12,191 | 12,905 | 8.3 | ||||||||||||||||||
Petróleos Mexicanos | 24,899 | 26,391 | 26,480 | 26,785 | 26,727 | 17.2 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Subtotal | 145,146 | 147,368 | 150,561 | 150,697 | 154,774 | 99.8 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
PMI Group | 315 | 324 | 323 | 325 | 332 | 0.2 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | 145,461 | 147,692 | 150,884 | 151,022 | 155,106 | 100.0 | % | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Year | 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 | |||||||||
2016 | 126,940 | 3,393 | 130,333 |
Source: Petróleos Mexicanos and the PMI Group.subsidiary companies.
The
As of December 31, 2016, the Petroleum Workers’ Union representsrepresented approximately 71.4%79% of the work force of Petróleos Mexicanos and the subsidiary entities.productive state-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 andLaw), a collective bargaining agreement between Petróleos Mexicanos and the Petroleum Workers’ Union.Union and the Employment Regulation for White Collar Employees of PEMEX and Subsidiary 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 July 29, 2013,September 10, 2015, Petróleos Mexicanos and the Petroleum Workers’ Union entered intoexecuted a new collective bargaining agreement which became effective on August 1, 2013.that will regulate their labor relations until July 31, 2017. The new collective bargaining agreement providesprovided for a 3.99% increase in wages and a 1.98%1.75% increase in benefits. By its terms,On July 20, 2016, Petróleos Mexicanos and the Petroleum Workers’ Union revised their collective bargaining agreement, is scheduledwhich revision became effective on August 1, 2016. The revised agreement provides for a 3.17% increase in wages.
On November 11, 2015, Petróleos Mexicanos announced that it had signed an agreement with the Petroleum Workers’ Union to expiremodify 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 from 55 to 60. Employees are still required to serve for at least 30 years in order to be eligible to receive full retirement benefits. In addition, new employees will receive individual defined contributions retirement plans, which will benefit from direct contributions from Petróleos Mexicanos, portability and tax benefits applicable to retirement savings. Current employees will also be permitted to opt into the new defined contributions 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 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). 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. 50 billion promissory note issued to us on July 31, 2015.December 24, 2015 with Ps. 184.2 billion in promissory notes.
In accordance with the Federal Labor Law and collective bargaining agreement and the Federal Labor Law,in effect as of December 31, 2015, Petróleos Mexicanos and the subsidiary entitiesproductive state-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 thecertain 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 familiesbeneficiaries and, subject to our overall budgetary constraints, we provide an interest-rate subsidy on employees’ mortgage loans.
On November 5, 1997, the SHCPMinistry 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. 30,79649,190 million in 20122015 and Ps. 33,21055,693 million in 2013.2016. As of December 31, 2015 and 2016, the balance of the Pemex Labor Fund was Ps. 5,229 million and Ps. 9,490 million, respectively.
Item 7. | Major Shareholders and Related Party Transactions |
Major Shareholders
Petróleos Mexicanos and the subsidiary entities have no shareholders because they are decentralized public entities of the Mexican Government. The Mexican Government closely regulatescontrols us and supervises our operations; it incorporates the consolidated annual budget and financing programsprogram of Petróleos Mexicanos and the subsidiary entities into its consolidated annual budget, which it submits tomust 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 approval.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 sixfive of the 15ten 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.Mexicanos with the power to cast atie-breaking vote. An additional fourfive seats on the Board of Directors are held by professionalindependent members appointed by the President of Mexico and ratified by the Senate. The various committees of the Board of Directors are comprised only of Mexican Government representatives,i.e., a combination of Mexican Government officials and professional members of the Board of Directors. The Director General of Petróleos Mexicanos is a member of the President of Mexico’s cabinet. See also “Item 3—Key Information—Risk Factors—Risk Factors Related to Ourour Relationship with the Mexican Government.”
Related Party Transactions
Under Article 8, Section XI of theLey Federal de Responsabilidades Administrativas de los Servidores Públicos (Federal Law of Administrative Responsibilities of Public Officials), which applies to our directors andrequires all of our employees, our directors and employees are obligatedpublic officials to “recuse themselves from intervening in any way in the attention to, processing or resolution of matters in which they might have personal, family or business interest, including those where some benefit can result for themselves, their spouse, blood or affinity relatives up to the fourth degree, or civil relatives, or for third parties with which they have professional, labor or business relations, or for partners or partnerships where the public officials or the persons referred above are or have been members thereof.”
Additionally, inThe 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, aan independent member of the Board of Directors of Petróleos Mexicanos or of the board of directors of a subsidiary entity may be removed from his or her position for, among other causes: (1) utilizing for personal benefit or for the benefit of any third party the information made available to him or her in connection with the exercise of his or her duties as a board member; (2) disclosing such information in violation of applicable law; or (3) not recusing him or herself from discussion of and voting on matters in respect of which he or she has a conflict of interest. A member of the Board of Directors of Petróleos Mexicanos or of the board of directors of aan existing subsidiary entity who acts in contravention of the Petróleos Mexicanos Law may be held liable for any damages therebythat he or she caused to Petróleos Mexicanos or aan 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 theReglamento de Trabajo del Personal de Confianza de Petróleos Mexicanos y Organismos
Subsidiarios (Employment Employment Regulation of White Collar Employees of Petróleos Mexicanos and SubsidiaryEntities), respectively.TheSubsidiary 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 20132016 was Ps. 26.98.9 million. As of March 31, 2014,April 15, 2017, the aggregate amount of salary advances outstanding to our executive officers was Ps. 21.6 million.8.1 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% |
|
| ||
Planta de Combustible Cozumel, S.A. de C.V. (which operates as a wholesale distributor) | Testamentary Trust(1) Mr. Pedro Joaquín Coldwell
| 57% |
|
| ||
Gasolinera y Servicios Juárez, S.A. de C.V. (which operates a retail service station) | Mr. Pedro Joaquín Coldwell Mr.
(nephew of Mr. Joaquín Coldwell) Testamentary Trust(2) | 40% 20% |
|
| ||
Combustibles Caleta, S.A. de C.V. (which operates a retail service station) | Mr. Pedro Joaquín Coldwell Mr. Pedro Oscar Joaquín Delbouis Mr. Nassim Joaquín Delbouis Mr.
Testamentary Trust(3) | 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) |
|
(2) |
|
(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-Refining’sPemex Industrial Transformation retail service stations and wholesale distributors.
Item 8. | Financial Information |
Legal Proceedings
Labor-Related Proceedings
We are a party to various legal actions involving labor claims of former and present employees. These labor disputes relate to severance payments, life insurance benefits, extensions of labor contracts, level of wages, improper termination and employee housing. We do not expect these lawsuits to have a material adverse effect on our financial condition or future results of operations.
For information on our negotiations with the Petroleum Workers’ Union and collective bargaining agreements, see “Item 6—Directors, Senior Management and Employees—Employees.”
Mexican Government AuditsEthics Committee and Other InvestigationsLiabilities Unit
Certain rules have been enacted in order to promote a culture of ethics and prevent corruption in our daily operations. On July 31, 2002, aNovember 26, 2016, the Board of Directors of Petróleos Mexicanos issued theCódigo de Ética de los Servidores Públicos de la Administración Pública Federalpara Petróleos Mexicanos, sus empresas productivas subsidiarias y empresas filiales (Code of Ethics for Public ServantsPetróleos Mexicanos, its productive subsidiary entities and affiliates, or the Code of Ethics), which applies to the members of the Federal Public Administration) was published in the Official Gazetteboards of the Federation, containing rules to promote legality, honesty, integrity, loyalty, impartiality and efficiency in the performancedirectors of public work by public sector officials and employees, including our directors, officers and employees. On October 3, 2003, we announced a corporate code of conduct for Petróleos Mexicanos and each of the subsidiary entities and all of our employees, including the Director General (chief executive officer) of Petróleos Mexicanos, the Chief Financial Officer of 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, Organismos Subsidiariosen su caso, empresas filiales(Code of Conduct of Petróleos Mexicanos, its productive subsidiary entities and, where applicable, affiliated companies, or the Subsidiary Entities) that definesCode 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 employees of Petróleos Mexicanos and its subsidiary entitiesour employees in the daily performance of their duties and which is designed to promote transparency and prevent abuses. In addition, on May 12, 2004,
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 Boardsuccessful implementation of Directorsthe program, including the distribution of Petróleos Mexicanos adopted aour Code of Ethics for our chief executive officer, chief financial officer, chief accounting officer and all other employees performing similar functions in Petróleos Mexicanos, the subsidiary entities and the subsidiary companies. For more information on this Code of Ethics, see “Item 16B—Code of Ethics.” On June 3, 2011, the Board of Directors of Petróleos Mexicanos approved theCódigo de Conducta de los Miembros del Consejo de Administración de Petróleos Mexicanos (Code of Conduct of the Members of the Board of Directors of Petróleos Mexicanos). In addition, on March 6, 2012, general guidelines to establish permanent measures to ensure the integrity and ethical behavior of public officers in performing their jobs, positions or commission work were published in the Official Gazette of the Federation. These guidelines provide that an ethics committee, consisting of our employees and officers, will be formed and given the following responsibilities: evaluate the Code of Conduct among personnel, the administration of Petróleos Mexicanostrainings on risk management, internal control and integrity and the Subsidiary Entities; issue, implementdevelopment of mechanisms to identify and enforce a new or updated code of conduct applicablecombat corrupt practices. Additionally, we are developing tools to all of our employees; and verifyassess compliance with our internal ethics and integrity guidelines, and intend to launch an ethics support line and an anti-corruption webpage in the Codefirst half of Ethics2017 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, is responsible for Public Servantsinvestigating violations of the Federal Law of Administrative Responsibilities of Public Administration.Officials, as well as imposing administrative penalties in accordance with the law.
In May 2005, the SFP announced that it had fined several former officers of Petróleos Mexicanos, alleging that these officers had illegally diverted Petróleos Mexicanos’ funds to members of the Petroleum Workers’ Union. In December 2009, the SFP announced it had fined Mr. Montemayor, former Director General of Petróleos Mexicanos, for Ps. 1,421.1 millionMexican Government Audits and banned him from holding public sector positions for 20 years. In April 2010, Mr. Montemayor filed an appeal against this penalty before theTribunal Federal de Justicia Fiscal y AdministrativaOther Investigations (Federal Court of Fiscal and Administrative Justice). On January 24, 2013, a judgment was issued confirming Mr. Montemayor’s ban from holding public sector positions but declaring the economic penalty null and void due to the inadequacy of the process by which this penalty was calculated. As of the date of this report, a final resolution is still pending.
In July 2007, the SFP announced that it had fined, among others, Mr. Raúl Muñoz Leos, former Director General of Petróleos Mexicanos, for Ps. 862.2 million and banned him from holding public sector positions for ten years for allegedly breaking budgetary laws and regulations in connection with a side agreement (No. 10275/04) dated August 1, 2004, between Petróleos Mexicanos and the Petroleum Workers’ Union. On August 25, 2005, Petróleos Mexicanos and the Petroleum Workers’ Union amended this side agreement in order
to make certain adjustments required by applicable regulations. These penalties were appealed by the former officer. On August 4, 2010, the Federal Court of Fiscal and Administrative Justice issued a resolution confirming Mr. Muñoz Leos’ liability for executing this side agreement, but declared the economic penalty null and void due to the fact that no economic damages were caused as a result of the side agreement. On September 6, 2012, the SFP issued a new resolution against Mr. Muñoz Leos confirming the decision to ban him from holding public sector positions for ten years. Mr. Muñoz Leos filed a motion against this resolution before theTercera Sala Regional Metropolitana(Third Regional Metropolitan Court) of the Federal Court of Fiscal and Administrative Justice, which is still pending as of the date of this report.
In March and April 2010, the SFP filed 7seven criminal complaints against officers and employees ofPemex-Refining, in connection with a pipeline rupture in Nanchital, Veracruz. In August 2013, the Federal Attorney General’s Office notified the SFP that it was closing the investigation related to the criminal complaints against the officers and employees. The SFP has filed a motion against this resolution, which is still pending as of the date of this report. In a concurrent proceeding, the SFP imposed administrative penalties against these officers and employees, as well as against contractors. The officers andAs of the date of this report, 28 appeals have been filed by these public sector employees, filed appeals to 28 administrative penalties, 1527 of which have concluded with the following results: ten16 penalties were confirmed, and fivenine penalties were declared null and void.void and new resolutions were ordered with respect to two penalties, imposing new sanctions that are now final. As of the date of this report, a final resolutionsresolution of the 13 otherfinal outstanding appeal against the administrative penalties appealed by these officers and employees areis still pending. The contractors filed appeals to nine administrative penalties, four of which have concluded with the following results: one penalty was confirmed and three penalties were declared null and void. As of the date of this report, final resolutions of the five other administrative penalties appealed by these contractors are still pending.
In May 2010, the SFP filed two criminal complaints and initiated severaltwo administrative proceedings against María Karen Miyazaki Hara, who served as PMI’s Deputy Director of Trading of Intermediate Distillates, for allegedly committing acts of corruption pursuant to which PMI lost revenues of approximately U.S. $13 million. The alleged acts involved the unauthorized sale of ultra low sulfur dieselULSD 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 receiving a 20 year banbanned from holding public sector employment.positions for 20 years. Ms. Miyazaki Hara filed a claimmotion 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, the triala final resolution is in the evidentiary stage. Once this stage concludes, the Superior Court of the Federal Court of Fiscal and Administrative Justice will review Ms. Miyazaki Hara’s claim.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.void, which was granted on February 20, 2017 (file No.66/2017-V). As of the date of this report, an order for Ms. Miyazaki Hara’s arrest has been issued in connection with one criminal complaint, and the investigation of the other criminal complainta final resolution is still underway.pending the Superior Court’s resolution.
In December 2010, the SFP announced that it had fined 15 officers andpublic sector employees for irregularities in a bidding process related to the leasing of Pemex-Refining and banned themfour vessels. These employees were barred from holding public sector positions for ten years for their alleged involvement in an illegal bidding process for the leasing of four tankers. These officers and several monetary penalties were ordered. The public sector employees appealedfiled motions against these resolutions. On appeal, tenpenalties. As of the resolutionsdate of this report, 13 of the motions were confirmed. The other five resolutions arein ten motions were declared null and void, in four motions were declared valid and one motion is still pendingpending. 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—four are subject to motions by the SFP, while onereport, is being reviewed by the Superior Court of the Federal Court of Fiscal and Administrative Justice.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, and had dismissed and fined the Director General of PMI, Ms. María del Rocío Cárdenas Zubieta, for Ps. 238.9 million, for allegedly committing acts of corruption during the period from January 2008 to January 2009. The alleged acts involved the use of improper contracting practices in the purchase and/or sale of petroleum products, which allegedly benefited certain of PMI’s commercial counterparties and resulted in financial harm to PMI in the amount of U.S. $25.7 million. Ms. Cárdenas Zubieta and thecounterparties. The implicated ex-officersformer officers of PMI were also barred from public sector employment for a period of ten years and may face criminal charges.
years. These former officers appealed the penalties. Two motions were granted and the resolutions declared null and void. On November 7, 2013,February 8, 2017, a judgment was issued confirmingby theSala Superior (Higher Court) of theTribunal Federal de Justicia Administrativa (Federal Court of Administrative Justice) declaring the third resolution against Ms. Cárdenas Zubieta.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, Ms. Cárdenas Zubieta has yet to file a motion against thisfinal resolution and the resolutions against the other former officers areis 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. 1111.0 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, the investigation of the criminal complaintthis resolution is still underway.being implemented.
On February 10,April 24, 2014, the SFP announcedissued a resolution imposing penalties against several public sector employees in the Official Gazette of the Federation that it had finedconnection with operations executed with Oceanografía, S.A. de C.V. (or Oceanografía), a Mexican oil-services firm, and banned it from bidding for and entering into government contracts, including contracts with us, for approximately one year and nine months. The fine and related ban resulted from the failure of Oceanografía to issue performance guarantees in connection with certain contracts between Oceanografía and Pemex-Exploration and Production. As of the date of this report, the SFP is conducting several investigations into the conduct of certainFour employees of Pemex-Exploration and Production’s currentProduction 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; and former officers or employees in connection with its contracts with Oceanografía.15972/14-17-11-4) 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. |
Key Energy Services
On April 9, 2014,August 11, 2016, the SEC issued an order imposing sanctions against Hewlett-Packard Company (or HP) based on its findingsannounced that HP’s subsidiaries in Mexico, RussiaKey Energy Services, Inc. agreed to pay U.S. $5 million to settle SEC charges that it violated the internal controls and Poland made improper payments to certain public officials in order to obtain public contracts in violationbooks-and-records provisions of the U.S. Foreign Corrupt Practices Act. InThese 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 caseU.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 Mexico,these allegations. On January 25, 2017, we filed a criminal complaint with the sanctions relatedFederal Attorney General’s Office against any party for acts that may have been committed against PEMEX. We are collaborating with the Liabilities Unit, the SFP and the Federal Attorney General’s Office in partorder to allegationshold those responsible for these acts accountable and ensure that Hewlett-Packard México, S. de R.L. de C.V., an HP subsidiary in Mexico, paid a Mexican information-technology and consulting company more than U.S. $1 millionwe recover any damages to win a software and licensing contract with Petróleos Mexicanos worth approximately U.S. $6 million. The SEC’s order alleged that a former officer of Petróleos Mexicanos received a portion of the HP subsidiary’s unlawful payment to the consulting company. As of the date of this report,which we are conducting an internal investigation into the tendering of this software and licensing contract by Petróleos Mexicanos to HP’s Mexican subsidiary.entitled.
Actions Against the Illicit Market in Fuels
The main characteristicsIn order to counteract the illicit fuel market, we have implemented a security strategy throughout our facilities that seeks to:
• | strengthen coordination and collaboration between Petróleos Mexicanos and our subsidiary entities, as well as with authorities in the three orders of government, including the Federal Attorney General’s Office, Federal Consumer’s Office, Tax Administration System, federal, state and municipal police, theSecretaría de la Defensa Nacional (Ministry of National Defense) and the Mexican navy; |
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 combat the illicit market in fuels, are:
In conjunction with the SHCP and the Ministry of Energy, we have implemented several actions to combat the illicit market in fuels, with the objective of eliminating the associated risks described above to personnel, facilities, the general population and the environment, as well as minimizing losses of our refined products, crude oil and condensates. We seek to prevent and deter theft in the workplace by analyzing information provided by certain measurement systems, field surveillance and control instruments. These include mobile laboratories, volumetric control at service stations, terminal operations measurement, satellite tracking, integrated control systems, closed circuit television and online measurement systems.
environment. In particular, during 2013,2016, we implementedcontinued the following strategic measures in order to decrease incidents of theft incriminal activity at our facilities:
Increased pipeline surveillancevigilance by 18.0% as2.1% compared to 2012. 2015 in order to mobilize these forces in patrolling areas with a higher crime rate on hydrocarbons.
• | 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 result of a decrease in the amount of hydrocarbons stolen along our pipeline systems. The number of individuals brought before judicial authorities in connection with the illicit market in fuels decreased to 583, as compared to 1,154 individuals brought before judicial authorities in 2015, which represents a 49.5% decrease, mainly due to implementation of theSistema de Justicia Penal Acusatorio (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. |
|
Together, these activities led to the recovery of 19,185,432 liters of hydrocarbon products in 2013.
During the first three months of 2014, we have continued implementing several strategic measures in order to decrease incidents of theft in our facilities, including the performance of a technical operational assessment in our facilities, in order to verify the proper application of our operating procedures regarding the measurement and distribution of our products and to detect those areas most vulnerable to illegal activities. In addition, in connection with the effort to combat the incidence of theft in the national pipeline system, we carried out pipeline surveillance, as well as right-of-way and facilities inspections, which totaled an average of 37,735 kilometers per day by vehicles and 1,120 kilometers per day by foot during this period. These activities were carried out in coordination with the Ministry of National Defense, the SecretaryMexican Navy and other governmental authorities. During 2016 we were able to patrol at levels similar to 2015, despite using only half of the Navy andnumber of vehicles as a result to budget cuts following the 2016 Budget Adjustment Plan.
These measures led to the recovery of 4,999,86513.1 million liters of hydrocarbon productsproduct 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 renewed focus on the detection of illegal pipeline taps in 2015 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, theLey Federal para Prevenir y Sancionar los Delitos Cometidos en Materia de Hidrocarburos (Federal Law to Prevent and Punish Crimes related to Hydrocarbons Matters) was published in the Official Gazette of the Federation, along 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 sealing of 764 illegal taps. A correspondingrelated reforms establish additional civil and criminal report was filed in each of these cases, which resulted in 306 individuals being charged with hydrocarbons theft and 631 vehicles that were used to transport stolen products being held in custody.
On June 7, 2010, Pemex-Exploration and Production filed a civil claim (4:10-cv-01997) before the United States District Court for the Southern District of Texas against several companies and individuals seeking damagespenalties for the illegal acquisition, possession and saletapping of stolen petroleum products from Pemex-Exploration and Production facilities inpipelines, the Burgos basin. Subsequently, this claim was amended to include additional defendants allegedly involved in the illegal purchase and resaletheft of stolen petroleum products originating in Mexico. In February 2014, a hearing was held with respect to this claimhydrocarbons and the parties were notified that a jury trial would be scheduled to begin on May 12, 2014. Pemex-Exploration and Production has also filed additional civil claims before the United States District Court for the Southern Districtalteration of Texas against Shell Chemical Co. andhydrocarbons measurements systems, among other companies that were not named in the original claim, generally asserting the same conversion based-claims brought in the initial action. On October 1, 2013, the District Court rejected a counterclaim filed by Murphy Energy Corporation, one of the defendants, that sought damages of U.S. $40 million.infractions.
The purpose of these claims is to prevent the illegal purchase and resale of our products in the United States and to recover damages caused by such activities in an amount up to the value of the stolen product that was allegedly purchased and then resold by the defendants. In the course of these proceedings, Pemex-Exploration and Production reached out-of-court settlements with several of the defendants. In February 2014, a number of defendants filed a motion seeking to dismiss certain of Pemex-Exploration and Production’s claims on the grounds that these claims had already been settled out of court, thereby barring the right to further remedies. Pemex-Exploration and Production expects to file a response to this motion.
As of the date of this report, a final resolution is pending with respect to a number of these proceedings. The results of these proceedings are uncertain until their final resolutions are issued by the appropriate authorities.
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, 2013,2015 and 2016, we had accrued a reserve of Ps. 17.612.8 billion and Ps. 15.1 billion, respectively, for our contingent liabilities in connection with these lawsuits. Our material legal proceedings are described in Note 2325 and Note 27 to our auditedconsolidated financial statements included in this report, and that description isthose descriptions are incorporated by reference under this Item.
Dividends
In March 1990, as a result of the implementation of the 1989-92 Financing Package for Mexico, our commercial bank creditors exchanged U.S. $7.58 billion of Petróleos Mexicanos’ external indebtedness for Brady Bonds issued by the Mexican Government. At the same time, Petróleos Mexicanos’ indebtednessPursuant to the Mexican Government was increased by the same amount; the new indebtedness was denominated in currencies other than pesos. In December 1990, the Mexican Government and Petróleos Mexicanos agreed to capitalize this indebtedness, converting it into CertificatesLaw, as of Contribution “A.” As a condition of this capitalization,January 1, 2016, Petróleos Mexicanos agreedand its subsidiary entities are subject to a new dividend policy that will require them to pay a minimum guaranteedstate dividend to the Mexican Government equal toon an annual basis. In accordance with the debt service onFederal Revenue Law of 2016 and the capitalized debt. The BoardFederal Revenue Law of Directors of2017, Petróleos Mexicanos approved the totalwas not required to pay a state dividend on the Certificates of Contribution “A” after the end of each fiscal year, although until January 2007 Petróleos Mexicanos paid an amount equalin 2016 and will not be required to the minimum guaranteedpay a state dividend in 2017. For more information, see “Item 4—Taxes, Duties and Other Payments to the Mexican Government in monthly advance payments during the year. During 2006 and 2007, Petróleos Mexicanos made advance paymentsGovernment—Fiscal Regime for PEMEX—Other Payments to the Mexican Government in aggregate annual amounts of Ps. 269 million and Ps. 4,260 million, respectively, toward the minimum guaranteed dividends for those years. On January 2, 2007, Petróleos Mexicanos made its final advance payment of minimum guaranteed dividends. We do not have a dividend policy; the Mexican Government may require that we make dividend payments at any time. On August 20, 2008, the Board of Directors of Petróleos Mexicanos approved the payment of a Ps. 4,270 million dividend to the Mexican Government. No dividends were declared or paid in the years 2009 to 2013. See “Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Equity Structure and Certificates of Contribution ‘A.’”
Item 9. | The Offer and Listing |
Trading in the debt securities issued by Petróleos Mexicanos takes place primarily in theover-the-counter market. All the debt securities issued by Petróleos Mexicanos that are registered pursuant to the U.S. Securities Act of 1933 (which we refer to as the Securities Act) are also listed on the Luxembourg Stock Exchange and traded on the Euro MTF market of the Luxembourg Stock Exchange.
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. On July 17, 1992, the Mexican Congress createdPetróleos Mexicanos and the subsidiary entities, out of operations that had previously been directly managed by Petróleos Mexicanos. Petróleos Mexicanos and its four subsidiary entities, Pemex-Exploration and Production, Pemex-Refining, Pemex-Gas and Basic Petrochemicals and Pemex-Petrochemicals, are decentralized public entities of the Mexican Government and each is a legal entity empowered to own property and carry on business in its own name.
The activities of Petróleos Mexicanos and the subsidiary entities are regulated by the Mexican Constitution, the Regulatory Law, 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 Performance EvaluationCompensation Committee, Transparency and Accountability
Committee,the Strategy and Investment Committee Compensation Committee,and the Acquisitions, Leasing, Public Works and Services Committee, Environmental and Sustainability Committee and Development and Technological Research Committee. See “Item 6—Directors, Senior Management and Employees.”
Under the Petróleos Mexicanos Law and the Regulations to the Petróleos Mexicanos Law, our directors are obligated to abstain from voting on a proposal, arrangement or contract in which they have a personal, family or business interest. Our directors do not have the power to vote compensation to themselves or any other member of the board. Except in the case of the professionalindependent board members, our directors do not receive compensation for their services as members of the Boardsboards of Directorsdirectors of Petróleos Mexicanos and the subsidiary entities. Under the FederalPetróleos Mexicanos Law, of Administrative Responsibilities of Public Officials, our directors must perform their duties without obtaining or attempting to obtain any benefits greater than those granted by law. Therefore, our directors do not have borrowing powers exercisable by themselves. There is no requirement for early retirement for our directors.
Material Contracts
On November 10, 1998, Petróleos Mexicanos, The Bank of New York Mellon (formerly The Bank of New York) and The Bank of New York (Delaware) entered into a Trust Agreement, which created the Master Trust and designated The Bank of New York Mellon as Managing Trustee and The Bank of New York (Delaware) as Delaware Trustee. On the same date, Petróleos Mexicanos, the subsidiary entities (except forPemex-Petrochemicals) and the Master Trust, acting through The Bank of New York Mellon, entered into an Assignment and Indemnity Agreement. This agreement provided for the assignment by such subsidiary entities to the Master Trust of certain payment obligations relating to PIDIREGAS, the arrangement by Petróleos Mexicanos of financing on behalf of the Master Trust to meet such payment obligations, the payment by Petróleos Mexicanos and such subsidiary entities to the Master Trust of the amounts necessary to meet the Master Trust’s obligations under such financings and the indemnification of the Master Trust by Petróleos Mexicanos and such subsidiary entities. Pemex-Petrochemicals became a party to the Assignment and Indemnity Agreement pursuant to an amendment of this agreement on August 17, 2006. Effective January 1, 2009, in connection with amendments to the Federal Law of Budget and Fiscal Accountability, Petróleos Mexicanos agreed to assume primary responsibility for the payment of all indebtedness of each of the Master Trust and Fideicomiso F/163. During the second half of 2009, Petróleos Mexicanos legally assumed, as primary obligor, the indebtedness of the Master Trust and Fideicomiso F/163 under the related agreements. On August 16, 2011, Fideicomiso F/163 was terminated, and on December 20, 2011, the Master Trust was terminated.
On December 30, 2004, the Master Trust and Petróleos Mexicanos entered into an indenture with Deutsche Bank Trust Company Americas (Deutsche Bank), as Trustee. This agreement provided for the issuance by the Master Trust from time to time of unsecured debt securities. All issuances of debt securities under this indenture were unconditionally guaranteed by Petróleos Mexicanos. Pursuant to a guaranty agreement, dated as of July 29, 1996, Petróleos Mexicanos’ obligations are jointly and severally guaranteed by Pemex-Exploration and Production, Pemex-Refining and Pemex-Gas and Basic Petrochemicals. Under the indenture, Petróleos Mexicanos was permitted, without the consent of the holders of the outstanding debt securities, to assume as primary obligor all of the Master Trust’s obligations under such debt securities in substitution of the Master Trust and, upon such assumption, the Master Trust would be released from its obligations under such debt securities. Effective September 30, 2009, Petróleos Mexicanos assumed all of the Master Trust’s obligations under the 2004 indenture and the debt securities issued under the 2004 indenture, and all of the Master Trust’s obligations under an indenture dated as of July 31, 2000, among the Master Trust, Petróleos Mexicanos and Deutsche Bank, as well as the debt securities issued under the 2000 indenture.
On each of February 11, 2005, February 23, 2007, October 11, 2007 and July 18, 2008, the Master Trust further increased the aggregate amount of debt securities issuable under its Medium-Term Notes program to U.S. $20,000,000,000, U.S. $30,000,000,000, U.S. $40,000,000,000 and U.S. $60,000,000,000, respectively. Following these increases and pursuant to the 2004 indenture referred to above, the Master Trust issued various
new series of securities. See “Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Financing Activities.” All of the Master Trust’s obligations under these securities were assumed by Petróleos Mexicanos effective as of September 30, 2009.
As of December 31, 20122015 and 2013,2016, we have entered into contracts with various contractors for approximate amounts of Ps. 470,233987,674 million and Ps 630,776Ps. 817,994 million, respectively. These contracts are for the development of investment projects. See Note 2224(e) 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$7.0 billion medium-term note, Series C, program. Pursuant to the 1996 guaranty agreement referred to above, Petróleos Mexicanos’ obligations under all notes issued under this program are jointly and severally guaranteed by Pemex-Exploration and Production, Pemex-Refining 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$12.0 billion and U.S. $22$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$32.0 billion and issued U.S. $6.9 billion of notes and bonds under it. During the first four months ofIn 2014, Petróleos Mexicanos increased the size of this program to U.S. $42$42.0 billion and issued U.S. $4.0$7.9 billion of notes and bonds under it. During the first three months of 2017, Petróleos Mexicanos increased the size of this program to U.S. $72.0 billion and €1.0issued € 4.3 billion of notes and bonds under it. 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” and “Item 3—Key Information—Risk Factors—Considerations Related to Mexico.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, 2016 and the 20132017 Securities.
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.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) 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 POMESSM 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 and up to U.S. $1,000,000,000 of 7.375% Notes due 2014.2022. 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 and up to U.S. $757,265,000 of 7.375% Notes due 2014.2022. 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. $18,095,000 of 7.375% Notes due 2014 and up to U.S. $47,085,000 of 8.625% Bonds due 2022. We refer to the securities registered in 2004 as the 2004 Securities.
Pursuant to a registration statement on 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 POMESSM due 2027 U.S. $1,000,000,000 of 5.75% Notes due 2015 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 POMESSM 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. $759,254,000 of 5.75% Notes due 2015 and 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 and
Pemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $2,000,000,000 of 8.00% Notes due 2019. We refer to the securities registered in 2009 as the 2009 Securities.
Effective as of September 30, 2009, Petróleos Mexicanos assumed, as primary obligor, all of the Master Trust’s obligations as issuer of the 2001 Securities, the 2003 Securities, the 2004 Securities, the 2006 Securities and the 2008 Securities. As a result, effective as of September 30, 2009, Petróleos Mexicanos is the issuer of all Registered Securities (as defined below).
Pursuant to a registration statement on 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. $1,500,000,000 of 4.875% Notes due 2015, up to U.S. $1,000,000,000 of 6.000% Notes due 2020, up to U.S. $2,000,000,000 of 5.50% Notes due 2021 and up to U.S. $1,000,000,000 of 6.625% Bonds due 2035. We refer to the securities registered in 2010 as the 2010 Securities.
Pursuant to a registration statement on 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 20122014 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-Exploration and Production, Pemex Industrial Transformation, Pemex 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. 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 Services 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 of 6.750% Notes due 2047. 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.
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:
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 SHCPMinistry 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:
If the effective beneficiaries, directly or indirectly, individually or jointly with related parties, receive more than 5% of the interest paid on such notes or bonds and are holders, directly or indirectly, individually or jointly, with related parties of more than 10% of the voting stock of the issuer or entities 20% or more of whose stock is owned directly or indirectly, individually or jointly, by parties related to the issuer, the withholding tax rate applicable to payment of interest on such notes or bonds may be significantly higher.
Payments of interest made by Petróleos Mexicanos Pemex-Explorationor the subsidiary entities, except for Pemex Fertilizers and Production, Pemex-Refining or Pemex-Gas and Basic PetrochemicalsPemex Ethylene, in respect of the Registered Securities tonon-Mexican pension or retirement funds will be exempt from Mexican withholding taxes, provided that:
Additional Amounts. Petró.Petróleos Mexicanos Pemex-Exploration and Production, Pemex-Refiningthe subsidiary entities, except for Pemex Fertilizers and Pemex-Gas and Basic PetrochemicalsPemex Ethylene, have agreed, subject to specified exceptions and limitations, to:
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 Pemex-Exploration and Production, Pemex-Refining or Pemex-Gas and Basic Petrochemicalsthe 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 Pemex-Exploration and Production, Pemex-Refining or Pemex-Gas and Basic Petrochemicalsthe 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 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, certain short-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 securitiesRegistered 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 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, and other tax consequences of purchasing, owning, and disposing of a Registered Security in their particular circumstances.
Taxation of Interest and Additional Amounts. A.A United States Holder will treat the gross amount of interest and Additional Amounts (i.e.(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.
Foreign tax credits may not be allowed for withholding taxes imposed in respect of certain short-term or hedged positions in securities or in respect of arrangements in which a United States Holder’s expected economic profits is insubstantial. United States Holders should consult their own advisors concerning the implications of these rules in light of their particular circumstances.
Taxation of Dispositions. Upon.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.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 be long-term capital gain or loss if, at the time of disposition, the securities have been held for more than one year. Long-term capital gain realized by an individual United States Holder is generally taxed at lower rates than short-term capital gains or ordinary income.
Non-United States Holders. Holders.Subject to the discussion below under “Backup Withholding and Information Reporting,” holders of the Registered Securities that are with respect to thenot United States non-resident aliens or foreign corporationsHolders (which we refer to asNon-United States Holders) will not be subject
to U.S. federal income taxes, including withholding taxes, on payments of interest on the securities so long as the requirements described under “Backup Withholding and Information Reporting” are satisfied, unless such income is effectively connected with the conduct by the Non-United States Holder of a trade or business in the United States.
The gain realized on any sale or exchange of the Registered Securities by a Non-United States Holdergenerally will not be subject to U.S. federal income tax, includingor withholding tax unless (1) such gain is effectively connected withon interest income in respect of the conduct by the holder of a tradeRegistered Securities or business in the United States or (2) in the case ofon any gain realized by an individual holder,on the holder is present in the United States for 183 days or more in the taxable yeardisposition of the sale and either (A) such gain or income is attributable to an office or other fixed place of business maintained in the United States by such holder or (B) such holder has a tax home in the United States.
A Registered Security held by an individual holder who at the time of death is a non-resident alien will not be subject to U.S. federal estate tax.Securities.
Backup Withholding and Information Reporting. The principal paying agent for each of the Registered Securities will.Information returns may be required to file information returnsfiled with the Internal Revenue Service with respect to payments made to certain United States Holders of those securities.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.
Specified Foreign Financial Assets.Certain United States Holders that own “specified foreign financial assets” with an aggregate value in excess of U.S. $50,000 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, any filings we make electronically with the SEC will be available to the public over the Internet at the SEC’s web site at http://www.sec.gov.
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.derivatives, as well as liquidity risk. In order to monitor and manage these risks, Petróleos Mexicanos and the subsidiary entitieswe 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 DFIsDerivative Financial Instruments (“DFIs”), and guide the development of risk mitigation strategies.
This regulatory framework establishes that DFIs should generally 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.
One of Petróleos Mexicanos We have a Financial Risk Committee, which is a joint body for consultation, opinion and the subsidiary entities’ policies is to help minimize the impact that unfavorable changes indecisions on financial risk factors have on itsexposure, financial results by promoting an adequate balance between expected incoming cash flows from operationsrisk mitigation schemes and outgoing cash flows relating to its liabilities.negotiation of DFIs.
In addition, certain of the PMI Group hassubsidiaries 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 exclusively;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 regular stress testing of major exposures;computation; and VaR limits, both at a global and business unit level and the implementation of stop loss mechanisms. In addition, the PMI GroupTrading also has its own risk management subcommittee whichthat supervises the trading of DFIs. Notwithstanding their execution for hedging purposes, commodity
Approved DFIs were not recorded as hedges for accounting purposes.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 1316 to our consolidated financial statements incorporatedincluded herein.
One of our policies is to contribute to minimizing the impact that unfavorable changes in Item 18.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.
Market RiskAs 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 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 limits such as VaR and capital at risk (an aggregation ofmark-to-market (“MtM”) and profit and loss, or CaR).
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 exchange
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
Exchange RateFair Value of DFIs
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 we do not have an independent third party to value our DFIs. Nonetheless, 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). We have no policies to designate a calculation or valuation agent.
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
Our fair-value assumptions fall under Level 1 and 2 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.
Liquidity Sources
Liquidity Risk
A significant amountOur main internal source of liquidity comes from our revenues is derived from exports of crude oil and petroleum products, which are priced and payable in U.S. dollars. Moreover,operations. Additionally, through our revenues from domestic sales of gasoline and diesel net of the IEPS tax, petrochemicals and natural gas and its byproducts are related to international U.S. dollar-denominated prices, except for domestic sales of LPG, which are priced in pesos and represent less than 5% of our revenues. Our expenses related to hydrocarbon duties are indexed to international U.S. dollar-denominated prices,debt planning and the costpurchase and sale of hydrocarbon importsU.S. dollars, we currently preserve a cash balance at a level of liquidity in domestic currency and U.S. dollars that we acquire for resale in Mexico or use inis considered adequate to cover our facilities is determined in U.S. dollars. By contrast, our capital expenditureinvestment and operating expenses, are determined in pesos.as well as other payment obligations, such as those related to DFI’s.
As a result of this cash flow structure, the depreciation of the peso against the U.S. dollar increases our financial balance in peso terms. The appreciation of the peso relative to the U.S. dollar has the opposite effect. We perceive this risk as manageable, 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
Most of our debt is denominated in U.S. dollars or pesos. Although we seek to issue debt either in U.S. dollars or pesos, this is not always achievable. As a consequence of the cash flow structure described above, fluctuations in non-U.S. dollar currencies (other than pesos) may increase our cost of funding due to the exposure to foreign exchange risk.
Since 1991, for non-U.S. dollar or peso issuances,In addition, we have as a risk mitigation strategy, used DFIs to swap this debt into U.S. dollars. In order to hedge inflation risk associated with debt denominated in UDIs, we swap this debt into pesos. As a result of this strategy, we hold a debt portfolio with negligible sensitivity to currency risk other than pesos and U.S. dollars.
The currencies underlying these DFIs are the euro, Swiss franc, Japanese yen, pound sterling and Australian dollar, which are each swapped against the U.S. dollar. UDIs are swapped against the peso.
During 2013, we entered into cross-currency swaps to hedge currency risk arising from debt obligations denominated in euros and inflation risk arising from debt denominated in UDIs, for an aggregate notional amount of U.S. $2,028.7 million. During 2012, we entered into various cross-currency swaps to hedge currency risk arising from debt obligations denominated in Swiss francs and Australian dollars for an aggregate notional amount of U.S. $484.0 million.
Most of our cross-currency swaps are plain vanilla, except for two swaps entered into in 2002 and 2004 to hedge our exposure to Japanese yen and euros, with termination dates in 2023 and 2016, respectively. These swaps are referred to as “extinguishing swaps” and were obtained in order to hedge long-term obligations. The main characteristic of extinguishing swaps is that these DFIs terminate upon the occurrence of any of theacquired committed revolving credit default events specified in the DFI contract confirmation, without any payment obligation by either party. These swaps have a notional amount of U.S. $241.4 million and U.S. $1,028.5 million, respectively.
We recorded a total net foreign exchange loss of Ps. 3,951.5 million in 2013, as compared to a total net foreign exchange gain of Ps. 44,845.7 million in 2012 and to a total net foreign exchange loss of Ps. 60,143.3 million in 2011. Our foreign exchange loss in 2013 was due to the depreciation of the peso, from Ps. 13.0101 = U.S. $1.00 on December 31, 2012 to Ps. 13.0765 = U.S. $1.00 on December 31, 2013. The depreciation of the peso caused a total net foreign exchange loss because a significant part of our debt (75.0% as of December 31, 2013) is denominated in foreign currency. Our foreign exchange gain in 2012 was due to the effect of a 7.5% appreciation of the peso (from Ps. 13.9904 = U.S. $1.00 on December 31, 2011 to Ps. 13.0101 = U.S. $1.00 on December 31, 2012). Our foreign exchange loss in 2011 was due to the depreciation of the peso, from Ps. 12.3571 = U.S. $1.00 on January 1, 2011 to Ps. 13.9904 = U.S. $1.00 on December 31, 2011.
The PMI Group also faces market risks generated by fluctuations in foreign exchange rates. In order to mitigate these risks, the board of directors of several of the companies that form the PMI Group have authorized a policy which stipulates that no more than 5% of a company’s total financial assets may be denominated in a currency other than its functional currency, unless the company owes a duty or expected payment in a currency other than its functional one. This policy further states that the exchange rate risk generated by financing contracts denominated in currencies other than the functional one is to be fully covered immediately upon the execution of the contract. Accordingly, the companies in the PMI Group will from time to time enter into DFIslines in order to mitigate liquidity risk, two of which provide access to Ps. 3,500 million and Ps. 20,000 million with expiration dates in June and November 2019, respectively, and two others that provide access to U.S. $1,500 million and U.S. $3,250 million with expiration dates in December 2019 and January 2020, respectively.
Finally, the risk associated with financing operations denominated in currencies other than a company’s functional currency.
PMI HBV has outstanding euro-dollar exchange rate forwards which were executedinvestment strategies of our portfolios are structured by selecting time horizons that consider each currency’s cash flow requirements in order to hedge its financing operations denominated in euros. Aspreserve liquidity.
Certain of December 31, 2013, the outstanding notional amountPMI subsidiaries mitigate their liquidity risk through several mechanisms, the most important of these contracts was €266.4 million.
Finally,which is the centralized treasury or“in-house bank,” which provides access to a significant amount of PMI Trading’s incomesyndicated credit line for up to U.S. $700 million 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. 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. dollarscash surplus capacity in the international market, as well ascustody of the centralized structure. In addition, certain related sales costs denominatedof the PMI subsidiaries have access to bilateral credit lines from financial institutions for up to U.S. $1,450 million.
These companies monitor their cash flow on a daily basis and protect their creditworthiness 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 thisfinancial markets. Liquidity risk is marginal relative tomitigated by monitoring the total flows of U.S. dollar. In addition,maximum/minimum permissible financial ratios as set forth in the event that a potential foreign exchange risk arisespolicies approved by each company’s board of directors.
Changes in connection with a commercial transaction, PMI Trading may implement risk mitigation measures by entering into DFIs.Exposure to Main Risks
Interest RateMarket Risk
(i) | Interest Rate Risk |
We are exposed to fluctuations in floating interest rate liabilities. We are exposed to U.S. dollar LIBOR and to Mexican pesoTasa de Interés Interbancaria de Equilibrio (Interbank Equilibrium Interest Rate, which we refer to as TIIE). TIIE. As of December 31, 2013,2016, approximately 24.8%18.2% of our total net debt outstanding consisted of floating rate debt.
Moreover, we make investmentsinvest 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 riskrisk.
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 itsour 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, 2013,2016, we were a party to anfour interest rate swap agreementagreements denominated in U.S. dollars for aan aggregate notional amount of U.S. $750.0$1,846.3 million at a weighted average fixed interest rate of 2.38%2.35% and a weighted average term of 10.138.3 years. The market value of Petróleos Mexicanos’ cross-currency swaps and interest rate swaps was Ps. 2,863.8 million as of December 31, 2012 and Ps. 285.3 million as of December 31, 2013. See Note 13 to our consolidated financial statements incorporated in Item 18.
Similarly, in order to eliminate the volatility associated with variable interest rates of long-term financing operations, PMI NASA has executed interest rate swap agreements denominated in U.S. dollars for an outstanding aggregate notional amount of U.S. $127.9$86.6 million, at a weighted average fixed interest rate of 4.16%4.17% and a weighted average term of 8.45.4 years.
(ii) | Exchange Rate Risk |
A significant amount of our revenues is derived from exports of crude oil and petroleum products, which are priced and payable in U.S. dollars. Moreover, our revenues from domestic sales of gasoline and diesel net of IEPS Tax, tax duties, incentives, and other related taxes, petrochemicals and natural gas and our 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 sales 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 our 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 to mitigate our exchange rate risk exposure. The rest of the debt is denominated in pesos or in UDIs, for which 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, our debt issued in international currencies other than U.S. dollars has exchange rate risk mitigation strategies. Through these strategies, we have further sought 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.
The underlying currencies of our DFIs are the euro, Swiss franc, Japanese yen, Pound sterling and Australian dollar, which are each swapped against the U.S. dollar and UDIs which are swapped against the peso.
In 2016, we 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. $3,459.2 million and the inflation risk arising from debt denominated in UDIs, for an aggregate notional amount of Ps. 1,077.1 million. During 2015, we 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. $3,109.3 million and the inflation risk arising from debt denominated in UDIs, 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 and 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.
We recorded a total net foreign exchange loss of Ps. 254,012.7 million in 2016, as compared to a total net foreign exchange loss of Ps. 154,765.6 million in 2015 and to a total net foreign exchange loss of Ps. 76,999.2 million in 2014, which includes the unrealized foreign exchange loss associated with debt of Ps.
243,182.8 million, Ps. 152,554.5 million, and Ps. 78,884.7 million for the years ended December 31, 2016, 2015 and 2014, respectively. The depreciation of the peso caused a total net foreign exchange loss in 2016 because a significant portion of our debt (83.0% as of December 31, 2016) is denominated in foreign currency. Unrealized foreign exchange losses and gains 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 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 of the 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 our 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.
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 DFIsHydrocarbon Price Risk.
(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.
We continuously evaluate the implementation of risk mitigation strategies, including those involving the use of DFIs, while taking into account operational and economic constraints. We
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.
Commodity Derivatives
In April 2017, we entered into a crude oil hedge 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, we hedged 409 thousand barrels per day from May to December 2017 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.
In 2015, we entered into various swaps in order to hedge 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. Although we entered into these contracts with economic hedging purposes, for accounting purposes, these DFIs do not qualify as hedges and were recorded as trading instruments in the financial statements. During 2016 we did not hedge theenter in any propane import price risk associated with any of our crude oil production for the period from 2007 to 2013.swap.
In addition to supplying natural gas, Pemex-Gas and Basic PetrochemicalsPemex 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-Gas and Basic PetrochemicalsPemex Industrial Transformation enters into DFIs with MGIMex Gas Supply, Ltd.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. MGIMex Gas Supply, Ltd.S.L. then transfers the related price risk derived from the DFI position held with Pemex-Gas and Basic PetrochemicalsPemex Industrial Transformation to international financial counterparties by entering into these opposite position DFIs with such parties. Through the above mechanism, Pemex-Gas and Basic Petrochemicals is able to maintain its natural risk profile withPemex Industrial Transformation maintains a negligible or even null exposure to market risk.
Pemex-Gas These portfolios have VaR and Basic Petrochemicals’ domestic sales of LPG have been subjectCaR limits in order to a price control mechanism imposed by the Mexican Government. This mechanism generates a risk exposure in the geographic areas where we sell imported LPG. During 2012, Pemex-Gas and Basic Petrochemicals mitigated thelimit market risk generated by this exposure by executing a hedging strategy consisting of propane swaps, since propane is the primary component of LPG. However, from July to December 2012, Pemex-Gas and Basic Petrochemicals mitigated the market risk of 50% of the volume of LPG sold domestically through propane swaps. During 2013, Pemex-Gas and Basic Petrochemicals did not enter into any DFIs of this type.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.
Risks RelatingIn 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.
(iv) | Risks Related to the Portfolio of Third-Party Shares |
As of Third-Party Shares
WeDecember 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. This isWe accomplished this by using threea total return swapsswap under which we paypaid variable amounts and receivesreceived a total return on the Repsol shares. Under these DFIs, we arewere entitled to any capital gains associated with the Repsol shares and agreeagreed 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.
These DFIs will mature between March and October of 2014. As of December 31, 2013 and 2012, the market value of2016, PMI HBV owned 22,221,893 Repsol shares was €18.320 and €15.335 per share, respectively.P.M.I. Holdings Petróleos España, S.L. holds one for a total of 22,221,894 shares. These shares have no related DFIs.
Between July and September 2011, we acquired 57,204,240 shares of Repsol through our affiliate PMI HBV. In order to protect that investment, PMI HBV entered into a structured product consisting of long put, short call and long call options maturing in 2012, 2013 and 2014. The exchange rate exposure associated with its financing of the shares was hedged with euro-dollar exchange rate forwards maturing in 2012, 2013 and 2014. The exchange rate forwards that matured in 2012 and 2013 correspond to 38,136,160 shares; hence, DFIs related to 19,068,080 shares remain outstanding. Notwithstanding their execution for hedging purposes, these DFIs were not recorded as hedges for accounting purposes.
Counterparty or Credit Risk
When the fair value of DFIsa DFI is favorable to us, we face the risk that counterpartiesthe counterparty will not be able to meet theirits obligations. To reduce this risk, weWe monitor our counterparties’ creditworthiness and calculate the credit risk exposure for our DFIs. In addition,As a risk mitigation strategy, we only enter into DFIs mostly 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 mark-to-market valueMtM exceeds the relevant threshold specified in the swap), thereby limiting our exposure with our counterparties to a specific threshold amount. The specified thresholds were reached in sevenfive cross-currency swaps during 2012 and four cross-currency swaps during 2013. These swapsfrom the first to the fourth quarter of 2016, which were used to hedge the exchange rate exposure to the euro and pound.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.
In addition, during 2016 we 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, we have 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 mark-to-marketMtM 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, 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) the MtM projection for each payment date based on forward yield curves; (b) the implied default probability obtained from both us and the counterparty’s credit default swaps, at each payment date; and (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.
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.
PMI Trading’s credit risk associated with DFI transactions is mitigatedminimized through the use of futures and standardized instruments that are cleared throughCME-Clearport.
PMI HBV’s credit risk associatedAccounting Standards Applied and the Impact on Results
We enter into derivatives transactions with DFI transactions isthe 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 financing that it obtains fromrequirements of the same DFI counterparties. PMI HBV’s debt balance with such counterparties is greater than the DFIs’ mark-to-market value.
Liquidity Risk
Through our debt planning and U.S. dollar selling operations, we currently preserve a cash balance at a level of liquidity in domestic currency and U.S. dollars that we believe is considered adequate to cover our investment and operating expenses,accounting standards for being designated as well as other payment obligations.
In addition, we have acquired three committed revolving credit lines in order to mitigate liquidity risk, one of which provides access to Ps. 10,000,000,000 with an expiration date of December 2015, and two others that each provides access to U.S. $1,250,000,000 with expiration dates in December 2016 and October 2017, respectively.
