| Notes: Numbers may not total due to rounding. tbpd = thousand barrels per day. API gravity refers to the specific gravity or density of liquid petroleum products, measured in degrees on the American Petroleum Institute (API) scale. On the API scale, oil with the lowest specific gravity has the highest API gravity. In addition, holding all other factors constant, the higher the API gravity, the greater the value of the crude oil. (1) | During 2018, 2019 and 2020 we did not export Olmeca crude oil. However, it was used for processing in our refineries. |
Source: PMI operating statistics as of January 9, 2018.7, 2021. | | | Year ended December 31, | | | Year ended December 31, | | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2017 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | | (U.S. dollars per barrel) | | | (U.S. dollars per barrel) | | Crude Oil Prices | | | | | | | | | | | | | | | | | | | | | Olmeca | | U.S.$ | 107.92 | | | U.S.$ | 93.54 | | | U.S.$ | 51.46 | | | U.S.$ | 39.71 | | | U.S.$ | 51.79 | | | U.S. $ | 39.71 | | | U.S. $ | 51.79 | | | U.S. $ | — | | | U.S. $ | — | | | U.S. $ | — | | Isthmus | | | 104.69 | | | | 93.39 | | | | 49.28 | | | | 37.72 | | | | 50.75 | | | | 37.72 | | | | 50.75 | | | | 64.54 | | | | 57.12 | | | | 37.37 | | Maya | | | 96.89 | | | | 83.75 | | | | 41.12 | | | | 35.30 | | | | 46.41 | | | | 35.30 | | | | 46.48 | | | | 61.47 | | | | 55.75 | | | | 36.14 | | Altamira | | | 94.35 | | | | 81.30 | | | | 36.19 | | | | 30.35 | | | | 39.45 | | | | 30.35 | | | | 39.45 | | | | 57.81 | | | | 53.69 | | | | 32.05 | | Talam | | | — | | | | 36.74 | | | | 36.40 | | | | 28.44 | | | | — | | | | 28.44 | | | | — | | | | 59.47 | | | | 53.50 | | | | 27.60 | | | | | | | | | | | | | | | | | | | Weighted average realized price | | U.S. $ | 98.44 | | | U.S. $ | 85.48 | | | U.S. $ | 43.12 | | | U.S. $ | 35.65 | | | U.S. $ | 46.73 | | | U.S. $ | 35.65 | | | U.S. $ | 46.79 | | | U.S. $ | 61.41 | | | U.S. $ | 55.53 | | | U.S. $ | 35.82 | | | | | | | | | | | | | | | | | | |
Source: PMI operating statistics as of January 9, 2018.7, 2021. Geographic Distribution of Export Sales As of December 31, 2017,2020, PMI had more than 3019 customers in 12five countries. Since 2013, the proportion of our crude oil export sales to the United States has declined, while the proportion of our crude oil export sales to Europe and Asia has increased. In 2017, 53%2020, 58.9 % of our crude oil export sales were to customers in the United States and Canada, which represents a 21% decrease3.7% increase as compared to 2013.2019. Since 2013,2014, primarily as a result of increased availability of light crude oil in the United States and other developing trends in international demand for imported crude oil, we have expanded the scope of our geographic distribution and adapted our strategy to diversify and strengthen the position of Mexican crude oil in the international market. As part of thatPMI’s strategy, in January 2014, PMI started exportingwe began to export Olmeca crude oil to several European countries and in recent yearsAsian countries. PMI has expanded its export sales in Asia and continued to do so in 2017.not exported Olmeca crude oil since 2018. However, exports of Isthmus crude oil resumed at the end of 2019. The following table sets forth the geographic distribution of PMI’s sales of crude oil exports for the five years ended December 31, 2017.2020. The table also presents the distribution of exports among PMI’s crude oil types for those years:years. Composition and Geographic Distribution of Crude Oil Export Sales | | | Year ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | 2013 | | 2014 | | 2015 | | 2016 | | 2017 | | | Year ended December 31, | | | | (tbpd) | | (%) | | (tbpd) | | (%) | | (tbpd) | | (%) | | (tbpd) | | (%) | | (tbpd) | | (%) | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | PMI Crude Oil Export Sales to: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | United States and Canada | | 879 | | | 74 | | | 813 | | | 71 | | | 690 | | | 59 | | | 572 | | | 48 | | | 617 | | | 53 | | | | 570.3 | | | | 47.8 | | | | 617.2 | | | | 52.6 | | | | 669.8 | | | | 56.6 | | | | 609.2 | | | | 55.2 | | | | 659.6 | | | | 58.9 | | Europe | | 179 | | | 15 | | | 215 | | | 18 | | | 248 | | | 21 | | | 273 | | | 23 | | | 219 | | | 19 | | | | 272.2 | | | | 22.8 | | | | 219.1 | | | | 18.7 | | | | 199.1 | | | | 16.8 | | | | 181.8 | | | | 16.5 | | | | 162.8 | | | | 14.5 | | Asia | | 116 | | | 10 | | | 100 | | | 9 | | | 219 | | | 19 | | | 319 | | | 27 | | | 317 | | | 27 | | | | 318.3 | | | | 26.7 | | | | 317.2 | | | | 27.0 | | | | 311.4 | | | | 26.3 | | | | 312.3 | | | | 28.3 | | | | 297.5 | | | | 26.6 | | Central and South America | | 15 | | | 1 | | | 15 | | | 1 | | | 15 | | | 1 | | | 34 | | | 3 | | | 20 | | | 2 | | | | 33.6 | | | | 2.8 | | | | 20.4 | | | | 1.7 | | | | 3.8 | | | | 0.3 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | 1,189 | | | 100 | | | 1,142 | | | 100 | | | 1,172 | | | 100 | | | 1,198 | | | 100 | | | 1,174 | | | 100 | | | | 1,194.3 | | | | 100 | | | | 1,173.9 | | | | 100 | | | | 1,184.0 | | | | 100 | | | | 1,103.3 | | | | 100 | | | | 1,119.9 | | | | 100 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Olmeca (API gravity of 38°-39°) | | | | | | | | | | | | | | | | | | | | | | Olmeca (API gravity of 38°-39°)(1) | | | | | | | | | | | | | | | | | | | | | | United States and Canada | | 90 | | | 8 | | | 35 | | | 3 | | | 40 | | | 4 | | | 4 | | | 0.3 | | | | — | | | | — | | | | 4.1 | | | | 0.3 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Others | | 8 | | | 1 | | | 56 | | | 5 | | | 84 | | | 7 | | | 104 | | | 9 | | | 19 | | | 2 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | 99 | | | 8 | | | 91 | | | 8 | | | 124 | | | 11 | | | 108 | | | 9 | | | 19 | | | 2 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Isthmus (API gravity of 32°-33°) | | | | | | | | | | | | | | | | | | | | | | United States and Canada | | 62 | | | 5 | | | 89 | | | 8 | | | 78 | | | 7 | | | 3 | | | 0.3 | | | 5 | | | 0.4 | | | Others | | 41 | | | 3 | | | 45 | | | 4 | | | 116 | | | 10 | | | 150 | | | 13 | | | 81 | | | 7 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | 103 | | | 9 | | | 134 | | | 12 | | | 194 | | | 17 | | | 153 | | | 13 | | | 86 | | | 7 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Maya (API gravity of 21°-22°) | | | | | | | | | | | | | | | | | | | | | | United States and Canada | | 707 | | | 60 | | | 662 | | | 58 | | | 513 | | | 44 | | | 541 | | | 45 | | | 597 | | | 51 | | | Others | | 260 | | | 22 | | | 225 | | | 20 | | | 230 | | | 20 | | | 326 | | | 27 | | | 457 | | | 39 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | 968 | | | 81 | | | 887 | | | 78 | | | 743 | | | 63 | | | 867 | | | 72 | | | 1,054 | | | 90 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Altamira (API gravity of 15.0°-16.5°) | | | | | | | | | | | | | | | | | | | | | | United States and Canada | | 20 | | | 2 | | | 27 | | | 2 | | | 28 | | | 2 | | | 22 | | | 2 | | | 15 | | | 1 | | | Others | | | — | | | | — | | | 0.4 | | | 0.04 | | | | — | | | | — | | | 2 | | | 0.2 | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | 20 | | | 2 | | | 27 | | | 2 | | | 28 | | | 2 | | | 24 | | | 2 | | | 15 | | | 1 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Talam (API gravity of 15.8º) | | | | | | | | | | | | | | | | | | | | | | United States and Canada | | | — | | | | — | | | | — | | | | — | | | 31 | | | 3 | | | 1 | | | 0.1 | | | | — | | | | — | | | Others | | | — | | | | — | | | 3 | | | 0.3 | | | 52 | | | 4 | | | 44 | | | 4 | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | — | | | | — | | | 3 | | | 0.3 | | | 83 | | | 7 | | | 45 | | | 4 | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | Others | | | 103.9 | | | | 8.7 | | | | 18.9 | | | | 1.6 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 108.0 | | | | 9.0 | | | | 18.9 | | | | 1.6 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Isthmus (API gravity of 32°-33°) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | United States and Canada | | | 3.2 | | | | 0.3 | | | | 4.7 | | | | 0.4 | | | | — | | | | — | | | | 2.7 | | | | 0.2 | | | | 124.6 | | | | 11.1 | | Others | | | 149.9 | | | | 12.5 | | | | 81.1 | | | | 6.9 | | | | 30.7 | | | | 2.6 | | | | 1.4 | | | | 0.1 | | | | 15.0 | | | | 1.3 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 152.7 | | | | 12.8 | | | | 85.8 | | | | 7.3 | | | | 30.7 | | | | 2.6 | | | | 4.1 | | | | 0.4 | | | | 139.6 | | | | 12.5 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Maya (API gravity of 21°-22°) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | United States and Canada | | | 539.9 | | | | 45.2 | | | | 597.2 | | | | 50.9 | | | | 623.9 | | | | 52.7 | | | | 506.1 | | | | 45.9 | | | | 474.8 | | | | 42.4 | | Others | | | 325.0 | | | | 27.2 | | | | 456.7 | | | | 38.9 | | | | 466.1 | | | | 39.4 | | | | 478.9 | | | | 43.4 | | | | 433.8 | | | | 38.7 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 864.9 | | | | 72.4 | | | | 1,053.9 | | | | 89.8 | | | | 1,090.0 | | | | 93.1 | | | | 985.0 | | | | 89.3 | | | | 908.7 | | | | 81.1 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Altamira (API gravity of 15.0°-16.5°) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | United States and Canada | | | 21.9 | | | | 1.8 | | | | 15.3 | | | | 1.3 | | | | 19.9 | | | | 1.7 | | | | 20.7 | | | | 1.9 | | | | 18.4 | | | | 1.6 | | Others | | | 1.8 | | | | 0.2 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 23.6 | | | | 2.0 | | | | 15.3 | | | | 1.3 | | | | 19.9 | | | | 1.7 | | | | 20.7 | | | | 1.9 | | | | 18.4 | | | | 1.6 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Talam (API gravity of 15.8°) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | United States and Canada | | | 1.3 | | | | 0.1 | | | | — | | | | — | | | | 25.8 | | | | 2.2 | | | | 79.7 | | | | 7.2 | | | | 41.7 | | | | 3.7 | | Others | | | 43.9 | | | | 3.7 | | | | — | | | | — | | | | 17.6 | | | | 1.5 | | | | 13.8 | | | | 1.3 | | | | 11.4 | | | | 1.0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 45.2 | | | | 3.8 | | | | — | | | | — | | | | 43.5 | | | | 3.7 | | | | 93.5 | | | | 8.5 | | | | 53.2 | | | | 4.7 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Notes: | Numbers may not total due to rounding. |
Notes: Numbers may not total due to rounding. tbpd = thousand barrels per day. API gravity refers to the specific gravity or density of liquid petroleum products, measured in degrees on the API scale. On the API scale, oil with the lowest specific gravity has the highest API gravity. In addition, holding all other factors constant, the higher the API gravity, the greater the value of the crude oil. (1) | During 2020, we used Olmeca crude oil for processing in our refineries and did not export Olmeca crude oil. |
Source: PMI operating statistics as of April 2018.January 7, 2021. In total, we exported 1,174.01,119.9 thousand barrels of crude oil per day in 2017,2020 and in 2018 we expect to export approximately 1,100.01,110.0 thousand barrels of crude oil per day.day in 2021. We sell the crude oil produced by Pemex Exploration and Production under a variety of contractual arrangements. Of the 1,100.0 thousand barrels of crude oil per day we expect to export in 2018, we are contractually committed to deliver approximately 980.0 thousand barrels per day pursuant to existing supply commitments. We believe that our proved developed and proved undeveloped reserves will be sufficient to allow us to fulfill our supply commitments. The following table sets forth the average volume of our exports and imports of crude oil, natural gas and petroleum products for the five years ended December 31, 2017.2020. Volume of Exports and Imports | | | Year ended December 31, | | | 2017 vs. 2016 | | | Year ended December 31, | | | | | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2017 | | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | 2020 vs. 2019 | | | | (in thousands of barrels per day, except as noted) | | | (%) | | | (in thousands of barrels per day, except as noted) | | | (%) | | Exports | | | | | | | | | | | | | | | | | | | Crude Oil: | | | | | | | | | | | | | | | | | | | | | | | | | Olmeca | | | 98.6 | | | | 91.2 | | | | 124.2 | | | | 108.0 | | | | 18.9 | | | | (82.5 | ) | | | 108.0 | | | | 18.9 | | | | — | | | | — | | | | — | | | | — | | Isthmus | | | 102.7 | | | | 133.7 | | | | 194.0 | | | | 152.7 | | | | 85.8 | | | | (43.8 | ) | | | 152.7 | | | | 85.8 | | | | 30.7 | | | | 4.1 | | | | 139.6 | | | | 3,304.9 | | Maya | | | 967.6 | | | | 887.1 | | | | 743.4 | | | | 864.9 | | | | 1,054.0 | | | | 21.9 | | | | 864.9 | | | | 1,053.9 | | | | 1,090.0 | | | | 985.0 | | | | 908.7 | | | | (7.7 | ) | Altamira | | | 19.9 | | | | 27.2 | | | | 27.8 | | | | 23.6 | | | | 15.3 | | | | (35.2 | ) | | | 23.6 | | | | 15.3 | | | | 19.9 | | | | 20.7 | | | | 18.4 | | | | (11.1 | ) | Talam | | | — | | | | 3.0 | | | | 83.1 | | | | 45.2 | | | | — | | | | (100 | ) | | | 45.2 | | | | — | | | | 43.5 | | | | 93.5 | | | | 53.2 | | | | (43.1 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total crude oil | | | 1,188.8 | | | | 1,142.2 | | | | 1,172.4 | | | | 1,194.3 | | | | 1,174.0 | | | | (1.7 | ) | | | 1,194.3 | | | | 1,173.9 | | | | 1,184.0 | | | | 1,103.3 | | | | 1,119.9 | | | | 1.5 | | Natural gas(1) | | | 3.1 | | | | 4.1 | | | | 2.7 | | | | 2.2 | | | | 1.7 | | | | (22.7 | ) | | | 2.2 | | | | 1.7 | | | | 1.4 | | | | 1.3 | | | | 1.0 | | | | (23.1 | ) | Gasoline | | | 66.8 | | | | 66.0 | | | | 62.9 | | | | 52.7 | | | | 45.0 | | | | (14.6 | ) | | | 52.7 | | | | 45.0 | | | | 37.7 | | | | 33.6 | | | | 12.2 | | | | (63.7 | ) | Other petroleum products | | | 109.6 | | | | 133.3 | | | | 130.8 | | | | 132.9 | | | | 113.1 | | | | (14.9 | ) | | Petrochemical products(2)(3) | | | 614.3 | | | | 406.1 | | | | 333.8 | | | | 124.7 | | | | 60.4 | | | | (51.6 | ) | | Imports | | | | | | | | | | | | | | Natural gas(1) | | | 1,289.7 | | | | 1,357.8 | | | | 1,415.8 | | | | 1,933.9 | | | | 1,766.0 | | | | (8.7 | ) | | Gasoline | | | 375.2 | | | | 389.7 | | | | 440.1 | | | | 510.8 | | | | 582.5 | | | | 14.0 | | | Other petroleum products and LPG(1)(4) | | | 226.3 | | | | 248.7 | | | | 299.7 | | | | 289.6 | | | | 353.6 | | | | 22.1 | | | Petrochemical products(2)(5) | | | 74.1 | | | | 85.3 | | | | 107.3 | | | | 278.2 | | | | 332.8 | | | | 19.6 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | | | | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | 2020 vs. 2019 | | | | (in thousands of barrels per day, except as noted) | | | (%) | | Other petroleum products | | | 132.9 | | | | 113.1 | | | | 95.1 | | | | 82.3 | | | | 127.1 | | | | 54.4 | | Petrochemical products(2) | | | 124.7 | | | | 60.5 | | | | 57.8 | | | | 71.9 | | | | 40.2 | | | | (44.1 | ) | Imports | | | | | | | | | | | | | | | | | | | | | | | | | Natural gas(1) | | | 1,933.9 | | | | 1,766.0 | | | | 1,316.5 | | | | 965.9 | | | | 853.1 | | | | (11.7 | ) | Gasoline | | | 510.9 | | | | 583.7 | | | | 607.0 | | | | 544.6 | | | | 396.0 | | | | (27.3 | ) | Other petroleum products and LPG(1) | | | 289.6 | | | | 354.1 | | | | 378.7 | | | | 302.5 | | | | 197.4 | | | | (34.7 | ) | Petrochemical products(2) | | | 278.2 | | | | 332.8 | | | | 831.8 | | | | 877.3 | | | | 386.0 | | | | (56.0 | ) |
Note: Numbers subject to adjustment because crude oil exports may be adjusted to reflect the percentage of water in each shipment. Numbers may not total due to rounding. (1) | Numbers expressed in millions of cubic feet per day. |
(2) | ThousandsIn thousands of metric tons. |
(4) | In 2013, we began importing liquefied natural gas through Manzanillo. |
(5) | Includes isobutane, butane andN-butane. |
Source: PMI operating statistics as of January 9, 2018,7, 2021, and Pemex Industrial Transformation. Crude oil exports decreasedincreased by 1.7%1.5% in 2017,2020, from 1,194.31,103.3 thousand barrels per day in 20162019 to 1,174.01,119.9 thousand barrels per day in 2017,2020, mainly due to an increase of exports of 21.9% of Maya crude oil, which was partially offset by a 43.8% decrease in exports of Isthmus light crude oil and a decrease of 82.5% inoil. We did not export Olmeca crude oil export during 2017. in 2019 and 2020 due to a lack of availability of Olmeca crude oil for export.NaturalWe import dry gas, importsa variety of natural gas, to satisfy shortfalls in our production and to meet demand in areas of northern Mexico that, due to their distance from the fields, can be supplied more efficiently by importing natural gas from the United States. Domestic sales of dry gas decreased by 8.7% in 2017,18.1%, as compared to 2019, from 1,933.91,604.4 million cubic feet per day in 20162019 to 1,766.01,313.6 million cubic feet per day in 2017, which includes imports of liquefied2020, mainly due to private companies importing natural gas through Manzanillo.directly to satisfy their requirements and because of the reduction in economic activity during 2020 due to the COVID-19 pandemic, including public health measures taken to combat it. Natural gas imports decreased by 11.7 % in 2020, from 965.9 million cubic feet per day in 2019 to 853.1 million cubic feet per day in 2020. This decrease isin natural gas imports was primarily due to a decreasedecreased demand in the volumedomestic market as a result of sales required by the electricity sector.
In 2017, exports of petroleum products decreased by 14.8%,competition from 185.5 thousand barrels per day in 2016 to 158.0 thousand barrels per day in 2017, mainly due to a 74.2% decrease in the volume of exports of diluent, an 8.6% decrease in the volume of sales of oil fuel and a 14.6% decrease in the volume of sales of natural gasoline. Imports of petroleum products increased by 17.0% in 2017, from 800.4 thousand barrels per day in 2016 to 936.2 thousand barrels per day in 2017, primarily due to a decrease in domestic production of petroleum products.third party suppliers.
P.M.I. Trading Ltd.DAC sells refined and petrochemical products on anFOB,DeliveredEx-ship andCost and Freight basis and buys refined and petrochemical products on ana FOBFree on Board,Cost and Freight andDelivered Ex-ship, orCost and Freight,Delivery at Frontierand Delivered at Place basis. The following table sets forth the value of exports and imports of crude oil, natural gas and petroleum products for the five years ended December 31, 2017.2020. Value of Exports and Imports(1) | | | Year ended December 31, | | 2017 vs. 2016 | | | Year ended December 31, | | | | | | | 2013 | | 2014 | | 2015 | | 2016 | | 2017 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | 2020 vs. 2019 | | | | (in millions of U.S. dollars) | | (%) | | | (in millions of U.S. dollars) | | | (%) | | Exports | | | | | | | | | | | | | | | | | | | | | Olmeca | | U.S.$ | 3,883.9 | | | U.S.$ | 3,114.7 | | | U.S.$ | 2,333.1 | | | U.S.$ | 1,569.4 | | | U.S.$ | 358.1 | | | (77.2 | ) | | U.S. $ | 1,569.3 | | | U.S. $ | 358.1 | | | U.S. $ | — | | | U.S. $ | — | | | U.S. $ | — | | | | — | | Isthmus | | 3,925.7 | | | 4,557.1 | | | 3,489.0 | | | 2,107.6 | | | 1,589.1 | | | (24.6 | ) | | | 2,107.6 | | | | 1,588.7 | | | | 722.2 | | | | 85.2 | | | | 1,910.1 | | | | 2,141.9 | | Altamira | | 683.7 | | | 806.8 | | | 366.6 | | | 262.4 | | | 219.8 | | | (16.2 | ) | | | 262.4 | | | | 219.8 | | | | 419.5 | | | | 405.5 | | | | 216.1 | | | | (46.7 | ) | Maya | | 34,217.9 | | | 27,119.4 | | | 11,158.8 | | | 11,172.7 | | | 17,856.4 | | | 60.0 | | | | 11,172.6 | | | | 17,880.6 | | | | 24,455.6 | | | | 20,043.9 | | | | 12,020.0 | | | | (40.0 | ) | Talam | | | — | | | 40.4 | | | 1,103.6 | | | 470.1 | | | | — | | | (100 | ) | | | 470.1 | | | | — | | | | 943.4 | | | | 1,826.6 | | | | 537.4 | | | | (70.6 | ) | Total crude oil(2) | | U.S.$ | 42,711.2 | | | U.S.$ | 35,638.4 | | | U.S.$ | 18,451.1 | | | U.S.$ | 15,582.2 | | | U.S$ | 20,023.4 | | | 28.5 | | | | | | | | | | | | | | | | | | | | | | | Total crude oil(2) | | | U.S. $ | 15,582.0 | | | U.S $ | 20,047.2 | | | U.S. $ | 26,540.7 | | | U.S. $ | 22,361.2 | | | U.S. $ | 14,683.6 | | | | (34.3 | ) | | | | | | | | | | | | | | | | | | | | | Natural gas | | 2.8 | | | 4.8 | | | 1.6 | | | 1.1 | | | 1.3 | | | 18.2 | | | | 1.1 | | | | 1.3 | | | | 1.0 | | | | 0.8 | | | | 0.4 | | | | (50.0 | ) | Gasoline | | 2,162.5 | | | 1,985.9 | | | 1,007.4 | | | 733.2 | | | 746.9 | | | 1.9 | | | | 733.2 | | | | 746.9 | | | | 813.9 | | | | 626.6 | | | | 154.9 | | | | (75.3 | ) | Other petroleum products | | 3,364.6 | | | 3,425.7 | | | 1,580.2 | | | 1,161.9 | | | 1,655.6 | | | 42.5 | | | | 1,161.9 | | | | 1,655.6 | | | | 1,938.1 | | | | 1,429.7 | | | | 1,308.5 | | | | (8.5 | ) | Petrochemical products | | 171.0 | | | 132.4 | | | 63.5 | | | 20.5 | | | 37.7 | | | 84.0 | | | | 20.5 | | | | 37.8 | | | | 39.2 | | | | 39.6 | | | | 12.7 | | | | (67.9 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total natural gas, petroleum and petrochemical products | | U.S.$ | 5,700.8 | | | U.S.$ | 5,548.8 | | | U.S.$ | 2,652.7 | | | U.S.$ | 1,916.7 | | | U.S.$ | 2,441.4 | | | 27.4 | | | U.S. $ | 1,916.7 | | | U.S. $ | 2,441.5 | | | U.S. $ | 2,792.3 | | | U.S. $ | 2,096.7 | | | U.S. $ | 1,476.6 | | | | (29.6 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total exports | | U.S.$ | 48,412.0 | | | U.S.$ | 41,187.2 | | | U.S.$ | 21,103.8 | | | U.S.$ | 17,498.9 | | | U.S.$ | 22,464.8 | | | 28.4 | | | U.S. $ | 17,498.7 | | | U.S. $ | 22,488.8 | | | U.S. $ | 29,333.0 | | | U.S $ | 24,457.9 | | | U.S. $ | 16,160.2 | | | | 34.0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Imports | | | | | | | | | | | | | | | | | | | | | | | | | Natural gas | | U.S.$ | 2,495.3 | | | U.S.$ | 2,819.3 | | | U.S.$ | 1,673.7 | | | U.S.$ | 2,097.9 | | | U.S.$ | 2,484.1 | | | 18.4 | | | U.S. $ | 2,097.9 | | | U.S. $ | 2,484.1 | | | U.S. $ | 2,043.2 | | | U.S. $ | 1,072.5 | | | U.S. $ | 774.1 | | | | (27.8 | ) | Gasoline | | 17,485.9 | | | 16,691.2 | | | 12,805.2 | | | 11,994.8 | | | 15,380.1 | | | 28.2 | | | | 12,005.4 | | | | 15,418.2 | | | | 18,957.9 | | | | 15,354.2 | | | | 8,110.1 | | | | (47.2 | ) | Other petroleum products and LPG | | 8,153.9 | | | 8,738.7 | | | 6,178.6 | | | 5,699.9 | | | 8,446.3 | | | 48.2 | | | Petrochemical products | | 128.9 | | | 168.1 | | | 196.3 | | | 85.5 | | | 122.5 | | | 43.3 | | | | | | | | | | | | | | | | | | | | | | | Total imports | | U.S.$ | 28,264.0 | | | U.S.$ | 28,417.3 | | | U.S.$ | 20,853.7 | | | U.S.$ | 19,878.1 | | | U.S.$ | 26,433.0 | | | 33.0 | | | | | | | | | | | | | | | | | | | | | | | Net exports (imports) | | U.S.$ | 20,148.0 | | | U.S.$ | 12,769.9 | | | U.S.$ | 250.1 | | | U.S.$ | (2,379.2 | ) | | U.S.$ | (3,968.2 | ) | | 66.8 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | | | | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | 2020 vs. 2019 | | | | (in millions of U.S. dollars) | | | (%) | | Other petroleum products and LPG | | | 5,697.4 | | | | 8,463.2 | | | | 11,159.1 | | | | 7,991.1 | | | | 3,617.3 | | | | (54.7 | ) | Petrochemical products | | | 85.5 | | | | 122.5 | | | | 588.8 | | | | 657.2 | | | | 633.0 | | | | (3.7 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | Total imports | | U.S.$ | 19,886.1 | | | U.S.$ | 26,488.1 | | | U.S.$ | 32,749.0 | | | U.S.$ | 25,075.0 | | | U.S.$ | 13,134.4 | | | | (47.6 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | Net exports (imports) | | U.S.$ | (2,387.4 | ) | | U.S.$ | (3,999.3 | ) | | U.S.$ | (3,416.0 | ) | | U.S.$ | (617.1 | ) | | U.S.$ | 3,025.8 | | | | (590.3 | ) | | | | | | | | | | | | | | | | | | | | | | | | | |
Note: Numbers may not total due to rounding. (1) | Does not include operations with third parties carried out by P.M.I. Trading DAC and PMI-NASA of crude oil, refined products, petrochemicals and petrochemicals purchased by P.M.I. Trading, Ltd. or PMI-NASA from third partiesliquefied petroleum gas outside of Mexico and resold in the international markets. The figuresFigures expressed in this table differ from the amounts contained underin the line itemAudited Consolidated Financial Statements under “Net Sales” in our financial statements because ofdue to differences in the methodology associated withrelated to 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 9, 2018,7, 2021, which are based on information in bills of lading, and Pemex Industrial Transformation. ImportsIn 2020, imports of natural gas increaseddecreased in value by 18.4% during 2017,27.8% as compared to 2019, primarily as a result of an increasea decrease in the average sales pricevolume of natural gas.gas imports. Imports of gasoline increaseddecreased in value by 28.2%47.2%, due to an increase ina lower volume of domestic gasoline salesimports, as well as the significant growth in imports by private companies and the reduction in economic activity mainly in April and May of 2020 due to the average sales priceimpact of gasoline.the COVID-19 pandemic.
The following table describes the composition of our exports and imports of selected refined products in 2015, 2016 and 2017.for the three years ended December 31, 2020. Exports and Imports of Selected Petroleum Products | | | Year ended December 31, | | | Year ended December 31, | | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | | (tbpd) | | | (%) | | Exports | | | | | | | | | | | | | | | | | | | | | | | | | Liquefied petroleum gas(1) | | | — | | | | — | | | | 4.5 | | | | 2.4 | | | | 5.7 | | | | 3.6 | | | | | | | | | | | | | | Fuel oil | | | 123.9 | | | | 64.0 | | | | 113.3 | | | | 61.0 | | | | 103.5 | | | | 65.5 | | | | 1.2 | | | | 0.9 | | | | 0.7 | | | | 0.6 | | | | 0.8 | | | | 0.6 | | Gasoline | | | 62.9 | | | | 32.5 | | | | 52.7 | | | | 28.4 | | | | 45.0 | | | | 28.4 | | | | 89.8 | | | | 67.7 | | | | 69.3 | | | | 59.7 | | | | 109.6 | | | | 78.7 | | Others | | | 6.8 | | | | 3.5 | | | | 15.1 | | | | 8.2 | | | | 3.9 | | | | 2.5 | | | | 37.7 | | | | 28.4 | | | | 33.6 | | | | 29.0 | | | | 12.2 | | | | 8.7 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 193.7 | | | | 100.0 | % | | | 185.5 | | | | 100.0 | % | | | 158.0 | | | | 100.0 | % | | | 4.0 | | | | 3.0 | | | | 12.4 | | | | 10.7 | | | | 16.7 | | | | 12.0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Imports | | | | | | | | | | | | | | | 132.7 | | | | 100.0 | | | | 116.0 | | | | 100.0 | | | | 139.3 | | | | 100.0 | | Gasoline(3)(2) | | | 440.1 | | | | 59.5 | | | | 510.8 | | | | 63.8 | | | | 582.5 | | | | 62.2 | | | | | | | | | | | | | | Fuel oil | | | 17.0 | | | | 2.3 | | | | 10.7 | | | | 1.3 | | | | 24.4 | | | | 2.6 | | | | 607.0 | | | | 61.6 | | | | 544.6 | | | | 64.3 | | | | 396.0 | | | | 66.7 | | Liquefied petroleum gas(2)(1) | | | 105.2 | | | | 14.2 | | | | 50.6 | | | | 6.3 | | | | 42.6 | | | | 4.5 | | | | 16.5 | | | | 1.7 | | | | 11.8 | | | | 1.4 | | | | 4.3 | | | | 0.7 | | Diesel | | | 145.3 | | | | 19.6 | | | | 187.8 | | | | 23.5 | | | | 237.5 | | | | 25.4 | | | | 61.8 | | | | 6.3 | | | | 53.9 | | | | 6.4 | | | | 53.1 | | | | 8.9 | | Others | | | 32.2 | | | | 4.3 | | | | 40.4 | | | | 5.1 | | | | 49.1 | | | | 5.2 | | | | 240.6 | | | | 24.4 | | | | 178.2 | | | | 21.0 | | | | 114.3 | | | | 19.3 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 739.8 | | | | 100.0 | % | | | 800.4 | | | | 100.0 | % | | | 936.2 | | | | 100.0 | % | | | 59.8 | | | | 6.1 | | | | 58.6 | | | | 6.9 | | | | 25.8 | | | | 4.3 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 985.7 | | | 100.0 | | | 847.1 | | | 100.0 | | | 593.4 | | | 100.0 | |
Notes: | Numbers may not total due to rounding. |
tbpd | = thousand barrels per day. |
Notes: Numbers may not total due to rounding. tbpd = thousand barrels per day. (1) | Includes butanes and propane. |
(2) | Includes methyl tert-butyl ether (MTBE). |
(3) | Includes premium gasoline, regular gasoline, premium components and naphtasnaphthas |
Source: Pemex BDI. In 2020, exports of petroleum products increased by 20.1%, from 116.0 thousand barrels per day in 2019 to 139.3 thousand barrels per day in 2020, mainly due to an increase in the export volumes of fuel oil of 58.2%. Imports of petroleum products decreased by 30.0% in 2020, from 847.1 thousand barrels per day in 2019 to 593.4 thousand barrels per day in 2020, mainly due to reduced gasoline imports because of the increase in volume imported by private companies. Exports of petroleum products increaseddecreased in value by 26.8%29.6 % in 2017,2020, primarily due to a 59.9% increase34.3% decrease in salesthe price of fuel oil and increasesdecreases in the prices of other petroleum products. In 2017,2020, imports of petroleum products increaseddecreased in value, by 34.7%,47.6 %, primarily due to a 17.0% increase47.2 % decrease in volume of imports due to increased domestic demand for regular gasoline and an increasea decrease in the average price of gasoline as compared to priorthe previous year. Our net importsexports of petroleum products for 20172020 totaled U.S. $21,423.93,025.8 million, which represents a 35.6%590.3% increase from our net imports of petroleum products of U.S. $15,799.0$617.1 million in 2016.2019. The Secretary of Energy has entered into certain agreements to reduce or increase crude oil exports.exports and production. See “Item 4—Information on the Company—Trade Regulation, Export Agreement and ExportProduction Agreements” below in this Item 4.below. Hedging Operations P.M.I. Trading Ltd.DAC engages in hedging operations to cover its price exposure in the trading of petroleum products. The internal policies and procedures of P.M.I. Trading Ltd.DAC establish: (1) that DFIsderivative financial instruments (DFIs) are used exclusively to mitigate the volatility of oil and gas prices; (2) limits on the maximum amount of capital at risk and on the daily and accumulated annual losses for each business unit; and (3) the segregation 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. P.M.I. Trading, Ltd. has a risk management subcommittee that reviews risk and hedging operations and meets on a quarterly basis.limits. See “Item 11—Quantitative and Qualitative Disclosures about Market Risk—Changes in Exposure to Main Risks—Hydrocarbon Price Risk.”
Gas Stations in the United States Between late 2015 and early 2016, we opened fiveIn 2020, additional PEMEX brand gas stations opened in Houston, Texas that are owned and operated by franchisees. This is part of our strategy to expand our operations to the United States, for a combined total of 15 locations in order to fulfill the energy reform mandate to generate economic valueareas with different demographic characteristics (nine in international markets. Further, it will allow us to measure the impactTexas and six in California) as of our brand against others and identify business opportunities abroad.December 31, 2020. The gas stations’ fuel supply at these gas stations is derived from the United States wholesale market and the selling prices are subject to local market conditions. AsWe believe that the information provided by the operating PEMEX branded gas stations will allow us to assess the market response to the PEMEX brand, establish a brand experience in accordance with the demand of December 31, 2017,the subset market segments and assess the impact of the COVID-19 pandemic on our service stations, generally. Additionally, we have seen an increase in fuel consumption of up to 150% as compared to 2016, primarily in areas with large Hispanic populations. We are looking to build on this strategy and expandexpect that the information gathered from our presencegas stations in the United States overwill help to develop a market penetration strategy to maximize the next several years.value of the PEMEX brand through major U.S. fuel marketers.
PEMEX Corporate Matters In addition to theour operating activities that we undertake through the activities of our subsidiary entities and subsidiary companies, we have certain centralized corporate operations that coordinate general labor, safety, insurance and legal matters. Industrial Safety and Environmental Protection Our Corporate Office of Planning, Coordination and Performance is responsible for planning, conducting and coordinating programs to: foster a company culture of safety, environmental protection and environmental protection;efficient and rational use of energy; improve the safety of our workers and facilities; reduce risks to residents of the areas surrounding our facilities; and reduce the environmental impacts generated by our operations and greenhouse gas emissions and identify the risks associated with climate change in Mexico in order to develop strategies to minimize the impact of climate change on our operations.emissions. We intend to further develop industrial safety and environmental programs for each subsidiary entity. The environmental and safety division of each subsidiary entity coordinates closely with the Corporate Office of Planning, Coordination and Performance.Performance to promote sustainable performance focused on continuous improvement. Insurance We maintain a comprehensive property and general liability insurance program for onshore and offshore properties and liabilities. All onshore properties, such as refineries, processing plants, pipelines and storage facilities are covered, as are all of our offshore assets, such as drilling platforms, rigs, gas gathering systems, maritime terminals and production facilities. Our insurance covers risks of sudden and accidental physical damage to or destruction of our properties, as well as risk of sudden and accidental physical loss, including as a consequence of purposeful terrorist acts. This insurance also provides coverage for the contents of pipelines and storage facilities, and any of our liabilities arising from such acts. Our insurance also covers extraordinary costs related to the operation of offshore wells, such as control andre-drilling costs, evacuation expenses and liability costs associated with spills. We also maintain protection and indemnity insurance for our full marine fleet, in addition to life insurance, aircraft, automobile and heavy equipment insurance, cargo and marine hull insurance, as well as insurance for deep water drilling activities and onshore and offshore minor construction projects on operating facilities. In accordance with Mexican law, we have entered into all of our insurance contracts with Mexican insurance carriers. These policies have limits of U.S. $1.8 billion for onshore property, U.S. $1.9 billion for offshore property, U.S. $0.3 billion for extraordinary costs related to the operation of offshore wells, U.S. $1.0 billion for marine-relatedmarine related liabilities, U.S. $1.1 billion for onshore and offshore liabilities, U.S. $0.5 billion for offshore terrorist acts and U.S. $0.5 billion for onshore terrorist acts.Limitsacts. Limits of insurance policies purchased for each category of risk are determined using professional risk management assessment surveys conducted by international companies on an annual basis and the market capacity available per risk and must be in compliance with local regulations enacted following the energy reform. In addition, in compliance with the regulations enacted in June of 2016 by the NationalAgencia Nacional de Seguridad Industrial y de Protección al Medio Ambiente del Sector Hidrocarburos (National Agency for Industrial Safety and Environmental Protection of the Hydrocarbons Sector, (ASEA)or ASEA), we maintain insurance coverage with respect to third party liability, liability for environmental damage and control of well,wells, works or drilling activities, and extraction of hydrocarbons, the treatment and refining of crude oil and the processing of natural gas. We have also made the necessary endorsements to ensureensured that we maintain insurance coverage in connection with our new strategic alliances and other joint arrangements. Since June 2003, we have not maintained business interruption insurance, which in the past compensated us for loss of revenues resulting from damages to our facilities. Instead, we purchasead-hoc ad hoc business interruption mitigation insurance coverage, which compensates us for the additional expenses necessary to recover our production capabilities in the shortest time possible. During 2017 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 policy to increase the coverage available for potential property damage, third-party liability and control of well risks related to these activities. Under this 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 a limit of U.S. $3.3 billion, including U.S. $1.3 billion for control of well risks, U.S. $1.1 billion for 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 we refer to as Kot AG). Kot AG is a wholly owned subsidiary company that was originally formed in 1993 under the laws of Bermuda as Kot Insurance Company, Ltd. and was subsequently organized under the laws of Switzerland in 2004. Kot AG is used as a risk management tool to structure and distribute risks across the international reinsurance markets. The purpose of Kot AG is to reinsurereinsures policies held through our local insurance carriers and to maintainmaintains control over the cost and quality of the insurance covering our risks. Kot AG reinsures over 90%80% of its reinsurance policies with unaffiliated third-partythird party reinsurers. Kot AG carefully monitors the financial performance of its reinsurers and actively manages counterparty credit risk across its reinsurance portfolio to ensure its own financial stability and maintain its creditworthiness. Kot AG maintains solid capitalization and solvency margins consistent with guidelines provided by Swiss insurance authorities and regulations. As of December 31, 2017,2020, Kot AG’s net risk retention is capped atcirca U.S. $327$550 million spread across different reinsurance coverages to mitigate potential aggregation factors. InvestmentCompliance at Pemex
Our current corporate compliance program Pemex Cumple (Pemex Complies) was authorized by the Board of Directors of Petróleos Mexicanos in RepsolNovember 2019. This program amended and supplemented our previous compliance program, which was approved by the Board of Directors of Petróleos Mexicanos in July 2017. See “Item 4 – General Regulatory Framework” for more information regarding Pemex Complies. On October 26, 2017, PMI HBV sold all of its shares in Repsol, S.A. (formerly known as Repsol YPF, S.A., and which we refer to as Repsol)—21,333,870 shares in total – to Credit Agricole CIB. This sale resulted in a loss of Ps. 3.5 billion. As of the datepart of this annual report,new program, we do not hold any shares in Repsol. See Note 10implemented a compliance hub with different lines of attention: ethics and integrity, anticorruption and due diligence, legal compliance, and data protection and transparency. The program is aimed at strengthening our compliance culture as well as preventing financial and legal risks, with respect to our consolidated financial statements included herein.the national anticorruption strategy, international laws, international treaties, specific regulations for the oil and gas sector, economic competition and internal policies. The General Counsel of Petróleos Mexicanos provides quarterly progress reports to the Board of Directors of Petróleos Mexicanos with respect to the implementation of Pemex Complies.