Finally, the investment strategies of our portfolioshedges. They are structured by selecting horizons that consider each currency’s cash flow requirements in order to preserve liquidity.
The PMI Group mitigates the liquidity risk within its companies through several mechanisms, the most important of which is the centralized treasury or “in-house bank,” which provides access to a syndicated credit line for up to U.S. $700,000,000, as well as to the additional cash in custody. In addition, the companies in the PMI Group have access to bilateral credit lines from financial institutions for up to U.S. $250,000,000.
The companies in the PMI Group monitor their cash flow on a daily basis and protect their creditworthinesstherefore recorded in the financial markets. Liquidity risk is mitigatedstatements asnon-hedge instruments or as instruments entered into for trading purposes, despite the fact that their cash flows are offset by monitoring the maximum/minimum permissible financial ratios as set forthcash 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 policies approved by each company’s board“Derivative financial instruments (cost) income—net” line item in the consolidated statement of directors.comprehensive income.
Instruments EnteredAs of December 31, 2016 and 2015, the net fair value of our DFIs, including both DFIs that have not reached maturity and those that have reached maturity but have not been settled, recognized in our consolidated statement of financial position, was Ps. (26,010.5) million and Ps. (25,699.6) million, respectively. As of December 31, 2016 and 2015, we did not have any DFIs designated as hedges. See Note 16 to our consolidated financial statements included herein.
For the years ended December 31, 2016, 2015 and 2014, we recognized a net loss of Ps. 14,001.0, Ps. 21,449.9 million and Ps. 9,438.6 million, respectively, in the “Derivative financial instruments (cost) income, net” line item with respect to DFIs treated as instruments entered into for Trading Purposestrading 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, 2016 and 2015, we did not recognize any embedded derivatives (foreign currency or index).
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, 2013.2016. It should be noted that:
*Quantitative Disclosure of Debt Cash Flows’Flow’s Maturities as of December 31, 20132016(1)(2)
Year of Expected Maturity Date | Total Carrying Value | Fair Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2014 | 2015 | 2016 | 2017 | 2018 | Thereafter | Year of expected maturity date | 2022 Thereafter | Total carrying value | Fair value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands of nominal pesos) | 2017 | 2018 | 2019 | 2020 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding debt | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed rate (U.S. dollars) | 18,827,853 | 30,599,245 | 8,012,990 | 7,282,939 | 54,091,020 | 304,856,256 | 423,670,303 | 447,282,809 | 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 (%) | — | — | — | — | — | — | 5.4470 | % | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average interest rate (%) | 5.6541 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed rate (Japanese yen) | 1,128,140 | 1,128,140 | 726,869 | 363,422 | — | 3,735,000 | 7,081,571 | 7,714,998 | 517,286 | — | — | — | — | 19,459,306 | 19,976,592 | 17,336,203 | ||||||||||||||||||||||||||||||||||||||||||||||||
Average Interest Rate (%) | — | — | — | — | — | — | 2.9070 | % | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed rate (pounds) | — | — | — | — | — | 7,528,128 | 7,528,128 | 10,022,857 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average Interest Rate (%) | — | — | — | — | — | — | 8.2500 | % | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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) | — | 9,500,000 | 7,498,990 | — | — | 51,230,219 | 68,229,209 | 72,738,704 | — | — | — | 10,048,950 | 20,457,671 | 90,393,507 | 120,900,128 | 160,930,040 | ||||||||||||||||||||||||||||||||||||||||||||||||
Average Interest Rate (%) | — | — | — | — | — | — | 8.1873 | % | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average interest rate (%) | 7.4878 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed rate (UDIs) | — | — | — | — | — | 26,746,411 | 26,746,411 | 25,295,383 | — | — | 17,319,897 | 4,464,787 | 3,630,557 | 28,288,180 | 53,703,421 | 50,809,979 | ||||||||||||||||||||||||||||||||||||||||||||||||
Average Interest Rate (%) | — | — | — | — | — | — | 3.6143 | % | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average interest rate (%) | 4.0559 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed rate (euros) | 500 | 46 | 15,316,513 | 21,511,809 | — | 41,245,103 | 78,073,971 | 88,219,672 | 26,006,880 | — | 29,198,138 | 28,061,554 | — | 123,886,644 | 207,153,216 | 216,100,006 | ||||||||||||||||||||||||||||||||||||||||||||||||
Average Interest Rate (%) | — | — | — | — | — | — | 4.9780 | % | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed rate (Swiss francs) | 7,352,900 | — | — | — | — | 4,403,283 | 11,756,183 | 12,200,636 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average Interest Rate (%) | — | — | — | — | — | — | 3.1255 | % | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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) | — | — | — | 1,747,544 | — | — | 1,747,544 | 1,917,297 | 2,232,195 | — | — | — | — | — | 2,232,195 | 2,346,390 | ||||||||||||||||||||||||||||||||||||||||||||||||
Average Interest Rate (%) | — | — | — | — | — | — | 6.1250 | % | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average interest rate (%) | — | — | — | — | — | — | 6.1250 | % | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
Total fixed rate debt | 27,309,393 | 41,227,431 | 31,555,362 | 30,905,714 | 54,091,020 | 439,744,400 | 624,833,320 | 665,392,357 | 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) | 25,497,804 | 14,778,763 | 38,952,740 | 12,424,670 | 13,994,202 | 15,177,965 | 120,826,144 | 123,407,193 | 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) | 2,608,275 | — | — | — | — | 7,968,000 | 10,576,275 | 10,995,410 | — | — | — | 11,341,440 | — | — | 11,341,440 | 11,025,531 | ||||||||||||||||||||||||||||||||||||||||||||||||
Variable rate (euros) | 4,779,803 | — | — | — | — | — | 4,779,803 | 5,041,659 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Variable rate (pesos) | 20,666,667 | 9,118,368 | 11,094,119 | 23,442,426 | — | 6,088,290 | 70,409,870 | 71,159,977 | 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 | 53,552,549 | 23,897,131 | 50,046,859 | 35,867,096 | 13,994,202 | 29,234,255 | 206,592,092 | 210,604,238 | 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 | 80,861,942 | 65,124,562 | 81,602,221 | 66,772,810 | 68,085,222 | 468,978,655 | 831,425,412 | 875,996,595 | 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 | ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: | Numbers may not total due to rounding. |
(1) | The information in this table has been calculated using exchange rates at December 31, |
Source: Petróleos Mexicanos.PEMEX.
Quantitative Disclosure of Cash Flows’Flow’s Maturities from Derivative Financial Instruments Held or Issued for Purposes other than Trading as of December 31, 20132016(1)2)(2)
Year of Expected Maturity Date | Total Notional Amount | Fair Value(3) | ||||||||||||||||||||||||||||||
2014 | 2015 | 2016 | 2017 | 2018 | Thereafter | |||||||||||||||||||||||||||
(in thousands of nominal pesos, except as noted) | ||||||||||||||||||||||||||||||||
Hedging Instruments(2)(4) | ||||||||||||||||||||||||||||||||
Interest Rate DFIs | ||||||||||||||||||||||||||||||||
Interest Rate Swaps (U.S. dollars) | ||||||||||||||||||||||||||||||||
Variable to Fixed | 903,252 | 1,155,684 | 1,163,103 | 1,171,060 | 1,179,378 | 5,907,161 | 11,479,638 | 36,019 | ||||||||||||||||||||||||
Average pay rate | 4.31 | % | 3.80 | % | 3.88 | % | 3.96 | % | 4.04 | % | 3.51 | % | n.a. | n.a. | ||||||||||||||||||
Average receive rate | 1.66 | % | 1.46 | % | 2.64 | % | 4.17 | % | 5.36 | % | 6.03 | % | 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 | — | — | 13,449,180 | 22,464,185 | — | 41,205,171 | 77,118,535 | 1,153,442 | ||||||||||||||||||||||||
Receive Japanese yen/ Pay U.S. dollars | 3,691,887 | 1,076,589 | 674,237 | 337,110 | — | 14,355,308 | 20,135,132 | (3,016,981 | ) | |||||||||||||||||||||||
Receive pounds/ Pay U.S. dollars | — | — | — | — | — | 8,322,630 | 8,322,630 | 90,303 | ||||||||||||||||||||||||
Receive UDI/ Pay pesos | — | — | — | — | — | 26,174,756 | 26,174,756 | 434,082 | ||||||||||||||||||||||||
Receive Swiss francs/ Pay U.S. dollars | 6,257,431 | — | — | — | — | 4,296,391 | 10,553,822 | 1,132,123 | ||||||||||||||||||||||||
Receive Australian dollars/ Pay U.S. dollars | — | — | — | 2,032,873 | — | — | 2,032,873 | (178,770 | ) | |||||||||||||||||||||||
Exchange Rate Forward | ||||||||||||||||||||||||||||||||
Receive euros/ Pay U.S. dollars | 4,800,666 | — | — | — | — | — | 4,800,666 | 158,144 | ||||||||||||||||||||||||
(in thousands of shares) | (in thousands of nominal pesos) | |||||||||||||||||||||||||||||||
Equity DFIs | ||||||||||||||||||||||||||||||||
Equity Options on Repsol shares | 19,068 | — | — | — | — | — | 19,068 | 101,458 | ||||||||||||||||||||||||
Non-Hedging Instruments | ||||||||||||||||||||||||||||||||
Equity DFIs | ||||||||||||||||||||||||||||||||
Equity Swaps on Repsol shares | 67,970 | — | — | — | — | — | 67,970 | 545,379 |
Year of expected maturity date | Total notional amount | Fair value(4) | ||||||||||||||||||||||||||||||
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 | ) |
Notes: | Numbers may not total due to rounding. |
n.a.N.A. = not applicable.
(1) | The information in this table has been calculated using the exchange rate at December 31, |
(2) | Our management uses these DFIs to hedge market risk; however, these DFIs do not qualify for accounting purposes as hedges and are recorded in |
(3) | Positive numbers represent a favorable fair value to us. |
(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: PEMEXPEMEX..
Quantitative Disclosure of Cash Flows’Flow’s Maturities from Derivative Financial Instruments (Natural Gas) Held or Issued for Purposes other than Trading as of December 31, 20132016(1)(2)
2014 | 2015 | 2017 | 2017 | 2018 | Thereafter | Total Volume | Fair Value(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) | (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-Gas and Basic Petrochemicals | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives entered into with Customers of Pemex Industrial Transformation | Derivatives entered into with Customers of Pemex Industrial Transformation |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
European Call Option | (5,842,014 | ) | (884,700 | ) | (219,550 | ) | (8,000 | ) | — | — | (6,954,264 | ) | (23,757 | ) | (789,475 | ) | (270,200 | ) | (13,750 | ) | — | — | — | (1,073,425 | ) | (11,488 | ) | |||||||||||||||||||||||||||||||||||||
Average strike price | 4.54 | 4.64 | 4.89 | 4.75 | — | — | 4.57 | n.a. | 3.32 | 3.29 | 3.81 | — | — | — | 3.32 | n.a. | ||||||||||||||||||||||||||||||||||||||||||||||||
Variable to Fixed Swap(3) | (1,409,090 | ) | (181,200 | ) | (129,000 | ) | — | — | — | (1,719,290 | ) | 5,731 | (1,899,650 | ) | (738,488 | ) | (62,364 | ) | — | — | — | (2,700,502 | ) | (25,145 | ) | |||||||||||||||||||||||||||||||||||||||
Average fixed price | 4.27 | 4.68 | 4.48 | — | — | — | 4.33 | n.a. | 2.89 | 2.80 | 2.96 | — | — | — | 2.87 | n.a. | ||||||||||||||||||||||||||||||||||||||||||||||||
Long | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
European Call Option | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Average strike price | — | — | — | — | — | — | — | n.a. | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives entered into with Third Parties to Offset Transactions entered into with Customers | Derivatives entered into with Third Parties to Offset Transactions entered into with Customers |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
European Call Option | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Average strike price | — | — | — | — | — | — | — | n.a. | — | — | — | — | — | — | — | n.a. | ||||||||||||||||||||||||||||||||||||||||||||||||
Long | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
European Call Option | 5,842,014 | 884,700 | 219,550 | 8,000 | — | — | 6,954,264 | 23,931 | 789,475 | 270,200 | 13,750 | — | — | — | 1,073,425 | 11,548 | ||||||||||||||||||||||||||||||||||||||||||||||||
Average strike price | 4.54 | 4.64 | 4.89 | 4.75 | — | — | 4.57 | n.a. | 3.32 | 3.29 | 3.81 | — | — | — | 3.32 | n.a. | ||||||||||||||||||||||||||||||||||||||||||||||||
Variable to Fixed Swap(4) | 1,409,090 | 181,200 | 129,000 | — | — | — | 1,719,290 | (3,965 | ) | 1,899,650 | 738,488 | 62,364 | — | — | — | 2,700,502 | 27,869 | |||||||||||||||||||||||||||||||||||||||||||||||
Average fixed price | 4.19 | 4.58 | 4.41 | — | — | — | 4.25 | n.a. | 2.85 | 2.75 | 2.93 | — | — | — | 2.82 | n.a. |
Notes: | Numbers may not total due to rounding. |
n.a.N.A. = not applicable.
(1) | The information in this table has been calculated using the exchange rate at December 31, |
(2) | Positive numbers represent a favorable fair value to us. |
(3) | Under short variable to fixed swaps entered into with customers of |
(4) | Under long variable to fixed swaps entered into with customers of |
Source: Pemex-Gas and Basic PetrochemicalsPemex 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, 20132016(1)
2014 | 2015 | 2016 | 2017 | 2018 | Thereafter | Total Volume | Fair Value(2) | |||||||||||||||||||||||||
(in thousands of barrels) | (in thousands of nominal pesos) | |||||||||||||||||||||||||||||||
Hedging Instruments | ||||||||||||||||||||||||||||||||
Exchange-traded futures(3)(5) | (1,830 | ) | — | — | — | — | — | (1,830 | ) | (117,525 | ) | |||||||||||||||||||||
Exchange-traded swaps(4)(5) | (3,954 | ) | — | — | — | — | — | (3,954 | ) | (58,229 | ) |
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, |
(2) | Positive numbers represent a favorable fair value to |
(3) | Net position. |
(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. PMI 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 16 from our consolidated financial statements included herein.
As discussed above, because our hedges are cash flow hedges, their effectiveness is maintained regardless of variations in the underlying assets or reference variables. Accordingly, over 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 Mex Gas Supply, S.L. Through this mechanism(back-to-back), Pemex Industrial Transformation maintains a negligible or even null market risk exposure, so we do not consider it necessary to conduct either a sensitivity analysis or to measure or monitor the hedge effectiveness.
Other DFIs seek to fix hydrocarbons prices, such that the DFIs’ underlying assets are the same as those involved in the commercialization, so we do not consider it necessary to conduct either a sensitivity analysis or to measure or monitor the hedge effectiveness. Notably, the price fixing DFIs of PMI Trading (crude and oil), 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 our Director General (chief executive officer) and our chief financial officer,Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of December 31, 2013.2016. 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, and because of the material weakness in internal control over financial reporting described below, our Director General and our chief financial officerChief Financial Officer concluded that our disclosure controls and procedures as of December 31, 20132016 were not effective to provide reasonable assurance that information required to be disclosed in the reports we filefiled 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 our Director General and our chief financial officer,Chief Financial Officer, 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 as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.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 accordance with Item 18 of Form 20-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 to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessedWe conducted an assessment of the effectiveness of our internal controlcontrols over financial reporting as of December 31, 2013.2016. In making this assessment, management used the criteria set forthfor in the “Internal Control—Integrated Framework” published by the Committee of
Sponsoring Organizations of the Treadway Commission
in its Internal Control-Integrated Framework and2013, supplemented for information technologies with the guidelines suggested byIT Control Objectives for Information and Related Technology createdSarbanes-Oxley (3rd Edition), published by the IT Governance Institute,Information Systems Audit and Control Association, which were in effect as of December 31, 2013.
2015. Management relied on Auditing Standards No. 2 and 5 of the Public Company Accounting Oversight BoardPCAOB 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. Based on our assessment and those criteria, management concluded that we maintained effectivea material weakness existed in our internal control over financial reporting as of December 31, 2013.2016, because, when we calculated the impairment effect at the time of our unaudited financial statements, 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, our unaudited consolidated financial statements as of and for the year ended December 31, 2016 only reflected a net reversal of impairment 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, we applied the 25-year life-of-field assumption allowed by the CNH which, combined with the certified reserves data, resulted in a net reversal of impairment 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
of the impairment, the uncertainties about the estimates used to calculate impairment and the relevant 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.
(c) | Attestation Report of the Independent Registered Public Accounting Firm |
Not applicable.
(d) | Changes in Internal Control over Financial Reporting |
ThereAs 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, there has been no change in our internal control over financial reporting during 20132016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 16A. Audit Committee Financial Expert
The Board of Directors of Petróleos Mexicanos has determined that it does not have an “audit committee financial expert” within the meaning of this Item 16A serving on its Audit and Performance Evaluation Committee. We believe that the combined knowledge, skills and experience of the members of the Audit and Performance Evaluation Committee enable them, as a group, to act effectively in the fulfillment of their tasks and responsibilities. In addition, the Audit and Performance Evaluation Committee can consult with outside experts as it deems appropriate in order to provide it with advice on matters related to its tasks and responsibilities.
Item 16B. | Code of Ethics |
We haveIn accordance with the Petróleos Mexicanos Law, we adopted a new code of ethics, as defined in Item 16B of Form20-F under the Exchange Act.Act, which took effect on November 26, 2016 and replaced the code of ethics that had been in place since 2014. 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,Chief Financial Officer, our chief accounting officer and all other employees performing similar functions, in Petróleos Mexicanos, the subsidiary entitiesas well as other individuals and the subsidiary companies.companies whose actions may affect our reputation. Our Codecode of Ethicsethics is available on our website at http://www.pemex.com. If we amend the provisions of our Code of Ethics that apply to our chief executive officer, our chief financial officer, our chief accounting officer and persons performing similar functions, or if we grant any waiver of such provisions, we will disclose such amendment or waiver on our website at the same address.
In addition, all of our employees are currently also subject to the Code of Ethics for Public Servants of the Federal Public Administration, which was issued by the SFP in July 2002 pursuant to the requirements of the Federal Law of Administrative Responsibilities of Public Officials in order to establish clear rules to promote and enforce legal and ethical standards of conduct and to prevent corruption and corporate abuses by Mexican public officials. See “Item 8—Financial Information—Legal Proceedings—Mexican Government Audits and Other Investigations” for more information.
Item 16C. | Principal Accountant Fees and Services |
In accordance with the Petróleos Mexicanos Law, the Audit and Performance Evaluation Committee, in its meeting held on October 8, 2013, and effective as24, 2016,the Board of November 15, 2013,Directors of Petróleos Mexicanos appointed BDO Mexico as external auditor of the financial statements of Petróleos Mexicanos, and of the consolidated financial statements of Petróleos Mexicanos and its subsidiary entities for the fiscal years 2013 and 2014, prepared in accordance with
Normas de Información Financiera Gubernamental para el Sector Paraestatal (Mexican Standards for Governmental Financial Information for Public Sector Entities). The Audit and Performance Evaluation Committee also appointed BDO Mexico as external auditor to audit the consolidated financial statements of Petróleos Mexicanos and its subsidiary entitiesproductive state-owned subsidiaries and subsidiary companies for the fiscal years 2013 and 2014, prepared in accordance with IFRS, as well as to perform other services associated withyear 2016 based on the auditingproposal of our financial statements.the Audit Committee. See “Item 6—Directors, Senior Management and Employees—Audit and Performance Evaluation Committee.”
Audit andNon-Audit Fees
The following table sets forth the aggregate fees billablebilled to us duringfor the fiscal year 2013years 2015 and 2016 by BDO Mexico, our independent registered public accounting firm for the yearyears ended December 31, 2013,2016 and by KPMG Cárdenas Dosal, S.C., our independent registered public accounting firm for the year ended December 31, 2012.2015.
Year ended December 31, | ||||||||||||||||
Year ended December 31, 2012 | Year ended December 31, 2013 | 2015 | 2016 | |||||||||||||
(in thousands of nominal pesos) | (in thousands of nominal pesos) | |||||||||||||||
Audit fees | Ps. | 54,308 | Ps. | 27,961 | Ps. 33,704 | Ps. 46,587 | ||||||||||
Audit-related fees | 9,756 | 0 | — | — | ||||||||||||
Tax fees | 1,558 | 0 | ||||||||||||||
Other fees | 3,452 | 0 | ||||||||||||||
Tax Fees | — | — | ||||||||||||||
All other fees | — | — | ||||||||||||||
|
|
|
| |||||||||||||
Total fees | Ps. | 69,074 | Ps. | 27,961 | Ps. 33,704 | Ps. 46,587 | ||||||||||
|
|
|
|
Audit fees for the year ended December 31, 2013 in the table above are the aggregate fees billablebilled by BDO Mexico for services provided in connection with the audits of our annual financial statements in 2013,each year, statutory filings and statutory audits, as well as filings with financial regulators, and services provided in accordance with the instructions of the Audit and Performance Evaluation Committee.
Audit fees for the year ended December 31, 2012 shown in the table above are the aggregate fees billed and billable by KPMG Cárdenas Dosal, S.C. for services provided in connection with the audits of our annual financial statements in 2012, statutory filings and statutory audits, as well as services provided in accordance with the instructions of the Audit and Performance Evaluation Committee.
Audit-related fees in the table above are the aggregate fees billed by KPMG Cárdenas Dosal, S.C. for services provided in 2012 in connection with 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.letters, and services provided in accordance with the instructions of the Audit Committee.
Tax fees in the table above are fees billed by KPMG Cárdenas Dosal, S.C. in 2012 for tax opinions and tax compliance services.
Other fees in the table above are fees billed by KPMG Cárdenas Dosal, S.C. in 2012 related to an agreed-upon procedures report in order to comply with a contract entered into by a subsidiary company.
Audit Committee Approval Policies and Procedures
In accordance with the Petróleos Mexicanos Law, the Audit and Performance Evaluation Committee appoints and evaluatesnominates the external auditor as well as supervisesfor approval by the preparationBoard 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 and Performance Evaluation 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. Exemptions from the Listing Standards for Audit Committees
Not applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Not applicable.
Item 16F. Change |
KPMG Cárdenas Dosal, S.C. previously served as our principal accountant. On October 8, 2013, KPMG Cárdenas Dosal, S.C. was notified that the Audit and Performance Evaluation Committee engaged BDO Mexico as our principal accountant (i) to audit Petróleos Mexicanos’ financial statements and the consolidated financial statements of Petróleos Mexicanos and its subsidiary entities for the fiscal years ending December 31, 2013 and December 31, 2014, prepared in accordance with the Mexican Standards for Governmental Financial Information for Public Sector Entities; (ii) to audit our consolidated financial statements for the fiscal years ending December 31, 2013 and 2014, prepared in accordance with IFRS; and (iii) to perform other services associated with the auditing of our financial statements. The auditor-client relationship with KPMG Cárdenas Dosal, S.C. formally ceased on November 15, 2013 upon KPMG Cárdenas Dosal, S.C.’s completion of the limited review of our unaudited interim consolidated financial statements as of and for the three-month and nine-month periods ended September 30, 2013. The change of auditor was due to KPMG Cárdenas Dosal, S.C.’s completion of the maximum time period for an external auditor to render services to us, as set forth in the criteria issued by the Audit and Performance Evaluation Committee for the performance of services by the external auditor in accordance with Article 23 of the Petróleos Mexicanos Law. See “Item 16C—PrincipalRegistrant’s Certifying Accountant Fees and Services—Audit Committee Approval Policies and Procedures.”
During the two most recent fiscal years and the subsequent interim period through November 15, 2013, there were no: (i) disagreements with KPMG Cárdenas Dosal, S.C. on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures that if not resolved to their satisfaction would have caused them to make references in connection with their opinion to the subject matter of the disagreements or (ii) “reportable events” as that term is defined in Item 16F(a)(1)(v) of Form 20-F.
KPMG Cárdenas Dosal, S.C.’s report with respect to our consolidated financial statements as of December 31, 2012 and 2011 and January 1, 2011 and for the fiscal years ended December 31, 2012 and 2011 did not contain any adverse opinion or disclaimer of opinion, or qualification or modification as to uncertainty, audit scope or accounting principles.
During the two most recent fiscal years and the subsequent interim period through November 15, 2013, we did not consult BDO Mexico regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our consolidated financial statements; or (ii) any matter that was either the subject of a disagreement or a “reportable event” as that term is defined in Item 16F(a)(1)(v) of Form 20-F. Further, during the two most recent fiscal years and the subsequent interim period through November 15, 2013, no written report or oral advice was provided that BDO Mexico concluded was an important factor considered by us in reaching a decision as to the accounting, auditing or financial reporting issue.
We have provided KPMG Cárdenas Dosal, S.C. with a copy of the foregoing disclosure and have requested that it furnish a letter addressed to the SEC stating whether or not it agrees with such disclosure. A copy of KPMG Cárdenas Dosal, S.C.’s letter, dated May 15, 2014, is filed as Exhibit 15.1 to this report.
Not applicable.
Item 16G. Corporate Governance
Not applicable.
Item 16H. Mine Safety Disclosure
Not applicable.
PART III
Item 17. | Financial Statements |
Not applicable.
Item 18. | Financial Statements |
See pagesF-1 through F-110,F-146, incorporated herein by reference.
Item 19. | Exhibits. Documents filed as exhibits to this Form20-F: |
1.1 | Ley de Petróleos Mexicanos (Petróleos Mexicanos Law), effective | |
1.2 | | Reglamento de la Ley de Petróleos Mexicanos |
1.3 | ||
1.4 | Acuerdo de Creación de la Empresa Productiva del Estado Subsidiaria de Petróleos Mexicanos, denominada Pemex Cogeneración y Servicios(Creation Resolution of the Productive State-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 Productive State-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 Productive State-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 Productive State-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 | Amendment to the Creation Resolution of the Productive State-Owned Subsidiary of Petróleos Mexicanos, denominated Pemex Exploration and Production, effective April 28, 2015 (English translation) (previously filed on FormF-4 (FileNo. 333-213351) on November 30, 2016 and incorporated by reference herein). | |
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 | |
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 | |
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 | |
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 | |
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 | |
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 |
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 | |
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 | |
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 | |
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 |
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 | |
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 | |
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. | |
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 | |
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). |
The registrant agrees to furnish to the U.S. Securities and Exchange Commission, upon request, copies of any instruments that define the rights of holders of long-term debt of the registrant that are not filed as exhibits to this 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 | |
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 | |
10.2 | ||
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, | |
10.5 | Consent | |
10.6 | ||
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. | |
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, as amended, the registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and has duly caused and authorized the undersigned to sign this annual report on its behalf.
PETRÓLEOS MEXICANOS | ||||
By: | /S/ | |||
Name: | ||||
Juan Pablo Newman Aguilar Title: | Chief Financial Officer |
Date: May 15, 2014April 28, 2017
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIESPRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013, 20122016, 2015 AND 20112014 AND REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIESPRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013, 20122016, 2015 AND 20112014
Contents | Page | |||
Consolidated | ||||
F-3 | ||||
F-4 | ||||
| F-5 | |||
F-6 | ||||
F-7 | to F-146 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the General Comptroller’s Office
and the Board of Directors of
Petróleos Mexicanos:
We have audited the accompanying consolidated statementstatements of financial position of Petróleos Mexicanos, Subsidiary EntitiesProductive State-Owned Subsidiaries and Subsidiary Companies (“PEMEX”) as of December 31, 2013,2016 and 2015, and the related consolidated statements of comprehensive income, changes in equity (deficit), and cash flows for each of the yearthree years in the period ended December 31, 2013. These consolidated financial statements are the responsibility of PEMEX’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
As discussed in Note 1 to these consolidated financial statements, 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 Political Constitution of the United Mexican States relating to energy matters, or the “Energy Reform Decree”) was published in theDiario Oficial de la Federación (Official Gazette of the Federation ). The Energy Reform Decree includes transitional articles that set forth the general framework for the secondary legislation or implementing laws, which have not been enacted at the date of this report. The Energy Reform Decree contemplates certain changes that will affect the current structure of PEMEX. PEMEX will be converted from a decentralized public entity to a productive state-owned company. The Mexican Government will carry out the exploration and extraction of hydrocarbons in Mexico through assignments to productive state-owned companies or through agreements with such productive state-owned companies or with private sector companies. PEMEX has requested that theSecretaría de Energía (Ministry of Energy) assign to it certain exploration and extraction areas in which it currently operates, based on its operational capabilities. Any such areas that PEMEX does not request or are not assigned to it will be subject to a bidding process that will be open to participation by private sector companies. The Mexican Government will form theCentro Nacional de Control del Gas Natural (National Center of Natural Gas Control), a new decentralized public entity of the Mexican Government, which will be created to own and operate the national gas pipeline system and storage infrastructure. Pemex-Gas and Basic Petrochemicals will transfer and assign to the National Center of Natural Gas Control the assets and contracts necessary for it to manage this system and infrastructure. At the date of this report, the effects related to the Energy Reform Decree have not been quantified due to the fact that the general framework for the secondary legislation has not been enacted. Our opinion is not qualified in respect of this matter.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Petróleos Mexicanos, Subsidiary Entities and Subsidiary Companies as of December 31, 2013, and the results of their operations and cash flows for the year ended December 31, 2013, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
CASTILLO MIRANDA Y COMPAÑÍA, S. C.
|
|
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the General Comptroller’s Office
and the Board of Directors of
Petróleos Mexicanos:
We have audited the accompanying consolidated statement of financial position of Petróleos Mexicanos, Subsidiary Entities and Subsidiary Companies (“PEMEX”) as of December 31, 2012, and the related consolidated statements of operations, changes in equity (deficit) and cash flows for the years ended December 31, 2012 and 2011.2016. These consolidated financial statements are the responsibility of PEMEX’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. PEMEX is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration 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 examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includesstatements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Petróleos Mexicanos, Subsidiary EntitiesProductive State-Owned Subsidiaries and Subsidiary Companies as of December 31, 2012,2016 and 2015, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2012 and 2011,2016, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
KPMG Cárdenas Dosal, S.C.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, these 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 do not include any adjustments that might result from the outcome of this uncertainty.
CASTILLO MIRANDA Y COMPAÑÍA, S. C. |
/s/ B |
|
|
Mexico City,
April 28, 2017
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIESPRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF DECEMBER 31, 20132016 AND 20122015
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Note | December 31, 2013 | December 31, 2013 | December 31, 2012 | Note | December 31, 2016 | December 31, 2016 | December 31, 2015 | |||||||||||||||||||||||
(Unaudited; U.S. dollars) | (Unaudited; U.S. dollars) | |||||||||||||||||||||||||||||
ASSETS: | ||||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||||||||
Cash and cash equivalents | 5 | U.S. $ | 6,174,872 | Ps. | 80,745,719 | Ps. | 119,234,891 | 6 | U.S. $ | 7,913,885 | Ps. | 163,532,513 | Ps. | 109,368,880 | ||||||||||||||||
Accounts, notes receivable and other | 6 | 9,368,869 | 122,512,011 | 133,009,511 | ||||||||||||||||||||||||||
Inventories | 7 | 4,352,426 | 56,914,500 | 56,847,570 | ||||||||||||||||||||||||||
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 | 13 | 515,554 | 6,741,640 | 9,050,153 | 16 | 235,069 | 4,857,470 | 1,601,106 | ||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
Total current assets | 20,411,721 | 266,913,870 | 318,142,125 | 17,198,935 | 355,398,800 | 267,200,497 | ||||||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||||
Non-current assets: | ||||||||||||||||||||||||||||||
Investments in equity instruments | 8 | 1,355,758 | 17,728,571 | 15,771,259 | ||||||||||||||||||||||||||
Permanent investments in associates | 9 | 1,283,180 | 16,779,501 | 14,646,263 | ||||||||||||||||||||||||||
Wells, pipelines, properties, plant and equipment—net | 10 | 131,654,398 | 1,721,578,741 | 1,658,734,085 | ||||||||||||||||||||||||||
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 | 17 | 190,660 | 2,493,162 | 1,935,997 | 20 | 4,855,047 | 100,324,689 | 54,900,384 | ||||||||||||||||||||||
Restricted cash | 5 | 588,980 | 7,701,798 | 2,605,332 | 6 | 507,096 | 10,478,626 | 9,246,772 | ||||||||||||||||||||||
Intangible assets | 13 | 418,082 | 8,639,242 | 14,304,961 | ||||||||||||||||||||||||||
Other assets | 11 | 1,085,513 | 14,194,710 | 12,347,835 | 14 | 460,349 | 9,512,645 | 7,407,660 | ||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
Total non-current assets | U.S. $ | 136,158,489 | Ps. | 1,780,476,483 | Ps. | 1,706,040,771 | 95,552,034 | 1,974,487,224 | 1,508,453,703 | |||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
Total assets | U.S. $ | 156,570,210 | Ps. | 2,047,390,353 | Ps. | 2,024,182,896 | U.S. $ | 112,750,969 | Ps. 2,329,886,024 | Ps. 1,775,654,200 | ||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
LIABILITIES: | ||||||||||||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||||||||
Current portion of long-term debt | 12 | U.S. $ | 6,934,344 | Ps. | 90,676,943 | Ps. | 114,241,005 | |||||||||||||||||||||||
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 | 8,163,132 | 106,745,193 | 61,513,451 | 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 | 1,085,514 | 14,194,719 | 9,315,539 | 903,339 | 18,666,607 | 13,237,407 | ||||||||||||||||||||||||
Derivative financial instruments | 13 | 480,594 | 6,284,482 | 6,752,811 | 16 | 1,493,804 | 30,867,956 | 27,300,687 | ||||||||||||||||||||||
Taxes and duties payable | 17 | 3,157,534 | 41,289,495 | 43,980,843 | ||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
Total current liabilities | 19,821,118 | 259,190,832 | 235,803,649 | 20,624,752 | 426,189,886 | 443,407,721 | ||||||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||||
Long-term liabilities: | ||||||||||||||||||||||||||||||
Long-term debt | 12 | 57,397,887 | 750,563,471 | 672,617,595 | 15 | 87,446,987 | 1,807,004,542 | 1,300,873,167 | ||||||||||||||||||||||
Employee benefits | 14 | 85,589,253 | 1,119,207,870 | 1,288,540,759 | 17 | 59,059,690 | 1,220,409,436 | 1,279,385,441 | ||||||||||||||||||||||
Provisions for sundry creditors | 15 | 5,292,655 | 69,209,398 | 63,802,794 | 18 | 4,273,997 | 88,317,878 | 73,191,796 | ||||||||||||||||||||||
Other liabilities | 566 337 | 7,405,724 | 6,346,034 | 814,844 | 16,837,893 | 8,288,139 | ||||||||||||||||||||||||
Deferred taxes | 17 | 2,069,338 | 27,059,698 | 28,137,915 | 20 | 200,084 | 4,134,536 | 2,183,834 | ||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
Total long-term liabilities | U.S. $ | 150,915,470 | Ps. | 1,973,446,161 | Ps. | 2,059,445,097 | 151,795,602 | 3,136,704,285 | 2,663,922,377 | |||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
Total liabilities | U.S. $ | 170,736,588 | Ps. | 2,232,636,993 | Ps. | 2,295,248,746 | U.S. $ | 172,420,354 | Ps. 3,562,894,171 | Ps. 3,107,330,098 | ||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
EQUITY (DEFICIT): | 18 | |||||||||||||||||||||||||||||
EQUITY (DEFICIT), NET | 21 | |||||||||||||||||||||||||||||
Controlling interest: | ||||||||||||||||||||||||||||||
Certificates of Contribution “A” | 8,764,183 | 114,604,835 | 49,604,835 | 17,254,377 | 356,544,447 | 194,604,835 | ||||||||||||||||||||||||
Mexican Government contributions to Petróleos Mexicanos | 8,818,391 | 115,313,691 | 178,730,591 | |||||||||||||||||||||||||||
Mexican Government contributions | 2,116,269 | 43,730,591 | 43,730,591 | |||||||||||||||||||||||||||
Legal reserve | 76,636 | 1,002,130 | 977,760 | 48,496 | 1,002,130 | 1,002,130 | ||||||||||||||||||||||||
Accumulated other comprehensive result | (9,870,044 | ) | (129,065,629 | ) | (383,337,573 | ) | (7,907,445 | ) | (163,399,441 | ) | (306,022,973 | ) | ||||||||||||||||||
Accumulated losses: | ||||||||||||||||||||||||||||||
(Deficit) from prior years | (9,003,932 | ) | (117,739,916 | ) | (120,572,948 | ) | ||||||||||||||||||||||||
Net (loss) profit for the year | (12,990,145 | ) | (169,865,633 | ) | 2,833,032 | |||||||||||||||||||||||||
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 | U.S. $ | (14,204,911 | ) | Ps. | (185,750,522 | ) | Ps. | (271,764,303 | ) | (59,716,651 | ) | (1,233,984,852 | ) | (1,331,929,176 | ) | |||||||||||||||
Total non-controlling interest | 38,533 | 503,882 | 698,453 | 47,266 | 976,705 | 253,278 | ||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
Total equity (deficit) | U.S. $ | (14,166,378 | ) | Ps. | (185,246,640 | ) | Ps. | (271,065,850 | ) | |||||||||||||||||||||
Total equity (deficit), net | U.S. $ | (59,669,385 | ) | (1,233,008,147 | ) | (1,331,675,898 | ) | |||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
Total liabilities and equity (deficit) | U.S. $ | 156,570,210 | Ps. | 2,047,390,353 | Ps. | 2,024,182,896 | ||||||||||||||||||||||||
Total liabilities and equity (deficit), net | U.S. $ | 112,750,969 | Ps. 2,329,886,024 | Ps. 1,775,654,200 | ||||||||||||||||||||||||||
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIESPRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)
Note | 2013 | 2013 | 2012 | 2011 | ||||||||||||||
(Unaudited; U.S. dollars) | ||||||||||||||||||
Net sales: | ||||||||||||||||||
Domestic | U.S. $ | 69,604,836 | Ps. | 910,187,634 | Ps. | 867,036,701 | Ps. | 779,197,974 | ||||||||||
Export | 52,588,815 | 687,677,634 | 772,699,053 | 772,965,362 | ||||||||||||||
Services income | 790,682 | 10,339,357 | 7,176,286 | 6,290,781 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
122,984,333 | 1,608,204,625 | 1,646,912,040 | 1,558,454,117 | |||||||||||||||
Cost of sales | 3(g) | 62,249,557 | 814,006,338 | 832,490,574 | 778,776,371 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Gross income | 60,734,776 | 794,198,287 | 814,421,466 | 779,677,746 | ||||||||||||||
Other revenues and expenses—net | 19 | 4,934,566 | 64,526,850 | 209,018,963 | 189,119,861 | |||||||||||||
General expenses: | ||||||||||||||||||
Transportation and distribution expenses | 2,481,431 | 32,448,436 | 28,488,283 | 26,709,677 | ||||||||||||||
Administrative expenses | 7,544,410 | 98,654,472 | 89,612,849 | 80,776,819 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Operating income | 55,643,501 | 727,622,229 | 905,339,297 | 861,311,111 | ||||||||||||||
Financing income | 20 | 1,875,671 | 24,527,209 | 23,214,838 | 30,584,234 | |||||||||||||
Financing cost | 20 | (4,134,671 | ) | (54,067,021 | ) | (72,951,238 | ) | (63,236,207 | ) | |||||||||
Exchange (loss) gain—net | (302,183 | ) | (3,951,492 | ) | 44,845,661 | (60,143,252 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||||
(2,561,183 | ) | (33,491,304 | ) | (4,890,739 | ) | (92,795,225 | ) | |||||||||||
Profit (loss) sharing in associates | 9 | 54,044 | 706,710 | 4,797,607 | (810,753 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Income before taxes, duties and other | 53,136,362 | 694,837,635 | 905,246,165 | 767,705,133 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Hydrocarbon extraction duties and others | 17 | 65,564,661 | 857,356,289 | 898,397,659 | 871,686,746 | |||||||||||||
Hydrocarbon income tax | 17(k) | 289,645 | 3,787,543 | 2,392,919 | (677,390 | ) | ||||||||||||
Income tax | 17(m) | 286,945 | 3,752,230 | 1,855,109 | 3,638,034 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total taxes, duties and other | 66,141,251 | 864,896,062 | 902,645,687 | 874,647,390 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Net (loss) income for the year | U.S. $ | (13,004,889 | ) | Ps. | (170,058,427 | ) | Ps. | 2,600,478 | Ps. | (106,942,257 | ) | |||||||
|
|
|
|
|
|
|
| |||||||||||
Other comprehensive results: | ||||||||||||||||||
Investments in equity instruments | U.S. $ | 340,572 | Ps. | 4,453,495 | Ps. | (10,125,874 | ) | Ps. | 3,872,160 | |||||||||
Actuarial gains (losses)—employee benefits | 18,917,602 | 247,376,029 | (364,878,859 | ) | (14,890,060 | ) | ||||||||||||
Cumulative currency translation effect | 186,643 | 2,440,643 | (1,838,242 | ) | 4,573,141 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total other comprehensive results | 19,444,817 | 254,270,167 | (376,842,975 | ) | (6,444,759 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Comprehensive result for the year | U.S. $ | 6,439,928 | Ps. | 84,211,740 | Ps. | (374,242,497 | ) | Ps. | (113,387,016 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||||
Net income (loss) for the year attributable to: | ||||||||||||||||||
Controlling interest | U.S. $ | (12,990,145 | ) | Ps. | (169,865,633 | ) | Ps. | 2,833,032 | Ps. | (106,732,090 | ) | |||||||
Non-controlling interest | (14,744 | ) | (192,794 | ) | (232,554 | ) | (210,167 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||||
Net (loss) income for the year | U.S. $ | (13,004,889 | ) | Ps. | (170,058,427 | ) | Ps. | 2,600,478 | Ps. | (106,942,257 | ) | |||||||
|
|
|
|
|
|
|
| |||||||||||
Other comprehensive results attributable to: | ||||||||||||||||||
Controlling interest | U.S. $ | 19,444,954 | Ps. | 254,271,944 | Ps. | (376,775,350 | ) | Ps. | (6,562,223 | ) | ||||||||
Non-controlling interest | (137 | ) | (1,777 | ) | (67,625 | ) | 117,464 | |||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total other comprehensive results for the year | U.S. $ | 19,444,817 | Ps. | 254,270,167 | Ps. | (376,842,975 | ) | Ps. | (6,444,759 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||||
Comprehensive income (loss) for the year: | ||||||||||||||||||
Controlling interest | U.S. $ | 6,454,809 | Ps. | 84,406,311 | Ps. | (373,942,318 | ) | Ps. | (113,294,313 | ) | ||||||||
Non-controlling interest | (14,881 | ) | (194,571 | ) | (300,179 | ) | (92,703 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||||
Comprehensive result for the year | U.S. $ | 6,439,928 | Ps. | 84,211,740 | Ps. | (374,242,497 | ) | Ps. | (113,387,016 | ) | ||||||||
|
|
|
|
|
|
|
|
Note | 2016 | 2016 | 2015 | 2014 | ||||||||||||||||
(Unaudited; U.S. dollars) | ||||||||||||||||||||
Net sales: | ||||||||||||||||||||
Domestic | 5 | U.S. $ | 32,423,561 | Ps. | 670,000,473 | Ps. | 746,235,912 | Ps. | 944,997,979 | |||||||||||
Export | 5 | 19,121,086 | 395,118,117 | 407,214,445 | 630,291,313 | |||||||||||||||
Services income | 5 | 698,175 | 14,427,081 | 12,912,112 | 11,438,582 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total of sales | 52,242,822 | 1,079,545,671 | 1,166,362,469 | 1,586,727,874 | ||||||||||||||||
(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 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
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 | ||||||||||||||
General expenses: | ||||||||||||||||||||
Distribution, transportation and sale expenses | 1,221,024 | 25,231,240 | 28,928,639 | 32,182,666 | ||||||||||||||||
Administrative expenses | 5,451,681 | 112,653,533 | 112,472,095 | 111,337,114 | ||||||||||||||||
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 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Financing income1 | 665,372 | 13,749,255 | 14,990,859 | 3,014,187 | ||||||||||||||||
Financing cost2 | (4,783,414 | ) | (98,844,464 | ) | (67,773,593 | ) | (51,559,060 | ) | ||||||||||||
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 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||||||
(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 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total duties, taxes and other | 12,801,076 | 264,521,435 | 331,500,247 | 746,074,764 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net loss | (9,250,114 | ) | (191,144,342 | ) | (712,567,398 | ) | (265,542,989 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Other comprehensive results: | ||||||||||||||||||||
Items that will be reclassified subsequently to profit or loss: | ||||||||||||||||||||
Available-for-sale financial assets | 10 | 10,057 | 207,817 | (3,206,316 | ) | (765,412 | ) | |||||||||||||
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 | ) | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total other comprehensive results | 6,188,177 | 127,872,481 | 88,612,354 | (265,348,125 | ) | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total comprehensive loss | U.S. $ | (3,061,937 | ) | Ps. | (63,271,861 | ) | Ps. | (623,955,044 | ) | Ps. | (530,891,114 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net loss attributable to: | ||||||||||||||||||||
Controlling interest | U.S. $ | (9,274,371 | ) | Ps. | (191,645,606 | ) | Ps. | (712,434,997 | ) | Ps. | (265,203,213 | ) | ||||||||
Non-controlling interest | 24,258 | 501,264 | (132,401 | ) | (339,776 | ) | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net loss | U.S. $ | (9,250,113 | ) | Ps. | (191,144,342 | ) | Ps. | (712,567,398 | ) | Ps. | (265,542,989 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||||||
Other comprehensive results attributable to: | ||||||||||||||||||||
Controlling interest | U.S. $ | 6,177,425 | Ps. | 127,650,318 | Ps. | 88,571,493 | Ps. | (265,528,837 | ) | |||||||||||
Non-controlling interest | 10,751 | 222,163 | 40,861 | 180,712 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total other comprehensive results | U.S. $ | 6,188,176 | Ps. | 127,872,481 | Ps. | 88,612,354 | Ps. | (265,348,125 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Comprehensive (loss) income: | ||||||||||||||||||||
Controlling interest | U.S. $ | (3,096,946 | ) | Ps. | (63,995,288 | ) | Ps. | (623,863,504 | ) | Ps. | (530,732,050 | ) | ||||||||
Non-controlling interest | 35,009 | 723,427 | (91,540 | ) | (159,064 | ) | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total comprehensive loss | U.S. $ | (3,061,937 | ) | Ps. | (63,271,861 | ) | Ps. | (623,955,044 | ) | Ps. | (530,891,114 | ) | ||||||||
|
|
|
|
|
|
|
|
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, 2015 and 2014. |
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, 2015 AND 2014
(Figures stated in thousands, except as noted)
(See Note 21)
Controlling interest | ||||||||||||||||||||||||||||||||||||||||||||
Accumulated other comprehensive income (loss) | Accumulated deficit | Total | Non controlling interest | Total Equity (deficit), net | ||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
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 | ) | ||||||||||||||||||||||||||||||
Total comprehensive income (loss) | — | — | — | (765,412 | ) | 11,192,953 | (275,956,378 | ) | (265,203,213 | ) | — | (530,732,050 | ) | (159,064 | ) | (530,891,114 | ) | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
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 | ) | |||||||||||||||||
Transfer to accumulated deficit | — | — | — | — | — | — | 265,203,213 | (265,203,213 | ) | — | — | — | ||||||||||||||||||||||||||||||||
Increase in Certificates of Contribution “A” | 60,000,000 | — | — | — | — | — | — | — | 60,000,000 | — | 60,000,000 | |||||||||||||||||||||||||||||||||
Total comprehensive income (loss) | — | — | — | (3,206,316 | ) | 13,229,927 | 78,547,882 | (712,434,997 | ) | — | (623,863,504 | ) | (91,540 | ) | (623,955,044 | ) | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
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, 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, 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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)
Controlling interest | ||||||||||||||||||||||||||||||||||||||||||||||
Accumulated other comprehensive income (loss) | ||||||||||||||||||||||||||||||||||||||||||||||
Note | Certificates of Contribution “A” | Mexican Government contributions to Petróleos Mexicanos | Legal reserve | Investments in equity instruments | Cumulative currency translation effect | Actuarial gains (losses)—employee benefits | Accumulated losses | |||||||||||||||||||||||||||||||||||||||
For the year | From prior years | Total | Non-controlling interest | Total equity | ||||||||||||||||||||||||||||||||||||||||||
Balances as of December 31, 2011 | Ps. | 49,604,835 | Ps. | 178,730,591 | Ps. | 977,760 | Ps. | 3,872,160 | Ps. | 4,455,677 | Ps. | (14,890,060 | ) | Ps. | (106,732,090 | ) | Ps. | (13,840,858 | ) | Ps. | 102,178,015 | Ps. | 998,632 | Ps. | 103,176,647 | |||||||||||||||||||||
Transfer to prior years’ accumulated losses approved by the Board of Directors | — | — | — | — | — | — | 106,732,090 | (106,732,090 | ) | — | — | — | ||||||||||||||||||||||||||||||||||
Comprehensive income (loss) for the year | — | — | — | (10,125,874 | ) | (1,770,617 | ) | (364,878,859 | ) | 2,833,032 | — | (373,942,318 | ) | (300,179 | ) | (374,242,497 | ) | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Balances as of December 31, 2012 | 18 | Ps. | 49,604,835 | Ps. | 178,730,591 | Ps. | 977,760 | Ps. | (6,253,714 | ) | Ps. | 2,685,060 | Ps. | (379,768,919 | ) | Ps. | 2,833,032 | Ps. | (120,572,948 | ) | Ps. | (271,764,303 | ) | Ps. | 698,453 | Ps. | (271,065,850 | ) | ||||||||||||||||||
Transfer to prior years’ accumulated losses approved by the Board of Directors | — | — | — | — | — | — | (2,833,032 | ) | 2,833,032 | — | — | — | ||||||||||||||||||||||||||||||||||
Increase in Certificates of Contribution “A” | 18(a) | 65,000,000 | — | — | — | — | — | — | — | 65,000,000 | — | 65,000,000 | ||||||||||||||||||||||||||||||||||
Decrease in Mexican Government contributions to Petróleos Mexicanos | 18(b) | — | (65,000,000 | ) | — | — | — | — | — | — | (65,000,000 | ) | — | (65,000,000 | ) | |||||||||||||||||||||||||||||||
Increase in Mexican Government contributions to Petróleos Mexicanos | 18(b) | — | 3,583,100 | — | — | — | — | — | — | 3,583,100 | — | 3,583,100 | ||||||||||||||||||||||||||||||||||
Increase in Mexican Government contributions to Petróleos Mexicanos—uncalled capital | 18(b) | — | (2,000,000 | ) | — | — | — | — | — | — | (2,000,000 | ) | — | (2,000,000 | ) | |||||||||||||||||||||||||||||||
Increase in legal reserve | 18(c) | — | — | 24,370 | — | — | — | — | — | 24,370 | — | 24,370 | ||||||||||||||||||||||||||||||||||
Comprehensive income (loss) for the year | — | — | — | 4,453,495 | 2,442,420 | 247,376,029 | (169,865,633 | ) | — | 84,406,311 | (194,571 | ) | 84,211,740 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Balances as of December 31, 2013 | 18 | 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. | (169,865,633 | ) | Ps. | (117,739,916 | ) | Ps. | (185,750,522 | ) | Ps. | 503,882 | Ps. | (185,246,640 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Balances as of December 31, 2013 (Unaudited U.S. dollars) | U.S. $ | 8,764,183 | U.S. $ | 8,818,391 | U.S. $ | 76,636 | U.S. $ | (137,668 | ) | U.S. $ | 392,114 | U.S. $ | (10,124,490 | ) | U.S. $ | (12,990,145 | ) | U.S. $ | (9,003,932 | ) | U.S. $ | (14,204,911 | ) | U.S. $ | 38,533 | U.S. $ | (14,166,378 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIESPRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)
2013 | 2013 | 2012 | 2011 | |||||||||||||
(Unaudited; U.S. dollars) | ||||||||||||||||
Operating activities: | ||||||||||||||||
Net (loss) income for the year | U.S. $(13,004,889 | ) | Ps. | (170,058,427 | ) | Ps. | 2,600,478 | Ps. | (106,942,257 | ) | ||||||
Activities related to investing activities: | ||||||||||||||||
Depreciation and amortization | 11,355,615 | 148,491,704 | 140,537,720 | 127,380,409 | ||||||||||||
Impairment of wells, pipelines, properties, plant and equipment | 1,958,386 | 25,608,835 | — | (6,855,535 | ) | |||||||||||
Unsuccessful wells | 955,739 | 12,497,726 | 13,842,410 | 12,021,450 | ||||||||||||
Disposal of wells, pipelines, properties, plant and equipment | 1,124,125 | 14,699,620 | 733,521 | 4,685,135 | ||||||||||||
Profit (loss) sharing in associates | (54,044 | ) | (706,710 | ) | (4,797,607 | ) | 810,753 | |||||||||
Dividends | (69,905 | ) | (914,116 | ) | (685,704 | ) | (599,907 | ) | ||||||||
Effects of net present value of reserve for well abandonment | (400,742 | ) | (5,240,305 | ) | 3,552,924 | 6,598,215 | ||||||||||
Gain on sale of properties, plant and equipment | (58,731 | ) | (768,000 | ) | — | — | ||||||||||
Net (profit) loss on investments in equity instruments | (21,324 | ) | (278,842 | ) | — | — | ||||||||||
Activities related to financing activities: | ||||||||||||||||
Amortization expenses related to debt issuance | (144,588 | ) | (1,890,710 | ) | 1,560,478 | 762,387 | ||||||||||
Unrealized foreign exchange gain (loss) | 252,996 | 3,308,299 | (40,561,801 | ) | 69,417,356 | |||||||||||
Interest expense | 3,005,693 | 39,303,943 | 45,738,584 | 34,830,543 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
4,898,331 | 64,053,017 | 162,521,003 | 142,108,549 | |||||||||||||
Funds provided by (used in) operating activities: | ||||||||||||||||
Derivative financial instruments | 140,725 | 1,840,184 | 1,919,393 | 3,380,190 | ||||||||||||
Accounts and notes receivable | 413,034 | 5,401,035 | 22,597,978 | (34,720,103 | ) | |||||||||||
Inventories | (5,118 | ) | (66,930 | ) | (11,829,418 | ) | (5,750,281 | ) | ||||||||
Other assets | (986,955 | ) | (12,905,916 | ) | (7,678,603 | ) | (9,669,152 | ) | ||||||||
Accounts payable and accrued expenses | 373,126 | 4,879,180 | 1,362,781 | 6,759,771 | ||||||||||||
Taxes paid | (205,816 | ) | (2,691,348 | ) | (21,789,616 | ) | 13,204,559 | |||||||||
Suppliers | 3,459,010 | 45,231,742 | 8,200,280 | 9,838,732 | ||||||||||||
Provisions for sundry creditors | 626,146 | 8,187,800 | (2,696,770 | ) | (5,927,517 | ) | ||||||||||
Employee benefits | 5,968,198 | 78,043,140 | 61,583,267 | 50,952,857 | ||||||||||||
Deferred taxes | (125,063 | ) | (1,635,382 | ) | (859,954 | ) | (905,882 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net cash flows from operating activities | 14,555,618 | 190,336,522 | 213,330,341 | 169,271,723 | ||||||||||||
Investing activities: | ||||||||||||||||
Acquisition of wells, pipelines, properties, plant and equipment | (18,783,891 | ) | (245,627,554 | ) | (197,508,998 | ) | (167,013,568 | ) | ||||||||
Exploration costs | (110,021 | ) | (1,438,685 | ) | (1,828,043 | ) | (4,135,188 | ) | ||||||||
Investments in equity instruments | 219,469 | 2,869,883 | — | (20,783,820 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Net cash flows from investing activities | (18,674,443 | ) | (244,196,356 | ) | (199,337,041 | ) | (191,932,576 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Financing activities: | ||||||||||||||||
Increase in equity from the Mexican Government | 509,1814 | 66,583,100 | — | — | ||||||||||||
Decrease in equity Mexican Government contributions | (4,970,749 | ) | (65,000,000 | ) | — | — | ||||||||||
Loans obtained from financial institutions | 18,120,677 | 236,955,033 | 377,896,149 | 189,693,019 | ||||||||||||
Debt payments, principal only | (14,617,527 | ) | (191,146,091 | ) | (341,863,963 | ) | (152,118,845 | ) | ||||||||
Interest paid | (2,839,682 | ) | (37,133,100 | ) | (46,589,066 | ) | (33,381,090 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net cash flows from financing activities | 784,533 | 10,258,942 | (10,556,880 | ) | 4,193,084 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in cash and cash equivalents | (3,334,292 | ) | (43,600,892 | ) | 3,436,420 | (18,467,769 | ) | |||||||||
Effects of change in cash value | 390,907 | 5,111,720 | 821,924 | 2,247,961 | ||||||||||||
Cash and cash equivalents at the beginning of the year | 9,118,257 | 119,234,891 | 114,976,547 | 131,196,355 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Cash and cash equivalents at the end of the year (Note 5) | U.S. $ | 6,174,872 | Ps. | 80,745,719 | Ps. | 119,234,891 | Ps. | 114,976,547 | ||||||||
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
NOTE 1—1. STRUCTURE AND BUSINESS OPERATIONS OF PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES:COMPANIES
Petróleos Mexicanos was created by a decree issued by the Mexican Congress on June 7, 1938, and began operations on July 20, 1938 in accordance with a1938. The decree of the Mexican Congress stating that all foreign-owned oil companies in operation at that time in the United Mexican States (“Mexico”) were thereby nationalized. Petróleos Mexicanos and its four Subsidiary Entities (as defined below) are decentralized entities of the Federal Government of Mexico (the “Mexican Government”) and together comprise the Mexican oil and gas industry.
The operations of Petróleos Mexicanos and its Subsidiary Entities (as defined below) are regulated mainly by theConstitución Política de los Estados Unidos Mexicanos (Political Constitution of the United Mexican States, or the “Mexican Constitution”), theLey Reglamentaria del Artículo 27 Constitucional en el Ramo del Petróleo (Regulatory Law to Article 27 of the Political Constitution of the United Mexican States concerning Petroleum Affairs, or the “Regulatory Law”), theLey de Petróleos Mexicanos(Petróleos Mexicanos Law) and theReglamento de la Ley de Petróleos Mexicanos(Regulations to the Petróleos Mexicanos Law), which establish the state will be exclusively entrusted with the activities in the strategic areas of petroleum, hydrocarbons and basic petrochemicals through Petróleos Mexicanos and its Subsidiary Entities (as defined below).
The Petróleos Mexicanos Law, which was published in theDiario Oficial de la Federación(Official (Official Gazette of the Federation) on November 28, 2008, establishesJuly 20, 1938 and came into effect on that the four Subsidiary Entities (as defined below) will continue carrying out their activities in accordance with their objectives, fulfilling the commitments they have already assumed in Mexico and abroad.date.
On March 21, 2012, the President of Mexico issued theDecreto que tiene por objeto establecer la estructura, el funcionamiento y el control de los organismos subsidiarios de Petróleos Mexicanos (Decree to establish the structure, operation and control of the subsidiary entities of Petróleos Mexicanos, or the “Subsidiary Entities Decree”), which was published in the Official Gazette of the Federation and became effective as of the following day.
Under the Subsidiary Entities Decree:
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
In addition, on September 4, 2009, the Board of Directors of Petróleos Mexicanos (the “Board”) approved theEstatuto Orgánico (Organic Statute) of Petróleos Mexicanos, which became effective on September 25, 2009 and has since been modified on August 9, 2010, August 2, 2011, February 23, 2012, March 27, 2013 and September 30, 2013.
On March 28, 2013, the Organic Statutes of each Subsidiary Entity (as defined below) was published in the Official Gazette of the Federation. These Organic Statutes establish the structure, organizational basis and functions of the administrative units of each of the Subsidiary Entities (as defined below), and also delineate the duties and internal regulations of their respective Boards of Directors.
The Subsidiary Entities are decentralized entities of a technical, industrial and commercial nature with their own corporate identity and equity and with the legal authority to own property and conduct business in their own names and are grouped in accordance with the areas delineated by the Secretary of Energy. The Subsidiary Entities are controlled by and have the characteristics of subsidiaries of Petróleos Mexicanos. The Subsidiary Entities, of which Petróleos Mexicanos owns 100% of the equity, are:
The principal objectives of the Subsidiary Entities are as follows:
For purposes of these consolidated financial statements, any capitalized name or term that is not defined herein will have the meaning attributed to it in the Regulatory Law or in the Petróleos Mexicanos Law.
On December 12, 2013, the Permanent Commission of the Mexican Congress approved amendments to Articles 25, 27 and 28 of the Mexican Constitution, which were subsequently approved by a majority of Mexico’s state legislatures and signed into law by President Peña Nieto. On December 20, 2013, these
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
amendments were published as theDecreto por el que se reforman y adicionan diversas disposiciones de la Constitución Política de los Estados Unidos Mexicanos, en Materia de Energía (Decree that amends and supplements various provisions of the Mexican Constitution relating to energy matters, or the “Energy Reform Decree”)matters), was published in the Official Gazette of the Federation and tookcame into effect on December 21, 2013. The Energy2013 (the “Energy Reform Decree includes transitional articles that set forth the general framework for the secondary legislation or implementing laws, which have not been enacted as of the date of these consolidated financial statements.
The key features ofDecree”). In accordance with the Energy Reform Decree, 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 respectproductive state-owned companies and with other companies.
As part of the secondary legislation enacted in accordance with the Energy Reform Decree, on August 11, 2014, theLey de Petróleos Mexicanos (the Petróleos Mexicanos 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, the Secretaría de Energía (Ministry of 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 special regime for acquisitions, leases, services and public works matters came into effect the day after.
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 perform activities related to refining, gas processing and engineering and research projects to create economic value and profitability for 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 hydrocarbons sector in Mexicodirection and PEMEX’s operations arecoordination of Petróleos Mexicanos (the “Subsidiary Entities”).
The Subsidiary Entities of Petróleos Mexicanos prior to the following:Corporate Reorganization werePemex-Exploración y Producción, Pemex-Refinación (Pemex-Refining),Pemex-Gas and Petroquímica Básica(Pemex-Gas and Basic Petrochemicals) andPemex-Petroquímica (Pemex-Petrochemicals), which were
|
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures statedFIGURES 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 thousands, except as noted)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 Officer 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”). 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 Drilling and Services, Pemex Logistics, Pemex Cogeneration and Services, Pemex Fertilizers and Pemex 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.
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 |
As
• | 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 dateseven 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 consolidatedcreation resolutions came into effect on June 1, 2015. On May 12, 2016, a modification to the creation resolution of the productive state-owned subsidiary Pemex Exploration and Production was published in the Official Gazette of the Federation and became effective that same date.
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 PEMEX does not know whatshall be understood as established in the scope of the secondary legislation will be. Accordingly, it cannot currently predict what specific effects these developments may have, although they will likely result in significant changes to PEMEX’s structure and have a material effect on its results of operations and financial position.Petróleos Mexicanos Law.
The principal distinction between the Subsidiary Entities and the Subsidiary Companies (as defined below) is that the Subsidiary Entities are decentralized publicproductive state-owned entities, created by the predecessor statute to theLey Orgánica de Petróleos Mexicanos y Organismos Subsidiarios(Organic Law of Petróleos Mexicanos and the Subsidiary Entities), whereas the Subsidiary Companies are affiliates companies that were formed in accordance with the applicable laws of each of the respective jurisdictions in which they were incorporated. In addition, unlike the Subsidiary Entities, the Subsidiary Companies are not decentralized entities and are managed as private corporations. The “Subsidiary Companies” are defined as those companies which are controlled, directly or indirectly, by PEMEXPetróleos Mexicanos (see Note 3(a))3-a).
“Associates”,Associates,” as used herein, means those companies in which Petróleos Mexicanos does not have effective control (see Note 3(a))3 a).
Petróleos Mexicanos, the Subsidiary Entities and the Subsidiary Companies are referred to collectively herein as “PEMEX”.“PEMEX.”
PEMEX’s address and its principal place of business is:
Av. Marina Nacional No. 329,
Col. Petróleos Mexicanos
Verónica Anzures, Delegación Miguel Hidalgo,
11300 Ciudad de México, D.F. 11311México.
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—2. BASIS OF PREPARATION:PREPARATION
Statement of compliance |
PEMEX prepared its consolidated financial statements as of December 31, 20132016 and 2012,2015, and for the years ended December 31, 2013, 20122016, 2015 and 2011,2014, in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
TheOn April 20, 2017, these consolidated financial statements under IFRS and the notes hereto were authorized for issuance by the following officers: Mr. José Antonio González Anaya, Chief Executive Officer, Mr. Juan Pablo Newman Aguilar, Chief Financial Officer, Mr. Manuel Salvador Cruz Flores, Deputy Director of Accounting and Tax Matters, and Mr. Francisco J. Torres Suárez, Associate Managing Director of Accounting.
These consolidated financial statements and the notes theretohereto as of December 31, 20132016 were approved by the Board of Petróleos Mexicanos on May 14, 2014April 27, 2017 with prior approval from the Audit Committee of the report of the Independent Registered Public Accountant, pursuant to the terms of Article 13 Fraction VI of the Petróleos Mexicanos Law, Article 104 Fraction III, paragraph a, of the MexicanLey del Mercado de Valores (Securities Market Law), and of Article 33 Fraction I, paragraph a, section 3 and Article 78 of theDisposiciones de carácter general aplicables a las emisoras de valores y a otros participantes del mercado de valores (General provisions applicable to Mexican securitiessecurities´ issuers and other participants inof the Mexican securities market.market).
Basis of measurement |
These consolidated financial statements have been prepared using the historical cost basis method, except where it is indicated that certain items 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.
Going concern
The consolidated financial statements have been prepared on a going concern basis, which assumes that PEMEX 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 had 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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
value. 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:
• | 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 principal items measuredbusiness 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: |
• | 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. |
• | 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. |
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 instruments. The principal items measured at amortized costposition 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 loans heldnot subject to maturity, whiletheLey de Concursos Mercantiles (the Bankruptcy Law) and none of PEMEX’S existing financing agreements include any clause that could lead to the principal item measured at present valuedemand 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 provision for employee benefits.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.
Functional and reporting currency and translation of |
These consolidated financial statements are presented in Mexican pesos,which is both PEMEX’s functional currency and reporting currency, due to the following:
the 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)
Employee benefits |
cash flows for payment of general expenses, taxes and duties are realized in Mexican pesos. |
Although the sales prices of several 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 recordedreceived in Mexican pesos.
Mexico’s monetary policy regulator, theBanco de México,, requires that Mexican Government entities other than financial entities sell their foreign currency to theBanco de México in accordance with its terms, receiving Mexican pesos in exchange, which is the currency of legal currencytender in Mexico.
Translation of financial statements of foreign operations
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. Ifoperations, and, if so, the currencies for a foreign transaction are different, then therecording currency for recording the foreign transaction is first translated into the functional currency and then translated into the reporting currency using theyear-end exchange rate of each period for assets and liabilities reported in the consolidated statements of financial position,position; the historical exchange rate at the date of the transaction for equity itemsitems; and the weighted average exchange rate of the period for income and expenses reported in the statement of comprehensive income of the period.income.
Terms definition |
References in these consolidated financial statements and the related notes to “pesos” or “Ps.” refers to Mexican pesos, “U.S. dollars” or “U.S. $”“US$” 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, “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. Figures in all currencies are presented in thousands of the relevant currency unit, except exchange rates and product and share prices.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
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 byBanco de Méxicoand the SHCP at December 31, 20132016 of Ps. 13.076520.6640 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 ACCOUNTING POLICIES:3. Significant accounting policies
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.
Significant estimates and underlying assumptions are reviewed, on an ongoing basis, and the effects of such revisions to accounting estimates are recognized in the period in which any estimates are revised and in any future periods affected by such revision.
In particular, informationInformation about estimates, assumptions estimation uncertainties and critical accounting policies that have the most significant effecteffects on the amounts recognized in the consolidated financial statements are described in the following notes:
Actual results could differ from those estimates and assumptions.
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:
Basis of consolidation |
The consolidated financial statements include those of Petróleos Mexicanos, the Subsidiary Entities and the Subsidiary Companies. All intercompany balances and transactions 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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Investment in subsidiaries
The Subsidiary Entities and Subsidiary Companies are those controlled by Petróleos Mexicanos. Control requires exposure or rights to variable returns and the ability to affect those returns through power over a company. The Subsidiary Entities and Subsidiary Companies are consolidated from the date that control commences until the date that control ceases.
The consolidated Subsidiary Entities are Pemex-Exploration and Production, Pemex-Refining, Pemex-Gas and Basic Petrochemicals and Pemex-Petrochemicals.
The consolidated Subsidiary Companies are companies that are 100% owned by Petróleos Mexicanos (withcontrols a subsidiary when it is exposed to or has rights to variable returns from the exception of Pemex Finance, Ltd. (“FIN”)company and P.M.I. Comercio Internacional, S.A. de C.V. (“PMI CIM”)), and are as follows: PMI CIM(i); P.M.I. Trading, Ltd. (“PMI Trading”)(i); P.M.I. Holdings North America, Inc. (“PMI HNA”)(i); P.M.I. Holdings Petróleos España, S.L. (“PMI HPE”)(i); P.M.I. Holdings, B.V. (“PMI HBV”)(i); P.M.I. Norteamérica, S.A. de C.V. (“PMI NASA”)(i); Kot Insurance Company, AG (“KOT”); Pemex Procurement International, Inc. (“PPI”)(ii); P.M.I. Marine, Ltd. (“PMI Mar”)(i); P.M.I. Services, B.V. (“PMI SHO”)(i); Pemex Internacional España, S.A. (“PMI SES”)(i); Pemex Services Europe, Ltd. (“PMI SUK”)(i)(iii); P.M.I. Services North America, Inc. (“PMI SUS”)(i); P.M.I. Field Management Resources, S.L. (“FMR”)(i)(iv); P.M.I. Campos Maduros, S. de R.L. de C.V. (“SANMA”)(iv); Mex Gas International, Ltd. (“MGAS”); FIN; Instalaciones Inmobiliarias para Industrias, S. A. de C. V. (“III”)(iv); III Servicios, S. A. de C. V. (“III Services”)(iv); PPQ Cadena Productiva, S.L. (“PPQCP”)(iv) and Hijos de J. Barreras, S. A. (“HJ BARRERAS”)(iv).has the ability to affect those returns through its power over the company.
The financial informationstatements of the Subsidiary Entities and Subsidiary Companies hashave been prepared based on the same period of Petróleos Mexicanos’ consolidated financial statements applying the same accounting policies.
For more information about Subsidiary Companies, see Note 4.
InvestmentsPermanent investments in associates and joint venturesarrangements
Investments in associatesAssociates are those entities in which PEMEX has significant influence but not the power to control financial and operational decisions. ThereIt is presumed that there is significant influence when PEMEX owns directly or indirectly between 20% and 50% of voting rights in another entity.
Joint venturesarrangements are those arrangements whereby two or more parties undertake an economic activity that is subject to joint control. A joint operation is a joint arrangement whereby the parties that have joint control of an arrangement. A joint arrangement is either a joint venture, where both of the arrangementparties have rights to the net assets of the arrangements, or a joint operation, where the parties have both rights to the assets, and obligations for the liabilities relating to the arrangement.arrangements.
Investments in associates and joint ventures are recognized based on the equity method and recorded initially at cost, including any goodwill identified on acquisition. With respect to joint operations, the assets, liabilities, income and expenses are recognized in relation to participation in the arrangementshare of each party and in accordance with the applicable IFRS.IFRS for each of those items. The investment cost includes transaction costs.
TheThese consolidated financial statements include the proportion of gains, losses and other comprehensive income corresponding to PEMEX’s share in each investee, once these items are adjusted to align with the accounting policies of PEMEX, from the date that significant influence and joint control begins to the date that such influence or joint control ceases.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
When the value of the share of losses exceeds the value of PEMEX’s investment in an associate or joint venture, the carrying value of the investment, including any long-term investment, is reduced to zero and PEMEX ceases to recognize additional losses, except in cases where PEMEX is jointly liable for obligations incurred by those associates and joint ventures.
Eliminated transactions in consolidation
All intercompany balancesFor more information about associates and transactions 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 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.joint arrangements, see Note 11.
Non-controlling interests
The interests of third parties who do not have a controlling interest in the equity or comprehensive result of subsidiaries of PEMEX are presented in the consolidated statements of financial position, the consolidated
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“non-controlling interests”, and as net“net income and comprehensive income for the period, attributable tonon-controlling interests,” in the consolidated statements of comprehensive income.
Dividends paid in cash and assets other than cash
A liability for distributions of dividends in cash andnon-cash assets to third parties is recognized when the distribution is authorized by the Board.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 re-measurementsthese measurements of the fair value, between the date on which the distribution is declared and the timedate when the assets are transferred, are recognized directly in equity.
When distributingnon-cash assets, any difference between the dividend paidcarrying 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.
Business combinations and goodwill |
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 foreign currency |
In accordance with IAS 21 “The Effects of Changes in Foreign Exchange Rates” (“IAS 21”), transactions in foreign currencies are translated to the functional currencyand recorded at exchange rates at the dates of the transactions.transactions and/or of the presentation of financial information.
Exchange differences arising onfrom the settlement of monetary items or on translatingfrom the translation of monetary items atinto rates different from those at which they were translated on their initial recognition, during the period or in previous financial statements are recognized in profit or lossthe results of operations in the reporting period in which they arise. When a gain or loss onfrom anon-monetary item is recognized in other comprehensive results, any exchange component ofdifference included in that gain or loss is recognized in other comprehensive results. Conversely, when a gain or loss onfrom anon-monetary item is recognized in profit or loss,the results of operations, any exchange component ofdifference included in that gain or loss shall beis recognized in profit or lossthe results of operations for the year.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)period.
Fair value measurement |
PEMEX measures certain financial instruments such as derivative financial instrumentsDFIs at fair value as of the closing date of the relevant reporting period, and the fair value of such instruments is disclosed in Note 13. The financial instruments valued at amortized cost are disclosed in Note 12.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. | 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.
The fair value of an asset or liability is measured based on 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 instruments |
Financial instruments are classified as: (i) financial instruments measured at fair value through profit or loss; (ii) financial instruments held to maturity;(iii) available for saleavailable-for-sale financial assets; (iv) investments in equity instruments; (v) loans held to maturity; orand receivables; and (vi) derivative financial instruments.DFIs. PEMEX determines the classification of its financial instruments at the time of initial recognition.
PEMEX’s financial instruments include cash and short-term deposits, equity investments,available-for-sale financial assets, accounts receivable, other receivables, loans, accounts payable to suppliers, other accounts payable, borrowings and debts, as well as derivatives.DFIs.
Below are descriptions of the financial instruments policies employed by PEMEX:
Financial instruments measured at fair value through profit or loss
A financial instrument is measured at fair value through profit or loss if it is classified as held for trading or designated as such upon initial recognition. Financial assets are designated at fair value through profit or loss if PEMEX manages such investments and makes purchase and sale decisions based on their fair value in accordance with PEMEX’s documented risk management or investment strategy. In addition, directly attributable transaction costs are recognized in the consolidated statements of comprehensive income for the period.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.
Held-to-maturity financial instruments
Financial instruments that are intended to be and are capable of being held to maturity are classified as held-to-maturity. Held-to-maturity financial instruments are recognized initially at fair value in addition to any directly attributable transaction costs. Subsequent to their initial recognition, held-to-maturity financial instruments are measured at amortized cost using the effective interest rate method (“EIR method”), less any impairment losses.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial instrumentsnon-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 financial assets that require the delivery of such assets within a period of time established by market practice are recognized as of the negotiation date (the date on which PEMEX commits to purchase or sell the asset).
Investments in equity instrumentsLoans and receivables
Certain investments in equity instrumentsLoans and receivables are designated irrevocably as investments in equity instruments upon initial recognition, as required under IFRS 9, “Financial Instruments” (“IFRS 9”). These investments are valuedinitially recognized at fair value and changes in their fair value are recognized in other comprehensive results. Dividends arising from these investments are recognized in results of the period when the shareholder’s right to receive payment of the dividend is established.
Loans held to maturity
value. After initial recognition, loans and debt securities that bear interest are measured at amortized cost using the EIReffective interest rate (“EIR”) method, less impairment losses.
The amortized cost is calculated based on any discount or premium on acquisition and fees and costs that are an integral part of the EIR method. Amortization of costs is included under the heading of financing cost—netcost in the statement of comprehensive income.
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)
Derivative financial instruments
Derivative financial instruments (“DFIs”)DFIs presented in the consolidated statement of financial position are carried at fair value. In the case of DFIs held for trading, changes in fair value are recorded in profit or loss; in the case of DFIs formally designated as and that qualify for hedging, changes in fair value are recorded in the statement of comprehensive income using cash flow or fair value hedge accounting, with gains or losses classified in accordance with the earnings treatment of the hedge transaction.
Embedded derivatives
PEMEX evaluates the potential existence of embedded derivatives, which may be found in the terms of its contracts, or combined with other host contracts, which could be structured financial instruments (debt or equity instruments with embedded derivatives). Embedded derivatives have terms that implicitly or explicitly meet the characteristics of a DFI. In some instances, these embedded derivatives must be segregated from the 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.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
Impairment of financial assets measured at amortized cost
At each reporting date, PEMEX evaluates whether there is objective evidence that a financial asset or group of financial assets is impaired, in which case the value of the recoverable amount of the asset is calculated. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of the financial asset.
Objective evidence that a financial asset or group of assets is impaired includes significant financial difficulty of the issuer or obligor, a breach of contract, such as a default or delinquency in interest or principal payments; the lender, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that the lender would not otherwise consider; it becoming probable that the borrower will enter bankruptcy or other financial reorganization; the disappearance of an active market for that financial asset because of financial difficulties; or observable data indicating that there is a measurable decrease in the estimated future cash flows. Impairments by asset are:
Impairment of financial assets carried at amortized cost
The impairment of financial assets carried at amortized cost is measured as the difference between the assets 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.
If, in a subsequent period, the 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 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)
When there is objective evidence of the impairment of an asset, the accumulated loss recognized in other comprehensive income shall be reclassified from equity to profit or loss even though the financial asset has not been derecognized.
If, in 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.
Cash and cash equivalents |
Cash and cash equivalents are comprised 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 date that are subject to an insignificant risk of changes in their fair value, which are used in the management of PEMEX’s short-term commitments.
With respect to the consolidated statement of cash flows, the cash and cash equivalents line item consists of the cash and cash equivalents described above, net of bank overdrafts pending payment.
Cash subject to restrictions or that cannot be exchanged or used to settle a liability within twelve12 months is not considered part of this line item and is presented in asnon-current assets.
Accounts, notes receivable and other are recognized at realizable value. The realizable value, if any, of a long-term account receivable is determined by considering its present value. In addition, interest income from accounts receivable is recognized on an accrued basis, provided that the amount can be reliably measured and collection is probable.
Inventories and cost of sales |
PEMEX’s inventoriesInventories 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.
AdvancesAdvance 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.
Wells, pipelines, properties, plant and equipment |
Wells, pipelines, properties, plant and equipment are measuredrecorded at acquisition or construction cost less accumulated depreciation and accumulated impairment losses.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
PEMEX uses the successful efforts method for the exploration and production of crude oil and gas activities, considering the criteria mentioned in IFRS 6, “Exploration for and Evaluation of Mineral Resources” in relation to the recognition of exploration and drilling assets. Costs of development wells and related plant, property and equipment involved in the exploitation of oil and gas are recorded as part of the cost of assets. The costs of exploratory wells in areas that have not yet been designated as containing proved reserves are recorded as intangible assets until it is determined whether they are commercially viable. Otherwise, the costs of drilling the exploratory wellviable to capitalize as fixed assets, otherwise they are charged torecognized as exploration expense.expenses. Other expenditures on exploration are recognized as exploration expenses as they are incurred.
Wells,
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”), initial 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, in accordance with IAS 16, “Property, Plant and Equipment” (“IAS 16”).
wells. The cost of financing projects that require large investments orand 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 the commissioning and interest on financing.start up. In some cases the cost also includes the cost of dismantlingplugging of wells and removal.
Expenditures related to the construction of wells, pipelines, properties, plant and equipment during the stage prior to commissioning are stated at cost as intangible assets or construction in progress, in accordance with the characteristics of the asset. Once the assets are ready for use, the coststhey are transferred to the respective component of wells, pipelines, properties, plant and equipment and depreciation or amortization begins.
The costs of major maintenance or replacement of a 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 commercialeconomic 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, with quarterly updates for new development investments.
Depreciation of other elements of wells, 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.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
When parts of an item of wells, pipelines, properties and equipment have different useful lives than such item and a cost that isare significant relative to the total cost of the item, the part is depreciated separately. Useful
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 relating tobased on the period in which the itemsassets will provide PEMEX with a service.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 are depreciated over the shorter of the lease term or the useful life of the asset.
Advance payments for the acquisition of pipelines, properties, plant and equipment are also recognized in the line item of wells, pipelines, properties, plant and equipment when the risks and benefits of the ownership have been transferred to PEMEX.
Crude oil and natural gas reserves |
Under the Mexican Constitution and the Regulatory Law,law, all crude oil and other hydrocarbon reserves withinlocated in the subsoil of Mexico are owned by the Mexican nation and not by PEMEX. AsIn accordance with the aforementioned and based on the applicable regulation as of the date of these consolidated financial statements, under the Petróleos Mexicanos Law, Pemex-Exploration and Production has the right to extract these reserves and to sell the resulting production, but the reserves assigned to PEMEX by the Mexican Government are not registered for accounting purposes sincebecause they are not owned by PEMEX. Pemex-Exploration and ProductionPEMEX’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 SEC,U.S. Securities and Exchange Commission (“SEC”) as amended, (“Rule 4-10(a)”), and where necessary, in accordance with theStandards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers (the “SPE”) as of February 19, 2007. These procedures are consistent with international reserves reporting practice. The estimation of these reserves depends on assumptions made and the interpretation of the data available, and may vary among analysts. The results of drilling activities, test wells and production after the date of estimation are utilized in future revisions of reserves estimates.
Although PEMEX does not own the oil and other hydrocarbon reserves within Mexico, these accounting procedures allow PEMEX to record the effects that such oil and other hydrocarbon reserves have on its consolidated financial statements, including, for example, in the depreciation and amortization line item.
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.
A cash-generating unit is the smallest identifiable group of assets which can generate cash inflowsflows 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 theits fair value minus the costcosts of disposal and the use value. Valueits 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
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
applied is 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, ifassuming 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 by adjustingusing the fair value which isin use based on the proved reserves and probable reserves in some cases, for the risk factor associated with such reserves.
ImpairmentBoth impairment losses and reversals are recognized in the statementcosts and expenses in which the depreciation and amortization are recognized. Impairment losses may not be presented as part of comprehensive income. If anthe 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 subsequently improves, and such improvement is greater thanshall 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 and appears to be permanent, the impairment loss recorded previously is reversed only up to the carrying amount of the item, as though no impairment had been recognized. Impairment losses and reversals are presented in a separate line item in the statement of comprehensive income.
Leases |
The determination of whether an agreement is or contains a lease is based on the contenteconomic substance of the agreement at the date of execution. An agreement contains a lease if performance under the agreement depends upon the use of a specific asset or assets, or if the agreement grants the right to use the asset.
Finance leases, which transfer to PEMEX substantially all the inherent benefits and risks of the leased property, are capitalized at the date the lease commences, and the value is recorded as the lower of the fair value of the leased property and the present value of the minimum lease payments. Payments on the lease are divided between the financial costs and the amortization of the remaining debt principal in order to achieve a constant effective interest rate for the outstanding liability. The financing costs are recognized in the statement of comprehensive income.
Operating lease payments that do not transfer to PEMEX substantially all the risks and benefits of ownership of the leased asset are recognized as expenses in the statement of comprehensive income on a straight line basis over the term of the lease. Operating lease and variable rent payments that do transfer to PEMEX substantially allare recognized in the risks and benefits of ownership are instead capitalized and treated as under the paragraph above (see Note 10(e)).operating results on an accrued basis.
Provisions |
PEMEX recognizes provisions where,when, as a result of a past event, PEMEX has incurred a legal or contractualassumed present obligation for which the transfer of an asseta future disbursement is probable and the amountvalue of such transferdisbursement 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 for as costsexpenses 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 costs.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.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
Retirement of assets
The obligations associated with the future retirement of assets, including those related to the retirement of well,wells, pipelines, properties, plant and equipment and their components but excluding those related to the retirement of wells, are recognized at the date that the retirement obligation is incurred, based on the discounted cash flow 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, and, accordingly, PEMEX lacks sufficient information to reasonably determine the date on which they will be dismantled.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.
Employee benefits |
PEMEXBeginning January 1, 2016, Petróleos Mexicanos and the Subsidiary Entities operates both a 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, underboth Petróleos Mexicanos and the Subsidiary Entities and its employees contribute to the worker’s individual account. PEMEX’s contributions are recognized on an accrual basis as cost, expense or asset, and are credited to liability.
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 it makes contributionsthe 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 fund thattrust which is administratedmanaged separately. PEMEX recognizesPetróleos Mexicanos and the Subsidiary Entities recognize the cost for defined benefit plans based on independent actuarial computations applying the projected unit credit method. Actuarial gains and losses are recognized within other comprehensive resultresults for the period in which they occur.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 incurred.determined.
PEMEX’s net obligation with respect toThe asset or liability in the defined benefit plan equalscomprises the present value of the defined benefit obligation less the fair value of plan assets.assets for which obligations have to be settled. The value of any asset is limited to the present value of availableany economic benefit represented by the plan reimbursements andor reductions inof the future contributions to the plan.
In addition, other long term employee benefits include the seniority premiums payable for disability, are recognized within other long-term employee benefits.death and survivors benefits, medical services, gas and basic food basket for beneficiaries.
Termination benefits are recognized in profit or loss for the periodyear in which they are incurred.
Petróleos Mexicanos and the Subsidiary Entities are primarily subject to the following specialCurrent income tax laws:Derecho ordinario sobre hidrocarburos (Ordinary Hydrocarbons Duty,
Current income tax assets or “DOSH”),Derecho sobre hidrocarburos para el fondo de estabilización (Hydrocarbons Dutyliabilities for the Stabilization Fund)current andImpuesto a los rendimientos petroleros (Hydrocarbon Income Tax, prior years are measured as the amount expected to be paid or “IRP”), all ofto be recovered from the tax authorities, using either the tax rates in force or tax rates which are based mainly on petroleum productionin the process of being approved and revenues from oil, gas and refined products taking into account certain tax deductions. Theseare substantially completed by the end of the year.
Current income taxes and federal dutiesrelated with items that are recognized within profit or lossas equity shall be presented in the other comprehensive income of the year. Periodically, PEMEX evaluates the positions taken in its tax returns for the period in which they are incurred (see Note 17).
Petróleos Mexicanos is not subject to theLey del Impuesto Sobre la Renta (Income Tax Law) and theLey del Impuesto Empresarial a Tasa Única (Flat Rate Business Tax, or “IETU”). The Subsidiary Entitiesthose regulations that are subject to these taxes.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
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 ofon the recognition of deferred taxes by applying tax rates applicable to the IRP and income tax to the temporary differences between the carrying value and tax values of assets and liabilities at the date of these consolidated financial statements.
Deferred tax liabilities are recognized for all taxable temporary differences, except to the extent that the deferred tax liability arises from:
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:
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 carrying amount of a deferred tax asset is reviewed at the end of each reporting period. PEMEX reduces the carrying amount of a deferred tax asset to the extent that it is no longer probable that a sufficient taxable profit will be available to allow the benefit of that deferred tax asset to be utilized in whole or in part. Unrecognized deferred tax assets are revalued at each reporting date and will be recognized to the extent that it is probable that future taxable income will be sufficient to allow for the recovery of the deferred tax asset.
Deferred tax assets and liabilities are measured at the tax benefits willrates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and deferred tax liabilities related with items that are recognized in equity shall be utilized.presented directly in other comprehensive income.
Deferred tax assets and deferred tax liabilities are offset, if PEMEX has a legal right to set off current tax assets against current tax liabilities and are levied by the same taxation authority or the same taxable entity.
Income taxes and 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 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 be 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 the costs and expenses relating to the transactions that gave rise to them.
Impuesto Especial sobre Producción y |
(Special Tax on Production and Services, or “IEPS Tax”)
The IEPS Tax charged to customers is a taxwitholding on domestic sales of gasoline, diesel and diesel.fossil fuels. The applicable ratesquotas depend on, among other factors, the product, producer’s price, freight costs, commissions and the region in which the respective product is sold.
Contingencies |
Liabilities for loss contingenciesContingency 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.
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)
Revenue recognition |
Sales revenue is recognized at the moment at whichwhen the risks and benefits of ownership of crude oil, refined or gas products, natural gas, and derivative and petrochemical products are transferred to the customers who acquire them, which occurs as follows:
PEMEX recognizes revenues forServices rendered are recognized as services atincome when the timecustomers accept the collection right on such services arises.receipt of the services.
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 costacquisition 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 administrativesale expenses
Transportation, distribution and administrativesale expenses are costs in connection to the storage, sale and delivery of products, as well as costs related to PEMEX’s administrative personnel, such as depreciation personnel-related expenses 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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Other revenues and expenses, net
Other revenues consists primarily of income received due to the “negative” IEPS Tax rate (see Notes 17(j) and 19).
Financing income and cost
Financing income and cost areis comprised of interest incomeexpenses, commissions and other expenses and the valuation effects of financial instruments,related to financing operations minus any portion of the financing cost that is capitalized.
Exchange rate variationsDerivative 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 of(loss) for the period.year.
Operating segments |
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 managementof Directors in order to allocate resources and assess the profitability of the segments.
The IASB issuedNon-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 following new IFRS, which applyasset or group of assets is available in its present condition for immediate sale and (c) the sale is expected to annual periods beginning onbe 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 the consolidated statements of financial position.Non-current assets classified as held for sale are not subject to depreciation or amortization after January 1, 2013:
IFRS 10, Consolidated Financial Statements (“IFRS 10”)
IFRS 10 defines the principle of control, establishes controlclassification as the basisheld for consolidation and sets outs the accounting requirements for the preparation of consolidated financial statements. IFRS 10 supersedes both IAS 27, “Consolidated and Separate Financial Statements” (“IAS 27”), and SIC-12, “Consolidation—Special Purpose Entities”.sale.
The adoptionliabilities of IFRS 10 dida disposal group classified as held for sale are presented separately from other liabilities in the statement of financial position. Those assets and liabilities are not have any accounting impact on PEMEX’s financial statements.offset and presented as a single amount.
IAS 27 (Revised), Separate Financial Statements (“IAS 27 Revised”)Non-current asset held for distribution to owners
IAS 27 Revised supersedes IAS 27,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 is now limited to only settingb) the standardsdistribution must be highly expected to be applied in accounting for investments in subsidiaries, joint ventures, associates and structured entitiescompleted within separate (non-consolidated) financial statements. The general requirements forone year from the aforementioned entities remain substantially unchanged under IAS 27 Revised.
The adoptiondate of IAS 27 did not have any accounting impact on PEMEX’s financial statements.
IFRS 11, Joint Arrangements (“IFRS 11”)
IFRS 11, which supersedes IAS 31, “Joint Ventures”, outlines the accounting practices for entities that agree to jointly control an arrangement. Arrangements subject to joint control are classified as either a joint operation or a joint venture. IFRS 11 sets forth that investments in joint ventures should be recognized using the equity method and no longer allows for the application of the proportionate consolidation method.classification, with certain exceptions.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)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 joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement and a jointdiscontinued operation is a joint arrangement whereby the partiescomponent of an entity that have joint controleither has been disposed of the arrangement have rightsor is classified as held for sale, and either:
The revenues or expenses from discontinued operations, including profits or losses from previous years, are presented in a joint operation’s assets, liabilities, revenues and expenses related to its involvement in the arrangement are accounted for in accordance with relevant IFRS standards.
The adoption of IFRS 11 did not have any accounting impact on PEMEX’s financial statements.
IFRS 12, Disclosure of Interests in Other Entities (“IFRS 12”)
IFRS 12 establishes the disclosure requirements relating to investments in subsidiaries, joint ventures, associates and/or unconsolidated structured entities. The additional required disclosure is included in Note 9.
The adoption of IFRS 12 did not have any accounting impact on PEMEX’s financial statements.
IFRS 13, Fair Value Measurement (“IFRS 13”)
IFRS 13 defines fair value, establishes a framework for measurement and requires disclosure about fair value measurements. However, it does not set forth additional requirements or prohibitions on the use of fair value.
The adoption of IFRS 13 did not have any accounting impact on PEMEX’s financial statements.
IAS 19 (Revised), Employee Benefits (“IAS 19 Revised”)
IAS 19 Revised eliminates the “corridor” approach previously used to recognize actuarial gains and losses related to employee benefits. Under IAS 19 Revised, actuarial gains and losses related to employee benefits are recognized in other comprehensive results upon their determination. Any such gains and losses that are recognizedspecific line item in the consolidated statementsfinancial statement of comprehensive income are limited to past and current service costs, termination gains and losses and interest income or expense. All other changes to the liabilities and assets related to retirement and post-employment benefits are recognized in other comprehensive results and have no further impact on the consolidated statements of comprehensive income. PEMEX chose the early adoption of IAS 19 Revised in 2012.
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 described therein. 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 amendments had no impact on these consolidated financial statements.
b) Amendments 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)
accounted for using the related principles to business combination accounting established in IFRS 3, “Business Combinations” (“IFRS 3”), and additionally requires certain related disclosures. |
The amendments had no impact on 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:
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.
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) Amendments to IAS 19, “Employee Benefits” (“IAS 19”) Discount rate: issuing in a regional market.
The amendments to IAS 19 clarify 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.
v. | New IFRS not yet adopted |
The IASB issued amendments and new IFRS that are not effective as of the issuance date of these consolidated financial statements but could have effect in subsequent PEMEX’s financial information.
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 amendments 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:
The amendments are to be applied retrospectively and are effective for annual periods beginning on or after January 1, 2017. Earlier application is permitted.
PEMEX is in 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 provided to the user of financial statements about an entity’s financing activities.
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 with 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 effects of changes in foreign exchange rate; (iv) changes in 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 statements 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 9, Financial Instruments (2010)12 “Disclosure of Interest in Other Entities” (“IFRS 9 (2010)”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 9, Financial Instruments (2009)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 9 (2009)”15”)
The IASB issued the amendment to IFRS 9 (2009) introduces new requirements for classifying and measuring financial assets. Under IFRS 9 (2009), financial assets are classified and measured based on the entity’s business15 to provide a single comprehensive model for the financial assetaccounting of revenue from contracts with customers and replaces the characteristicscurrent guidelines on revenue recognition.
The core principle of the contractual cash flows associated withnew IFRS 15 is that an entity should recognize revenue as the financial asset. IFRS 9 (2010) introduces additional changes relating to financial liabilities. Currently, the IASB intends to make limited modificationspromised transfer of goods or services to the classification and measurement requirements of IFRS 9 (2009) and IFRS 9 (2010) andcustomer, valued at the amount that the entity expects to add new requirements to address the impairment of financial assets and changes to hedge accounting.be entitled in exchanged for those goods or services.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Pursuant to IFRS 9 (2010)15, an entity should:
The new IFRS 9 (2009) are effective15 enhances disclosures of revenue. This standard must be applied for annual periods beginning on or after January 1, 2018, and early adoptionapplication is permitted. ItDuring the year of application, entities may apply the rule retrospectively or use a modified approach.
PEMEX is anticipatedin the process of evaluating the impact that the adoption of these standards will have an impact on PEMEX’s financial assets but not its financial liabilities.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 November 2013, the IASB announcedreleased a new model for hedge accounting. The final version of IFRS 9, which was issued in July 2014 (“IFRS 9 (2014)”), replaces the completionprevious 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 packagefinancial instrument. Additional disclosure is required to describe the basis for recognizing expected credit losses and any changes in the estimated amount of amendmentsexpected 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 requirements forwith risk management in order to better reflect risk management activities in the financial instruments. The amendments:
IFRS 14, Regulatory Deferral Accounts (“IFRS 14”)
The objective of this standard is to specify the reporting requirements for rate-regulated activities that arise when an entity is subject to rate regulation. In many countries, industry sectors are subject to rate regulation, whereby governments regulatefaces and the supply and pricesimpact of certain types ofrisk management activities undertaken by private entities.on its financial information.
Credit Risk
IFRS 14 allows first-time adopters9 (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 to continue recognizing amounts related to rate regulation,9 (2014), earnings from the impairment credit risk of liabilities are recognized in accordance with their respective previous local generally accepted accounting principles requirements. However, to facilitate comparison of financial statements among entities that have already adopted IFRS, the standard requires separate presentation of regulatory rate effects.
Entities that already present financial statementsother comprehensive income rather than directly in accordance with IFRS, such as PEMEX, are not eligible to apply IFRS 14.profit or net loss.
IFRS 149 (2014) is effective for annual periods beginning on or after January 1, 2016; however, early adoption2018. 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 of 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 stated above,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)
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:
The Interpretations Committee concluded that:
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 replaces IAS 17, “Leases and Guide interpretations.”
The main changes from the previous standard are:
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 in the process of assessing the impact this new standard will not have anon its financial statements.
w. | Reclassifications |
For comparison purposes, the following amounts in the consolidated financial statements as of December 31, 2015 were reclassified to add long-term notes receivable as a separate line item from other assets in the consolidated financial statements as of December 31, 2016.
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 |
These reclassifications had no impact on PEMEX’s total assets or liabilities.
NOTE 4. SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
As of December 31, 2016, the Subsidiary Entities consolidated in these financial statements because entities that have already adopted IFRSinclude Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Cogeneration and Services, Pemex Drilling and Services, Pemex Logistics, Pemex Fertilizers and Pemex Ethylene.
The consolidated Subsidiary Companies are not eligible to apply IFRS 14.as follows:
• | P.M.I. Marine, Ltd. (PMI Mar) (i) |
• | P.M.I. Services, B.V. (PMI SHO) (i) |
• | P.M.I. Holdings, B.V. (PMI HBV) (i) |
• | P.M.I. Trading, Ltd. (PMI Trading) (i) |
• | PEMEX Internacional España, S. A. (PMI SES) (i) |
• | P.M.I. Holdings Petróleos España, S.L. (HPE) (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) |
• | 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) |
• | PMI 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. de C.V. (PMI CT) (i)(iv) |
• | PMI Transoceánico Gas LP, S.A. de C.V. (PMI TG) (i)(iv) |
• | PMI Servicios Portuarios Transoceánicos, S.A. de C.V. (PMI SP) (i)(iv) |
• | PMI Midstream del Centro, S.A. de C.V. (PMI MC) (i)(iv) |
• | Hijos de J. Barreras, S. A. (HJ BARRERAS) (ii) |
• | Pemex Finance, Ltd. (FIN) (ii) |
• | Mex Gas Internacional, S.L. (MGAS) (v) |
• | Pemex Desarrollo e Inversión Inmobiliaria, S.A. de C.V. (III)(vi) |
• | PMI Ducto de Juárez, S. de R.L. de C.V. (PMI DJ) (i)(vii) |
• | PMX Cogeneración Internacional, S.L. (MG COG) (viii)(x) |
• | 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. |
iii. | As of August 2014, these companies were included in the consolidated financial statements of PEMEX. |
iv. | As of February 2015, these companies were included in the consolidated financial statements of PEMEX. |
v. | Until May 2014, formerly Mex Gas International, Ltd. |
vi. | Until September 2015, formerly Instalaciones Inmobiliarias para Industrias, S.A. de C.V. |
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 this company was included in the consolidated financial statements of PEMEX. |
x. | Until October 2016, formerly Mex Gas Cogeneración S.L. |
NOTE 4—SEGMENT FINANCIAL INFORMATION: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 the refining and marketingdistribution of petroleum products,and petrochemical products. After the Corporate Reorganization, PEMEX’s operations are now conducted through sixnine business segments: Pemex-Explorationexploration and Production, Pemex-Refining, Pemex-Gasproduction, industrial transformation, cogeneration and Basic Petrochemicals, Pemex-Petrochemicals,services, drilling 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, the Trading Companies (as defined below) and Corporate and Other Operating Subsidiary Companies. Management makes decisions relatedThe 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 operationssegments of the consolidated business along these six strategic lines.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 quantities of inter-segment sales among the reporting segments, which are made at internal transfer prices established by PEMEX reflecting international market prices.
The primary sources of revenue for PEMEX’s business segments following the segmentsCorporate Reorganization are as described below:
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)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. 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.PEMEX and makes decisions.