Ethics Committee Our Ethics Committee consists of members from our management team, with the headGeneral Counsel of the Institutional Internal Control Unit at Petróleos Mexicanos serving as its chairman.chairperson. Our Ethics Committee is primarily responsible for: promoting awareness and use of our code of ethics and code of conduct, including through online training available for our employees, in order to improve our culture of ethics; establishing procedures that implement the principles found in our code of ethics in order to increase compliance and to detect behavior that adversely affects our activities; analyzing and giving instructionscounsel to the appropriate areas on possible violations to our code of ethics and code of conduct that are reported through the Ethics Line;ethics tip line; and working with the Liabilities Unit at Petróleos Mexicanos and our Internal Auditing Area to exchangeprovide information regarding violations of our code of ethics and our code of conduct. See “Item 16B—Code of Ethics” for more information regarding our code of ethics. Collaboration and Other Agreements On September 30, 2014, Petróleos Mexicanos and theSecretaria de Desarrollo Social (SEDESOL), signed a collaboration agreement with the objective of supporting community development in the zones of influence of oil industries by providing food and nutrition support as part of theCruzada Nacional Contra el Hambre (National Cruzade Against Hunger). This collaboration agreement expired in November 2017. On October 27, 2014, Petróleos Mexicanos and theSecretaria de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación (SAGARPA) signed a collaboration agreement to provide community and environmental support to communities within the zones of influence of the oil industries. This collaboration agreement is set to expire in November 2018.
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 andwe reaffirmed our commitment with 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 Petroleumwe signed a memorandum of understatingunderstanding with Mubadala Petroleum 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 andwe signed a memorandum of understanding with 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 Aramcowe signed a memorandum of understanding with Saudi Aramco renewing and strengthening the relationship between both companies and establishing an exchange of ideas surrounding operational excellence, sustainability and energy efficiency and innovation and technological development. On April 1, 2018, we subscribed to a memorandum of understanding and collaboration with the SENER, the CNH and Natural Resources Canada in order for Mexico and Canada to share demonstrations of technology and practices for the conservation of hydrocarbons and the measurement and reduction of emissions. On March 6, 2019, we signed a memorandum of understanding with the Japan Bank for International Cooperation with the purpose of exchanging experiences and promoting development in the energy sector. On November 15, 2019, we signed a memorandum of understanding with China Export & Credit Insurance Corporation (Sinosure) with the purpose of strengthening our cooperative relationship. On April 3, 2020, we signed a general coordination agreement for the exchange of services with the Instituto Mexicano de Seguro Social (IMSS), Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado (ISSSTE) and the Secretaría de Salud (Mexican Ministry of Health) with the aim of joining the federal universal healthcare system. The agreement establishes general guidelines and operational, administrative, financing and legal criteria for the provision of universal healthcare and for the exchange or unilateral provision of health care services between our medical providers and those of the other signatories, as well Mexican government health service providers, national health institutes, specialty regional hospitals, federal hospitals and other institutions of the national health system, once we join the universal healthcare program. On April 24, 2020, we signed a Convenio Marco para el Intercambio y Atención de Pacientes Graves con COVID-19(Framework Agreement for the Exchange and Care of Serious Patients with COVID-19) with the Mexican Ministry of Health, the Secretaría de la Defensa Nacional (Ministry of National Defense), the Mexican Navy, IMSS, ISSSTE and the Instituto de Salud para el Bienestar(Institute of Health for Welfare). The agreement establishes the guidelines for the care of critically ill COVID-19 patients at the medical facilities of each of the parties. The agreement aims to control the health emergency through the coordination of the parties’ respective medical personnel and medical infrastructure, in accordance with the applicable legal provisions. The agreement is in force and will remain in force until the Consejo de Salubridad General (General Health Council) declares the end of the health emergency caused by the COVID-19 pandemic. Through these agreements and health services, we seek to increase our technical and scientific knowledge in areas that include exploration and drilling. These broad agreements of technological and scientific collaboration are strictlynon-commercial,i.e., there is no transfer of resources among the parties. Property, Plants and Equipment General Substantially all of our property, consisting of refineries, storage, production, manufacturing and transportation facilities and certain retail outlets, is located in Mexico, including Mexican waters in the Gulf of Mexico. The location, character, utilization and productive capacity of our exploration, drilling, refining, petrochemical production, transportation and storage facilities are described above. See “—Exploration and Production,” “—Drilling and Services,” “Industrial Transformation,”, “—Ethylene,” “—Fertilizers,” “—Logistics”Fertilizers” and “—Cogeneration and Services.”Logistics”. The insurance program covering all of our properties is also described above. See “—Insurance.” Reserves Under Mexican law, all crude oil and other oil and gas reserves located in the subsoil of Mexico are owned by the Mexican nationMexico and not by us. The Mexican Government has granted us the right to exploit the petroleum and other oil and gas reserves assigned to us in connection with Round Zero,the process that occurred in August 2014 and is commonly referred to as round zero, as well as the right to explore for and exploit petroleum and other oil and gas reserves in areas that have been granted to us in Round 1.4.various subsequent rounds. Productive state-owned companies and other companies participating in the Mexican oil and gas industry may report assignments or contracts and the corresponding expected benefits for accounting and financial purposes. See “Information on the Company—History and Development—Energy Reform”Legal Regime” above in this Item 4. Our estimates of hydrocarbons reserves are described under “—Exploration and Production—Reserves” above. GENERAL REGULATORY FRAMEWORK Petróleos Mexicanos is regulated by the Mexican Constitution, the Petróleos Mexicanos Law and the Hydrocarbons Law, among other regulations. The purpose of the Petróleos Mexicanos Law is to regulate the organization, management, operation, monitoring, evaluation and accountability of Petróleos Mexicanos as 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 regulate our operations in the oil and gas sector. The Ministry of EnergySENER monitors our operations, and the Secretary of Energy acts as the chairperson of the Board of Directors of Petróleos Mexicanos. In addition, theLey de los Órganos Reguladores Coordinados en Materia Energética (Coordinated Energy Regulatory Bodies Law related to the Energy Matters Law,Law), which was enacted as part of the Secondary Legislation and took effect on August 12, 2014)2014, establishes mechanisms for the coordination of these entities with the Ministry of EnergySENER and other ministries of the Mexican Government. The CNH has the authority to award and execute contracts for exploration and production in connection with competitive bidding rounds. The CRE 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 CNH and the CRE extend to all oil and gas companies operating in Mexico, including Petróleos Mexicanos and our subsidiary entities. On December 2, 2014, the Ministry of EnergySENER published in the Official Gazette of the Federation a statement declaring that the new Board of Directors of Petróleos Mexicanos was performing its duties and the mechanisms for our oversight, transparency and accountability had been implemented in accordance with the Petróleos Mexicanos Law. As a result, the special regime that governs Petróleos Mexicanos’ activities relating to 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. On May 18, 2018, new General Provisions for Contracting with Petróleos Mexicanos and its Productive State-Owned Subsidiaries were published in the Official Gazette of the Federation, repealing the previous general provisions published in June 2015 and their subsequent amendments. These General Provisions regulate the legal process for acquisitions, leases, works and services needed for our projects and require that our suppliers, contractors and other participants with whom we have or intend to have a commercial relationship recognize and adopt our compliance program, Pemex Complies, and establish prevention and compliance systems in accordance with applicable law. New amendments to these General Provisions were published in the Official Gazette of the Federation on August 1, 2018 and August 19, 2019. In accordance with the Petróleos Mexicanos Law, each year the Ministry of Finance and Public Credit provides us with estimated macroeconomic indicators for the following fiscal year, which we are to use to prepare the consolidated annual budget for Petróleos Mexicanos and the subsidiary entities, including our financing program. Upon approval by the Board of Directors of Petróleos Mexicanos, our consolidated budget and financing program is then submitted to the Ministry of Finance and Public Credit, which has the authority to adjust our financial balance goal and the ceiling on our wage and salary expenditures for the fiscal year. The consolidated annual budget and financing program of Petróleos Mexicanos and the subsidiary entities, including any adjustments made by the Ministry of Finance and Public Credit, is then incorporated into the federal budget for approval by the Chamber of Deputies. The Mexican Government is not, however, liable for the financial obligations that we incur. In approving the federal budget, the Chamber of Deputies authorizes our financial balance goal and the ceiling on our wage and salary expenditures for the fiscal year, which it may subsequently adjust at any time by modifying the applicable law. We are also subject to various domestic and international laws and regulations related to anti-corruption, anti-bribery and anti-money laundering. Thelaundering, such as the Código Penal Federal (Federal Criminal Code), which criminalizes certain corrupt practices, including bribery, embezzlement and abuse of authority. Theauthority; the LeyGeneral del Sistema Nacional Anticorrupción (General Law of the National Anti-Corruption System); the Ley Federal Anticorrupcióde Fiscalización y Rendición en Contrataciones Públicasde Cuentas de laFederación (Federal Audit and Accountability Law) and the Ley General de Responsabilidades Administrativas (General Law of Anti-Corruption in Public Contracting) sanctions companiesAdministrative Liabilities), among others. These laws establish a national anti-corruption system designed to coordinate efforts among the Mexican Government, federal entities, states and individuals that violate this law while participating in federal government contracting in Mexico,municipalities to prevent, investigate and punish corrupt activities and oversee public resources, as well as Mexican companies and individuals engaged in international commercial transactions. This law is analogous in many respects to the FCPA. In addition, the Federal Lawdetermine administrative liabilities of Administrative Responsibilities of Public Officials prohibits the bribery of federal public officials in Mexico, including members of the Mexican Congress and the federal judiciary.applicable penalties. We also employ internal control procedures and guidelines designed to monitor the activities of our employees, including senior management, and to ensure compliance with applicable anti-corruption, anti-bribery and anti-money laundering laws and regulations. TheLineamientos que regulan el sistema de control interno en Petróleos Mexicanos, sus empresas productivas subsidiarias y empresas filiales (Guidelines(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 deregular a los Testigos Sociales en Petróleos Mexicanos y sus empresas productivas subsidiarias (Guidelines for the participation ofto regulate public witnesses in the procurement and supply activities and contracting procedures of Petróleos Mexicanos and its productive subsidiary entities and affiliates)entities), delineates the ways in which public witnesses may act as third-party observers in connection with our procurement procedures. These internal controls and guidelines are applicable to Petróleos Mexicanos and the subsidiary entities. For a description of the risks relating to anti-corruption, anti-bribery and anti-money laundering laws and regulations, see “Item 3—Key Information—Risk Factors—Risk Factors Related to our Operations—We are subject to Mexican and international anti-corruption, anti-bribery and anti-money laundering laws. Our failure to comply with these laws could result in penalties, which could harm our reputation, prevent us from obtaining governmental authorizations needed to carry out our operations and have an adverse effect on our business, results of operations and financial condition.” Petróleos Mexicanos and the subsidiary entities, as public entities of the Mexican Government, are subject to theLey General del Sistema Nacional Anticorrupción (General Law of the National Anti-corruption System), theLey de Fiscalización y Rendición de Cuentas de la Federación (Federal Audit and Accountability Law), and theLey General de Responsabilidades Administrativas (General Law of Administrative Liabilities), among others. These laws establish a national anti-corruption system to coordinate efforts among the Mexican Government, federal entities, states and municipalities to prevent, investigate and punish corrupt activities and oversee public resources, as well as determine administrative liabilities of public officials and the applicable penalties.
On July 14, 2017,Our previous compliance program was superseded by our current corporate compliance program, Pemex Complies, which was authorized by the Board of Directors of Petróleos Mexicanos approvedin November 2019. As part of this new program, we implemented a compliance hub with different lines of attention: ethics and integrity, anticorruption and due diligence, legal compliance, and data protection and transparency.
The program is aimed at strengthening our “Compliance Program”, a series of procedures aimedcompliance culture as well as preventing financial and legal risks. with respect to comply with legal, accounting,national anticorruption strategy and financial provisions to prevent corruptionnational and to promote ethical values. These procedures include a focus oninternational laws, international treaties, specific regulations for the oil and gas sector, economic competition and internal controls, risk management, ethical principles and corporate integrity, policies promoting transparency and accountability.policies. On August 28, 2017, a newNovember 11, 2019, the Código de Conducta de Petróleos Mexicanos, sus empresas productivas subsidiarias y, en su caso, empresas filiales (Code of Conduct of Petróleos Mexicanos, its productive subsidiary entities and, where applicable, affiliated companies, or the Code of Conduct), was published in the Official Gazette of the Federation, replacing the code of conduct issued in February 2015.on August 28, 2017. This Code of Conduct delineates behaviors expected of and banned for our executives and employees, in accordance with the values established in our Code of Ethics, and includes data protection and transparency related matters. See “Item 16B—Code of Ethics” for more information regarding our code of ethics. Our new Código de Ética para Petróleos Mexicanos, sus empresas productivas subsidiarias y empresas filiales (Code of Ethics for Petróleos Mexicanos, its productive subsidiary entities and affiliates, or the Code of Ethics, whichEthics) was also published on that same day in the Official Gazette of the Federation on December 24, 2019. This new Code of Ethics was approved by the Board of the Directors of Petróleos Mexicanos inon November 2016, such as:26, 2019. Our new Code of Ethics includes the following principles and values: respect,non-discrimination, honesty, loyalty, responsibility, legality, impartiality and integrity, among others.integrity. See “Item 16B—Code of Ethics” for more information regarding our code of ethics. On September 11, 2017, thePolíticas y Lineamientos AnticorrupcióAnticorrupcioÌn para Petróleos Mexicanos, sus empresas productivas subsidiarias y, en su caso, Empresas Filiales (Anti-corruption Policies and Guidelines for Petróleos Mexicanos, its productive subsidiary entities and, where applicable, affiliated companies) and thePolíticas y Lineamientos para el desarrollo de la Debida Diligencia en Petróleos Mexicanos, sus empresas productivas subsidiarias y, en su caso, Empresas Filiales, en Materia de Ética e Integridad Corporativa (Policies and Guidelines to carry out Due Diligence in Petróleos Mexicanos, its productive subsidiary entities and, where applicable, affiliated companies, in Ethics and Corporate Integrity matters)Matters) became effective. The due diligence policy was revised in November 2018. The purpose of these regulations is to set up actions againstto prevent acts of corruption, as well as provide means for executives and employees to confrontidentify, manage, mitigate and fight them and mitigateconfront our own risks as well as third-partyas-third party risks that may affect the activitiesattainment of PEMEX for acts ofour objectives with respect to corruption, lack of ethics or corporate integrity or our involvement in illicit acts of any kind. On June 15, 2020 and January 1, 2021, the Políticas y Lineamientos para la Protección de Datos Personales en Petróleos Mexicanos, sus empresas productivas subsidiarias y, en su caso, Empresas Filiales (Data Privacy Protection Policies and Guidelines for Petróleos Mexicanos, its productive subsidiary entities and, where applicable, affiliated companies) and the Políticas y Lineamientos para el Cumplimiento de Obligaciones de Transparencia y Acceso a la Información Públicaen Petróleos Mexicanos, sus empresas productivas subsidiarias y, en su caso, Empresas Filiales (Policies and Guidelines to comply Transparency and Public Access Information duties in Petróleos Mexicanos, its productive subsidiary entities and, where applicable, affiliated companies) became effective, respectively. These regulations aim to create a framework for data privacy protection and promote transparency and public access in respect of our operations. In addition, the regultions seek to provide a means by which our executives and employees may identify, manage, mitigate and confront risks related to corruption, corporate integrity, transparency or our involvement in illicit acts of any kind. As an issuer of debt securities that are registered under the Securities Act and in connection with certain representations and covenants included in our financing agreements, we must comply with the U.S. Foreign Corrupt Practices Act, or the FCPA. The FCPA generally prohibits companies and anyone acting on their behalf from offering or making improper payments or providing benefits to government officials for the purpose of obtaining or keeping business. In addition, we are subject to other international laws and regulations related 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. ENVIRONMENTAL REGULATION Legal Framework We are subject to the environmental laws and regulations issued by the local and state governments where our facilities are located, including those associated with atmospheric emissions, water usage and wastewater discharge, as well as thewaste management of hazardous andnon-hazardous waste. care for affected sites. In particular, we are subject to the provisions of the Ley General del Equilibrio Ecológico y la Protección al Ambiente (General Law on Ecological Equilibrium and Environmental Protection, which we refer to as the Environmental Law) and related regulations, the Ley General de Cambio Climático (General Law on Climate Change) and other technical environmental standards issued by the Secretaría del Medio Ambiente y Recursos Naturales (Secretariat of the Environment and Natural Resources or SEMARNAT) and theAgencia de Seguridad, Energía y Ambiente (National Agency for Industrial Safety and Environmental Protection of the Hydrocarbons Sector or ASEA). We are also subject to theLey General para la Prevención y Gestión Integral de los Residuos (General Law on Waste Prevention and Integral Management), the Ley General de Cambio Climático (General Law on Climate Change) and other environmental standards issued by theLey de Transición EnergéticaSecretaría del Medio Ambiente y Recursos Naturales (Law(Ministry of the Energy Transition)Environment and Natural Resources, or SEMARNAT), the Comisión Nacional del Agua (National Water Commission, or CONAGUA), the SEMAR, the CNH and the ASEA. In April 1997, the SEMARNAT issued regulations governing the procedures for obtaining an environmental license, under which new industrial facilities can comply with all applicable environmental requirements through a single administrative procedure. Each environmental license integrates all of the different permits, licenses and authorizations related to environmental matters for a particular facility. Since these regulations went into effect, we have been required to obtain an environmental license for any new facility. Our facilities that existed prior to the effectiveness of these regulations are not subject to this requirement. Before we carry out any activity that may have an adverse impact on the environment, we are required to obtain certain authorizations from the ASEA, the SEMARNAT, the Ministry of Energy,SEMAR, the National Water CommissionSENER and the Mexican Navy,CONAGUA, as applicable. In particular, specific environmental regulations apply to petrochemical,petrochemicals, 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 ASEA requires the submission of an environmental impact and risk analysis. ASEA is an administrative body of the SEMARNAT that operates with technical and administrative autonomy and has the authority to regulate and supervise companies participating in the hydrocarbon sector through its issuance of rules establishing safety standards limits on greenhouse gas emissions and guidelines for the dismantling and abandonment of facilities, among other things. TheLey de la Agencia Nacional de Seguridad Industrial y de Protección al Medio Ambiente del Sector Hidrocarburos (Law(Law of the Hydrocarbons Industrial Safety and Environmental Protection Agency of the Hydrocarbon Sector) provides that until the general administrative provisions and Official Mexican Standards proposed by the Hydrocarbons Industrial Safety and Environmental Protection AgencyASEA are in effect, obligations will continue under the guidelines, technical and administrative arrangements, agreements and Official Mexican Standards promulgated by the SEMARNAT, the CNH and the CRE. The environmental regulations specify, among other matters, the maximum levels of emissions and waste water discharge that are permissible. These regulations also establish procedures for measuring pollution levels, the management of hazardous andnon-hazardous waste and the treatment of sites affected by hydrocarbon production.
We are also subject to theNOM-001-SEMARNAT-1996 issued by CONAGUASEMARNAT in conjunction with the Procuraduría Federal de Protección al Ambiente (PROFEPA), which sets forth the maximum permissible levels of pollutants in wastewater that can be discharged into national bodies of water. In addition, we are subject to theNOM-052-SEMARNAT-2006 and the NOM-001-ASEA-2019,which regulatesregulate hazardous waste theNOM-161-SEMARNAT-2011, which regulatesand its special waste management procedures,handling, respectively, as well as theNOM-138-SEMARNAT/SSA1-2012, which establishes the maximum permissible levels of hydrocarbons in the soil and sets forth guidelines with respect to soil testing and the treatment of sites affected by hydrocarbon production.production, among other forms of contamination. We are also subject to the NOM-006-ASEA-2017, which provides technical guidelines and criteria for industrial safety, operational safety and environmental protection for each of the phases of the design, construction, pre-start, operation, maintenance, closing and, finally, the dismantling of land installations for the storage of petroleum and petroleum products, except liquefied petroleum gas. Federal and state authorities are authorized to inspect any facility to determine its compliance with the Environmental Law, localstate environmental laws, regulations and technical environmental regulations. Violations ornon-compliance with environmental standards and regulations may result in substantial fines, temporary or permanent shutdown of a facility, required capital expenditures to minimize the effect of our operations on the environment, cleanup of contaminated soil and water, cancellation of a concession or revocation of an authorization to carry out certain activities and, in certain cases, criminal proceedings. See “Item 3—Key Information—Risk Factors—Risk Factors Related to Our Operations—Our compliance with environmental regulations in Mexico could result in material adverse effects on our results of operations.” Mexico participates in multilateral negotiations on climate change to promote a sustainable and low-carbon economy. In September 2016, the Mexican Government ratified the Paris Agreement and endorsed its Nationally Determined Contribution (NDC) by unconditionally committing Mexico to the reduction of 22% of its greenhouse gas emissions and 51% of its black carbon emissions by 2030. This commitment adopts 2013 metrics as a baseline. This commitment may also be increased by an additional reduction of up to 36% of Mexico’s greenhouse gas emissions and 70% of its black carbon emissions, on a conditional basis and subject to the adoption of a global market agreement, which would promote international carbon pricing, as well as financial and technical cooperation. Mexico’s NDC commitment envisions the participation of all social and economic segments of the country, especially the energy and industrial sectors. As a result, in July 2018, the second transitory article of the General Law on Climate Change was amended to include the commitments made by the government. Pursuant to the General Law on Climate Change, greenhouse gas emissions from the oil and gas sector are required to decrease by 14% by the year 2030, as compared to the sector’s baseline. Additionally, Article 94 of the General Law on Climate Change was supplemented to indicate that the SEMARNAT must gradually and progressively establish a national emissions trading system, designed to promote the reduction of emissions at the lowest possible cost. Pursuant to this law, the reduction of emissions must be measurable, reportable and verifiable. In order to ease the transition for system participants, the Programa de Prueba del Sistema de Comercio de Emisiones (Pilot Program for the Emissions Trading System) will operate from 2020 to 2022. During this time period, we are required to actively participate in the program by evaluating or increasing initiatives and projects that may reduce our emissions, taking into consideration the additional cost that such initiatives will have once emissions caps are defined for each participant. Mexico generally reviews and updates its environmental regulatory framework every five years, , and we work with the Mexican Government to develop new environmental regulations of activities related to the oil and gashydrocarbon industry. During 2016, the CNH updated the technical provisions for the use of natural gas in exploration and extraction activities and issued regulations for drilling, exploration and development.
Also in 2016, ASEA required that CONAGUA monitor water tables before we began drilling shale gas exploratory wells in the northern part of Veracruz and the southern part of Tamaulipas.
During 2016, ASEA issued further regulations that establish guidelines on, among others, implementing and authorizing industrial safety management systems, operational safety and environmental protection, as well as the reporting of incidents to the authorities. Moreover, in 2017 ASEA issued regulations for the external auditing of the performance of such safety systems.
Climate Change 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 ecosystemsWe are working to the adverse effects of climate change. The General Law on Climate Change establishes a series of financial, regulatory and technical rules and regulations, as well as tools for strategy formation, evaluation and monitoring that form the framework for a comprehensive public policy on climate change.
Our Special Climate Change Program 2014-2018 aims to reduce greenhouse gas emissions, improve energy and operational efficiency, reduce gas flaring and promote the efficient use of gas, among other things. Pursuant to this program, in 2016, we began upgrading the Ing. Antonio Dovalí Jaime Refinery in Salina Cruz, Oaxaca to operate on cleaner natural gas. We also began the test period for a cogeneration project to increase energy efficiency at the Antonio M. Amor Refinery in Salamanca, Guanajuato, and to evaluate the reduction of greenhouse gas emissions. In addition, we continue to work on our PEMEX Environmental Strategy 2016-2020, which incorporates our former Plan de Acción Climática (Climate Action Plan), to identify action items,develop projects and best practicesinitiatives related to mitigate the impact ofour emissions goals for our main productive activities. In 2020, our operations on climate change. These actions include the construction of infrastructure for transportation and gas management.
We also work with several national and international entities to develop and promote initiatives that mitigate the effects of climate change. For instance, we participate in the Climate and Clean Air Coalition (CCAC), with which we aim to identify emission sources in our key facilities and substantially reduce emissions of climate pollutants. In compliance with CCAC criteria, we carried out inspections in nine facilities, including Dos Bocas, Cactus and Atasta and have mitigated the emissions identified in those inspections.
In accordance with the actions carried out by the Mexican Government to mitigate global climate change, we are analyzing the implementation of 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 dioxide capture projects at PEMEX and CFE facilities and enhanced oil recovery (EOR) initiatives. In 2016, several tools were developed to evaluate the firstCCUS-EOR project in Mexico. This project included a plan to inject carbon dioxide produced at our Cosoleacaque Petrochemical Complex into the Brillante producing field at the Cinco Presidentes business unit. By the end of 2017, we had put in place the necessary environmental and social safeguards for the pilot projects, which in turn allows us to receive support from the World Bank.
During 2017, we recorded greenhouse gas emissions of approximately 40generated 54.0 million tons of carbon dioxide equivalent, which represented a 30 % decrease12.5% increase, as compared to 2016, mainlyour total carbon dioxide equivalent emissions in 2019. The increase was primarily due to (i) exploration and production activities, (ii) maintenance and unscheduled shutdowns, resulting in an increase in gas flaring, (iii) the inability to use gas recovered in the production process due to failures in our compression systems and (iv) the need for maintenance to our productive refining equipment.
In 2020, in support of our efforts to mitigate climate change, we carried out the following actions and investments: The operation and maintenance continuity of installed gas infrastructure used by Pemex Exploration and Production. The acquisition, repair and overhaul of compressors to increase Pemex Exploration and Production’s gas handling and utilization. The improvement of operational flexibility through the interconnection of projects associated with the gas transportation system. The refurbishment of failing compressors in our gas processing complexes (GPCs) in order to achieve a higher productive usage of natural gas. The monitoring of our actions every quarter in order to ensure the fulfillment of objectives related to the use of associated gas from Kumaza, Cantarell, AbkatúnPol-Chucin the extraction of hydrocarbons, our methane emission reduction program for vents and Litoral de Tabasco fields. Ourother escapeways and the update of our emissions inventory and vulnerability map regarding the effects of climate change. The verification of greenhouse gas usage level was approximately 97% during 2017, as compared to 91% in 2016, which increase was mainly due to field performance and our operational flexibility. In 2017, we continued to develop several conservation and reforestation projects designed to increaseemission levels at sites that recorded emissions of more than one million tons of carbon dioxide equivalent per year.
The development of the necessary infrastructure to participate in the Pilot Program for the Emissions Trading System and water capture to preserve the ecosystems in which we operate. Our biodiversity conservation efforts and indirect mitigation measures have been carried out through the following projects:trained key personnel. | • | | The definition of key metrics for the ProyectoProgramas de ConservacióPrevención Manejo y RestauracióControl de Emisiones de Metano (Methane Emission Prevention and Control Programs) in Pemex Exploration and Production, as well as in Pemex Logistics. We continue to identify the main sources of methane emissions and establish our baseline emissions levels. We plan to implement the Programas de Detección y Reparación de los Ecosistemas Naturales de la Cuenca Media del Río UsumacintaFugas (Conservation, Management(Leak Detection and Restoration Project of the Natural Ecosystems of the Rio Usumacinta Basin) in Chiapas;Repair Programs) to reduce our methane emissions. |
Biodiversity | • | | 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; and |
During 2020, we continued operating the Jaguaroundi Ecological Park, located in Coatzacoalcos, Veracruz. This park is certified as an Área Destinada Voluntariamente a la Conservación (Voluntary Area for Conversation). This park is the first Voluntary Area for Conservation and has an extension of 960 hectares of rain forest, natural grassland, tropical oak and 57 hectares of water bodies that are registered with the Comisión Nacional de Áreas Naturales Protegidas (National Commission for Protected Natural Areas). The park is open to the public and environmental education activities are carried out for nearby communities, schools and industries. In 2020, we organized virtual workshops, talks and tours through the park’s social networks. | • | | 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. |
We also continued to developmaintain the JATUSATuzandépetl Ecological Corridor.Park, located in the Municipality of Ixhuatlán del Sureste, Veracruz. With an area of 1,104 hectares, the Tuzandépetl Ecological Park is also certified as a Voluntary Area for Conservation. Interesting and rich extensions of mangrove, popal and tular are found here. This projectwetland of about 600 hectares is important for its role as a flood regulator in the area and as a receiver of migratory birds in the winter. The property also has important groves of corozo palms, yucatecan palms and evergreen rainforest. Troops of howler monkeys and spider monkeys live in the park, which are the only two Mexican primates considered as fauna in protected status under the NOM-059-SEMARNAT-2018. The conservation value of Tuzandépetl Ecological Park lies in the fact that is located in one of our most important conservation initiatives and its purpose is to merge natural or modified spaces, ecosystems and habitats to facilitate the conservation of biodiversity. During the months of April through June of 2017, we made improvements to the Jaguaroundi Parkstates with the goalgreatest change in land use that preserves only 3% of attracting more visitors. Additionally, byits native vegetation. By keeping these wet land and rain forest remnants in a good state of conservation, it allows the end of 2017 we developed a business plancommunity and Pemex to enjoy the environmental services that encourages the participation of nearby communities to maximize profits and facilitate the preservation of biodiversity. For 2018, we plan to establish a fund to guarantee the continuing operation of this project. Clean Development Mechanism Projects
In 2000, Mexico ratified the Kyoto Protocol to the United Nations Framework Convention on Climate Change as anon-Annex B country. Accordingly, Mexico is not subject to emission parameters under the Kyoto Protocol, but Mexican companies,nature provides, such as PEMEX, are allowed to develop projects known as Clean Development Mechanism (CDM) projects. These CDM projects generatea favorable habitat for pollinators or the capture of water and carbon dioxide emission reduction certificates or credits that can be traded in international markets. We have registered two CDM projects under the United Nations Framework Convention on Climate Change: waste energy recovery at the Dos Bocas Maritime Terminal, which increases thermal efficiency by recovering wasted heat for the Maya oil dewatering process, and the Tres Hermanos oil field gas recovery and utilization project, which involves the recovery and transportation of gas from oil wells that used to be flared from oil batteries to a new carbon dioxide separation and gas conditioning plant, where dry gas and condensates are produced. The decrease in emissions resulting from these projects is expected to be verified by a third party recognized by the United Nations.dioxide.
In addition, in November of 2017 we participated in a meeting of the Oil and Gas Climate Initiative (OGCI). This initiative is an effort by ten international oil companies, representing 20% of the total production of oil and gas in the world, to reduce emissions of greenhouse gases. The leadership of these companies endorse the Paris Agreement and the OGCI aims to reduce methane emissions, accelerate the deployment of carbon capture, use and sequestration, improve energy efficiency and contribute to transport efficiency. During this meeting, our CEO explained our strategy of reducing gas burning in the shallow water assets through the rehabilitation of compression modules and optimizing energy consumption in the refining processes.
HEALTH, SAFETY AND ENVIRONMENTAL PERFORMANCE We believe that we are in substantial compliance with current federal and state environmental laws and that we maintain an organizational structure designed to identify and solve environmental risks. In addition, our subsidiary entities have specialized departments that implement their own internal environmental programs, audits and facilities inspections. When these internal audits reveal problems or deficiencies, the subsidiary entities take the necessary measures to eliminate them. In addition to our internal monitoring structure, Petróleos Mexicanos and its subsidiary entities’ environmental audit program is subject to review by ASEA, which oversees reviewing compliance with environmental regulations for the oil and gas sector and establishes environmental remediation standards.
Since 1993, we have participated in the National Environmental Audit Program (NEAP), a voluntary alternative to the traditional system of inspections and penalties, with PROFEPA and now with ASEA.penalties. This program was created by PROFEPA in 1992 as a regulatory incentive for companies to voluntarily correct any environmental irregularities in their operations.operations and is now carried out instead by ASEA for the hydrocarbons sector. In general terms, voluntary environmental auditing consists of three stages: (i) an audit and compliance diagnosis; (ii) the development of an action plan to correct irregularities; and (iii) the implementation of the action plan. If a company satisfactorily completes these three stages, ASEA or PROFEPA grants the audited company a clean industry certificate, which means that it compliesindicating the company’s compliance with the applicable environmental legislation of theirfor its industry. As of December 31, 2017,2020, we have registered 29016 of our facilities with NEAP with the objective of obtaining a “clean industry” certificate for each facility. During 2017, 1232020, six of our facilities werere-certified and an additional 44 facilitesfour of our facilities were certified for the first time. The audits of the remaining 123Six more facilities are still under review. We will continue including new facilities under this program, as we expand our activitiescurrently in the areasprocess of exploration, exploitation, refining and distribution of hydrocarbons.obtaining certification. On February 7, 2016, a fire and explosion occurred at theAbkatun-A-Compression processing platform in the Gulf of Mexico, which activated the safety systems, procedures and protocols and the platform was evacuated. As a result of this accident, three offshore workers (two PEMEX employees and one contractor) lost their lives. The explosion was caused when the welding of anFA-4210 cap failed.
During 2017, we did not experience any major incident that had significant environmental consequences. We did, however, experience the following nine material blasts or hazardous events at our facilities, none of which had significant environmental consequences:
On January 12, 2017, during the cleaning of the hydrodesulphurizing plant exchangers of the intermediate distillatesU-501 of the Francisco I. Madero Refinery, there was a leak of sulfuric acid that killed one worker.
On March 15, 2017, an explosion occurred at the Salamanca storage and dispatch terminal during work that was done to uncover a heavy fuel oil line. As a result of this accident three of our employees and five contractors lost their life.
On March 23, 2017, an incident occurred at the Independencia Petrochemical Complex during railroad maneuvers. As a result of this incident, which was caused by a miscommunication between the machinist and a rail transport worker, one employee of the railroad company lost his life.
On March 29, 2017, a fire occurred inside a barge tank located at the dock of Madero shipyards while employees were removing heating coils, resulting in minor injuries to 17 employees.
On March 31, 2017, while fixing an illegal tap of the Mendoza pipeline, a leak and fire occurred that resulted in three workers being injured, one of whom lost his life.
On June 14, 2017, as a result of flooding caused by tropical storms “Beatriz” and “Calvin”, there was an explosion at our Salina Cruz refinery and subsequent fire that lasted 43 hours. As a result of this incident, one employee lost his life, the pumping house at the location of the explosion and many pipelines were destroyed and operations at the Salina Cruz refinery were temporarily suspended.
On July 29, 2017, the driver of a fire protection unit at our Salina Cruz Maritime Storage Terminal lost control over the unit, resulting in an accident which caused two fatalities.
On December 12, 2017, during railroad maneuvers inside our Salamanca Refinery, an employee of the railroad company fell down the convoy, resulting in his death.
On December 14, 2017, during maintenance and cleaning activities at the alkylation plant at our Madero Refinery, there was a leak of hydrofluoric acid, causing the maintenance supervisor to suffer chemical burns and ultimately lose his life.