Year ended December 31, 2013: | Exploration and Production | Refining | Gas and Basic Petrochemicals | Petrochemicals | Trading Companies | Corporate and Other Subsidiary Companies | Intersegment Eliminations | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. | 740,371,929 | Ps. | 143,290,615 | Ps. | 26,525,091 | Ps. | 687,677,633 | Ps. | — | Ps. | — | Ps. | 1,597,865,268 | 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 | 1,250,771,663 | 74,893,930 | 73,998,380 | 13,840,212 | 407,663,967 | 56,136,413 | (1,877,304,565 | ) | — | 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 | — | 4,125,144 | 2,180,256 | — | 786,596 | 4,432,211 | (1,184,850 | ) | 10,339,357 | — | 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 | (338,550,003 | ) | (963,816,046 | ) | (205,190,171 | ) | (43,128,475 | ) | (1,079,513,935 | ) | (5,288,105 | ) | 1,821,480,397 | (814,006,338 | ) | 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) | 912,221,660 | (144,425,043 | ) | 14,279,080 | (2,763,172 | ) | 16,614,261 | 55,280,519 | (57,009,018 | ) | 794,198,287 | 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 and expenses—net | (27,207,006 | ) | 97,387,329 | 1,142,830 | 1,102,963 | (6,525,139 | ) | (1,082,910 | ) | (291,217 | ) | 64,526,850 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transportation and distribution expenses | — | (28,989,721 | ) | (2,623,144 | ) | (880,839 | ) | (395,725 | ) | 35 | 440,958 | (32,448,436 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | (42,809,551 | ) | (32,927,261 | ) | (11,352,890 | ) | (12,706,033 | ) | (1,789,969 | ) | (54,012,586 | ) | 56,943,818 | (98,654,472 | ) | 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) | 842,205,103 | (108,954,696 | ) | 1,445,876 | (15,247,081 | ) | 7,903,428 | 185,058 | 84,541 | 727,622,229 | 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 | (48,381,896 | ) | (15,049,203 | ) | (595,846 | ) | (67,170 | ) | (3,451,846 | ) | (76,659,137 | ) | 90,138,077 | (54,067,021 | ) | (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 | ) | ||||||||||||||||||||||||||||||||||||||||
Financing income | 24,936,100 | 289,978 | 3,720,376 | 382,930 | 3,074,167 | 82,386,675 | (90,263,017 | ) | 24,527,209 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exchange gain (loss) | (4,071,119 | ) | 699,215 | (69,484 | ) | 17,082 | (44,828 | ) | (482,358 | ) | — | (3,951,492 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Profit (loss) sharing in associates | 207,132 | — | 933,927 | — | (577,434 | ) | (173,785,799 | ) | 173,928,884 | 706,710 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total taxes, duties and other | (856,978,971 | ) | — | (1,525,410 | ) | (21,349 | ) | (3,930,748 | ) | (2,439,584 | ) | — | (864,896,062 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | (42,083,651 | ) | (123,014,706 | ) | 3,909,439 | (14,935,588 | ) | 2,972,739 | (170,795,145 | ) | 173,888,485 | (170,058,427 | ) | (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 | 502,902,664 | 274,764,785 | 115,251,777 | 72,066,407 | 106,410,426 | 497,731,670 | (1,302,213,859 | ) | 266,913,870 | 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 | 1,189,451 | 488,319 | 4,294,023 | — | 7,018,985 | 419,817,118 | (416,028,395 | ) | 16,779,501 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Wells, pipelines, properties, plant and equipment—net | 1,315,399,260 | 253,117,660 | 101,513,879 | 39,008,884 | 1,982,647 | 10,556,411 | — | 1,721,578,741 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | 1,837,046,755 | 529,767,519 | 221,866,273 | 111,818,055 | 122,116,141 | 1,688,293,303 | (2,463,517,693 | ) | 2,047,390,353 | 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 | 213,952,321 | 352,932,603 | 35,977,158 | 6,145,414 | 81,810,182 | 863,145,326 | (1,294,772,172 | ) | 259,190,832 | 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 | 719,013,631 | 23,360,262 | 1,094,807 | 171,745 | 3,617,414 | 737,651,756 | (734,346,144 | ) | 750,563,471 | 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 | 342,612,970 | 354,166,740 | 83,372,338 | 107,202,896 | 1,222,116 | 230,630,810 | — | 1,119,207,870 | 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 | 1,342,978,777 | 740,780,574 | 144,252,327 | 113,696,802 | 90,354,847 | 1,847,935,634 | (2,047,361,968 | ) | 2,232,636,993 | 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) | 494,067,978 | (211,013,055 | ) | 77,613,946 | (1,878,747 | ) | 31,761,294 | (159,642,331 | ) | (416,155,725 | ) | (185,246,640 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | 127,029,321 | 10,780,711 | 7,060,955 | 2,563,482 | 9,321 | 1,050,068 | (2,154 | ) | 148,491,704 | 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 | 36,532,518 | 37,401,828 | 8,837,963 | 11,112,176 | 204,268 | 21,250,936 | — | 115,339,689 | 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 | 205,579,644 | 31,587,666 | 5,170,234 | 5,237,725 | 1,907,105 | 2,162,441 | — | 251,644,815 | 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 |
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Year ended December 31, 2012: | Exploration and Production | Refining | Gas and Basic Petrochemicals | Petrochemicals | Trading Companies | Corporate and Other Subsidiary Companies | Intersegment Eliminations | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. | 720,874,065 | Ps. | 118,402,283 | Ps. | 27,760,353 | Ps. | 772,699,053 | Ps. | — | Ps. | — | Ps. | 1,639,735,754 | 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 | 1,333,286,214 | 61,480,371 | 66,226,902 | 7,650,488 | 448,731,943 | 55,352,873 | (1,972,728,791 | ) | — | 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 | — | 4,361,364 | 1,088,258 | — | 727,371 | 2,191,282 | (1,191,989 | ) | 7,176,286 | — | 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 | (302,840,887 | ) | (1,025,958,672 | ) | (175,765,662 | ) | (31,826,657 | ) | (1,211,608,953 | ) | (2,900,312 | ) | 1,918,410,569 | (832,490,574 | ) | 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 income (loss) | 1,030,445,327 | (239,242,872 | ) | 9,951,781 | 3,584,184 | 10,549,414 | 54,643,843 | (55,510,211 | ) | 814,421,466 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other revenues and expenses—net | 448,248 | 211,227,180 | (1,008,016 | ) | (814,161 | ) | (138,712 | ) | (326,438 | ) | (369,138 | ) | 209,018,963 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transportation and distribution expenses | — | (25,162,163 | ) | (2,461,140 | ) | (809,784 | ) | (325,402 | ) | (54,760 | ) | 324,966 | (28,488,283 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | (40,979,675 | ) | (32,751,142 | ) | (10,678,233 | ) | (12,414,605 | ) | (1,330,361 | ) | (47,321,046 | ) | 55,862,213 | (89,612,849 | ) | 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 income (loss) | 989,913,900 | (85,928,997 | ) | (4,195,608 | ) | (10,454,366 | ) | 8,754,939 | 6,941,599 | 307,830 | 905,339,297 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | (50,578,659 | ) | (20,179,519 | ) | (1,432,540 | ) | (816,496 | ) | (10,151,108 | ) | (78,064,892 | ) | 88,271,976 | (72,951,238 | ) | (90,822,360 | ) | (13,738,104 | ) | 2,110 | (95,280 | ) | (61,153 | ) | — | — | (1,299,580 | ) | (87,289,616 | ) | 125,530,390 | (67,773,593 | ) | |||||||||||||||||||||||||||||||||||||||||||
Financing income | 17,336,197 | 589,603 | 4,511,208 | 16,447 | 8,915,706 | 80,420,511 | (88,574,834 | ) | 23,214,838 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exchange gain (loss) | 35,186,096 | 3,421,271 | 368,507 | 840 | 16,773 | 5,852,174 | — | 44,845,661 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Profit (loss) sharing in associates | 189,227 | — | 2,140,344 | — | 1,389,441 | (7,118,378 | ) | 8,196,973 | 4,797,607 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total taxes, duties and other | (898,064,551 | ) | — | 221,123 | (16,774 | ) | (1,817,453 | ) | (2,968,032 | ) | — | (902,645,687 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 income (loss) | 93,982,210 | (102,097,642 | ) | 1,613,034 | (11,270,349 | ) | 7,108,298 | 5,062,982 | 8,201,945 | 2,600,478 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | 558,119,361 | 284,541,363 | 98,911,204 | 78,807,571 | 113,000,751 | 486,513,401 | (1,301,751,526 | ) | 318,142,125 | 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 | 982,320 | 409,266 | 3,751,219 | — | 7,527,734 | 380,364,510 | (378,388,786 | ) | 14,646,263 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Wells, pipelines, properties, plant and equipment—net | 1,268,551,020 | 234,415,129 | 104,165,805 | 40,945,932 | 225,166 | 10,431,033 | — | 1,658,734,085 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | 1,836,007,172 | 520,567,164 | 207,224,542 | 120,216,927 | 127,859,808 | 1,549,109,628 | (2,336,802,345 | ) | 2,024,182,896 | 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 | 167,466,913 | 330,225,909 | 23,617,986 | 6,478,390 | 87,534,727 | 913,204,611 | (1,292,724,887 | ) | 235,803,649 | 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 | 633,350,725 | 24,050,812 | 1,119,845 | 185,303 | 2,351,037 | 661,796,313 | (650,236,440 | ) | 672,617,595 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | 412,306,417 | 429,583,865 | 96,139,228 | 127,012,099 | 1,347,909 | 222,151,241 | — | 1,288,540,759 | 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 | 1,276,781,279 | 794,166,012 | 145,426,752 | 133,924,623 | 94,597,039 | 1,808,776,162 | (1,958,423,121 | ) | 2,295,248,746 | 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) | 559,225,893 | (273,598,848 | ) | 61,797,790 | (13,707,696 | ) | 33,262,769 | (259,666,534 | ) | (378,379,224 | ) | (271,065,850 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | 118,246,402 | 11,071,793 | 7,769,141 | 2,725,017 | 7,983 | 717,384 | — | 140,537,720 | 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 | 31,045,021 | 31,221,665 | 7,331,348 | 9,121,565 | 101,143 | 17,781,595 | — | 96,602,337 | 23,608,485 | 21,392,600 | (298 | ) | — | (310 | ) | — | — | (119,819 | ) | 17,668,484 | — | 62,549,142 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of wells, pipelines, properties, plant and equipment | 168,534,984 | 26,605,301 | 2,831,398 | 8,794,184 | — | 812,399 | — | 207,578,266 | 184,786,051 | 68,935,841 | — | — | 1,544,224 | 320,762 | 1,882,108 | 677,314 | 6,711,511 | — | 264,857,811 |
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Year ended December 31, 2011: | Exploration and Production | Refining | Gas and Basic Petrochemicals | Petrochemicals | Trading Companies | Corporate and Other Subsidiary Companies | Intersegment Eliminations | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. | 621,678,105 | Ps. | 128,665,354 | Ps. | 28,854,514 | Ps. | 772,965,363 | Ps. | — | Ps. | — | Ps. | 1,552,163,336 | 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 | 1,270,839,927 | 75,154,806 | 77,479,563 | 14,583,501 | 424,018,097 | 45,389,776 | (1,907,465,670 | ) | — | 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 | — | 3,619,441 | 1,107,783 | — | 942,302 | 2,054,886 | (1,433,631 | ) | 6,290,781 | — | 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 | (275,325,700 | ) | (931,101,803 | ) | (202,116,728 | ) | (43,882,724 | ) | (1,187,096,578 | ) | (2,668,178 | ) | 1,863,415,340 | (778,776,371 | ) | 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) | 995,514,227 | (230,649,451 | ) | 5,135,972 | (444,709 | ) | 10,829,184 | 44,776,484 | (45,483,961 | ) | 779,677,746 | 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 revenues and expenses—net | 11,274,243 | 173,375,469 | 214,394 | 6,592,870 | 462,158 | (2,277,129 | ) | (522,144 | ) | 189,119,861 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transportation and distribution expenses | — | (23,730,912 | ) | (2,360,876 | ) | (690,816 | ) | (368,659 | ) | (26,721 | ) | 468,307 | (26,709,677 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
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 | (34,327,210 | ) | (28,019,853 | ) | (9,917,263 | ) | (10,946,514 | ) | (1,082,261 | ) | (42,172,197 | ) | 45,688,479 | (80,776,819 | ) | 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) | 972,461,260 | (109,024,747 | ) | (6,927,773 | ) | (5,489,169 | ) | 9,840,422 | 300,437 | 150,681 | 861,311,111 | 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 | (42,188,969 | ) | (16,635,802 | ) | (5,374,311 | ) | (756,538 | ) | (8,187,285 | ) | (78,108,831 | ) | 88,015,529 | (63,236,207 | ) | (74,492,786 | ) | (9,917,204 | ) | (346,660 | ) | (72,354 | ) | (1,068,869 | ) | (69,026,534 | ) | 103,365,347 | (51,559,060 | ) | ||||||||||||||||||||||||||||||||||
Financing income | 18,121,683 | 395,051 | 8,700,706 | 16,533 | 5,738,536 | 85,769,298 | (88,157,573 | ) | 30,584,234 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exchange gain (loss) | (48,149,666 | ) | (6,607,465 | ) | (261,715 | ) | (15,805 | ) | (27,522 | ) | (5,081,079 | ) | — | (60,143,252 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
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 | 39,873 | — | (341,562 | ) | — | (84,873 | ) | (110,195,198 | ) | 109,771,007 | (810,753 | ) | 203,285 | — | 284,080 | — | (247,303 | ) | (263,425,082 | ) | 263,219,388 | 34,368 | ||||||||||||||||||||||||||||||||||||||||||
Total taxes, duties and other | (871,471,372 | ) | — | 857,340 | (10,532 | ) | (3,458,054 | ) | (564,772 | ) | — | (874,647,390 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Taxes, duties and other | 760,627,534 | — | (21,772,116 | ) | — | 3,839,908 | 3,379,438 | — | 746,074,764 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | 28,812,809 | (131,872,963 | ) | (3,347,315 | ) | (6,255,511 | ) | 3,821,224 | (107,880,145 | ) | 109,779,644 | (106,942,257 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
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 | 27,078,766 | 27,262,316 | 6,559,388 | 7,931,521 | 113,570 | 15,149,591 | — | 84,095,152 | 37,582,742 | 38,198,504 | 9,338,059 | 11,512,589 | 177,003 | 24,914,431 | — | 121,723,328 | ||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 108,404,968 | 9,015,060 | 7,307,057 | 2,026,575 | 6,334 | 620,415 | — | 127,380,409 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
PEMEX’s management measures the performance of the entitiessegments 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.
Exploration and Production | Refining | Gas and Basic Petrochemicals | Petrochemicals | Trading Companies | Corporate and Other Subsidiary Companies | |||||||||||||||||||
Year ended December 31, 2013: | ||||||||||||||||||||||||
Sales: | ||||||||||||||||||||||||
By segment | Ps. | 1,250,785,620 | Ps. | 820,912,682 | Ps. | 219,332,517 | Ps. | 40,360,373 | Ps. | 1,096,302,859 | Ps. | 60,568,624 | ||||||||||||
Less unrealized intersegment sales | (13,957 | ) | (1,521,679 | ) | 136,734 | 4,930 | (174,663 | ) | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total consolidated sales | Ps. | 1,250,771,663 | Ps. | 819,391,003 | Ps. | 219,469,251 | Ps. | 40,365,303 | Ps. | 1,096,128,196 | Ps. | 60,568,624 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Operating income (loss): | ||||||||||||||||||||||||
By segment | 850,636,276 | (119,734,273 | ) | 873,221 | (15,418,058 | ) | 2,568,759 | 185,058 | ||||||||||||||||
Less unrealized intersegment sales | (12,826 | ) | (1,521,678 | ) | 136,735 | 4,929 | (174,663 | ) | — | |||||||||||||||
Less unrealized gain due to production cost valuation of inventory | 17,747 | 12,301,255 | 435,920 | 166,048 | 5,509,332 | — | ||||||||||||||||||
Less capitalized refined products | (8,555,076 | ) | — | — | — | — | — | |||||||||||||||||
Less amortization of capitalized interest | 118,982 | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total consolidated operating income (loss) | Ps. | 842,205,103 | Ps. | (108,954,696 | ) | Ps. | 1,445,876 | Ps. | (15,247,081 | ) | Ps. | 7,903,428 | Ps. | 185,058 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income (loss): | ||||||||||||||||||||||||
By segment | (33,648,136 | ) | (133,794,283 | ) | 3,336,785 | (15,034,571 | ) | (2,361,930 | ) | (173,636,180 | ) | |||||||||||||
Less unrealized intersegment sales | (12,826 | ) | (1,521,678 | ) | 136,734 | 4,930 | (174,663 | ) | — | |||||||||||||||
Less unrealized gain due to production cost valuation of inventory | 17,747 | 12,301,255 | 435,920 | 166,048 | 5,509,332 | — | ||||||||||||||||||
Less capitalized refined products | (8,555,076 | ) | — | — | — | — | — | |||||||||||||||||
Less equity method for unrealized profits | (4,342 | ) | — | — | (71,995 | ) | — | 2,841,035 | ||||||||||||||||
Less amortization of capitalized interest | 118,982 | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Consolidated net income (loss) | Ps. | (42,083,651 | ) | Ps. | (123,014,706 | ) | Ps. | 3,909,439 | Ps. | (14,935,588 | ) | Ps. | 2,972,739 | Ps. | (170,795,145 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Assets: | ||||||||||||||||||||||||
By segment | 1,856,325,965 | 575,246,559 | 224,241,728 | 114,087,313 | 119,933,908 | 1,685,452,269 | ||||||||||||||||||
Less unrealized intersegment sales | (9,479 | ) | 3,753,919 | 140,189 | 7,310 | 3,232,537 | — | |||||||||||||||||
Less unrealized gain due to production cost valuation of inventory | (11,777 | ) | (49,232,959 | ) | (2,515,644 | ) | (2,204,574 | ) | (1,050,304 | ) | — | |||||||||||||
Less capitalized refined products | (16,755,002 | ) | — | — | — | — | — | |||||||||||||||||
Less equity method for unrealized profits | (4,344 | ) | — | — | (71,994 | ) | — | 2,841,034 | ||||||||||||||||
Less amortization of capitalized interest | (2,498,608 | ) | — | — | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Consolidated assets | Ps. | 1,837,046,755 | Ps. | 529,767,519 | Ps. | 221,866,273 | Ps. | 111,818,055 | Ps. | 122,116,141 | Ps. | 1,688,293,303 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Exploration and Production | Refining | Gas and Basic Petrochemicals | Petrochemicals | Trading Companies | Corporate and Other Subsidiary Companies | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
By segment | 1,342,978,777 | 740,780,574 | 144,252,327 | 113,696,802 | 87,307,528 | 1,847,935,634 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less unrealized gain due to production cost valuation of inventory | — | — | — | — | 3,047,319 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated liabilities | Ps. | 1,342,978,777 | Ps. | 740,780,574 | Ps. | 144,252,327 | Ps. | 113,696,802 | Ps. | 90,354,847 | Ps. | 1,847,935,634 | ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended December 31, 2012: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
By segment | Ps. | 1,333,276,930 | Ps. | 784,417,918 | Ps. | 184,985,084 | Ps. | 35,418,252 | Ps. | 1,221,655,507 | Ps. | 57,544,155 | ||||||||||||||||||||||||||||||||||||||||||||||||
Less unrealized intersegment sales | 9,284 | 2,297,882 | 732,359 | (7,411 | ) | 502,860 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total consolidated sales | Ps. | 1,333,286,214 | Ps. | 786,715,800 | Ps. | 185,717,443 | Ps. | 35,410,841 | Ps. | 1,222,158,367 | Ps. | 57,544,155 | ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating income (loss): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
By segment | 993,473,459 | (95,467,749 | ) | (4,379,626 | ) | (10,250,176 | ) | 8,801,985 | 6,941,599 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Less unrealized intersegment sales | 9,284 | 2,297,882 | 732,359 | (7,411 | ) | 502,860 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Less unrealized gain due to production cost valuation of inventory | (8,394 | ) | 7,240,870 | (548,341 | ) | (196,779 | ) | (549,906 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Less capitalized refined products | (3,679,430 | ) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Less amortization of capitalized interest | 118,981 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total consolidated operating income (loss) | Ps. | 989,913,900 | Ps. | (85,928,997 | ) | Ps. | (4,195,608 | ) | Ps. | (10,454,366 | ) | Ps. | 8,754,939 | Ps. | 6,941,599 | |||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
By segment | 97,536,450 | (111,636,394 | ) | 1,429,016 | (11,066,159 | ) | 7,155,344 | (854,312 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Less unrealized intersegment sales | 9,284 | 2,297,882 | 732,359 | (7,411 | ) | 502,860 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Less unrealized gain due to production cost valuation of inventory | (8,394 | ) | 7,240,870 | (548,341 | ) | (196,779 | ) | (549,906 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Less capitalized refined products | (3,679,430 | ) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Less equity method for unrealized profits | 5,319 | — | — | — | — | 5,917,294 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less amortization of capitalized interest | 118,981 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated net income (loss) | Ps. | 93,982,210 | Ps. | (102,097,642 | ) | Ps. | 1,613,034 | Ps. | (11,270,349 | ) | Ps. | 7,108,298 | Ps. | 5,062,982 | ||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | 1,846,831,001 | 583,489,721 | 210,263,190 | 122,663,976 | 130,797,642 | 1,543,192,334 | 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 | — | (4,419,930 | ) | (958,022 | ) | (7,654 | ) | (2,102,134 | ) | — | 483,230 | (4,158,101 | ) | — | — | — | — | (5,304 | ) | (332,529 | ) | — | ||||||||||||||||||||||||||||||||||||||
Less unrealized gain due to production cost valuation of inventory | (11,633 | ) | (58,502,627 | ) | (2,080,626 | ) | (2,439,395 | ) | (835,700 | ) | — | (3,246,782 | ) | (33,361,438 | ) | — | — | — | — | — | (5,688,341 | ) | — | |||||||||||||||||||||||||||||||||||||
Less capitalized refined products | (8,199,925 | ) | — | — | — | — | — | (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 | 5,319 | — | — | — | — | 5,917,294 | (742,055 | ) | ( 7,293,447 | ) | (36,718 | ) | — | — | 4,435,288 | (4,308,877 | ) | (8,960,344 | ) | — | ||||||||||||||||||||||||||||||||||||||||
Less amortization of capitalized interest | (2,617,590 | ) | — | — | — | — | — | 118,981 | — | — | — | — | — | — | (424,198 | ) | — | |||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||
Consolidated assets | Ps. | 1,836,007,172 | Ps. | 520,567,164 | Ps. | 207,224,542 | Ps. | 120,216,927 | Ps. | 127,859,808 | Ps. | 1,549,109,628 | ||||||||||||||||||||||||||||||||||||||||||||||||
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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Exploration and Production | Refining | Gas and Basic Petrochemicals | Petrochemicals | Trading Companies | Corporate and Other Subsidiary Companies | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
By segment | 1,276,781,279 | 794,166,012 | 145,426,752 | 133,924,623 | 96,699,173 | 1,808,776,162 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less unrealized gain due to production cost valuation of inventory | — | — | — | — | (2,102,134 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated liabilities | Ps. | 1,276,781,279 | Ps. | 794,166,012 | Ps. | 145,426,752 | Ps. | 133,924,623 | Ps. | 94,597,039 | Ps. | 1,808,776,162 | ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended December 31, 2011: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As of/for the year ended | 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. | 1,270,854,327 | Ps. | 703,698,643 | Ps. | 208,136,502 | Ps. | 43,445,669 | Ps. | 1,198,617,934 | Ps. | 47,444,662 | 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 | (14,400 | ) | (3,246,291 | ) | (883,802 | ) | (7,654 | ) | (692,172 | ) | — | — | (597,212 | ) | — | — | — | — | (5,304 | ) | (200,197 | ) | — | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||
Total consolidated sales | Ps. | 1,270,839,927 | Ps. | 700,452,352 | Ps. | 207,252,700 | Ps. | 43,438,015 | Ps. | 1,197,925,762 | Ps. | 47,444,662 | 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 | 976,875,297 | (76,575,103 | ) | (4,833,882 | ) | (4,740,125 | ) | 10,370,875 | 623,875 | 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 | (14,400 | ) | (3,246,291 | ) | (883,802 | ) | (7,654 | ) | (692,172 | ) | — | — | (597,212 | ) | — | — | — | — | (5,304 | ) | (200,197 | ) | — | |||||||||||||||||||||||||||||||||||||
Less unrealized gain due to production cost valuation of inventory | 1,877 | (29,203,353 | ) | (1,210,089 | ) | (741,390 | ) | 161,719 | (323,438 | ) | (251,995 | ) | 21,681,180 | — | — | — | — | 2,163 | 494,727 | — | ||||||||||||||||||||||||||||||||||||||||
Less capitalized refined products | (4,520,495 | ) | — | — | — | — | — | (3,496,201 | ) | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Less amortization of capitalized interest | 118,981 | — | — | — | — | — | 118,980 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Less depreciation of revaluated assets | — | — | — | 95,811 | 1,192,250 | 117,141 | 531,745 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||
Total consolidated operating income (loss) | Ps. | 972,461,260 | Ps. | (109,024,747 | ) | Ps. | (6,927,773 | ) | Ps. | (5,489,169 | ) | Ps. | 9,840,422 | Ps. | 300,437 | |||||||||||||||||||||||||||||||||||||||||||||
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 | 33,234,258 | (99,423,319 | ) | (1,253,424 | ) | (5,506,467 | ) | 4,351,677 | (67,519,241 | ) | 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 | (14,400 | ) | (3,246,291 | ) | (883,802 | ) | (7,654 | ) | (692,172 | ) | — | — | (597,212 | ) | — | — | — | — | (5,304 | ) | (200,197 | ) | — | |||||||||||||||||||||||||||||||||||||
Less unrealized gain due to production cost valuation of inventory | 1,877 | (29,203,353 | ) | (1,210,089 | ) | (741,390 | ) | 161,719 | (323,438 | ) | (251,995 | ) | 21,681,180 | — | — | — | — | 2,163 | 494,727 | — | ||||||||||||||||||||||||||||||||||||||||
Less capitalized refined products | (4,520,495 | ) | — | — | — | — | — | (3,496,201 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Less equity method for unrealized profits | (7,412 | ) | — | — | — | — | (40,037,466 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Less equity method elimination | (45,679 | ) | (1,129,042 | ) | — | — | — | — | 30,953 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Less amortization of capitalized interest | 118,981 | — | — | — | — | — | 118,980 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Less depreciation of revaluated assets | — | — | — | 95,811 | 1,192,250 | 117,141 | 531,745 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||
Total consolidated net income (loss) | Ps. | 28,812,809 | Ps. | (131,872,963 | ) | Ps. | (3,347,315 | ) | Ps. | (6,255,511 | ) | Ps. | 3,821,224 | Ps. | (107,880,145 | ) | ||||||||||||||||||||||||||||||||||||||||||||
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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
As of/for the year ended | 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:
For the years ended December 31, | For the years ended December 31, | |||||||||||||||||||||||
2013 | 2012 | 2011 | 2016 | 2015 | 2014 | |||||||||||||||||||
Domestic sales | Ps. | 910,187,634 | Ps. | 867,036,701 | Ps. | 779,197,974 | Ps. | 670,000,473 | Ps. | 746,235,912 | Ps. | 944,997,979 | ||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Export sales: | ||||||||||||||||||||||||
United States | 493,148,967 | 573,515,085 | 613,805,564 | 221,954,461 | 266,826,499 | 481,364,906 | ||||||||||||||||||
Canada; Central and South America | 21,004,723 | 39,806,335 | 34,921,636 | |||||||||||||||||||||
Canada, Central and South America | 14,058,897 | 11,027,813 | 17,575,078 | |||||||||||||||||||||
Europe | 86,872,410 | 98,987,049 | 70,567,172 | 64,348,997 | 58,707,787 | 54,214,041 | ||||||||||||||||||
Other | 86,651,534 | 60,390,584 | 53,670,990 | 94,755,762 | 70,652,346 | 77,137,288 | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Total export sales | Ps. | 687,677,634 | Ps. | 772,699,053 | Ps. | 772,965,362 | 395,118,117 | 407,214,445 | 630,291,313 | |||||||||||||||
|
|
| ||||||||||||||||||||||
Services income | 10,339,357 | 7,176,286 | 6,290,781 | 14,427,081 | 12,912,112 | 11,438,582 | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Total sales | Ps. | 1,608,204,625 | Ps. | 1,646,912,040 | Ps. | 1,558,454,117 | Ps. | 1,079,545,671 | Ps. | 1,166,362,469 | Ps. | 1,586,727,874 | ||||||||||||
|
|
|
|
|
|
PEMEX does not have significant long-lived assets outside of Mexico.
The following table shows income by product:
For the years ended December 31, | For the years ended December 31, | |||||||||||||||||||||||
2013 | 2012 | 2011 | 2016 | 2015 | 2014 | |||||||||||||||||||
Domestic Sales | ||||||||||||||||||||||||
Domestic sales | ||||||||||||||||||||||||
Refined petroleum products and derivatives (primarily gasolines) | Ps. | 805,460,402 | Ps. | 779,572,582 | Ps. | 676,407,259 | Ps. 578,718,674 | Ps. 660,573,780 | Ps. 830,545,046 | |||||||||||||||
Gas | 70,781,410 | 51,249,544 | 65,847,550 | 59,648,576 | 54,497,824 | 77,813,359 | ||||||||||||||||||
Petrochemical products | 33,945,822 | 36,214,575 | 36,943,165 | 31,633,223 | 31,164,308 | 36,639,574 | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Total domestic sales | Ps. | 910,187,634 | Ps. | 867,036,701 | Ps. | 779,197,974 | Ps. 670,000,473 | Ps. 746,235,912 | Ps. 944,997,979 | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Export Sales | ||||||||||||||||||||||||
Export sales | ||||||||||||||||||||||||
Crude oil | Ps. | 548,411,085 | Ps. | 618,104,685 | Ps. | 614,161,757 | Ps. 288,625,794 | Ps. 288,170,451 | Ps. 475,056,981 | |||||||||||||||
Refined petroleum products and derivatives (primarily gasolines) | 137,048,991 | 150,850,052 | 155,553,997 | 92,705,248 | 118,129,615 | 153,436,847 | ||||||||||||||||||
Gas | 43,544 | 7,713 | 18,182 | 20,995 | 27,283 | 64,397 | ||||||||||||||||||
Petrochemical products | 2,174,014 | 3,736,603 | 3,231,426 | 13,766,080 | 887,096 | 1,733,088 | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Total export sales | Ps. | 687,677,634 | Ps. | 772,699,053 | Ps. | 772,965,362 | Ps. 395,118,117 | Ps. 407,214,445 | Ps. 630,291,313 | |||||||||||||||
|
|
|
|
|
|
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 5—6. CASH, CASH EQUIVALENTS AND RESTRICTED CASH:CASH
a. As of December 31, 20132016 and 2012,2015, cash and cash equivalents were as follows:
As of December 31, | ||||||||||||||||
2013 | 2012 | 2016 | 2015 | |||||||||||||
Cash on hand and in banks(i) | Ps. | 45,942,338 | Ps. | 76,201,010 | Ps. | 71,430,427 | Ps. | 52,509,683 | ||||||||
Marketable securities | 34,803,381 | 43,033,881 | 92,102,086 | 56,859,197 | ||||||||||||
|
|
|
| |||||||||||||
Ps. | 80,745,719 | Ps. | 119,234,891 | Ps. | 163,532,513 | Ps. | 109,368,880 | |||||||||
|
|
|
|
(i) | Cash on hand and in banks is primarily composed of cash in banks. |
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
b. At December 31, 2013,2016, and 2012,2015, restricted cash was as follows:
As of December 31, | ||||||||
2013 | 2012 | |||||||
Restricted cash | Ps. | 7,701,798 | Ps. | 2,605,332 | ||||
|
|
|
|
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 2013 primarily increased due to the following: In December 2004, Corporación Mexicana de Mantenimiento Integral, S. de R.L. de C.V. (“COMMISA”) filedamount 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”) against Pemex-Exploration. At December 31, 2016 and Production2015, 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 among other things, the breach of a constructioncredit agreement in connectionaccordance with two platformsthe 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 Cantarell project. Since the initiation of such claim, COMMISA and Pemex-Exploration and Production have filed several additional claims against one another. As a result of one of these additional claims, on September 25, 2013, the U.S. District Court ordered Pemex-Exploration and Production to deposit with COMMISA Ps. 6,081,706. Pemex-Exploration and Production subsequentlyRepsol S. A. (“Repsol”) shares owned by PMI HBV. Accordingly, PMI HBV deposited the judgmentthis amount in a bank account in New York as a conditionorder to filing a motionmaintain theloan-to-value ratio required under the credit agreement. As of December 31, 2016 and 2015, this deposit, including income interest, amounted to appeal the resolution before the Second Circuit Court of Appeals (SeePs. 853,822 and Ps.1,236,474, respectively (see Note 23(b))10).
NOTE 6—7. ACCOUNTS NOTES RECEIVABLE, AND OTHER:NET
As of December 31, 20132016 and 2012,2015, accounts and notes receivable and other receivables were as follows:
As of December 31, | ||||||||
2013 | 2012 | |||||||
Export costumers | Ps. | 46,337,045 | Ps. | 40,717,458 | ||||
Domestic customers | 38,648,470 | 53,355,711 | ||||||
Tax credits | 15,416,955 | 13,420,166 | ||||||
Sundry debtors | 7,818,554 | 5,652,405 | ||||||
Employee and officers | 5,077,687 | 4,773,466 | ||||||
Negative IEPS Tax pending to be credit | 4,293,619 | 11,833,727 | ||||||
Advances to suppliers | 3,284,575 | 1,801,231 | ||||||
Insurance claims | 1,618,828 | 1,440,337 | ||||||
Other account receivables | 16,278 | 15,010 | ||||||
|
|
|
| |||||
Ps. | 122,512,011 | Ps. | 133,009,511 | |||||
|
|
|
|
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)
The following table shows a breakdown of accounts receivable based on their credit history at December 31, 20132016 and 2012:2015:
Export Customers | ||||||||||||||||
As of December 31, | Domestic customers | |||||||||||||||
2013 | 2012 | 2016 | 2015 | |||||||||||||
1 to 30 days | Ps. | 38,163 | Ps. | 1,690,104 | Ps. | 1,767,718 | Ps. | 620,034 | ||||||||
31 to 60 days | 1,070 | 63,011 | 658,456 | 28,278 | ||||||||||||
61 to 90 days | 95 | 8,072 | 263,447 | (32,411 | ) | |||||||||||
More than 91 days | 385,887 | 149,165 | ||||||||||||||
More than 90 days | 1,016,553 | 692,040 | ||||||||||||||
|
|
|
| |||||||||||||
Expired | 425,215 | 1,910,352 | ||||||||||||||
Impaired (Reserved) | — | — | ||||||||||||||
Past due | 3,706,174 | 1,307,941 | ||||||||||||||
Impaired (reserved) | (458,428 | ) | (667,883 | ) | ||||||||||||
|
|
|
| |||||||||||||
Unimpaired | 425,215 | 1,910,352 | 3,247,746 | 640,058 | ||||||||||||
Unexpired | 45,911,830 | 38,807,106 | ||||||||||||||
Current | 38,636,833 | 28,688,692 | ||||||||||||||
|
|
|
| |||||||||||||
Total | Ps. | 46,337,045 | Ps. | 40,717,458 | Ps. | 41,884,579 | Ps. | 29,328,750 | ||||||||
|
|
|
|
Export customers | ||||||||
2016 | 2015 | |||||||
1 to 30 days | Ps. | 341,184 | Ps. | 323 | ||||
31 to 60 days | 6,824 | 425 | ||||||
61 to 90 days | 35,372 | 37,239 | ||||||
More than 90 days | 624,157 | 413,603 | ||||||
|
|
|
| |||||
Past due | 1,007,537 | 451,590 | ||||||
Impaired (reserved) | (374,699 | ) | (312,004 | ) | ||||
|
|
|
| |||||
Unimpaired | 632,838 | 139,586 | ||||||
Current | 34,226,503 | 16,991,869 | ||||||
|
|
|
| |||||
Total | Ps. | 34,859,341 | Ps. | 17,131,455 | ||||
|
|
|
|
Additionally, the reconciliation for impaired accounts receivable is as follows:
Domestic customers | ||||||||
2016 | 2015 | |||||||
Balance at the beginning of the year | Ps. (667,883 | ) | Ps. (598,624 | ) | ||||
Additions against income | (218,836 | ) | (196,856 | ) | ||||
Application against estimation | 428,291 | 127,597 | ||||||
|
|
|
| |||||
Balance at the end of the year | Ps. (458,428 | ) | Ps. (667,883 | ) | ||||
|
|
|
|
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Domestic Customers | ||||||||
As of December 31, | ||||||||
2013 | 2012 | |||||||
1 to 30 days | Ps. | 874,553 | Ps. | 1,205,492 | ||||
31 to 60 days | 15,091 | 284,968 | ||||||
61 to 90 days | 80,331 | 53,110 | ||||||
More than 91 days | 223,009 | 1,079,711 | ||||||
|
|
|
| |||||
Expired | 1,192,984 | 2,623,281 | ||||||
Impaired (Reserved) | (697,284 | ) | (1,059,215 | ) | ||||
|
|
|
| |||||
Unimpaired | 495,700 | 1,564,066 | ||||||
Unexpired | 38,152,770 | 51,791,645 | ||||||
|
|
|
| |||||
Total | Ps. | 38,648,470 | Ps. | 53,355,711 | ||||
|
|
|
|
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 7—INVENTORIES:8. INVENTORIES, NET
As of December 31, 20132016 and 2012,2015, inventories were as follows:
As of December 31, | ||||||||
2013 | 2012 | |||||||
Crude oil, refined products, derivatives and petrochemicals products | Ps. | 51,638,624 | Ps. | 51,058,073 | ||||
Materials and products in stock | 5,259,341 | 5,755,367 | ||||||
Materials and products in transit | 16,535 | 34,130 | ||||||
|
|
|
| |||||
Ps. | 56,914,500 | Ps. | 56,847,570 | |||||
|
|
|
|
2016 | 2015 | |||||||
Refined and petrochemicals products | Ps. 21,534,846 | Ps. 23,673,427 | ||||||
Crude oil | 11,391,310 | 11,461,185 | ||||||
Products in transit | 7,735,163 | 3,262,252 | ||||||
Materials and products in stock | 4,721,834 | 5,145,874 | ||||||
Materials in transit | 419,547 | 120,750 | ||||||
Gas and condesate products | 89,360 | 107,440 | ||||||
|
|
|
| |||||
Ps. 45,892,060 | Ps. 43,770,928 | |||||||
|
|
|
|
NOTE 8—INVESTMENTS9. HELD—FOR—SALENON-FINANCIAL ASSETS
a. | Petróleos Mexicanos and theCentro Nacional de Control de Gas Natural (National Center of Natural Gas Control, or CENAGAS) signed a framework agreement on October 29, 2015 for the transfer to CENAGAS 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 received 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 EQUITY INSTRUMENTS: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 2011, PMI HBV acquired 57,204,2402016, 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 S.A. (formerly known as Repsol YPF, S.A., “Repsol”)valued at a cost of Ps. 20,783,820,3,944,696, which represented approximately 4.69%1.48% of Repsol’s share capital.
On June 19, 2012, Repsol approved a dividend program under which Repsol shareholders had the option to receive their pro rata portion of the dividend declared at the annual meeting in the form of either (i) new shares of Repsol or (ii) cash. On June 29, 2012, Petróleos Mexicanos opted to receive its dividend in cash, which it received on July 13, 2012, while on July 9, 2012,January 16, 2015, PMI HBV received its dividend in the form of 2,600,191 new Repsol shares. As part of the same program, on January 21 and July 16, 2013, PMI HBV opted to receive dividends in the form of 1,683,322 and 1,506,130575,205 new Repsol shares, respectively.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 9, 2013, PEMEX divested4, 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 direct interestshareholders, from which PMI HBV received 942,015 new Repsol shares as anin-kind dividend in 9,289,968January 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 which resultedshares as anin-kind dividend in a net profitJanuary 23, 2017. This amount was recognized as an account receivable of Ps. 278,842. On the same date, PEMEX entered into an equity swap for the same numberPs.165,346 as of shares with a notional amount of Ps. 2,869,882, pursuant to which PEMEX retains economic and voting rights in such shares (see Note 13(a)(iv)).December 31, 2016.
As of December 31, 20132016 and 2012,December 31, 2015, the investments in 53,703,915 and 59,804,43120,724,331 shares of Repsol held by PMI HBV were valued at Ps. 17,728,4906,027,540 and Ps. 15,771,202,3,944,696, respectively. These shares are presented undernon-current assets. The effect of the valuation ofon the investment at fair value was recorded in other comprehensive result in the statement of changes in equity (deficit) as a gainprofit of Ps. 4,453,495207,817 at December 31, 20132016, and a loss of Ps. 10,125,9123,206,316 at December 31, 2012. In addition, PEMEX recorded dividend payments received from Repsol2015.
As of Ps. 914,116 and Ps. 685,704 in the statements of comprehensive income at December 31, 20132016 and 2012, respectively.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, resulting in approximately Ps.461,000 in damages. Chorinated Plant 3 incurred the greatest amount of damaged, including the loss of certain assets 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. |
ii. | On December 15, 2015, PEMEX completed the divestiture of PMI HBV’s ownership interest in the TAG Norte Holding, S. de R.L. de 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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)
At December 31, 2013 and 2012, PEMEX held three equity swaps with financial institutions through which it had obtained the economic and voting rights of 67,969,767 and 58,679,799 shares of Repsol, respectively, which amounted to approximately 5.13% and 4.80% of Repsol’s total shares, respectively (see Note 13).
At December 31, 2013 and 2012, PEMEX’s direct holdings of Repsol shares, together with the economic and voting rights acquired through the equity swaps mentioned above, amounted to approximately 9.19% and 9.49% of Repsol’s total shares, respectively. In addition, PEMEX holds one Repsol share through PMI-SES.
NOTE 9—PERMANENT INVESTMENTSFIGURES STATED IN ASSOCIATES:THOUSANDS, EXCEPT AS NOTED)
The permanent investments in associates as of December 31, 2013 and 2012, which were accounted for under the equity method, were as follows:
Percentage of Investment | December 31, | |||||||||||
2013 | 2012 | |||||||||||
Deer Park Refining Limited | 50.00% | Ps. | 6,710,317 | Ps. | 7,337,384 | |||||||
Gasoductos de Chihuahua, S. de R.L. de C.V. | 50.00% | 4,051,682 | 3,530,632 | |||||||||
Petroquímica Mexicana de Vinilo, S.A. de C.V.(i) | 44.09% | 3,253,978 | — | |||||||||
Instalaciones Inmobiliarias para Industrias, S.A. de C.V.(ii) | 100.00% | — | 1,424,309 | |||||||||
Compañía Mexicana de Exploraciones, S.A. de C.V.(iii) | 60.00% | 1,141,065 | 936,689 | |||||||||
Frontera Brownsville, LLC | 50.00% | 517,945 | 535,653 | |||||||||
Mexicana de Lubricantes, S.A. de C.V. | 46.85% | 488,321 | 509,265 | |||||||||
Other—net | Various | 616,193 | 372,331 | |||||||||
|
|
|
| |||||||||
Total | Ps. | 16,779,501 | Ps. | 14,646,263 | ||||||||
|
|
|
|
Profit (loss) sharing in associates:associates and others:
December 31, | ||||||||||||
2013 | 2012 | 2011 | ||||||||||
Deer Park Refining Limited | Ps. | (591,472 | ) | Ps. | 1,320,180 | Ps. | 80,480 | |||||
Gasoductos de Chihuahua, S. de R.L. de C.V. | 475,942 | 548,765 | 221,148 | |||||||||
Petroquímica Mexicana de Vinilo, S.A. de C.V. | 93,853 | — | — | |||||||||
Others—Net | 728,387 | 2,928,662 | (1,112,381 | ) | ||||||||
|
|
|
|
|
| |||||||
Total | Ps. | 706,710 | Ps. | 4,797,607 | Ps. | (810,753 | ) | |||||
|
|
|
|
|
|
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 2016 and 2015:
Condensed statements of financial position
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
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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The following tables show condensed financialAdditional information of majorabout the significant permanent investments recognized under the equity method:
Condensed Statements of Financial Positionin associates and other is presented below:
Deer Park Refining Limited | Gasoductos de Chihuahua, S. de R.L. de C.V. | |||||||||||||||
December 31, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | |||||||||||||
Total assets | Ps. | 27,331,336 | Ps. | 23,237,327 | Ps. | 9,006,292 | Ps. | 8,007,571 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total liabilities | 13,910,702 | 8,562,558 | 902,928 | 946,306 | ||||||||||||
Total equity | 13,420,634 | 14,674,769 | 8,103,364 | 7,061,265 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total liabilities and equity | Ps. | 27,331,336 | Ps. | 23,237,327 | Ps. | 9,006,292 | Ps. | 8,007,571 | ||||||||
|
|
|
|
|
|
|
|
Condensed Statements of Comprehensive Income
• | Deer Park Refining Limited. On March 31, 1993, PMI NASA acquired 50% of the Deer Park Refinery. In its capacity as General Partner of Deer Park Refining Limited Partnership, Shell is responsible for the operation and management of the Refinery, the purpose of which is 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 products in the same equal amounts. Shell is responsible for purchasing the total amount of finished products in stock at market prices. This joint venture is recorded under the equity method. |
Deer Park Refining Limited | Gasoductos de Chihuahua, S. de R.L. de C.V. | |||||||||||||||||||||||
December 31, 2013 | December 31, 2012 | December 31, 2011 | December 31, 2013 | December 31, 2012 | December 31, 2011 | |||||||||||||||||||
Sales and other income | Ps. | 9,767,622 | Ps. | 12,240,553 | Ps. | 11,766,416 | Ps. | 2,124,812 | Ps. | 1,984,198 | Ps. | 1,592,555 | ||||||||||||
Costs and expenses | 10,950,566 | 9,600,192 | 11,605,456 | 1,172,927 | 886,669 | 1,150,260 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net result | Ps. | (1,182,944 | ) | Ps. | 2,640,361 | Ps. | 160,960 | Ps. | 951,885 | Ps. | 1,097,529 | Ps. | 442,295 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
• | 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.This company was created on June 24, 2013. Its main activity is the developing of projects related to the transport 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., 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 are responsible for the results in proportion of this investment. As of December 31, 2016, the company has seven tanks of 120,000 barrels of capacity, each of them. This joint venture is recorded under the equity method. |
• | CH4 Energía, 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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
NOTE 10—WELLS, PIPELINES, PROPERTIES, PLANT AND EQUIPMENT:
As of December 31, 2013 and 2012, the components of wells, pipelines, properties, plant and equipment were as follows:
• | Administración Portuaria Integral de Dos Bocas, S.A. de C.V.This company was constituted on August 12, 1999. Its primarily activity is the use of water and land in port areas in Mexico’s public domain; operates the use and development of building sites. It also provides related port services. This investment is recorded under the equity method. |
Plants | Drilling Equipment | Pipelines | Wells | Buildings | Offshore platforms | Furniture and Equipment | Transportation Equipment | Construction in progress | Land | Unproductive fixed assets | Other fixed assets | Total | ||||||||||||||||||||||||||||||||||||||||
INVESTMENT | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances as of January 1, 2012 | Ps. | 640,476,821 | 39,551,408 | 545,183,035 | 882,779,891 | 61,084,265 | 298,983,863 | 45,199,722 | 20,003,935 | 125,148,670 | 41,623,977 | 8,422,839 | — | 2,708,458,426 | ||||||||||||||||||||||||||||||||||||||
Acquisitions | 28,345,950 | 3,382,577 | 3,034,148 | 52,636,412 | 810,283 | 6,095,841 | 4,584,555 | 1,253,739 | 107,171,303 | 97,877 | 12,737 | 152,844 | 207,578,266 | |||||||||||||||||||||||||||||||||||||||
Capitalization and reclassifications | 46,045,271 | (566,879 | ) | 1,596,719 | 72,039,394 | (9,355,395 | ) | 14,558,538 | (71,555 | ) | (130,141 | ) | (131,010,580 | ) | (3,611 | ) | 3,673,967 | (125,211 | ) | (3,349,483 | ) | |||||||||||||||||||||||||||||||
Disposals | (5,119,828 | ) | — | (2,577,283 | ) | — | 899,856 | — | 75,563 | (536,840 | ) | 3,993,884 | (135,072 | ) | (961,129 | ) | — | (4,360,849 | ) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
Balances as of December 31, 2012 | 709,748,214 | 42,367,106 | 547,236,619 | 1,007,455,697 | 53,439,009 | 319,638,242 | 49,788,285 | 20,590,693 | 105,303,277 | 41,583,171 | 11,148,414 | 27,633 | 2,908,326,360 | |||||||||||||||||||||||||||||||||||||||
Acquisitions | 29,336,696 | 3,106,174 | 5,387,150 | 62,580,630 | 1,965,492 | 5,633,305 | 3,644,600 | 3,701,628 | 134,079,686 | 1,100,230 | 1,104,295 | 4,929 | 251,644,815 | |||||||||||||||||||||||||||||||||||||||
Capitalization and reclassifications | 10,174,501 | (433,975 | ) | 7,875,199 | 56,885,847 | 5,761,369 | 1,115,273 | (1,072,347 | ) | (99,191 | ) | (85,903,444 | ) | (23,662 | ) | 264,810 | — | (5,455,620 | ) | |||||||||||||||||||||||||||||||||
Impairment | 1,650,664 | — | — | (26,364,717 | ) | — | — | — | — | (894,782 | ) | — | — | — | (25,608,835 | ) | ||||||||||||||||||||||||||||||||||||
Disposals | (15,360,225 | ) | — | (2,057,115 | ) | — | (903,509 | ) | (62,212 | ) | (424,245 | ) | (875,443 | ) | (3,154,696 | ) | (301,882 | ) | (2,249,721 | ) | — | (25,389,048 | ) | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
Balances as of December 31, 2013 | Ps. | 735,549,850 | 45,039,305 | 558,441,853 | 1,100,557,457 | 60,262,361 | 326,324,608 | 51,936,293 | 23,317,687 | 149,430,041 | 42,357,857 | 10,267,798 | 32,562 | 3,103,517,672 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
ACCUMULATED DEPRECIATION AND AMORTIZATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances as of January 1, 2012 | Ps. | (254,138,741) | (20,707,896 | ) | (187,966,009 | ) | (491,889,237 | ) | (33,557,438 | ) | (79,411,627 | ) | (30,120,584 | ) | (11,727,040 | ) | — | — | (6,515,091 | ) | — | (1,116,033,663 | ) | |||||||||||||||||||||||||||||
Depreciation | (32,672,945 | ) | (2,868,400 | ) | (16,964,385 | ) | (67,857,495 | ) | (1,465,645 | ) | (14,284,606 | ) | (3,159,986 | ) | (1,264,258 | ) | — | — | — | — | (140,537,720 | ) | ||||||||||||||||||||||||||||||
Reclassifications | (139,324 | ) | 510,016 | 2,834,880 | (6,141 | ) | 1,220,599 | (1,441,319 | ) | 430,999 | 119,497 | — | — | (177,427 | ) | — | 3,351,780 | |||||||||||||||||||||||||||||||||||
Disposals | 2,663,300 | — | 2,810 | — | 78,604 | — | 286,377 | 537,127 | — | — | 59,110 | — | 3,627,328 | |||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
Balances as of December 31, 2012 | (284,287,710 | ) | (23,066,280 | ) | (202,092,704 | ) | (559,752,873 | ) | (33,723,880 | ) | (95,137,552 | ) | (32,563,194 | ) | (12,334,674 | ) | — | — | (6,633,408 | ) | — | (1,249,592,275 | ) | |||||||||||||||||||||||||||||
Depreciation | (36,154,914 | ) | (2,790,948 | ) | (16,457,891 | ) | (71,831,243 | ) | (1,779,543 | ) | (14,669,152 | ) | (3,468,615 | ) | (1,339,398 | ) | — | — | — | — | (148,491,704 | ) | ||||||||||||||||||||||||||||||
Reclassifications | 2,513,262 | 358,288 | 1,290,514 | 1,153 | (84,961 | ) | — | 1,230,624 | 146,740 | — | — | — | — | 5,455,620 | ||||||||||||||||||||||||||||||||||||||
Disposals | 8,267,723 | — | 1,409,767 | — | 519,279 | — | 297,756 | 903,404 | — | — | (708,501 | ) | — | 10,689,428 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
Balances as of December 31, 2013 | Ps. | (309,661,639) | (25,498,940 | ) | (215,850,314 | ) | (631,582,963 | ) | (35,069,105 | ) | (109,806,704 | ) | (34,503,429 | ) | (12,623,928 | ) | — | — | (7,341,909 | ) | — | (1,381,938,931 | ) | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
Wells, pipelines, properties, plant and equipment—net as of December 31, 2012 | Ps. | 425,460,504 | 19,300,826 | 345,143,915 | 447,702,824 | 19,715,129 | 224,500,690 | 17,225,091 | 8,256,019 | 105,303,277 | 41,583,171 | 4,515,006 | 27,633 | 1,658,734,085 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
Wells, pipelines, properties, plant and equipment—net as of December 31, 2013 | Ps. | 425,888,211 | 19,540,365 | 342,591,539 | 468,974,494 | 25,193,256 | 216,517,904 | 17,432,864 | 10,693,759 | 149,430,041 | 42,357,857 | 2,925,889 | 32,562 | 1,721,578,741 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
Depreciation rates | 4 | % | 5 | % | 3 | % | — | 3 | % | 4 | % | 10 | % | 5 | % | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Estimated useful lives | 25 years | 20 years | 33 years | — | 33 years | 25 years | 10 years | 20 years | — | — | — | — | — |
• | PMV Minera, S.A. de 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. |
• | 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. |
• | 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 Exploration 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. |
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)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. | As of December 31, |
b. | The combined depreciation of fixed assets and amortization of wells for the fiscal years ended December 31, |
c. | As of December 31, |
As a result of the sale of certain properties and plants of the Pajaritos petrochemical complex by Pemex-Petrochemicals to Petroquímica Mexicana de Vinilo, S.A. de C.V., value in use for the complex was favorable, reducing the impairment charge for previous years by Ps. 1,650,664. This reduction in impairment charges was offset by additional impairment charges totaling Ps. (894,782) due to the identification of additional impaired assets.
As of December 31, 2013 and 2012, assets acquired through these capital leases were as follows:
2013 | 2012 | |||||||
Investment in tankers and drilling equipment | Ps. | 5,870,050 | Ps. | 3,075,142 | ||||
Less accumulated depreciation | (636,276 | ) | (513,123 | ) | ||||
|
|
|
| |||||
Ps. | 5,233,774 | Ps. | 2,562,019 | |||||
|
|
|
|
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
d. | As of December 31, 2016 PEMEX recognized a net reversal of impairment of Ps. (331,314,343) and a net impairment of Ps.477,944,688 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. |
Cash Generating Unit of Pemex Exploration and Production
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) 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, which fields are located primarily in the Aceite Terciario del Golfo, Crudo Ligero Marino, Burgos, Cantarell and Antonio J. Bermudez crude oil projects, (ii) 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, given that cash inflows are denominated in U.S. dollars and then translated to the reporting currency using the exchange rate at the end of the period, (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 decrease in the discount rate; (2) an impairment of fixed assets of Ps. 16,872,238, mainly due to the fact that cash flows were not sufficient to cover the recovery value of the Lakach project as a result of the increase in investments in this strategic gas 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). 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). The recoverable amount on each asset is the value in use. As of December 31, 2015 the value in use of impairment fixed assets amounted to Ps. 266,214,532. Until December 31, 2014, Pemex Exploration and Production based its estimates of long-term prices for proved reserves on 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.
Cash Generating Units of industrial transformation
As of December 31, 2015, industrial transformation cash generating units recognized Ps. 76,442,079 of impairment of long-lived assets, mainly due to: an impairment of Ps. 75,724,859 in the cash generating unit of refining, an impairment of Ps. 325,200 in the cash generating unit 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 redefined to those refineries located in the following strategic points of Mexico: Cadereyta, Minatitlán, Salamanca, Salina Cruz, Madero and Tula. The National Refinery System was previously a cash generating unit.
To determine the value in use of long-lived assets associated with refineries of the National Refinery System, the net present value of reserves was determined based on the following assumptions:
Crude oil average price | 56.02 U.S. dollars per processed barrel (2016-2029) | |
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% annually |
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 volumes produced and sold. As of December 31, 2015 the value in use 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)
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:
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 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 use of impairment fixed assets amounted to Ps. 235,000. Until December 31, 2015, the projection of cash flows was calculated based on a period of 13 years. During 2015 the discount rate used was 9.52%.
As of December 31, 2015, impairment of wells, pipelines, properties, plant and equipment includes an impairment charge on long-lived assets of Ps. 325,200 recorded by the Arenque cash generating unit.
Cash generating unit of petrochemicals
The cash generating units of PEMEX’s petrochemicals segment are petrochemicals centers located in the following strategic points of Mexico: Independencia and Cangrejera.
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, 2015 there was no value in use for these cash generating units. Until December 31, 2015, the projection of cash flows was calculated based on a period of 14 years. During 2015 the discount rate used was 8.84%.
As of December 31, 2015, impairment of wells, pipelines, properties, plant 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 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. 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%.
As of December 31, 2015, impairment of wells, pipelines, properties, plant and equipment includes an impairment charge on long-lived assets 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 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 sales and services income. As of December 31, 2015 the value in use of impairment fixed assets amounted to Ps. 129,843. During 2015 the discount rate used was 7.28%.
As of December 31, 2015, impairment of wells, pipelines, properties, plant and equipment includes an impairment charge on long-lived assets of Ps. 1,276,510 recorded by the cash generating units mentioned above.
PEMEX’snet-future cash flow projections are based on the best available estimations of revenues and expenses of the cash-generating units, using forecasts, past performances and market developement. PEMEX’s annual budget and business plan set macroeconomic variables for each of the cash-generating units using real basis and including some variables, such as production volume, market prices, exchange rates, among other variables, which are used 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:
i. | Sales prices for oil and gas. The resulting prices are consistent with those used by PEMEX to make investing decisions and are based on observable prices in the international market from the date of the statement of financial position. |
ii. | 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. |
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. | 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 |
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, 20132016 as presented below:
Year | Pesos | U.S. dollars | ||||||
2014 | Ps. | 761,941 | U.S. $ | 58,268 | ||||
2015 | 741,863 | 56,733 | ||||||
2016 | 741,863 | 56,733 | ||||||
2017 | 741,863 | 56,733 | ||||||
2018 | 681,643 | 52,127 | ||||||
2019 and later | 1,184,622 | 90,592 | ||||||
|
|
|
| |||||
4,853,795 | 371,186 | |||||||
Less: Short-term unaccrued interest | 239,772 | 18,336 | ||||||
Less: Long-term unaccrued interest | 664,118 | 50,787 | ||||||
|
|
|
| |||||
Total capital leases | 3,949,905 | 302,063 | ||||||
Less: Current portion of leases | 522,167 | 39,932 | ||||||
|
|
|
| |||||
Total long-term capital leases | Ps. | 3,427,738 | U.S. $ | 262,131 | ||||
|
|
|
|
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, 2013, 20122016, 2015 and 20112014 was Ps.500,654, Ps. 159,380, Ps. 214,041450,760 and Ps. 212,497,242,436, respectively.
The discount rates applied to the calculation of capitalized leases were as follows:
i. |
ii. |
iii. |
g. | 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). |
h. | 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). |
NOTE 11—OTHER ASSETS:13. INTANGIBLE ASSETS
At December 31, 20132016 and 2012,2015, intangible assets are wells unassigned to a reserve, which amounted Ps. 8,639,242 and Ps. 14,304,961, 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 | ||||||
|
|
|
|
In addition, as of December 31, 2016 and 2015, PEMEX recognized expenses related to unsuccessful wells of Ps. 19,307,838 and Ps. 10,131,739, respectively, directly in its statement of comprehensive income.
NOTE 14. LONG-TERM NOTES RECEIVABLE AND OTHER ASSETS
a. | Long-term notes receivable |
As of December 31, 2016 and 2015, the balance of other assetslong-term notes receivable was as follows:
As of December 31, | ||||||||
2013 | 2012 | |||||||
Construction in progress (wells) | Ps. | 7,892,474 | Ps. | 5,306,333 | ||||
Payments in advance | 2,244,450 | 3,290,756 | ||||||
Other | 4,057,786 | 3,750,746 | ||||||
|
|
|
| |||||
Ps. | 14,194,710 | Ps. | 12,347,835 | |||||
|
|
|
|
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 | ||||||
|
|
|
|
As of December 31, | ||||||||
2013 | 2012 | |||||||
Construction in progress (wells): | ||||||||
Balance at the beginning of period | Ps. | 5,306,333 | Ps. | 9,552,703 | ||||
Additions to construction in progress | 21,813,041 | 18,945,289 | ||||||
Deductions against expenses | (9,244,399 | ) | (11,889,271 | ) | ||||
Deductions against fixed assets | (9,982,501 | ) | (11,302,388 | ) | ||||
|
|
|
| |||||
Balance at the end of period | Ps. | 7,892,474 | Ps. | 5,306,333 | ||||
|
|
|
|
(i) | Primarily CENAGAS, see Note9-a. |
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
NOTE 12—DEBT:Promissory notes issued by the Mexican Government
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 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 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 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.
Petróleos Mexicanos recognized a Ps. 135,439,612 increase in equity as a result of the Ps. 184, 230,586 discount 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 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).
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, 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% 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.
b. | Other assets |
At December 31, 2016 and 2015, the balance of other assets was as follows:
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. 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 approves the termsof Directors of Petróleos Mexicanos approved policies and conditionsgeneral requirements for the incurrence of obligations that constitute public debt of Petróleos Mexicanos for each fiscal year,and Subsidiary Entities, in accordance with the PetróleosArticle 107 of the Petroleos Mexicanos Law andLaw.
Subsequently, the Regulations toBoard of Directors of PEMEX, approved the debt program for fiscal year 2016 in accordance with Article 13 section XXVI of the Petróleos Mexicanos Law. These terms
During 2016, 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. |
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. |
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. |
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. |
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. |
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. |
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. |
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. |
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”). |
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)
(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. |
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. |
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. |
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. |
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. |
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 |
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)
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. |
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 conditionsDecember 31, 2016, PMI HBV obtained and paid U.S. $11,369,800 in revolving credit lines. As of December 31, 2016 there 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 promulgatedU.S. $4,630,000 and Ps. 3,500,000, respectively.
The Federal Income Law applicable to PEMEX as of January 1, 2015, published in conformitythe 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 guidelinesArticle 107 of the Petroleos Mexicanos Law.
Subsequently, the Board of Directors of PEMEX, approved by the SHCPdebt program for fiscal year 2015 in accordance with Article 13 section XXVI of the Petróleos Mexicanos for the respective fiscal year.Law.
During 2013,2015, the significant financing activities of PEMEX were as follows:
a. | On January |
b. | On January |
c. | On January |
d. | On |
maturity date to February 5, 2020. On |
|
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)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 |
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, |
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 |
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. |
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. |
l. | On |
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. |
n. | On |
o. | On |
p. | On August 28, 2015, Petróleos Mexicanos borrowed U.S. $120,000 from a certain U.S. $3,250,000 revolving credit line, which |
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 |
On |
On |
On |
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 |
z. | On December 15, 2015, Petróleos Mexicanos obtained a loan for Ps. 10,000,000, |
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
On December |
During 2012, the significant financing activities of PEMEX were as follows:
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
On |
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
As of December 31, 2012,2015, Petróleos Mexicanos had U.S. $3,268,634$4,500,000 and Ps. 23,500,000 in available lines of credit in order to ensure liquidity.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:
As of December 31, 2013 and 20122016 and as of the date of the issuance of these consolidated financial statements, PEMEX was in compliance with the covenants described above.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
As of December 31, 2013,2016, long-term debt was as follows:
December 31, 2013 | Pesos | Foreign currency | ||||||||||||||||||||||||||
Rate of Interest(1) | Maturity | Pesos (thousands) | Foreign currency (thousands) | Rate of interest(1) | Maturity | (thousands) | (thousands) | |||||||||||||||||||||
U.S. dollars: | ||||||||||||||||||||||||||||
U.S. dollars | ||||||||||||||||||||||||||||
Bonds | Fixed from 1.7% to 9.5% and LIBOR plus 0.43% to 2.2% | Various to 2045 | Ps. | 407,719,934 | 31,179,592 | 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 0.4% to 0.5% | Various to 2014 | 12,520 | 957 | LIBOR plus 0.8% to 0.85% | Various to 2016 | 2,479,680 | 120,000 | ||||||||||||||||||||
Project financing | Fixed from 2.45% to 5.45% and LIBOR plus .01% to 1.71% | Various to 2022 | 75,603,945 | 5,781,665 | 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% to 1.20% | Various to 2018 | 10,981,118 | 839,760 | Fixed at 5.44% and LIBOR plus 1.0% | Various to 2018 | 33,100,587 | 1,601,848 | ||||||||||||||||||||
Syndicated loans | LIBOR plus 0.8% and 1% | Various to 2016 | 27,918,337 | 2,135,001 | LIBOR plus 0.85% | Various to 2020 | 41,056,571 | 1,986,865 | ||||||||||||||||||||
Bank loans | Fixed from 3.5% to 5.28% | Various to 2022 | 4,032,468 | 308,375 | Fixed from 3.5% to 5.28% | Various to 2023 | 4,339,826 | 210,019 | ||||||||||||||||||||
Financial leases (Note 10(e)) | Fixed from 0.37% to 1.99% | Various to 2023 | 3,949,905 | 302,061 | ||||||||||||||||||||||||
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 | 530,218,227 | 40,547,411 | 1,342,150,436 | U.S. $ | 64,951,144 | |||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Euros: | ||||||||||||||||||||||||||||
Euros | ||||||||||||||||||||||||||||
Bonds | Fixed from 5.5% to 6.375% | Various to 2025 | 78,073,403 | 4,332,742 | Fixed from 3.125% to 6.375% | Various to 2030 | 196,317,016 | € | 9,058,388 | |||||||||||||||||||
Secured loan | EURIBOR plus 5.37% | Various to 2014 | 4,779,802 | 265,259 | ||||||||||||||||||||||||
Project financing | Fixed at 2% | Various to 2016 | 569 | 32 | Fixed at 2% | Various to 2016 | 10,836,200 | 500,000 | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Total financing in Euros | 82,853,774 | 4,598, 033 | 207,153,216 | € | 9,558,388 | |||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Japanese yen: | ||||||||||||||||||||||||||||
Direct loans | LIBOR yen plus 0.71% | Various to 2014 | 2,608,275 | 20,950,000 | ||||||||||||||||||||||||
Bonds | Fixed at 3.5% and LIBOR yen plus 0.75% | Various to 2023 | 11,703,000 | 94,000,000 | Fixed at 3.5% and LIBOR yen plus 0.75% | Various to 2023 | 30,800,746 | ¥ | 173,809,300 | |||||||||||||||||||
Project financing | Fixed at 2.90% and Prime Rate yen plus 1% to 2% | Various to 2017 | 3,346,571 | 26,880,086 | Fixed at 1.56% and Prime Rate yen plus 2.56% | Various to 2017 | 517,286 | 2,919,056 | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Total financing in yen | 17,657,846 | 141,830,086 | 31,318,032 | ¥ | 176,728,356 | |||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Pesos: | ||||||||||||||||||||||||||||
Pesos | ||||||||||||||||||||||||||||
Certificados bursátiles | Mexican Federal Treasury Certificates (“Cetes”) plus 0.57%,Tasa de Interés Interbancaria de Equilibrio (TIIE)(1)less 0.07% to 0.7%, and Fixed at 7.19% to 9.91% | Various to 2024 | 132,159,337 | 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 2.4% | Various to 2022 | 6,479,741 | 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 | 138,639,078 | Ps. | 277,254,794 | |||||||||||||||||||||||||
Unidades de Inversión Certificados Bursátiles | Zero rate and Fixed at 3.02% to 4.2% | Various to 2028 | 26,746,411 | |||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Other currencies: | ||||||||||||||||||||||||||||
Bonds | Fixed from 2.5% to 8.25% | Various to 2022 | 21,031,855 | |||||||||||||||||||||||||
Unidades de Inversión Certificados bursátiles | ||||||||||||||||||||||||||||
Certificados bursátiles | Zero rate and Fixed at 3.02% to 5.23% | Various to 2035 | 53,703,421 | |||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Total principal in pesos(2) | 817,147,191 | |||||||||||||||||||||||||||
Plus: Accrued interest | 9,815,002 | |||||||||||||||||||||||||||
Notes payable to contractors(3) | 14,278,221 | |||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Total principal and interest | 841,240,414 | |||||||||||||||||||||||||||
Less: Short-term maturities | 72,450,283 | |||||||||||||||||||||||||||
Current portion of notes payable to contractors(3) | 8,411,658 | |||||||||||||||||||||||||||
Accrued interest | 9,815,002 | |||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Total short-term debt | 90,676,943 | |||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Long-term debt (Note 13(c)) | Ps. | 750,563,471 | ||||||||||||||||||||||||||
|
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
As of December 31, 2012, long-term debt was as follows:
December 31, 2012 | ||||||||||||
Rate of Interest(1) | Maturity | Pesos (thousands) | Foreign currency (thousands) | |||||||||
U.S. dollars: | ||||||||||||
Bonds | Fixed from 1.7 % to 9.5% | Various to 2045 | Ps. | 322,847,701 | 24,815,159 | |||||||
Purchasing loans | LIBOR plus 0.4% to 0.5% | Various to 2014 | 39,156 | 3,010 | ||||||||
Project financing | Fixed from 2.45% to 5.45% and LIBOR plus 01% to 1.71% | Various to 2022 | 94,659,520 | 7,275,849 | ||||||||
Direct loans | Fixed 1.457% to 5.44% and LIBOR plus 1.0% to 1.9% | Various to 2018 | 16,521,754 | 1,269,918 | ||||||||
Syndicated loans | LIBOR plus 0.475% and 1.5% | Various to 2016 | 43,909,088 | 3,375,000 | ||||||||
Bank loans | Fixed from 3.5% to 5.28% | Various to 2022 | 2,603,408 | 200,107 | ||||||||
Financial leases | Fixed from 0.38% to 1.99% | Various to 2022 | 2,320,522 | 178,363 | ||||||||
|
|
|
| |||||||||
Total financing in U.S. dollars | 482,901,149 | 37,117,406 | ||||||||||
Euros: | ||||||||||||
Bonds | Fixed from 5.5% to 6.375% | Various to 2025 | 60,910,720 | 3,543,687 | ||||||||
Secured loan | EURIBOR plus 5.37% | Various to 2014 | 9,163,050 | 532,835 | ||||||||
Project financing | Fixed at 2% | Various to 2016 | 1,454 | 85 | ||||||||
|
|
|
| |||||||||
Total financing in Euros | 70,075,224 | 4,076,607 | ||||||||||
Japanese yen: | ||||||||||||
Direct loans | LIBOR yen plus 0.71% | Various to 2014 | 3,157,165 | 20,950,000 | ||||||||
Bonds | Fixed at 3.5% and LIBOR yen plus 0.75% | Various to 2023 | 14,165,800 | 94,000,000 | ||||||||
Project financing | Fixed at 2.90% and Prime Rate yen plus 1% to 2% | Various to 2017 | 5,416,376 | 35,941,450 | ||||||||
|
|
|
| |||||||||
Total financing in yen | 22,739,341 | 150,891,450 | ||||||||||
Pesos: | ||||||||||||
Certificados bursátiles | Cetes plus 0.57%, TIIE(1)less 0.07% to 0.7%, and Fixed at 7.65% and 9.91% | Various to 2021 | 115,210,065 | |||||||||
Direct loans | Fixed from 5.04% and 6.55% and TIIE plus 0.55% to 2.4% | Various to 2022 | 10,421,100 | |||||||||
|
| |||||||||||
Total financing in pesos | 125,631,165 | |||||||||||
Unidades de Inversión Certificados Bursátiles | Zero rate and Fixed at 3.02% to 4.2% | Various to 2028 | 25,769,565 | |||||||||
Other currencies: | ||||||||||||
Bonds | Fixed from 2.5% to 8.25% | Various to 2022 | 29,201,396 | |||||||||
|
| |||||||||||
Total principal in pesos(2) | 756,317,840 | |||||||||||
Plus: Accrued interest | 8,997,741 | |||||||||||
Notes payable to contractors(3) | 21,543,019 | |||||||||||
|
| |||||||||||
Total principal and interest | 786,858,600 | |||||||||||
Less: Short-term maturities | 93,226,762 | |||||||||||
Current portion of notes payable to contractors(3) | 12,016,502 | |||||||||||
Accrued interest | 8,997,741 | |||||||||||
|
| |||||||||||
Total short-term debt | 114,241,005 | |||||||||||
|
| |||||||||||
Long-term debt (Note 13(c)) | Ps. | 672,617,595 | ||||||||||
|
|
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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
2014 | 2015 | 2016 | 2017 | 2018 | 2019 and thereafter | Total | ||||||||||||||||||||||
Maturity of the total principal outstanding and accrued interest as of December 31, 2013, for each of the years ending December 31, | Ps. | 90,676,943 | Ps. | 65,124,562 | Ps. | 81,602,221 | Ps. | 66,772,810 | Ps. | 68,085,223 | Ps. | 468,978,655 | Ps. | 841,240,414 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 | |||||||||
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 | |||||||||
Other currencies: | ||||||||||||
Bonds | Fixed from 2.5% to 8.25% | Various to 2022 | 26,357,327 | |||||||||
Total principal in pesos(2) | 1,466,585,945 | |||||||||||
Plus: accrued interest | 18,488,522 | |||||||||||
Notes payable to contractors(3) | 8,307,368 | |||||||||||
Total principal and interest | 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 | |||||||||||
2013(i) | 2012(i) | |||||||
Changes in total debt: | ||||||||
At the beginning of the period | Ps. | 786,858,600 | Ps. | 783,154,616 | ||||
Loans obtained | 241,939,473 | 385,419,743 | ||||||
Debt payments | (191,146,091 | ) | (341,863,963 | ) | ||||
Interest paid | 2,170,843 | (850,473 | ) | |||||
Foreign exchange | 3,308,299 | (40,561,801 | ) | |||||
Expenses related to debt issuance | (1,890,710 | ) | 1,560,478 | |||||
|
|
|
| |||||
At the end of the period | Ps. | 841,240,414 | Ps. | 786,858,600 | ||||
|
|
|
|
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 | ||||||
|
|
|
|
(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, |
(2) | Includes financing from foreign banks of Ps. |
(3) | The total amounts of notes payable to contractors as of December 31, |
December 31, | ||||||||||||||||
2013 | 2012 | 2016 | 2015 | |||||||||||||
Total notes payable to contractors(a)(b) | Ps. | 14,278,221 | Ps. | 21,543,019 | Ps.6,988,699 | Ps.8,307,368 | ||||||||||
Less: Current portion of notes payable to contractors | 8,411,658 | 12,016,502 | ||||||||||||||
Less: current portion of notes payable to contractors | 4,181,102 | 4,677,431 | ||||||||||||||
|
|
|
| |||||||||||||
Notes payable to contractors (long-term) | Ps. | 5,866,563 | Ps. | 9,526,517 | Ps.2,807,597 | Ps.3,629,937 | ||||||||||
|
|
|
|
(a) | PEMEX has entered into |
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) | 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, |
Year | U.S. $ | Amount | ||||||
2014 | 25,267 | |||||||
2015 | 25,267 | |||||||
2016 | 25,267 | |||||||
2017 | 25,267 | U.S. $ | 25,267 | |||||
2018 | 25,267 | 25,267 | ||||||
2019 and thereafter | 94,748 | |||||||
2019 | 25,267 | |||||||
2020 | 25,267 | |||||||
2021 | 25,267 | |||||||
2022 and thereafter | 18,948 | |||||||
|
| |||||||
Total | U.S.$ | 221,083 | 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 | ||||||
|
|
|
|
(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 |
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
As of December 31, 2013 and 2012, PEMEX used the following exchange rates to translate the outstanding balances in foreign currencies to pesos in the statement of financial position:
December 31, | ||||||||
2013 | 2012 | |||||||
U.S. dollar | 13.0765 | 13.0101 | ||||||
Japanese yen | 0.1245 | 0.15070 | ||||||
Pounds sterling | 21.6560 | 21.1401 | ||||||
Euro | 18.0194 | 17.1968 | ||||||
Swiss francs | 14.7058 | 14.2451 | ||||||
Canadian dollar | 12.3076 | 13.0689 | ||||||
Australian dollar | 11.6982 | 13.5045 |
NOTE 13—16. DERIVATIVE FINANCIAL INSTRUMENTS: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 DFIsderivative financial instruments (“DFIs”), and guide the development of risk mitigation strategies.
This regulatory framework establishes that DFIs should generally 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.
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 relatingrelated to its liabilities.
In addition, thecertain PMI Group hassubsidiaries 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 exclusively;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 regular stress testing of major exposures;computation; and VaR limits, both at a global and business unit level and the implementation of stop loss mechanisms. In addition, the PMI GroupTrading also has its own risk management subcommittee which supervises the trading of DFIs.
Risk Management |
Market Risk
i. Interest rate risk
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, 2013,2016, approximately 24.8%18.2% of PEMEX’s total net debt outstanding consisted of floating rate debt.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
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, 2013,2016, PEMEX was a party to anfour interest rate swap agreementagreements denominated in U.S. dollars for aan aggregate notional amount of U.S. $750,000$1,846,250 at a weighted average fixed interest rate of 2.38%2.35% and a weighted average term of 10.138.27 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 outstandingaggregate notional amount of U.S. $127,883,$86,545, at a weighted average fixed interest rate of 4.16%4.17% and a weighted average term of 8.45.41 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 makes investmentsinvests 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 revenuesrevenue is derived from exports of crude oil and petroleum products, which are priced and payable in U.S. dollars. Moreover, PEMEX’s revenues from domestic sales of gasoline and diesel net of the IEPS Tax, 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 LPG,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 indexed tocalculated 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 is determined inare indexed to international U.S. dollars.dollar-denominated prices. By contrast, PEMEX’s capital expenditure and operating expenses are determinedestablished 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 in peso terms.balance. The appreciation of the peso relative to the U.S. dollar has the opposite effect. PEMEX perceivesmanages this risk as manageable, 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.
Most of PEMEX’s debt is denominated in U.S. dollars or pesos. Although PEMEX seeksIn order to issue debt either in U.S. dollars or pesos, this is not always achievable. As a consequence offavor the cash flow structure described above, fluctuationsmost of PEMEX’s debt is issued in non-U.S.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 currencies (other than pesos) may increase PEMEX’shas exchange rate risk mitigation strategies. Through these strategies, PEMEX has further sought to reduce its cost of funding dueby 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 exposure to foreign exchange risk.inflation risk arising from debt denominated in UDIs, for an aggregate notional amount of Ps. 1,077,101. During
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Since 1991, for non-U.S. dollar or peso issuances, PEMEX has, as a risk mitigation strategy, used DFIs to swap this debt into U.S. dollars. In order to hedge inflation risk associated with debt denominated in UDIs, PEMEX swaps this debt into pesos. As a result of this strategy, PEMEX holds a debt portfolio with negligible sensitivity to currency risk other than pesos and U.S. dollars.
The currencies underlying these DFIs are the euro, Swiss franc, Japanese yen, Pound sterling and Australian dollar, which are each swapped against the U.S. dollar. UDIs are swapped against the peso.
During 2013,2015, PEMEX entered into cross-currency swapsthe 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 U.S. $2,028,701. In 2012, PEMEX entered into various cross-currency swaps to hedge currency risk arising from debt obligations denominated in Swiss francs and Australian dollars for an aggregate notional amount of U.S. $484,018.Ps. 9,706,932.
Most of PEMEX’s cross-currency swaps are plain vanilla except for two swapsone swap entered into in 2002 and 2004 to hedge its exposure to Japanese yen and euros, with termination dateseuro, which expired in 2023 and 2016, respectively. These swaps are2016. This swap was referred to as an “extinguishing swaps”swap” and werewas obtained in order to hedge long-term obligations. The main characteristic of extinguishing swaps iswas that these DFIs terminate upon the occurrence of any of the credit default events specified in the DFI contract confirmation, without any payment obligation by either party. These swaps haveThis swap had a notional amount of U.S. $241,352$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 U.S. $1,028,500, respectively.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.3,951,492Ps. 254,012,743 in 2013,2016, as compared to a total net foreign exchange gainloss of Ps. 44,845,661154,765,574 in 20122015 and to a total net foreign exchange loss of Ps. 60,143,25276,999,161 in 2011. PEMEX’s2014, which includes the unrealized foreign exchange loss in 2013 was due toassociated with debt of Ps. 243,182,764, Ps. 152,554,454 and Ps. 78,884,717 for the depreciation of the peso, from Ps. 13.0101 = U.S. $1.00 onyears ended December 31, 2012 to Ps. 13.0765 = U.S. $1.00 on December 31, 2013.2016, 2015 and 2014, respectively. The depreciation of the peso caused a total net foreign exchange loss because a significant part of PEMEX’s debt (75.0%(83.0% as of December 31, 2013)2016) is denominated in foreign currency. PEMEX’sUnrealized foreign exchange gain in 2012 was duelosses and gains do not impact PEMEX’s cash flows. Due to the effectcash flow structure described above, the depreciation of a 7.5%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 (from Ps. 13.9904 =relative to the U.S. $1.00dollar may increase PEMEX’s peso debt service costs on December 31, 2011 to Ps. 13.0101 =a U.S. $1.00 on December 31, 2012).dollar basis. PEMEX’s foreign exchange loss in 20112016 was due to the depreciation of the peso, from Ps. 12.3571 = U.S. $1.00 on January 1, 2011 to Ps. 13.990417.2065 = U.S. $1.00 on December 31, 2011.2015 to Ps.20.6640 = 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.
TheCertain PMI Group also facessubsidiaries face market risks generated by fluctuations in foreign exchange rates. In order to mitigate these risks, the boardboards of directors of several of thethese companies that form the PMI Group have authorized a policy which stipulates that no more than 5% of a company’s total financial assets may be denominated in a currency other than its functional currency, unless the company owes a duty or expected payment in a currency other than its functional one. This policy further states that the exchange rate risk generated by financing contracts denominated in currencies other than the functional one is to be fully covered immediately upon the execution of the contract. Accordingly, the companies in thecertain PMI Groupsubsidiaries will, from time to time, enter into DFIs in order to mitigate the risk associated with financing operations denominated in currencies other than a company’s functional currency.
PMI HBV has outstanding euro-dollar exchange rate forwards which were executed in order to hedge its financing operations denominated in euros. As of December 31, 2013, the outstanding notional amount of these contracts was €266,420.
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
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
and third parties, whose prices are determined and are payable in U.S. dollars. PMI Trading’s exposure to foreign currency risk results primarily from the need to fund tax payments denominated in domestic currency and secondarily from the need to purchase products in domestic currency for sale in U.S. dollars in the international market, as well as certain related sales costs denominated in domestic currency.
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.
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 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, these DFIs do not qualify as hedges and were recorded as trading instruments in the financial statements. During 2016, PEMEX did not hedge theenter into any propane import price risk associated with any of its crude oil production for the period from 2007 to 2013.swaps.
In addition to supplying natural gas, Pemex-Gas and Basic PetrochemicalsPemex 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-Gas and Basic PetrochemicalsPemex Industrial Transformation enters into DFIs with MGIMex Gas Supply, Ltd.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. MGIMex Gas Supply, Ltd.S.L. then transfers the related price risk derived from the DFI position held with Pemex-Gas and Basic PetrochemicalsPemex Industrial Transformation to international financial counterparties by entering into these opposite position DFIs with such parties. Through the above mechanism, Pemex-Gas and Basic Petrochemicals is able to maintain its natural risk profile withPemex Industrial Transformation maintains a negligible or even null exposure to market risk.
Pemex-Gas These portfolios have VaR and Basic Petrochemicals’ domestic salesCapital at Risk (“CaR”—An aggregation of LPG have been subjectMark to a price control mechanism imposed by the Mexican Government. This mechanism generates a risk exposureMarket “MtM” and Profit and Loss “P&L”) limits in the geographic areas where PEMEX sells imported LPG. During 2012, Pemex-Gas and Basic Petrochemicals mitigated theorder to limit market risk generated by this exposure by executing a hedging strategy consisting of propane swaps, since propane is the primary component of LPG. However, from July to December 2012, Pemex-Gas and Basic Petrochemicals mitigated the market risk of 50% of the volume of LPG sold domestically through propane swaps. During 2013, Pemex-Gas and Basic Petrochemicals did not enter into any DFIs of this type.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.
PEMEX holds a synthetic long position on 67,969,767 shares of Repsol, with the objective of maintaining corporate rights over these shares. This is accomplished by using three total return swaps under which PEMEX
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
paysiv. 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 receivesreceived a total return on the Repsol shares. Under these DFIs, PEMEX iswas entitled to any capital gains associated with the Repsol shares and agreesagreed 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.
These DFIs will mature between March and October On June 3, 2014, PEMEX made an early termination of 2014. As of December 31, 2013 and 2012, the market value of Repsol shares was €18.320 and €15.335 per share, respectively.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 affiliatesubsidiary PMI HBV. In order to protect thatthis investment, PMI HBV entered into a structured product consisting of long put, short call and long call options maturingwith maturities in 2012, 2013 and 2014. The exposure to the exchange rate exposure associated with its financing of the shares financing was hedged with euro-dollarcovered by euro exchange rate forwards maturing in 2012, 2013 and 2014. The exchange rate forwards that maturedAll corresponding DFIs expired in 2012, 2013 and 2013 correspond2014, 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 38,136,160 shares; hence, DFIs related to 19,068,080 shares remain outstanding. Notwithstanding their executionthe share price of Repsol, for hedgingaccounting purposes, these DFIs do not qualify as hedges and were not recorded as hedgestrading instruments in the financial statements.
As of December 31, 2016, PMI HBV owned 22,221,893 Repsol shares and HPE holds one for accounting purposes.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, 2013,2016, the VaR of PEMEX’s investment portfolios werewas Ps. (35.6)(461.6) for the Peso Treasury Portfolio, Ps. (215.5)(38.6) for theFondo Laboral PemexPortfolio (“FOLAPE”), Ps. (53.1)(15.5) for theFideicomiso de Cobertura Laboral y de ViviendaPortfolio (“FICOLAVI”), and U.S. $0 for the U.S. Dollar Treasury Portfolio.
In addition to the exposure to interest rate fluctuations of the DFIs in which PEMEX is obligated to pay floating rates, PEMEX’s DFIs are exposed to mark-to-marketMtM 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 one10 basis pointpoints (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.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
Interest RateINTEREST RATE and CurrencyCURRENCY DFIs
Interest Rate Sensitivity to + 1 bp | ||||||||||||||||||||||||||||||||
Interbank Curves | PEMEX Curves | |||||||||||||||||||||||||||||||
Interest rate sensitivity to + 10 bp | Interest rate sensitivity to + 10 bp | |||||||||||||||||||||||||||||||
Sensitivity | Sensitivity | Sensitivity | Sensitivity | Interbank Yield Curves | ||||||||||||||||||||||||||||
Currency | Debt | DFIs | Net | Debt | Sensitivity debt | Sensitivity DFIs | Sensitivity net | PEMEX Curves Sensitivity debt | ||||||||||||||||||||||||
AUD | 44,933 | (44,933 | ) | — | 43,470 | 36,676 | (36,676 | ) | 0 | 36,319 | ||||||||||||||||||||||
CHF | 236,092 | (236,092 | ) | — | 219,785 | 4,446,080 | (4,446,080 | ) | 0 | 4,032,264 | ||||||||||||||||||||||
Euro | 3,849,186 | (3,849,183 | ) | 3 | 3,400,944 | 67,026,628 | (67,026,628 | ) | 0 | 49,162,441 | ||||||||||||||||||||||
Pound sterling | 555,118 | (555,118 | ) | — | 482,441 | |||||||||||||||||||||||||||
Pound Sterling | 2,869,215 | (2,869,215 | ) | 0 | 2,462,337 | |||||||||||||||||||||||||||
Yen | 365,219 | (365,219 | ) | — | 360,903 | 9,642,639 | (4,653,708 | ) | 4,988,931 | 6,741,888 | ||||||||||||||||||||||
Peso | 2,840,130 | 600,717 | 3,440,847 | 2,740,304 | 47,171,321 | 3,096,961 | 50,268,282 | 40,695,583 | ||||||||||||||||||||||||
UDI | 1,339,741 | (1,339,741 | ) | — | 1,275,372 | 17,737,545 | (10,382,347 | ) | 7,355,198 | 14,291,786 | ||||||||||||||||||||||
U.S. dollar | 30,250,919 | 4,679,272 | 34,930,191 | 21,161,349 | 729,563,673 | 75,281,102 | 804,844,774 | 352,524,570 | ||||||||||||||||||||||||
Amounts in U.S. dollars | 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, 2013, 20122016, 2015 and 2011,2014, in which itPEMEX assumed either an increase or decrease of 25 basis points in the floating interest rates of its debt and corresponding hedges.
At December 31, 2013, 20122016, 2015 and 2011,2014, had market interest rates been 25 basis points higher, with all other variables remaining constant, net income for the periodyear would have been Ps. 4,993,915,841,024, Ps. 5,319,309922,268 and Ps. 6,040,6357,297,773 lower for December 31, 2013, 20122016, 2015 and 2011,2014, respectively, mainlyprimarily as a result of an increase in interest expense. Conversely, had market interest rates been 25 basis points lower, net income for the periodyear would have been Ps. 4,993,915,841,024, Ps. 5,319,309922,268 and Ps. 6,040,6357,297,773 greater at December 31, 2013, 20122016, 2015 and 2011,2014, 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, of currency DFIs, 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 theits debt portfolio, PEMEX periodically conducts quantitative analyses in order to estimate the exchange rate risk exposure generated by its debt issuances. Based on these analyses, PEMEX has elected to enter into DFIs as an exchange rate risk mitigation strategy.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
Interest RateINTEREST RATE and CurrencyCURRENCY DFIs
Interbank Yield Curves | PEMEX Curves | |||||||||||||||||||||||||||||||||||||||
1% | 1% | 1% | VaR 95% | 1% | Interbank Yield Curves | PEMEX Curves 1% Debt | ||||||||||||||||||||||||||||||||||
Currency | Debt | DFI | Net | Net | Debt | 1% Debt | 1% DFIs | 1% Net | VaR 95% Net | |||||||||||||||||||||||||||||||
AUD | (1,501,518 | ) | 1,501,518 | — | — | (1,461,764 | ) | (1,139,617 | ) | 1,139,617 | 0 | 0 | (1,135,496 | ) | ||||||||||||||||||||||||||
CHF | (9,596,046 | ) | 9,596,046 | — | — | (9,293,359 | ) | (13,757,737 | ) | 13,757,737 | 0 | 0 | (12,809,496 | ) | ||||||||||||||||||||||||||
Euro | (72,456,392 | ) | 72,455,953 | (439 | ) | (299 | ) | (67,313,083 | ) | (126,172,455 | ) | 126,172,455 | 0 | 0 | (104,578,013 | ) | ||||||||||||||||||||||||
Pound sterling | (8,536,371 | ) | 8,536,371 | — | — | (7,662,961 | ) | |||||||||||||||||||||||||||||||||
Pound Sterling | (6,219,613 | ) | 6,219,613 | 0 | 0 | (5,503,942 | ) | |||||||||||||||||||||||||||||||||
Yen | (14,582,598 | ) | 14,582,598 | — | — | (13,851,766 | ) | (17,156,740 | ) | 11,818,964 | (5,337,775 | ) | (6,091,892 | ) | (13,725,191 | ) | ||||||||||||||||||||||||
Peso | (91,513,213 | ) | (19,352,163 | ) | (110,865,376 | ) | (122,377,944 | ) | 18,993,494 | (161,626,313 | ) | (21,079,370 | ) | (182,705,683 | ) | (234,335,192 | ) | (153,507,202 | ) | |||||||||||||||||||||
UDI | (19,903,106 | ) | 19,903,106 | — | — | (19,344,143 | ) | (27,466,689 | ) | 20,246,729 | (7,219,960 | ) | (9,526,703 | ) | (24,588,646 | ) | ||||||||||||||||||||||||
Amounts in U.S. dollars |
Amounts in U.S. dollars
As shown in the table above, DFIs mitigate 100% of the exchange rate risk derived from debt.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, 2013, 20122016, 2015 and 2011,2014, in which itPEMEX assumed either an increase or decrease of 10% in the exchange rate between the U.S. dollar and peso in order to determine the impact on net income and equity as a result of applying these new rates to the monthly balances of assets and liabilities denominated in U.S. dollars.
At December 31, 2013, 20122016, 2015 and 2011,2014, had the peso depreciated against the U.S. dollar by 10% with other variables remaining constant, net income would have been Ps. 55,137,410, Ps. 59,026,725Ps.124,512,400, Ps.105,915,340 and Ps. 50,298,52070,280,300 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. 55,137,410, Ps. 59,026,725Ps.124,512,400, Ps.105,915,340 and Ps. 50,298,520,70,280,300, 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
Equity DFIs do not generate additional risk exposure to that arising from the shares. These sharesShares 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 a period of one year,500 observations, of Repsol’s share price in euros converted to U.S. dollars. In addition, the mark-to-market sensitivity to an increase of 1% in the euro/U.S. dollar exchange rate is provided for informational purposes. These metrics are not considered for portfolio management purposes because the investment in shares of Repsol has a strategic,non-financial purpose.
EQUITY DFIs | ||||||||||||||||||||||||||||||||
Equity Risk | FX Risk | |||||||||||||||||||||||||||||||
Equity DFIs | ||||||||||||||||||||||||||||||||
Currency | Shares | Shares Value | VaR EQ | 1% | Shares | Equity risk Shares value | VaR EQ | FX risk 1% | ||||||||||||||||||||||||
Euro | 67,969,767 | 1,711,286,786 | (41,745,882 | ) | 17,087,994 | 22,221,894 | 313,635,679 | (11,539,301 | ) | 3,136,357 | ||||||||||||||||||||||
Amounts in U.S. dollars | Amounts in U.S. dollars |
Hydrocarbon price risk quantification
Pemex-Gas and Basic PetrochemicalsPemex 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, 2013, Pemex-Gas and Basic Petrochemicals2016, Pemex Industrial Transformation’s natural gas DFI portfolio had no market risk exposure.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
Market risk exposure is measured using the20-day Delta-Gamma VaR methodology, with a confidence level of 95%, based on 500 daily observations; VaR and Capital at Risk (CaR)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 the short term,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-mitigationrisk mitigation mechanisms as necessary.
PMI Trading’s global VaR associated with commodities market risk was Ps. 248.7U.S. $(23,198) as of December 31, 2013.2016. This VaR was calculated using the historical method with a 99% confidence level,two-year history and aone-day horizon. Similarly, PMI NASA is exposed to market risk associated with inventories of feedstocksThe minimum VaR recorded on the year was U.S. $(4,145) (registered on February 16, 2016) and refined products, as well as with the purchase of crude oil for processing atmaximum VaR recorded on the Deer Park refinery in a proportion equal to its shares in the refinery. This VaRyear was Ps. 154.2 asU.S. $(23,198) (registered on December 30, 2016). As of December 31, 2013. These values were calculated with a 99% confidence level and a one-day horizon.2015, the global VaR was US $(12,789).
Credit Risk
II. | Credit Risk |
When the fair value of DFIsa DFI is favorable to PEMEX, PEMEX faces the risk that counterpartiesthe counterparty will not be able to meet theirits obligations. To reduce this risk, PEMEX monitors theits counterparties’ creditworthiness of its counterparties and calculates the credit risk exposure for its DFIs. In addition,As a risk mitigation strategy, PEMEX only enters into DFIs mostly with major financial institutions with a minimum credit rating ofBBB-. These ratings are issued and revised periodically by risk rating agencies. Furthermore, PEMEX maintainsseeks 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 mark-to-marketMtM 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 sevenfive 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 2012 and four cross-currency swaps during 2013. These swaps2015, which were used to hedge the exchange rate exposure to the euro and the Pound sterling.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 mark-to-marketMtM value of a DFIDFIs 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)(“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 addition, in order to estimatedetermining the credit exposure torisk, 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 financialpayment 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 potential future exposure was calculated by projecting the risk factors used in the valuationdefault recovery rates of each DFI in order to calculate the mark-to-market for different periods, taking into account anycounterparty.
The current and potential exposures, aggregated by credit risk mitigation provisions.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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
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+ | 42 | 79 | 120 | 153 | 161 | 108 | 0 | |||||||||||||||||||||
A | 115 | 356 | 327 | 86 | 42 | 42 | 0 | |||||||||||||||||||||
A- | 168 | 427 | 608 | 72 | 73 | 71 | 64 | |||||||||||||||||||||
BBB+ | 96 | 198 | 313 | 301 | 359 | 0 | 0 | |||||||||||||||||||||
BBB | 74 | 321 | 201 | 256 | 145 | 77 | 25 | |||||||||||||||||||||
BBB- | 39 | 366 | 728 | 1,043 | 1,154 | 307 | 385 | |||||||||||||||||||||
In millions of U.S. dollars |
|
Moreover, PEMEX also faces credit risk derived from its investments. As of December 31, 2013,2016, the notional amounts of investments in domestic currency, according to issuanceorganized by the credit ratings areof the issuances, were as follows:
Credit
| Notional amount (In millions of pesos) | ||||||
mxAAA | |||||||
mxAA | 250.35 | ||||||
mxA | |||||||
| |||||||
| |||||||
| |||||||
*Minimum S&P, Moody’s and Fitch credit rating. | |||||||
| |||||||
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.
As of December 31, 2013, PEMEX held an investment in a note linked to Mexico’sUnited Mexican States’ credit risk that was issued by a U.S. financial institution with a BBBBBB+ credit rating. This note maturesmatured in June 2016 and hashad a face value of U.S. $108,000. As of December 31, 2016, PEMEX periodically monitors the issuer’s credit rating, as well as the credit rating of the underlying assets,does not hold an investment in order to quantify its exposure to the note’s embedded credit risk.structured notes.
Furthermore, by means of its credit guidelines for DFI operations, Pemex-Gas and Basic PetrochemicalsPemex 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 prices.gas.
In order to qualify for these DFIs, Pemex-Gas and Basic Petrochemicals’Pemex Industrial Transformation’s customers must be party to a current natural gas supply contract and sign a domestic master derivative agreement. Since
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. As of December 31, 2013, Pemex-Gas and Basic Petrochemicals had a number of outstanding DFIs contracted before October 2, 2009 in which customers are not required
On August 20, 2014, certain amendments to post collateral, the last of which matures in March 2014. The Board of Directors of Pemex-Gas and Basic Petrochemicals approves 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 entering into DFIs with Pemex-Gasthis client are terminated early and Basic Petrochemicals.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
natural gas supply is suspended until the payment is made.
As of December 31, 2013,2016, 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-Gas and Basic Petrochemicals.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, 2013, Pemex-Gas and Basic Petrochemicals2016, Pemex Industrial Transformation had open DFIs with 3311 customers, of which 2610 are industrial customers (79%), 6 are distributors (18%(91%) and one customer is both an industrial customer and a distributor (3%(9%). Of the total volume (in millions of British thermal units or MMBtu) of DFIs, traded in 2013, industrial customers represented 50.4%77%, while distributorsand customers who are both industrial and distributor customers represented 46.4%. The customer belonging to both categories represented 3.2%23%.
As of December 31, 20132016 and 2012, Pemex-Gas and Basic Petrochemicals, through its subsidiary MGI Supply, Ltd.,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 MGIMex Gas Supply, Ltd.S.L.’s DFI portfolio was calculated in aan analogous manner analogous 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-Gas and Basic Petrochemicals | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maximum Credit Exposure by term in Pemex Industrial Transformation | 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 | Current | Less than 1 year | 1-3 years | 3-5 years | 5-7 years | 7-10 years | More than 10 years | ||||||||||||||||||||||||||||||||||||||||||
A | 1.6 | 1.3 | 0.2 | 0.0 | 0.0 | 0.0 | 0.0 | 0.68 | 0.68 | 0.27 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
A- | 0.4 | 0.5 | 0.5 | 0.0 | 0.0 | 0.0 | 0.0 | 2.95 | 2.95 | 2.47 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
BBB+ | 0.0 | 0.1 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 1.16 | 1.16 | 0.34 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
In millions of U.S. dollars | In millions of U.S. dollars |
| 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.
PMI HBV’s credit risk associated with DFI transactions is related to the financing that it obtains from the same DFI counterparties. PMI HBV’s debt balance with such counterparties is greater than the DFIs’ mark-to-market value.
Liquidity Risk
III. | Liquidity Risk |
Through its debt planning and the purchase and sale of U.S. dollar selling operations,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.
In addition, PEMEX has acquired three committed revolving credit lines in order to mitigate liquidity risk, onetwo of which providesprovide access to Ps. 10,000,0003,500,000 and Ps. 20,000,000 with an expiration date of December 2015,dates in June and November 2019, respectively; and two others that each provides access to U.S. $1,250,000$1,500,000 and U.S. $3,250,000 with expiration dates in December 20162019 and October 2017,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.
TheCertain PMI Group mitigates thesubsidiaries mitigate their liquidity risk within its companies through several mechanisms, the most important of which is the centralized treasury or“in-house bank,,” which provides access to a syndicated credit 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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
line for up to U.S. $700,000, as well as to the additional cash in custody. In addition, theThese companies in the PMI Group have access to bilateral credit lines from financial institutions for up to U.S. $250,000.