As part of our accident prevention strategy, we conduct root cause investigations of all incidents that occur during our operations. These investigations allow us to identify the causes of accidents and establish corrective measures to avoid the recurrence of similar incidents. During 2020, we did not register any major incident that had significant environmental consequences. We did, however, experience the following 8 hazardous events at our facilities. On January 1, 2020, an employee lost his life due to inhaling hydrogen sulfide while taking measurements in the MJA-T-91 Primary Gasoline Tank at the Madero Refinery. On February 10, 2020, a contractor los his life due to inhaling gases while checking the level of a tank at the well head in the Constituciones 1294 well of the Macropera Constituciones 313. On March 7, 2020, three contractors lost their lives due to the collapse of a wall during manual excavation work carried out in response to a leak at the Cadereyta-Satellite pipeline. On May 7, 2020, a contractor lost his life due to electrocution when the crane he was operating made contact with power cables at the Tintal 51D well. On July 17, 2020, two employees lost their lives and one employee was injured when the PEMEX-365 boat sank in the vicinity of pier no. 7 of the Pajaritos storage and port services terminal. On September 11, 2020, an employee lost her life due to inhaling fumes without respiratory protection equipment while taking oxidation samples at the Cactus GPC. On October 14, 2020, an employee lost his life due to a fall when he leaned backwards to a railing without realizing that there was an inspection opening in the railing at such typepoint at walkway one of incident.the control tower of the Cadereyta storage and dispatch terminal. On December 31, 2020, an employee lost his life due to an accident where he was struck by a reversing tank truck at the automotive workshop. In 2017,2020, our lost time injury rate decreased 5.6% from 0.36remained the same, registering 0.24 accidents per million man-hours worked with exposure to risk, both in 2016 to 0.34 in 2017. The segment that contributed most to this decrease was2019 and 2020. Pemex Exploration and Production and Pemex Corporate had the industrial transformation segment.highest lost time injury rates during the year. Our lost days indicator due to injuries decreased 8.7%23.5%, from 2317 to 2113 lost days per million man hoursman-hours worked with risk exposure from 20162019 to 2017.2020. Lost days are those missed as a result of incapacitating injuries suffered at work or those onfor which compensation is paid for partial, total or permanent incapacity or death. From 20162019 to 2017,2020, our contractors’ lost time injury rate decreased 65.4%increased 14.3%, from 0.260.14 to 0.090.16 injuries per millionman-hours worked with risk exposure.exposure, respectively. In 2017,2020, our primary initiatives in industrial safety, health and environmental protection (EH&S) included the following: | • | | Monitored our Programa de Atención a los Riesgos Críticos A1 (A1 Critical Risks Attention Program). 98% of the authorized risks occurred at facilities which are not part of the National Refining System, as compared to 77.2% in 2019. In 2020, 81 out of 240 authorized risks were addressed. We are currently performing the critical risk assessment for 2021. |
| • | | Our Verification Unit accredited 198 vessels subject to pressure in accordance with NOM-020 of the Secretaría de Trabajo y Previsión Social (Ministry of Labor and Social Welfare). |
Weekly visits to subsidiaryImplemented safety priorities for facilities to superviseand personnel, including the implementationverification of the PEMEX-SSPA System;compliance by each of our subsidiaries. Review of compliance with our 12 zero tolerance EH&S guidelines;Issued seven security alerts to coordinate security personnel at similar facilities. VerificationImplemented institutional programs to reinforce EH&S practices, such as: layers of protection, planning, scheduling and advice in the applicationexecution of the eight critical standardsjobs with risk, prevention of process safety;falls, contractors safety and order and cleaning. | • | | EvaluationImplemented the Revisión de Seguridad de Pre-Arranque(Pre-Start Safety Review) at Akal C6 (Pajaritos) to verify the safe operation of ourBinomio project for the immediate verification and mitigation of risks;strategic facilities. |
EH&S campaigns, includingReinforced and communicated sanitary measures to avoid the “Order and Cleaning”, “Preventionspread of Falls atCOVID-19 in our facilities. We plan to continue to carry out such trainings in 2021 in order to reduce the Same Level” and the “Up the Voice, All Safe, All Aboard” campaigns to ensure that platform workers are in optimal health; Several EH&S campaigns aimed at creating awareness of the importance of, and reinforcing a commitment to, equipment protection; and
EH&S leadership evaluations at the three levels of the organization (strategic, tactical and operational).
On May 19, 2017, Pemex Exploration and Production received an award for high performance from ASEA for achieving the lowest lost time injury frequency rate in its history in 2016, with 0.25 injuries per millionman-hours worked, 45% lower than 2015. In 2017, this index was 0.34and meet our goal established for PEMEX as a whole, which represents a decrease of 5.6% compared to 2016.
By the end of 2017, we finished the design of the new model of the PEMEX-SSPA System, which works to incorporate international best practices and includes the International Association of Oil and Gas Producers (IOGP) standards. The Pemex-SSPA System was approved by ASEA, which allows us to operate our facilities in accordance with the energy reform.year.
Environmental Liabilities As of December 31, 2017,2020, our estimated and accrued environmental liabilities totaled Ps. 17,482.49,178.6 million. Of this total, Ps. 755.93,612.3 million belongpertained to Pemex Exploration and Production, Ps. 2,680.83,426.8 million to Pemex Industrial Transformation and Ps. 14,045.82,139.5 million to Pemex Logistics. The following tables detail our environmental liabilities by productive subsidiary entity and operating region at December 31, 2017.2020.
| | | | | | | | | Pemex Exploration and Production | | Estimated Affected Area | | | Estimated Liability | | | | (in hectares) | | | (in millions of pesos) | | Northern region | | | 437.5 | | | Ps. | 1,651.8 | | Southern region | | | 523.0 | | | | 1,757.8 | | | | | | | | | | | Total | | | 960.5 | | | Ps. | 3,409.6 | | | | | | | | | | |
Note: Numbers may not total due to rounding. Source: Pemex Exploration and Production(1)Production. | | | Estimated Affected Area | | | Estimated Liability | | | Holding Ponds Drainage | | | | (in hectares) | | | (in millions of pesos) | | | Number of Holding Ponds Reported as Liabilities | | | Estimated Liability | | | | | | | | (in millions of pesos) | | Southern region | | | | 9 | | | Ps. | 77.7 | | Northern region | | | 150.42 | | | Ps. | 359.0 | | | | 44 | | | | 125.0 | | Southern region | | | 159.14 | | | | 250.7 | | | | | | | | | | | | | | | | Total(2) | | | 309.56 | | | Ps. | 609.6 | | | Total | | | | 53 | | | Ps. | 202.7 | | | | | | | | | | | | | | | Total estimated environmental liabilities of Pemex Exploration and Production | | | | | | Ps 3,612.3 | | | | | | | | | |
Note: Numbers may not total due to rounding. Source: Pemex Exploration and Production. | 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 2017, environmental remediation was completed on 66.36 hectares. There were 154.65 hectares of additional affected areas in 2016, as a result of spills from pipelines mainly. |
| | | | | | | | | Pemex Industrial Transformation | | Estimated Affected Area | | | Estimated Liability | | | | (in hectares) | | | (in millions of pesos) | | Refineries | | | 285.5 | | | Ps. | 3,316.0 | | Complex gas processors | | | 6.1 | | | | 110.8 | | Total estimated environmental liabilities of Pemex Industrial Transformation | | | 291.6 | | | Ps. | 3,426.8 | | | | | | | | | | |
Note: Numbers may not total due to rounding | | | | | | | | | | | Holding Ponds Drainage | | | | Number of Holding Ponds Reported as Liabilities(1) | | | Estimated Liability | | | | | | | (in millions of pesos) | | Southern region | | | 11 | | | Ps. | 19.3 | | Northern region | | | 69 | | | | 127.0 | | | | | | | | | | | Total | | | 80 | | | Ps. | 146.2 | | | | | | | | | | | Total estimated environmental liabilities of Pemex Exploration and Production | | | | | | Ps. | 755.9 | | | | | | | | | | |
Note: | Numbers may not total due to rounding. |
(1) | In 2017, no new ponds were added, and no holding ponds were restored. As a result, as of December 31, 2017, 80 ponds remain to be reported. |
Source: | Pemex Exploration and Production. |
Source: Pemex Industrial TransformationTransformation. | | | | | | | | | | | Estimated Affected Area | | | Estimated Liability | | | | (in hectares) | | | (in millions of pesos) | | Refineries | | | 285.49 | | | | Ps. 2,661.3 | | Reynosa Gas complex processor | | | 11.52 | | | | 19.5 | | Total estimated environmental liabilities of Pemex Industrial Transformation | | | 297.01 | | | | Ps 2,680.8 | | | | | | | | | | |
Note: | Numbers may not total due to rounding. |
Source: | Pemex Industrial Transformation. |
| | | | | | | | | Pemex Logistics | | Estimated Affected Area | | | Estimated Liability | | | | (in hectares) | | | (in millions of pesos) | | Storage and Distribution Terminals | | | 61.0 | | | Ps. | 990.7 | | Pipelines | | | 61.4 | | | | 1,124.1 | | Treatment and Logistics | | | 1.3 | | | | 24.6 | | Total estimated environmental liabilities of Pemex Logistics | | | 123.7 | | | Ps. | 2,139.5 | | | | | | | | | | |
Note: Numbers may not total due to rounding. Source: Pemex LogisticsLogistics. | | | | | | | | | | | Estimated Affected Area | | | Estimated Liability | | | | (in hectares) | | | (in millions of pesos) | | Storage and Distribution Terminals | | | 69.58 | | | Ps. | 919.0 | | Pipelines | | | 989.59 | | | | 13,126.8 | | Total estimated environmental liabilities of Pemex Logistics | | | 1,059.17 | | | Ps. | 14,045.8 | | | | | | | | | | |
Note: | Numbers may not total due to rounding. |
Our estimates of environmental liabilities include cost estimates for site-specific evaluation studies, which draw upon aspectsbased on the characteristics of previous evaluations for sites with comparable characteristicsthe claim and the corresponding remediation. The remediation sites consist of facilities identified in the audit process described above, as well as those previously identified sites in more mature petroleum operating areas that were not cleaned up in the past. Our environmental liabilities also include the elimination of holding ponds created by abandoned petroleum wells. Additionally, our environmental liabilities include an accrual based on information received periodically from field managers regarding probable environmental liabilities identified in their respective areas of responsibility. We accrue environmental liabilities, when sufficient basic knowledge is available to form a preliminary estimation as to remediation cost. Although the full potential scope of the remediation cost may not be known with certainty, these accruals are made when the liability is probable and the amount may be reasonably estimated, in accordance with IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” for IFRS purposes. These estimatedEstimated liabilities include assumptions resulting from an initial evaluation of damage, including land acreage to be remediated, depth and type of contamination. While the initial evaluation is extensive, thereThere is a possibility that the actual scope of remediation could vary depending upon information gathered during the initial evaluation and the remediation process. For a further discussion of our environmental liabilities, see Note 3(l)3-J and Note 20 to our consolidated financial statements included herein. Unasserted or additional claims are not reflected in our identified liabilities. We are not awareAs of any such claims that would be of such magnitude as to materially affect our estimates of environmental liabilities. At the end of 2017,December 31, 2020, we were not aware of uncertainties with respect to joint and several liabilities that could affect our assessment of environmental contingencies or otherwise result in a major environmental liability. See “—History and Development—Energy Reform” above in this Item 4 for more information regarding the participation of other companies in the Mexican energy sector. As a result, we believe we are positioned to know immediately of any claims and are therefore directly accountable for any claims that may be brought against us. Pemex Exploration and Production remains responsible for handling existing environmental liabilities—these responsibilities are not part of the Integrated E&P Contracts. Nevertheless, the Integrated E&P Contracts include environmental clauses related to the contractors’ and Pemex Exploration and Production’s responsibility to ensure an adequate environmental performance, and also establish the terms for compensation and repair of any new environmental impacts. The timinginitial evaluation and remediation of remediation or cleanup of theenvironmental liability sites to which these environmental liabilities relate isare dependent upon the annual budget approved by the Mexican Congress. On August 1, 2017, we were granted a favorable judgment by the Supreme Court of Justice of the Nation, which determined that we are not liable for material and environmental damages caused by hydrocarbons spills related to illegal tapping of pipelines, since the environmental damage was caused by third party criminal behavior. Environmental Projects and Expenditures In 2017,2020, we spent approximately Ps. 5,760468.7 million on environmental projects and related expenditures, as compared to Ps. 11,4241,846.4 million in 2016.2019. For 2018,2021, we have budgeted Ps. 3,473Ps 1,344.5 million for environmental projects and expenditures, including modernizationmodernizing of installations, implementation ofimplementing systems and mechanisms to monitor and control atmospheric pollution, acquisition ofacquiring equipment to address contingencies related to oil and gas spills, the expansion ofexpanding water effluent systems, restorationrestorating, and reforestation ofreforesting affected areas, studies forengaging in environmental investigationinvestigations 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 NAFTAUSMCA among the governments of Mexico, the United States and Canada, the Vienna Convention for the Protection of the Ozone Layer, the Agreement on Environmental Cooperation between the Governments of Mexico and Canada or Mexico’s membership in the Organization for Economic Cooperation and Development, has caused or will cause a significant increase in our environmental expenditures. Social Responsibility We haveDuring 2020, we implemented and continued various corporate social responsibility initiatives primarily with respect to the protection and preservation of the environment, relations within communities where we operate, ethical work practices, respect for labor rights and the general promotion of quality of life for communities and employees.engage in substantial operations.
Our corporate and social responsibility goals are carried out through the following mechanisms: cash donations;
product donations of fuels and asphalt; donations of movable and immovable property;
environmental protection projects;
mutually beneficial public works or projects, which are projects we carry out in collaboration with local authorities and communities to improve infrastructure that is beneficial both to us and to the community; | • | | thePrograma de apoyo a la comunidad y medio ambiente (Program to support communities and the environment, which we refer to as PACMA), which supports and implements social programs, actions and public works designed to promote the economic and social development of the communities in which we operate and to protect their environment; and |
the PACMA, which supports and implements social programs, designed to improve the social conditions of the communities in which we operate; and other instruments that provide a positive impact on communities including integrated exploration and production contracts and the sustainable development annexes and clauses to our contracts, insuch as Integrated E&P Contracts, through which we and our contractors commit to improving the quality of life in communities where we operate.operate, directly or indirectly. In 2017,2020, the total value of our social responsibility donations and contributions amounted to Ps. 1,670.31,764.8 million. Our cash donations amounted to approximately Ps. 59.0 million, our asphalt and fuel donations amounted to approximately Ps. 1,247.0 million and our movable and immovable property donations959.6 million. PACMA contributions amounted to approximately 17.0 million. ContributionsPs. 727.2 million, contributions made through provisions of our Integrated E&P Contracts FPWCs, SD Annexes and RS KMZ sustainable development clause amounted to Ps. 90.547.0 million and PACMA and mutual benefit project contributions amounted to Ps. 233.8 million and Ps. 23.0 million, respectively.31.0 million. Approximately 92.4%97.7% of our donations and contributions were assigned to 12eleven states with greater activity in the oil and gas industry (Campeche, Chiapas, Coahuila, Guanajuato, Hidalgo, Nuevo León, Oaxaca, Puebla, San Luis Potosí, Tabasco, Tamaulipas and Veracruz)); and the remaining 7.6%2.3% to the remaining states. Most importantly,
Notably, we took the following specific actions in 2017:2020: contributed approximately Ps. 894.8959.6 million in asphalt and fuel for the operation of vehiclesdonations. Of our 2020 asphalt and machinery for various state and municipal governments, principally to provide assistance for emergencies, civil protection programs, services and public safety; contributed approximately Ps. 326.5 million to the construction, improvement or pavement of roads and highway infrastructure in 23 states;
contributed approximately Ps. 98.9 million toward education and sports programs in oil and gas communities in 6 states, mainly for scholarships and the construction of schools and sports facilities;
contributed approximately Ps. 41.3 million for environmental education, restoration and conservation of protected natural areas through programs implementedfuel donations, 76.4% was concentrated in the states of Tabasco, Campeche, Chiapas,Veracruz and Tamaulipas;
contributed a total of Ps. 31.0 million via our mutual benefit projects, Ps. 29.0 million of which was directed towards the state of Tabasco and Veracruz;Ps. 2.0 million towards the state of Veracruz. These projects were mainly infrastructure projects, such as the paving of roads; and contributed approximately Ps. 25.7 million in turbosine for the operation of state aircraftscarried out 35 projects related to Integrated E&P Contracts in the states of Campeche, Chiapas, HidalgoVeracruz, Tamaulipas and Veracruz;Puebla for a total amount of Ps. 47.0 million. We contributed Ps. 34.0 million in Veracruz and contributed approximately Ps. 15.713.0 million towards sustainabilityin Tamaulipas. These projects were mainly infrastructure projects, education projects and training programs primarily aimed at fishing communities in the states of Oaxaca and Tabasco.sports projects.
In addition, in 2020 we made the followingseveral donations under our PACMA program:program. Approximately 41.5% of donations were allocated to Tabasco, approximately 23.1% to Veracruz and approximately 10.5% to Campeche. The remainder, or approximately 24.9%, was allocated to Tamaulipas, Oaxaca, Hidalgo, Guanajuato, Puebla, Chiapas, Nuevo León and Coahuila, among others. In sum, we contributed approximately Ps. 82.4766.4 million for the operation of mobile medical unitsto public safety and other medical services in the state of Tabasco; contributed approximatelycivil protection, Ps. 33.5591.6 million for the installation of public lighting in communities in the states of Campeche, Guanajuata, Oaxaca and Veracruz;
contributed approximatelyto infrastructure, Ps. 16.3246.8 million for the construction and restoration of public parksto community health, Ps. 45.8 million to education and sports, facilities in communities in the states of Campeche, Nuevo León, TabascoPs. 43.9 million to productive projects, Ps. 32.3 million to environmental protection and Veracruz; and
contributed approximately Ps. 7.038.0 million for the construction ofto community kitchens in eight municipalities in the states of Oaxaca and Veracruz.
equity projects.TRADE REGULATION, EXPORT AGREEMENTS AND EXPORTPRODUCTION AGREEMENTS Though Mexico is not a member of Organization of the Petroleum Exporting Countries (which we refer to as OPEC),OPEC, it has periodically announced increases and decreases in our crude oil exports reflecting production revisions made by other oil producing countries and entered into agreements with OPEC and non-OPEC members to reduce its oil exports, in order to contribute to crude oil prices stabilization. However, we have not changed On April 12, 2020, Mexico entered into an agreement with OPEC and non-OPEC countries to reduce world crude oil production. Pursuant to this agreement, the OPEC+ countries agreed to reduce their overall crude oil production by 9.7 million barrels per day from May 1, 2020 through June 30, 2020, by 7.7 million barrels per day from July 1, 2020 through December 31, 2020 and by 5.8 million barrels per day from January 1, 2021 through April 30, 2022. In particular, Mexico agreed to reduce its, and in turn our, export goals becausecrude oil production by 100,000 barrels per day for a period of announcements made by OPEC since 2004,two months beginning on May 1, 2020. This agreement was intended to help mitigate the decrease in oil prices and we believedemand that has taken place as a result of the COVID-19 pandemic. Mexico has no current plansnot agreed to change our current level of crude oil exports.additional production cuts since the April 12, 2020 agreement. NAFTA
On July 1, 2020, the USMCA entered into force, replacing NAFTA. The USMCA has not affected Mexico’s rights, through usPEMEX or other companies, to explore and exploit crude oil and natural gas in Mexico, to refine and process crude oil and natural gas and to produce petrochemicals in Mexico. Since 2003,The USMCA continues the zero-tariff rate on the export of 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 fromthat existed under NAFTA. However, any change in trade relations between Mexico, the United States and Canada have also been exempt from tariffs. In addition,as a result of the implementation of the USMCA could require us to renegotiate our contracts, limit our ability to explore and exploit crude oil or natural gas in 2004, NAFTA approved lower tariffsMexico, increase the tariff rate and/or lose business, resulting in an adverse impact on certain materialsour business and equipment imported by Mexico. The zero tariff on Mexico’s importsthe results of petrochemicals fromour operations. See “Item 3—Key Information—Risk Factors—Risk Factors Related to Mexico—Economic and political developments in Mexico and the United States may adversely affect Mexican economic policy and, Canada could have increased competition in the petrochemicals industry in Mexico. To the extent that domestic and international prices for our products remain constant, lower tariffs on products, materials and equipment that we import from and export to the United States and Canada, reduce our expenses and increase our revenue.turn, PEMEX’s operations.” TAXES, DUTIES AND OTHER PAYMENTS TO THE MEXICAN GOVERNMENT General Taxes and duties applicable to us are a significant source of revenues to the Mexican Government. We contributed approximately 8.6%7.7% of the Mexican Government’s revenues in 20162019 and 11.3%3.7 in 2017.2020. In 2017,2020, we paid a number of special oil and gas taxes and duties, in addition to the other taxes and duties paid by some of the subsidiary companies, as described below under “—Other Taxes.” The fiscal regime in effect for Petróleos Mexicanos and the subsidiary entities for 20172020 (which we refer to as the fiscal regime) became effective in 2015 and can be subsequently modified from time to time. The Secondary Legislationimplementing legislation published in August 2014 set forth a fiscal regime applicable to the new contractual arrangements that governs exploration and production activities conducted in Mexico beginning on January 1, 2015, as well as a new state dividend to be paid by Petróleos Mexicanos and the subsidiary entities beginning on January 1, 2016. See “—Fiscal Regime” and “—Other Payments to the Mexican Government” below. Fiscal Regime for PEMEX Fiscal Regime The Hydrocarbons Revenue Law that was adopted as part of the Secondary Legislation sets forth, among other things, the following duties applicable to us in connection with our assignments granted by the Mexican Government: | • | | Derecho por la Utilidad Compartida(Profit-Sharing Duty): As of January 1, 2015, this duty iswas equivalent to 70%70.0% of the value of oil and gas produced in the relevant area, less certain permitted deductions. Pursuant to the Hydrocarbons Revenue Law, this duty is to decreasedecreases on an annual basis untilbasis. As of January 1, 2019, at which point it will bethe rate of this duty was set at 65%. During 2017,2020, we paidaccrued expenses of Ps. 373,728218,913 million in connection with this duty, a 22.8% increase from36.22% decrease as compared to the Ps. 304,299 paid343,242 million accrued in 2016,2019, primarily resulting from an increasea reduction in oil and gas prices. On August 18, 2017,prices and a decrease in the rate of the duty to 58%. In addition, the application of the decree was published in the Official Gazette of the Federation that increasedon April 21, 2020 decreased the duty by Ps. 65,000 million. As a result, the final amount we can deduct for investments, costs and expenses made pursuant todue by Pemex under this duty and resulted in a benefit ofwas Ps. 7,770 million. On November 30, 2017,153,913 million for the decree entitledAcuerdo por el que se reforman y adicionan diversas disposiciones de las Reglas de carácter general para definir los métodos de ajuste del valor de los hidrocarburos de los derechos sobre hidrocarburos (Agreement by which various provisions of the general rules are reformed and added to define the methods of adjusting the value of hydrocarbons and hydrocarbon rights) was published in the Official Gazette of the Federation, defining the method for adjusting the value of hydrocarbons, which resulted in an estimated tax benefit of Ps. 8,854 million. In addition, we received a benefit of Ps. 2,187 million in the payment of this duty as a result of adjustments to the fair economic value of certain exploration and production areas. See “Item 5—Critical Accounting Policies—Exploration and Production Taxes and Duties” below.fiscal year ended December 31, 2020. |
| • | | Derecho de Extracción de Hidrocarburos(Hydrocarbons (Hydrocarbons Extraction Duty):This duty is to be determined based on a rate linked to the type of hydrocarbons (e.g.hydrocarbon (e.g., crude oil, associated natural gas,non-associated natural gas or condensates), the volume of production and the relevant market price.price of such hydrocarbon. During 2017,2020, we paid Ps. 58,523.137,674 million under this duty, a 32% increase from38.61% decrease as compared to the Ps. 43,517.461,371 million paid in 2016,2019, mainly due to an increasea reduction in oil and gas prices. |
| • | | Derecho de Exploración de Hidrocarburos( (Hydrocarbons Exploration Hydrocarbons Duty): TheFor the year ended December 31 2021, the Mexican Government is entitled to collect a monthly payment of Ps. 1,2141,396.09 per square kilometer ofnon-producing areas. After 60 months, this duty increases to Ps. 2,9043,338.46 per square kilometer for each additional month that the area is not producing. These amounts will be updated on an annual basis in accordance with the national consumer price index (NCPI). During 2017,2020, we paid Ps. 9811,069 million under this duty, a 1.8% decrease from1.81% increase as compared to the Ps. 9631,050 million paid in 2016.2019. |
In 2016, Mexican companies paid a corporate income tax at a rate of 30% applied to revenues, less certain deductions. Beginning in 2015, Petróleos Mexicanos and the subsidiary entities became subject
| • | | In 2020, Mexican companies paid a corporate income tax at a rate of 30.0% applied to revenues, less certain deductions. Beginning in 2015, Petróleos Mexicanos and the subsidiary entities became subject to theLey del Impuesto sobre la Renta, or Mexican Income Tax Law. During, 2017,2019 and 2020, we did not pay any tax under this law, as compared to the Ps. 1,333 million we paid in 2016.law. |
Under the 20172020 fiscal regime, some of our products are subject to the following IEPS Taxes,taxes, which we withhold from our customers and pay to the tax authorities. The IEPS tax is no longernot included in our sales or expenses. | • | | IEPS sobreSobre la ventaVenta de los combustibles automotricesCombustibles Automotrices (IEPS Tax on the Sale of Automotive Fuels): This tax is a fee on domestic sales of automotive fuels, gasoline and diesel, thatdiesel. Pemex Industrial Transformation collects the tax on behalf of the Mexican Government. The applicable fees for this tax are Ps. 4.304.95 per liter of Magna gasoline;gasoline, Ps. 3.644.18 per liter of Premium gasoline and Ps. 4.735.44 per liter of diesel. The amount of the fee will dependdepends on the class of fuel, andfuel. It is fixed monthlyyearly and adjusted on a weekly basis by the Ministry of Finance and Public Credit. The fees apply to sales in Mexico and imports, and are not subject to VAT.imports. |
| • | | IEPS beneficioBeneficio de entidades federativas, municipiosEntidades Federativas, Municipios y demarcaciones territorialesDemarcaciones Territoriales (IEPS Tax in Favor of States, Municipalities and Territories): This tax is a fee on domestic sales of automotive fuels, gasoline and diesel, thatdiesel. Pemex Industrial Transformation collects the tax on behalf of the Mexican Government. The applicable fees for this tax are 3843.69 cents per liter of Magna gasoline 46.37with an octane level less than 91, 53.31 cents per liter of Premium gasoline with an octane level of 91 or greater and 31.5436.26 cents per liter of diesel. This fee changes yearly in accordance with inflation. Funds gathered bycollected from this feetax are allocated to Mexican states and municipalities as provided for in theLey de Coordinación Fiscal (Tax Coordination Law). The fees only apply to sales in Mexico and are not subject to VAT. |
| • | | IEPSa los combustibles fóCombustibles Fósiles(IEPS (IEPS Tax on Fossil Fuels): This tax is a fee on domestic sales of fossil fuels thatfuels. Pemex Industrial Transformation collects the tax on behalf of the Mexican Government. The applicable fees for this tax are 6.507.48 cents per liter forof propane, 8.429.68 cents per liter forof butane, 11.4113.12 cents per liter forof gasoline and aviation gasoline, 13.6415.67 cents per liter forof jet fuel and other kerosene, 13.8415.92 cents per liter forof diesel, 14.7816.99 cents per liter forof fuel oil, Ps. 19.72 per ton of petroleum coke, Ps. 46.23 per ton of coal coke, Ps. 34.81 per ton of mineral carbon and Ps. 17.1550.32 per ton for petroleum coke. This fee changesof carbon from other fossil fuels. These fees change yearly in accordance with inflation and appliesapply to imports to Mexico. |
The Hydrocarbons Revenue Law also establishes the fiscal terms to be applied to the contracts for exploration and production granted by the Mexican Government to us or to other companies in connection with potential future competitive bidding rounds. Specifically, these fiscal terms contemplate the following taxes, duties, royalties and other payments to the Mexican Government (in addition to any taxes owedpayable pursuant to theLey de Ingresos de la Federación (Federal Revenue Law) for the applicable year and other applicable tax laws): | • | | Cuota Contractual para la Fase Exploratoria(Exploration (Exploration Phase Contractual Fee): During the exploration phase of a project governed by a license, production-sharing contract or profit-sharing contract, the Mexican Government is entitled to collect a monthly payment of Ps. 1,214 per square kilometer ofnon-producing areas. After 60 months, this fee increases to Ps. 2,9043,338.46 per square kilometer for each additional month that the area is not producing. The fee amount will be updated on an annual basis in accordance with the NCPI. |
| • | | Regalías (Royalties): Royalty payments to the Mexican Government are determined based on the “contractual value” of the relevant hydrocarbons, whichhydrocarbons. The contractual value is determined based on a variety of factors, including the typetypes of underlying hydrocarbons (e.g.(e.g., crude oil, associated natural gas,non-associated natural gas or condensates), the volume of production and the market price. Royalties are payable in connection with licenses, production-sharing contracts and profit-sharing contracts. |
| • | | Pago del Valor Contractual (Contractual Value Payment): Licenses require a payment calculated as a percentage of the “contractual value” of the hydrocarbons produced, as determined by the Ministry of Finance and Public Credit on acontract-by-contract basis. |
| • | | Porcentaje a la Utilidad Operativa(Operating (Operating Profit Payment): Production-sharing contracts 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 (Signing Bonus): Upon execution of a license or migration of an assignment, a signing bonus is to be paid to the Mexican Government in an amount specified by the Ministry of Finance and Public Credit. |
| • | | Impuesto por la actividad de Exploración y Extracción de Hidrocarburos (Hydrocarbons Exploration and Extraction Activities Tax): Contracts for exploration and extraction and assignments granted by the Mexican Government will include a specified tax on the exploration and extraction activities carried out in the relevant area. A monthly tax of Ps. 1,5841,820.97 per square kilometer is payable during the exploration phase until the extraction phase begins. During the extraction phase of a project, a monthly tax of Ps. 6,3357,283.92 per square kilometer is payable until the relevant contract for exploration and extraction or assignment is terminated. |
Under the Hydrocarbons Revenue Law, exploration and production activities associated with contracts for exploration and production are not subject to a value added tax. Fluctuating crude oil price levels directly affect the level of certain taxes and duties that we pay. See “Item 3—Key Information—Risk Factors—Risk Factors Related to our Relationship with the Mexican Government—We pay significant taxes and duties to the Mexican Government, and, if certain conditions are met, to pay a state dividend, which may limit our capacity to expand our investment program or negatively impact our financial condition generally.” Other Payments to the Mexican Government Pursuant to the Petróleos Mexicanos Law, as of January 1, 2016, Petróleos Mexicanos and the subsidiary entities are required to pay a state dividend to the Mexican Government on an annual basis. In July of each year, Petróleos Mexicanos and the subsidiary entities are required to provide the Ministry of Finance and Public Credit a report disclosing their financial results for the previous fiscal year and their investment and financing plans for the following five years, together with an analysis of the profitability of these investments and the relevant projections of their financial positions. The Ministry of Finance and Public Credit will rely on this report and a favorable opinion issued by a technical committee of the Mexican Petroleum Fund for Stabilization and Development to determine the amount of the state dividend to be paid by Petróleos Mexicanos and each of the subsidiary entities. The Petróleos Mexicanos Law provides that the aggregate amount of the state dividend to be paid in 2016 iswas to be equal to, at minimum, 30%30.0% of the total revenues of Petróleos Mexicanos and the subsidiary entities, after taxes, from the previous fiscal year. It further provides that that percentage will decrease in subsequent years, until reaching 15% in 2021 and 0% in 2026. In accordance with the Federal Revenue Law for 2016, the Federal Revenue Law for 20172018, 2019 and the Federal Revenue Law for 2018,2020, Petróleos Mexicanos was not required to pay a state dividend in 20162018, 2019 and 20172020 and will not be required to pay a state dividend in 2018.2021. The following table sets forth the taxes and duties that we recorded for each of the past three years. | | | | | | | | | | | | | | | Year ended December 31, | | | | 2015 | | | 2016 | | | 2017 | | | | (in millions of pesos)(1) | | Hydrocarbon extraction duties and others | | | Ps. 377,087 | | | | Ps. 277,162 | | | | Ps. 338,044 | | Income tax | | | (45,587 | ) | | | (12,640 | ) | | | (5,064 | ) | | | | | | | | | | | | | | Total | | | Ps. 331,500 | | | | Ps. 264,522 | | | | Ps. 332,980 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | Year ended December 31, | | | | 2018 | | | 2019 | | | 2020 | | | | (in millions of pesos)(1) | | Hydrocarbon extraction duties | | Ps. | 469,934 | | | Ps. | 372,813 | | | Ps. | 154,609 | | Income tax (benefit) expense | | | (8,355 | ) | | | (28,989 | ) | | | 30,963 | | | | | | | | | | | | | | | Total | | Ps. | 461,579 | | | Ps. | 343,824 | | | Ps. | 185,572 | | | | | | | | | | | | | | |
Note: | For a description of these taxes and duties, see “Item 4—Information on the Company—Taxes, Duties and Other Payments to the Mexican Government.”Numbers may not total due to rounding. |
(1) | Figures are stated in nominal pesos. |
Source: | Source: PEMEX’s audited financial statements, prepared in accordance with IFRS. |
Other Taxes Since 1994, our interest payments on our external debt have been subject to Mexican Government withholding taxes. Nevertheless, withholding taxes do not represent a substantial portion of our total tax liability. We are subject to municipal and state taxes, such as real property and payroll taxes. However, because most of our facilities are located on federal property, which is not subject to municipal taxation, real property taxes are not a significant part of our overall taxes. Similarly, payroll taxes do not represent a substantial portion of our total tax liability. In addition, we have a number ofnon-Mexican subsidiary companies that may be subject to taxation in the jurisdiction of their incorporation or operations. The aggregate taxes paid by the subsidiary companies were Ps. 6,833.41,616.7 million in 2015,2018, Ps. 7,200.9 millionin 20163,090.2 million in 2019 and Ps. 2,536.32,298.8 million in 2017.2020. No assurance can be given that our tax regime will not change in the future. See “Item 3—Key Information—Risk Factors—Risk Factors Related to our Relationship with the Mexican Government—We pay significant taxes and duties to the Mexican Government, and, if certain conditions are met, to pay a state dividend, which may limit our capacity to expand our investment program or negatively impact our financial condition generally.” UNITED MEXICAN STATES
The information in this section with regard to Mexico has been derived from publicly available information published by, or on the websites of, the Comisión Nacional Bancaria y de Valores (National Banking and Securities Commission), Banco de México (the Mexican central bank), the Ministry of Finance and Public Credit and the Instituto Nacional de Estadística y Geografía (INEGI).
Form of Government
The President of Mexico (or the President) is the chief of the executive branch of the Mexican Government. The President is elected by the popular vote of Mexican citizens who are eighteen years of age or older. The Mexican Constitution limits the President to onesix-year term; the President may not run for reelection. In accordance with Mexico’s electoral law, on August 31, 2012, theTribunal Electoral del Poder Judicial de la Federación (Federal Electoral Court) officially validated the results of the presidential election held in Mexico on July 1, 2012, and declared Mr. Enrique Peña Nieto, a member of thePartido 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. From 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.
Each of Mexico’s 31 states is headed by a state governor. Mexico’s Federal District, Mexico City, is headed by an elected mayor.
Legislative authority is vested in the Mexican Congress, which is composed of the 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. 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 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 500 seats in the Chamber of Deputies were last held on June 7, 2015. The following table provides the distribution as of September 1, 2017 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 | | | | Seats | | | % of Total | | | Seats | | | % of Total | | Institutional Revolutionary Party | | | 55 | | | | 43.0 | % | | | 197 | | | | 39.4 | % | National Action Party | | | 38 | | | | 29.7 | | | | 109 | | | | 21.8 | | Democratic Revolution Party | | | 18 | | | | 6.2 | | | | 54 | | | | 10.8 | | Ecological Green Party of Mexico | | | 7 | | | | 5.5 | | | | 48 | | | | 9.6 | | Social Encounter Party | | | 0 | | | | 0 | | | | 9 | | | | 1.8 | | Labor Party | | | 15 | | | | 11.7 | | | | 0 | | | | 0.0 | | Citizen Movement Party | | | 0 | | | | 0.0 | | | | 21 | | | | 4.2 | | New Alliance Party | | | 0 | | | | 0.0 | | | | 12 | | | | 2.4 | | Unaffiliated Independent | |
| 5
0 |
| |
| 3.9
0 |
| |
| 3
1 |
| |
| 0.6
0.2 |
| | | | | | | | | | | | | | | | | | National Regeneration Movement (New) | | | 0 | | | | 0 | | | | 46 | | | | 9.2 | | | | | | | | | | | | | | | | | | | Total | | | 128 | | | | 100.0 | % | | | 500 | | | | 100.0 | % | | | | | | | | | | | | | | | | | |
Note: | Numbers may not total due to rounding. According to official sources, there is one vacant seat in the Senate. |
Source: | Senate and Chamber of Deputies. |
The Economy
General
According to World Bank data, the Mexican economy, as measured by 2016 gross domestic product (GDP) (at current prices in U.S. dollars), is the 15th largest in the world. The Mexican economy had a real GDP of Ps. 1,046.0 billion in 2016 and a decrease in GDP of Ps. 141.0 billion between 2012 and 2016.
Gross Domestic Product
The following table sets forth the percentage change in Mexico’s real GDP by economic sector in percentage terms for the periods indicated.
Real GDP Growth by Sector
(% change against prior years)(1)
| | | | | | | | | | | | | | | | | | | | | | | | | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | Third quarter (annualized) 2017(2)(3) | | GDP | | | 4.0 | % | | | 1.4 | % | | | 2.3 | % | | | 2.6 | % | | | 2.3 | % | | | 2.2 | % | Primary activities: | | | | | | | | | | | | | | | | | | | | | | | | | Agriculture, forestry, fishing, hunting and livestock(4) | | | 7.4 | | | | 0.9 | | | | 4.3 | | | | 1.6 | | | | 3.6 | | | | 2.2 | | Secondary Activities: | | | | | | | | | | | | | | | | | | | | | | | | | Mining | | | 0.9 | | | | (0.1 | ) | | | (1.4 | ) | | | (4.6 | ) | | | (6.4 | ) | | | (10.1 | ) | Utilities | | | 2.1 | | | | 0.5 | | | | 8.2 | | | | 2.3 | | | | 3.3 | | | | (0.3 | ) | Construction | | | 2.5 | | | | (4.8 | ) | | | 2.0 | | | | 2.5 | | | | 1.8 | | | | (1.2 | ) | Manufacturing | | | 4.1 | | | | 1.2 | | | | 4.2 | | | | 2.6 | | | | 1.3 | | | | 3.4 | | Tertiary Activities: | | | | | | | | | | | | | | | | | | | | | | | | | Wholesale and retail trade | | | 4.8 | | | | 2.2 | | | | 3.1 | | | | 4.8 | | | | 2.4 | | | | 3.2 | | Transportation and warehousing | | | 4.1 | | | | 2.4 | | | | 3.2 | | | | 4.3 | | | | 2.8 | | | | 3.2 | | Information | | | 16.3 | | | | 5.0 | | | | 0.2 | | | | 7.8 | | | | 10.1 | | | | 6.9 | | Finance and insurance | | | 7.7 | | | | 10.4 | | | | (0.8 | ) | | | 4.3 | | | | 7.7 | | | | 9.0 | | Real estate, rental and leasing | | | 2.5 | | | | 1.0 | | | | 2.1 | | | | 2.5 | | | | 1.9 | | | | 2.4 | | Professional, scientific and technical services | | | 1.1 | | | | 1.2 | | | | 1.7 | | | | 4.2 | | | | 7.0 | | | | 1.5 | | Management of companies and enterprises | | | 8.6 | | | | (1.8 | ) | | | 7.2 | | | | 3.5 | | | | 4.7 | | | | 2.2 | | Administrative support, waste management and remediation services | | | 4.4 | | | | 4.3 | | | | (0.2 | ) | | | 1.2 | | | | 4.1 | | | | 5.4 | | Education services | | | 2.2 | | | | 0.8 | | | | 0.1 | | | | 0.0 | | | | 1.0 | | | | (0.1 | ) | Health care and social assistance | | | 2.1 | | | | 0.6 | | | | (0.6 | ) | | | (2.3 | ) | | | 1.3 | | | | 2.7 | | Arts, entertainment and recreation | | | 2.9 | | | | 3.4 | | | | (1.5 | ) | | | 3.8 | | | | 5.7 | | | | 3.1 | | Accommodation and food services | | | 5.4 | | | | 1.8 | | | | 2.9 | | | | 5.8 | | | | 3.8 | | | | 4.2 | | Other services (except public administration) | | | 3.3 | | | | 2.1 | | | | 1.7 | | | | 2.4 | | | | 5.8 | | | | 0.9 | | Public administration | | | 3.7 | | | | (0.5 | ) | | | 1.9 | | | | 2.7 | | | | 0.0 | | | | 0.4 | |
Note: | Numbers may not total due to rounding. |
(1) | For 2012, 2013, 2014, 2015 and 2016, figures based on GDP calculated in constant pesos with purchasing power as of December 31, 2008. For the third quarter of 2017, figures based on GDP calculated in constant pesos with purchasing power as of December 31, 2013. |
(3) | Annualized. Actual third quarter data has been annualized by multiplying it by four. It is provided for comparison purposes only and is not necessarily indicative of performance for the full fiscal year. |
(4) | 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. |
According to preliminary figures, Mexico’s GDP increased by 2.2% in real terms during the first nine months of 2017, as compared to the same period of 2016. This increase reflects increases in both primary and tertiary activities which compensated for a decrease in secondary activities.