The companies in the PMI Group monitor their cash flow on a daily basis and protect their creditworthiness in the financial markets. Liquidity risk is mitigated by monitoring the maximum/minimum permissible financial ratios as set forth in the policies approved by each company’s Boardboard of Directors.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, 20132016 and 2012.2015. It should be noted that:
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Quantitative Disclosure of Debt Cash Flows’Flow’s Maturities as of December 31, 20132016(1)(2)
Year of Expected Maturity Date | Total Carrying Value | Fair Value | Year of expected maturity date | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2014 | 2015 | 2016 | 2017 | 2018 | 2019 Thereafter | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 thereafter | Total carrying value | Fair value | |||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding debt | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed rate (U.S. dollars) | 18,827,853 | 30,599,245 | 8,012,990 | 7,282,939 | 54,091,020 | 304,856,256 | 423,670,303 | 447,282,809 | 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 (%) | — | — | — | — | — | — | 5.4470 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average interest rate (%) | 5.6541 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed rate (Japanese yen) | 1,128,140 | 1,128,140 | 726,869 | 363,422 | — | 3,735,000 | 7,081,571 | 7,714,998 | 517,286 | — | — | — | — | 19,459,306 | 19,976,592 | 17,336,203 | ||||||||||||||||||||||||||||||||||||||||||||||||
Average Interest Rate (%) | — | — | — | — | — | — | 2.9070 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average interest rate (%) | 1.3665 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed rate (Pounds) | — | — | — | — | — | 7,528,128 | 7,528,128 | 10,022,857 | — | — | — | — | — | 8,825,434 | 8,825,434 | 11,373,345 | ||||||||||||||||||||||||||||||||||||||||||||||||
Average Interest Rate (%) | — | — | — | — | — | — | 8.2500 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average interest rate (%) | 8.2500 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed rate (pesos) | — | 9,500,000 | 7,498,990 | — | — | 51,230,219 | 68,229,209 | 72,738,704 | — | — | — | 10,048,950 | 20,457,671 | 90,393,507 | 120,900,128 | 160,930,040 | ||||||||||||||||||||||||||||||||||||||||||||||||
Average Interest Rate (%) | — | — | — | — | — | — | 8.1873 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average interest rate (%) | 7.4878 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed rate (UDIs) | — | — | — | — | — | 26,746,411 | 26,746,411 | 25,295,383 | — | — | 17,319,897 | 4,464,787 | 3,630,557 | 28,288,180 | 53,703,421 | 50,809,979 | ||||||||||||||||||||||||||||||||||||||||||||||||
Average Interest Rate (%) | — | — | — | — | — | — | 3.6143 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average interest rate (%) | 4.0559 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed rate (euros) | 500 | 46 | 15,316,513 | 21,511,809 | — | 41,245,103 | 78,073,971 | 88,219,672 | 26,006,880 | — | 29,198,138 | 28,061,554 | — | 123,886,644 | 207,153,216 | 216,100,006 | ||||||||||||||||||||||||||||||||||||||||||||||||
Average Interest Rate (%) | — | — | — | — | — | — | 4.9780 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average interest rate (%) | 3.9581 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed rate (Swiss Francs) | 7,352,900 | — | — | — | — | 4,403,283 | 11,756,183 | 12,200,636 | — | 4,539,022 | 6,056,338 | 12,102,748 | 3,031,480 | — | 25,729,588 | 26,469,543 | ||||||||||||||||||||||||||||||||||||||||||||||||
Average Interest Rate (%) | — | — | — | — | — | — | 3.1255 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average interest rate (%) | 1.8385 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed rate (Australian dollars) | — | — | — | 1,747,544 | — | — | 1,747,544 | 1,917,297 | 2,232,195 | — | — | — | — | — | 2,232,195 | 2,346,390 | ||||||||||||||||||||||||||||||||||||||||||||||||
Average Interest Rate (%) | — | — | — | — | — | — | 6.1250 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average interest rate (%) | — | — | — | — | — | — | 6.1250 | % | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
Total fixed rate debt | 27,309,393 | 41,227,431 | 31,555,362 | 30,905,714 | 54,091,020 | 439,744,400 | 624,833,320 | 665,392,357 | 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) | 25,497,804 | 14,778,763 | 38,952,740 | 12,424,670 | 13,994,202 | 15,177,965 | 120,826,144 | 123,407,193 | 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) | 2,608,275 | — | — | — | — | 7,968,000 | 10,576,275 | 10,995,410 | — | — | — | 11,341,440 | — | — | 11,341,440 | 11,025,531 | ||||||||||||||||||||||||||||||||||||||||||||||||
Variable rate (euros) | 4,779,803 | — | — | — | — | — | 4,779,803 | 5,041,659 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Variable rate (pesos) | 20,666,667 | 9,118,368 | 11,094,119 | 23,442,426 | — | 6,088,290 | 70,409,870 | 71,159,977 | 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 | 53,552,549 | 23,897,131 | 50,046,859 | 35,867,096 | 13,994,202 | 29,234,255 | 206,592,092 | 210,604,238 | 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 | 80,861,942 | 65,124,562 | 81,602,221 | 66,772,810 | 68,085,222 | 468,978,655 | 831,425,412 | 875,996,595 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, |
Source: PEMEX
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, exceptFIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Quantitative Disclosure of Debt Cash Flow’s Maturities as noted)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 Flows’Flow’s Maturities from Derivative Financial Instruments
Held or Issued for Purposes Other than Trading as of December 31, 20132016(1)(2)
Year of Expected Maturity Date | Total Notional Amount | Fair Value(3) | ||||||||||||||||||||||||||||||
2014 | 2015 | 2016 | 2017 | 2018 | Thereafter | |||||||||||||||||||||||||||
Hedging Instruments(2)(4) | ||||||||||||||||||||||||||||||||
Interest Rate DFIs | ||||||||||||||||||||||||||||||||
Interest Rate Swaps (U.S. dollars) | ||||||||||||||||||||||||||||||||
Variable to Fixed | 903,252 | 1,155,684 | 1,163,103 | 1,171,060 | 1,179,378 | 5,907,161 | 11,479,638 | 36,019 | ||||||||||||||||||||||||
Average pay rate | 4.31 | % | 3.80 | % | 3.88 | % | 3.96 | % | 4.04 | % | 3.51 | % | n.a. | n.a. | ||||||||||||||||||
Average receive rate | 1.66 | % | 1.46 | % | 2.64 | % | 4.17 | % | 5.36 | % | 6.03 | % | 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 | — | — | 13,449,180 | 22,464,185 | — | 41,205,171 | 77,118,535 | 1,153,442 | ||||||||||||||||||||||||
Receive Japanese yen/Pay U.S. dollars | 3,691,887 | 1,076,589 | 674,237 | 337,110 | — | 14,355,308 | 20,135,132 | (3,016,981 | ) | |||||||||||||||||||||||
Receive Pounds sterling/Pay U.S. dollars | — | — | — | — | — | 8,322,630 | 8,322,630 | 90,303 | ||||||||||||||||||||||||
Receive UDI/ Pay pesos | — | — | — | — | — | 26,174,756 | 26,174,756 | 434,082 | ||||||||||||||||||||||||
Receive Swiss francs/Pay U.S. dollars | 6,257,431 | — | — | — | — | 4,296,391 | 10,553,822 | 1,132,123 | ||||||||||||||||||||||||
Receive Australian dollars/Pay U.S. dollars | — | — | — | 2,032,873 | — | — | 2,032,873 | (178,770 | ) | |||||||||||||||||||||||
Exchange Rate Forward | ||||||||||||||||||||||||||||||||
Receive euros/Pay U.S. dollars | 4,800,666 | — | — | — | — | — | 4,800,666 | 158,144 | ||||||||||||||||||||||||
(in thousands of shares) | (nominal pesos) | |||||||||||||||||||||||||||||||
Equity DFIs | ||||||||||||||||||||||||||||||||
Equity Options on Repsol shares | 19,068 | — | — | — | — | — | 19,068 | 101,458 | ||||||||||||||||||||||||
Non-Hedging Instruments | ||||||||||||||||||||||||||||||||
Equity DFIs | ||||||||||||||||||||||||||||||||
Equity Swaps on Repsol shares | 67,970 | — | — | — | — | — | 67,970 | 545,379 |
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 |
(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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)
Quantitative Disclosure of Debt Cash Flows’ Maturities as of December 31, 2012(1)
Year of Expected Maturity Date | Total Carrying Value | Fair Value | ||||||||||||||||||||||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | Thereafter | |||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Outstanding debt | ||||||||||||||||||||||||||||||||
Fixed rate (U.S. dollars) | 18,065,918 | 10,739,796 | 29,100,931 | 6,657,348 | 5,916,768 | 289,010,070 | 359,490,832 | 409,508,428 | ||||||||||||||||||||||||
Average Interest Rate (%) | — | — | — | — | — | — | 5.5065 | % | — | |||||||||||||||||||||||
Fixed rate (Japanese yen) | 1,365,548 | 1,365,548 | 1,365,548 | 879,832 | 439,902 | 4,521,000 | 9,937,376 | 10,025,412 | ||||||||||||||||||||||||
Average Interest Rate (%) | — | — | — | — | — | — | 2.8298 | % | — | |||||||||||||||||||||||
Fixed rate (Pounds sterling) | 8,456,040 | — | — | — | — | 7,341,929 | 15,797,969 | 18,975,682 | ||||||||||||||||||||||||
Average Interest Rate (%) | — | — | — | — | — | — | 7.8500 | % | — | |||||||||||||||||||||||
Fixed rate (pesos) | 2,600,000 | — | 9,500,000 | 7,498,540 | — | 32,825,083 | 52,423,623 | 53,759,282 | ||||||||||||||||||||||||
Average Interest Rate (%) | — | — | — | — | — | — | 8.1325 | % | — | |||||||||||||||||||||||
Fixed rate (UDIs) | — | — | — | — | — | 25,769,564 | 25,769,564 | 21,955,725 | ||||||||||||||||||||||||
Average Interest Rate (%) | — | — | — | — | — | — | 6.8183 | % | — | |||||||||||||||||||||||
Fixed rate (euros) | 8,599,310 | 477 | 44 | 14,617,302 | 20,498,240 | 17,196,800 | 60,912,174 | 70,308,401 | ||||||||||||||||||||||||
Average Interest Rate (%) | — | — | — | — | — | — | 5.8315 | % | — | |||||||||||||||||||||||
Fixed rate (Swiss francs) | — | 7,122,574 | — | — | — | 4,264,960 | 11,387,534 | 11,792,235 | ||||||||||||||||||||||||
Average Interest Rate (%) | — | — | — | — | — | — | 3.1255 | % | — | |||||||||||||||||||||||
Fixed rate (Australian dollars) | — | — | — | — | 2,015,893 | — | 2,015,893 | 2,195,044 | ||||||||||||||||||||||||
Average Interest Rate (%) | — | — | — | — | — | — | 6.1250 | % | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total fixed rate debt | 39,086,816 | 19,228,395 | 39,966,523 | 29,653,022 | 28,870,803 | 380,929,406 | 537,734,965 | 598,520,209 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Variable rate (U.S. dollars) | 47,754,190 | 18,915,934 | 12,810,116 | 37,632,511 | 11,376,909 | 16,463,678 | 144,953,337 | 142,226,642 | ||||||||||||||||||||||||
Variable rate (Japanese yen) | — | 3,157,165 | — | — | — | 9,644,800 | 12,801,965 | 11,718,065 | ||||||||||||||||||||||||
Variable rate (euros) | 4,581,525 | 4,581,525 | — | — | — | — | 9,163,050 | 9,852,056 | ||||||||||||||||||||||||
Variable rate (pesos) | 13,820,733 | 20,658,367 | 9,115,190 | 11,142,846 | 18,470,405 | — | 73,207,542 | 71,861,151 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total variable rate debt | 66,156,448 | 47,312,992 | 21,925,306 | 48,775,357 | 29,847,314 | 26,108,478 | 240,125,894 | 235,657,914 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total debt | 105,243,264 | 66,541,386 | 61,891,829 | 78,428,379 | 58,718,117 | 407,037,884 | 777,860,859 | 834,178,124 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Quantitative Disclosure of Cash Flows’Flow’s Maturities from Derivative Financial Instruments
Held or Issued for Purposes Other than Trading as of December 31, 20122015(1)(2)
Year of Expected Maturity Date | Total Notional Amount | Fair Value(4) | ||||||||||||||||||||||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | Thereafter | |||||||||||||||||||||||||||
Hedging Instruments(2)(3) | ||||||||||||||||||||||||||||||||
Interest Rate DFIs | ||||||||||||||||||||||||||||||||
Interest Rate Swaps (U.S. dollars) | ||||||||||||||||||||||||||||||||
Variable to Fixed | 86,064 | 90,117 | 94,348 | 98,557 | 103,310 | 430,350 | 902,745 | (81,142 | ) | |||||||||||||||||||||||
Average pay rate | 4.53 | % | 4.53 | % | 4.52 | % | 4.52 | % | 4.51 | % | 4.44 | % | n.a. | n.a. | ||||||||||||||||||
Average receive rate | 1.76 | % | 1.86 | % | 2.10 | % | 2.56 | % | 3.07 | % | 3.95 | % | n.a. | n.a. | ||||||||||||||||||
Interest Rate Swaps (pesos) | ||||||||||||||||||||||||||||||||
Variable to Fixed | 7,500,000 | — | — | — | — | — | 7,500,000 | (252,778 | ) | |||||||||||||||||||||||
Average pay rate | 11.485 | % | — | — | — | — | — | n.a. | n.a. | |||||||||||||||||||||||
Average receive rate | 4.787 | % | — | — | — | — | — | n.a. | n.a. | |||||||||||||||||||||||
Currency DFIs | ||||||||||||||||||||||||||||||||
Cross Currency Swaps | ||||||||||||||||||||||||||||||||
Receive euros/Pay U.S. dollars | 8,443,555 | — | — | 13,380,888 | 22,350,116 | 16,226,808 | 60,401,367 | 52,516 | ||||||||||||||||||||||||
Receive Japanese yen/Pay U.S. dollars | 1,071,123 | 3,673,141 | 1,071,123 | 670,813 | 335,398 | 14,282,414 | 21,104,012 | 662,872 | ||||||||||||||||||||||||
Receive Pounds sterling/Pay U.S. dollars | 8,880,564 | — | — | — | — | 8,460,559 | 17,341,123 | 98,085 | ||||||||||||||||||||||||
Receive UDI/Pay pesos | — | — | — | — | — | 21,935,663 | 21,935,663 | 1,367,252 | ||||||||||||||||||||||||
Receive Swiss francs/Pay U.S. dollars | — | 6,225,657 | — | — | — | 4,274,575 | 10,500,232 | 803,148 | ||||||||||||||||||||||||
Receive Australian dollars/Pay U.S. dollars | — | — | — | — | 2,022,550 | — | 2,022,550 | 132,749 | ||||||||||||||||||||||||
Exchange Rate Forward | ||||||||||||||||||||||||||||||||
Receive euros/Pay U.S. dollars | 7,181,512 | 4,581,512 | — | — | — | — | 11,763,024 | (41,795 | ) | |||||||||||||||||||||||
(in thousands of shares) | (nominal pesos) | |||||||||||||||||||||||||||||||
Equity DFIs | �� | |||||||||||||||||||||||||||||||
Equity Options on Repsol shares | 19,070 | 19,070 | — | — | — | — | 38,140 | 1,433,769 | ||||||||||||||||||||||||
Non-Hedging Instruments | ||||||||||||||||||||||||||||||||
Equity DFIs | ||||||||||||||||||||||||||||||||
Equity Swaps on Repsol shares | 58,680 | — | — | — | — | — | 58,680 | (2,030,668 | ) |
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, |
(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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Fair |
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 DFIDFIs 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 methodsapproximations for their valuation.
The options contained in PMI HBV’s DFI portfolio are European-style, consisting of plain vanilla calls or puts, and/or are valued internally based on the traditional Black-Scholes model or certain variations thereof.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, 2013, 20122016 and 2011,2015, PEMEX did not recognize any foreignembedded derivatives (foreign currency embedded derivatives.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 strict requirements of IAS 39, “Financial Instruments Recognition and Measurement” (“IAS 39”)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 financing cost.“Derivative financial instruments (cost) income, net” line item in the consolidated statement of comprehensive income.
As of December 31, 20132016 and 2012,2015, 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. 457,158(26,010,486) and Ps. 2,173,692,(25,699,581), respectively. As of December 31, 2013,2016 and 2012,2015, 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, 20132016 and 2012.2015. It should be noted that:
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
December 31, 2013 | December 31, 2012 | |||||||||||||||||
DFI | Position | Notional Amount | Fair Value | Notional Amount | Fair Value | |||||||||||||
Equity Swaps | PEMEX pays floating in U.S. dollar and receives total return on Repsol shares. | 21,751,402 | 545,379 | 17,414,977 | (2,030,668 | ) | ||||||||||||
Interest Rate Swaps | PEMEX pays fixed in peso and receives the PIP 182 day rate. | — | — | 7,500,000 | (252,778 | ) | ||||||||||||
Cross-Currency Swaps | PEMEX pays fixed in U.S. dollar and receives floating in 3-month U.S. dollar LIBOR + spread. | 9,807,375 | 100,454 | — | — | |||||||||||||
Cross-Currency Swaps | PEMEX pays fixed in pesos and receives notional in UDI. | 16,105,371 | (195,500 | ) | 15,395,443 | 29,415 | ||||||||||||
Cross-Currency Swaps | PEMEX pays the 28-day TIIE + spread in pesos and receives fixed in UDI. | 10,069,385 | 629,582 | 6,540,220 | 1,337,837 | |||||||||||||
Cross-Currency Swaps | PEMEX pays fixed in U.S. dollar and receives fixed in Japanese yen. | 6,320,558 | 3,519 | 7,359,585 | 1,355,238 | |||||||||||||
Cross-Currency Swaps | PEMEX pays floating in 3-month U.S. dollar LIBOR + spread and receives floating in 3-month yen LIBOR + spread. | 2,615,300 | (14,337 | ) | 2,602,020 | 559,122 | ||||||||||||
Cross-Currency Swaps | PEMEX pays floating in 6-month U.S. dollar LIBOR + spread and receives floating in 6-month yen LIBOR + spread. | 11,199,274 | (3,006,164 | ) | 11,142,406 | (1,251,488 | ) | |||||||||||
Cross-Currency Swaps | PEMEX pays fixed in U.S. dollar and receives fixed in euro. | 77,118,535 | 1,153,442 | 60,401,367 | 52,516 | |||||||||||||
Cross-Currency Swaps | PEMEX pays fixed in U.S. dollar and receives fixed in Pound sterling. | — | — | 8,880,564 | (403,796 | ) | ||||||||||||
Cross-Currency Swaps | PEMEX pays floating in 6-month U.S. dollar LIBOR + spread and receives fixed in Pound sterling. | 8,322,630 | 90,303 | 8,460,559 | 501,881 | |||||||||||||
Cross-Currency Swaps | PEMEX pays fixed in U.S. dollar and receives fixed in CHF. | 10,553,822 | 1,132,123 | 10,500,232 | 803,148 | |||||||||||||
Cross-Currency Swaps | PEMEX pays fixed in U.S. dollar and receives fixed in AUD. | 2,032,873 | (178,770 | ) | 2,022,550 | 132,749 | ||||||||||||
Natural Gas Swaps | PEMEX Receives fixed | (97,301 | ) | 5,731 | (505,595 | ) | 159,110 | |||||||||||
Natural Gas Swaps | PEMEX Receives floating | 95,493 | (3,965 | ) | 498,239 | (153,745 | ) | |||||||||||
Natural Gas Options | PEMEX Long Call | 415,243 | 23,928 | 374,048 | 13,979 | |||||||||||||
Natural Gas Options | PEMEX Short Call | (415,380 | ) | (23,755 | ) | (374,461 | ) | (13,733 | ) | |||||||||
Interest Rate Swaps | PEMEX pays fixed in U.S. dollar and receives floating in U.S. dollar LIBOR 1M. | 1,672,263 | (64,435 | ) | 902,745 | (81,142 | ) | |||||||||||
Exchange Rate Forward | PEMEX pays fixed in U.S. dollar and receives fixed in euro. | 4,800,666 | 158,144 | 11,765,925 | (41,795 | ) | ||||||||||||
Stock Options | PEMEX Long Put, Short Call and Long Call. | | 19,068,080 shares | | 101,458 | | 38,140,000 shares | | 1,433,769 | |||||||||
|
|
|
|
|
|
|
| |||||||||||
Subtotal | — | 457,138 | — | 2,149,619 | ||||||||||||||
|
|
|
|
|
|
|
|
Note: Numbers may not total due to rounding.
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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
December 31, 2013 | December 31, 2012 | December 31, 2016 | December 31, 2015 | |||||||||||||||||||||||||||||||||||||
DFI | Market | Volume (MMb) | Fair Value | Volume (MMb) | Fair Value | Market | Volume (MMb) | Fair value | Volume (MMb) | Fair value | ||||||||||||||||||||||||||||||
Futures | Exchange traded | — | $ | — | 0.4 | $ | (7,994 | ) | ||||||||||||||||||||||||||||||||
Petroleum Products Swaps | Exchange Traded | (3.95 | ) | (58,229 | )(1) | (1.8 | ) | 24,073 | Exchange traded | 4.1 | $ | (688,016 | ) | 11.6 | $ | 550,952 | ||||||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||||||||||||||
Subtotal | (58,229 | ) | 24,073 | |||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
Total | 398,910 | 2,173,692 | ||||||||||||||||||||||||||||||||||||||
|
|
Note:Notes: Numbers may not total due to rounding.
(1) | The fair value of the Futures and the Petroleum Products Swaps, |
The exchange rate for U.S. dollars as of December 31, 20132016 and 20122015 was Ps. 13.076520.664 and Ps. 13.010117.2065 per U.S. dollar, respectively. The exchange rate for euros as of December 31, 20132016 and 20122015 was Ps. 18.019421.6724 and Ps. 17.196818.80843 per euro, respectively.
For the years ended December 31, 2013, 20122016, 2015 and 2011,2014, PEMEX recognized a net gain (loss)loss of Ps. 1,310,973, (Ps. 6,257,648)14,000,987, Ps. 21,449,877 and (Ps. 1,419,183),Ps. 9,438,570, respectively, in financing costthe “Derivative financial instruments (cost) income, net” line item with respect to DFIs treated as instruments entered into for trading purposes.
In addition, for the year ended December 31, 2011, PEMEX recognized a loss of Ps. 277,042, recorded in financing cost, corresponding to its embedded derivatives related to the Repsol shares it purchased in 2011.
The following table presents the location on the consolidated 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, 20132016 and 2012:2015:
Derivatives Assets | ||||||||||||
Location in Statement of Financial Position | Fair Value | |||||||||||
Derivatives not designated as hedging instruments | December 31, 2013 | December 31, 2012 | ||||||||||
Embedded Derivatives | Derivative financial instruments | Ps. | — | Ps. | — | |||||||
Forwards | Derivative financial instruments | 158,156 | — | |||||||||
Futures | Derivative financial instruments | — | — | |||||||||
Stock Options | Derivative financial instruments | 119,367 | 1,433,769 | |||||||||
Natural Gas Options | Derivative financial instruments | 23,930 | 13,979 | |||||||||
Equity Swaps | Derivative financial instruments | 991,346 | 31,762 | |||||||||
Cross-currency Swaps | Derivative financial instruments | 5,342,656 | 7,211,988 | |||||||||
Natural Gas Swaps | Derivative financial instruments | 5,731 | 159,110 | |||||||||
Petroleum Product Swaps | Derivative financial instruments | — | 80,908 | |||||||||
Propane Swaps | Derivative financial instruments | — | — | |||||||||
Interest Rate Swaps | Derivative financial instruments | 100,454 | — | |||||||||
Others | Derivative financial instruments | — | 118,637 | |||||||||
|
|
|
| |||||||||
Total Derivatives not designated as hedging instruments |
| 6,741,640 | 9,050,153 | |||||||||
|
|
|
| |||||||||
Total Assets |
| Ps. | 6,741,640 | Ps. | 9,050,153 | |||||||
|
|
|
|
Derivatives assets | ||||||||||
Derivatives not designated as | Location in statement of | 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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Derivatives Liabilities | ||||||||||||
Fair Value | ||||||||||||
Derivatives not designated as hedging instruments | Location in Statement of Financial Position | December 31, 2013 | December 31, 2012 | |||||||||
Embedded Derivatives | Derivative financial instruments | Ps. | — | Ps. | — | |||||||
Forwards | Derivative financial instruments | — | (41,795) | |||||||||
Futures | Derivative financial instruments | — | — | |||||||||
Stock Options | Derivative financial instruments | (17,901) | — | |||||||||
Natural Gas Options | Derivative financial instruments | (23,757) | (13,733) | |||||||||
Equity Swaps | Derivative financial instruments | (445,966) | (2,062,429) | |||||||||
Cross-currency Swaps | Derivative financial instruments | (5,728,458) | (4,095,366) | |||||||||
Natural Gas Swaps | Derivative financial instruments | (3,965) | (153,746) | |||||||||
Petroleum Product Swaps | Derivative financial instruments | — | (9,490) | |||||||||
Propane Swaps | Derivative financial instruments | — | — | |||||||||
Interest Rate Swaps | Derivative financial instruments | (64,435) | (333,919) | |||||||||
Others | Derivative financial instruments | — | (42,333) | |||||||||
|
|
|
| |||||||||
Total Derivatives not designated as hedging instruments |
| (6,284,482) | (6,752,811) | |||||||||
|
|
|
| |||||||||
Total Liabilities |
| Ps. | (6,284,482) | Ps. | (6,752,811) | |||||||
|
|
|
| |||||||||
Net Total |
| Ps. | 457,158 | Ps. | 2,297,342 | |||||||
|
|
|
|
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 tabletables presents the net gain (loss) recognized in income on PEMEX’s DFIs for the years ended December 31, 2013, 20122016, 2015 and 2011,2014, and the line location in the financial statementsconsolidated 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 | ||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||
Embedded Derivatives | Financing cost | Ps. | — | Ps. | — | Ps. | (277,042) | |||||||||
Forwards | Financing cost | 186,857 | (120,753) | (280,248) | ||||||||||||
Futures | Financing cost | (129,329) | (1,098,645) | (1,880,401) | ||||||||||||
Stock Options | Financing cost | (1,241,765) | 1,418,503 | (1,275,188) | ||||||||||||
Natural Gas Options | Financing cost | 3,587 | 6,402 | 31,451 | ||||||||||||
Equity Swaps | Financing cost | 4,726,258 | (7,211,961) | 2,129,389 | ||||||||||||
Cross-currency Swaps | Financing cost | (2,166,762) | 664,773 | 571,822 | ||||||||||||
Natural Gas Swaps | Financing cost | 8,931 | 1,472 | 71,071 | ||||||||||||
Petroleum Product Swaps | Financing cost | (89,020) | (130,662) | (594,694) | ||||||||||||
Propane Swaps | Financing cost | 20 | 205,366 | — | ||||||||||||
Interest Rate Swaps | Financing cost | 58,744 | (103,123) | (192,618) | ||||||||||||
Others | Financing cost | (46,548) | 110,980 | 233 | ||||||||||||
|
|
|
|
|
| |||||||||||
Total |
| Ps. | 1,310,973 | Ps. | (6,257,648) | Ps. | (1,696,225) | |||||||||
|
|
|
|
|
|
Derivatives not designated as | Location of gain (loss) | 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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Derivatives not designated as | Location of gain (loss) | 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)
Fair value hierarchy |
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.
The fair values determined by Level 1 inputs utilize quoted prices in activefinancial markets for identical assets or liabilities. Fair values determined by Level 2 inputs are based on quoted prices for similar assets or liabilities in activefinancial 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.
PEMEX periodically evaluates its exposure to international hydrocarbon prices, interest rates and foreign currencies and uses derivative instruments as a mitigation mechanism when potential sources of market risk are identified.
The following tables present information about PEMEX’s financial assets and liabilities measured at fair value, and indicatesindicate the fair value hierarchy of the inputs utilized to determine the fair values as of December 31, 20132016 and 2012.2015.
Fair value hierarchy | Total as of December 31, 2013 | Fair value hierarchy | Total as of 2016 | |||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Derivative financial instruments | Ps. | — | Ps. | 6,741,640 | Ps. | — | Ps. | 6,741,640 | Ps. | — | Ps. | 4,857,470 | Ps. | — | Ps. | 4,857,470 | ||||||||||||||||
Investments in equity instruments | 17,728,490 | 81 | — | 17,728,571 | ||||||||||||||||||||||||||||
Permanent investments in associates | — | 16,779,501 | — | 16,779,501 | ||||||||||||||||||||||||||||
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 | — | (6,284,482 | ) | — | (6,284,482 | ) | — | (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) |
Fair value hierarchy | Total as of December 31, 2012 | |||||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||||||
Assets: | ||||||||||||||||
Derivative financial instruments | Ps. | — | Ps. | 9,050,153 | Ps. | — | Ps. | 9,050,153 | ||||||||
Investments in equity instruments | 15,771,202 | 57 | — | 15,771,259 | ||||||||||||
Permanent investments in associates | — | 14,646,263 | — | 14,646,263 | ||||||||||||
Liabilities: | ||||||||||||||||
Derivative financial instruments | — | (6,752,811 | ) | — | (6,752,811 | ) |
Where directly comparableWhen market quotes are not available to measure the fair value of PEMEX’s financial instruments,DFIs, PEMEX uses Level 2 valuationinputs 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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)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, 20132016 and 2012 in nominal terms, was as follows:2015:
December 31, 2013 | December 31, 2012 | |||||||||||||||||||||||||||||||
Carrying value | Fair value | Carrying value | Fair value | Carrying value | Fair value | Carrying value | Fair value | |||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | Ps. | 80,745,719 | Ps. | 80,745,719 | Ps. | 119,234,891 | Ps. | 119,234,891 | Ps. | 163,532,513 | Ps. | 163,532,513 | Ps. | 109,368,880 | Ps. | 109,368,880 | ||||||||||||||||
Accounts, notes receivable and other | 122,512,011 | 122,512,011 | 133,009,511 | 133,009,511 | ||||||||||||||||||||||||||||
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 | 106,745,193 | 106,745,193 | 61,513,451 | 61,513,451 | 151,649,540 | 151,649,540 | 167,314,243 | 167,314,243 | ||||||||||||||||||||||||
Accounts and accumulated expenses payable | 14,194,719 | 14,194,719 | 9,315,539 | 9,315,539 | ||||||||||||||||||||||||||||
Current portion of long-term debt | 90,676,943 | 90,676,943 | 114,241,005 | 114,241,005 | ||||||||||||||||||||||||||||
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 | 750,563,471 | 795,134,654 | 672,617,595 | 719,937,119 | 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 appearare 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,”equivalents”, “Accounts notes receivable, and other,” “Investments in equity instruments,”net”,“Available-for-sale financial assets”, “Permanent investments in associates”, “Long-term notes receivable” and “Debt” is described in the following notes, respectively:
NOTE 14—17. EMPLOYEE BENEFITS:BENEFITS
PEMEX has establishedUntil 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. 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 employer contributes. Benefits under these plans are based onemployee contribute to an employee’s salary and years of service completed at retirement. Obligations and costs of such plans are recorded in accordance with actuarial valuations performed by independent actuaries. The regulatory framework of the plan assets does not establish minimum funding requirements. PEMEX has also established plans for other post-employment benefit obligations whose actuarial amounts are determined by independent actuaries. Such plans include medical services to retired employees and their dependents and cash provided for basic necessities.individual account.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
PEMEX fundsBenefits 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 funded its employees benefits through Mexican trusts, the resources of which come from the seniority premiumretirement line item of PEMEX’s annual budget (programmable(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.
During 2013 there were no changes to the benefits of the plans, nor was any reduction events and early extinguishment of employee benefit obligations.
The following table show the amounts associated with PEMEX’s labor obligations:
December 31, | December 31, | |||||||||||||||
2013 | 2012 | 2016 | 2015 | |||||||||||||
Defined Benefits Liabilities | ||||||||||||||||
Liability for defined benefits at retirement and post-employment at the end of the year | Ps. | 1,106,039,249 | Ps. | 1,270,595,644 | Ps. | 1,202,624,665 | Ps. | 1,258,480,019 | ||||||||
Liability for other long-term benefits | 13,168,621 | 17,945,115 | 17,784,771 | 20,905,422 | ||||||||||||
|
|
|
| |||||||||||||
Total liability for defined benefits recognized in the statement of financial consolidated position at the end of the year | Ps. | 1,119,207,870 | Ps. | 1,288,540,759 | ||||||||||||
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:
Changes in the Liability for Defined Benefits
2013 | 2012 | |||||||
Liability for defined benefits at the beginning of year | Ps. | 1,270,595,644 | Ps. | 849,254,113 | ||||
Charge to income for the year | 120,154,689 | 91,481,743 | ||||||
Defined benefits paid by the fund | (3,965,258 | ) | (4,490,055 | ) | ||||
Contributions paid to the fund | (33,210,277 | ) | (30,796,230 | ) | ||||
Actuarial (gains) losses in other comprehensive result due to variances in assumptions | (247,535,549 | ) | 365,146,073 | |||||
|
|
|
| |||||
Defined benefit liabilities at end of year | Ps. | 1,106,039,249 | Ps. | 1,270,595,644 | ||||
|
|
|
|
In 2013 and 2012, the net actuarial gains of Ps. (247,535,549) and losses of Ps. 365,146,073, respectively, were primarily due to the following modifications to the actuarial assumptions:
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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
ChangesIn 2016 and 2015, the net actuarial gains recognized in Plan Assetsother 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 including the normalyear-to-year increase in obligations based on changes in population, age, seniority, wages, pensions and benefits, mainly due to the increase in the discount and expected return on plan assets rates, from 7.41% in 2015 to 8.17% in 2016.
2013 | 2012 | December 31, | ||||||||||||||
2016 | 2015 | |||||||||||||||
Changes in pension plan assets | ||||||||||||||||
Plan assets at the beginning of year | Ps. | 5,049,225 | Ps. | 4,977,231 | Ps. | 5,228,909 | Ps. | 2,993,244 | ||||||||
Expected return on plan assets | 975,488 | 1,187,856 | 742,477 | 340,335 | ||||||||||||
Payments by the fund | (34,819,235 | ) | (31,490,428 | ) | ||||||||||||
Payments by the pension fund | (51,889,821 | ) | (46,843,824 | ) | ||||||||||||
Company contributions to the fund | 33,210,277 | 30,796,230 | 55,693,256 | 49,189,912 | ||||||||||||
Actuarial (gains) losses in plan assets | (97,326 | ) | (421,664 | ) | (285,155 | ) | (450,758 | ) | ||||||||
|
|
|
| |||||||||||||
Plan assets at the end of the year | Ps. | 4,318,429 | Ps. | 5,049,225 | ||||||||||||
Pension plan assets at the end of year | Ps. | 9,489,666 | Ps. | 5,228,909 | ||||||||||||
|
|
|
|
ChangesPEMEX’s plan assets are held in Defined Benefit Obligationstwo 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:
2013 | 2012 | |||||||
Defined benefit obligations at the beginning of year | Ps. | 1,275,644,867 | Ps. | 854,161,562 | ||||
Service costs | 34,677,009 | 20,518,547 | ||||||
Financing costs | 86,393,563 | 71,820,624 | ||||||
Past service costs | (66,637 | ) | 7,745 | |||||
Payments by the fund | (38,723,945 | ) | (35,915,595 | ) | ||||
Actuarial (gains) losses (remeasurements) in accumulated defined benefit obligations (“OBD”) derived from changes in actuarial assumptions | (247,567,178 | ) | 365,051,984 | |||||
|
|
|
| |||||
Defined benefit obligations at the end of year | Ps. | 1,110,357,679 | Ps. | 1,275,644,867 | ||||
|
|
|
|
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 13.17% decrease-12.27% increase or a 16.73% increase15.53% decrease in defined benefit obligations, respectively.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 23.29%22.75% increase or a 17.76%-17.38% decrease in defined benefit obligations, respectively.obligations.
Assumptions regarding future mortality are based on EMSSA2009 to Unique Circular S 22.2 of theComisión Nacional de Seguros y Fianzas (National Commission of Insurance and Bonds). The SHCP also provides recommendations concerning actuarial valuations and include changes to entities of the Federal Public Administration.mortality rate established in 2016.
The effects discussed above were determined using the projected unit credit method, which is the applied method in prior years.
The expected contribution to the fund for next year amounts to Ps. 38,029,665.
The average length of a defined benefit obligation is 18.4 years.
PEMEX’sfollowing tables present additional fair value disclosure about plan assets are heldand indicate their rank, in two trusts, the FOLAPEaccordance with IFRS 13, as of December 31, 2016 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.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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)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, 20132016 and 2012, the amounts and types of plan assets are as follows:
As of December 31, | ||||||||
2013 | 2012 | |||||||
Cash and cash equivalents | Ps. 1,622,166 | Ps. 3,017,245 | ||||||
Equity instruments | 541,262 | 410,357 | ||||||
Debt instruments | 2,155,001 | 1,621,623 | ||||||
|
|
|
| |||||
Total plan assets | Ps. 4,318,429 | Ps. 5,049,225 | ||||||
|
|
|
|
The following tables present additional fair value disclosure about plan assets as of December 31, 2013 and 2012:
Fair Value Measurements as of December 31, 2013 | ||||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||||
Asset Category: | ||||||||||||||||
Cash and cash equivalents | Ps. 1,622,166 | Ps. — | Ps. — | Ps. 1,622,166 | ||||||||||||
Equity instruments | 541,262 | — | — | 541,262 | ||||||||||||
Debt instruments | 2,155,001 | — | — | 2,155,001 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | Ps. 4,318,429 | Ps. — | Ps. — | Ps. 4,318,429 | ||||||||||||
|
|
|
|
|
|
|
|
Fair Value Measurements as of December 31, 2012 | ||||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||||
Asset Category: | ||||||||||||||||
Cash and cash equivalents | Ps. 3,017,245 | Ps. — | Ps. — | Ps. 3,017,245 | ||||||||||||
Equity instruments | 410,357 | — | — | 410,357 | ||||||||||||
Debt instruments | 1,621,623 | — | — | 1,621,623 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | Ps. 5,049,225 | Ps. — | Ps. — | Ps. 5,049,225 | ||||||||||||
|
|
|
|
|
|
|
|
As of December 31, 2013 and 2012,2015, the principal actuarial assumptions used in determining the defined benefit obligation for the plans are as follows:
As of December 31, | ||||||||
2013 | 2012 | |||||||
Rate of increase in salaries | 5.10 | % | 5.10 | % | ||||
Rate of increase in pensions | 4.60 | % | 4.60 | % | ||||
Rate of increase in medical services | 7.65 | % | 6.79 | % | ||||
Inflation assumption | 4.00 | % | 4.00 | % | ||||
Discount and expected return on plan assets rate | 8.45 | % | 6.90 | % |
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 |
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
TheIn accordance with IAS 19, the discount rate wasused is determined based on the performance of government bonds at the reporting date andby considering the average durationgovernment zero coupon curve generated from the Bonds M and Cetes, as well as the flow of the defined benefit obligation.payments expected to cover contingent liabilities.
Other long-term benefits
PEMEXPetróleos Mexicanos and Subsidiary Entities has established other long-term benefit plans for its employees, to which employees do not contribute, which correspond to the same seniority premiums payable for disability.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.separation date. Obligations and costs of such plans are recorded in accordance with actuarial valuations performed by independent actuaries. The regulatory framework does not set forth any minimum funding requirements.
During the year under review there were no changes to plan benefits, nor was any reduction events and early extinguishment of employee benefit obligations.
The amounts recognized for theselong-term obligations in the statements of comprehensive income for the years ended December 31, 20132016 and 20122015 are as follows:
Changes in the Liability for Defined Benefits
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)
2013 | 2012 | |||||||
Liabilities Defined benefit at the beginning of year | Ps. 17,945,114 | Ps. 12,824,520 | ||||||
Charge to income for the year | 2,658,122 | 2,086,252 | ||||||
Actuarial (gains) losses recognized in income | (7,434,615 | ) | 3,034,342 | |||||
|
|
|
| |||||
Liabilities Defined benefit at the end of year | Ps. 13,168,621 | Ps. 17,945,114 | ||||||
|
|
|
|
The principal actuarial assumptions used in determining the defined benefit obligation for the plans are as follows:
December 31, | ||||||||||||||||
2013 | 2012 | 2016 | 2015 | |||||||||||||
Rate of increase in salaries | 5.10 | % | 5.10 | % | 4.77 | % | 5.00 | % | ||||||||
Inflation assumption | 4.00 | % | 4.00 | % | 3.75 | % | 3.75 | % | ||||||||
Discount and expected return on plan assets rate | 8.45 | % | 6.90 | % | 8.17 | % | 7.41 | % | ||||||||
Average length of obligation (years) | 17.67 | 19.31 |
TheIn accordance with IAS 19, the discount rate wasused is determined based on the performance of government bonds at the reporting date andby considering the average durationgovernment zero coupon curve generated from the fixed rate bonds Mexican Government (“Bonds M”) and Cetes, as well as the flow of the defined benefit obligation.payments expected to cover contingent liabilities.
NOTE 15—18. PROVISIONS FOR SUNDRY CREDITORS:CREDITORS
At December 31, 20132016 and 2012,2015, the provisions for sundry creditors and others is as follows:
December 31, | ||||||||
2013 | 2012 | |||||||
Provision for plugging of wells (Note10(c)) | Ps. 46,118,080 | Ps. 48,153,060 | ||||||
Provision for trails in process (Note 23) | 17,624,737 | 9,977,366 | ||||||
Provision for environmental costs (Note 23) | 5,466,581 | 5,672,368 | ||||||
|
|
|
| |||||
Ps. 69,209,398 | Ps. 63,802,794 | |||||||
|
|
|
|
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
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 | ||||||||
December 31, | ||||||||
2013 | 2012 | |||||||
Balance at the beginning of the period | Ps. | 48,153,060 | Ps. | 42,507,002 | ||||
Additions capitalized in fixed assets | 3,518,799 | 2,547,962 | ||||||
Discount rate against income | (5,240,305 | ) | 3,552,924 | |||||
Deductions | (313,474 | ) | (454,828 | ) | ||||
|
|
|
| |||||
Balance at the end of the period | Ps. | 46,118,080 | Ps. | 48,153,060 | ||||
|
|
|
| |||||
Trials in progress | ||||||||
December 31, | ||||||||
2013 | 2012 | |||||||
Balance at the beginning of the period | Ps. | 9,977,366 | Ps. | 8,421,697 | ||||
Additions against income | 8,722,029 | 2,452,104 | ||||||
Discount rate against income | (324,607 | ) | (724,716 | ) | ||||
Deductions | (750,051 | ) | (171,719 | ) | ||||
|
|
|
| |||||
Balance at the end of the period | Ps. | 17,624,737 | Ps. | 9,977,366 | ||||
|
|
|
| |||||
Environmental costs | ||||||||
December 31, | ||||||||
2013 | 2012 | |||||||
Balance at the beginning of the period | Ps. | 5,672,368 | Ps. | 5,527,919 | ||||
Additions against income | 534,574 | 1,489,955 | ||||||
Discount rate against income | (208,307 | ) | (971,469 | ) | ||||
Deductions | (532,054 | ) | (374,037 | ) | ||||
|
|
|
| |||||
Balance at the end of the period | Ps. | 5,466,581 | Ps. | 5,672,368 | ||||
|
|
|
|
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 cost of an oil production facility or pipeline at the time that it is built.
The plugging provision represents the present value of plugging costs related to oil and gas properties. These provisions have been created based on internal estimates of PEMEX. PEMEX has made certain assumptions based on the current economic environment that PEMEX believes provide a reasonable basis on which to estimate the future liability. These estimates are reviewed regularly to take into account any material changes in the assumptions. However, actual plugging costs in the long run will depend on future market prices for the necessary plugging work, which reflect market conditions at the time the work is being performed.
Moreover, the time of plugging depends on when the fields cease to have economically viable production rates, which, in turn, depends on the inherently uncertain future prices of oil and gas.
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. |
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
NOTE 16—DISCLOSURES OF CASH FLOW:
The following items represent non-cash transactions and are presented for disclosure purposes:
For the years ended December 31, | ||||||||||||
2013 | 2012 | 2011 | ||||||||||
Investments in equity instruments | Ps. | 4,453,495 | Ps. | (10,125,874 | ) | Ps. | 13,872,160 | |||||
Employee benefits equity effect | 247,376,029 | (364,878,859 | ) | (14,890,060 | ) | |||||||
Net cost of the year for employee benefits | 115,339,689 | 96,602,337 | 84,095,152 | |||||||||
Financed Public Works Contracts | 3,042,876 | 7,523,603 | 9,606,162 | |||||||||
Cumulative currency translation effect | 5,127,480 | 2,685,060 | 4,455,677 | |||||||||
Accrued interest | 817,261 | 389,773 | 1,218,222 |
NOTE 17—20. INCOME TAXES AND FEDERAL DUTIES:DUTIES
On December 21, 2005, the Mexican Congress approved a new fiscal regime for Petróleos MexicanosThe Hydrocarbons Revenue law and the Subsidiary Entities, which wasFederal Revenue Law were published in the Official Gazette of the Federation effectiveon August 11, 2014 and November 13, 2014, respectively, and came into effect, in each case, on January 1, 2006. Under this2015. TheLey de Ingresos sobre Hidrocarburos (Hydrocarbons Revenue Law) and the Federal Revenue Law for fiscal regime, Pemex-Exploration and Production’s contribution scheme continues to be governed by theLey Federal de Derechos (Federal Duties Law), whileyear 2015 comprise the fiscal regime applicable to PEMEX for PEMEX (other than Pemex-Explorationfiscal year 2015. The new fiscal regime applicable to Petróleos Mexicanos applicable to the assignments and Production) is determined by theLey de Ingresos de la Federación (Federal Revenue Law). contracts were established on such date.
ThisTax regime was modified in each of 2007, 2008, 2009, 2010, 2011 and 2012. In addition, new modifications entered into effect on January 1, 2013, including the following:applicable to Assignments
The fiscal regime applicable to the exploration and production for the assignments granted to PEMEX for 2013by the Mexican Government contemplates the following taxes and duties:
During both 2013As of January 1, 2015, Pemex Exploration and 2012,Production is obligated to pay a Profit-sharing Duty.
As of January 1, 2016 and 2015, the applicable rate of this duty was 71.5%.68.75% and 70% respectively. The computation of this duty is based on the excess of the value of the extracted total production of crude oil and natural gashydrocarbons produced during the fiscal year (including self-consumption, shrinkage and burning), minus certain permitted deductions established inby the Federal DutiesHydrocarbons Revenue Law, (including certainincluding part of the investments and some costs, expenses and duties)duties. Pursuant to the Hydrocarbons Revenue Law, this duty decreases on an annual basis. As of January 1, 2019, this duty will be set at 65%.
During 2013, Pemex-Exploration2016, this duty totaled Ps. 304,299,019 from annual payments presented on April 3, 2017 paid as follows: Ps. 301,050,325, in monthly installment payments and Production made daily, weekly anda payable balance amounting to Ps. 3,248,694.
During 2015 this duty totaled Ps. 375,990,409, paid as follows: Ps. 266,136,000 in monthly advance payments, Ps. 85,234,004 in the amounts of Ps. 231,601,625, Ps. 231,601,760 and Ps. 254,070,440, respectively,monthly installment payments and a pending paymentpayable balance amounting to Ps. 24,620,405 as of Ps. 69,927, totaling Ps. 717,343,752, which was credited to the annual payment of the DOSH. During 2012, Pemex-Exploration and Production made daily, weekly and monthly advance payments in the amounts of Ps. 233,925,606, Ps. 233,925,517 and Ps. 278,417,852, respectively, totaling Ps. 747,623,002, which was credited towards the annual payment of the DOSH.December 31, 2015.
In computing this duty, deductions derivedThe accounting result differs from the residual value of investments made before the current fiscal regime took effect may be applied astax result mainly due to differences in depreciation,non-deductible expenses and others. Such differences generate a deferred deduction, referred to as a “temporary difference”, in accordance with IAS 12, “Income Taxes” (“IAS 12”). These deductions may be made in a maximum remainingdefered DUC.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
period of ten years,The principal factors generating the effect of which, if applied, can have a favorable effect in an amount up to approximately Ps. 302,763,680, depending on certain conditions established indeferred DUC are the Federal Duties Law. To date, PEMEX has not recognized such effect from these deferred deductions because they are considered unlikely to materialize. These deductions will expire in 2017.following:
Pemex-Exploration and Production must pay this duty when, during the applicable year, the weighted average Mexican crude oil export price exceeds U.S. $22.00. The applicable rate varies between 1% and 10%, depending on the weighted average price of crude oil exports, with the maximum rate of 10% applying when the price exceeds U.S. $31.00 per barrel. Collections of this duty are deposited in theFondo de Estabilización de Ingresos Petroleros (Oil Revenues Stabilization Fund).
This duty is calculated by applying a rate of 13.1% to the value resulting from multiplication of (i) the difference between the annual weighted average Mexican crude oil export price and the budgeted crude oil price as provided for in the Federal Revenue Law (U.S. $86.00 during 2013 and U.S. $85.00 during 2012), by (ii) the annual export volume. The duty actually paid may be credited against the Hydrocarbons Duty for the Stabilization Fund. Collections of this duty are directed to the Federative Entities through the Stabilization Fund for the Income of Federative Entities.
During both 2013 and 2012, this duty was applied at a rate of 0.65% to the value of the extracted production of crude oil and natural gas for the year. The proceeds of this tax are allocated to the following funds:
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. | — | ||||
|
|
|
|
2016 | 2015 | |||||||
Expected expense: | Ps. | 159,897,683 | Ps. | 200,925,491 | ||||
Increase (decrease) resulting from: | ||||||||
Non-cumulative profit | (423,761,673 | ) | 483,449,494 | |||||
Non-deductible expenses | 263,863,990 | (684,374,984 | ) | |||||
Production value | 441,655,000 | 483,916,169 | ||||||
Deductible duties | (29,918,201 | ) | (34,200,348 | ) | ||||
Deductions cap | (107,437,780 | ) | (73,033,117 | ) | ||||
|
|
|
| |||||
DUC-Profit-sharing duty expense | Ps. | 304,299,019 | Ps. | 376,682,705 | ||||
|
|
|
|
On April 18, 2016, a decree granting a fiscal benefit to Pemex Exploration and Production (assignee) was published in the Official Gazette of Energy.
the Federation and increases the limit on the amount Pemex Exploration and Production can deduct for costs, expenses and investments in the calculation of its DUC, for terrestrial areas or in maritime areas with water depths lower than 500 meters. The benefit was granted to further 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 with 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 granted PEMEX a fiscal support on November 16, by Ps. 28,439,379. This duty was applied atbenefit consisted in a ratetax credit against the DUC as a measure to mitigate the impact generated in the financial environment of 0.003%the Mexican hydrocarbons exploration and extraction companies (assignees), as international energy prices continued to be depressed, generating effects on the valueeconomies of extracted production of crude oil and natural gas for the year. The revenues from this tax are earmarked for theAuditoria Superior de la Federación (Supreme Federal Audit Office).several countries, including Mexico.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Derecho de Extracción de Hidrocarburos (Hydrocarbons Extraction |
In 2013 this duty was applied at a 15% rate to the value of the crude oil and natural gas extracted from the following fields:
In each case, certain deductions are subtracted from the amount owed. Collections of this duty are deposited in the Oil Revenues Stabilization Fund.
During 2013, this duty was applied at a rate of 30% to the difference between the annual value of the crude oil and natural gas extracted from the fields covered in Note 17(f) above, and certain permitted deductions (including specific investments, certain expenses and costs, among others).
Production above a threshold of 240 million barrels of crude oil equivalent is taxed at a rate of 36% of the value that exceeds this threshold.
The permitted deductions for certain costs, expenses and investments may not exceed 60% of the value of the crude oil and natural gas extracted annually from these fields or U.S. $32.50. This amount is updated annually using the U.S. producer price index. At December 31, 2013 and 2012 the updated amounts were U.S. $36.77 and U.S. $36.46, respectively.
Fields referred to this law are those set forth in Sections (i), (ii), (iii) and (iv) of subsection (f) of this Note.
This duty is applied when the accumulated annual average value of barrels of oil equivalent extracted is greater than U.S. $60.00. The accumulated annual average value of barrels of oil equivalent extracted in 2013 and 2012, respectively, were U.S. $67.88 and U.S. $67.31. Each year, the threshold price at which the duty takes effect is adjusted to take account of inflation, as measured by the change in the U.S. producer price index.
This duty shall be calculated by applyingbased on a rate based on a formula applicable to each type of 52% to the value resulting from multiplication of (i) the difference between the accumulated annual average value of barrels of oil equivalent extracted in the field in question and U.S. $60.00, by (ii)hydrocarbon, the volume of oil equivalent extractedproduction and utilizing the relevant market price for hydrocarbons in U.S. Dollars.
During 2016 Pemex Exploration and Production made payments of Ps.43,517,383.
c. | Derecho de Exploración de Hidrocarburos (Exploration Hydrocarbons Duty). |
The Mexican Government is entitled to collect a monthly payment of Ps. 1,175.42 per square kilometer ofnon-producing areas. After 60 months, this tax increases to Ps. 2,810.78 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, Pemex Exploration and Production made payments under this duty, totaling Ps. 962,740.
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 fieldcorresponding area. The monthly tax paid during the exploration phase and until the extraction phase begins is 1,533.15 pesos per square kilometer. During the extraction phase, the monthly tax from the start of the extraction phase and until the assignment ends is 6,132.60 pesos per square kilometer. During 2016 payments for this tax amounted Ps. 3,944,738.
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 questionthe Hydrocarbons Revenue law 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 1,175.42 pesos per square kilometer ofnon-producing areas. After 60 months, this fee increases to 2,810.78 pesos per square kilometer for each additional month that the year.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.
• | 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., crude oil, associated natural gas,non-associated natural gas or condensates), the
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Fields referredvolume 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 Governement 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 lawcontractual 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 1,533.15 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 6,132.6 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 the Subsidiary Entities during 2015, they became 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).
2016 indirect taxes are those set forth in Sections (i), (ii), (iii) and (iv) of subsection (f) of this Note.below mentioned:
This duty applies a fee of 0.03% on the annual value of crude oil and natural gas extracted during the year. The fee is assessed on an annual basis, but is to be paid in advance monthly installments within seven business days following the end of each month. Collections of this duty are directed to the budget of the NHC. The Hydrocarbons Exploration Tax for 2013 will be declared through a tax return filed with the Federal Treasury no later than the last business day of March 2014, and the monthly advance payments made during the fiscal year will be credited to that amount.
IEPS Tax |
In accordance with current regulations, PEMEX is subject to the IEPS Tax which applies toon the sale of automotive fuels: This is a tax imposed on domestic sales of gasoline and diesel. The IEPS Tax is paid to the SHCP monthly, after deducting daily advance payments made in accordance with applicable rules. The effective rate of this tax depends on factors such as the type of product, reference price, the region where the product is sold, additional freight costs and applicable commissions.
Effective January 1, 2006, the Federal Revenues Law was amended, allowing PEMEX to credit the negative IEPS Tax, which is generated when the prices at which PEMEX is required to sellautomotive fuels, including gasoline and diesel, in the domestic market are lower than international market prices, against other taxes and payments to which PEMEX is also subject. In 2013 and 2012, increases in international prices of hydrocarbons and petroleum products caused the ratePemex Industrial Transformation collects on behalf of the Mexican Government. The applicable quotas for 2016 were: 4.16 pesos per liter of Magna gasoline; 3.52 pesos per liter of Premium gasoline and 4.58 pesos per liter of diesel. This fee is updated annually according to inflation and adjusted monthly by the tax authorities.
IEPS Tax to be negative. As a result of this credit, in 2013, 2012benefit Mexican states and 2011 PEMEX recognized revenues of approximately Ps. 94,466,039, Ps. 214,102,498 and Ps. 178,869,172, respectively.
municipalities: This tax is applicable to Petróleos Mexicanosa quota on domestic sales of automotive fuels, including gasoline and the Subsidiary Entities other than Pemex-Exploration and Production, and is calculated by applying a 30% rate to the excess of total revenues minus authorized deductions, pursuant to the specific rules provided by the SHCP in accordance with the Federal Income Law.