Employment and Labor
According to preliminaryTasa de Desocupación Abierta (open unemployment rate) figures, Mexico’s unemployment rate was 3.6% as of September 30, 2017, a 0.1 percentage point increase from the rate registered on December 31, 2016. As of September 30, 2017, the economically active population in Mexico fifteen years of age and older consisted of 54.4 million individuals.
The new minimum wage of Ps. 88.36 per day, as set by theComisión Nacional de los Salarios Mínimos (National Minimum Wage Commission) on November 21, 2017, went into effect on December 1, 2017 and was applied uniformly across Mexico.
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)(1)
| | | | | | | | | | | | | | | | | | | | | | | | | | | 2012 | | | 2013(2) | | | 2014(2) | | | 2015(2) | | | 2016(2) | | | Third quarter of 2017(2) | | Food | | | 2.6 | % | | | 0.9 | % | | | 0.7 | % | | | 1.7 | % | | | 2.6 | % | | | 1.9 | % | Beverage and tobacco products | | | 2.6 | | | | (0.5 | ) | | | 3.1 | | | | 4.9 | | | | 5.2 | | | | 1.9 | | Textile mills | | | 3.1 | | | | (2.7 | ) | | | (1.7 | ) | | | 3.9 | | | | (0.7 | ) | | | 0.1 | | Textile product mills | | | (0.1 | ) | | | 3.5 | | | | 7.0 | | | | 9.8 | | | | 4.1 | | | | (14.1 | ) | Apparel | | | (0.5 | ) | | | 3.3 | | | | (2.8 | ) | | | 7.2 | | | | (2.0 | ) | | | 0.3 | | Leather and allied products | | | 3.5 | | | | (0.6 | ) | | | (1.7 | ) | | | 2.4 | | | | (1.6 | ) | | | (1.8 | ) | Wood products | | | 13.0 | | | | (2.2 | ) | | | 1.0 | | | | 3.6 | | | | (4.8 | ) | | | 7.0 | | Paper | | | 4.8 | | | | 2.1 | | | | 3.1 | | | | 3.9 | | | | 3.4 | | | | 2.7 | | Printing and related support activities | | | (4.1 | ) | | | (6.9 | ) | | | (2.7 | ) | | | 1.7 | | | | (2.9 | ) | | | (2.0 | ) | Petroleum and coal products | | | 1.1 | | | | 3.3 | | | | (4.5 | ) | | | (7.5 | ) | | | (11.2 | ) | | | (16.3 | ) | Chemicals | | | (0.3 | ) | | | 0.8 | | | | (1.3 | ) | | | (3.0 | ) | | | (2.8 | ) | | | (2.4 | ) | Plastics and rubber products | | | 9.0 | | | | (1.9 | ) | | | 6.5 | | | | 3.4 | | | | 3.2 | | | | 4.3 | | Nonmetallic mineral products | | | 2.3 | | | | (3.1 | ) | | | 2.8 | | | | 4.9 | | | | 2.8 | | | | (1.0 | ) | Primary metals | | | 3.8 | | | | 2.3 | | | | 8.1 | | | | (4.1 | ) | | | 3.3 | | | | 1.0 | | Fabricated metal products | | | 3.9 | | | | (3.3 | ) | | | 8.1 | | | | 2.9 | | | | 3.3 | | | | 1.9 | | Machinery | | | 5.5 | | | | 0.2 | | | | 1.7 | | | | (0.3 | ) | | | 3.3 | | | | 9.4 | | Computers and electronic products | | | 0.5 | | | | 3.6 | | | | 11.2 | | | | 7.0 | | | | 6.1 | | | | 7.9 | | Electrical equipment, appliances and components | | | 1.7 | | | | (2.0 | ) | | | 9.0 | | | | 6.2 | | | | 3.6 | | | | 2.1 | | Transportation equipment | | | 13.9 | | | | 5.8 | | | | 12.6 | | | | 7.1 | | | | 0.2 | | | | 10.8 | | Furniture and related products | | | 2.8 | | | | (5.8 | ) | | | (1.8 | ) | | | 7.8 | | | | (3.4 | ) | | | (5.7 | ) | Miscellaneous | | | 0.4 | | | | 0.0 | | | | 6.3 | | | | 4.9 | | | | 3.3 | | | | 5.8 | | | | | | | | | | | | | | | | | | | | | | | | | | | Total expansion/contraction | | | 4.1 | | | | 1.2 | | | | 4.2 | | | | 2.6 | | | | 1.3 | | | | 3.4 | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | For 2012, 2013, 2014, 2015 and 2016, percent change against prior years. Percent change reflects differential in constant pesos with purchasing power as of December 31, 2008. For the third quarter of 2017, percent change against corresponding period of prior year. Percent change reflects differential in constant 2013 pesos. |
Financial System
Monetary Policy, Inflation and Interest Rates
Banco de México’s M1 monetary aggregate consists of bills and coins held by the public,plus: (1) checking accounts denominated in local currency and foreign currency; (2) interest-bearing deposits denominated in pesos and operated by debit cards; and (3) savings and loan deposits. M2 consists of M1,plus: (1) bank deposits; (2) Government-issued securities; (3) securities issued by firms andnon-bank financial intermediaries; and (4) Government and INFONAVIT liabilities related to the Retirement Savings System. M3 consists of M2,plus financial assets issued in Mexico and held bynon-residents. M4 consists of M3,plus deposits abroad at foreign branches and agencies of Mexican banks.
The following table shows Mexico’s M1 and M4 money supply aggregates at each of the dates indicated.
Money Supply
| | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, | | | September 30 | | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2017(1) | | | | (in millions of nominal pesos) | | | | | M1: | | | | | | | | | | | | | | | | | | | | | | | | | Bills and coins | | | Ps.734,034 | | | | Ps.792,928 | | | | Ps.928,777 | | | | Ps.1,088,106 | | | | Ps.1,262,735 | | | | Ps.1,227,837 | | Checking deposits | | | | | | | | | | | | | | | | | | | | | | | | | In domestic currency | | | 979,413 | | | | 1,082,702 | | | | 1,170,381 | | | | 1,301,904 | | | | 1,475,811 | | | | 1,448,144 | | In foreign currency | | | 163,611 | | | | 189,020 | | | | 232,467 | | | | 333,094 | | | | 469,185 | | | | 516,892 | | Interest-bearing peso deposits | | | 393,231 | | | | 438,012 | | | | 534,973 | | | | 614,312 | | | | 647,414 | | | | 651,458 | | Savings and loan deposits | | | 9,760 | | | | 11,097 | | | | 12,598 | | | | 14,560 | | | | 17,332 | | | | 18,908 | | | | | | | | | | | | | | | | | | | | | | | | | | | Total M1 | | | Ps.2,280,049 | | | | Ps.2,513,758 | | | | Ps.2,879,196 | | | | Ps.3,351,975 | | | | Ps.3,872,477 | | | | Ps.3,863,239 | | | | | | | | | | | | | | | | | | | | | | | | | | | M4 | | | Ps.10,684,898 | | | | Ps.11,658,729 | | | | Ps.13,107,550 | | | | Ps.13,858,271 | | | | Ps.14,970,234 | | | | Ps.15,830,848 | |
Note: | Numbers may not total due to rounding. |
Consumer inflation for the first nine months of 2017 was 5.9%, which was above the 3.0% (+/- 1.0%) target inflation for the year and 3.1 percentage points higher than the 2.8% consumer inflation for 2016. This was mainly a combined result of the adjustment of energy prices, particularly the liberalization of gasoline prices, exchange rate changes, higher agricultural prices and the increase in the minimum wage.
The following 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)(3)(4) | | | National Consumer Price Index(1)(5) | | | Increase in Minimum Wage | | 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 | | 2017 | | | | | | | | | | | | | January | | | 9.8 | | | | 4.7 | | | | — | | February | | | 9.5 | | | | 4.9 | | | | — | | March | | | 9.4 | | | | 5.4 | | | | — | | April | | | 8.7 | | | | 5.8 | | | | — | | May | | | 8.1 | | | | 6.2 | | | | — | | June | | | 6.7 | | | | 6.3 | | | | — | | July | | | 5.9 | | | | 6.4 | | | | — | | August | | | 5.6 | | | | 6.7 | | | | — | | September | | | 4.5 | | | | 6.3 | | | | — | | October | | | 5.3 | | | | 6.4 | | | | — | | November | | | 5.2 | | | | 6.6 | | | | — | | December(6) | | | — | | | | — | | | | 10.4 | |
| (1) | For annual figures, changes in price indices are calculated each December. |
| (2) | National Producer Price Index figures represent the changes in the prices for basic merchandise and services (excluding oil prices). The index is based on a methodology implemented in June 2012. |
| (3) | Preliminary figures for 2016-2017. |
| (4) | National Producer Price Index takes June 2012 as a base date. |
| (5) | National Consumer Price Index takes the second half of December 2010 as a base date. |
| (6) | December 2017 National Producer Price Index and National Consumer Price Index figures not available. |
| Sources: | INEGI; Ministry of Labor. |
During the first nine months of 2017, interest rates on28-dayCetes averaged 6.6%, as compared to 3.8% during the same period of 2016. Interest rates on91-dayCetes averaged 6.8%, as compared to 4.0% during the same period of 2016.
On December 28, 2017, the28-day Cetes rate was 7.22% and the91-day Cetes rate was 7.36%.
Exchange Controls and Foreign Exchange Rates
On December 29, 2017, the peso/dollar exchange rate closed at Ps. 19.6629 = U.S. $1.00, a 4.6% appreciation in dollar terms as compared to the rate on December 31, 2016. The peso/U.S. dollar exchange rate announced by Banco de México on December 29, 2017 (which took effect on the second business day thereafter) was Ps. 19.6595 = 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.
On December 28, 2017, the IPC stood at 48,862 points, representing a 7.1% 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) | | | First nine months of 2017(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 | | | $ | 49,481 | | | $ | 42,369 | | | $ | 23,100 | | | $ | 18,818 | | | $ | 16,248.5 | | Crude oil | | | 46,852 | | | | 42,712 | | | | 35,638 | | | | 18,451 | | | | 15,575 | | | | 13,349.0 | | Other | | | 6,103 | | | | 6,770 | | | | 6,731 | | | | 4,648 | | | | 3,243 | | | | 2,899.5 | | Non-oil products | | | 317,814 | | | | 330,534 | | | | 354,542 | | | | 357,450 | | | | 355,122 | | | | 283,039.7 | | Agricultural | | | 10,914 | | | | 11,246 | | | | 12,181 | | | | 12,971 | | | | 14,672 | | | | 11,685.5 | | Mining | | | 4,906 | | | | 4,714 | | | | 5,064 | | | | 4,505 | | | | 4,368 | | | | 3,988.9 | | Manufactured goods(2) | | | 301,993 | | | | 314,573 | | | | 337,297 | | | | 339,975 | | | | 336,081 | | | | 267,365.3 | | | | | | | | | | | | | | | | | | | | | | | | | | | Total merchandise exports | | | 370,770 | | | | 380,015 | | | | 396,912 | | | | 380,550 | | | | 373,939 | | | | 299,288.2 | | Merchandise imports (f.o.b.) | | | | | | | | | | | | | | | | | | | | | | | | | Consumer goods | | | 54,272 | | | | 57,329 | | | | 58,299 | | | | 56,279 | | | | 51,950 | | | | 41,064.3 | | Intermediate goods(2) | | | 277,911 | | | | 284,823 | | | | 302,031 | | | | 297,253 | | | | 294,994 | | | | 237,122.8 | | Capital goods | | | 38,568 | | | | 39,057 | | | | 39,647 | | | | 41,700 | | | | 40,120 | | | | 30,152.3 | | | | | | | | | | | | | | | | | | | | | | | | | | | Total merchandise imports | | | 370,752 | | | | 381,210 | | | | 399,977 | | | | 395,232 | | | | 387,064 | | | | 308,339.4 | | | | | | | | | | | | | | | | | | | | | | | | | | | Trade balance | | $ | 18 | | | $ | (1,195 | ) | | $ | (3,066 | ) | | $ | (14,683 | ) | | $ | (13,125 | ) | | $ | (9,051.2 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | Average price of Mexican oil mix(3) | | $ | 102.0 | | | $ | 98.4 | | | $ | 85.5 | | | $ | 43.1 | | | $ | 35.6 | | | $ | 44.3 | |
Note: | Numbers may not total due to rounding. |
(2) | Includes thein-bond industry. |
(3) | In U.S. dollars per barrel. |
Source: | Banco de México / PEMEX. |
During the first nine months of 2017, total merchandise exports increased by 9.3% as compared to the same period of 2016, while total merchandise imports increased by 7.8%. The trade balance for the first nine months of 2017 registered a deficit of U.S. $9.1 billion as compared to the U.S. $12.3 billion deficit registered in the same period in 2016. This deficit was a result of the combination of an increase in both merchandise exports and merchandise imports.
Balance of Payments and International Reserves
During the third quarter of 2017, Mexico’s current account registered a deficit of U.S. $5,528 million. The increase in the oil deficit was offset by a decrease in thenon-oil trade balance deficit, caused by a strengthening of global economic activity which contributed to the recovery of Mexican manufactured exports, an increase in the Primary Income balance, as well as an increase in the surplus of the remittances account. The capital account registered a deficit of U.S.$4 million in the third quarter of 2017, while the financial account registered outflows of U.S. $9.2 billion, which was due to a net outflow of foreign direct investment and portfolio investment, offset by other investment.
During 2017, the Mexican Government removed price controls on gasoline and diesel and, as of December 31, 2017, gasoline and diesel prices are determined by the free market . 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 with respect to fuel prices 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 | | 2016 | | | 176,542 | | | | 178,057 | | 2017(4) | | | | | | | | | January | | | 174,791 | | | | 176,657 | | February | | | 175,145 | | | | 181,847 | | March | | | 174,931 | | | | 178,735 | | April | | | 175,011 | | | | 176,779 | | May | | | 175,138 | | | | 177,045 | | June | | | 174,246 | | | | 175,425 | | July | | | 173,360 | | | | 175,713 | | August | | | 173,032 | | | | 174,482 | | September | | | 173,031 | | | | 174,920 | | October | | | 172,820 | | | | 177,208 | | November | | | 172,672 | | | | 174,474 | | December(5) | | | 172,465 | | | | 175,253 | |
| (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. |
| (5) | Figures as of December 22, 2017. |
Source: Banco de México.
Public Finance
Fiscal Policy
ThePrograma Nacional de Financiamiento del Desarrollo2013-2018 (National Program to Finance Development2013-2018, or PRONAFIDE), which was approved and published in the Official Gazette of the Federation on May 20, 2013 and announced on December 16, 2013, establishes the Mexican Government’s fiscal policy goals. These goals include securing sufficient fiscal resources to strengthen social infrastructure and productivity. To this end, PRONAFIDE has outlined several specific objectives, including the promotion of economic development and macroeconomic stability on a federal and state level, as well as the improvement of the financial system to generate additional resources and to transform the financial system into a simpler, more progressive and more transparent system through spending efficiency and the facilitation of access to financial services.
2017 UMS Budget and Fiscal Results
On September 8, 2016, the President of Mexico submitted the proposed 2017 Federal Revenue Law and the proposed 2017 Federal Expenditure Budget to Congress for its approval. The 2017 Revenue Law was approved by the Senate on October 26, 2016, and the 2017 Expenditure Budget was approved by the Chamber of Deputies on November 11, 2016. They were published in the Official Gazette of the Federation on November 15, 2016 and November 30, 2016, respectively. We refer to these two bills together as Mexico’s 2017 budget (the 2017 UMS Budget).
The following table illustrates the composition of public sector budgetary revenues for the first nine months of 2016 and 2017.
2017 Public Sector Budgetary Revenues
| | | | | | | | | | | | | | | | | | | First nine months of 2016(1) | | | First nine months of 2017(1) | | | 2017 Budget(2) | | | 2018 Budget(2) | | | | (in billions of constant pesos)(3) | | | | | Budgetary revenues | | | 3,501.2 | | | | 3,773.0 | | | | 4,360.9 | | | | 4,778.3 | | Federal government | | | 2,655.4 | | | | 2,986.3 | | | | 3,263.8 | | | | 3,584.9 | | Taxes | | | 2,041.5 | | | | 2,182.7 | | | | 2,739.4 | | | | 2,957.5 | | Income tax | | | 1,066.0 | | | | 1,188.7 | | | | 1,422.7 | | | | 1,564.3 | | Value-added tax | | | 586.0 | | | | 637.6 | | | | 797.7 | | | | 876.9 | | Excise taxes | | | 322.5 | | | | 282.4 | | | | 433.9 | | | | 421.8 | | Import duties | | | 37.2 | | | | 38.5 | | | | 45.8 | | | | 47.3 | | Export duties | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | Luxury goods and services | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | Other | | | 26.9 | | | | 32.3 | | | | 39.3 | | | | 42.4 | | Non-tax revenue | | | 613.9 | | | | 809.2 | | | | 524.4 | | | | 627.4 | | Fees and tolls | | | 46.1 | | | | 51.9 | | | | 50.7 | | | | 46.4 | | Transfers from the Mexican Petroleum Fund for Stabilization and Development | | | 238.3 | | | | 335.3 | | | | 386.9 | | | | 456.8 | | Rents, interest and proceeds of assets sales | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | Fines and surcharges | | | 322.8 | | | | 416.4 | | | | 86.7 | | | | 117.8 | | Other | | | 6.6 | | | | 5.6 | | | | 0.0 | | | | 6.5 | | Public enterprises and agencies | | | 845.8 | | | | 786.7 | | | | 1,097.2 | | | | 1,193.3 | | PEMEX | | | 382.6 | | | | 255.1 | | | | 400.4 | | | | 423.3 | | Others | | | 463.2 | | | | 531.6 | | | | 696.7 | | | | 770.0 | |
Note: Numbers may not total due to rounding.
(2) | Budgetary estimates as of December 2016. Budgetary estimates for 2017 were converted into constant pesos using the GDP deflator for 2017, estimated as of December 2016. |
(3) | Constant pesos with purchasing power as of December 31, 2013. |
Source: Ministry of Finance and Public Credit.
2018 UMS Budget
On September 8, 2017, the President of Mexico submitted the proposedLey de Ingresos de la Federación para el Ejercicio Fiscalde 2018 (Federal Revenue Law for 2018, or the 2018 Revenue Law) and the proposedPresupuesto de Egresos de la Federación para el Ejercicio Fiscal de 2018 (Federal Expenditure Budget for 2018, the 2018 Expenditure Budget to the Mexican Congress for its approval. The 2018 Revenue Law was approved by theCámara de Diputados (Chamber of Deputies) on October 19, 2017 and by the Senate on October 27, 2017. The 2018 Revenue Law was published in the Official Gazette of the Federation on November 15, 2017. The 2018 Expenditure Budget was approved by the Chamber of Deputies on November 9, 2017 and was published in the Official Gazette of the Federation on November 29, 2017. We refer to these two bills together as Mexico’s 2018 budget (the 2018 UMS Budget).
Public Debt
External Public Debt
Mexico’s external public debt goals are intended to provide the Mexican Government with flexibility to finance its stated needs, while also accounting for market volatility and unforeseen developments. The policy also seeks to maintain
costs and risks at stable levels. Mexico primarily seeks debt financing through local markets, supplemented by external financing from the U.S., Europe and Japan. Mexico’s principal objectives in connection with its external financing include improving the terms and conditions of Mexico’s external liabilities, as well as strengthening and diversifying Mexico’s investor base, with specific consideration to Mexico’s continued presence in the most influential international markets. Objectives also include strengthening Mexico’s benchmark bonds and maintaining a constant relationship with international investors in order to ensure transparency and to promote investment in Mexico.
Internal Public Debt
The Mexican Government’s “net internal debt” includes only the internal portion of indebtedness incurred directly by the Mexican Government and the assets of theFondo del Sistema de Ahorro Para el Retiro(Retirement Savings System Fund). In addition, “net internal debt” is comprised ofCetesand other securities sold to the public in auctions for new issuances (primary auctions) but does not include any debt allocated toBanco de Méxicofor its use inRegulación Monetaria (regulating the money supply). It also does not include debt by theInstituto para la Protección al Ahorro Bancario (Bank Savings Protection Institute, or IPAB) or the debt of budget-controlled or administratively-controlled agencies. At December 31, 2016, all of the Mexican Government’s internal debt was denominated in pesos or UDIs and was payable in pesos.
Over the last two decades, the Mexican Government has actively sought to increase its average debt maturity date. Accordingly, the Mexican Government has issued new debt instruments bearing longer maturities than those previously issued. In doing so, the Mexican Government hopes to mitigate any risk associated with the refinancing of its internal public debt. This has had the effect of establishing a long-dated benchmark yield curve (the line that plots interest rates across different contract lengths for bonds having equal credit quality). These issuances have also encouraged long-term investments in the following areas: (1) fixed-rate contracts; (2) peso-denominated securities by Mexican companies; (3) Mexican financial hedging products; and (4) the use of long-term savings in financing long-term investment projects.
As a result of this policy, the average maturity of the Government’s internal debt increased from 7.6 years at December 31, 2011 to 8.0 years at December 31, 2016.
The following table summarizes the gross and net internal debt of the Mexican Government at each of the dates indicated.
Gross and Net Internal Debt of the Mexican Government(1)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At December 31, | | | At September 30, | | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2017(2) | | | | (in billions of pesos, except percentages) | | Gross Debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Government Securities | | | 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 | % | | | Ps. 5,407.3 | | | | 90 | % | Cetes | | | 531.3 | | | | 14.9 | | | | 635.6 | | | | 15.6 | | | | 678.7 | | | | 14.9 | | | | 655.8 | | | | 12.9 | | | | 634.7 | | | | 11.3 | | | | 678.9 | | | | 11 | | Floating Rate Bonds | | | 200.4 | | | | 5.6 | | | | 216.6 | | | | 5.3 | | | | 232.6 | | | | 5.1 | | | | 296.5 | | | | 5.8 | | | | 397.9 | | | | 7.1 | | | | 460.8 | | | | 8 | | Inflation-Linked Bonds | | | 747.2 | | | | 20.9 | | | | 888.7 | | | | 21.9 | | | | 1,011.1 | | | | 22.2 | | | | 1,196.6 | | | | 23.6 | | | | 1,223.5 | | | | 21.8 | | | | 1,434.6 | | | | 24 | | Fixed Rate Bonds | | | 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 | | | | 2,825.5 | | | | 47 | | STRIPS of Udibonos | | | 1.0 | | | | 0.0 | | | | 3.6 | | | | 0.1 | | | | 5.1 | | | | 0.1 | | | | 6.1 | | | | 0.1 | | | | 7.2 | | | | 0.1 | | | | 7.5 | | | | 0 | | Other(3) | | | 317.6 | | | | 8.9 | | | | 329.1 | | | | 8.1 | | | | 323.3 | | | | 7.1 | | | | 372.8 | | | | 7.3 | | | | 705.0 | | | | 12.5 | | | | 591.5 | | | | 10 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Gross Debt | | | Ps. 3,575.3 | | | | 100.0 | % | | | Ps. 4,063.2 | | | | 100.0 | % | | | Ps. 4,546.6 | | | | 100.0 | % | | | Ps. 5,074.0 | | | | 100.0 | % | | | 5,620.3 | | | | 100.0 | % | | | Ps. 5,998.8 | | | | 100.0 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net Debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Financial Assets(4) | | | (74.2 | ) | | | | | | | (169.3 | ) | | | | | | | (222.5 | ) | | | | | | | (259.9 | ) | | | | | | | (224.0 | ) | | | | | | | 594.7 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Net Debt | | | Ps. 3,501.1 | | | | | | | | Ps. 3,893.9 | | | | | | | | Ps. 4,324.1 | | | | | | | | Ps. 4,814.1 | | | | | | | | Ps. 5,396.3 | | | | | | | | Ps. 5,404.1 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross Internal Debt/GDP | | | 22.1 | % | | | | | | | 24.2 | % | | | | | | | 25.3 | % | | | | | | | 26.9 | % | | | | | | | 27.8 | % | | | | | | | 28.2 | % | | | | | Net Internal Debt/GDP | | | 21.6 | % | | | | | | | 23.2 | % | | | | | | | 24.0 | % | | | | | | | 25.5 | % | | | | | | | 26.7 | % | | | | | | | 25.4 | % | | | | |
Note: | Numbers may not total due to rounding. |
(1) | Internal debt figures do not include securities sold byBanco de México in open-market operations to manage liquidity levels pursuant toRegulación Monetaria. This is because the securities do not increase the Mexican Government’s overall level of internal debt.Banco de México must reimburse the Mexican Government for any allocated debt thatBanco de México sells into the secondary market and that is presented to the Mexican Government for payment. IfBanco de México undertakes extensive sales of allocated debt in the secondary market, however, this can result in an elevated level of outstanding internal debt as compared to the Mexican Government’s figure for net internal debt. |
(3) | Includes Ps. 169.0 billion for 2012, Ps. 165.5 billion for 2013, Ps. 161.5 billion for 2014, Ps. 153.8 billion for 2015, Ps. 147.5 billion for December 31, 2016 and Ps. 142.7 billion at September 30, 2017 in liabilities associated with social security under the ISSSTE Law. |
(4) | Includes the net balance (denominated in pesos) of the Federal Treasury’s General Account inBanco de México. |
Source: | Ministry of Finance and Public Credit |
External Public Debt
“External public sector debt” consists of the external portion of the long-term indebtedness incurred directly by the Mexican Government, the external long-term indebtedness incurred by budget-controlled agencies, the external long-term indebtedness incurred directly by productive state-owned companies, the external long-term indebtedness incurred directly or guaranteed by administratively-controlled agencies (including but not limited to national development banks) and the short-term external debt of the public sector. Private sector debt guaranteed by the Mexican Government is not included, unless and until the Mexican Government is called upon to make payment under the applicable guaranty. “External public debt” does not include, among other things, repurchase obligations ofBanco de México with the IMF.
According to preliminary figures, at September 30, 2017, outstanding gross public sector external debt totaled U.S. $193.7 billion, an approximate U.S. $12.7 billion increase from the U.S. $181.0 billion outstanding at December 31, 2016. Of this amount, U.S. $191.3 billion represented long-term debt and U.S. $2.5 billion represented short-term debt. Net external indebtedness also increased by U.S. $14.1 billion during the first nine months of 2017, mainly due to an increase in indebtedness issued on the capital markets. Overall, at December 31, 2016, total public debt (gross external debt plus net internal public sector debt) represented approximately 48.2% of nominal GDP, an increase of 5.4 percentage points from December 31, 2015.
The following tables set forth a summary of Mexico’s external public debt, including a breakdown of such debt by 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
By Type(1)
| | | | | | | | | | | | | | | | | | | | | | | | | | | 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, | | | | | | | | | | | | | | | | | | | | | | | | | 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 | | | 88,083 | | | | 82,688 | | | | 7,122 | | | | 177,893 | | | | 3,093 | | | | 180,986 | | At September 30, | | | | | | | | | | | | | | | | | | | | | | | | | 2017(3) | | | 90,635 | | | | 92,895 | | | | 7,731 | | | | 191,261 | | | | 2,463 | | | | 193,724 | |
By Currency(4)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At December 31, | | | At September 30, | | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2017(3) | | | | (in millions of U.S. dollars, except for percentages) | | U.S. Dollars | | U.S.$ | 105,836 | | | | 84.2 | % | | U.S.$ | 111,647 | | | | 83.0 | % | | U.S.$ | 121,927 | | | | 82.6 | % | | U.S.$ | 131,702 | | | | 81.2 | % | | U.S.$ | 144,185 | | | | 79.7 | % | | U.S.$ | 149,496 | | | | 77.2 | % | Japanese Yen | | | 6,847 | | | | 5.4 | | | | 5,519 | | | | 4.1 | | | | 5,058 | | | | 3.4 | | | | 4,857 | | | | 3.0 | | | | 6,410 | | | | 3.5 | | | | 6,690 | | | | 3.5 | | Swiss Francs | | | 961 | | | | 0.8 | | | | 969 | | | | 0.7 | | | | 401 | | | | 0.3 | | | | 1,011 | | | | 0.6 | | | | 1,331 | | | | 0.7 | | | | 1,375 | | | | 0.7 | | Pounds Sterling | | | 1,993 | | | | 1.6 | | | | 1,369 | | | | 1.0 | | | | 2,848 | | | | 1.9 | | | | 2,694 | | | | 1.7 | | | | 2,257 | | | | 1.3 | | | | 2,450 | | | | 1.3 | | Euro | | | 9,530 | | | | 7.6 | | | | 11,489 | | | | 8.5 | | | | 13,986 | | | | 9.5 | | | | 18,834 | | | | 11.6 | | | | 24,409 | | | | 13.5 | | | | 31,085 | | | | 16.0 | | Others | | | 558 | | | | 0.4 | | | | 3,443 | | | | 2.6 | | | | 3,445 | | | | 2.3 | | | | 3,113 | | | | 1.9 | | | | 2,393 | | | | 1.3 | | | | 2,629 | | | | 1.4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | U.S.$ | 125,726 | | | | 100.0 | % | | U.S.$ | 134,436 | | | | 100.0 | % | | U.S.$ | 147,666 | | | | 100.0 | % | | U.S.$ | 162,209 | | | | 100.0 | % | | U.S.$ | 180,986 | | | | 100.0 | % | | U.S.$ | 193,724 | | | | 100.0 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net External Debt of the Public Sector
| | | | | | | | | | | | | | | | | | | | | | | | | | | At December 31, | | | At September 30, | | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2017(3) | | | | (in millions of U.S. dollars, except for percentages) | | | | | | | | | Total Net Debt | | U.S.$ | 121,659.0 | | | U.S.$ | 130,949.7 | | | U.S.$ | 145,617.4 | | | U.S.$ | 161,609.5 | | | U.S.$ | 177,692.5 | | | U.S.$ | 191,825.3 | | Gross External Debt/GDP | | | 10.1 | % | | | 10.5 | % | | | 12.0 | % | | | 15.3 | % | | | 19.2 | % | | | 16.5 | % | Net External Debt/GDP | | | 9.8 | % | | | 10.2 | % | | | 11.9 | % | | | 15.2 | % | | | 18.8 | % | | | 16.3 | % |
Gross External Debt of the Mexican Government
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At December 31, | | | At September 30, | | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2017(3) | | | | (in millions of U.S. dollars, except for percentages) | | U.S. Dollars | | 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 | % | | U.S.$ | 68,082 | | | | 75.1 | % | Japanese Yen | | | 4,433 | | | | 6.6 | | | | 3,643 | | | | 5.0 | | | | 3,686 | | | | 4.7 | | | | 3,672 | | | | 4.4 | | | | 4,525 | | | | 5.1 | | | | 4,687 | | | | 5.2 | | Swiss Francs | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Pounds Sterling | | | 774 | | | | 1.1 | | | | 789 | | | | 1.1 | | | | 2,302 | | | | 2.9 | | | | 2,177 | | | | 2.6 | | | | 1,825 | | | | 2.1 | | | | 1,981 | | | | 2.2 | | Euros | | | 4,771 | | | | 7.1 | | | | 5,447 | | | | 7.6 | | | | 7,437 | | | | 9.5 | | | | 10,422 | | | | 12.6 | | | | 14,256 | | | | 16.2 | | | | 15,868 | | | | 17.5 | | Others | | | 18 | | | | 0.0 | | | | 16 | | | | 0.0 | | | | 20 | | | | 0.0 | | | | 19 | | | | 0.0 | | | | 18 | | | | 0.0 | | | | 18 | | | | 0.0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | 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 | % | | U.S.$ | 90,635 | | | | 100.0 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net External Debt of the Mexican Government
| | | | | | | | | | | | | | | | | | | | | | | | | | | At December 31, | | | At September 30, | | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2017 | | | | (in millions of U.S. dollars, except for percentages) | | | | | | | | | Total Net Debt | | U.S.$ | 66,016.5 | | | U.S.$ | 69,910.4 | | | U.S.$ | 77,352.4 | | | U.S.$ | 82,320.3 | | | U.S.$ | 86,666.0 | | | U.S.$ | 90,326.0 | | Gross External Debt/GDP | | | 5.4 | % | | | 5.6 | % | | | 6.5 | % | | | 7.8 | % | | | 9.4 | % | | | 7.7 | % | Net External Debt/GDP | | | 5.3 | % | | | 5.5 | % | | | 6.4 | % | | | 7.8 | % | | | 9.2 | % | | | 7.7 | % |
Net Debt of the Mexican Government
| | | | | | | | | | | | | | | | | | | | | | | | | | | At December 31, | | | At September 30, | | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2017 | | External Debt | | | 19.7 | % | | | 19.0 | % | | | 20.8 | % | | | 22.7 | % | | | 25.0 | % | | | 76.7 | % | Internal Debt | | | 80.3 | % | | | 81.0 | % | | | 79.2 | % | | | 77.3 | % | | | 75.0 | % | | | 23.3 | % |
Note: | Numbers may not total due to rounding. |
(1) | External debt denominated in foreign currencies other than U.S. dollars has been translated into dollars at exchange rates as of each of the dates indicated. External public debt does not include (a) repurchase obligations ofBanco de México with the IMF (none of which were outstanding as of September 30, 2017) or (b) loans from the Commodity Credit Corporation to public sector Mexican banks. External debt is presented herein on a “gross” basis, and includes external obligations of the public sector at their full outstanding face or principal amount. For certain informational and statistical purposes, Mexico sometimes reports its external public sector debt on a “net” basis, which is calculated as the gross debt net of certain financial assets held abroad. These financial assets include Mexican public sector external debt that is held by public sector entities but that has not been cancelled.Banco de México’s reserves are not subtracted from gross debt. |
(2) | Includes development banks’ debt and the debt of other administratively-controlled agencies whose finances are consolidated with those of the Mexican Government. |
(4) | Adjusted to reflect the effect of currency swaps. |
Source: | Ministry of Finance and Public Credit. |
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 March 28, 2017, Mexico issued U.S. $3.2 billion of its 4.150% Global Notes due 2027. Mexico used a portion of the proceeds from this offering to redeem its outstanding 5.950% Global Notes due 2019.
On October 10, 2017, Mexico issued U.S.$1,880,000,000 4.600% Global Notes due 2048. Mexico used a portion of the proceeds from this offering to redeem its outstanding 5.125% Global Notes due 2020.
As of September 29, of 2017, Mexico had repurchased approximately U.S. $500 million in aggregate principal amount of outstanding debt securities in open market transactions.
Legal and Political Reforms
Anti-Corruption
On 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.
On December 21, 2016, the U.S. Department of Justice publicly disclosed that Odebrecht S.A. (or 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. On December 22, 2016, authorities commenced administrative and criminal investigations into instances of bribery or corruption related to these allegations. On January 25, 2017, the Mexican Government filed a criminal complaint with the Federal Attorney General’s Office against any party for acts that may have been committed against it.
Access to Information and Government Transparency
On May 9, 2016 theLey Federal de Transparencia y Acceso a la Información Pública (Federal Law for Transparency and Access to Public 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 Hydrocarbons Sector), the CNH, the CRE, theFondo Mexicano del Petróleo para la Estabilización y el Desarrollo (Mexican Petroleum Fund for Stabilization and Development) and the productive state-owned companies. The new law sets forth the authority of theInstituto Nacional de Transparencia, Acceso a la Información y Protección de Datos Personales(National Institute of Transparency, Information Access and Protection of Private Data or INAI) to impose sanctions.
Criminal Justice
In June 2008, theConstitución Política de los Estados Unidos Mexicanos (the Political Constitution of Mexico, or the Constitution) was amended to reform the criminal justice system. The reforms were implemented over a period of 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 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 new set of requirements that must be met prior to having the Mexican Government guarantee debt issued by states and municipalities. This legislation follows a May 2015 decree amending various provisions of the Constitution, creating a new legal framework to control the borrowing practices of the states and municipalities.
Economic Development
On June 1, 2016, theLey de Zonas Económicas Especiales(Law of Special Economic Zones) was published in the Official Gazette of the Federation. This law is part of the National Development Plan and its purpose is to regulate the establishment and 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 9, 2017, the Mexican Government announced that it signed theAcuerdo para el Fortalecimiento Económico y la Protección de la Economía Familiar(Agreement for Economic Strengthening and Protection of the Economy of the Family). This agreement aims to strengthen the domestic market in Mexico with a focus on protecting the economic well-being of Mexican families, increasing investment and maintaining job creation, economic growth and competitiveness.
On May 15, 2017, theDisposiciones de Carácter General Aplicables a las Bolsas de Valores (General Provisions Applicable to Stock Exchanges) were published in the Official Gazette of the Federation. These General Provisions strengthen the regulatory framework applicable to stock exchanges, including, among other measures, enhanced internal controls of the stock market, rules covering the disclosure of market-moving information and the establishment of contingency plans for stock exchanges experiencing operational distress.
On August 29, 2017, the concession for a new stock exchange in Mexico was published in the Official Gazette of the Federation by the Ministry of Finance and Public Credit. The newBolsa Institutional de Valores (Institutional Stock Exchange, or BIVA) will begin operations once it fulfills the requirements set forth in theLey del Mercado de Valores (Stock Market Exchange Law). This new concession was granted as part of the Ministry of Finance and Public Credit’s program to develop the securities market based on four main pillars: (1) changing the configuration and regulation of securities; (2) providing for the participation of development banks to promote securities markets; (3) changing the regulation of retirement funds and insurance companies to encourage investment in new projects and creating reference portfolios to establish incentives to participate in the securities market; and (4) developing a national strategy for financial education to encourage participation in development instruments.
Item 4A. | Unresolved Staff Comments |
Not applicable. Item 5. | Operating and Financial Review and Prospects |
General We earn income from: export sales, which consist of sales of crude oil and condensates, petroleum products and petrochemical products; domestic sales, which consist of sales of natural gas, petroleum products (such as gasoline, diesel fuel and LPG) and petrochemical products; and other sources, including financial and investment income and insurance revenue. Our operating expenses include: cost of sales, including the cost of purchases of imported petroleum and other products, depreciation and amortization, salaries, wages and benefits, a portion of the net cost of employee benefits for the period, the variation of inventories, maintenance, and exploration and unsuccessful drilling expenses; transportation and distribution expenses (including a portion of the net cost of employee benefits for the period); and administrative expenses (including a portion of the net cost of employee benefits for the period). Our income is affected by a number of factors, including: changes in international prices of crude oil, petroleum products and petrochemical products, which are denominated in U.S. dollars, and domestic prices of petroleum products, which are denominated in pesos; the type and volume of crude oil produced and exported; the type and volume of natural gas produced, processed and sold domestically and internationally; the results of development and exploration activities; the amount of taxes, duties and other payments that we are required to make to the Mexican Government; fluctuations in thepeso-U.S. dollar exchange rate; and Mexican and global economic conditions, including the levels of international interest rates. Overview In 20172020, we focused on further recovering our financial stability, taking concrete steps towards implementingexperienced one of the most challenging years yet, not only for PEMEX but for the entire oil and buildinggas industry, due to the economic impacts of the COVID-19 pandemic and the disagreement between Russia and Saudi Arabia regarding production cuts. These factors had a considerable adverse impact on the opportunities presented to us by the energy reformglobal oil and strengthening the relationship with our stakeholders, including with our more recent partners in farm-outs and other associations. These actions took place against a macroeconomic landscape that continues to be challenging for us. While the decline in crude oil prices that commenced in late 2014 began to stabilize in 2017 and prices even began to rise slowly, we remain in a low price environment. In 2017, the weightedgas market. The average price of the Mexican crude oil export price increasedmix decreased from U.S. $35.63$55.53 per barrel in 20162019 to U.S. $46.73$35.82 per barrel.barrel in 2020. Total crude oil plus condensates production (excluding partners) was 1,686 Mbd in 2020, a slight 0.1% increase as compared to 1,684 Mbd in 2019. During 2020, we implemented various measures to address the impacts of the COVID-19 pandemic, including: (1) a decrease of our capital investment; (2) a reduction of non-strategic projects coupled with a focus on the more profitable ones; and (3) the development of alternative financing mechanisms that do not constitute public debt. Moreover, the Mexican Government announced that it would reduce our tax burden for 2020 by U.S. $65.0 billion to provide additional resources to support our operations. Additionally, on April 12, 2020, the OPEC+ countries, which include Mexico, reached an agreement to reduce their overall crude oil production in an attempt to stabilize oil prices. Pursuant to this agreement, Mexico agreed to reduce its, and in turn our crude oil production by 100,000 barrels per day for a two-month period beginning May 1, 2020. During May, June, July, August, September, October and November 2020, we decreased our crude oil production to 1,676.6, 1,654.7, 1,647.3, 1,687.9, 1,697.8, 1,680.2 and 1,688.8 thousand barrels per day, respectively. In December 2020, we increased our crude oil production to 1,711.5 thousand barrels per day. Going Concern Our consolidated financial statements as of December 31, 20172020 and 20162019 have been prepared on a going concern basis, which assumes that we can meet our payment obligations.obligations and our operating continuity. As we describe in Note 222-F to our consolidated financial statements, we have experienced certain conditions that have generated material uncertainty that may castthere exists significant doubt onabout our ability to continue operating as a going concern. We discuss below, and in Note 222-F to our consolidated financial statements, the circumstances that have caused these negative trends and the concrete actions we are taking to improve our results, strengthen our ability to continue operating and achieve revenue maximization and efficiencies in an economic environment which is showing recovery and some stability.efficiencies. We continue operating as a going concern, and our consolidated financial statements do not includecontain any adjustments that might result from the outcome of this uncertainty. We have recognized continuous net losses during 2020, 2019 and 2018 of Ps. 509,052.1 million, Ps. 282,112.0 million, and Ps. 180,419.8 million, respectively. In addition, we had a negative equity of Ps. 2,404,727.0 million and Ps. 1,931,409.3 million as of December 31, 2020 and 2019, respectively, mainly due to continuous net losses. We had a negative working capital of Ps. 442,550.3 million and Ps. 209,168.6 million, as of December 31, 2020 and 2019, respectively. We also have substantial debt, including substantial short-term debt. Due to our heavy fiscal burden resulting from the payment of hydrocarbons extraction duties and other taxes that we are required to pay to the Mexican Government, the cash flows derived from our operations in recent years have not been sufficient to fund our operations and investment programs. As a result, our indebtedness has increased significantly, and our working capital has deteriorated. In addition, the significant crude oil price drop, which started in March 2020, and the negative economic impact as a result of the current global health crisis caused by the COVID-19 pandemic, have negatively impacted our financial performance. During 2020, the weighted average Mexican crude oil price was U.S. $35.82 per barrel, a decrease of U.S. $19.71 per barrel as compared to the 2019 weighted average Mexican crude oil export price of U.S. $55.53 per barrel. As of May 3, 2021, the weighted average Mexican crude oil export price was U.S. $61.60 per barrel. While prices have begun to stabilize, any future decline in international crude oil and natural gas prices will have a similar negative impact on our results of operations and financial condition. Despite the OPEC+ agreement entered into by Mexico on April 12, 2020, to reduce world crude oil production intended to mitigate the drop in oil prices and demand, crude oil prices have remained volatile. See “—Risk Factors Related to our Operations—The outbreak of COVID-19 has had and may continue to have an adverse effect on our business, results of operations and financial condition.” We believe we have the capacity to comply with our payment obligations and our operating continuity, including our ability to refinance debt. However, our future cash flows, including the ability to refinance debt, are uncertain due to circumstances outside of our control. Any adverse impact from sustained decrease in crude oil prices below the budgeted average price for 2021 and from the slow-down of the economy would have an adverse impact on our results of operation, cash flows and may require us to consider additional actions to address these shortfalls. The combined effect of the above-mentioned events indicates the existence of significant doubt about our ability to continue as a going concern. For more information on the circumstances that have caused these negative trends and the concrete actions we are taking to improve our results, strengthen our ability to continue operating and achieve revenue maximization and efficiencies, see Note 22-F to our consolidated financial statements included herein. RedefinitionBusiness Plan
On March 22, 2021, our Board of Directors approved the business plan of Petróleos Mexicanos as a State-Ownedand its Subsidiary Productive Company We are continuing to implement aCompanies for 2021-2025 (the “2021-2025 Business Plan), which effectively replaced our 2019-2023 business strategy that redefines us as a state-owned productive company, enables us to operate competitivelyplan (the “2019-2023 Business Plan”). The 2019-2023 Business Plan was approved on July 16, 2019 and efficientlyfocused mainly on limiting our indebtedness and takes advantagethe recovery of the opportunities made availableproductive capacity of the value chain to us byincrease hydrocarbon petroleum products production, as well as strengthen our commercial strategy. However, due to the energy reform. Aseconomic pressures at the end of the first quarter of 2020 resulting from the COVID-19 pandemic, including the decrease in oil demand and historically low prices, we decided to update our strategy and reassess our expectations of economic recovery in a productive state-owned company,way that is more aligned with the current situation.
The 2021-2025 Business Plan updates certain objectives we hope to achieve with respect to our business model contemplates maximizing value for Mexico and, accordingly,operations. For 2021, we intend to focus on high-yield projects with growth potential. Every action taken underconsolidate our business plan will be directed towardsfinancial and operating strategy. We are expected to transfer Ps. 897 billion in direct and indirect contributions to the efficient allocationMexican Government in 2021. This reaffirms our strategic position for Mexico, being the largest taxpayer in the country as well as a main generator of resources, developing profitable businesses and considering thefunding for various development projects. The following sets forth a summary of new businesses with third parties. These opportunities include expanding the scope of activities in which we participate, enhancing our ability to acquire technology and knowledge along the entire hydrocarbons value chain through strategic alliances and continuing the migration of certain assignments into exploration and production contracts. Commencing in 2016, we have begun to take certain actions to increase our efficiency and competitiveness. Towards that end, we have continued with our implementationsome of the 2017-2021key objectives of our 2021-2025 Business Plan (described below), and have otherwise taken advantage of the opportunities provided by the energy reform in the following ways:Plan:
| • | | 2017-2021 Business PlanStrengthen our financial position:On November 3, 2016, Given the particularly challenging macroeconomic environment that we announcedare facing, we are focusing our businessattention on investing our financial resources in projects based on their profitability and their alignment with Mexico’s strategic vision. We are working to efficiently manage our cash flows so as to meet our financial obligations. We plan to implement a series of measures to administer our debt more efficiently. During 2019 and 2020, we carried out a variety of refinancing operations, which allowed us to decrease our total debt 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 lossesfirst time 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. We intend to continue to execute on our business plan in 2018, even while our management seeks to update it with a 2018 plan that is currently under evaluation.
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11 years. | • | | Farm-outs and Other Associations: An important part of our business plan is the leveraging of resources and expertise of third parties. In 2017, we entered into our firstfarm-out in deep waters (Trión) and our first two onshore farm-outs (Cárdenas-Mora and Ogarrio) and we intend to continue ourfarm-out program in 2018. We expect that these farm-outs will allow us to recoup some of our previous investments in our fields, as well as share certain risks associated with further development of those fields, while maintaining an interest in future profits. In addition, we participated and won assignments in multiple bidding rounds in 2017 and we intend to participate in subsequent bidding rounds, either with partners or independently, in order to further diversify and strengthen our exploration and production portfolio. |
| • | | Improved Financial Position:In addition to taking advantage of new business opportunities and arrangements provided by the energy reform, such as farm-outs, we also continue to take certain specific measures to improve our financial position, including the following: |
| • | | Pension ReformExploration and Production:As We intend to increase hydrocarbon production levels. In order to achieve this objective, we intend to focus on accelerating the development of January 1, 2016, new employees receive a defined contribution plan, pursuant to which both we andnewly discovered wells as well as optimizing our employees contribute to each employee’s individual account,
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| in contrast to the defined benefit pension plan, pursuant to which only we contribute. To further reduce our pension liabilities, we are inviting employees hired prior to 2016 to transfer from their existing defined benefit pension plan to a defined contribution plan. We expect that this will allow us to decrease our employee benefits service cost and employee benefits liability going forward.current wells.
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| • | | Assets Sales:SustainabilityIn November 2017, we completed: We believe that the divestiturelong-term value and viability of Ductos y Energéticos del Norte, S. de R.L. de C.V.any petroleum company is linked to its reserves. We are working to sustainably develop and we continuemaintain our reserve levels, given their importance to evaluateour long-term financial strength. We plan to do so by seeking a balance between the divestitureuse and development of othernon-essential assetsnatural resources, while also aiming to obtain working capital, such asreduce the divestitureenvironmental impact of TAG Norte Holding, S. de R.L. C.V., which we expect will be concluded in the first half of 2018.our operations.
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| • | | Decreased Debt FinancingEfficiency and Competition:We also intendseek to improvestrengthen our financial position by relying less on debt financing. As part ofoperational efficiency as to reach operating conditions that strategy,maximize value and create opportunities for further economic growth. We are working to minimize unexpected stoppages in 2017 we issued Ps. 72.4 billion in debt, which is significantly less than the Ps. 231.6 billion we issued in 2016. For the year 2018, we intendoperations as to continue this strategy and are authorized to incur additional internal net debt of Ps. 30 billion and an additional external net debt of U.S. $6.2 billion. We continue to evaluate market conditions for opportunities to execute liability management transactions, which we expect will allow us to improve the terms ofstrengthen our outstanding debt.operational performance.
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| • | | 2018 PlansInvestment in projects with the participation of third-parties:Our 2018 plans set out certain objectives We intend to continue our efforts to seek opportunities to attract capital as to develop new projects in order to overcome some of the operational and infrastructural challenges we expecthave been facing. We seek to achieveimplement business strategies with respectthird-party participation, including private parties. However, we plan to maintain limits on such strategic agreements by not creating public debt, by sharing the economic risks and benefits and by making sure that the assets remain our subsidiary entities as follows:property.
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Impact and Response to the COVID-19 Pandemic | • | | Pemex Exploration and Production. Pemex Exploration and Production will focus on maintainingThe COVID-19 pandemic has had an adverse effect on our business, results of operations and financial condition. Decline in international crude oil prices: The COVID-19 pandemic has led to a worldwide economic slowdown and a decrease in global demand for crude oil and derivatives. For more information related to the decline in international crude oil prices and the decrease in the demand of petroleum products, see Note 7-D to our consolidated financial statements included herein. On March 6, 2020, OPEC, led by Saudi Arabia, and another group of petroleum producing nations, led by Russia, did not reach an agreement to reduce crude oil production levels and developing farm-outs and associations with the aim of increasing its operations and, with time, the production of hydrocarbons in themid-term. Pemex Exploration and Production will also accelerate the migration of Integrated E&P Contracts and FPWC to exploration and extraction contracts and will focus on the rehabilitation and reincorporation activities of wells with production possibilities. In 2018, Pemex Exploration and Production will continue to promote actions that encourage efficiency and optimize costs. |
In order to support crude oil prices, which resulted in a significant drop in global crude oil prices. On April 12, 2020, the OPEC+ countries, including Mexico, reached an agreement to reduce their overall crude oil production. Pursuant to this agreement, these countries, which are known as OPEC+, agreed to reduce their overall crude oil production by 9.7 million barrels per day from May 1, 2020 through June 30, 2020, by 7.7 million barrels per day from July 1, 2020 through December 31, 2020 and by 5.8 million barrels per day from January 1, 2021 through April 30, 2022. This agreement is expected to help mitigate the decrease in oil prices and demand that has taken place as a result of the COVID-19 pandemic. For more information regarding this OPEC+ production agreement, see “Item 3––Risk Factors–– Risk Factors Related to Our Operations––Crude oil, natural gas and petroleum products 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” and “Item 4—Trade Regulation, Export Agreements and Production Agreements”. However, prices continue to take advantagedisplay significant volatility.
On April 20, 2020, Mexican crude oil experienced an unprecedented drop below U.S. $0.00 per barrel to negative U.S. $2.37 per barrel. This drastic drop in price was due to low oil demand as a result of COVID-19 and the lack of oil storage. As of December 31, 2020, the weighted average Mexican crude oil export price was U.S. $47.16 per barrel. While prices have begun to stabilize, they remain significantly lower than 2014 levels. For more information regarding the impact of the benefitsdecline in international crude oil prices on us, see Note 7-D to our consolidated financial statements included herein. Decrease in the demand for petroleum products: The Mexican Government, through the Mexican Ministry of Health, has implemented actions to protect against COVID-19. Some of these actions consist of, among others, directives to avoid places of work, crowded public areas, public buildings or unnecessary social activities during this time. These preventative measures caused a decrease in demand of certain goods and services, including petroleum products. As of the energy reformdate of this annual report, the Mexican Government has lifted some restrictions, including the closure of the Mexico-U.S. Border, and to ensure ournation-wide restrictions on non-essential activities. As a result of the worldwide economic sustainability, in 2018slowdown and, in particular, the decrease in fuel demand, we have experienced a decrease in its domestic sales of petroleum products. Mexican Government support: On April 21, 2020, the Mexican Government, through a Presidential decree, granted us a reduction in our tax burden equal to Ps. 65.0 million for 2020, which consists of a fiscal credit applicable to the profit sharing duty up to such amount. This decrease in the profit-sharing duty is incremental to the one resulting from the decrease of the rate from 65% to 58% in 2020 in accordance with amendments to the 2020 Hydrocarbons Revenue Law. On February 19, 2021, the Mexican Government, through a presidential decree, granted us a reduction in our tax burden equal to Ps. 73.3 billion for 2021 via a tax credit applicable to the Derecho por la Utilidad Compartida (Profit-sharing Duty). This tax incentive is in addition to the measures announced in December 2019 that adjusted our tax regime to reduce our Profit-Sharing Duty by 11 percentage points to 54% by 2021 in two incremental steps. On February 24, 2021, the Ministry of Finance and Public Credit provided us with a capital injection of U.S. $1.6 billion to cover debt amortizations coming due in 2021. The Ministry of Finance and Public Credit plans to provide an additional U.S. $3.4 billion throughout 2021 to cover amortizations this year. Reduction in our budget: As a result of the decrease in crude oil prices and the global economic conditions arising from the up-comingCOVID-19 years, Pemex Exploration and Production will focus onpandemic, our management proposed to our Board of Directors an amendment to our budget intended to reflect the impacts in our cash flows of the following strategies: (1) establishment of an exploration model that allowsassumptions: a decrease in crude oil prices and derivatives and production volumes, Mexican Government’s supports through contributions and tax benefits to us, to grow our proven, probably and possible reserves; (2) further development of business plans for the development of shale; (3) containment and reversal of production decline and increase of profitabilityU.S. dollar exchange rate and adjustments to operating expenses by Ps. 5.0 billion and in exploration and production capital expenditures, including non-capitalizable maintenance for Ps. 40.5 billion. On July 14, 2020, our Board of assignments migrated without third party participation; (4) entering intoDirectors authorized the amendment to the 2020 budget for us and developing existing strategic alliances, partnertshipsour Subsidiary Productive Entities, which considers a decrease in budgeted income of Ps. 4,471,000 that is offset by a net decrease in expenses by Ps. 20,980,000, consisting of a (1) a decrease in investment expenditure by Ps. 27,979,000 and other arrangements to attract additional investment and to expand exploration activities; (5) focus on maintenance to improve the safety of our operations; (6) improved operational efficiency and cost control; and (7)(2) an increase in salesoperating expense of Ps. 6,999,000 and an increase in the financial cost of Ps. 16,510,000, so that our budget balance sheet target for the 2020 financial year did not change. Reduction in budget and response: Our operations are generally considered strategic within the meaning of Articles 27 and 28 of the Mexican Constitution. All of our hydrocarbons.operations therefore remain active as of the date of this annual report – however, in accordance with our business continuity plan, we have reduced our workforce, implemented alternating shifts and allowed a portion of our workforce to work remotely. In addition, we have implemented sanitizing measures to disinfect our facilities and the use of thermal cameras and other special equipment to monitor infection risks. We prepared our budget for 2021 based on a Mexican crude oil basket price of U.S. $42.12 per barrel. As a result, we entered into derivative financial instruments to hedge our risk exposure to drops in prices below this level. These derivative financial instruments are intended to hedge a proportion of our exposure of up to five U.S. dollars below the budgeted price. In addition, in accordance with the Federal Revenue Law for 2021, crude oil revenues between U.S. $42.12 and U.S. $44.12 per barrel will be used to attempt to improve our financial balance goal for 2021. Revenues above U.S. $44.12 per barrel may be used for operating expenses and capital expenditures. | • | | Pemex Industrial Transformation. With respect to Pemex Industrial Transformation, we will continue to perform reconfiguration and auxiliary services for our refineries and we will focus on the following strategies in 2018: (1) keeping our facilities safe and reliable, (2) improving the financial balance, (3) maintaining a significant market share in Mexico and (4) eliminating debts, which will help to improve our refining margin. |
The Federal Budget for 2021 authorized us to have a budget deficit of Ps. 92,687,000. This deficit does not consider payments of principal of our debt which is due in 2021. | • | | Pemex Logistics. After holding its first successful Open Season Public Auction in 2017, Pemex Logistics will continue to evaluate opportunities for executing subsequent auctions for certain of its pipelines and storage systems with the goal of diversifying its customer base and improving profitability. |
Taking into consideration the conditions described above and the level of prices as of the date of this report, we hope to increase our revenues, improve our budget deficit and potentially increase our capital expenditures during the year. | • | | Pemex Fertilizers, Pemex Ethylene and Pemex Drilling and Services. With respect to Pemex Fertilizers, Pemex Ethylene and Pemex Drilling and Services, we continue to focus on efficiency and profitability by, among others, entering into service contracts and by seeking partnerships for the purpose of modernizing our facilities. |
| • | | New Budget:On July 14, 2017, Petróleos Mexicanos’ Board of Directors approved a proposal for the consolidated annual budget of Petróleos Mexicanos and the subsidiary entities for 2018, which was subsequently approved by the Mexican Congress on November 9, 2017 and published in the Official Gazette of the Federation on November 15, 2017. The consolidated annual budget of Petróleos Mexicanos and the subsidiary entities for 2018 approved by the Mexican Chamber of Deputies is approximately Ps. 391.9 billion, as compared to the Ps. 385.2 billion consolidated annual budget for 2017. |
In addition, while we remain in a low price environment, if prices and markets for hydrocarbons continue to stabilize, this may allow us to accelerate the development of our fields, through partnerships or alone, contain the decline in our production and increase our revenues through the initiatives described above. In July 2018, presidential and federal congressional elections will be held in Mexico, which could also have an impact on the political and economic environment of the oil and gas industry and, in turn, our strategy.
Results of operations and financial condition in 20172020 For the year ended December 31, 2017, we increased2020, our net loss by 47.0%,income decreased, from a net loss of Ps. 191.1282.1 billion (U.S. $9.3$15.0 billion) in 20162019 to a net loss of Ps. 280.9509.1 billion (U.S. $14.2$25.5 billion) in 2017.2020. This increase inhigher net loss was primarily due to: a Ps. 482.8448.3 billion decrease in total sales, mainly due to a decrease in the average price of crude oil and natural gas; a Ps. 5.1 billion increase in impairment of wells, pipelines, properties, plant and equipment; a Ps. 138.4 billion increase in cost of sales, mainly due to an increase in total sales; a Ps. 68.5 billion increase in taxes and other duties;
a Ps. 17.52.8 billion decrease in other revenues, net;
a Ps. 3.95.7 billion increase in general expenses; and a Ps. 1.81.0 billion increase in financing cost, net; a Ps. 215.9 billion increases in exchange loss, net; and a Ps. 2.4 billion decrease in profit sharing in joint ventures, associates and other. This increase wasThese effects were partially offset by:
a Ps. 322.9290.3 billion increasedecrease in totalcost of sales, mainly due to an increasea decrease in the average pricepurchases of crude oilproducts; and natural gas; a Ps. 277.2158.2 billion decrease in exchange loss, net;taxes and other duties. a Ps. 23.0 billion decrease in financing cost, net.
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, 20172020 Compared to the Year Ended December 31, 2016”2019” below. In 2017,2020, our total equity (deficit) equity increaseddeteriorated by Ps. 269.3473.3 billion from negative Ps. 1,233.01,931.4 billion as of December 31, 20162019 to negative Ps. 1,502.42,404.7 billion as of December 31, 2017.2020. For more information on the decrease of our deficit increase,total equity (deficit) see “—Liquidity and Capital Resources—Equity Structure and Mexican Government Contributions” below. This increasedecrease was mainly due to (1) our net loss for the year of Ps. 280.9509.1 billion; (2) a Ps. 12.019.2 billion increase in actuarial gainslosses on employee benefits;benefits and (3)a Ps. 6.07.9 billion in accumulated lossincome from the foreign currency translation effect. Although we continue to depend heavily on net cash flows from financing activities, in 2017 we were able to strengthen our liquidity. Our accounts receivable, net,receivables increased 37.4%5.1% in 2017,2020, from Ps. 133.2180.5 billion as of December 31, 20162019 to Ps. 170.6189.8 billion as of December 31, 2017,2020, mainly due to the following:
an increase in accounts receivables from sales to our international customers; customer services reimbursements;
the current portion of the promissory notes issued by the Mexican Government in relation to our pension liabilities;
higher accounts receivable from sundry debtors (mainly IEPS tax) from larger gasoline distributors; and
an increase in tax credits associated with hydrocarbon extraction duties.
In addition to increasing our assets, during 2017 we continued to address oneimports at the end of the most critical problems we faced in 2015—our accounts payable to suppliers. year.
As of December 31, 2017,2020, we owed our suppliers approximately Ps. 140.0282.0 billion as compared to Ps. 151.6208.0 billion as of December 31, 2016.2019. As of December 31, 2017,2020, we have paid the total outstanding balance due to suppliers and contractors as of December 31, 20162019 and, as of March 31, 2018,2021, we have paid approximately 75.0%51.5% of the total outstanding balance due to suppliers and contractors as of December 31, 2017.2020. Operating Challenges During 2017 ourIn 2020, we continued to experience significant operating challenges. Our crude oil and condensates production totaled 1,948.31,686 thousand barrels per day, which, while slightly surpassing our targetas compared to the average production of 1,9441,684 thousand barrels per day for 2017, represented a decreasein 2019. This marginal increase was mainly due to the addition of 205.2 thousand barrels per day, or 9.5%, aswells in new fields: Mulach 10, Tlacame 3, Hok 44, Mulach 5, Ixachi 10, Xikin 24, Manik NW 4, Cheek 1, Ixachi 2, Ixachi 20, Cibix 12, Cahua 2, Octli 2, Xikin 32, Mulach 9, Tlacame 9, Tlacame 13, Cheek 45, Cahua 3, Hok 4, Octli 3, Mulach 4, Ixachi 11, Ixachi 24, Cibix 14, Cheek 22, Manik NW 3 and Octli 4. This slight increase when compared to 2016. This decline2019 was primarily a resultdue to our strategic attempts to incorporate production from wells in new fields, as well as our attempts to continue production in our fields despite the reduction production agreement between Mexico and OPEC+, operating issues, such as inventory surplus, minor incidents in our crude oil export facilities, weather conditions and the decrease in production due to the impact of the natural declineCOVID-19 pandemic on lower global demand of certain ofcrude oil, which caused partial shutdowns in our fields.operations and thus, a lower production. We further describe the reasons for this declineincrease in production under “Item 4—Information on the Company—Business Overview—Exploration and Production—Crude Oil and Natural Gas Production.”
Additionally, our production targets were affected by the agreement on April 12, 2020, between OPEC+ countries including Mexico. For 2018,more information regarding this OPEC+ production agreement, see “Item 3––Risk Factors–– Risk Factors Related to Our Operations––Crude oil, natural gas and petroleum products 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”. Our Business Plan 2021-2025 set a crude oil and condensates production target for 2021 of 1,951 thousand barrels per day. In 2017, the total crude oil we processed decreased by 17.8% to 767.01,944 thousand barrels per day primarilyand a natural gas production target, excluding nitrogen, of 4,186 million cubic feet per day.
In 2020, we processed a total of 590.6 thousand barrels of crude oil per day, a 0.2% decrease as compared to 2019, mainly due to unscheduled shutdowns atthe fact that we carried out repairs beyond those originally scheduled under the National Refining System rehabilitation program, together with operational and reliability in our Salina Cruz refinery as a result of natural disasters and the implementation of general maintenance programs at our Madero and Minatitlán refineries.units. As a result, usagewe used 36% of our primary distillation capacity decreased by 11.1% to 47.1% in 2017. Although we had a decrease2020, preserving the level observed in crude oil processing,2019. In 2020, our variable refining margin increaseddecreased by U.S. $0.95$0.04 per barrel to U.S. $5.43$0.76 per barrel, in 2017,a 5.0% decrease as compared to 2019. This decrease was primarily as a result of the increasea decrease in average sales prices for refined products. 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 trendsweak refining margins in the oilU.S. Gulf Coast region, which were caused by decreased demand for gasoline and gas industry, both internationally and within Mexico; economic factors in Mexico; and informationheightened levels of refinery production.
New Accounting Standards The following new accounting standards were effective from outside sources. We believe that the following critical accounting policies, among others, affect management’s judgments and estimates used in the preparation ofJanuary 1, 2020, but they did not have a material effect on our consolidated financial statements accordingstatements: Amendments to References to Conceptual Framework in IFRS Standards; Definition of a Business (Amendments to IFRS 3); Definition of Material (Amendments to IAS 1 Presentation of Financial Statements and could potentially impact our financial resultsIAS 8 Accounting Policies, Changes in Accounting Estimates and future financial performance. There can be no assurance that actual results do not differErrors); and The interest rate benchmark reform amendments retrospectively to hedging relationships. In addition, IFRS 16 Leases was effective from these estimates. These policies are more fully described in NoteJanuary 1, 2019 and was adopted by us. See Notes 3 and 4 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 policies and guidelines that promote an integrated scheme for market risk management, regulate the use of DFIs, guide the development of hedging strategies and provide strategies for the formulation of risk limits.
We enter into derivatives transactions with the sole purpose of hedging financial risks related to our operations. Nonetheless, some of these transactions do not qualify for hedge accounting treatment because they do not meet the strict requirements of IAS 39, “Financial Instruments Recognition and Measurement” for designation as hedges. They are therefore recorded in the financial statements asnon-hedge instruments or as instruments entered into for trading purposes, despite the fact that their cash flows are offset by the cash flows of the positions to which they relate. As a result, the changes in their fair value are recognized in the financing cost. See Note 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. Our future net cash flow projections are based on the best available estimates of the 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 calculated based on different assumptions regarding projected commodity sales prices, volume of production and overhead costs, foreign currency exchange rates and inflation, among other items, that are used to quantify income and expense estimates. Any change in the assumptions upon which the forecasts for each cash-generating unit are based can materially affect the anticipated cash flows to be generated bynon-financial assets.
These estimated future net cash flows are discounted at present value 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, 2017, we have carried out an impairment test to assess the carrying amount ofnon-financial assets, other than inventories and deferred taxes. The impairment test has resulted in a net impairment of Ps. 151.4 billion, primarily resulting from a Ps. 129.3 billion impairment for Pemex Exploration and Production due to (1) the deferral of the development investments in the first five years of the economic horizon in the proved reserves, (2) insufficient cash flows to make up for costs recovery at the Burgos and Lakach projects resulting from the 4.3% appreciation of the Mexican peso against the U.S. dollar from a peso–U.S. dollar exchange rate of Ps. 20.6640 to U.S. $1.00 as of December 31, 2016 to a peso–U.S. dollar exchange rate of Ps. 19.7867 to U.S. $1.00 as of December 31, 2017, due to the fact that cash inflows are denominated in U.S. dollars and then translated to the reporting currency using the exchange rate at end of the
period; (3) a 0.3% increase in the discount rate; (4) a 7.2% decrease in crude oil forward prices and (5) the natural decline in production in the Macuspana project. For more information on the impairment of ournon-financial assets, see Note 12 to our consolidated financial statements2020 included herein.
Income Taxes
As described under “Item 4—Information on the Company—Taxes, Duties and Other Payments to the Mexican Government” above and in Note 3(n) and Note 20 to our consolidated financial statements included herein, the fiscal regime applicable to Petróleos Mexicanos and the subsidiary entities and certain subsidiary companies as of December 31, 2017 became effective on January 1, 2015. Effective as of this date, the Hydrocarbons Revenue Law and the Federal Revenue Law of the applicable year comprise the fiscal regime applicable to us.
As of December 31, 2017, Petróleos Mexicanos and the subsidiary entities are required to estimate taxable income according to IAS 12, “Income Taxes.” This process involves an estimation of our actual current tax and an assessment of temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred assets and liabilities, which are included within our consolidated balance sheet. We must then assess the likelihood that our deferred assets will be recovered from future taxable income.
Management judgment is required in determining our provision for income taxes. In the event that actual results differ from our estimates, any adjustments recorded will affect our net income during the corresponding period.
Exploration and Production Taxes and Duties
The fiscal regime applicable to the exploration and production assignments granted to us by the Mexican Government includes the following taxes and duties:
| • | | Profit-Sharing Duty. The Profit-Sharing Duty is calculated based on the value of hydrocarbons produced in the relevant area minus certain permitted deductions. As of January 1, 2017, the applicable rate of this duty was 67.50%. 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. 1,214 per square kilometer ofnon-producing areas. After 60 months, this tax increases to Ps. 2,903.54 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. |
For more information on the taxes and duties applicable to and paid by Pemex Exploration and Production, see Note 20 to our consolidated financial statements included herein.
Contingencies
In the ordinary course of business, we are named in a number of lawsuits of various types. We evaluate the merit of each claim and assess the likely outcome. Liabilities for loss contingencies are recorded when it is probable that a liability has been incurred and the amount thereof can be reasonably estimated. We do not
recognize contingent revenues, earnings or assets until their realization is assured. We have not recorded provisions related to ongoing legal proceedings whenever we do not expect an unfavorable resolution in such proceedings, except as disclosed in “Item 8—Financial Information—Legal Proceedings—Civil Actions” and Notes 6 and 25 to our consolidated financial statements included herein.
Employee Benefits
As described under “Item 6—Directors, Senior Management and Employees—Employees” below and in Note 2(m) and Note 17 to our consolidated financial statements included herein, as of January 1, 2016, we are operating both a defined contribution plan and defined benefit pension plan. Until December 31, 2015, we only operated a defined benefit pension plan.
Contribution Plan
Under the defined contribution plan, both we and our employees contribute to each employee’s individual account, in contrast to the existing defined benefit plan, pursuant to which only we contribute. We account for our contributions as costs, expenses or assets. Contributions to the defined contribution plan that are not expected to be fully settled within 12 months after the end of the annual reporting period in which the employee rendered related services will be discounted using the defined benefits plan discount rate.
Benefit Pension Plan
Under the defined benefit pension plan, we are the only contributor to a trust, which is managed separately. We recognize the cost for the defined benefit pension plan based on independent actuarial computations applying the projected unit credit method. Actuarial gains and losses are recognized within other comprehensive results for the period in which they occur. The costs of prior services are recognized within profit or loss for the period in which they are incurred.
Our net obligation with respect to the defined benefit pension plan equals the present value of the defined benefit obligation less the fair value of plan assets for which obligations have yet to be settled. The value of any asset is limited to the present value of the economic benefit represented by the plan reimbursements and reductions in future contributions to the plan.
In addition, other long-term employee benefits include seniority premiums payable for disability, death and survivors’ benefits, medical services, gas and basic food baskets for beneficiaries. Termination benefits are recognized in profit or loss for the year in which they are incurred.
Benefits to employees were approximately 34.6% and 34.3% of our total liabilities as of December 31, 2017 and 2016, respectively, and any adjustments recorded will affect our net income and/or comprehensive net income during the corresponding period.
Recently Issued Accounting Standards NewSome of the new accounting interpretations and revisions under IFRS that apply tostandards went into effect for annual periods beginning on or after January 1, 2018, as well as additional2020 and earlier application is permitted. However, we have not early adopted the new or amended standards amendments orin preparing these consolidated financial statements (see Note 29 to our consolidated financial statements included herein). The following amended standards and interpretations that, even thoughare not yet effective, couldexpected to have a materialsignificant impact on our consolidated financial statements,statements.
| • | | Interest Rate Benchmark Reform –Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16); |
| • | | Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37); |
COVID-19-Related Rent Concessions (Amendment to IFRS 16); | • | | Property, Plant and Equipment – Proceeds Before Intended Use (Amendments to IAS 16); |
Reference to Conceptual Framework (Amendments to IFRS 3); Classification of Liabilities as Current or Non-Current (Amendments to IAS 1); and a breakdown of the effect of such new Insurance Contracts (Amendments to IFRS 17). For more information about recently issued accounting interpretations and revisions are disclosed instandards see Note 3(v)29 to our consolidated financial statements included 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 Exploration and Production sells crude oil to PMI, which then sells it to international clients. The volume of crude oil that we export is the volume delivered to international clients as adjusted for water content according to the bill of lading and standard market practice. PMI bases crude oil export price formulas on a basket of international reference prices and a constant set according to specific market conditions. We determine export prices of refined products, petrochemicals and natural gas by reference to market conditions and direct negotiations with our clients. Significant changes in international crude oil prices directly affect our financial results. The impact of changes in crude oil prices on our refining activities and petrochemicals business depends on: the magnitude of the change in crude oil prices; how quickly petroleum and petrochemical product prices in international markets adjust to reflect changes in crude oil prices; and the extent to which prices in Mexico, where we sell most of our petroleum products and petrochemicals, reflect international prices for those products. The following table sets forth the weighted average market price per barrel of crude oil that PMI received from exports and the average price of itsthe United States benchmark, West Texas Intermediate (or WTI) crude oil, for the years indicated. In 2013,The average price differential between WTI and the average prices of crude oil that we exported were higher thanin the average priceslast three years fluctuated between U.S. $3.79 in 2018 to U.S. $3.43 in 2020, which is mainly the result of WTI crude oil. As of December 31, 2014, 2015, 2016 and 2017 however, the average price of crude oil that we exported fell below the average price of WTI crude oil, primarily due to the strengthening of the WTI crude oil against the prices of certain benchmark crudes, such as West Texas Sour, Light Louisiana Sweet and Brent Dated, and againstfluctuations in the price of high sulfur fuel oil, uponother benchmarks on which theour pricing formulas for our crude oil are based. See “Item 4—Information on the Company—Business Overview—International Trading.” | | | Year ended December 31, | | | Year ended December 31, | | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | | (in dollars per barrel) | | | (in dollars per barrel) | | West Texas Intermediate crude oil average price | | U.S. $ | 97.99 | | | U.S. $ | 93.28 | | | U.S. $ | 48.71 | | | U.S. $ | 43.34 | | | U.S. $ | 50.79 | | | U.S. $ | 65.20 | | | U.S. $ | 57.03 | | | U.S. $ | 39.25 | | PEMEX crude oil weighted average export price | | | 98.44 | | | | 85.48 | | | | 43.12 | | | | 35.65 | | | | 46.73 | | | | 61.41 | | | | 55.53 | | | | 35.82 | |
Note: | The numbers in this table are daily average prices for the full year, which differ from spot prices at year end. On April 27, 2018,May 11, 2021, the spot price for West Texas Intermediate crude oil was U.S. $68.10$65.28 per barrel and the spot price for the PEMEX crude oil basket was an estimated U.S. $60.89$62.43 per barrel. |
Sources: PMI operating statistics and Platt’s U.S. Marketscan (McGraw-Hill Company)
Sources: PEMEX’s | oil statistics and Platt’s U.S. Marketscan (S&P Global Inc.). |
Domestic Prices UntilAs of December 31, 2017, the formulas used to determine prices for petroleum products and petrochemical products sold in the Mexican market were determined by the Ministry of Finance and Public Credit and the CRE, in accordance with the Federal Public Administration Organic Law, as amended, theLey de Planeación(Planning Law), theReglamento Interior (Internal Regulations) of the Ministry of Finance and Public Credit and theLey de la Comisión Reguladora de Energía (Energy Regulatory Commission Law). The Ministry of Finance and Public Credit and the CRE received input from us and other governmental ministries through committees composed of officers of Petróleos Mexicanos, the subsidiary entities, some of the subsidiary companies, and representatives of various government ministries, including, among others, the Ministry of Finance and Public Credit, the Ministry of Energy, theSecretaría de la Función Pública (Ministry of Public Function, or the SFP) and theSecretaría de Economía (Ministry of Economy). The Ministry of Finance and Public Credit and the CRE determined wholesale and first-hand sale prices based on opportunity cost, which considers international prices,
and makes adjustments to reflect transportation expenses and differences in the quality of our products relative to international benchmarks. The retail price was determined based on the wholesale price plus the value added tax, the retailer’s margin and freight costs. The Ministry of Finance and Public Credit adjusted prices for petroleum and petrochemical products sold in the Mexican market, so that they are consistent with the Mexican Government’s macroeconomic targets.