For the years ended December 31, 2013, 2012 and 2011, PEMEX generated an IRP as follows:
For the years ended December 31, | ||||||||||||
2013 | 2012 | 2011 | ||||||||||
Current IRP | Ps. | 4,705,201 | Ps. | 3,176,510 | Ps. | 555,335 | ||||||
Deferred IRP | (917,658 | ) | (783,591 | ) | (1,232,725 | ) | ||||||
|
|
|
|
|
| |||||||
Total IRP | Ps. | 3,787,543 | Ps. | 2,392,919 | Ps. | (677,390 | ) | |||||
|
|
|
|
|
|
During 2013 Petróleos Mexicanos and the Subsidiary Entities, other than Pemex-Exploration and Production, made aggregate daily and weekly payments of Ps. 750,440 and Ps. 750,464, respectively, as determined by the SHCP, for an overall total of Ps. 1,500,904 credited to the annual paymentdiesel, which Pemex Industrial Transformation collects on behalf of the IRP. During 2012, the aggregate daily and weekly payments determined by the SHCP were Ps. 758,718 and Ps. 758,854, respectively, for an overall total of Ps. 1,517,572 credited to the annual payment.Mexican
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Government. The 2013 IRP will be declared throughapplicable quotas for 2016 were 36.68 cents per liter of Magna gasoline, 44.75 cents per liter of premium gasoline and 30.44 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 tax return filed withquota on the Federal Treasury no later than the last business dayinternal sales of March 2014, and the daily and weekly advance payments made during the fiscal year will be credited against that amount.
Petróleos Mexicanos must comply for its own account, and for the accountfossil fuels, which Pemex Industrial Transformation collects on behalf of the Subsidiary Entities, with all obligations under the Federal Income LawMexican Government. The applicable quotas for 2016 were 6.29 cents per liter for propane, 8.15 cents per liter for butane, 11.05 cents per liter for jet and other fiscal laws, except as explicitly providedfuel, 13.20 cents per liter for in relationturbosine 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 share increases annually according to the making of daily and weekly payments. As such, Petróleos Mexicanos is solely responsible for the payment of contributions and duties owed by the Subsidiary Entities to the Mexican Government.
The principal factors generating the deferred IRP are the following:
As of December 31, | ||||||||
2013 | 2012 | |||||||
Deferred IRP asset: | ||||||||
Advances from customers | Ps. | 50,895 | Ps. 49,907 | |||||
Provision for contingencies and others(1) | 103,282 | 348,481 | ||||||
Environmental reserve | 178,830 | 223,204 | ||||||
Valuation of accounts receivable | 67,317 | — | ||||||
Valuation of inventories | 96,852 | — | ||||||
|
|
|
| |||||
Total deferred IRP assets | 497,176 | 621,592 | ||||||
Valuation allowance | (263,304) | — | ||||||
|
|
|
| |||||
Total deferred IRP asset, net | 233,872 | 621,592 | ||||||
Deferred IRP liability: | ||||||||
Properties, plant and equipment | (23,903,298) | (25,196,617) | ||||||
|
|
|
| |||||
Total deferred IRP liability, net | (23,903,298) | (25,196,617) | ||||||
|
|
|
| |||||
Net long-term deferred IRP liability | Ps. | (23,669,426) | Ps. (24,575,025 | ) | ||||
|
|
|
|
The expense (benefit) attributable to the profit (loss) from continuing operations before IRP was different from what would result from applying the rate of 30% to profit, as a result of the items listed below:
For the years ended December 31, | ||||||||||||
2013 | 2012 | 2011 | ||||||||||
Expected IRP expense (benefit) | Ps. | 54,674,666 | Ps. | 5,945,580 | Ps. | 2,126,212 | ||||||
Increase (decrease) resulting from: | ||||||||||||
Tax effect of inflation, net | 2,736,501 | (835,493 | ) | (1,416,820 | ) | |||||||
Difference between accounting and tax depreciation | (1,360,929 | ) | (813,093 | ) | (1,214,613 | ) | ||||||
Non-taxable loss sharing in subsidiaries, associates and others | (52,276,542 | ) | (3,070,490 | ) | (779,667 | ) | ||||||
Non-deductible expenses | 130,377 | 809,303 | 681,254 | |||||||||
Other, net | (116,530 | ) | 357,112 | (73,756 | ) | |||||||
|
|
|
|
|
| |||||||
IRP expense | Ps. | 3,787,543 | Ps. | 2,392,919 | Ps. | (677,390) | ||||||
|
|
|
|
|
|
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)inflation.
Value Added Tax |
For VAT purposes, final monthly payments are determined based on PEMEX’s cash flow, in accordance with the provisions of the Value Added Tax Law, which is applicable to payers of this tax.
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:
Income Tax |
CertainAs of January 1, 2015, Petróleos Mexicanos, Subsidiary Entities and the Subsidiary Companiessubsidiary companies residing in Mexico for tax purposes are subject to the Income Tax Law andLaw.
This tax is calculated by applying a rate of 30% to the IETU,tax result. Tax result is the excess of total revenues over the allowed deductions and are therefore required to pay the greater of their IETU or income tax liability.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, 2013, 20122016, 2015 and 2011, the2014, Petroleos Mexicanos and its Subsidiary Companies incurred the following income tax expense (benefit):
For the years ended December 31, | ||||||||||||
2013 | 2012 | 2011 | ||||||||||
Current income tax | Ps. | 4,641,531 | Ps. | 1,664,257 | Ps. | 3,281,445 | ||||||
Deferred income tax | (889,301 | ) | 190,852 | 356,589 | ||||||||
|
|
|
|
|
| |||||||
Ps. | 3,752,230 | Ps. | 1,855,109 | Ps. | 3,638,034 | |||||||
|
|
|
|
|
|
The principal factors generating the deferred income tax are the following:
As of December 31, | ||||||||
2013 | 2012 | |||||||
Deferred income tax asset: | ||||||||
Provisions | Ps. | 732,499 | Ps. | 47,081 | ||||
Employee benefits | 183,009 | 295,449 | ||||||
Advance payments from clients | 127,245 | 99,639 | ||||||
Losses from prior years | 20,524 | 822,924 | ||||||
Non-recoverable accounts | 24,666 | 24,541 | ||||||
Derivative financial instruments | 102,131 | 24,771 | ||||||
Tax loss carryforwards(1) | 1,069,216 | — | ||||||
|
|
|
| |||||
Total deferred income tax asset | 2,259,290 | 1,314,405 | ||||||
Deferred income tax liability: | ||||||||
Wells, pipelines, properties, plant and equipment | (2,077,648 | ) | (2,167,435 | ) | ||||
Other | (1,078,752 | ) | (773,863 | ) | ||||
|
|
|
| |||||
Total deferred income tax liability | (3,156,400 | ) | (2,941,298 | ) | ||||
|
|
|
| |||||
Net long-term deferred income tax liability | Ps. | (897,110 | ) | Ps. | (1,626,893) | |||
|
|
|
|
2016 | 2015 | 2014 | ||||||||||
Current income tax | Ps. | 6,201,842 | Ps. | 7,426,892 | Ps. | 4,673,476 | ||||||
Deferred income tax | (18,842,211 | ) | (53,014,159 | ) | (775,506 | ) | ||||||
|
|
|
|
|
| |||||||
Total(1) | Ps. | (12,640,369 | ) | Ps. | (45,587,267 | ) | Ps. | 3,897,970 | ||||
|
|
|
|
|
|
(1) |
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The principal factors generating the deferred income tax are the following:
December 31, | ||||||||
2016 | 2015 | |||||||
Deferred income tax asset: | ||||||||
Provisions | Ps. | 5,906,581 | Ps. | 25,414,822 | ||||
Employee benefits provision | 125,973,332 | 247,834,882 | ||||||
Advance payments from clients | 1,046,010 | 1,015,357 | ||||||
Accrued liabilities | 2,269,561 | 1,514 | ||||||
Non-recoverable accounts receivable | 778,179 | 104,346 | ||||||
Derivative financial instruments | 223,518 | 22,506 | ||||||
Wells, pipelines, properties and equipment | 458,273,897 | 446,970,333 | ||||||
Tax loss carryforwards(1) | 43,327,737 | 14,894,231 | ||||||
|
|
|
| |||||
Total deferred income tax asset | 637,798,815 | 736,257,991 | ||||||
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 | ) | ||||
Other | (502,242 | ) | (274,305 | ) | ||||
|
|
|
| |||||
Total deferred income tax liability | (4,134,536 | ) | (2,183,834 | ) | ||||
|
|
|
| |||||
Net long-term deferred income tax liability | Ps. | 68,538,582 | Ps. | 52,716,550 | ||||
|
|
|
|
(1) Tax loss carryforwards expires 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. |
Expense (benefit) attributable to the profit (loss) from continuing operations before income taxes was different from whatthat which would result from applying the 30% rate of 30% to profit, as a result of the items listed below:
For the years ended December 31, | For the years ended December 31, | |||||||||||||||||||||||
2013 | 2012 | 2011 | 2016 | 2015 | 2014 | |||||||||||||||||||
Expected income tax expense | Ps. | 4,445,349 | Ps. | 1,422,051 | Ps. | 3,319,998 | Ps. | (14,901,324 | ) | Ps. | (3,089,241 | ) | Ps. | 272,457 | ||||||||||
Increase (decrease) resulting from: | ||||||||||||||||||||||||
Tax effect of inflation, net | (106,974 | ) | (30,714 | ) | 24,352 | |||||||||||||||||||
Tax effect ofinflation-net | 8,098,213 | (1,618,327 | ) | 4,020,358 | ||||||||||||||||||||
Difference between accounting and tax depreciation | (34,860 | ) | 278,347 | (4,569 | ) | (1,765,183 | ) | (107,231 | ) | 1,116,630 | ||||||||||||||
Non-deductible expenses | 72,841 | 2,107 | 153,856 | 1,558,120 | (1,921,515 | ) | 2,437,778 | |||||||||||||||||
Others, net(1) | (624,126 | ) | 183,318 | 144,397 | ||||||||||||||||||||
Others-net(1) | (5,630,195 | ) | (38,850,953 | ) | (3,949,253 | ) | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Income tax expense | Ps. | 3,752,230 | Ps. | 1,855,109 | Ps. | 3,638,034 | Ps. | (12,640,369 | ) | Ps. | (45,587,267 | ) | Ps. | 3,897,970 | ||||||||||
|
|
|
|
|
|
(1) |
NOTE 18—EQUITY (DEFICIT):
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)
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 December 31, 1990, certain debt owed by Petróleos Mexicanos to the Mexican Government was capitalized as equity. This capitalization amounted to Ps. 22,334,195 in nominal terms (U.S. $7,577,000) and was authorized by the Board. In December 1997, the Board and the Mexican Government agreed to a reduction in equity in respect of the Certificates of Contribution “A” in exchange for a payment in cash to the Mexican Government of Ps. 12,118,050 (U.S. $1,500,000). As of December 31, 2012, the value of the Certificates of Contribution “A” was Ps. 49,604,835 (historical value of Ps. 10,216,145 plus (a) an adjustment of Ps. 6,318 and (b) an inflation restatement increase of Ps. 39,382,372). On December 24, 2013,January 19, 2015, the Mexican Government made an equity contribution of Ps. 65,000,00010,000,000 to Petróleos Mexicanos in accordance with theLey Federal del Presupuesto y Responsabilidad Hacendaria (Federal Law of Budget and Fiscal Accountability).
On December 24, 2015, the Mexican Government, through the SHCP, issued anon-negotiable promissory note of Ps. 50,000,000 due December 31, 2050 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 formamount 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.
The capitalization agreement between PEMEXPetróleos Mexicanos and the Mexican Government states that the Certificates of Contribution “A” constitute permanent capital.
PermanentPEMEX’s permanent equity is as follows:
Amount | ||||
Certificates of Contribution “A” | ||||
| ||||
Increase in Certificates of Contribution “A” during 2015 | 60,000,000 | |||
|
| |||
Certificates of Contribution “A” as of December 31, | ||||
Increase in Certificates of Contribution “A” during 2016 | ||||
|
| |||
Certificates of Contribution “A” as of December 31, | ||||
|
|
Mexican Government contributions |
OnAs of December 16, 2013, the31, 2016 and 2015 there were not operations in Mexican Government withdrew Ps. 65,000,000 from PEMEX’s equity. On December 19, 2013, the Board acknowledged the equity withdrawal made by the Mexican Government. This equity withdrawal was recognized as a decrease in the Mexican Government contributions to Petróleos Mexicanos line item in PEMEX’s consolidated statements of changes in equity (deficit).
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
In December 2013, the Mexican Government contributed Ps. 1,583,100 to theFondo de Estabilización para la Inversión en Infraestructura de Petróleos Mexicanos (PEMEX Infrastructure Investment Stabilization Fund, or “FEIIP”). This contribution was recorded in the Mexican Government contributions to Petróleos Mexicanos line item in PEMEX’s consolidated statements of changes in equity (deficit) for the year ended December 31, 2013.
In 2013, the Mexican Government authorized a contribution of Ps. 2,000,000 to theFondo de Estabilización de los Ingresos Petroleros (Oil Revenues Stabilization Fund, or “FEIPEMEX”). This amount was not paid to FEIPEMEX until January 27, 2014, and was therefore recognized as uncalled capital in PEMEX’s consolidated statements of changes in equity (deficit) for the year ended December 31, 2013.contibutions.
Legal reserve |
Under Mexican law, each of the Subsidiary Companies is required to allocate a certain percentage of its net income to a legal reserve fund until the fund reaches an amount equal to a certain percentage of each Subsidiary Company’s capital stock. In 2013,
As of December 31, 2016 and 2015, there were no changes to the legal reserve fund increased by Ps. 24,370 due to the consolidation of new companies.reserve.
Accumulated |
PEMEX has recorded negative earnings in the past several years. However, under theLey de Concursos Mercantiles (Commercial Bankruptcy Law of Mexico) decentralized public entities such asis not applicable to Petróleos Mexicanos and the Subsidiary Entities cannot be subject to a bankruptcy proceeding.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.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 makingdecision-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)
Non-controlling interest |
Effective July 1, 2005, PEMEX entered into an option agreement with BNP Paribas Private Bank and& Trust Cayman Limited; the option was not excercised 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, the financial results of Pemex Finance, Ltd. are included in these consolidated financial statements of PEMEX. Under IFRS, variations in income and equity from Pemex Finance, Ltd. are presented in the consolidated statements of changes in equity (deficit), net as “non-controlling interest”,“non-controlling interest,” and as net income and comprehensive income for the period,year, attributable tonon-controlling interest, in the consolidated statements of comprehensive income, due to the fact that PEMEX does not currently own any of the shares of Pemex Finance, Ltd.
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, 20132016 and 2012, 2015,non-controlling interest represented gains of Ps. 503,882976,705 and Ps. 698,453,253,278, respectively, ofin PEMEX’s equity (deficit).
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
NOTE 19—22. OTHER REVENUES AND EXPENSES-NET:EXPENSES-NET
At December 31, 2013, 2012 and 2011, otherOther revenues and expenses—net for each of the years ended December 31, 2016, 2015 and 2014, was as follows:
December 31, | 2016 | 2015 | 2014 | |||||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
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 | Ps. | 94,466,039 | Ps. | 214,102,498 | Ps. | 178,869,172 | — | 2,519,126 | 43,108,707 | |||||||||||||||
Other | 8,184,140 | 6,284,045 | 15,744,402 | |||||||||||||||||||||
Claims recovery | 3,695,217 | 1,975,281 | 780,509 | |||||||||||||||||||||
Bidding terms, sanctions, penalties and other | 2,159,847 | 2,052,818 | 204,605 | 3,223,437 | 1,262,458 | 3,031,159 | ||||||||||||||||||
Reversal of impairment of properties, plant and equipment | 1,650,642 | — | 11,689,832 | |||||||||||||||||||||
Franchise fees | 999,491 | 930,140 | 910,067 | 1,059,333 | 1,148,528 | 1,055,753 | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Total other revenues | 107,460,159 | 223,369,501 | 207,418,078 | 87,736,340 | 17,852,235 | 54,918,007 | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Expenses: | ||||||||||||||||||||||||
Impairment of properties plant and equipment | (25,608,835 | ) | — | (6,855,535 | ) | |||||||||||||||||||
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 | (15,285,119 | ) | (13,190,572 | ) | (10,021,932 | ) | (779,496 | ) | (552,955 | ) | (3,054,848 | ) | ||||||||||||
Claims | (2,039,355 | ) | (1,159,966 | ) | (1,420,750 | ) | ||||||||||||||||||
Other provisons | (2,801,540 | ) | (173,634 | ) | (4,365,119 | ) | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Total other expenses | (42,933,309 | ) | (14,350,538 | ) | (18,298,217 | ) | (68,780,760 | ) | (20,225,501 | ) | (17,365,610 | ) | ||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Other revenues and expenses—net | Ps. | 64,526,850 | Ps. | 209,018,963 | Ps. | 189,119,861 | ||||||||||||||||||
Other revenues andexpenses-net | Ps. | 18,955,580 | Ps. | (2,373,266 | ) | Ps. | 37,552,397 | |||||||||||||||||
|
|
|
|
|
|
NOTE 20—FINANCING INCOME AND COST:23. RELATED PARTIES
At December 31, 2013, 2012 and 2011, the financing income and cost were as follows:
December 31, | ||||||||||||
2013 | 2012 | 2011 | ||||||||||
Derivative financial instruments income | Ps. | 15,791,510 | Ps. | 20,683,047 | Ps. | 26,386,424 | ||||||
Interest income | 8,735,699 | 2,531,791 | 4,197,810 | |||||||||
|
|
|
|
|
| |||||||
Financing income | Ps. | 24,527,209 | Ps. | 23,214,838 | Ps. | 30,584,234 | ||||||
|
|
|
|
|
| |||||||
Interest expense | (39,586,484 | ) | (46,010,543 | ) | (35,153,558 | ) | ||||||
Derivative financial instruments cost | (14,480,537 | ) | (26,940,695 | ) | (28,082,649 | ) | ||||||
|
|
|
|
|
| |||||||
Financing cost | Ps. | (54,067,021 | ) | Ps. | (72,951,238 | ) | Ps. | (63,236,207 | ) | |||
|
|
|
|
|
|
NOTE 21—RELATED PARTIES:
All significant intercompany balances and transactions have been eliminated in the consolidation of PEMEX’s financial statements. Balances and transactions with related parties are mainly due to: (i) sale and purchase of products, (ii) administrative services rendered and (iii) financial loans among related parties. The terms and conditions of transactions with related parties were no more favorable than those available to other parties on an arm’s length basis.
Under theLey Federal de Responsabilidades Administrativas de los Servidores Públicos (Federal Law of Administrative Responsibilities of Public Officials), which applies to PEMEX’s directors and all of its
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
employees, 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 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, 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, theirMr. Pedro Joaquín Coldwell as well as certain members of his family had the following ownership interests are as follows:interests:
Company | Name | Ownership | ||||
Servicio Cozumel, | Mr. Pedro Joaquín Coldwell | 60 | % | |||
Mr. Pedro Oscar Joaquín Delbouis (son of Mr. Joaquín Coldwell) | 20 | % | ||||
Mr. Nassim Joaquín Delbouis (son of Mr. Joaquín Coldwell) | 20 | % | ||||
Planta de Combustible Cozumel, | 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 | % | |||
| ||||||
40 | % | |||||
Mr. Ignacio Nassim Ruiz Joaquín (nephew of Mr. Joaquín Coldwell) | 20 | % | ||||
Combustibles Caleta, | Mr. Pedro Joaquín Coldwell | 20 | % | |||
Mr. Pedro Oscar Joaquín Delbouis | 20 | % | ||||
Mr. Nassim Joaquín Delbouis | 20 | % | ||||
20 | % | |||||
Mr. Ignacio Nassim Ruiz Joaquín | 20 | % | ||||
Combustibles San Miguel, | 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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)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 of Pemex-Refining’sPemex Industrial Transformation’s retail service stations and wholesale distributors.
Compensation of Directors and Officers |
For the years ended December 31, 2013, 20122016, 2015 and 2011,2014, 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. 174,800,111,541, Ps. 167,800116,930 and Ps. 154,400,79,831, respectively. Retirement and former employee benefits are granted as described in Note 17. 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 2013, 20122016, 2015 and 20112014 to the professional members of the Boardsprevious Board of Directors of Petróleos Mexicanos and boards of directors of the existing Subsidiary Entities was approximately Ps. 13,600,7,693, Ps. 13,60017,899, and Ps. 13,700,12,599, respectively.
Salary Advances |
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 Subsidiarios (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. The amount of salary advances outstanding to executive officers at December 31, 20132016 was Ps. 23,0167,436 and at December 31, 20122015 was Ps. 21,785. As of March 31, 2014, the aggregate5,765. The amount of salary advances outstanding to PEMEX’s executive officers at April 15, 2017 was Ps. 21,605.8,147.
NOTE 22—COMMITMENTS:24. COMMITMENTS
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)
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, |
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
Estimated future payments under this contract for upcoming fiscal years are as follows:
2014 | Ps. | 1,331,122 | ||
2015 | 1,375,412 | |||
2016 | 890,967 | |||
2017 | 589,436 | |||
2018 | 589,659 | |||
More than 5 years | 5,067,405 | |||
|
| |||
Total | Ps. | 9,844,001 | ||
|
|
Estimated future payments under this contract for upcoming fiscal years are as follows:
2014 | Ps. | 140,012 | ||
2015 | 140,012 | |||
2016 | 140,142 | |||
2017 | 138,552 | |||
|
| |||
Total | Ps. | 558,718 | ||
|
|
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 | ||
|
|
As of December 31, |
As of December 31, 2016 and 2015, the estimated value of these contracts was as follows:
Contract date | Block | 2013 | 2012 | |||||||
February 9, 2004 | Olmos | U.S. $ | 296,301 | U.S. $ | 297,890 | |||||
November 21, 2003 | Cuervito | 59,160 | 45,558 | |||||||
November 28, 2003 | Misión | 435,343 | 639,002 | |||||||
November 14, 2003 | Reynosa-Monterrey | 12,422 | 1,966,108 | |||||||
December 8, 2003 | Fronterizo | 34,204 | 72,948 | |||||||
March 23, 2005 | Pirineo | 254,912 | 348,582 | |||||||
April 3, 2007 | Nejo | 752,338 | 919,368 | |||||||
April 20, 2007 | Monclova | 296,452 | 718,545 | |||||||
May 12, 2008 | Burgos VII | 61,146 | 171,891 | |||||||
|
|
|
| |||||||
U.S. $ | 2,202,278 | U.S. $ | 5,179,892 | |||||||
|
|
|
|
Maturity | 2016 | 2015 | ||||||
Up to 1 year | Ps. | 7,366,247 | Ps. 3,484,630 | |||||
1 to 3 years | 2,518,207 | 1,191,247 | ||||||
4 to 5 years | 2,470,878 | 1,168,858 | ||||||
More than 5 years | 4,157,843 | 1,966,882 | ||||||
|
|
|
| |||||
Total | Ps. | 16,513,175 | Ps. 7,811,617 | |||||
|
|
|
|
In |
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
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 |
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, |
Maturity | 2016 | 2015 | ||||||
Up to 1 year | Ps. 347,606,848 | Ps. 388,047,435 | ||||||
1 to 3 years | 281,563,607 | 294,020,900 | ||||||
4 to 5 years | 69,541,826 | 127,885,086 | ||||||
More than 5 years | 119,281,849 | 177,720,692 | ||||||
|
|
|
| |||||
Total | Ps. 817,994,130 | Ps. 987,674,113 | ||||||
|
|
|
|
NOTE 23—CONTINGENCIES:25. CONTINGENCIES
In the ordinary course of business, PEMEX is named in a number of lawsuits of various types. PEMEX evaluates the merit of each claim and 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 disclosed in Note 5 and 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, 2016 and 2015, PEMEX had accrued a reserve of Ps. 15,119,692 and Ps. 12,775,263, respectively, for these contingent liabilities. As of December 31, 2016, the current status of the principal lawsuits in which PEMEX is involved is as follows:
In September 2001, Conproca, S.A.December 2004, Corporación Mexicana de C.V.Mantenimiento Integral, S. de R. L. de C. V. (“CONPROCA”COMMISA”), the construction company performing construction and maintenance services for Pemex-Refining’s Cadereyta refinery, filed aan arbitration claim for arbitration(No. 13613/CCO/JRF) before the ICAInternational Court of Arbitration of the International Chamber of Commerce against Pemex-RefiningPemex-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 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 (No. 11760/KGA) related to expenses incurred by CONPROCA for, among other things, additional work performedlocated in several financial institutions. On November 15, 2013, Pemex-Exploration and value added. On April 30, 2012, the ICA ordered Pemex-Refining and Petróleos Mexicanos to pay U.S. $311,178 and CONPROCA to pay U.S. $29,038. On July 27, 2012, Petróleos Mexicanos and
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
|
In a concurrent proceeding, on January 22, 2013, COMMISA submitted a request to a court in Luxembourg for the precautionary attachment of assets owned by Pemex-Exploration and Production and Petróleos Mexicanos andmotion against the execution of the arbitration award. The precautionaryaward 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, was granted on January 23, 2013, and on July 15, 2013, Pemex-Exploration and Production and Petróleos MexicanosCOMMISA filed an appeal againsta motion before the resolution. On December 24, 2013,Court of Appeals of Luxembourg seeking that the court granted the appeal against the resolution to attach the assets. On March 22, 2013, the court recognizedCourt recognizes the arbitration award without considering that it was declared null and ordered its execution.void by the Mexican courts. On June 26, 2013, Pemex-Exploration and Production and Petróleos Mexicanos filed an appeal against25, 2016, the resolution recognizing the arbitration award. On September 10, 2013, COMMISA filed its pleadings in connection with this appeal andCourt of Appeals of Luxembourg issued a hearing will be held before the appellate court on May 12, 2014.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)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 |
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.
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 challenging the assessment. On November 20, 2013, thein connection with an administrative claim was admitted(No. 4957/1117071) filed by the Superior Courtplaintiffs 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 Regional Metropolitan Court) of the Tax and Administrative Federal Court (file No. 28733/10-17-03-7/1838/13-S1-05-04). As ofin Mexico City seeking damages totaling U.S. $193,713 related to the date of these consolidated financial statements, this matterabove mentioned contract. Pemex-Exploration and Production filed a response requesting the two administrative claims be joined in a single proceeding, which was granted on May 10, 2016 by the Seventh Regional Metropolitan Court. A final resolution is still pending.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures statedFIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
• | On |
• | 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 |
On July 8, 2011, Pemex-Exploration and Production was summoned in connection with an administrative claim (No. 4334/1111026) filed by Compañía Petrolera La Norma, S.A., against the Director General of Petróleos Mexicanos and the Director General of Pemex-Exploration and Production before the Segunda Sala RegionalHidalgo-México (Hidalgo-Mexico Second Regional Court) of the Tax and Administrative Federal Court in Tlalnepantla, State of Mexico. The plaintiff is seeking compensation in connection with the cancellation of its alleged petroleum rights concessions and damages for up to Ps. 1,552,730. On August 20, 2014, the proceeding was sent to the Segunda
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)
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 |
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.
NOTE 24—SUBSEQUENT EVENTS:26. BUSINESS COMBINATION
During the period from January 1 to May 14, 2014, PEMEX participated in the following financing activities:
The net fair value of Fertinal’s assets and liabilities as of the date of acquisition is:
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 | |||
| ||||
Total assets | 12,341,078 | |||
Accounts payable | Ps. | |||
Debt | 9,365,152 | |||
Deferred taxes | 328,578 | |||
Total liabilities | 12,025,270 | |||
Total assets, net | Ps. | |||
Transaction value | Ps. | |||
Goodwill | Ps. |
PMX FP, carried out the purchase price allocation (PPA) of the Fertinal acquisition in accordance with International Financial Reporting Standard 3 “Business Combination”. It was determined that net assets acquired amounted to Ps. 315,808 and a goodwill of Ps. 4,007,018. As of December 31, 2016, a calculation of the impairment of goodwill resulted in the complete cancellation of that amount. The impairment of goodwill is recognized in the consolidated statement of comprehensive income in other income (expenses), net. See Note 22.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures statedFIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
PEMEX intends to incorporate Fertinal into thegas-ammonia solid fertilizers value chain in thousands, except as noted)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:
| € 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%; and |
iii. | € 1,250,000 of its 4.875% Notes due in February 2028, bearing interest rate at 4.98%. |
As of December 31, 2016, PEMEX has valued and repaid U.S. $1,080,000.
On May 14, 2014,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. 12.953418.9225 per U.S. dollar, which represents a 0.95%8.43% appreciation of the value of the peso in U.S. dollar terms as compared to the exchange rate as of December 31, 2013,2016, which was Ps. 13.076520.6640 per U.S. dollar.
On May 14, 2014,As of April 27, 2017, the weighted average price of the crude oil exported by PEMEX was U.S. $97.64$42.25 per barrel; thisbarrel. This represents a price increased bydecrease of approximately 5.55%8.75% as compared to the average price as of December 31, 2013,2016, which was U.S. $92.51$46.30 per barrel.
On February 4March 8, 2017, PEMEX obtained U.S.$ 693,000 to settle the claim of the fire at the Abkatun Permanente Platform occurred last April 2015, as a result of negotiations and 7, 2014,other actions taken by Kot Insurance Company AG in the Organic Statuteinternational 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 was amended. These amendments set forth or revised the responsibilitiesexecuted a settlement agreement with COMMISA and functions of several of PEMEX’s offices and departments.
As of December 31, 2013, PEMEX has valued and recorded the 53,703,915 Repsol shares acquired through PMI HBV as an investment in equity instruments. The market value of Repsol shares has increased approximately 9.99% from €18.32 per share as of December 31, 2013agreed to €20.15 per share as of May 14, 2014.
On March 21, 2014, as part of Round Zero, Petróleos Mexicanos submittedpay to the Ministry of Energy a request that PEMEX be assigned the right to continue to explore and develop areas that together contain 96% of Mexico’s estimated proved reserves of crude oil and natural gas as of December 31, 2013. The transitional articles of the Energy Reform Decree provide that the Ministry of Energy will take the following factors into consideration when determining whether to grant PEMEX an assignment:
The Ministry of Energy has a deadline of September 17, 2014 to respond to the request.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
On April 30, 2014, President Enrique PeñCOMMISA U.S.$ 435,000 plus the applicable value added tax, with the funds deposited by Pemex Exploration and Production in a Nieto submittedbank 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 Mexican Congress bills proposing secondary legislation intended to implement certain provisionscriteria determined by the Tax Management Service.
As of the Energy Reform Decree. Amongdate 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 things, these proposed bills providerelated 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 additional technical, managerial and budgetary autonomy designed to increase its production and allow it to compete effectively with other oil and gas companies that enterfull protection when the monthly average price of the Mexican energy sector. As of May 14, 2014,crude oil basket is between U.S.$42 and U.S.$37 per barrel, which is the proposed bills are subject to review, debateprice range with a higher probability among adverse scenarios, and revision bypartial protection when the Mexican Congress, and therefore itprice is uncertain what the final scope and terms of any approved bill will be.below U.S.$37 per barrel.
NOTE 25—28. SUBSIDIARY GUARANTOR INFORMATION:INFORMATION
The following consolidating information presents: (i) condensed consolidatingconsolidated statements of financial position at December 31, 20132016 and 20122015 and condensed consolidatingconsolidated statements of comprehensive income and cash flows for the years ended December 31, 2013, 20122016, 2015 and 20112014 of Petróleos Mexicanos, Pemex-Explorationthe Subsidiary Guarantors and Production, Pemex-Refining, Pemex-Gas and Basic Petrochemicals and theNon-Guarantor Subsidiaries (as defined below; excluding the Master Trust) and (ii) condensed consolidating statements of cash flows for the year ended December 31, 2011 of the Master Trust as required by Rule 3-10 of Regulation S-X of the SEC.below).
These condensed consolidatingconsolidated statements arewere 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-ExplorationPemex Exploration and Production, Pemex-RefiningPemex Industrial Transformation, Pemex Drilling and Pemex-GasServices, Pemex Logistics and Basic PetrochemicalsPemex Cogeneration and Services (collectively, the “Subsidiary Guarantors”) and Pemex-PetrochemicalsPemex Ethylene and Pemex Fertilizers are 100%-owned subsidiaries of Petróleos Mexicanos. Pemex-Petrochemicals, Pemex Finance, Ltd. and the Subsidiary Companies collectively comprise the non-guarantor subsidiaries (the “Non-Guarantor Subsidiaries”).Mexican Government. The guaranties by the Subsidiary Guarantors of Petróleos Mexicanos’ payment obligations under this indebtedness are full, and unconditional, and 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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The following table sets forth, as of the date of these consolidated financial statements,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 | Guarantors | Principal outstanding (U.S. $) | |||||
| ||||||||
5.75% Guaranteed Notes due 2018 | Petróleos Mexicanos | |||||||
6.625% Guaranteed Bonds due 2035 | Petróleos Mexicanos | 1,750,000 | ||||||
6.625% Guaranteed Bonds due 2038 | Petróleos Mexicanos | 491,175 | ||||||
| ||||||||
8.625% Bonds due 2022 | Petróleos Mexicanos | 160,245 | ||||||
8.625% Guaranteed Bonds due 2023 | Petróleos Mexicanos | 106,507 | ||||||
9 1⁄4% Guaranteed Bonds due 2018 | Petróleos Mexicanos | 107,109 | ||||||
9.50% Guaranteed Bonds due 2027 | Petróleos Mexicanos | 219,217 |
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The following table sets forth, as of the date of these consolidated financial statements,December 31, 2016, the principal amount outstanding of the registered debt securities issued by Petróleos Mexicanos, and guaranteed by Pemex-ExplorationPemex Exploration and Production, Pemex-RefiningPemex Industrial Transformation, Pemex Drilling and Pemex-GasServices, Pemex Logistics and Basic Petrochemicals.Pemex Cogeneration and Services.
Table 2: Registered Debt Securities originally issued by Petróleos Mexicanos
Security | Issuer | Guarantors | Principal (U.S. $) | |||||
8.00% Notes due 2019 | Petróleos Mexicanos | |||||||
9 1⁄4% Global Guaranteed Bonds due 2018 | Petróleos | Pemex Exploration and Production, | 9,296 | |||||
9.50% Global Guaranteed Bonds due 2027 | Petróleos | |||||||
| 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 | 999,590 | ||||||
Floating Rate Notes due 2018 | Petróleos Mexicanos | 498,570 | ||||||
6.000% Notes due 2020 | Petróleos Mexicanos | 995,364 | ||||||
| ||||||||
| ||||||||
| ||||||||
|
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Security | Issuer | Guarantors | Principal (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 | 3,000,000 | ||||||
4.875% Bonds 2022 | Petróleos Mexicanos | 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, 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)
Security | Issuer | Guarantors | Principal amount outstanding (U.S. $) | |||||
5.50% Bonds due 2044 | Petróleos Mexicanos | |||||||
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, 20132016 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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF FINANCIAL POSITION
As of December 31, 20132016
Petróleos Mexicanos | Subsidiary Guarantors | Non-Guarantor Subsidiaries | Eliminations | PEMEX Consolidated | Petróleos Mexicanos | Subsidiary guarantors | Non-guarantor subsidiaries | Eliminations | PEMEX consolidated | |||||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||||||
Current assets | ||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | Ps. | 50,131,405 | Ps. | 5,331,901 | Ps. | 25,282,413 | Ps. | — | Ps. | 80,745,719 | Ps. | 92,503,607 | Ps. | 9,732,503 | Ps. | 61,296,403 | Ps. | — | Ps. | 163,532,513 | ||||||||||||||||||||
Accounts, notes receivable and other, net, and derivative financial instruments | 28,693,366 | 34,290,219 | 66,270,066 | — | 129,253,651 | |||||||||||||||||||||||||||||||||||
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 | 383,510,275 | 821,836,275 | 96,867,309 | (1,302,213,859) | — | 440,645,367 | 1,684,782,235 | 70,268,246 | (2,195,695,848 | ) | — | |||||||||||||||||||||||||||||
Inventories | 659,252 | 31,460,831 | 24,794,417 | — | 56,914,500 | 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 | 462,994,298 | 892,919,226 | 213,214,205 | (1,302,213,859) | 266,913,870 | 540,200,523 | 1,807,006,434 | 203,887,691 | (2,195,695,848 | ) | 355,398,800 | |||||||||||||||||||||||||||||
Long-term receivables—inter-company | 737,649,602 | 2,938,490 | 4,687,346 | (745,275,438) | — | |||||||||||||||||||||||||||||||||||
Investments in equity instruments | — | — | 17,728,571 | — | 17,728,571 | |||||||||||||||||||||||||||||||||||
Permanent investments in associates | 416,044,158 | 5,971,793 | 10,791,945 | (416,028,395) | 16,779,501 | |||||||||||||||||||||||||||||||||||
Wells, pipelines, properties, plant and equipment, net | 9,666,204 | 1,670,030,799 | 41,881,738 | — | 1,721,578,741 | |||||||||||||||||||||||||||||||||||
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 | — | 233,872 | 2,259,290 | — | 2,493,162 | 59,162,878 | 40,341,615 | 820,196 | — | 100,324,689 | ||||||||||||||||||||||||||||||
Restricted cash | 1,620,091 | 6,081,707 | — | — | 7,701,798 | — | 9,624,804 | 853,822 | — | 10,478,626 | ||||||||||||||||||||||||||||||
Intangible assets | — | 8,639,242 | — | — | 8,639,242 | |||||||||||||||||||||||||||||||||||
Other assets | 1,181,797 | 10,504,660 | 2,508,253 | — | 14,194,710 | 1,824,104 | 2,707,788 | 4,980,753 | — | 9,512,645 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total assets | Ps. | 1,629,156,150 | Ps. | 2,588,680,547 | Ps. | 293,071,348 | Ps. | (2,463,517,692) | Ps. | 2,047,390,353 | Ps. | 2,244,774,970 | Ps. | 3,472,400,061 | $ | 305,189,828 | $ | (3,692,478,835 | ) | $ | 2,329,886,024 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||||||||||||||||||||
Current portion of long-term debt | Ps. | 67,909,431 | Ps. | 8,933,827 | Ps. | 13,833,685 | Ps. | — | Ps. | 90,676,943 | 157,937,631 | 7,381,095 | 10,847,462 | — | 176,166,188 | |||||||||||||||||||||||||
Accounts payable—inter-company | 760,642,526 | 466,591,441 | 67,538,205 | (1,294,772,172) | — | 1,265,244,986 | 854,106,939 | 68,510,835 | (2,187,862,760 | ) | — | |||||||||||||||||||||||||||||
Other current liabilities | 18,238,388 | 127,336,814 | 22,938,687 | — | 168,513,889 | 34,913,773 | 169,182,239 | 45,927,686 | — | 250,023,698 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total current liabilities | 846,790,345 | 602,862,082 | 104,310,577 | (1,294,772,172) | 259,190,832 | 1,458,096,390 | 1,030,670,273 | 125,285,983 | (2,187,862,760 | ) | 426,189,886 | |||||||||||||||||||||||||||||
Long-term debt | 732,584,613 | 9,294,300 | 8,684,558 | — | 750,563,471 | 1,737,332,174 | 46,090,919 | 23,581,449 | — | 1,807,004,542 | ||||||||||||||||||||||||||||||
Long-term payables—inter-company | 2,938,487 | 744,839,772 | 4,811,537 | (752,589,796) | — | — | 1,746,433,870 | 8,303,850 | (1,754,737,720 | ) | — | |||||||||||||||||||||||||||||
Employee benefits, provisions for sundry creditors, other liabilities and deferred taxes | 232,593,227 | 871,015,524 | 119,273,939 | — | 1,222,882,690 | 282,902,667 | 1,035,019,339 | 11,777,737 | — | 1,329,699,743 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total liabilities | 1,814,906,672 | 2,228,011,678 | 237,080,611 | (2,047,361,968) | 2,232,636,993 | 3,478,331,231 | 3,858,214,401 | 168,949,019 | (3,942,600,480 | ) | 3,562,894,171 | |||||||||||||||||||||||||||||
EQUITY | (185,750,522) | 360,668,869 | 55,990,737 | (416,155,724) | (185,246,640) | |||||||||||||||||||||||||||||||||||
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. | 1,629,156,150 | Ps. | 2,588,680,547 | Ps. | 293,071,348 | Ps. | (2,463,517,692) | Ps. | 2,047,390,353 | 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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF FINANCIAL POSITION
As of December 31, 20122015
Petróleos Mexicanos | Subsidiary Guarantors | Non-Guarantor Subsidiaries | Eliminations | PEMEX Consolidated | Petróleos Mexicanos | Subsidiary guarantors | Non-guarantor subsidiaries | Eliminations | PEMEX consolidated | |||||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||||||
Current assets | ||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | Ps. | 96,787,354 | Ps. | 7,195,766 | Ps. | 15,251,771 | Ps. | — | Ps. | 119,234,891 | Ps. | 58,461,012 | Ps. | 6,630,670 | Ps. | 44,277,198 | Ps. | — | Ps. | 109,368,880 | ||||||||||||||||||||
Accounts, notes receivable and other, net, and derivative financial instruments | 25,234,689 | 56,823,237 | 60,001,738 | — | 142,059,664 | |||||||||||||||||||||||||||||||||||
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 | 326,146,962 | 845,251,812 | 130,352,752 | (1,301,751,526 | ) | — | 125,742,649 | 900,153,311 | 137,229,202 | (1,163,125,162 | ) | — | ||||||||||||||||||||||||||||
Inventories | 659,127 | 32,301,113 | 23,887,330 | — | 56,847,570 | 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 | 448,828,132 | 941,571,928 | 229,493,591 | (1,301,751,526 | ) | 318,142,125 | 221,972,786 | 937,614,993 | 270,737,880 | (1,163,125,162 | ) | 267,200,497 | ||||||||||||||||||||||||||||
Long-term receivables—inter-company | 652,032,481 | 2,235,625 | 2,393,927 | (656,662,033 | ) | — | ||||||||||||||||||||||||||||||||||
Investments in equity instruments | 1,122,034 | — | 14,649,225 | — | 15,771,259 | |||||||||||||||||||||||||||||||||||
Permanent investments in associates | 379,828,855 | 5,142,805 | 8,063,389 | (378,388,786 | ) | 14,646,263 | ||||||||||||||||||||||||||||||||||
Wells, pipelines, properties, plant and equipment | 9,460,483 | 1,607,131,954 | 42,141,648 | — | 1,658,734,085 | |||||||||||||||||||||||||||||||||||
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 | — | — | 1,935,997 | — | 1,935,997 | 52,242,786 | 2,168,657 | 488,941 | — | 54,900,384 | ||||||||||||||||||||||||||||||
Restricted cash | 2,605,332 | — | — | — | 2,605,332 | — | 8,010,298 | 1,236,474 | — | 9,246,772 | ||||||||||||||||||||||||||||||
Intangible assets | — | 14,304,961 | — | — | 14,304,961 | |||||||||||||||||||||||||||||||||||
Other assets | 1,313,411 | 7,716,566 | 3,317,858 | — | 12,347,835 | 1,559,055 | 2,528,699 | 3,319,906 | — | 7,407,660 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total assets | Ps. | 1,495,190,728 | Ps. | 2,563,798,878 | Ps. | 301,995,635 | Ps. | (2,336,802,345 | ) | Ps. | 2,024,182,896 | 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: | ||||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||||||||||||||||||||
Current portion of long-term debt | Ps. | 80,738,221 | Ps. | 12,339,176 | Ps. | 21,163,608 | Ps. | — | Ps. | 114,241,005 | Ps. | 183,985,562 | Ps. | 5,933,027 | Ps. | 2,590,079 | Ps. | — | Ps. | 192,508,668 | ||||||||||||||||||||
Accounts payable—inter-company | 796,677,437 | 432,690,603 | 63,356,847 | (1,292,724,887 | ) | — | 915,533,239 | 162,455,837 | 76,784,232 | (1,154,773,308 | ) | — | ||||||||||||||||||||||||||||
Other current liabilities | 15,456,052 | 76,281,029 | 29,825,563 | — | 121,562,644 | 35,189,773 | 195,646,938 | 20,062,342 | — | 250,899,053 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total current liabilities | 892,871,710 | 521,310,808 | 114,346,018 | (1,292,724,887 | ) | 235,803,649 | 1,134,708,574 | 364,035,802 | 99,436,653 | (1,154,773,308 | ) | 443,407,721 | ||||||||||||||||||||||||||||
Long-term debt | 647,774,876 | 11,524,366 | 13,318,353 | — | 672,617,595 | 1,271,921,360 | 11,589,261 | 17,362,546 | — | 1,300,873,167 | ||||||||||||||||||||||||||||||
Long-term payables—inter-company | 2,235,625 | 659,364,483 | 4,098,126 | (665,698,234 | ) | — | — | 1,281,683,849 | 7,298,100 | (1,288,981,949 | ) | — | ||||||||||||||||||||||||||||
Employee benefits, provisions for sundry creditors, other liabilities and deferred taxes | 224,072,822 | 1,024,174,386 | 138,580,294 | — | 1,386,827,502 | |||||||||||||||||||||||||||||||||||
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 | 1,766,955,033 | 2,216,374,043 | 270,342,791 | (1,958,423,121 | ) | 2,295,248,746 | 2,697,158,296 | 2,601,770,165 | 252,156,894 | (2,443,755,257 | ) | 3,107,330,098 | ||||||||||||||||||||||||||||
EQUITY | (271,764,305 | ) | 347,424,835 | 31,652,844 | (378,379,224 | ) | (271,065,850 | ) | ||||||||||||||||||||||||||||||||
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. | 1,495,190,728 | Ps. | 2,563,798,878 | Ps. | 301,995,635 | Ps. | (2,336,802,345 | ) | Ps. | 2,024,182,896 | 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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF COMPREHENSIVE INCOME
For the year ended December 31, 20132016
Petróleos Mexicanos | Subsidiary Guarantors | Non-Guarantor Subsidiaries | Eliminations | PEMEX Consolidated | Petróleos Mexicanos | Subsidiary guarantors | Non-guarantor subsidiaries | Eliminations | PEMEX consolidated | |||||||||||||||||||||||||||||||
Net sales | Ps. | 22,115 | Ps. | 2,283,326,517 | Ps. | 1,136,284,419 | Ps. | (1,821,767,783 | ) | Ps. | 1,597,865,268 | Ps. | — | Ps. | 1,361,538,624 | Ps. | 828,143,332 | Ps. | (1,124,563,366 | ) | Ps. | 1,065,118,590 | ||||||||||||||||||
Services income | 55,361,187 | 6,305,400 | 5,394,402 | (56,721,632 | ) | 10,339,357 | 46,330,245 | 98,959,131 | 7,422,494 | (138,284,789 | ) | 14,427,081 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total sales revenues | 55,383,302 | 2,289,631,917 | 1,141,678,821 | (1,878,489,415 | ) | 1,608,204,625 | 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 | 1,478,302 | 1,507,556,220 | 1,126,452,213 | (1,821,480,397 | ) | 814,006,338 | 1,236,921 | 1,244,388,072 | 810,915,191 | (1,188,959,550 | ) | 867,580,634 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Gross income | 53,905,000 | 782,075,697 | 15,226,608 | (57,009,018 | ) | 794,198,287 | 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 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Other (expenses) revenues, net | (1,629,063 | ) | 71,323,153 | (4,876,023 | ) | (291,217 | ) | 64,526,850 | ||||||||||||||||||||||||||||||||
General expenses: | ||||||||||||||||||||||||||||||||||||||||
Transportation and distribution expenses | — | 31,612,865 | 1,276,529 | �� | (440,958 | ) | 32,448,436 | |||||||||||||||||||||||||||||||||
Transportation, distribution and sale expenses | — | 50,948,771 | 945,489 | (26,663,020 | ) | 25,231,240 | ||||||||||||||||||||||||||||||||||
Administrative expenses | 52,176,527 | 87,089,702 | 16,332,061 | (56,943,818 | ) | 98,654,472 | 57,437,455 | 96,884,031 | 7,050,271 | (48,718,224 | ) | 112,653,533 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total general expenses | 52,176,527 | 118,702,567 | 17,608,590 | (57,384,776 | ) | 131,102,908 | 57,437,455 | 147,832,802 | 7,995,760 | (75,381,244 | ) | 137,884,773 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Operating income | 99,410 | 734,696,283 | (7,258,005 | ) | 84,541 | 727,622,229 | (12,656,742 | ) | 419,027,899 | 17,153,195 | 825,835 | 424,350,187 | ||||||||||||||||||||||||||||
Financing cost—Net | 6,745,042 | (35,080,491 | ) | (1,079,423 | ) | (124,940 | ) | (29,539,812 | ) | |||||||||||||||||||||||||||||||
Exchange (loss) gain—Net | (305,581 | ) | (3,441,388 | ) | (204,523 | ) | — | (3,951,492 | ) | |||||||||||||||||||||||||||||||
(Loss) profit sharing in associates | (173,928,884 | ) | 1,141,059 | (434,349 | ) | 173,928,884 | 706,710 | |||||||||||||||||||||||||||||||||
(Loss) income before taxes, duties and other | (167,390,013 | ) | 697,315,463 | (8,976,300 | ) | 173,888,485 | 694,837,635 | |||||||||||||||||||||||||||||||||
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 | 2,475,621 | 858,504,381 | 3,916,060 | — | 864,896,062 | (8,834,626 | ) | 266,155,181 | 7,200,880 | — | 264,521,435 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Net (loss) income for the year | (169,865,634 | ) | (161,188,918 | ) | (12,892,360 | ) | 173,888,485 | (170,058,427 | ) | (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 other comprehensive income | 25,443,543 | 194,725,595 | 34,101,029 | — | 254,270,167 | |||||||||||||||||||||||||||||||||||
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 | ) | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Comprehensive result for the year | Ps. (144,422,091 | ) | Ps. 33,536,677 | Ps. 21,208,669 | Ps. 173,888,485 | Ps. 84,211,740 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF COMPREHENSIVE INCOME
For the year ended December 31, 20122015
Petróleos Mexicanos | Subsidiary Guarantors | Non-Guarantor Subsidiaries | Eliminations | PEMEX Consolidated | Petróleos Mexicanos | Subsidiary guarantors | Non-guarantor subsidiaries | Eliminations | PEMEX consolidated | |||||||||||||||||||||||||||||||
Net sales | Ps. | 16,009 | Ps. | 2,300,269,835 | Ps. 1,257,236,879 | Ps. | (1,917,786,969 | ) | Ps. | 1,639,735,754 | Ps. | 15,556 | Ps. | 1,523,767,800 | Ps. | 803,623,324 | Ps. | (1,173,956,323 | ) | Ps. | 1,153,450,357 | |||||||||||||||||||
Services income | 54,963,056 | 5,449,622 | 2,897,419 | (56,133,811 | ) | 7,176,286 | 16,897,139 | 16,815,589 | 7,187,694 | (27,988,310 | ) | 12,912,112 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total sales revenues | 54,979,065 | 2,305,719,457 | 1,260,134,298 | (1,973,920,780 | ) | 1,646,912,040 | 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 | 1,252,618 | 1,504,565,221 | 1,245,083,304 | (1,918,410,569 | ) | 832,490,574 | 2,695,423.00 | 1,280,404,059 | 794,252,043 | (1,182,282,621 | ) | 895,068,904 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Gross income | 53,726,447 | 801,154,236 | 15,050,994 | (55,510,211 | ) | 814,421,466 | 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 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Other (expenses) revenues, net | (335,781 | ) | 210,667,412 | (943,530 | ) | (369,138 | ) | 209,018,963 | ||||||||||||||||||||||||||||||||