As a part of the energy reform, the Mexican Government began to liberalize prices for petroleum and petrochemical products in 2017 and, as of the date of this annual report, domestic fuel prices have beenare fully liberalized and are now determined according to market forces and may vary without regard to any specific range determined by the Mexican Government. For further information on domestic prices, see “Item 4—Business Overview—Industrial Transformation—Refining—Pricing Decrees” and “Item 4—Business Overview—Industrial Transformation—Gas and Aromatics—Pricing Decrees” above..
The following table compares the average prices in nominal terms of selected petroleum and petrochemical products in Mexico for the years indicated: | | | | | | | | | | | | | Year ended December 31, | | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | Petroleum Products | | | | | | | | | | | | | | | | | Unleaded regular gasoline(1) | | | Ps. 1,398.03 | | | | Ps. 1,460.45 | | | | Ps. 1,463.02 | | | | Ps. 1,460.19 | | | | Ps. 1,413.27 | | | Ps. | 1,813.33 | | | Ps. | 1,671.92 | | | Ps. | 1,391.19 | | Premium gasoline(1) | | | 1,464.83 | | | | 1,272.73 | | | | 1,127.40 | | | | 931.81 | | | | 1,277.53 | | | | 1,948.66 | | | | 1,821.32 | | | | 1,501.62 | | Diesel(1) | | | 1,471.28 | | | | 1,457.16 | | | | 1,482.90 | | | | 1,457.27 | | | | 1,543.52 | | | | 1,935.54 | | | | 1,813.10 | | | | 1,438.57 | | Jet fuel(1) | | | 1,558.08 | | | | 1,458.34 | | | | 1,370.67 | | | | 1,268.38 | | | | 1,187.40 | | | | 1,815.91 | | | | 1,824.23 | | | | 1,415.72 | | Natural Gas(2) | | | 5.57 | | | | 5.44 | | | | 6.18 | | | | 5.81 | | | | 6.99 | | | | 5.57 | | | | 5.01 | | | | 4.61 | | Liquified Petroleum(2) | | | 21.57 | | | | 21.77 | | | | 22.18 | | | | 30.43 | | | | 36.13 | | | | 39.24 | | | | 18.60 | | | | 18.41 | | Selected Petrochemicals | | | | | | | | | | | | | | | | | Ammonia(3) | | | 6,242.51 | | | | 6,125.17 | | | | 6,275.83 | | | | 6,083.33 | | | | 6,433.61 | | | | 7,905.97 | | | | 7,556.74 | | | | 6,317.20 | | Polyethylene(3) | | | 17,931.24 | | | | 20,300.29 | | | | 19,798.58 | | | | 23,402.82 | | | | 22,300.62 | | | | 22,945.27 | | | | 17,601.39 | | | | 17,720.23 | |
(2) | Pesos per hundred cubic feet. |
Source: | Source: Petróleos Mexicanos.
|
IEPS Tax,
Hydrocarbon Duties and OtherIncome Taxes The following table sets forth the taxes and duties that we recorded for each of the past three years. | | | | | | | | | | | | | | | Year ended December 31, | | | | 2015 | | | 2016 | | | 2017 | | | | (in millions of pesos)(1) | | Hydrocarbon extraction duties and others | | | Ps. 377,087 | | | | Ps. 277,162 | | | | Ps. 338,044 | | Income tax | | | (45,587 | ) | | | (12,640 | ) | | | (5,064 | ) | | | | | | | | | | | | | | Total | | | Ps. 331,500 | | | | Ps. 264,522 | | | | Ps. 332,980 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | Year ended December 31, | | | | 2018 | | | 2019 | | | 2020 | | | | (in millions of pesos)(1) | | Hydrocarbon extraction duties | | Ps. | 469,934 | | | Ps. | 372,812 | | | Ps. | 154,609 | | Income tax (benefit) | | | (8,355 | ) | | | (28,989 | ) | | | 30,963 | | | | | | | | | | | | | | | Total | | Ps. | 461,579 | | | Ps. | 343,823 | | | Ps. | 185,572 | | | | | | | | | | | | | | |
| Note: | For a description of these taxes and duties, see “Item 4—Information on the Company—Taxes, Duties and Other Payments to the Mexican Government.”Numbers may not total due to rounding. | |
| (1) | Figures are stated in nominal pesos. |
Source: PEMEX’s audited financial statements, prepared in accordance with IFRS. Relation to the Mexican Government Petróleos Mexicanos and theour subsidiary entities are public entities of the Mexican Government, rather than Mexican corporations. Therefore, we do not have the power to issue shares of equity securities evidencing ownership interests and are not required, unlike Mexican corporations, to have multiple shareholders. However, our financing obligations do not constitute obligations of and are not guaranteed by the Mexican Government. The President of Mexico appoints five of the ten members of the Board of Directors of Petróleos Mexicanos as representatives of the Mexican Government, including the Secretary of Energy, who serves as the Chairperson of the Board of Directors of Petróleos Mexicanos, and the Secretary of Finance and Public Credit. The President of Mexico also appoints five independent members to the Board of Directors of Petróleos Mexicanos, whose appointments are ratified by the Senate. Pursuant to the Petróleos Mexicanos Law, theour consolidated annual budget, of Petróleos Mexicanos and the subsidiary entities, including our financing program, must be submitted to the Ministry of Finance and Public Credit, which has the authority to adjust our financial balance goal and the ceiling on our wage and salary expenditures for the fiscal year. The Mexican Government incorporates our consolidated annual budget and financing program into its budget, which the Chamber of Deputies must approve each year. The Mexican Congress has the authority to adjust our annual financial balance goal at any time by amending the applicable law. In addition, any adjustment proposed by the Board of Directors of Petróleos Mexicanos to change our annual financial balance goal or increase the limit on our wage and salary expenditures or our financing program must be approved by the Chamber of Deputies. Inflation
Mexico experienced high inflation during the 1980s. The annual rate of inflation (as measured by the change in the NCPI) decreased from a high of 159.2% in 1987 to 11.9% in 1992, 8.0% in 1993 and 7.1% in 1994. However, the economic events that followed the devaluation of the peso against the U.S. dollar in late 1994 and 1995, along with turbulence in international financial markets, caused inflation to increase to 52.0% in 1995. After 1995, inflation decreased to 27.7% in 1996 and 15.7% in 1997. The annual inflation rate was, 4.0% in 2013, 4.1% in 2014, 2.1% in 2015, 3.4% in 2016 and 6.8% in 2017.
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, 2015, 2016 and 2017 did not qualify as hyperinflationary, we did not use inflation accounting to prepare our consolidated financial statements as of December 31, 2015, 2016 and 2017 included herein.
Consolidation Our financial statements consolidate the results of Petróleos Mexicanos, theour subsidiary entities and the subsidiary companies. Certainnon-material subsidiary companies are not consolidated and are accounted for under either the cost method or the equity method. For a list of the consolidated subsidiary companies, see Note 3(a)3-A and Note 45 to our consolidated financial statements included herein. Export Agreements and Production Agreements Though Mexico is not a member of OPEC, it has periodically announced increases and decreases in our crude oil exports reflecting production revisions made by other oil producing countries and entered into agreements with OPEC and non-OPEC members to reduce its oil exports, in order to contribute to crude oil prices stabilization. However, we have not changed our export goals because of announcements made by OPEC since 2004, and we believe that On April 12, 2020, the OPEC+ countries, including Mexico, has no plansagreed to change our current level ofreduce their overall crude oil exports.production by 9.7 million barrels per day from May 1, 2020 through June 30, 2020, by 7.7 million barrels per day from July 1, 2020 through December 31, 2020 and by 5.8 million barrels per day from January 1, 2021 through April 30, 2022. Pursuant to this agreement, Mexico agreed to reduce its crude oil production by 100,000 barrels per day for a period of two months beginning on May 1, 2020. Immaterial Correction of 2019 Information During 2020, we detected errors in certain costs and expenses used for the determination of the value in use of certain cash generating units of the exploration and production segment as of December 31, 2019. This resulted in a different value in use in some cash generating units and thus, an increase in the value of wells, pipelines, plants and platforms as of December 31, 2019 in the amount of Ps. 65,799,060. The increase in value has led to a favorable impact in our results of operation for 2019 for the same amount. Our financial results for 2019 included herein reflect an adjustment for these errors. For further information about the corrections resulting from the errors, see Note 4-B to our consolidated financial statements included herein. Selected Financial Data The selected statement of comprehensive income (loss), statement of financial position and cash flows data set forth below have been derived from, and should be read in conjunction with, our consolidated financial statements. Certain amounts in the consolidated financial statements for 2019 and 2018 have been reclassified to conform with the presentation of the amounts in the consolidated financial statements for 2020. These reclassifications are not significant to the consolidated financial statements. | | | | | | | | | | | | | | | | | | | Year ended December 31,(1) | | | | 2018 | | | 2019(2) | | | 2020 | | | 2020(3) | | | | (in millions of pesos) | | | (in millions of U.S. dollars) | | Statement of Comprehensive Income (Loss) Data | | | | | | | | | | | | | | | | | Net sales | | | 1,681,119 | | | | 1,401,971 | | | | 953,662 | | | | 47,806 | | Operating income | | | 367,400 | | | | 102,829 | | | | (63,063 | ) | | | (3,161 | ) | Financing income | | | 31,557 | | | | 29,236 | | | | 16,742 | | | | 839 | | Financing cost | | | (123,870 | ) | | | (132,861 | ) | | | (161,765 | ) | | | (8,109 | ) | Derivative financial instruments (cost) income—Net | | | (19,116 | ) | | | (23,264 | ) | | | 17,096 | | | | 857 | | Exchange (loss) gain—Net | | | 23,659 | | | | 86,930 | | | | (128,949 | ) | | | (6,464 | ) | Net (loss) for the period | | | (180,420 | ) | | | (282,112 | ) | | | (509,052 | ) | | | (25,518 | ) | Statement of Financial Position Data (end of period) | | | | | | | | | | | | | | | | | Cash and cash equivalents | | | 81,912 | | | | 60,622 | | | | 39,990 | | | | 2,005 | | Total assets | | | 2,075,197 | | | | 1,984,247 | | | | 1,928,488 | | | | 96,672 | | Short-term debt | | | 191,796 | | | | 244,924 | | | | 391,097 | | | | 19,605 | | Long-term debt | | | 1,890,490 | | | | 1,738,250 | | | | 1,867,630 | | | | 93,622 | | Total long-term liabilities | | | 3,086,826 | | | | 3,363,453 | | | | 3,560,805 | | | | 178,498 | | Total equity (deficit) | | | (1,459,405 | ) | | | (1,931,409 | ) | | | (2,404,727 | ) | | | (120,546 | ) | Statement of Cash Flows | | | | | | | | | | | | | | | | | Depreciation and amortization | | | 153,382 | | | | 137,187 | | | | 129,632 | | | | 6,498 | | Acquisition of wells, pipelines, properties, plant and equipment(4) | | | (94,004 | ) | | | (109,654 | ) | | | (114,977 | ) | | | (5,264 | ) |
(1) | Includes Petróleos Mexicanos, the subsidiary entities and the subsidiary companies listed in Note 5 to our consolidated financial statements included herein. |
(2) | During 2020, we detected errors in certain costs and expenses used for the determination of the value in use of certain cash generating units in the exploration and production segment as of December 31, 2019. This resulted in a different value in use in some cash generating units and thus, an increase in the value of wells, pipelines, plants and platforms as of December 31, 2019 in the amount of Ps. 65,799,060 and a favorable impact in our results of operation for 2019 for the same amount. For further information about the corrections resulting from the errors, see Note 4-B to our consolidated financial statements included herein. |
(3) | Translations into U.S. dollars of amounts in pesos have been made at the exchange rate established by the Ministry of Finance and Public Credit for accounting purposes of Ps. 19.9487 = U.S. $1.00 at December 31, 2020. Such translations should not be construed as a representation that the peso amounts have been or could be converted into U.S. dollar amounts at the foregoing or any other rate. |
(4) | Includes capitalized financing cost. See Note 13-A to our consolidated financial statements included herein and “Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources.” |
Source: | PEMEX’s consolidated financial statements, prepared in accordance with IFRS, as it relates to the selected statements of comprehensive income, statement of financial position and statement of cash flows data; and Petróleos Mexicanos, as it relates to other financial data. |
Results of Operations of Petróleos Mexicanos, the Subsidiary Entities and the Subsidiary Companies—For the Year Ended December 31, 20172020 Compared to the Year Ended December 31, 20162019 Total Sales Total sales increaseddecreased by 30.1%,32.0% or Ps. 322.9448.3 billion in 2017,2020, from Ps. 1,074.11,402.0 billion in 20162019 to Ps. 1,397.0953.7 billion in 2017,2020, primarily due to an increasea decrease in the sales volume of our domestic and export sales, mainly due to an increase in the average sales prices of our petroleum products forand the reasons explained in further detail below.weighted average price of Mexican crude oil. Domestic Sales Domestic sales increaseddecreased by 30.9%37.6% or 303.3 billion in 2017,2020, from Ps. 670.0807.0 billion in 20162019 to Ps. 877.4 billion503.7 in 2017, primarily2020, mainly due to an increasedecreases in the average pricessales volume of gasoline, diesel, fuel oil diesel, gasoline and liquefied natural gas.jet fuel. Domestic sales of petroleum products increaseddecreased by 39.6%43.1% in 2017,2020, from Ps. 529.3718.7 billion in 20162019 to Ps. 738.9409.1 billion in 2017, primarily2020, mainly due to a 34.1% increase26.1% decrease in the sales volume of gasoline, a 29.0% decrease in the sales volume of diesel, 27.6% decrease in the sales volume of fuel oil and 53.4% decrease in the sales volume of jet fuel. The average sales price of gasoline, diesel, fuel oil and jet fuel decreased 38.2%, 44.8%, 69.8% and 63.8%, respectively, in 2020 as compared to 2019, as a 60.7% increaseresult of decreased demand. The decreased demand was primarily the result of lower economic activity caused by the COVID-19 pandemic and a drop in the average price of diesel, a 26.2% increase in the average price of jet fuelinternational hydrocarbons and a 78.9% increase in the average price of fuel oil. These price increases were partially offset by a 27.1% decrease in the volume of sales of premium gasoline, primarily due to a decrease in demand from retail service stations and a 15.8% decrease in the volume of sales of liquefied natural gas. refined products prices. Domestic sales of natural gas increaseddecreased by 19.0%20.7% in 2017,2020, from Ps. 59.628.5 billion in 20162019 to Ps. 70.922.6 billion in 2017,2020, primarily due to a 43.0% increase20.6% decrease in the average sales price of natural gas, partially offset by a 16.8%and 13.6% decrease in the sales volume of sales of natural gas. Domestic sales of liquefied natural gasLPG decreased by 3.7%4.3% in 2017,2020, from Ps. 50.932.2 billion in 20162019 to Ps. 49.030.8 billion in 2017,2020. This decrease was primarily as a result of a 15.8% decrease in the volume of sales of liquefied natural gas due to the market share loss that resulted from increased competition due to the liberalization of imports that began in 2016, which was partially offset by a 14.4% increase4.3% decrease in the average sales price of liquefied natural gas. Domestic petrochemical sales (including sales of certainby-products of the petrochemical production process) decreased by 47.0%, from Ps. 30.2 billion in 2016 to Ps. 16.0 billion in 2017, primarily as a result of aand 3.4% decrease in the sales volume, of sales of polyethylene.mainly due to lower economic activity caused by the COVID-19 pandemic. Export Sales Export sales increaseddecreased by 28.7%24.0% in peso terms in 20172020 (with U.S. dollar-denominated export revenues translated to pesos at the exchange rate on the date of the corresponding export sale), from Ps. 395.1585.8 billion in 20162019 to Ps. 508.5445.2 billion in 2017.2020. This increasedecrease was primarilymainly due to a 33.9% increase36.2% decrease in the weighted average Mexican export crude oil export price a 63.4% increase in the export sales of fuel oil, mainly due2020, from U.S. $55.60 per barrel in 2019 to an increaseU.S. $35.47 per barrel in the average sales price of fuel oil, a 4.5% increase in the export sales of naphthas and a Ps. 1,087.8 million increase in the export sales of petrochemical products. This increase in export sales was partially offset by a 2.7% decrease in the volume of export sales of petroleum products.2020. 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 increaseddecreased by 31.4%26.4% in peso terms, from Ps. 327.8474.0 billion in 20162019 to Ps. 430.6349.1 billion in 2017.2020. In U.S. dollar terms, excluding the trading activities of the Trading Companies, total export sales (which are U.S. dollar-denominated) increaseddollar denominated) decreased by 29.7%34.5% in 2017,2020, from U.S. $17.5$24.6 billion in 20162019 to U.S. $22.7$16.1 billion in 2017.2020. This was primarily due to the 33.9% increase36.2% decrease in the weighted average Mexican crude oil export price. The trading and export activities of the Trading Companies generated additional marginal revenues of Ps. 77.996.1 billion in 2017, 15.6% higher2020, 14.0% lower in peso terms than the Ps. 67.4111.8 billion of additional revenues generated in 2016,2019. This decrease was mainly due to an increasea decrease in the average prices of diesel and gasoline.Exportgasoline. Export sales of PMI-NASA, one of our principal Trading Companies, increaseddecreased by 13.6%26.4% in 2017,2020, from Ps. 57.974.3 billion in 20162019 to Ps. 65.854.7 billion in 2017. The weighted average price per barrel of crude oil that PMI sold to third parties in 2017 was U.S. $47.73, or 33.9%, higher than the weighted average price of U.S. $35.63 in 2016.2020. Crude oil and condensate export sales to PMI accounted for 88.4%90.3% of total export sales (excluding the trading activities of the Trading Companies) in 2017,2020, as compared to 88.1%90.8% in 2016.2019. These crude oil and condensate sales increaseddecreased in peso terms by 31.8%26.8% in 2017,2020, from Ps. 288.6430.4 billion in 20162019 to Ps. 380.5315.1 billion in 2017,2020, and increased in U.S. dollar terms by 29.7 % in 2017,34.5%, from U.S. $15.5$22.3 billion in 20162019 to U.S. $20.1$14.6 billion in 2017.2020. The weighted average price per barrel ofMexican crude oil that Pemex Exploration and Production sold to PMI for export price in 20172020 was U.S. $47.26, 34.4% higher36.2% lower than the weighted average price of U.S. $35.17$55.60 per barrel in 2016.2019. Export sales of petroleum products, including natural gas and natural gas liquids, by our industrial transformation segment to the Trading Companies and third parties decreased from 10.9%8.2% of total export sales (excluding the trading activities of the Trading Companies) in 20162019 to 10.7%8.7% of those export sales in 2017.2020. Export sales of petroleum products, including products derived from natural gas and natural gas liquids, increased decreased by 29.2%21.6%, from Ps. 35.638.9 billion in 20162019 to Ps. 46.030.5 billion in 2017,2020, primarily due to an increasea decrease in the average sales pricesvolume of fuel oil and naphthas. In U.S. dollar terms, export sales of petroleum products, including products derived from natural gas and natural gas liquids, increased by 26.3%, from U.S. $1.9 billion in 2016 to U.S. $2.4 billion in 2017. Export sales of natural gas increased by 3.3%, from Ps. 21.0 million in 2016 to Ps. 21.7 million in 2017, primarily due to an increase in the average sales price of natural gas.naphtha.
Petrochemical products accounted for the remainder of export sales in 2016 and 2017. Export sales of petrochemical products (including certainby-products of the petrochemical process) increased by Ps. 1,087.8 million in 2017, from Ps. 3,537.5 million in 2016 to Ps. 4,625.3 million in 2017, primarily due to an increase in export sales of Grupo Fertinal in 2017. In U.S. dollar terms, export sales of petrochemical products (including certainby-products byproducts of the petrochemical process) decreased by 2.7% in 2017, from U.S. $218.7Ps. 1,255.4 million in 2016 to U.S. $212.82020, from Ps. 4,705.3 million in 2017.2019 to Ps. 3,449.9 million in 2020, primarily due to a decrease in export sales by Grupo Fertinal, S.A. de C.V. in 2020.
Services Income Services income increaseddecreased by 24.0%48.4% in 2017,2020, from Ps. 9.09.1 billion in 20162019 to Ps. 11.14.7 billion in 2017,2020, primarily as a result of an increasea decrease in transportation services provided by Pemex Logistics to CENAGASIndustrial Transformation and an increase in freight services provided by Pemex Industrial TransformationLogistics to third parties. Cost of Sales Cost of sales increaseddecreased by 16.0%25.9%, from Ps. 865.81,122.9 billion in 20162019 to Ps. 1,004.2832.6 billion in 2017.2020. This increasedecrease was mainly due to: (1) an increase ofa Ps. 131.2206.4 billion decrease in import purchases, of imports, primarily Magna gasoline, diesel and natural gas, mainlyjet fuel, due to an increasedecreased demand. The decreased demand was primarily the result of the lower economic activity caused by the COVID-19 pandemic and a drop in the price of importsinternational hydrocarbons and an increase in the volume of imports required to meet domestic demand;refined products prices; (2) a Ps. 15.523.5 billion increasedecrease in hydrocarbontaxes and duties on exploration and extraction duties and taxes due to higherof hydrocarbons resulting from lower average sales prices in 2017;and (3) a decrease of Ps. 9.554.0 billion increase in operating expenses, mainly due to an increase in expenses for materials and spare parts; and (4) a Ps. 6.2 billion increase in depreciation of fixed assets and amortization of wells, primarily due to the increased value of assets to be depreciated as a result of the partial reversal of the impairment recorded in 2016. This increase was partially offset by a Ps. 26.0 billion decrease in the cost of unsuccessful wells, primarily due to a decrease in investment.wells. Impairment of Wells, Pipelines, Properties, Plant and Equipment Impairment of wells, pipelines, properties, plant and equipment increased by Ps. 482.7(5.1) billion in 2017,2020, from a net impairment of Ps. (31.3) billion in 2019 to a net impairment of Ps. (36.4) billion in 2020. This net impairment was primarily due to Ps. (71.8) billion in the cash generating units of Pemex Industrial Transformation, mainly due to lower production levels, at the Madero, Minatitlan, and Salamanca Refineries. These lower production levels were primarily the result of a lower crude oil processing rate than previously projected and a decrease in prices of refined products. The lower production levels were partially offset by a net reversal of impairment of Ps. 331.335.0 billion in 2016 to a net impairmentthe cash generating units of Ps. 151.4 billion in 2017,Pemex Exploration and Production, mainly due to: (1) the deferral of the development investments in the first five years of the economic horizon in the proved reserves, (2) insufficient cash flows to make up for costs recovery at the Burgos and Lakach projects resulting from the 4.3% appreciation of the Mexican peso against the U.S. dollar from a peso–U.S. dollar exchange rate of Ps. 20.6640 to U.S. $1.00 as of December 31, 2016 to a peso–U.S. dollar exchange rate of Ps. 19.7867 to U.S. $1.00 as of December 31, 2017, due to the fact 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; (3) a 0.3%an increase in the discount rate; (4) a 7.2% decreaseeffect of exchange rates and an increase in projected crude and oil forward prices and (5) the natural decline in production in the Macuspana project.volume. General Expenses General expenses increased by Ps. 3.95.6 billion in 2020, from Ps. 137.9152.7 billion in 20162019 to Ps. 141.8 billion158.3 in 2017,2020, mainly due to an increase in administrative expenses relating to the contributions to the defined contribution pension plan and incentives to encourage employees to migrate from the defined benefit pension plan to the defined contribution plan.periodic cost of employee benefits. Other Revenues/Expenses, NetRevenues Other revenues net, decreased by Ps. 17.53.1 billion in 2017,2020, from other revenues, net, of Ps. 22.714.9 billion in 20162019 to other revenues, net, of Ps. 5.211.8 billion in 2017.2020. This decrease was primarilymainly due to the recognition of a Ps. 8.42.3 billion lossdecrease in theincome from insurance recovery. Other Expenses Other expenses decreased by Ps. 6.0 billion in 2020, from Ps. 7.2 billion in 2019 to Ps. 1.2 billion in 2020. This decrease was mainly due to a decrease of Ps. 5.4 billion in disposal of wells, pipelines, properties, plant and equipment and a Ps. 3.3 billion loss in the sale of our shares in Repsol. The decrease in other revenues, net, was partially offset by a Ps. 3.1 billion gain from the sale of our 50% interest in Ductos y Energéticos del Norte and the recovery of a Ps. 13.6 million insurance payment relating to an accident that occurred on ourAbkatún-A platform in April 2015. For more information on the explosion at theAbkatún-A platform, see “Item 4—Health, Safety and Environmental Performance”.equipment. Financing Income Financing income decreased by Ps. 12.5 billion in 2020, from Ps. 29.2 billion in 2019 to Ps. 16.7 billion in 2020. This decrease was mainly due to effects from the liability management transactions conducted in September 2019. Financing Costs Financing costs increased by Ps. 2.428.9 billion in 2017,2020, from Ps. 13.8132.9 billion in 20162019 to Ps. 16.2161.8 billion in 2017, primarily due to interest on the promissory notes issued by the Mexican Government in relation to our pension liabilities. Financing Cost
Financing cost increased by 18.8% in 2017, from Ps. 98.8 billion in 2016 to Ps. 117.6 billion in 2017, primarily2020, mainly due to an increase in interest expense in 2017 following higher levelsexpenses as a result of indebtednessthe effects of depreciation of the peso against the U.S. dollar and the 4.3% appreciationeffects of variations in sales prices and volume of exports.
Derivative Financial Instruments Income, Net Derivative financial instruments income, net, increased by Ps. 40.3 billion, from a derivative financial instruments cost of Ps. 23.3 billion in 2019 to an income of Ps. 17.0 billion in 2020, mainly as a result of (1) the increase in the fair value of our favorable cross-currency swaps, arising from the depreciation of the U.S. dollar against other currencies in which our debt is denominated; (2) the gains from our crude oil options, as a result of the decrease in crude oil prices and (3) a net increase in other derivative financial instruments, such as currency options. Exchange Loss, Net A substantial portion of our indebtedness, 87.1% as of December 31, 2020, is denominated in foreign currencies. Our exchange loss, net, increased by Ps. 215.8 billion in 2020, from an exchange gain of Ps. 86.9 billion in 2019 to an exchange loss of Ps. 128.9 billion in 2020, primarily as a result of a 5.9% depreciation of the peso relative to the U.S. dollar in 2017 as compared to 2016. Derivative Financial Instruments Income (Cost)
Derivative financial instruments income (cost), net, increased by Ps. 39.3 billion, from a net cost of Ps. 14.0 billion in 2016 to a net income of Ps. 25.3 billion in 2017, primarily due to the depreciation of the U.S. dollar relative to other foreign currencies we hedge and the restructuring of certain of our derivative financial instruments.
Exchange Gain, Net
A substantial portion of our indebtedness, 86.6% as of December 31, 2017, is denominated in foreign currencies. Our exchange gain, net, increased by Ps. 277.2 billion in 2017, from an exchange loss of Ps. 254.0 billion in 2016 to an exchange gain of Ps. 23.2 billion in 2017, primarily as a result of a 4.3% appreciation of the peso relative to the U.S. dollar in 2017.2020. Due to the fact that 100.0%100% of our revenues from exports and domestic sales are referenced to prices denominated in U.S. dollars, and only 74.0%72% of our expenses, including financing costs, are linked to U.S. dollar prices, the appreciationdepreciation of the peso relative to the U.S. dollar had an unfavorablea negative effect on our ability to meet peso-denominated obligations. The value of the peso in U.S. dollar terms appreciateddepreciated by 4.3%5.9% in 2017,2020, from Ps. 20.6640 =18.8452 per U.S. $1.00 on December 31, 20162019 to Ps. 19.7867 =19.9487 per U.S. $1.00 on December 31, 2017,2020, as compared to a 20.1% depreciation4.3% appreciation of the peso in U.S. dollar terms in 2016.2019.
Taxes, Duties and Other Hydrocarbon extraction dutiesThe Profit-Sharing Duty and other duties and taxes paid increaseddecreased by 25.9%46.0% in 2017,2020, from Ps. 264.5343.8 billion in 20162019 to Ps. 333.0185.6 billion in 2017, primarily2020, mainly due to (1) the 34.4% increase36.2% decrease in the weighted average export price of the Mexican crude oil, export price, from U.S. $35.63$55.60 in 2019 to U.S. $35.47 per barrel in 20162020; (2) a decrease in the applicable tax rate for 2020, which is 58% for 2020 as compared to U.S. $47.26 per barrel65% for 2019 and (3) the application of a tax credit to the DUC in 2017. Income related dutiesthe amount of Ps. 65.0 billion, which was granted to us by the Mexican Government through a presidential decree dated April 21, 2020. Duties and taxes represented 23.8%19.5% and 24.5% of total sales in 2017, as compared to 24.6 % of total sales in 2016.2020 and 2019, respectively.
Net Income/Loss In 2017,2020, we had a net loss of Ps. 280.9509.1 billion from Ps. 1,397.0953.7 billion in total sales revenues, as compared to a net loss of Ps. 191.1282.1 billion from Ps. 1,074.11,402.0 billion in total sales revenues in 2016.2019. This increase in net loss relative to 2019 was primarily explained by: a Ps. 482.7448.3 billion increase in the impairment of fixed assets; a Ps. 68.5 billion increase in taxes and other duties, mainly due to the increase in the weighted average price of the Mexican crude oil export price; and
a Ps. 17.5 billion decrease in other revenues, net.
This increase was partially offset by:
a Ps. 322.9 billion increase in total sales, mainly due to a decrease in the weighted average Mexican export crude oil price, as well as a decrease in the sales volume and average price of gasoline, diesel, fuel oil and jet fuel;
a Ps. 5.1 billion increase in average sales pricesimpairment of our domestic refined petroleum productswells, pipelines, properties, plant and export crude oil;equipment; a Ps. 277.23.1 billion decrease in other revenues, net; a Ps. 5.6 billion increase in general expenses, a Ps. 28.9 billion increase in financing cost; a Ps. 12.5 billion decrease in financing income; a Ps. 215.8 billion increase in exchange gain,loss, net; and a Ps. 39.32.4 billion increasedecrease in profit sharing in joint ventures, associates and other. These effects were partially offset by: a Ps. 290.3 billion decrease in cost of sales, mainly due to a decrease in purchases of import products; a Ps. 6.0 billion decrease in other expenses a Ps. 40.3 billion decrease in derivative financial instruments income, net.cost, net; and a Ps. 158.2 billion decrease in taxes and other duties. Other Comprehensive Results In 2017,2020, we had a net gainloss of Ps. 11.5520.4 billion in other comprehensive results, as compared to a net gainloss of Ps. 127.9594.1 billion in 2016,2019, primarily due to an increase in the reserve for employee benefits that resulted from the decrease in the discount rate and expected rate of return on plan assets used in the actuarial computation method from 8.2%7.5% in 20162019 to 7.9%7.1% in 2017, as well as the effect of employees migrating from the defined benefits pension plan to the defined contribution plan.2020. Results of Operations of Petróleos Mexicanos, the Subsidiary Entities and the Subsidiary Companies—For the Year Ended December 31, 20162019 Compared to the Year Ended December 31, 20152018 Total Sales Total sales decreased by 7.5%,16.6% or Ps. 87.7279.2 billion in 2016,2019, from Ps. 1,161.81,681.1 billion in 20152018 to Ps. 1,074.11,402.0 billion in 2016,2019, primarily due to a decreasedecreases in our domestic sales following the decrease in average sales prices of our petroleum products and the decrease in volumeweighted average price of sales of liquefied natural gas in Mexico, in each case, for the reasons explained in further detail below. This decrease in total sales was partially offset by a 8.0% increase in services income.Mexican crude oil. Domestic Sales Domestic sales decreased by 10.2%17.7% in 2016,2019, from Ps. 746.2980.6 billion in 20152018 to Ps. 670.0807.0 billion in 2016, primarily2019, mainly due to a decreasedecreases in the averagesales prices of gasoline, diesel, fuel oil diesel, gasoline and liquefied natural gas.LPG. Domestic sales of petroleum products decreased by 9.5%15.2% in 2016,2019, from Ps. 585.0847.5 billion in 20152018 to Ps. 529.3718.7 billion in 2016, primarily2019, mainly due to a 5.5%7.1% decrease in the average price of gasoline, a 15.9%6.9% decrease in the average price of diesel and a 36.5%10.8% decrease in the average price of fuel oil. The sales volume of gasoline, diesel and fuel oil decreased 5.8%, 11.5% and 26.3%, respectively, in 2019 as compared to 2018, as a result of decreased demand, fromwhich in turn was primarily the CFE. These price decreases were partially offset by a 4.3% increase in the volumeresult of sales of gasolinemarket share loss due to an increase in demand from retail service stations and an 8.1% increase in the volumeentry of sales of jet fuel.new competitors. Domestic sales of natural gas increaseddecreased by 9.2%44.1% in 2016,2019, from Ps. 54.550.9 billion in 20152018 to Ps. 59.528.5 billion in 2016,2019, primarily due to a 6.4% increase10.0% decrease in the average sales price and 37.9% decrease in the volume of sales of natural gas, and a 2.9% increase in the average sales price of natural gas.mainly due to market competition. Domestic sales of liquefied natural gasLPG decreased by 34.9%38.2% in 2016,2019, from Ps. 78.252.1 billion in 20152018 to Ps. 50.932.2 billion in 2016, primarily2019, mainly as a result of a 27.1%52.6% decrease in the volume of sales of liquefied natural gas due to the market share loss that resulted from increased competition due to the liberalization of imports in 2016 and a 10.8% decrease in theits average sales price of liquefied natural gas. Domestic petrochemical sales (including sales of certainby-products of the petrochemical production process) increased by 6.0%, from Ps. 28.5 billion in 2015 to Ps. 30.2 billion, primarily as a result of Ps. 2.6 billion in petrochemical sales by Grupo Fertinal.price.
Export Sales Export sales decreased by 3.0%15.3% in peso terms in 20162019 (with U.S. dollar-denominated export revenues translated to pesos at the exchange rate on the date of the corresponding export sale), from Ps. 407.2691.9 billion in 20152018 to Ps. 395.1585.8 billion in 2016.2019. This decrease was primarilymainly due to a 7.4% decrease in the volume of petroleum product exports, a 17.4%10.7% decrease in the weighted average Mexican crude oil export price an 18.5% decrease in the export sales of fuel oil, mainly due2019, from U.S. $62.29 per barrel in 2018 to a decreaseU.S. $55.60 per barrel 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.2019. Excluding the trading activities of the Trading Companies (in order to show only the amount of export sales related to the subsidiary entities), export sales by the subsidiary entities to the Trading Companies and third parties decreased by 0.5%17.1% in peso terms, from Ps. 329.6571.8 billion in 20152018 to Ps. 327.8474.0 billion in 2016.2019. In U.S. dollar terms, excluding the trading activities of the Trading Companies, total export sales (which are U.S. dollar-denominated)dollar denominated) decreased by 16.2%17.2% in 2016,2019, from U.S. $20.9$29.7 billion in 20152018 to U.S. $17.5$24.6 billion in 2016.2019. This was primarily due to the 17.4%10.7% decrease in the weighted average Mexican crude oil export price and a 2.1% increase in the volume of crude oil exports.price. The trading and export activities of the Trading Companies generated additional marginal revenues of Ps. 67.4111.8 billion in 2016, 13.2%2019, 6.8% lower in peso terms than the Ps. 77.5120.0 billion of additional revenues generated in 2015,2018, mainly due to a decrease in the average prices of diesel and gasoline.Exportgasoline. Export sales of PMI-NASA, one of our principal Trading Companies, decreased by 9.4%16.7% in 2016,2019, from Ps. 63.989.2 billion in 20152018 to Ps. 57.974.3 billion in 2016. The weighted average price per barrel of crude oil that PMI sold to third parties in 2016 was U.S. $35.63, or 17.4%, lower than the weighted average price of U.S. $43.12 in 2015.2019. Crude oil and condensate export sales to PMI accounted for 88.1%90.8% of total export sales (excluding the trading activities of the Trading Companies) in 2016,2019, as compared to 87.4%89.7% in 2015.2018. These crude oil and condensate sales increaseddecreased in peso terms by 0.2%16.1% in 2016,2019, from Ps. 288.2513.2 billion in 20152018 to Ps. 288.6430.4 billion in 2016,2019, and decreased in U.S. dollar terms by 14.9% in 2016,16.2%, from U.S. $18.2$26.6 billion in 20152018 to U.S. $15.5$22.3 billion in 2016.2019. The weighted average Mexican crude oil export price in 2019 was U.S. $55.60 per barrel, of crude oil that Pemex Exploration and Production sold to PMI for export in 2016 was U.S. $35.17, 17.6%10.7% lower than the weighted average price of U.S. $42.70$62.29 per barrel in 2015.2018. Export sales of petroleum products, including natural gas and natural gas liquids, by our industrial transformation segment to the Trading Companies and third parties decreased from 12.4%9.2% of total export sales (excluding the trading activities of the Trading Companies) in 20152018 to 10.9%8.2% of those export sales in 2016.2019. Export sales of petroleum products, including products derived from natural gas and natural gas liquids, decreased by 13.0%15.2%, from Ps. 40.953.0 billion in 20152018 to Ps. 35.638.9 billion in 2016,2019, 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 gasfuel oil and natural gas liquids, decreased by 26.1%, from U.S. $2.6 billion in 2015 to U.S. $1.9 billion in 2016. naphthas. Export sales of natural gaspetrochemical products (including certain byproducts of the petrochemical process) decreased by 23.1%,Ps. 1.0 billion in 2019, from Ps. 27.3 million5.7 billion in 20152018 to Ps. 21.0 million4.7 billion in 2016. This was2019, 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 millionS.A. de C.V. in 2016, from Ps. 39.2 million in 2015 to Ps. 6,248.0 million in 2016.2019.