General expenses: | ||||||||||||||||||||||||||||||||||||||||
Transportation and distribution expenses | — | 27,623,303 | 1,189,946 | (324,966 | ) | 28,488,283 | ||||||||||||||||||||||||||||||||||
Transportation, distribution and sale expenses | — | 32,870,908 | 2,921,430 | (6,863,699 | ) | 28,928,639 | ||||||||||||||||||||||||||||||||||
Administrative expenses | 46,788,554 | 84,409,050 | 14,277,458 | (55,862,213 | ) | 89,612,849 | 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 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total general expenses | 46,788,554 | 112,032,353 | 15,467,404 | (56,187,179 | ) | 118,101,132 | ||||||||||||||||||||||||||||||||||
Operating income | 6,602,112 | 899,789,295 | (1,359,940 | ) | 307,830 | 905,339,297 | 305,369 | (173,820,796 | ) | 19,113,820 | 14,526 | (154,387,081 | ) | |||||||||||||||||||||||||||
Financing cost—Net | 1,492,938 | (49,753,710 | ) | (1,172,770 | ) | (302,858 | ) | (49,736,400 | ) | |||||||||||||||||||||||||||||||
Exchange gain (loss) —Net | 5,720,540 | 38,975,874 | 149,247 | — | 44,845,661 | |||||||||||||||||||||||||||||||||||
(Loss) profit sharing in associates | (8,164,817 | ) | 2,329,571 | 2,435,880 | 8,196,973 | 4,797,607 | ||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Income (loss) before taxes, duties and other | 5,650,773 | 891,341,030 | 52,417 | 8,201,945 | 905,246,165 | |||||||||||||||||||||||||||||||||||
(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 | 2,817,741 | 897,843,428 | 1,984,518 | — | 902,645,687 | (51,982,560 | ) | 376,649,369 | 6,833,438 | — | 331,500,247 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Net (loss) income for the year | 2,833,032 | (6,502,398 | ) | (1,932,101 | ) | 8,201,945 | 2,600,478 | (712,309,525 | ) | (765,702,940 | ) | 15,606,464 | 749,838,603 | (712,567,398 | ) | |||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
Total other comprehensive result | (60,588,295 | ) | (265,515,874 | ) | (50,738,806 | ) | — | (376,842,975 | ) | 10,980,787 | 56,585,790 | 21,045,777 | — | 88,612,354 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Comprehensive result for the year | Ps. | (57,755,263 | ) | Ps. | (272,018,272 | ) | Ps. | (52,670,907 | ) | Ps. | 8,201,945 | Ps. | (374,242,497 | ) | ||||||||||||||||||||||||||
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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF COMPRENSIVECOMPREHENSIVE INCOME
For the year ended December 31, 20112014
Petróleos Mexicanos | Subsidiary Guarantors | Non-Guarantor Subsidiaries | Eliminations | PEMEX Consolidated | Petróleos Mexicanos | Subsidiary guarantors | Non-guarantor subsidiaries | Eliminations | PEMEX consolidated | |||||||||||||||||||||||||||||||
Net sales | Ps. 44,905,923 | Ps. 2,173,817,756 | Ps. 1,240,905,328 | Ps. (1,907,465,671 | ) | Ps. 1,552,163,336 | 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 | 18,718 | 4,727,223 | 2,978,470 | (1,433,630 | ) | 6,290,781 | 64,245,159 | 6,055,328 | 6,426,288 | (65,288,193 | ) | 11,438,582 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total sales revenues | 44,924,641 | 2,178,544,979 | 1,243,883,798 | (1,908,899,301 | ) | 1,558,454,117 | 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 | 1,164,720 | 1,408,544,231 | 1,232,482,760 | (1,863,415,340 | ) | 778,776,371 | 2,663,293 | 1,492,165,034 | 1,106,898,998 | (1,759,092,541 | ) | 842,634,784 | ||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
Gross income | 43,759,921 | 770,000,748 | 11,401,038 | (45,483,961 | ) | 779,677,746 | 61,600,864 | 706,566,282 | 6,568,518 | (53,288,270 | ) | 721,447,394 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Other (expenses) revenues, net | (2,272,532 | ) | 184,864,106 | 7,050,431 | (522,144 | ) | 189,119,861 | 514,056 | 36,518,256 | 778,682 | (258,597 | ) | 37,552,397 | |||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
General expenses: | ||||||||||||||||||||||||||||||||||||||||
Transportation and distribution expenses | — | 26,091,788 | 1,086,196 | (468,307 | ) | 26,709,677 | ||||||||||||||||||||||||||||||||||
Transportation, distribution and sale expenses | — | 34,095,556 | 1,555,276 | (3,468,166 | ) | 32,182,666 | ||||||||||||||||||||||||||||||||||
Administrative expenses | 41,658,446 | 72,264,326 | 12,542,526 | (45,688,479 | ) | 80,776,819 | 57,654,464 | 86,112,895 | 17,701,494 | (50,131,739 | ) | 111,337,114 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total general expenses | 41,658,446 | 98,356,114 | 13,628,722 | (46,156,786 | ) | 107,486,496 | 57,654,464 | 120,208,451 | 19,256,770 | (53,599,905 | ) | 143,519,780 | ||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
Operating income | (171,057 | ) | 856,508,740 | 4,822,747 | 150,681 | 861,311,111 | 4,460,456 | 622,876,087 | (11,909,570 | ) | 53,038 | 615,480,011 | ||||||||||||||||||||||||||||
Financing cost—Net | 10,473,792 | (36,981,642 | ) | (6,002,079 | ) | (142,044 | ) | (32,651,973 | ) | |||||||||||||||||||||||||||||||
Exchange (loss) gain—Net | (6,279,415 | ) | (55,018,846 | ) | 1,155,009 | — | (60,143,252 | ) | ||||||||||||||||||||||||||||||||
(Loss) profit sharing in associates | (110,370,444 | ) | (301,689 | ) | 90,373 | 109,771,007 | (810,753 | ) | ||||||||||||||||||||||||||||||||
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 | (106,347,124 | ) | 764,206,563 | 66,050 | 109,779,644 | 767,705,133 | (262,106,391 | ) | 487,235,691 | (7,880,909 | ) | 263,283,384 | 480,531,775 | |||||||||||||||||||||||||||
Total taxes, duties and other | 384,791 | 870,614,032 | 3,648,567 | — | 874,647,390 | 3,160,818 | 738,855,418 | 4,058,528 | — | 746,074,764 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Net (loss) income for the year | (106,731,915 | ) | (106,407,469 | ) | (3,582,517 | ) | 109,779,644 | (106,942,257 | ) | (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 income | (7,580,605) | (5,470,555) | 6,606,401 | — | (6,444,759) | |||||||||||||||||||||||||||||||||||
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 | ) | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Comprehensive result for the year | Ps. (114,312,520) | Ps. (111,878,024) | Ps. 3,023,884 | Ps. 109,779,644 | Ps. (113,387,016) | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF CASH FLOWS
For the year ended December 31, 20132016
Petróleos Mexicanos | Subsidiary Guarantors | Non-Guarantor Subsidiaries | Eliminations | PEMEX Consolidated | Petróleos Mexicanos | Subsidiary guarantors | Non-guarantor subsidiaries | Eliminations | PEMEX consolidated | |||||||||||||||||||||||||||||||
Operating Activities: | ||||||||||||||||||||||||||||||||||||||||
Operating activities: | ||||||||||||||||||||||||||||||||||||||||
Net (loss) income for the year | Ps. | (169,865,634 | ) | Ps. | (161,188,918 | ) | Ps. | (12,892,360 | ) | Ps. | 173,888,485 | Ps. | (170,058,427 | ) | 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 | 686,088 | 145,329,809 | 2,475,807 | — | 148,491,704 | 1,066,033 | 146,545,307 | 2,828,151 | — | 150,439,491 | ||||||||||||||||||||||||||||||
Impairment of wells, pipelines, properties, plant and equipment | — | 26,364,717 | (755,882 | ) | — | 25,608,835 | — | (330,037,834 | ) | (1,276,509 | ) | — | (331,314,343 | ) | ||||||||||||||||||||||||||
Unsuccessful wells | — | 12,497,726 | — | — | 12,497,726 | — | 29,106,084 | — | — | 29,106,084 | ||||||||||||||||||||||||||||||
Disposal of properties, plant and equipment | 24,668 | 7,744,792 | 6,930,160 | — | 14,699,620 | |||||||||||||||||||||||||||||||||||
Profit (loss) sharing in associates | 173,258,510 | (1,141,058 | ) | 434,349 | (173,258,511 | ) | (706,710 | ) | ||||||||||||||||||||||||||||||||
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 | — | — | (914,116 | ) | — | (914,116 | ) | — | — | (293,397 | ) | — | (293,397 | ) | ||||||||||||||||||||||||||
Effects of net present value of reserve for well abandonment | — | (5,240,305 | ) | — | — | (5,240,305 | ) | — | 11,968,966 | — | — | 11,968,966 | ||||||||||||||||||||||||||||
Gain on sale of properties, plant and equipment | — | — | (768,000 | ) | — | (768,000 | ) | |||||||||||||||||||||||||||||||||
(Profit) loss on investments in equity instruments | (278,842 | ) | — | — | — | (278,842 | ) | |||||||||||||||||||||||||||||||||
Amortization gains related to debt issuance | (1,037,663 | ) | (853,047 | ) | — | — | (1,890,710 | ) | ||||||||||||||||||||||||||||||||
Unrealized foreign exchange gain (loss) | 2,836,523 | (172,772 | ) | 644,548 | — | 3,308,299 | ||||||||||||||||||||||||||||||||||
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 | 36,108,777 | 2,077,850 | 1,117,316 | — | 39,303,943 | 91,044,541 | 5,687,502 | 2,112,421 | — | 98,844,464 | ||||||||||||||||||||||||||||||
Funds provided by (used in) operating activities: | ||||||||||||||||||||||||||||||||||||||||
Accounts and notes receivable and derivative financial instruments | (5,132,196 | ) | 16,451,312 | (4,077,897 | ) | — | 7,241,219 | |||||||||||||||||||||||||||||||||
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 | (125 | ) | 840,283 | (907,088 | ) | — | (66,930 | ) | 83,317 | 3,508,494 | (4,950,690 | ) | — | (1,358,879 | ) | |||||||||||||||||||||||||
Other assets | 667,515 | (14,081,007 | ) | 507,576 | — | (12,905,916 | ) | (2,405,412 | ) | (22,600,504 | ) | (122,614 | ) | — | (25,128,530 | ) | ||||||||||||||||||||||||
Accounts payable and accrued liabilities | 1,695,525 | 57,495,890 | (5,219,423 | ) | — | 53,971,992 | ||||||||||||||||||||||||||||||||||
Employee benefits | 34,961,922 | 36,848,133 | 6,233,085 | — | 78,043,140 | 2,591,000 | 136,354,337 | (91,652,268 | ) | — | 47,293,069 | |||||||||||||||||||||||||||||
Inter-company charges and deductions | (89,826,553 | ) | 162,188,266 | 37,867,036 | (110,228,749 | ) | — | (393,835,932 | ) | (83,049,125 | ) | 48,435,633 | 428,449,424 | — | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Cash flows provided by operating activities | (15,901,485 | ) | 285,161,671 | 30,675,111 | (109,598,775 | ) | 190,336,522 | |||||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
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 | (916,477 | ) | (233,834,924 | ) | (10,876,153 | ) | — | (245,627,554 | ) | (2,172,586 | ) | (147,786,686 | ) | (1,449,208 | ) | — | (151,408,480 | ) | ||||||||||||||||||||||
Inter-company (increase) decrease investing | (71,142,378 | ) | (111,826,436 | ) | — | 182,968,814 | — | |||||||||||||||||||||||||||||||||
Investments in equity instruments | 2,869,883 | — | — | — | 2,869,883 | |||||||||||||||||||||||||||||||||||
Exploration costs | — | (1,438,685 | ) | — | — | (1,438,685 | ) | — | (2,022,826 | ) | — | — | (2,022,826 | ) | ||||||||||||||||||||||||||
Investments in subsidiaries | (2,066,366 | ) | (244,823 | ) | 2,311,189 | — | — | |||||||||||||||||||||||||||||||||
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 | (71,255,338 | ) | (347,344,868 | ) | (8,564,964 | ) | 182,968,814 | (244,196,356 | ) | (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 | 155,545,511 | 81,409,522 | — | 236,955,033 | 571,944,209 | 34,483,348 | 235,564,210 | — | 841,991,767 | |||||||||||||||||||||||||||||||
Debt payments, principal only | (86,279,510 | ) | (10,499,109 | ) | (94,367,472 | ) | — | (191,146,091 | ) | (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 | 702,864 | 71,203,090 | 675,957 | (72,581,911 | ) | — | — | 464,488,030 | 3,741227 | (468,229,257 | ) | — | ||||||||||||||||||||||||||||
Increase in equity of Subsidiary Entities | 66,583,100 | 206,288 | 231,705 | (437,993 | ) | 66,583,100 | ||||||||||||||||||||||||||||||||||
Interest paid | (35,192,692 | ) | (1,172,776 | ) | (767,632 | ) | (37,133,100 | ) | ||||||||||||||||||||||||||||||||
Withdrawal of Government contributions | (65,000,000 | ) | 581,839 | (231,704 | ) | (350,135 | ) | (65,000,000 | ) | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Cash flows provided by financing activities: | 36,359,273 | 60,319,332 | (13,049,624 | ) | (73,370,039 | ) | 10,258,942 | 192,236,879 | 487,849,991 | 1,502,867 | (468,229,257 | ) | 213,360,480 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Net (decrease) increase in cash and cash equivalents | (50,797,550 | ) | (1,863,865 | ) | 9,060,523 | — | (43,600,892 | ) | 28,471,701 | (17,269,297 | ) | 26,156,962 | — | 37,359,366 | ||||||||||||||||||||||||||
Effects of change in cash value | 4,141,601 | — | 970,119 | — | 5,111,720 | 5,570,892 | 20,371,126 | (9,137,751 | ) | — | 16,804,267 | |||||||||||||||||||||||||||||
Cash and cash equivalents at the beginning of the year | 96,787,354 | 7,195,766 | 15,251,771 | — | 119,234,891 | 58,461,014 | 6,630,674 | 44,277,192 | — | 109,368,880 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Cash and cash equivalents at the end of the year | Ps. | 50,131,405 | Ps. | 5,331,901 | Ps. | 25,282,413 | Ps. | — | Ps. | 80,745,719 | Ps. | 92,503,607 | Ps. | 9,732,503 | Ps. 61,296,403 | Ps. | — | Ps. | 163,532,513 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF CASH FLOWS
For the year ended December 31, 20122015
Petróleos Mexicanos | Subsidiary Guarantors | Non-Guarantor Subsidiaries | Eliminations | PEMEX Consolidated | Petróleos Mexicanos | Subsidiary guarantors | Non-guarantor subsidiaries | Eliminations | PEMEX consolidated | |||||||||||||||||||||||||||||||
Operating Activities: | ||||||||||||||||||||||||||||||||||||||||
Net income (loss) for the year | Ps. | 2,833,032 | Ps. | (6,502,398 | ) | Ps. | (1,932,101 | ) | Ps. | 8,201,945 | Ps. | 2,600,478 | ||||||||||||||||||||||||||||
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 | 570,890 | 137,241,770 | 2,725,060 | — | 140,537,720 | 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 | — | 13,842,410 | — | — | 13,842,410 | — | 23,213,519 | — | — | 23,213,519 | ||||||||||||||||||||||||||||||
Disposal of wells, pipelines, properties, plant and equipment | 68,329 | (437,338 | ) | 1,102,530 | — | 733,521 | 180,992 | 21,945,266 | 2,512,279 | — | 24,638,537 | |||||||||||||||||||||||||||||
Profit (loss) sharing in associates | 8,434,500 | (2,329,571 | ) | (2,468,036 | ) | (8,434,500 | ) | (4,797,607 | ) | |||||||||||||||||||||||||||||||
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 | — | — | (685,704 | ) | — | (685,704 | ) | — | — | (359,941 | ) | — | (359,941 | ) | ||||||||||||||||||||||||||
Effects of net present value of reserve for well abandonment | — | 3,552,924 | — | — | 3,552,924 | — | (608,160 | ) | — | — | (608,160 | ) | ||||||||||||||||||||||||||||
Amortization expenses related to debt issuance | 1,560,476 | — | — | — | 1,560,476 | (2,299,657 | ) | — | — | — | (2,299,657 | ) | ||||||||||||||||||||||||||||
Unrealized foreign exchange gain (loss) | (40,144,818 | ) | (2,266,480 | ) | 1,849,490 | — | (40,561,808 | ) | ||||||||||||||||||||||||||||||||
Unrealized foreign exchange loss (gain) | 145,971,158 | 2,996,219 | 3,708,879 | — | 152,676,256 | |||||||||||||||||||||||||||||||||||
Interest expense | 42,020,763 | 12,160,731 | 1,804,544 | (10,247,445 | ) | 45,738,593 | 63,460,443 | 3,414,430 | 898,720 | — | 67,773,593 | |||||||||||||||||||||||||||||
Funds provided by (used in) operating activities: | ||||||||||||||||||||||||||||||||||||||||
Accounts and notes receivable | 6,288,911 | 2,944,581 | 13,364,486 | — | 22,597,978 | |||||||||||||||||||||||||||||||||||
Accounts receivable, accounts payable and derivative financial instruments | (58,554,144 | ) | 119,761,648 | (27,777,939 | ) | — | 33,429,565 | |||||||||||||||||||||||||||||||||
Inventories | (167,346 | ) | (12,228,746 | ) | 566,674 | — | (11,829,418 | ) | 108,568 | 4,547,843 | 1,511,317 | — | 6,167,728 | |||||||||||||||||||||||||||
Other assets | (489,291 | ) | (7,215,184 | ) | 25,872 | — | (7,678,603 | ) | (149,819 | ) | (16,578,827 | ) | 126,281 | — | (16,602,365 | ) | ||||||||||||||||||||||||
Accounts payable and accrued liabilities | 4,261,846 | (20,566,075 | ) | 2,440,343 | — | (13,863,886 | ) | |||||||||||||||||||||||||||||||||
Employee benefits | 8,432,015 | 46,744,724 | 6,406,528 | — | 61,583,267 | (10,037,444 | ) | (94,183,192 | ) | (11,801,596 | ) | — | (116,022,232 | ) | ||||||||||||||||||||||||||
Inter-company charges and deductions | (22,322,476 | ) | 156,037,261 | (20,700,257 | ) | (113,014,528 | ) | — | (310,384,820 | ) | 30,044,041 | 31,975,215 | 248,365,564 | — | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Cash flows provided by operating activities | 11,346,831 | 320,978,609 | 4,499,429 | (123,494,528 | ) | 213,330,341 | (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 | (1,128,811 | ) | (192,801,968 | ) | (3,578,219 | ) | — | (197,508,998 | ) | (1,496,277 | ) | (239,315,507 | ) | (12,702,217 | ) | — | (253,514,001 | ) | ||||||||||||||||||||||
Inter-company (increase) decrease investing | (9,667,629 | ) | (103,341,908 | ) | — | 113,009,537 | — | |||||||||||||||||||||||||||||||||
Available-for-sale financial assets | ||||||||||||||||||||||||||||||||||||||||
Investments in associates | — | — | (36,214 | ) | — | (36,214 | ) | |||||||||||||||||||||||||||||||||
Exploration costs | — | (1,828,043 | ) | — | — | (1,828,043 | ) | — | (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 | (10,796,440 | ) | (297,971,919 | ) | (3,578,219 | ) | 113,009,537 | (199,337,041 | ) | (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 | 118,081,331 | — | 259,814,818 | — | 377,896,149 | 345,383,990 | — | 33,587,088 | — | 378,971,078 | ||||||||||||||||||||||||||||||
Debt payments, principal only | (70,037,268 | ) | (10,914,565 | ) | (260,912,130 | ) | — | (341,863,963 | ) | (145,628,200 | ) | (8,081,177 | ) | (37,609,464 | ) | — | (191,318,841 | ) | ||||||||||||||||||||||
Inter-company (decrease) increase financing | — | (8,226 | ) | (53,367 | ) | 61,593 | — | |||||||||||||||||||||||||||||||||
Interest paid | (42,121,370 | ) | (12,231,579 | ) | (2,483,557 | ) | 10,247,440 | (46,589,066 | ) | (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 | 5,922,693 | (23,154,370 | ) | (3,634,236 | ) | 10,309,033 | (10,556,880 | ) | ||||||||||||||||||||||||||||||||
Cash flows provided by financing activities: | 148,005,974 | 276,418,151 | (2,424,869 | ) | (287,084,169 | ) | 134,915,087 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 6,473,084 | (147,680 | ) | (2,713,026 | ) | (175,958 | ) | 3,436,420 | ||||||||||||||||||||||||||||||||
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 | (422,540 | ) | 1,278,252 | (209,746 | ) | 175,958 | 821,924 | 11,185,788 | 1,138,356 | (3,363,931 | ) | — | 8,960,213 | |||||||||||||||||||||||||||
Cash and cash equivalents at the beginning of the year | 90,736,810 | 6,065,194 | 18,174,543 | — | 114,976,547 | 73,002,640 | 5,407,420 | 39,578,468 | — | 117,988,528 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Cash and cash equivalents at the end of the year | Ps. | 96,787,354 | Ps. | 7,195,766 | Ps. | 15,251,771 | Ps. | — | Ps. | 119,234,891 | Ps. | 58,461,014 | Ps. | 6,630,674 | Ps. | 44,277,192 | Ps. | — | Ps. | 109,368,880 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
STATEMENT OF CASH FLOWS
For the year ended December 31, 20112014
Petróleos Mexicanos | Master Trust | �� | Subsidiary Guarantors | Non-Guarantor Subsidiaries | Eliminations | PEMEX Consolidated | Petróleos Mexicanos | Subsidiary guarantors | Non-guarantor subsidiaries | Eliminations | PEMEX consolidated | |||||||||||||||||||||||||||||||||
Operating Activities: | ||||||||||||||||||||||||||||||||||||||||||||
Operating activities: | ||||||||||||||||||||||||||||||||||||||||||||
Net (loss) income for the year | Ps. | (106,731,915 | ) | Ps. | — | Ps. | (106,407,469 | ) | Ps. | (3,582,517 | ) | Ps. | 109,779,644 | Ps. | (106,942,257 | ) | Ps. | (265,267,209 | ) | Ps. | (251,619,727 | ) | Ps. | (11,939,437 | ) | Ps. | 263,283,384 | Ps. | (265,542,989 | ) | ||||||||||||||
Adjustments to reconcile net income (loss) to cash provided by operating activities | ||||||||||||||||||||||||||||||||||||||||||||
Adjustments to reconcile net loss to cash provided by operating activities: | ||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 600,028 | — | 124,727,086 | 2,053,295 | — | 127,380,409 | 744,081 | 139,522,310 | 2,808,396 | — | 143,074,787 | |||||||||||||||||||||||||||||||||
Impairment of wells, pipelines, properties, plant and equipment | — | — | (6,855,535 | ) | — | — | (6,855,535 | ) | — | 21,199,704 | 1,445,992 | — | 22,645,696 | |||||||||||||||||||||||||||||||
Unsuccessful wells | — | — | 12,021,450 | — | — | 12,021,450 | — | 12,148,028 | — | — | 12,148,028 | |||||||||||||||||||||||||||||||||
Disposal of wells, pipelines, properties, plant and equipment | 149,315 | — | 10,855,859 | (6,320,039 | ) | — | 4,685,135 | 211,414 | 3,499,602 | 2,659,921 | — | 6,370,937 | ||||||||||||||||||||||||||||||||
Profits (loss) sharing in associates | 91,888,790 | — | 301,689 | 614,035 | (91,993,761 | ) | 810,753 | |||||||||||||||||||||||||||||||||||||
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 | — | — | — | (599,907 | ) | — | (599,907 | ) | — | — | (736,302 | ) | — | (736,302 | ) | |||||||||||||||||||||||||||||
Effects of net present value of reserve for well abandonment | — | — | 6,598,215 | — | — | 6,598,215 | — | 9,169,327 | — | — | 9,169,327 | |||||||||||||||||||||||||||||||||
Amortization expenses related to debt issuance | 762,387 | — | — | — | — | 762,387 | 312,296 | — | — | — | 312,296 | |||||||||||||||||||||||||||||||||
Unrealized foreign exchange gain (loss) | 64,713,020 | — | 2,908,723 | 1,795,613 | — | 69,417,356 | ||||||||||||||||||||||||||||||||||||||
Unrealized foreign exchange loss (gain) | 75,053,801 | 1,903,282 | 1,927,634 | — | 78,884,717 | |||||||||||||||||||||||||||||||||||||||
Interest expense | 40,704,054 | — | 5,795,631 | 1,554,449 | (13,223,591 | ) | 34,830,543 | 44,969,920 | 5,084,856 | 854,848 | — | 50,909,624 | ||||||||||||||||||||||||||||||||
Derivative financial instruments | (4,304,124 | ) | — | (367,917 | ) | 4,672,041 | — | — | ||||||||||||||||||||||||||||||||||||
Funds provided by (used in) operating activities: | ||||||||||||||||||||||||||||||||||||||||||||
Accounts and notes receivable and derivative financial instruments | (3,841,880 | ) | 1,456,154 | (7,517,371 | ) | (21,436,816 | ) | — | (31,339,913 | ) | ||||||||||||||||||||||||||||||||||
Accounts receivable, accounts payable and derivative financial instruments | 14,951,048 | (19,048,441 | ) | 14,075,687 | — | 9,978,294 | ||||||||||||||||||||||||||||||||||||||
Inventories | (272,845 | ) | — | 1,422,857 | (6,900,293 | ) | — | (5,750,281 | ) | 20,413 | (5,046,019 | ) | 12,001,450 | — | 6,975,844 | |||||||||||||||||||||||||||||
Other assets | 372,713 | — | (8,566,926 | ) | (1,474,939 | ) | — | (9,669,152 | ) | (227,438 | ) | (17,819,505 | ) | (937,934 | ) | — | (18,984,877 | ) | ||||||||||||||||||||||||||
Accounts payable and accrued liabilities | 1,431,412 | (425,793 | ) | 2,202,506 | 16,816,831 | — | 20,024,956 | |||||||||||||||||||||||||||||||||||||
Provisions for sundry creditors | — | — | 2,944,707 | — | — | 2,944,707 | ||||||||||||||||||||||||||||||||||||||
Employee benefits | 8,812,862 | — | 36,942,842 | 5,197,153 | — | 50,952,857 | 17,913,078 | 52,988,257 | 8,068,673 | — | 78,970,008 | |||||||||||||||||||||||||||||||||
Inter-company charges and deductions | (24,876,137 | ) | (1,030,361 | ) | 21,849,784 | 12,155,858 | (8,099,144 | ) | — | (274,747,392 | ) | 37,103,048 | (13,393,984 | ) | 251,038,328 | — | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||
Cash flows provided by operating activities | 69,407,680 | — | 98,856,131 | 4,544,764 | (3,536,852 | ) | 169,271,723 | (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 | (702,978 | ) | — | (163,613,569 | ) | (2,697,021 | ) | — | (167,013,568 | ) | (2,574,431 | ) | (215,531,732 | ) | (12,572,707 | ) | — | (230,678,870 | ) | |||||||||||||||||||||||||
Inter-company (increase) decrease investing | (91,709,068 | ) | — | (223,287 | ) | — | 91,932,355 | — | ||||||||||||||||||||||||||||||||||||
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 | — | — | (4,135,188 | ) | — | — | (4,135,188 | ) | — | (1,593,706 | ) | — | — | (1,593,706 | ) | |||||||||||||||||||||||||||||
Investments in subsidiaries | 15,394,390 | — | (1,570,769 | ) | (15,519,183 | ) | (19,088,258 | ) | (20,783,820 | ) | ||||||||||||||||||||||||||||||||||
Received dividends | — | — | 336,095 | — | 336,095 | |||||||||||||||||||||||||||||||||||||||
Investments in associates | 7,942,930 | — | — | (7,942,930 | ) | — | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||
Cash flows used in investing activities | (77,017,656 | ) | — | (169,542,813 | ) | (18,216,204 | ) | 72,844,097 | (191,932,576 | ) | 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 | 97,714,350 | — | — | 91,978,669 | — | 189,693,019 | 320,893,270 | — | 102,506,205 | — | 423,399,475 | |||||||||||||||||||||||||||||||||
Debt payments, principal only | (72,936,610 | ) | — | (11,151,706 | ) | (68,030,529 | ) | — | (152,118,845 | ) | (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 | 61,142 | — | 89,361,235 | 364,423 | (89,786,800 | ) | — | 687,961 | 240,568,067 | 1,563,590 | (242,819,618 | ) | — | |||||||||||||||||||||||||||||||
Interest paid | (39,661,962 | ) | — | (5,565,988 | ) | (1,376,730 | ) | 13,223,590 | (33,381,090 | ) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||
Cash flows provided by financing activities | (14,823,080 | ) | — | 72,643,541 | 22,935,833 | (76,563,210 | ) | 4,193,084 | ||||||||||||||||||||||||||||||||||||
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 | (22,433,056 | ) | — | 1,956,859 | 9,264,393 | (7,255,965 | ) | (18,467,769 | ) | 18,279,030 | (813,539 | ) | 11,335,454 | — | 28,800,945 | |||||||||||||||||||||||||||||
Effects of change in cash value | (3,686,911 | ) | — | 79,876 | (1,400,969 | ) | 7,255,965 | 2,247,961 | 4,592,205 | 889,057 | 2,960,602 | — | 8,441,864 | |||||||||||||||||||||||||||||||
Cash and cash equivalents at the beginning of the year | 116,856,777 | — | 4,028,458 | 10,311,120 | — | 131,196,355 | 50,131,405 | 5,331,902 | 25,282,412 | — | 80,745,719 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||
Cash and cash equivalents at the end of the year | Ps. | 90,736,810 | Ps. | — | Ps. | 6,065,193 | Ps. | 18,174,544 | Ps. | — | Ps. | 114,976,547 | Ps. | 73,002,640 | Ps. | 5,407,420 | Ps. | 39,578,468 | Ps. | — | Ps. | 117,988,528 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
NOTE 26—29. SUPPLEMENTARY INFORMATION ON OIL AND GAS EXPLORATION AND PRODUCTION ACTIVITIES (UNAUDITED):
Effective January 1, 2010, certain ofUnder the SEC’s rules were revised in order to modernize the reporting requirements applicable to oil and gas companies such as PEMEX in respect ofMexican Constitution, all crude oil and other hydrocarbon reserves. The most significantreserves located in the subsoil of these revisions includeMexico are owned by the following: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.
There has been no material change in Mexico’s proved reserves as a result of the application of these revised SEC rules.
The following tables provideThis note provides supplementary information on the oil and gas exploration, development and production activities of Pemex-ExplorationPemex Exploration and Production in compliance with the U.S. Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 932932-10-510-5 “Extractive Activities—Oil and Gas” (“ASC Topic 932”) and Accounting Standards Update 2010-03.2010-03 (see Note 3(i)).
AllAs of the date of these consolidated financial statements, all exploration and production activities of Pemex-ExplorationPemex Exploration and Production are conducted in Mexico. The supplemental data presented herein reflect information for all of Pemex-ExplorationPemex Exploration and Production’s oil and gas producing activities.
Capitalized costs for oil and gas producing activities (unaudited): |
As of December 31, | ||||||||||||
2013 | 2012 | 2011 | ||||||||||
Proved properties | Ps. | 2,254,784,515 | Ps. | 2,108,592,519 | Ps. | 1,921,817,651 | ||||||
Construction in progress | 83,764,607 | 46,908,049 | 54,255,040 | |||||||||
Accumulated depreciation and amortization | (994,476,861 | ) | (870,694,075 | ) | (756,353,372 | ) | ||||||
|
|
|
|
|
| |||||||
Net capitalized costs | Ps. | 1,344,072,261 | Ps. | 1,284,806,493 | Ps. | 1,219,719,319 | ||||||
|
|
|
|
|
|
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
As of December 31, | ||||||||||||
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 | ||||||
|
|
|
|
|
|
Costs incurred for oil and gas property exploration and development activities (unaudited): |
As of December 31, | ||||||||||||||||
2013 | 2012 | 2016 | 2015 | |||||||||||||
Exploration | Ps. | 36,552,489 | Ps. | 33,345,223 | Ps. | 41,661,666 | Ps. | 44,165,179 | ||||||||
Development | 181,671,933 | 158,425,613 | 113,895,246 | 161,433,414 | ||||||||||||
|
|
|
| |||||||||||||
Total costs incurred | Ps. | 218,224,422 | Ps. | 191,770,836 | 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 offor geological and geophysical studies of fields amounting to Ps. 10,163,6056,804,341 and Ps. 11,978,5318,119,241 for 20132016 and 2012,2015, respectively, that, in accordance with the successful efforts method of accounting, are accounted for as geological and geophysical exploration expenses.
Development costs include those 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)
Results of operations for oil and gas producing activities (unaudited): |
2013 | 2012 | 2011 | 2016 | 2015 | 2014 | |||||||||||||||||||
Revenues from sale of oil and gas | Ps. | 1,250,737,299 | Ps. | 1,333,247,872 | Ps. | 1,270,832,133 | Ps. | 616,380,608 | Ps. | 690,591,455 | Ps. | 1,134,448,708 | ||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Hydrocarbon duties | 856,978,971 | 898,064,551 | 871,471,372 | 304,299,019 | 376,682,705 | 760,627,534 | ||||||||||||||||||
Production costs (excluding taxes) | 134,645,739 | 121,973,668 | 103,250,426 | 171,194,337 | 177,774,082 | 156,134,037 | ||||||||||||||||||
Other costs and expenses | 40,599,327 | 30,828,632 | 30,676,623 | 61,359,271 | 20,360,540 | 35,978,232 | ||||||||||||||||||
Exploration expenses | 22,661,332 | 25,820,942 | 25,746,850 | 39,693,273 | 31,244,564 | 22,291,247 | ||||||||||||||||||
Depreciation, depletion, amortization and accretion | 119,161,541 | 122,356,141 | 107,385,238 | (150,891,739 | ) | 527,014,056 | 144,384,138 | |||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
1,174,046,910 | 1,199,043,934 | 1,138,530,509 | 425,654,161 | 1,133,075,947 | 1,119,415,188 | |||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Results of operations for oil and gas producing activities | Ps. | 76,690,389 | Ps. | 134,203,938 | Ps. | 132,301,624 | Ps. | 190,726,447 | Ps. | (442,484,491 | ) | Ps. | 15,033,520 | |||||||||||
|
|
|
|
|
|
Note: Numbers may not total due to rounding.
Sales prices (unaudited) |
The following table summarizes average sales prices in U.S. dollars asfor each of the years ended December 31 (excluding production taxes):
2013 | 2012 | 2011 | 2016 | 2015 | 2014 | |||||||||||||||||||
Weighted average sales price per barrel of oil equivalent (boe)(1) | U.S.$ | 76.81 | U.S.$ | 78.89 | U.S.$ | 80.41 | US$ | 29.18 | US$ | 37.17 | US$ | 71.44 | ||||||||||||
Crude oil, per barrel | 99.92 | 102.36 | 100.01 | 36.55 | 48.22 | 90.37 | ||||||||||||||||||
Natural gas, per thousand cubic feet | 4.93 | 4.03 | 4.68 | 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. |
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
Crude oil and natural gas reserves (unaudited) |
Under the Mexican Constitution, and the Regulatory Law, all oil and other hydrocarbon reserves located in the subsoil of Mexico are owned by the Mexican nation and not by PEMEX. As ofUnder the date of these consolidated financial statements, Pemex-ExplorationPetróleos Mexicanos Law, Pemex Exploration and Production hadhas 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, 20132016 were prepared by Pemex-Explorationthe exploration and Productionproduction segment and were reviewed by the Independent Engineering Firms (as defined below), which audit Pemex-Exploration and Production’sits estimates of its hydrocarbon reserves. In addition, pursuant to the Regulatory Law,Reglamento de la Ley de Hidrocarburos (Regulations to the NHCHydrocarbons Law), on March 31, 2017 theComisión Nacional de Hidrocarburos reviewed and approved the proved reserves reports estimates as of December 31, 2013 provided by Pemex-Exploration and Production on March 11, 2014. These reserves estimates were then registered and published by the Ministry of Energy on March 18, 2014.2016.
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)
Pemex-Exploration and Production estimates Mexico’sestimated 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 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:
Reserves data set forth herein representrepresents 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 2013,2016, PEMEX did not record any material increase in Mexico’sPEMEX’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 Mexico’s reserves since 1996. PEMEX has established certain internal controls in connection with the preparation of its proved reserves estimates. Initially, teams of geoscientists from
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Figures stated in thousands, except as noted)
Pemex-Exploration and Production’s exploration and exploitation business units (with each of these units covering several projects) prepare the reserves estimates, using distinct estimation processes for valuations relating to new discoveries and developed fields, respectively. Subsequently, the regional reserves offices collect these reserves estimates from the units and request the review and certification of such valuations and the booking of the related reserves fromthat theGerencia de Recursos y Certificación de Reservas (Office of Resources and Reserves)Reserves Certification), the central hydrocarbon reserves management body of Pemex-Exploration and Production.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 provedhydrocarbon reserves, which are based on the SEC’s rules and definitions. The HydrocarbonsOffice of Resources and Reserves and Resources Management Office,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; NODALTM (an analytical tooltools used in forecasting the performance of the various elements comprising the production system) analysis;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 tenfifteen 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 the abovethis internal review process, Pemex-ExplorationPemex Exploration and Production’s final reserves estimates are audited by independent engineering firms. Three independent engineering firms auditedPemex-Exploration Pemex Exploration and Production’s estimates of Mexico’s proved reserves as of December 31, 2013:2016: Netherland Sewell International, S. de R.L.R. L. de C.V.C. V. (“Netherland Sewell”); DeGolyer and MacNaughton;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 99.3%97.6% of Mexico’sPEMEX’s estimated proved reserves. The remaining 0.7%2.4% of PEMEX’s estimated proved reserves consisted of reserves located in certain areas in which third parties provide drilling services to Pemex-ExplorationPemex 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 Northeastern Marine regionPoza Rica-Altamira, Aceite Terciario del Golfo and Southern region,Litoral de Tabasco Assets, DeGolyer in Burgos and MacNaughton audited the reserves in the Southwestern Marine regionVeracruz Assets and Ryder Scott audited the reserves in the Northern region.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 Mexican oilsome of the fields; (3) economic analysis of selectedthe fields; and (4) review ofPemex-Exploration 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-ExplorationPemex Exploration and Production’s reserves estimates so that they could express an opinion as to whether, in the aggregate, the reserves estimates that PEMEXPemex 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-ExplorationPemex 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 as of December 31, 2013set 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.
Mexico’sPEMEX’s total proved developed and undeveloped reserves of crude oil, condensates and liquefiable hydrocarbons recoverable from field processing plants decreased by 3.0%9.5% in 2013,2016, from 11,4247,977 million barrels at December 31, 20122015 to 11,0797,219 million barrels at December 31, 2013. Mexico’s2016. 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, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
oil, condensates and liquefiable hydrocarbons recoverable from processing plants decreased by 5.5% in 2013, from 7,790 million barrels4,513 billion cubic feet at December 31, 2012 to 7,360 million barrels at December 31, 2013.2016. These decreases were principally due to fewer positive revisions to PEMEX’s reserves estimatesthe production of gas in 2013,2016, low prices of hydrocarbons, as well as a decrease in extensions and discoveries, particularly in connection with the decrease in field development activities at the Aceite Terciario del Golfo (“ATG”) project, where the dismantling of fourand field laboratories resulted in a decrease in the number of wells completed, and the decrease in the number of exploratory activities carried out in the deep waters of the Gulf of Mexico.behavior. The amount of crude oil, condensate and liquefiable hydrocarbondry gas reserves added in 20132016 was insufficient to offset the level of production in 2013,2016, which amounted to 1,037 million barrels1,134 billion cubic feet of crude oil, condensates and liquefiable hydrocarbons.
Mexico’s totaldry gas. Its proved developed and undeveloped dry gas reserves decreased by 3.5%4.9 % in 2013,2016, from 12,7132,598 billion cubic feet at December 31, 20122015 to 12,2732,471 billion cubic feet at December 31, 2013. Mexico’s proved developed dry gas reserves decreased by 6.2% in 2013, from 7,951 billion cubic feet at December 31, 2012 to 7,461 billion cubic feet at December 31, 2013. This decrease was principally due to the level of production during 2013, which amounted to 1,539 billion cubic feet of dry gas. The amount of dry gas reserves added in 2013 was insufficient to offset the level of production in 2013, which amounted to 1,539 billion cubic feet of dry gas. Mexico’s proved undeveloped dry gas reserves increased by 1.0% in 2013, from 4,762 billion cubic feet at December 31, 2012 to 4,811 billion cubic feet at December 31, 2013. This increase was primarily due to field development activities in the Burgos and Veracruz basins.2016.
During 2013, 903.42016, the exploratory activity in shallow waters incorporated 57 million barrels of oil equivalent were reclassifiedcoming from proved undeveloped, probableone new field located close to existing facilities of exploitation through exploration assignments. Pemex Exploration and possible reservesProduction keep the exploratory jobs in shallow waters in order to proved developed reserves, at a cost of Ps. 181,670,000. The only fields containing material volumes of Mexico’sincorporate proved reserves that have remained undeveloped for five years or more arewhich support the Ayatsil, Ayín and Alux fields, which are all located offshore. These fields remain undeveloped due to delaysfuture fresh production in construction related to certain unique field characteristics. In particular, the design of the development plan for the Ayatsil field, the largest of the three, has required additional time due to the complexity of this project, which is expected to represent Pemex-Exploration and Production’s first offshore project producing extra-heavy crude oil. As of the date of these consolidated financial statements, three drilling platforms have been installed at the Ayatsil field and drilling activity is expected to begin in the near future. PEMEX also expects to continue to develop the Ayín and Alux fields during 2014.short term.
The following three tables set forth PEMEX’s estimates of Mexico’s proved crude oil and dry gas reserves set forth PEMEX’s estimates of its proved reserves determined in accordance with Rule4-10(a).
Summary of Oiloil and Gasgas(1) Proved Reservesproved reserves as of December 31, 2013 Based2016
based on Average Fiscal Year Pricesaverage fiscal year prices
Crude Oil and Condensates(2) | Dry Gas(3) | Crude oil and Condensates(2) | Dry Gas(3) | |||||||||||||
(in millions of barrels) | (in billions of cubic feet) | (in millions of barrels) | (in billions of cubic feet) | |||||||||||||
Proved developed and undeveloped reserves Proved developed reserves | 7,360 | 7,461 | ||||||||||||||
Proved developed and undeveloped reserves: | ||||||||||||||||
Proved developed reserves | 4,886 | 4,513 | ||||||||||||||
Proved undeveloped reserves | 3,719 | 4,812 | 2,333 | 2,471 | ||||||||||||
|
|
|
| |||||||||||||
Total proved reserves | 11,079 | 12,273 | 7,219 | 6,984 | ||||||||||||
|
|
|
|
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. |
Source: Pemex Exploration and Production.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Crude Oiloil and Condensate Reservescondensate reserves
(including natural gas liquids)(1)
2011 | 2012 | 2013 | 2016 | 2015 | 2014 | |||||||||||||||||||
(in millions of barrels) | (in millions of barrels) | |||||||||||||||||||||||
Proved developed and undeveloped reserves | ||||||||||||||||||||||||
Proved developed and undeveloped reserves: | ||||||||||||||||||||||||
At January 1 | 11,394 | 11,362 | 11,424 | 7,977 | 10,292 | 11,079 | ||||||||||||||||||
Revisions(2) | 824 | 1,012 | 630 | 189 | (1,491 | ) | 95 | |||||||||||||||||
Extensions and discoveries | 194 | 103 | 62 | (55 | ) | 111 | 119 | |||||||||||||||||
Production | (1,050 | ) | (1,053 | ) | (1,037 | ) | (891 | ) | (935 | ) | (1001 | ) | ||||||||||||
|
|
|
|
|
| |||||||||||||||||||
At December 31 | 11,362 | 11,424 | 11,079 | 7,219 | 7,977 | 10,292 | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Proved developed reserves at December 31 | 7,618 | 7,790 | 7,360 | 4,886 | 5,725 | 7,141 | ||||||||||||||||||
Proved undeveloped reserves at December 31 | 3,744 | 3,634 | 3,719 | 2,333 | 2,252 | 3,719 |
Note: Numbers may not total due to rounding.
(1) | Crude oil and condensate reserves include the fraction of liquefiable hydrocarbons recoverable in natural gas processing plants located at fields. |
(2) | Revisions include positive and negative changes due to new data from well drilling, |
Source: Pemex Exploration and Production.
Dry Gas Reservesgas reserves
2011 | 2012 | 2013 | 2016 | 2015 | 2014 | |||||||||||||||||||
(in billions of cubic feet) | (in billions of cubic feet) | |||||||||||||||||||||||
Proved developed and undeveloped reserves | ||||||||||||||||||||||||
Proved developed and undeveloped reserves: | ||||||||||||||||||||||||
At January 1 | 12,494 | 12,734 | 12,713 | 8,610 | 10,859 | 12,273 | ||||||||||||||||||
Revisions(1) | 1,592 | 1,377 | 1,010 | (183 | ) | (955 | ) | 4 | ||||||||||||||||
Extensions and discoveries | 249 | 162 | 89 | (308 | ) | 47 | 93 | |||||||||||||||||
Production(2) | (1,601 | ) | (1,560 | ) | (1,539 | ) | (1,134 | ) | 1,341 | ) | (1,511 | ) | ||||||||||||
|
|
|
|
|
| |||||||||||||||||||
At December 31 | 12,734 | 12,713 | 12,273 | 6,984 | 8,610 | 10,859 | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Proved developed reserves at December 31 | 7,958 | 7,951 | 7,461 | 4,513 | 6,012 | 6,740 | ||||||||||||||||||
Proved undeveloped reserves at December 31 | 4,776 | 4,762 | 4,811 | 2,471 | 2,598 | 4,119 |
Note: Numbers may not total due to rounding.
(1) | Revisions include positive and negative changes due to new data from well drilling, |
(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. |
Pemex-ExplorationSource: Pemex Exploration and Production.
Pemex Exploration and Production’s reserves replacement rate (“RRR”)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. In 2013, the RRR was 67.8%, which was 36.5 percentage points lower than the 2012 RRRDuring 2016, PEMEX obtained an increase of 104.3%. The fact that the reserves replacement rate was less than 100% in 2013 represents a decline in Mexico’s proved reserves during this period. This decrease in the RRR was mainly due to a significant decrease in the amount40 million barrels of oil equivalent of proved reserves as aggregated from discoveries, revisions, delimitations, development and production in 2016, that were added asrepresents a resultRRR of discoveries, extensions and positive revisions in 20134 %. While low, 2016 RRR is an improvement as compared to 2012. Specifically, lower levels of field development activities in the ATG2015, where there was
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
project as well as the decreaseno replacement of proved reserves. PEMEX believes there will be continued improvements in the number of exploratory activities carried out in the deep waters of the Gulf of Mexico, where the lack of infrastructure precluded PEMEX from booking proved reserves, contributed to the decrease inits RRR in 2013.
PEMEX’s goal is to increase its RRR during 2014, in part by increasing Mexico’s proved reserves over the comingsubsequent years. PEMEX aims to accomplish this primarily through development of the Ku-Maloob-Zaap, Crudo Ligero Marino and ATG projects, as well as through the performance of delineation activities. PEMEX has developed these objectives based on reserves estimates, which are subject to the uncertainty and risks associated with hydrocarbon exploration and production activities. Additionally, future decisions regarding authorized exploration and exploitation investment levels may lead to related changes.
PEMEX’s reserves production ratio, which is presented in terms of years, is calculated by dividing the estimated remaining reserves at the end of the relevant year by the total production of hydrocarbons for that year. As of December 31, 2013,2016, this ratio was equal to 10.17.7 years for proved reserves in oil equivalent, which represents a decrease of 1.0%4.9 % as compared to the 20122015 reserves production ratio of 10.28.1 years for proved reserves.reserves
Standardized measure of discounted future net cash |
The standardized measure tables presented below relate to proved oil and gas reserves excluding proved reserves scheduled to be produced after the year 2038.2042. 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 ofon the first day of each month of 2013.2016. 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-ExplorationPemex Exploration and Production already legislated for 20132016 to the futurepre-tax net cash flows related to Mexico’s proved oil and gas reserves.
The estimated future payment of taxes was calculated based on fiscal regime applicable by decree to Pemex-ExplorationPemex Exploration and Production effective January 1, 20132015 and which reformed Chapter XIIby the tax benefits published in the Official Gazette of the Federal Duties Law.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.
PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 20122016, 2015 AND 20112014
(Figures stated in thousands, except as noted)FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Standardized measure of discounted future net cash flows as of December 31
2013 | 2012 | 2011 | 2016 | 2015 | 2014 | |||||||||||||||||||
(in millions of U.S. dollars) | (in millions of dollars) | |||||||||||||||||||||||
Future cash inflows | U.S. $ | 931,874 | U.S. $ | 974,411 | U.S. $ | 1,004,082 | US$ | 228,196 | US$ | 325,052 | US$ | 757,794 | ||||||||||||
Future production costs (excluding taxes) | (135,211 | ) | (124,485 | ) | (118,123 | ) | ||||||||||||||||||
Future development cost | (46,339 | ) | (46,146 | ) | (38,521 | ) | ||||||||||||||||||
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 | 750,324 | 803,780 | 847,438 | 114,738 | 192,544 | 608,353 | ||||||||||||||||||
Future production and excess gains taxes | (634,371 | ) | (664,343 | ) | (649,023 | ) | (108,960 | ) | (167,056 | ) | (543,743 | ) | ||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Future net cash flows | 115,953 | 139,437 | 198,415 | 5,779 | 25,488 | 64,610 | ||||||||||||||||||
Effect of discounting net cash flows by 10% | (34,996 | ) | (41,913 | ) | (60,518 | ) | (937 | ) | (9,946 | ) | (19,949 | ) | ||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Standardized measure of discounted future net cash flows | U.S. $ | 80,957 | U.S. $ | 97,524 | U.S. $ | 137,897 | 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 flowsflows:
2013 | 2012 | 2011 | ||||||||||||||||||||||
(in millions of U.S. dollars) | 2016 | 2015 | 2014 | |||||||||||||||||||||
Sales of oil and gas produced, net of production costs | U.S. $ | (82,802 | ) | U.S. $ | (87,609 | ) | U.S. $ | (91,280 | ) | US$(19,411) | US$ | (28,371 | ) | US$ | (69,582 | ) | ||||||||
Net changes in prices and production costs | (61,268 | ) | (58,215 | ) | 269,575 | (53,278 | ) | (327,865 | ) | (79,617 | ) | |||||||||||||
Extensions and discoveries | 4,280 | 6,315 | 7,935 | 1,105 | 3,086 | 3,022 | ||||||||||||||||||
Development cost incurred during the year | 14,224 | 11,431 | 10,554 | 4,124 | 10,172 | 14,215 | ||||||||||||||||||
Changes in estimated development costs | (12,625 | ) | (17,466 | ) | (11,722 | ) | 1,763 | (2,171 | ) | (7,086 | ) | |||||||||||||
Reserves revisions and timing changes | 49,091 | 58,150 | 57,968 | 6,366 | (22,801 | ) | (13,432 | ) | ||||||||||||||||
Accretion of discount of pre-tax net cash flows | 54,280 | 56,921 | 29,216 | 11,094 | 43,394 | 51,504 | ||||||||||||||||||
Net changes in production and excess gains taxes | 18,253 | (9,899 | ) | (192,730 | ) | 37,537 | 295,437 | 64,678 | ||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Aggregate change in standardized measure of discounted future net cash flows | U.S. $ | (16,567 | ) | U.S. $ | (40,372 | ) | U.S. $ | 79,516 | US$(10,700) | US$ | (29,119 | ) | US$ | (36,296 | ) | |||||||||
|
|
|
|
|
| |||||||||||||||||||
Standardized measure | ||||||||||||||||||||||||
Standardized measure: | ||||||||||||||||||||||||
As of January 1 | 97,524 | 137,896 | 58,380 | US$ | 15,541 | US$ | 44,661 | US$ | 80,957 | |||||||||||||||
As of December 31 | 80,957 | 97,524 | 137,896 | 4,841 | 15,541 | 44,661 | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Change | U.S. $ | (16,567 | ) | U.S. $ | (40,372 | ) | U.S.$ | 79,516 | 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-111F-146