Services Income Services income increased by 8.0%5.0% in 2016,2019, from Ps. 8.38.7 billion in 20152018 to Ps. 9.09.1 billion in 2016,2019, 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 in 2019 and Pemex Logistics in 2018 to third parties. Cost of Sales Cost of sales decreased by 2.9%6.4%, from Ps. 892.01,199.5 billion in 20152018 to Ps. 865.81,122.9 billion in 2016.2019. This decrease was mainly due to: (1) a decrease of Ps. 23.4146.2 billion in purchases of import products, primarily those related to Magna gasoline, Premium gasoline diesel and natural gas, mainly due to a decrease in operating expenses, primarily due to cost saving measures;the price of imports, (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. 5.521.0 billion decrease in hydrocarbon extractionexploration and explorationextraction duties and taxes due to decreased production and lower average sales prices in 2016 as compared to 2015.2019, (3) a Ps. 34.7 billion decrease in fuels subtraction resulting from our actions against the illicit market in fuels and (4) a Ps. 18.7 billion decrease in amortization of other assets. 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. 5.965.3 billion increase in the cost of unsuccessful wells.wells and exploration expenses, (2) a Ps. 16.8 billion increase in maintenance and (3) a Ps. 63.2 billion increase resulting from a decrease in the cost valuation of the inventory. Impairment of Wells, Pipelines, Properties, Plant and Equipment Impairment of wells, pipelines, properties, plant and equipment decreasedincreased by Ps. 809.3(52.7) billion in 2016,2019, from a net reversal of impairment of Ps. 21.4 billion in 2018 to a net impairment of Ps. (31.3) billion in 2019. This net impairment was primarily due to an impairment of Ps. 477.9(104.0) billion in 2015the cash generating units of Pemex Exploration and Production mainly, due to a decrease in volumes of production of crude oil, offset by a (1) net reversal of impairment of Ps. 331.342.2 billion in 2016,the cash generating unit of Pemex Industrial Transformation, 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 priceprocess of crude oil. Net Periodic Costoil in the refineries and (2) net reversal of Employee Benefits
During 2015, we hadimpairment of Ps. 34.1 billion in the cash generating unit of Pemex Logistics mainly due to a Ps. 196.1 billion increasedecrease 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.fuel subtraction.
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. 3.56.0 billion in 2019, from Ps. 141.4158.7 billion in 20152018 to Ps. 137.9152.7 billion in 2016, primarily2019, mainly due to the effects of our 2016 Budget Adjustment Plan.a decrease in operating expenses related to personnel services. Other Revenues/Revenues / Expenses, Net Other revenues, net, increaseddecreased by Ps. 23.515.3 billion in 2016,2019, from other expenses, net revenues of Ps. 0.923.0 billion in 20152018 to othernet revenues net, of Ps. 22.67.7 billion in 2016.2019. This increasedecrease 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,mainly due to the decreaserecognition in average prices2018 of income from contracts for participation rights in the Cárdenas-Mora, Misión, Santuario 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 billionOgarrio blocks that was recognized following our transfer of pipelines and other assets to CENAGAS, due tonot present in the difference between the book value of these assets and the amount paid by CENAGAS for these assets.same period in 2019.
Financing Income Financing income decreased by Ps. 1.22.4 billion in 2016,2019, from Ps.15.0Ps. 31.6 billion in 20152018 to Ps. 13.829.2 billion in 2016, primarily2019. This decrease was mainly due to a decreaseto: (1) the recognition of the premium from notes exchanged in the amount we were able to invest during the year, which was partially offset by yield derived fromFebruary 2018 and (2) lower interest income on the promissory notes issued by the Mexican Government in connection withrelation to our pension liabilities.liabilities in 2019. Financing CostCosts Financing costcosts increased by 45.7%Ps. 9.0 billion in 2016,2019, from Ps. 67.8123.9 billion in 20152018 to Ps. 98.8132.9 billion in 2016, primarily2019, mainly due to an increase in interest expenseexpenses, premium paid and amortized cost in 2016 following higher levels of indebtedness and2019 as a 20.1% depreciationresult of the peso againsteffects from the U.S. dollarliability management transactions conducted in 2016 as compared to 2015.September 2019 and the recognition of interest on leases in 2019. Derivative Financial Instruments Income (Cost), Net Derivative financial instruments income (cost), net, decreasedincreased by Ps. 7.44.2 billion, from a netderivative financial instruments cost of Ps. 21.419.1 billion in 20152018 to a netderivative financial instruments cost of Ps. 14.023.3 billion in 2016, primarily due to2019, mainly as a decrease inresult of the appreciation of the U.S. dollar relative to other foreign currencies we hedge, the restructuring of certain of our derivative financial instrumentssuch as euros, Japanese yen and favorable changes in market variables involved in our calculation of fair value of these instruments, including exchange rates, foreign currency interest rates and our counterparties’ credit spread.pounds sterling. Exchange Loss,Gain, Net A substantial portion of our indebtedness, 83.2%86.8% as of December 31, 2016,2019, is denominated in foreign currencies. Our exchange lossgain, net, increased by Ps. 99.263.2 billion in 2019, from an exchange lossgain of Ps. 154.823.7 billion in 20152018 to an exchange lossgain of Ps. 254.086.9 billion in 2016,2019, primarily as a result of the 5.3% increase in our indebtedness that is denominated in other currencies and the higher rate of depreciationa 4.3% appreciation of the peso againstrelative to the U.S. dollar which depreciated by 20.1% in 2016 as compared to 16.9% in 2015. However, due2019. Due to the fact that over 95.7%100.0% of our revenues from exports and domestic sales are referenced to prices denominated in U.S. dollars, and only 71.0%71% of our expenses, including financing costs, are linked to U.S. dollar prices, the depreciationappreciation of the peso relative to the U.S. dollar did havehad a significantfavorable effect on our ability to meet U.S. dollar-denominated financial obligations and improved our ability to meet peso-denominated financial obligations in 2016.obligations. The value of the peso in U.S. dollar terms depreciatedappreciated by 20.1%4.3% in 2016,2019, from Ps. 17.2065 =19.6829 per U.S. $1.00 on December 31, 20152018 to Ps. 20.6640 =18.8452 per U.S. $1.00 on December 31, 2016,2019, as compared to a 16.9% depreciation0.5% appreciation of the peso in U.S. dollar terms in 2015.2018. Taxes, Duties and Other Hydrocarbon extraction dutiesThe Profit-Sharing Duty and other duties and taxes paid decreased by 20.2%25.5% in 2015,2019, from Ps. 331.5461.6 billion in 20152018 to Ps. 264.5343.8 billion in 2016, primarily2019, mainly due to the 17.4%10.7% decrease in the weighted average export price of the Mexican crude oil, export price, from U.S. $43.12$62.29 per barrel in 20152018 to U.S. $35.63$55.60 per barrel in 2016. Income related duties2019. Duties and taxes represented 24.9%24.5% and 27.5% of total sales in 2016, as compared to 24.9% of total sales in 2015.2019 and 2018, respectively.
Net Income/Loss In 2016,2019, we had a net loss of Ps. 191.1282.1 billion from Ps. 1,079.51,402.0 billion in total sales revenues, as compared to a net loss of Ps. 712.6180.4 billion from Ps. 1,166.41,681.1 billion in total sales revenues in 2015.2018. This decreaseincrease in net loss relative to 2018 was primarily explained by: a Ps. 809.2 billion decrease in the impairment of fixed assets; a Ps. 67.0 billion decrease in taxes and other duties, mainly due to the decrease in the weighted average price of the Mexican crude oil export price; and
a Ps. 23.5 billion increase in other revenues, net.
This decrease was partially offset by
a Ps. 172.3 billion increase in the net periodic cost of employee benefits, mainly due to theone-time Ps. 196.1 billion decrease in pension liabilities recorded in 2015 as a result of modifications made to our pension regime;
a Ps. 99.2 billion increase in exchange loss, net;
a Ps. 86.8279.2 billion decrease in total sales, mainly due to thea decrease in the average sales pricesprice of ourgasoline, diesel, fuel oil, liquefied petroleum productsgas and thecrude oil;
a Ps. 52.7 billion increase in impairment of wells, pipelines, properties, plant and equipment; a Ps. 15.3 billion decrease in volume of sales of liquefied natural gas in Mexico; andother revenues, net; a Ps. 24.99.0 billion increase in financing costs,cost; a Ps. 2.4 billion decrease in financing income; a Ps. 2.7 billion decrease in profit sharing in joint ventures, associates and other; and a Ps. 4.2 billion increase in cost of derivative financial instruments cost, net. These effects were partially offset by: a Ps. 76.6 billion decrease in cost of sales, mainly due to a decrease in purchases of import products; a Ps. 6.0 billion decrease in general expenses; a Ps. 63.2 billion increase in exchange gain, net; and a Ps. 117.8 billion decrease in taxes and other duties. Other Comprehensive Results In 2016,2019, we had a net gainloss of Ps. 127.9312.0 billion in other comprehensive results, as compared to a net gain of Ps. 88.6223.4 billion in 2015,2018, primarily due to a decreasean increase in the reserve for employee benefits that resulted from the increasedecrease in the discount rate and expected rate of return on plan assets used in the actuarial computation method from 7.4%9.3% in 20152018 to 8.2%7.5% in 2016 and Ps. 21.4 in accumulated gains from the foreign currency translation effect.2019. Changes in Statement of Financial Position of Petróleos Mexicanos, the Subsidiary Entities and the Subsidiary Companies—from December 31, 2016 to December 31, 2017
Assets
Cash and cash equivalents decreased by Ps. 65.7 billion, or 40.2%, in 2017, from Ps. 163.5 billion as of December 31, 2016 to Ps. 97.8 billion as of December 31, 2017. This decrease was mainly due to an increase in payments to suppliers and contractors, payments on our debt instruments and taxes.
Accounts receivable, net, increased by Ps. 37.4 billion, or 28.1%, in 2016, from Ps. 133.2 billion as of December 31, 2016 to Ps. 170.6 billion as of December 31, 2017, primarily due to: (1) a Ps. 19.6 billion increase in accounts receivable, net, from sales to our international customers, mainly due to the 34.4% increase in the weighted average market price per barrel of crude oil during 2017, from U.S. $35.17 per barrel in 2016 to U.S. $46.27 per barrel in 2017; (2) a Ps. 20.5 billion increase in accounts receivable, net, from sales to domestic customers, mainly due to an increase in the sales price of gasoline and fuel oil to the CFE; and (3) a Ps. 3.6 billion increase in accounts receivable from sundry debtors, mainly due to Ps. 2.5 billion as the current portion of the promissory notes issued by the Mexican Government in relation to our pension liabilities. This increase was partially offset by a Ps. 6.3 billion decrease in accounts receivable from tax credits.
Inventories increased by Ps. 17.8 billion, or 39.2%, in 2017, from Ps. 45.9 billion as of December 31, 2016, to Ps. 63.9 billion as of December 31, 2017, mainly due to an increase in the volume of imports of petroleum products to meet domestic demand.
Derivative financial instruments increased by Ps. 25.3 billion in 2017, from Ps. 4.8 billion as of December 31, 2016 to Ps. 30.1 billion as of December 31, 2017. This increase was mainly due to the increase in the fair value of cross-currency swaps as a result of the depreciation of the U.S. dollar relative to the other relevant currencies.
Wells, pipelines, properties, plant and equipment decreased by Ps. 231.2 billion in 2017, primarily due to a net impairment in the amount of Ps. 151.4 billion. See “—Results of Operations of Petróleos Mexicanos, the Subsidiary Entities and the Subsidiary Companies—For the Year Ended December 31, 2017 Compared to the Year Ended December 31, 2016—Impairment of Wells, Pipelines, Properties, Plant and Equipment” above in this Item 5 for more information.
Deferred taxes increased by Ps. 45.9 billion, or 45.7%, in 2017, from Ps. 100.3 billion as of December 31, 2016 to Ps. 146.2 billion as of December 31, 2017, mainly due to the Ps. 37.2 billion in deferred profit-sharing duty assets and Ps. 7.1 billion oftax-loss carryforwards.
During 2017, restricted cash decreased by Ps. 10.5 due to the disbursement of previously deposited funds following a settlement agreement with COMMISA. As a result, we no longer have any restricted cash.
Liabilities
Total debt, including accrued interest, increased by Ps. 54.7 billion, or 2.8%, in 2017, from Ps. 1,983.2 billion as of December 31, 2016 to Ps. 2,037.9 billion as of December 31, 2017, mainly due to higher levels of indebtedness.
Line items related to suppliers and contractors decreased by Ps. 11.7 billion, or 7.7%, in 2017, from Ps. 151.6 billion as of December 31, 2016 to Ps. 140.0 billion as of December 31, 2017, primarily due to the continued execution of 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. 2.2 billion, or 4.5%, in 2017, from Ps. 48.8 billion as of December 31, 2016 to Ps. 51.0 billion as of December 31, 2017, primarily due to (1) a Ps. 4.6 billion increase in hydrocarbon extraction duties and (2) a Ps. 2.9 billion decrease in the Profit-Sharing Duty and other taxes.
Derivative financial instruments liabilities decreased by Ps. 13.1 billion, or 42.5%, in 2017, from Ps. 30.9 billion as of December 31, 2016 to Ps. 17.8 billion as of December 31, 2017. This decrease was mainly due to a decrease in the fair value of our cross-currency swaps, partially as a result of the depreciation of the U.S. dollar against the other relevant currencies, as well as changes in the maturity and settlement of certain cross-currency swaps.
Employee benefits liabilities increased by Ps. 38.0 billion, or 3.1%, in 2017, from Ps. 1,220.4 billion as of December 31, 2016 to Ps. 1,258.4 billion as of December 31, 2017. This increase was primarily due to (1) recognition of the net periodic cost of employee benefits and active employee transfers; (2) actuarial gains and 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.
Equity (Deficit), Net
Equity (deficit), net, increased by Ps. 269.3 billion, or 21.8%, in 2017, from negative Ps. 1,233.0 billion as of December 31, 2016 to negative Ps. 1,502.4 billion as of December 31, 2017. This increase was mainly due to (1) our net loss for the year of Ps. 280.9 billion; (2) a Ps. 12.0 billion increase in actuarial gains on employee benefits; and (3) Ps. 6.0 billion in accumulated loss from the foreign currency translation effect.
Liquidity and Capital Resources Overview During 2017, we were able to strengthen2020, our liquidity position was adversely affected mainly due to (1) the increase in short-term debt caused by increasing ourthe depreciation of the peso against the U.S. dollar; (2) the reduction in the value of the inventories derived from the decrease in oil prices in 2020 compared to oil prices in 2019 and (3) the increase in other accounts receivable, decreasing our accounts payablemainly sundry debtors. This negative impact to suppliers and managing our liquidity risk through derivative financial instruments.position was partially offset by payments made by customers. Our principal usesuse of funds in 2017 were primarily2020 was the repayment of debt, strengthening our cash flow through the actions listed below, and, to a lesser extent, the acquisition of wells, pipelines, properties, plant and equipment, sale of financial assets and shares, which collectively amounted to Ps. 80.7 billion. We met this requirement primarily with cash provided by cash flows from borrowings, which amounted to Ps. 704.71,288.1 billion. During 2017, our net cash flow from operating activities, together with our funds from financing activities, was sufficient to fund our capital expenditures and other expenses. See “—Overview— Redefinition of Petróleos Mexicanos as a State-Owned Productive Company”Business Plan” above for more information and a discussion of actions being taken in response to thisthe imbalance of our resources. For 2017,2020, our capital expenditures decreased by approximately 38.2%37.0% from 2016, primarily due to the expected price levels of our products in 2017 and our expected borrowing capacity. Additionally, one of the most critical problems we faced in 2015 and continued to address in 2017 was our accounts payable to suppliers.2019. As of December 31, 2017,2020, we owed our suppliers approximately Ps. 140.0282.0 billion as compared to Ps. 151.6208.0 billion as of December 31, 2016.2019. As of December 31, 2017,2020, we have paid the total outstanding balance due to suppliers and contractors as of December 31, 2016.2019 and, as of March 31, 2021, we have paid approximately 51.5% of the total outstanding balance due to suppliers and contractors as of December 31, 2020. The average number of days outstanding of our accounts payable decreasedincreased from 82125 days as of December 31, 20162019 to 62263 days as of December 31, 2017.2020. Despite these obligations, we believe net cash flows from our operating and financing activities, together with available cash from our available credit lines and cash and cash equivalents, will be sufficient to meet our working capital, debt service and capital expenditure requirements in 20182021 because, since early 2015, we andin collaboration with the Mexican Government, we have adjusted investment, taxationbegun to implement initiatives intended to help us meet our working capital needs, continue to service our debt as it comes due and financing plans to address declining oil pricesimprove our capital expenditure programs and maintainwe are in the process of developing and refining our financial strength and flexibilitynew long-term business plan, as described above under “Redefinition of Petróleos Mexicanos as a State-Owned Productive Company”“—Overview—Business Plan” 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 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. |
| • | | Changes to Employee Benefits Plans.We have incentivized our existing employees to migrate from the defined benefits pension plan to the defined contribution plan. 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 divestiture of our participation in the Ramones II Norte gas pipeline through the sale of our interest in Ductos y Energéticos del Norte, S. de R.L. de C.V., which is expected to be concluded in the first half of 2018. |
| • | | Reduction in Outstanding Accounts Payable.As described above, as of December 31, 2017, we have paid the total outstanding balance due to suppliers and contractors as of December 31, 2016. |
| • | | No Payment of Dividend.The Mexican Government announced that Petróleos Mexicanos was not required to pay a state dividend in 2017 and will not be required to pay one in 2018. 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. |
The Federal IncomeRevenue Law applicable to us as of January 1, 2017,2020, provides for theour incurrence of a net additional indebtedness up to Ps. 42,100 million (Ps. 22,000,000 and U.S. $8.1 billion$1,000 million), which is considered public debt by the Mexican Government and may be used to partially cover a negative financial balance. In addition, in net indebtedness through a combination of domesticaccordance with the Federal Revenue Law for 2021, crude oil revenues between U.S. $42.12 and internationalU.S. $44.12 per barrel will be used to attempt to improve our financial balance goal for 2021. Revenues above U.S. $44.12 per barrel may be used for operating expenses and capital markets offerings and borrowings from domestic and international financial institutions.expenditures. We have a substantial amount of debt, which we have incurred primarilyincluding a substantial amount of short-term debt. Due to finance theour heavy tax burden, our cash flow from operations in recent years has not been sufficient to fund our capital expenditures needed to carry outand other expenses and, accordingly, our debt has significantly increased and our working capital investment projects. The sharp decline inhas deteriorated. Relatively low oil prices that began in late 2014and declining production have also had a negative impact on our ability to generate positive cash flows, which, together with our continued heavy tax burden, has further exacerbated our ability to fund our capital expenditures and other expenses from cash flow from operations.expenses. Despite the continuingrelatively low price environmentand fluctuating oil prices and our heavy tax burden, our cash flow from operations in 20172020, together with our funds from financing activities, werewas sufficient to fund our capital expenditures and other expenses. We expect that net cash flows from our operations and financing activities will also be sufficient to meet our working capital requirements, debt service and capital expenditures for 2018.2021. We continue to evaluate our capital expenditures needs and opportunities in light of the ongoing COVID-19 pandemic. As of December 31, 2017,2020, our total indebtedness, including accrued interest, was approximately Ps. 2,037.92,258.7 billion (U.S. $103.0$113.2 billion), in nominal terms, which represents a 2.8%13.9% increase compared to our total indebtedness, including accrued interest, of approximately Ps. 1,983.2 billion (U.S. $96.0$105.2 billion) as of December 31, 2016. Approximately 25.8%2019. 28.3% of our existing debt as of December 31, 2017,2020, or Ps. 526.5640.2 billion (U.S. $26.6$32.1 billion), is scheduled to mature in the next three years. Our working capital increaseddecreased from a negative working capital of Ps. 68.4209.2 billion (U.S. $3.3$11.1 billion) as of December 31, 20162019 to a negative working capital of Ps. 25.6442.5 billion (U.S. $1.3$22.2 billion) as of December 31, 2017.2020. Our level of debt may increase further in the short or medium term, as a result of new financing activities or future depreciation of the peso as compared to the U.S. dollar, and may have an adverse effect on our financial condition, results of operations and liquidity position. To service our debt, we have relied and may continue to rely on a combination of cash flow from operations, drawdowns under our available credit facilities and the incurrence of additional indebtedness (including refinancings ofrefinancing our existing indebtedness).indebtedness. In addition, we are taking actions to improve our financial position, such as those discussed above, particularly through our 2017-2021 Business Plan.above. Certain rating agencies have expressed concerns regarding: (1) our heavy tax burden; (2) the total amount of our debt; (2)debt and the ratio of our debt to our proven reserves; (3) the significant increase in our indebtedness over the last several years; (3)(4) our negative free cash flow during 2016, primarily resulting fromflow; (5) the natural decline of certain of our significant capital investment projectsoil fields and the declining pricelower quality of crude oil; (4)(6) our substantial unfunded reserve for retirement pensions and seniority premiums, which was equal to Ps. 1,258.41,535 billion (U.S. $63.6$76.9 billion) as of December 31, 2017, and (5)2020; (7) the resiliencepersistence of our operating expenses notwithstanding the sharp declinedeclines in oil pricesprices; (8) our rising per barrel lifting costs; (9) the possibility that beganour budget for capital expenditures will be insufficient to maintain and exploit reserves, particularly given our high investment needs to maintain production and replenish reserves; (10) the possibility that the Mexican Government will not be able to continue providing the support it has provided in late 2014. recent years; and (11) the involvement of the Mexican Government in our strategy, financing and management. Ratings address our creditworthiness and the likelihood of timely payment of our long-term debt securities. Ratings are not a recommendation to purchase, hold or sell securities and may be changed, suspended or withdrawn at any time. Our current ratings and the rating outlooks depend, in part, on economic conditions and other factors that affect credit risk and are outside our control, as well as assessments of the creditworthiness of Mexico. Certain ratings agencies have recently lowered Mexico’s credit ratings and their assessment of Mexico’s creditworthiness has and may further affect our credit ratings. Ratings actions related to us that occurred in 2020 and 2021 include the following: On March 31, 2016, Moody’s Investors Service announced the revision of26, 2020, Standard & Poor’s lowered our globalcredit ratings for foreign currency long term issues and for local currency long term issues from BBB+ and A- to BBB and BBB+, respectively, maintaining a negative credit ratings from “Baa1” to “Baa3”outlook on a global scale. On April 1, 2020, HR Ratings affirmed our local credit rating at HR AAA with a stable outlook and changed the outlook for itslowered our global credit ratings to negative. HRBBB+(G) with a negative outlook. On AugustApril 3, 2017,2020, Fitch Ratings affirmedlowered our credit rating of “BBB+”from BB+ to BB in both global local and global foreign currency with a negative outlook. On April 17, 2020, Fitch Ratings lowered our international foreign and modified itslocal currency long-term ratings from BB to BB-. Fitch Ratings also revised the outlook from negative to stable. On April 17, 2020, Moody’s lowered our credit ratings from Baa3 to Ba2, maintaining a negative credit outlook. On April 21, 2020, Moody’s lowered our credit ratings of our outstanding notes, as well as credit ratings based on our guarantee to A2.mx/Ba2 from Aa3.mx/Baa3. Moody’s also downgraded our short-term local scale rating to MX-2 from MX-1. On December 18, 2017,4, 2020, Standard & Poor’s affirmed our foreign currency rating on BBB in line with affirmation of sovereign rating; the outlook remains negative. On March 31, 2021, Fitch Ratings affirmed our long-term foreign and local currency ratings at BB-. The rating outlook is stable. In addition, Fitch simultaneously affirmed our national long-term ratings at A(mex) and national short-term ratings at F1(mex), and has withdrawn all national scale ratings for commercial reasons. On April 30, 2021, HR Ratings affirmed our global credit ratings as stableto HRBBB+(G) with a negative outlook and affirmed our global foreign currencylocal credit rating as “BBB+”, but lowered our global local currency credit rating from “A” to“A-”, citing revisions to its methodology for calculating sovereign ratings. On April 12, 2018, Moody’s Investors Service announced the revision of its outlook for ourat HR AAA with a stable outlook. These credit ratings, from negative to stable. Any lowering of our credit ratingsparticularly those below investment grade, may have material adverse consequences on our ability to access the financial markets and/or our cost of financing. If we were unable to obtain financing on favorable terms or at all,In turn, this could hamper our ability to obtain further financing on favorable terms as well as investment in projects financed through debt and impairsignificantly harm our ability to meet our principal and interest paymentexisting obligations, with our creditors. As a result, we may be exposed to liquidity constraints and may not be able to service our debt, 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 needednecessary to meet our debt service obligations, in order to provide additional liquidity to our operations, we could be forced to further reduce our planned capital expenditures, implement further austerity measures and/or sell additionalnon-strategic assets in order to raise funds.utilize alternative financing mechanisms that do not constitute public debt. A reduction in our capital expenditure program could adversely affect our financial condition and results of operations. SuchAdditionally, such measures may not be sufficient to permit us to meet our obligations. Going Concern
Our consolidated financial statements have been prepared under the 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 material uncertainty that may cast significant doubt on our ability to continue operating as a going concern. 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 (deficit) as of December 31, 20172020 was negative Ps. 1,502.42,404.7 billion, and our total capitalization (long-term(long-term debt plus equity) totaled Ps. 378.3(Ps. 537.1) billion. During 2017,2020, our total equity decreased by Ps. 269.3 billiondeficit increased from negative Ps 1,233.0Ps. 1,931.4 billion as of December 31, 2016,2019 to negative Ps. 2,404.7 billion as of December 31, 2020, primarily due to (1) our net loss for the year of Ps. 280.9 billion; (2)509.1 billion, a Ps. 12.019.2 billion increase in actuarial gainslosses on employee benefits;benefits and (3)a Ps. 6.07.9 billion in accumulated lossgain from the foreign currency translation effect..effects. Under theLey deConcursos Mercantiles (Commercial Bankruptcy Law of Mexico), Petróleos Mexicanos and the subsidiary entities cannot be subject to a bankruptcy proceeding. In addition, our current financing agreements do not include financial covenants or events of default that would be triggered as a result of our having negative equity. In 2017,
On January 31, 2019, the Mexican Government notified the Board of Directors of Petróleos Mexicanos that the Mexican Government would make payments to us through the SENER in a total amount of Ps. 25.0 billion. On March 8, 2019, we did not receive anyreceived a payment for Ps. 10.0 billion and on April 11, 2019, we received a payment for Ps. 5.0 billion. These payments are part of the Mexican Government’s Strengthening Program for Petróleos Mexicanos. From January 10, 2020 to July 21, 2020, we received Ps. 46.3 billion in capital contributioncontributions from the Mexican Government. On April 21, 2016,September 11, 2019, we received a capital contribution of Ps. 26.5122.1 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 would assume Ps. 184.2 billion in payment liabilities related to help improve 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 the payment obligations related to pensions and retirement plans of Petróleos Mexicanos and 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, which replaced the Ps. 50.0 billion promissory note issued to us on December 24, 2015 and was recognized as an increase in equity in the amount of Ps. 135.4 billion in the form of Certificates of Contribution “A.” The Ps. 135.4 billion increase in equity was the result of 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 Ps. 1.2 billion increase in the value of the promissory notes from June 29, 2016 to August 15, 2016, which is the date on which we received the promissory notes. On August 15, 2016, we exchanged Ps. 47.0 billion of these promissory notes for short-term floating rate Mexican Government debt securities known asBonos de Desarrollo del Gobierno Federal (Development Bonds of the Federal Government, or BONDES D). We then sold the BONDES D to Mexican development banks for the same price at which we received them from the Mexican Government.financial position. As of December 31, 20162020 and 2017, the balance of Mexican Government contributions to Petróleos Mexicanos was Ps. 140.6 billion. As of December 31, 2016 and 2017,2019, the total amount of contributions in the form of Certificates of Contribution “A” was Ps. 356.5 billion.46.3 billion and Ps. 122.1 billion, respectively. As of December 31, 2020 and 2019, the balance of Mexican Government contributions to Petróleos Mexicanos was Ps. 524.9 billion and Ps. 478.7 billion, respectively. Cash Flows from Operating, Financing and Investing Activities During 2017,2020, net funds provided by operating activities totaled Ps. 63.465.3 billion, as compared to negative Ps. 41.985.2 billion in 2016,2019, mainly due to an increasea decrease in sales, the net effect of impairment of wells, pipelines, properties, plant and a lower corresponding increaseequipment and the foreign exchange loss in cost of sales resulting from improvements2020. During 2020, our net cash flows used in our operations. Net loss wasinvesting activities totaled Ps. 280.9141.1 billion, in 2017, as compared to net losscash flows used in investing activities of Ps. 191.1111.3 billion in 2016. For more information on the reasons for this increase2019. Our net cash flows from financing activities totaled Ps. 47.2 billion in net loss, see “ —Results of Operations of Petróleos Mexicanos, the Subsidiary Entities and the Subsidiary Companies—For the Year Ended December 31, 2017 Compared2020, as compared to the Year Ended December 31, 2016” above. Our net cash flows used in financing activities totaledof Ps. 46.35.0 billion in 2017, as compared to net cash flows from financing activities of Ps. 211.7 billion in 2016, primarily due to lower financing requirments in 2017 and an increase in interest paid in 2017, as compared to 2016. During 2017, we applied net cash flows of Ps. 80.7 billion for net investments at cost in fixed assets, as compared to our application of cash flows of Ps. 132.5 billion in 2016 for net investments at cost in fixed assets, primarily due to a 38.2% decrease in our capital expenditures in 2017, as compared to 2016.2019.
At December 31, 2017,2020, our cash and cash equivalents totaled Ps. 97.940.0 billion, as compared to Ps. 163.560.6 billion at December 31, 2016.2019. 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, 20162019 and 2017.2020. | | | As of December 31, | | | As of December 31, | | | | 2017 | | | 2016 | | | 2019 | | | 2020 | | | | (millions of pesos) | | | (millions of pesos) | | Borrowing base under lines of credit | | | Ps. 130,348 | | | | Ps. 99,174 | | | Ps. | 177,397 | | | Ps. | 74,903 | | Cash and cash equivalents | | | 97,852 | | | | 163,533 | | | | 60,622 | | | | 39,990 | | | | | | | | | | | | | | | Liquidity | | | Ps. 228,200 | | | | Ps. 262,707 | | | Ps. | 238,019 | | | Ps. | 114,893 | | | | | | | | | | | | | | |
The following table summarizes our sources and uses of cash for the years ended December 31, 20162019 and 2017:2020. | | | For the years ended December 31, | | | For the years ended December 31, | | | | 2017 | | | 2016 | | | 2019 | | | 2020 | | | | (millions of pesos) | | | (millions of pesos) | | Net cash flows (used in) from operating activities | | | Ps. 63,397 | | | | Ps. (41,898) | | | Net cash flows from operating activities | | | Ps. | 85,221 | | | Ps. | 65,294 | | Net cash flows used in investing activities | | | (80,691) | | | | (132,493) | | | | (111,299 | ) | | | (141,140 | ) | Net cash flows from financing activities | | | (46,255) | | | | 211,750 | �� | | | 4,974 | | | | 47,225 | | Effect of change in cash value | | | (2,133) | | | | 16,804 | | | | (186 | ) | | | 7,989 | | | | | | | | | | | | | | | Net increase (decrease) in cash and cash equivalents | | | Ps. (65,682) | | | | Ps. 54,143 | | | Net decrease in cash and cash equivalents | | | Ps. | (21,291) | | | Ps. | (20,632) | | | | | | | | | | | | | | |
Note: Numbers may not total due to rounding. Investment Policies Our Finance and Treasury Department maintains financial resources sufficient to meet our payment commitments and those of the subsidiary entities, as well as a comprehensive, consolidated cash position and related projections in anticipation of such commitments. Our investment policies attempt to take advantage of favorable market conditions by accessing the most favorable terms offered to us by financial institutions. Investments of financial resources by our Finance and Treasury Department are made in accordance with the following policies: Investments of Mexican Pesos In connection with investments in Mexican pesos, we are obligated, during the structuring and development phase of our financial transactions, to observe and comply with the investment guidelines for resources in pesos that were approved by our Financial Resources Committee on December 21, 2006, as modified from time to time. We may only invest in the following:
| (a) | In connection with investments in Mexican pesos, we are obligated, during the structuring and development phase of our financial transactions, to observe and comply with the investment guidelines for resources in pesos that were approved by our Financial Resources Committee on July 24, 2017, as modified from time to time. We may only invest in the following: securities issued or guaranteed by the Mexican Government; |
| (b) | securities issued bySociedades Nacionales de Crédito(National (National Credit Societies), the balance of which may not exceed 50% of our cash and cash equivalents; |
| (c) | repurchase agreements that use securities issued or guaranteed by the Mexican Government; |
| (d) | time deposits with major financial institutions, the balance of which may not exceed 30% of our cash and cash equivalents; and |
| (e) | shares of mutual funds whose investments are limited to securities issued or guaranteed by the Mexican Government. |
In addition to the above limits, demand deposit accounts must be traded with financial institutions that maintain, at a minimum, the following credit ratings as issued by the applicable rating agency: | | | | | | | Domestic scale | | Fitch Ratings | | S&P | | Moody’s | Long term | | AA(mex) | | mxAA | | Aa2.mx | Short term | | F1(mex) | | A-1 | | Mx-1 |
Investments of Financial Resources in Dollars Investments of financial resources in dollars must meet our operational and strategic requirements and must be previously approved byBanco de México on acase-by-case basis. Currently, our investments in dollars are limited to operational accounts, short-term money market funds and time deposits. Our dollar investments are managed byBanco de México. Operational Currencies The main currencies for investing cash and cash equivalents are pesos and dollars. Similarly, we generate revenues from the domestic and international sales of our products in those two currencies and our expenses, including those relating to our debt service, are payable in these two currencies. Commitments for Capital Expenditures and Sources of Funding Our current aggregate commitments for capital expenditures for 2018 total approximately2020 were Ps. 113.2 billion.122,476 million, however, we expect to increase our capital expenditures budget for 2021 up to Ps. 194,495 million. Both figures exclude amounts for non-capitalizable maintenance. For a general descriptionmore information regarding the impact of the COVID-19 pandemic on our current commitments for capital expenditures,investment budget, see “Item 4—Information on the Company—History and Development—Capital Expenditures.” For an overview of current capital expenditure commitments, see “Item 4—Information on the Company—History and Development—Capital Expenditures” and the “Capital Expenditures and Budget” sections for each business segment in Item 4. The amount of our aggregate capital expenditures commitments for 20182021 remains subject to adjustment by the Mexican Government. See “Item 3—Key Information—Risk Factors—Risk Factors Related to our Relationship with the Mexican Government—The Mexican Government controls us and it could limit our ability to satisfy our external debt obligations or could reorganize or transfer us or our assets.” The following table sets forth our total capital expenditures, excluding non-capitalizable maintenance, by segment for the year ended December 31, 2017,2020, and the budget for these expenditures for 2018.2021. Capital expenditure amounts are derived from our budgetary records, which are prepared on a cash basis. Accordingly, these capital expenditure amounts do not correspond to capital expenditure amounts included in our consolidated financial statements prepared in accordance with IFRS. For more information, see “Item 4—History and Development—Capital Expenditures.” | | | | | | | | | | | Year ended December 31, 2017 | | | Budget 2018(1) | | | | (millions of pesos) | | Exploration and Production | | | Ps. 85,491 | | | | Ps. 81,765 | | Industrial Transformation(2) | | | 18,576 | | | | 18,360 | | Drilling and Services | | | 1,550 | | | | 1,434 | | Logistics | | | 4,917 | | | | 4,449 | | Fertilizers | | | 264 | | | | 444 | | Ethylene | | | 618 | | | | 1,786 | | Cogeneration and Services | | | — | | | | — | | Corporate and other Subsidiaries | | | 1,609 | | | | 4,978 | | | | | | | | | | | Total | | | Ps. 113,025 | | | | Ps. 113,216 | | | | | | | | | | |
| | | | | | | | | | | Budget Year ended December 31, | | | | 2020 | | | 2021(1) | | | | (millions of pesos)(2) | | Exploration and Production | | | Ps. 107,149 | | | | Ps. 179,275 | | Industrial Transformation | | | 11,991 | | | | 11,652 | | Logistics | | | 2,955 | | | | 3,193 | | Fertilizers(3) | | | 175 | | | | n.a. | | Corporate and other Subsidiaries | | | 205 | | | | 375 | | | | | | | | | | | Total | | | Ps. 122,476 | | | | Ps. 194,495 | | | | | | | | | | |
Note: Numbers may not total due to rounding. n.a. = Not applicable | (1) | Budget presentedAn adjustment to the Boardoriginal budget was authorized on January 28, 2021. The original budget was published in the Official Gazette of Directorsthe Federation on November 30, 2020. |
(2) | Figures are stated in nominal pesos. |
(3) | Prior to January 1, 2021, Pemex Fertilizers operated as an additional productive state-owned subsidiary. As of Petróleos Mexicanos on March 5, 2018.January 1, 2021, Pemex Fertilizers was merged into Pemex Industrial Transformation. |
Source: Petróleos Mexicanos. Our current commitments for capital expenditures have fluctuated in recent years as compared to previous years. Based on past experience, we expect to generate sufficient funds for our working capital, capital expenditures and investments through: cash flow generated by operations; | • | | the issuance ofcertificados bursátiles (peso-denominated publicly traded notes) in the Mexican market; |
the issuance of debt securities in the international capital markets;
support from the Federal Government; the renewal of existing lines of credit and the entering into of new lines of credit from international and local commercial banks; and the issuance of certificados bursátiles (peso-denominated publicly traded notes) in the Mexican market; and other financing activities.activities that do not constitute public debt. TheWe are not anticipating the issuance of debt securities thatin the international capital markets for the year 2021, however, if we issue may vary in tenor, amount, currency and type of interest rate. Wedeem it necessary, we may issue debt securities in U.S. dollars, Japanese yen, euros, pounds pesossterling 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, ormarket; these securities may vary in both markets.tenor, amount and type of interest rate. 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. Finally, we may consider the implementation and development of alternative financing mechanisms that do not constitute public debt. See also “—Financing Activities” below.
Financing Activities 20182021 Financing Activity.Activities. During the period from January 1 to April 27, 2018, we participated in the following activity:
On February 12, 2018, Petróleos Mexicanos issued U.S. $4,000,000,000 of debt securities under its U.S. $92,000,000,000 Medium-Term Notes Program, Series C, in two tranches: (1) U.S. $2,500,000,000 5.35% Notes due 2028 and (2) U.S. $1,500,000,000 6.35% Bonds due 2048. All debt securities under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services.
On February 12, 2018, Petróleos Mexicanos consummated an exchange offer pursuant to which it exchanged (1) U.S. $952,454,000 aggregate principal amount of its outstanding 5.500% Bonds due 2044 for U.S. $881,899,000 aggregate principal amount of its new 6.350% Bonds due 2048 and (2) U.S. $1,021,065,000 aggregate principal amount of its outstanding 5.6250% Bonds due 2046 for U.S. $946,764,000 aggregate principal amount of its 6.350% Bonds due 2048.
On March 5, 2018, Petróleos Mexicanos consummated a tender offer pursuant to which it purchased U.S. $138,598,000 aggregate principal amount of its outstanding 3.125% Notes due 2019, U.S. $558,644,000 aggregate principal amount of its outstanding 5.500% Notes due 2019, U.S. $91,843,000 aggregate principal amount of its outstanding 8.000% Notes due 2019, U.S. $183,017,000 aggregate principal amount of its outstanding 6.000% Notes due 2020 and U.S. $817,303,000 aggregate principal amount of its outstanding 3.500% Notes due 2020.
On March 27, 2018, Petróleos Mexicanos entered into a loan agreement with Atriadius DSB in the amount of U.S. $181,101,291, which bears interest at a floating rate linked to LIBOR and matures in February 2025.
On April 17, 2018, Petróleos Mexicanos increased its Medium-Term Notes Program from U.S. $92,000,000,000 to U.S. $102,000,000,000.
2017 Financing Activities.During 2017May 11, 2021, we participated in the following activities:
On February 14, 2017, Petróleos MexicanosJanuary 22, 2021, we issued €4,250,000,000 of debt securities under its U.S. $72,000,000,000 Medium-Term Notes Program, Series C, in three tranches: (1) €1,750,000,000 of its 2.5% NotesPs. 2,500,000,000 promissory notes due 2021; (2) €1,250,000,000 of its 3.75% Notes due 2024; and (3) €1,250,000,000 of its 4.875% Notes due 2028. All debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services. On April 6, 2017, Petróleos Mexicanos obtained a a loan from a line of credit for U.S. $132,000,000, which bears interestJuly 2021 at a fixed rate of 5.25% and matures on April 6, 2024. The line of credit is guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services.
On May 15, 2017, Petróleos Mexicanos entered into a term loan credit facility in the amount of U.S. $400,000,000, which bears interest at a floating rate linked to LIBOR (plus 165the 28-day Interbank Equilibrium Interest Rate (“TIIE”) plus 240 basis points) and matures on May 15, 2020. The term loan is guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services.points.
On June 16, 2017, Petróleos Mexicanos increased its Medium-Term Notes Program from U.S. $72,000,000,000 to U.S. $92,000,000,000. OnJanuary 22, 2021, we issued Ps. 4,000,000,000 promissory notes due in July 17, 2017, Petróleos Mexicanos entered into a revolving credit facility in the amount of U.S. $1,950,000,000, which matures in 2020.
On July 18, 2017, Petróleos Mexicanos issued U.S. $5,000,000,000 of debt securities under its U.S. $92,000,000,000 Medium-Term Notes Program, Series C, in two tranches: (1) U.S. $2,500,000,000 of its 6.50% Notes due 2027 and (2) U.S. $2,500,000,000 of its 6.75% Bonds due 2047. All debt securities under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services.
On July 21, 2017, Petróleos Mexicanos consummated a tender offer pursuant to which it purchased U.S. $922,485,000 aggregate principal amount of its outstanding 5.750% Notes due 2018, U.S. $644,374,000 aggregate principal amount of its outstanding 3.500% Notes due 2018 and U.S. $172,591,000 aggregate principal amount of its outstanding 3.125% Notes due 2019.
On November 16, 2017, Petróleos Mexicanos issued £450,000,000 of its 3.750% Notes due 2025 under its U.S.$92,000,000,000 Medium-Term Notes Program, Series C. All debt securities under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services.
On December 15, 2017, one of our subsidiary companies, Pro-Agroindustria, S.A. de C.V., refinanced a credit line for U.S. $390,000,000, prepaying U.S. $140,000,000 and entering into a new credit line for the outstanding U.S. $250,000,000, which bears interest2021 at a floating rate linked to LIBORthe TIIE plus 250248 basis points on a quarterly basis and matures on June 29, 2018.points.
On December 18, 2017, Petróleos MexicanosJanuary 22, 2021, we entered into a credit line facility infor the amount of U.S. $200,000,000, which bears interest$152,237,234.94 due 2031. On March 23, 2021, we issued Ps. 2,000,000,000 promissory notes due in June 2021, at a floating rate linked to LIBORthe TIIE plus 165238 basis points and matures on December 18, 2020.points. On December 21, 2017, Petróleos Mexicanos borrowed U.S. $300,000,000 from a bilateral credit line which bears interestApril 13, 2021, we issued Ps. 1,500,000,000 promissory notes due in July 2021, at a floating rate linked to LIBORthe TIIE plus 175215 basis points and matures on December 21, 2022.points. On April 22, 2021, we issued Ps. 4,000,000,000 promissory notes due in October 2021, at a rate linked to the TIIE plus 248 basis points. As of December 31, 2017, Petróleos MexicanosMay 11, 2021, we had U.S. $6,700,000,000$5,500 million and Ps. 23,500,000,00037,000 million in available revolving credit lines in order to ensureprovide liquidity, with U.S. $5,400,000,000$70 million and Ps. 23,500,000,00024,500 million remaining available. 2016 Financing Activities.During 2016 we participated For further discussion of our financing activities undertaken in the following activities:
On January 25, 2016, Petróleos Mexicanos increased its Medium-Term Notes Program from U.S. $52,000,000,0002020 and 2019, please see Note 16 to U.S. $62,000,000,000 pursuant to an authorization by the Board of Directors of Petróleos Mexicanos on August 18, 2015.
On January 28, 2016, subsidiaries of Pemex Fertilizers obtained loans for an aggregate amount of U.S. $635,000,000 in connection with the acquisition of Grupo Fertinal, S.A.
On February 4, 2016, Petróleos Mexicanos issued U.S. $5,000,000,000 of debt securities under its U.S. $62,000,000,000 Medium-Term Notes Program, Series C, in three tranches: (1) U.S. $750,000,000 of its 5.500% Notes due 2019; (2) U.S. $1,250,000,000 of its 6.375% Notes due 2021; and (3) U.S. $3,000,000,000 of its 6.875% Notes due 2026. All debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services as of the date of this annual report.
On February 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%, which was repaid in full on January 27, 2017.
On March 15, 2016, Petróleos Mexicanos issued €2,250,000,000 of debt securities under its U.S. $62,000,000,000 Medium-Term Notes Program, Series C in two tranches: (1) €1,350,000,000 of its 3.750% Notes due 2019 and (2) €900,000,000 of its 5.125% Notes due 2023. All debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services.
On March 17, 2016, Petróleos Mexicanos received a disbursement of Ps. 2,000,000,000 from its revolving credit lines at a floating rate linked to the TIIE, which was repaid in full on March 17, 2017.
On March 17, 2016, Petróleos Mexicanos received a disbursement of Ps. 3,300,000,000 from its revolving credit lines at a floating rate linked to the TIIE, which was repaid in full on March 17, 2017.
| • | | On March 23, 2016, Petróleos Mexicanos issued in the Mexican market Ps. 5,000,000,000 ofCertificados Bursátiles under its Ps. 200,000,000,000Unidades de Inversión(or UDI) equivalentCertificados Bursátiles Program, at a floating rate linked to the TIIE due 2019. All debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services as of the date of this annual report. |
On March 28, 2016, Petróleos Mexicanos borrowed Ps. 9,700,000,000 from a credit line at a floating rate linked to the TIIE, which was repaid in full on March 28, 2017.
On April 19, 2016, Petróleos Mexicanos borrowed €500,000,000 from a credit line at a fixed rate of 5.11%, which matures on March 15, 2023.
On May 31, 2016, Petróleos Mexicanos borrowed U.S. $300,000,000 from a bilateral credit line which bears interest at a floating rate linked to the LIBOR, which matures on May 31, 2021.
On June 14, 2016, Petróleos Mexicanos issued CFH 375,000,000 aggregate principal amount of Notes under its U.S. $62,000,000,000 Medium-Term Notes Program, Series C, in two tranches: (1) CFH 225,000,000 of its 1.500% Notes due 2018 and (2) CFH 150,000,000 of its 2.375% Notes due 2021. All debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services as of the date of this annual report.
On June 17, 2016, Pemex Exploration and Production obtained approximately U.S. $1.1 billion in connection with the sale and leaseback of certain infrastructure assets used for oil and gas activities. As part of this transaction, Pemex Exploration and Production entered into a15-yearour consolidated financial lease agreement pursuant to which Pemex Exploration and Production will retain the operation of these assets and the title and ownership of such assets will revert to Pemex Exploration and Production at the end of this period following payment of an agreed price.
On July 8, 2016, Pemex Industrial Transformation obtained approximately U.S. $600,000,000 in connection with the sale and leaseback of a plant located in the Madero Refinery. As part of this transaction, Pemex Industrial Transformation entered into a20-year financial lease agreement pursuant to which Pemex Industrial Transformation will retain the operation of this plant and the title and ownership will revert to Pemex Industrial Transformation at the end of this period following payment of an agreed price. This transaction was recognized as a financing activity due to the fact that we retained all of the risks and benefits associated with ownership of the asset and substantially all of the operating rights of the asset.
On July 26, 2016, Petróleos Mexicanos issued ¥80,000,000,000 of its 0.54% Bonds due 2026. The Bonds are guaranteed by the Japan Bank for International Cooperation.
On September 21, 2016, Petróleos Mexicanos issued U.S. $4,000,000,000 of its debt securities under its U.S. $62,000,000,000 Medium-Term Notes Program, Series C, in two tranches: (i) U.S. $2,000,000,000 of its 4.625% Notes due 2023 and (ii) U.S. $2,000,000,000 of its 6.750% Bonds due 2047. All debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services as of the date of this annual report.
On October 3, 2016, Petróleos Mexicanos consummated a tender and exchange offer pursuant to which it (i) purchased U.S. $687,725,000 aggregate principal amount of its outstanding 8.000% Notes due 2019 and U.S. $657,050,000 aggregate principal amount of its outstanding 5.750% Notes due 2018 and (ii) exchanged (a) U.S. $73,288,000 aggregate principal amount of its outstanding 5.750% Notes due 2018 for U.S. $69,302,000 aggregate principal amount of its 4.625% Notes due 2023 and U.S. $8,059,000 aggregate principal amount of its 6.750% Bonds due 2047 and (b) U.S. $1,591,961,000 aggregate principal amount of its outstanding 5.500% Bonds due 2044 for U.S. $1,491,941,000 aggregate principal amount of its 6.750% Bonds due 2047. The 4.625% Notes due 2023 and 6.750% Bonds due 2047 are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services and represent reopenings of the 4.625% Notes due 2023 and 6.750% Bonds due 2047, respectively, originally issued on September 21, 2016.
On December 6, 2016, Petróleos Mexicanos increased its Medium-Term Notes Program, Series C, from U.S. $62,000,000,000 to U.S. $72,000,000,000.
On December 13, 2016, Petróleos Mexicanos issued U.S. $5,500,000,000 of its debt securities under its U.S. $72,000,000,000 Medium-Term Notes Program, Series C in three tranches: (1) U.S. $3,000,000,000 at a fixed rate of 6.50% due 2027, (2) U.S. $1,500,000,000 at a fixed rate of 5.375% due 2022, and (3) U.S. $1,000,000,000 at a floating rate linked to LIBOR plus 365 basis points, due 2022. All debt securities issued under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services as of the date of this annual report.
On December 14, 2016, Petróleos Mexicanos entered into a term loan credit facility in the amount of U.S. $300,000,000 at a floating rate linked to LIBOR plus 165 basis points, which matures on December 6, 2019.
Between January 1 and December 31, 2016, P.M.I. Holdings B.V. obtained U.S. $11,369,800 in financing from its revolving credit lines, which was repaid in full. As of December 31, 2016, there was no outstanding amount under this revolving credit line.
As of December 31, 2016, 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.statements included herein.
Indebtedness During 2017,2020, our total debt increased by 2.8%13.9%, from Ps. 1,983.2 billion at December 31, 20162019 to Ps. 2,037.92,258.7 billion at December 31, 2017,2020, primarily due to the financing activities undertaken during this period, as described in Note 1516 to our consolidated financial statements included herein. As of December 31, 20172020 and as of the date of this annual report, we were not in default on any of our financing agreements. The following table sets forth the analysis of our total indebtedness (not including accrued interest) as of December 31, 20172020 based on short- 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. $ | 693125 | | Lines of credit with variable interest rates established under committed credit facilities with various international commercial banks | | | 2,6986,634 | | Lines of credit with fixed interest rates | | | 2,93310,708 | | | | | | | Total short-term debt(1) | | U.S. $ | 6,32417,467 | | | | | | | Long-term debt | | | | | Fixed rate instruments | | | | | Instruments with fixed annual interest rates ranging from 0.5%0.54% to 9.5% and maturities ranging from 20192022 to 20472060 and perpetual bonds with no maturity date | | U.S. $ | 83,23985,678 | | Variable rate instruments | | | | | Drawings under lines of credit based on LIBOR and other variable rates with maturities ranging from 20192022 to 20302031 | | | 8,0386,041 | | Floating rate notes with maturities ranging from 20192022 to 2025 | | | 3,7701,903 | | | | | | | Total variable rate instruments | | | 11,8087,944 | | | | | | | Total long-term debt | | | 95,04793,622 | | | | | | | Total indebtedness(1) | | U.S. $ | 101,371111,089 | | | | | | |
Note: Numbers may not total due to rounding. (1) | Excludes U.S. $1,620.5$2,138.3 million of accrued interest and includes notes payable to contractors. |
The table below sets forth our total indebtedness as of December 31 for each of the three years from 20152018 to 2017.2020. Total Indebtedness of PEMEX | | | As of December 31,(1) | | | As of December 31,(1) | | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | | (in millions of U.S. dollars)(2) | | | (in millions of U.S. dollars)(2) | | Domestic debt in various currencies | | U.S. $ | 19,415 | | | U.S. $ | 16,651 | | | U.S. $ | 13,595 | | | U.S. $ | 13,669 | | | U.S. $ | 13,724 | | | U.S. $ | 14,490 | | External debt in various currencies(3) | | | | | | | | | | | | | Bonds(4) | | | 52,981 | | | | 67,523 | | | | 76,007 | | | | | | | | Direct loans | | | 7,486 | | | | 3,808 | | | | 6,244 | | | | 80,134 | | | | 78,758 | | | | 82,856 | | Project financing(5)(4) | | | 4,816 | | | | 4,125 | | | | 3,284 | | | | 5,609 | | | | 7,209 | | | | 10,559 | | Financial leases | | | 536 | | | | 2,181 | | | | 2,036 | | | Notes payable to contractors | | | 483 | | | | 338 | | | | 205 | | | | | | | | | | | | | | Total external debt | | U.S. $ | 66,302 | | | U.S. $ | 77,975 | | | U.S. $ | 87,776 | | | | | | | | | | | | | | Total indebtedness | | U.S. $ | 85,717 | | | U.S. $ | 94,626 | | | U.S. $ | 101,371 | | | | | | | | | | | | | | Capital lease and financing of infrastructure assets(5) | | | | 2,650 | | | | 2,184 | | | | 1,722 | |
| | | | | | | | | | | | | Notes payable to contractors | | | 1,878 | | | | 1,493 | | | | 1,410 | | | | | | | | | | | | | | | Total external debt | | | 153 | | | | 108 | | | | 51 | | | | | | | | | | | | | | | Total indebtedness | | U.S. $ | 90,424 | | | U.S. $ | 89,752 | | | U.S. $ | 96,598 | | | | | | | | | | | | | | | | | U.S. $ | 104,093 | | | U.S. $ | 103,476 | | | U.S. $ | 111,088 | | | | | | | | | | | | | | |
Note: Numbers may not total due to rounding. (1) | Figures do not include accrued interest. Accrued interest was U.S. $1,074.5UU.S. $1,698.7 million, U.S. $1,346.1$1,758.9 million and U.S. $1,602.5 million$2,138.3 at December 31, 2015, 20162018, 2019 and 2017,2020, respectively. |
(2) | Indebtedness payable in currencies other than U.S. dollars was first converted into pesos for accounting purposes at the exchange rates set byBanco de México and then converted from pesos to U.S. dollars at the following exchange rates: Ps. 17.2065 = U.S. $1.00 for 2015, Ps.20.6640 = U.S. $1.00 for 2016 and Ps. 19.786719.6829 = $1.00 for 2017.2018, Ps. 18.8452 = $1.00 for 2019 and Ps. 19.9487 = $1.00 for 2020. See Notes 3 and 15Note 16 to our consolidated financial statements included herein. |
(3) | Indebtedness payable other than in pesos and owed to persons or institutions having their head offices or chief places of business outside of Mexico and payable outside the territory of Mexico. |
(4) | Includes, as of December 31, 2015 , 2016 and 2017, U.S. $0.28 billion, U.S. $0.16 billion and U.S. $0.06 billion, respectively, of bonds issued by Pemex Finance, Ltd. See “—Financing Activities of Pemex Finance, Ltd.” below. |
(5) | All credits included in this line are insured or guaranteed by export credit agencies. |
(5) | Beginning in 2019, this only includes Financing of infrastructure assets and does not include financial leases due to the adoption of IFRS. Financial leases were reclassified to lease liabilities. |
Source: PEMEX’s consolidated financial statements, prepared in accordance with IFRS. Financing Activities of Pemex Finance, Ltd.
Commencing on December 1, 1998, Petróleos Mexicanos, Pemex-Exploration and Production, PMI and P.M.I. Services, B.V. have entered into several agreements with Pemex Finance, Ltd. Under these contracts, Pemex Finance, Ltd. purchases certain existing PMI accounts receivable for crude oil as well as certain accounts receivable to be generated in the future by PMI related to crude oil. The receivables sold are those generated by the sale of Maya and Altamira crude oil to designated customers in the United States, Canada and Aruba. The net proceeds obtained by Pemex Exploration and Production, which assumed all of the rights and obligations ofPemex-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. $162.5 million in aggregate principal amount as of December 31, 2016, has been redeemed.
As of December 31, 2017, the outstanding debt of Pemex Finance, Ltd. was composed of U.S. $62.5 million aggregate principal amount of fixed rate notes with maturities in 2018 and interest rates between 9.15% and 10.61% and accrued interest of U.S. $3.5 million.
2018 Financing Activities. During the first four months of 2018, Pemex Finance, Ltd. made payments of U.S. $15.6 million in principal of its notes. Pemex Finance, Ltd. did not incur any additional indebtedness during the first four months of 2018.
2017 Financing Activities. During 2017, Pemex Finance, Ltd. made payments of U.S. $100.0 million in principal of its notes. Pemex Finance, Ltd. did not incur any additional indebtedness during 2017.
2016 Financing Activities. During 2016, Pemex Finance, Ltd. made payments of U.S. $28.1 million in principal of its notes. Pemex Finance, Ltd. did not incur any additional indebtedness during 2016.
Contractual Obligations andOff-Balance Sheet Arrangements
Information about our long-term contractual obligations andoff-balance sheet arrangements outstanding as of December 31, 2017 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, 2017(1)
| | | | | | | | | | | | | | | | | | | | | | | | | | Payments due by period | | | | Total | | | Less than 1 year | | | 1-3 years | | | 4-5 years | | | After 5 years | | | | (in millions of U.S. dollars) | | Contractual obligations recognized in balance sheet: | | | | | Debt(2) | | | U.S. $100,751 | | | | U.S. $7,679 | | | | U.S. $18,353 | | | | U.S. $17,059 | | | | U.S. $57,660 | | Notes payable to contractors(3) | | | 205 | | | | 110 | | | | 53 | | | | 42 | | | | — | | Capital lease obligations(4) | | | 2,036 | | | | 156 | | | | 260 | | | | 287 | | | | 1,333 | | Other long-term liabilities: | | | | | | | | | | | | | | | | | | | | | Dismantlement and abandonment costs obligations(5) | | | 3,477 | | | | 13 | | | | 478 | | | | 543 | | | | 2,443 | | Employee benefits plan(6) | | | 63,600 | | | | 3,150 | | | | 6,542 | | | | 7,311 | | | | 46,597 | | | | | | | | | | | | | | | | | | | | | | | Total contractual obligations recognized in balance sheet | | | 170,069 | | | | 11,108 | | | | 25,686 | | | | 25,242 | | | | 108,033 | | | | | | | | | | | | | | | | | | | | | | | Other contractual obligations not recognized in liabilities: | | | | | | | | | | | | | | | | | | | | | Infrastructure works contracts(7) | | | 35,322 | | | | 11,611 | | | | 9,923 | | | | 6,224 | | | | 7,564 | | Financed Public Works Contracts (FPWC)(8) | | | 627 | | | | 280 | | | | 96 | | | | 94 | | | | 157 | | Nitrogen supply contracts(9) | | | 379 | | | | 39 | | | | 79 | | | | 79 | | | | 182 | | | | | | | | | | | | | | | | | | | | | | | Total contractual obligations not recognized in liabilities(10) | | | 36,328 | | | | 11,930 | | | | 10,098 | | | | 6,397 | | | | 7,903 | | | | | | | | | | | | | | | | | | | | | | | Total contractual obligations | | | U.S. $206,397 | | | | U.S. $23,038 | | | | U.S. $35,784 | | | | U.S. $31,639 | | | | U.S. $115,936 | | | | | | | | | | | | | | | | | | | | | | |
Note: Numbers may not total due to rounding.
(1) | All amounts calculated in accordance with IFRS. |
(2) | See Note 15to our consolidated financial statements included herein. Figures in this line item do not include notes payable to contractors and capital lease obligations, which are presented in separate line items, but do include accrued interest as of December 31, 2017. |
(3) | See Note 15 to our consolidated financial statements included herein. |
(4) | See Note 15 to our consolidated financial statements included herein. |
(5) | See Notes 3(l) and 12(c) to our consolidated financial statements included herein. |
(6) | See Note 17 to our consolidated financial statements included herein. |
(7) | See Note 24(e) to our consolidated financial statements included herein. |
(8) | The amounts presented for Financed Public Works 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—Pemex Exploration and Production—Integrated Exploration and Production Contracts and Financed Public Works Contracts” and Note 24(c) to our consolidated financial statements included herein. |
(9) | See Notes 24(b) to our consolidated financial statements included herein. |
(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—Pemex Exploration and Production—Integrated Exploration and Production Contracts and Financed Public Works Contracts” and Note 24(d) to our consolidated financial statements included herein. |
Source: PEMEX’s consolidated financial statements, prepared in accordance with IFRS.
As of December 31, 2017, we did not have anyoff-balance sheet arrangements of the type that we are required to disclose under Item 5.E of Form20-F.See “Item 11—Quantitative and Qualitative Disclosures about Market Risk.”
Results of Operations by Business Segment This section presents the results of our operations by business segment, including our central corporate operations and the operations of the consolidated subsidiary companies. As further described under “Item 4— Information on the Company—History and Development—Energy Reform—Corporate Reorganization” and in Note 1 and Note 5 to our consolidated financial statements included herein, as a result of the energy reform, we have undergone a corporate reorganization that created new business segments and redistributed the operation of certain business units to different business segments. Accordingly, the results for the business segments presented as of and for the years ended December 31, 2017 and 2016 reflect different business segments from those presented as of and for the year ended December 31, 2015. 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, 2015, 20162018, 2019 and 20172020 as well as the percentage change in sales revenues for those years. | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, | | | 2016 | | | 2017 | | | | 2015 | | | 2016 | | | 2017 | | | vs. 2015 | | | vs. 2016 | | | | (in millions of pesos)(1) | | | (%) | | | (%) | | Exploration and Production(4) | | | | | | | | | | | | | | | | | | | | | Trade sales(2) | | | — | | | | — | | | | — | | | | — | | | | — | | Intersegment sales | | | Ps.690,642 | | | | Ps.616,381 | | | | Ps. 762,637 | | | | (10.8 | ) | | | 23.7 | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | 690,642 | | | | 616,381 | | | | 762,637 | | | | (10.8 | ) | | | 23.7 | | Industrial Transformation(5) | | | | | | | | | | | | | | | | | | | | | Refining(6) | | | | | | | | | | | | | | | | | | | | | Trade sales(2)(3) | | | 589,548 | | | | n.a. | | | | n.a. | | | | n.a. | | | | n.a. | | Intersegment sales | | | 54,876 | | | | n.a. | | | | n.a. | | | | n.a. | | | | n.a. | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | 644,424 | | | | n.a. | | | | n.a. | | | | n.a. | | | | n.a. | | Gas and Basic Petrochemicals(7) | | | | | | | | | | | | | | | | | | | | | Trade sales(2)(3) | | | 137,456 | | | | n.a. | | | | n.a. | | | | n.a. | | | | n.a. | | Intersegment sales | | | 55,594 | | | | n.a. | | | | n.a. | | | | n.a. | | | | n.a. | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | 193,050 | | | | n.a. | | | | n.a. | | | | n.a. | | | | n.a. | | Petrochemicals(8) | | | | | | | | | | | | | | | | | | | | | Trade sales(2) | | | 20,735 | | | | n.a. | | | | n.a. | | | | n.a. | | | | n.a. | | Intersegment sales | | | 15,824 | | | | n.a. | | | | n.a. | | | | n.a. | | | | n.a. | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | 36,559 | | | | n.a. | | | | n.a. | | | | n.a. | | | | n.a. | | Total Industrial Transformation | | | | | | | | | | | | | | | | | | | | | Total trade sales | | | 747,739 | | | | 653,654 | | | | 863,573 | | | | (12.6 | ) | | | 32.1 | | Total intersegment sales | | | 126,264 | | | | 117,096 | | | | 150,360 | | | | (7.3 | ) | | | 28.4 | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | 874,033 | | | | 770,750 | | | | 1,013,933 | | | | (11.8 | ) | | | 31.6 | | Drilling and Services(9) | | | | | | | | | | | | | | | | | | | | | Trade sales(2) | | | n.a | | | | 70 | | | | 42 | | | | 100.0 | | | | (40.0 | ) | Intersegment sales | | | 1,512 | | | | 1,982 | | | | 3,400 | | | | 31.1 | | | | 71.5 | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | 1,512 | | | | 2,052 | | | | 3,442 | | | | 35.7 | | | | 67.7 | | Logistics(10) | | | | | | | | | | | | | | | | | | | | | Trade sales(2) | | | 10,356 | | | | 2,814 | | | | 3,715 | | | | (72.8 | ) | | | 32.0 | | Intersegment sales | | | 599 | | | | 68,317 | | | | 70,672 | | | | 11,305.2 | | | | 3.4 | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | 10,955 | | | | 71,131 | | | | 74,387 | | | | 549.3 | | | | 4.6 | |
| | | Year Ended December 31, | | 2016 | | 2017 | | | Year Ended December 31, | | | | | | | | 2015 | | 2016 | | 2017 | | vs. 2015 | | vs. 2016 | | | 2018 | | 2019 | | 2020 | | 2019 vs. 2018 | | 2020 vs. 2019 | | | | (in millions of pesos)(1) | | (%) | | (%) | | | (in millions of pesos)(1) | | (%) | | (%) | | Cogeneration and Services(11) | | | | | | | | | | | | Trade sales(2) | | | 0 | | | 133 | | | 335 | | | 100.0 | | | 151.9 | | | Exploration and Production(2) | | | | | | | | | | | | Trade sales(3) | | | Ps. | 482,485 | | | Ps. | 409,533 | | | Ps. | 301,527 | | | | (15.1 | ) | | | (26.4 | ) | Intersegment sales | | | 0 | | | 52 | | | 114 | | | 100.0 | | | 119.2 | | | | 400,614 | | | | 333,736 | | | | 242,455 | | | | (16.7 | ) | | | (27.4 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | 0 | | | 184 | | | 449 | | | 100.0 | | | 142.7 | | | | 883,099 | | | | 743,269 | | | | 543,982 | | | | (15.8 | ) | | | (26.8 | ) | Fertilizers(12) | | | | | | | | | | | | Trade sales(2) | | | 1,496 | | | 3,875 | | | 4,125 | | | 159.0 | | | 6.5 | | | Industrial Transformation(4)(5) | | | | | | | | | | | | Total trade sales | | | | 973,927 | | | | 799,256 | | | | 477,920 | | | | (17.9 | ) | | | (40.2 | ) | Total intersegment sales | | | | 143,632 | | | | 127,888 | | | | 97,303 | | | | (11.0 | ) | | | (23.9 | ) | | | | | | | | | | | | | | | | | | Total net sales | | | | 1,117,559 | | | | 927,144 | | | | 575,223 | | | | (17.0 | ) | | | (38.0 | ) | Logistics | | | | | | | | | | | | Trade sales(3) | | | | 4,708 | | | | 4,664 | | | | 4,099 | | | | (0.9 | ) | | | (12.1 | ) | Intersegment sales | | | 209 | | | 900 | | | 643 | | | 330.8 | | | (28.6 | ) | | | 63,673 | | | | 88,605 | | | | 80,575 | | | | 39.2 | | | | (9.1 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | 1,705 | | | 4,776 | | | 4,768 | | | 180.1 | | | (0.1 | ) | | | 68,381 | | | | 93,269 | | | | 84,674 | | | | 36.4 | | | | (9.2 | ) | Ethylene(13) | | | | | | | | | | | | Trade sales(2) | | | 4,569 | | | 15,453 | | | 12,648 | | | 238.2 | | | (18.2 | ) | | Fertilizers | | | | | | | | | | | | Trade sales(3) | | | | 2,938 | | | | 1,635 | | | | 1,516 | | | | (44.3 | ) | | | (7.3 | ) | Intersegment sales | | | 474 | | | 1,764 | | | 1,566 | | | 272.2 | | | (11.2 | ) | | | 66 | | | | 561 | | | | 425 | | | | 750.0 | | | | (24.2 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | 5,043 | | | 17,217 | | | 14,214 | | | 241.4 | | | (17.4 | ) | | | 3,004 | | | | 2,196 | | | | 1,941 | | | | (26.9 | ) | | | (11.6 | ) | Trading Companies | | | | | | | | | | | | | | | | | | | | | Trade sales(2)(3) | | | 407,876 | | | 395,354 | | | 508,606 | | | (3.1 | ) | | 28.6 | | | Trade sales(3) | | | | 204,168 | | | | 175,577 | | | | 160,016 | | | | (14.0 | ) | | | (8.9 | ) | Intersegment sales | | | 353,137 | | | 405,293 | | | 539,193 | | | 14.8 | | | 33.0 | | | | 640,382 | | | | 484,139 | | | | 280,924 | | | | (24.4 | ) | | | (42.0 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | 761,013 | | | 800,648 | | | 1,047,799 | | | 5.2 | | | 30.9 | | | | 844,550 | | | | 659,716 | | | | 440,940 | | | | (21.9 | ) | | | (33.2 | ) | Corporate and other subsidiary companies | | | | | | | | | | | | | | | | | | | | | Trade sales(2)(3) | | | (10,275 | ) | | 2,740 | | | 3,985 | | | (126.7 | ) | | 45.4 | | | Trade sales(3) | | | | 12,893 | | | | 11,306 | | | | 8,584 | | | | (12.3 | ) | | | (24.1 | ) | Intersegment sales and eliminations | | | (1,172,868 | ) | | (1,211,785 | ) | | (1,528,585 | ) | | 3.3 | | | 26.1 | | | | (1,248,367 | ) | | | (1,034,929 | ) | | | (701,682 | ) | | | (17.1 | ) | | | (32.2 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | (1,183,143 | ) | | | (1,209,045 | ) | | | (1,524,600 | ) | | | 2.2 | | | | 26.1 | | | | (1,235,474 | ) | | | (1,023,623 | ) | | | (693,098 | ) | | | (17.1 | ) | | | (32.3 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total net sales | | | Ps. 1,161,760 | | | | Ps. 1,074,093 | | | | Ps. 1,397,029 | | | | (7.5 | ) | | | 30.1 | | | Ps. | 1,681,119 | | | | Ps.1,401,971 | | | Ps. | 953,662 | | | | (16.6 | ) | | | (32.0 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note: Numbers may not total due to rounding. (1) | Figures for 2015, 20162018, 2019 and 20172020 are stated in nominal pesos. |
(2) | Prior to July 1, 2019, Pemex Drilling and Services operated as an additional productive state-owned subsidiary. As of July 1, 2019, Pemex Drilling and Services was merged into Pemex Exploration and Production. For comparison purposes all operations for periods prior to the merger are presented in the Pemex Exploration and Production segment. See “Item 4—Information on the Company—History and Development”. |
(3) | Trade sales represent sales to external customers. See “Item 3—Key Information—5—Operating and Financial Review and Prospects—Selected Financial Data.” |
(3) | Includes services income. |
(4) | FiguresPrior to July 1, 2019, Pemex Ethylene operated as an additional productive state-owned subsidiary. As of July 1, 2019, Pemex Ethylene was merged into Pemex Industrial Transformation. For comparison purposes all operations for the exploration and production segment for the year ended December 31, 2015 include net sales revenue relatedperiods prior to the drillingmerger are presented in the Pemex Industrial Transformation segment. See “Item 4—Information on the Company—History 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.Development”. |
(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 years ended December 31, 2016 and 2017 has been included under the industrial transformation segment. |
(7) | Net sales revenue for gas and basic petrochemicals for the years ended December 31, 2016 and 2017 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) | Figuresliquidated on July 27, 2018. Except for certain expenses incurred in the fertilizers segmentliquidation, all operations were transferred to Pemex Industrial Transformation. For comparison purposes all operations for periods prior to the year ended December 31, 2015 refer to net sales revenue since October 1, 2015 whenmerger are presented in the Pemex Fertilizers was formed. |
(13) | Figures forIndustrial Transformation segment. See “Item 4—Information on the ethylene segment for the year ended December 31, 2015 refer to net sales revenue since October 1, 2015 when Pemex Ethylene was formed.Company—History and Development”. |
Source: PEMEX’s consolidated financial statements, prepared in accordance with IFRS. Income by Business Segment The following table sets forth our net income (loss) by business segment for each year in the three-year period ended December 31, 2017,2020, as well as the percentage change in income for the years 20152018 to 2017.2020. | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, | | | 2016 vs. 2015 | | | 2017 vs. 2016 | | | | 2015 | | | 2016 | | | 2017 | | | (%) | | | (%) | | | | (in millions of pesos)(1) | | | | | | | | Business Segment | | | | | | | | | | | | | | | | | | | | | Exploration and Production(2) | | | Ps.(667,394) | | | | Ps.(45,879) | | | | Ps. (151,037) | | | | (93.1 | ) | | | 229.2 | | Industrial Transformation(3) | | | | | | | | | | | | | | | | | | | | | Refining(4) | | | (113,147 | ) | | | n.a. | | | | n.a. | | | | n.a. | | | | n.a. | | Gas and Basic Petrochemicals(5) | | | 18,126 | | | | n.a. | | | | n.a. | | | | n.a. | | | | n.a. | | Petrochemicals(6) | | | 7,812 | | | | n.a. | | | | n.a. | | | | n.a. | | | | n.a. | | | | | | | | | | | | | | | | | | | | | | | Total Industrial Transformation | | | (87,209 | ) | | | (69,865 | ) | | | (55,787 | ) | | | (19.9 | ) | | | (20.2 | ) | Drilling and Services(7) | | | 455 | | | | (142 | ) | | | 1,266 | | | | (131.3 | ) | | | (988.7 | ) | Logistics(8) | | | (3,685 | ) | | | (10,018 | ) | | | (834 | ) | | | 171.8 | | | | (91.7 | ) | Cogeneration and Services(9) | | | (57 | ) | | | (35 | ) | | | (92 | ) | | | (39.5 | ) | | | 165.4 | | Fertilizers(10) | | | (145 | ) | | | (1,659 | ) | | | (4,270 | ) | | | 1,043.7 | | | | 157.3 | | Ethylene(11) | | | (1,755 | ) | | | 2,097 | | | | (1,442 | ) | | | (219.5 | ) | | | (168.8 | ) | Trading Companies | | | 8,697 | | | | 11,167 | | | | 12,045 | | | | 28.4 | | | | 7.9 | | Corporate and other subsidiary companies(12) | | | 38,526 | | | | (76,809 | ) | | | (80,699 | ) | | | (299.4 | ) | | | 5.1 | | | | | | | | | | | | | | | | | | | | | | | Total net income (loss) | | | Ps. (712,567 | ) | | | Ps. (191,144 | ) | | | Ps. 280,851 | | | | (73.2 | ) | | | 46.9 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, | | | 2019 vs. 2018 | | | 2020 vs. 2019 | | | | 2018 | | | 2019 | | | 2020 | | | | (in millions of pesos)(1) | | | (%) | | | (%) | | Business Segment | | | | | | | | | | | | | | | | | | | | | Exploration and Production (2) | | Ps. | (7,929) | | | Ps. | (240,844) | | | Ps. | (216,922) | | | | 2,937.5 | | | | (9.9 | ) | Industrial Transformation (3)(4) | | | (62,033 | ) | | | (72,428 | ) | | | (232,426 | ) | | | 16.8 | | | | 220.9 | | Logistics | | | (62,576 | ) | | | 87,815 | | | | 23,731 | | | | 240.3 | | | | (72.9 | ) | Fertilizers | | | (5,330 | ) | | | (7,344 | ) | | | (5,661) | | | | 37.8 | | | | (22.9 | ) | Trading Companies | | | 4,778 | | | | 5,186 | | | | (682 | ) | | | 8.5 | | | | (113.2 | ) | Corporate and other subsidiary companies(5) | | | (47,330) | | | | (54,496) | | | | (77,092 | ) | | | 15.1 | | | | 41.5 | | | | | | | | | | | | | | | | | | | | | | | Total net income (loss) | | Ps. | (180,420) | | | Ps. | (282,112) | | | Ps. | (509,052) | | | | 56.4 | | | | 80.4 | | | | | | | | | | | | | | | | | | | | | | |
Note: Numbers may not total due to rounding. n.a. not available. (1) | Figures are stated in nominal pesos. See “Item 3—Key Information—5—Operating and Financial Review and Prospects—Selected Financial Data.” |
(2) | Figures for the exploration and production segment for the year ended December 31, 2015 include net income (loss) relatedPrior to the drilling and services segment until the formation ofJuly 1, 2019, Pemex Drilling and Services on Augustoperated as an additional productive state-owned subsidiary. As of July 1, 2015 and to the logistics segment until the formation of Pemex Logistics on October 1, 2015. |
(3) | Figures for the industrial transformation segment for the year ended December 31, 2015 include net income (loss) related to refining, gas and basic petrochemicals and petrochemicals. |
(4) | Net income (loss) for refining for the years ended December 31, 2016 and 2017 has been included under the industrial transformation segment. |
(5) | Net income (loss) for gas and basic petrochemicals for the years ended December 31, 2016 and 2017 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 years ended December 31, 2016 and 2017 has been included under the industrial transformation segment. |
(7) | Figures for the drilling and services segment for the year ended December 31, 2015 refer to net income (loss) since August 1, 2015 when2019, Pemex Drilling and Services was formed.merged into Pemex Exploration and Production. For comparison purposes all operations for periods prior to the merger are presented in the Pemex Exploration and Production segment. See “Item 4—Information on the Company—History and Development”. |
(8)(3) | FiguresPrior to July 1, 2019, Pemex Ethylene operated as an additional productive state-owned subsidiary. As of July 1, 2019, Pemex Ethylene was merged into Pemex Industrial Transformation. For comparison purposes all operations for periods prior to the logistics segment formerger are presented in the year ended December 31, 2015 refer to net income (loss) since October 1, 2015 when Pemex Logistics was formed.Industrial Transformation segment. See “Item 4—Information on the Company—History and Development”. |
(9)(4) | 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.liquidated on July 27, 2018. Except for certain expenses incurred in the liquidation, all operations were transferred to Pemex Industrial Transformation. For comparison purposes all operations for periods prior to the merger are presented in the Pemex Industrial Transformation segment. See “Item 4—Information on the Company—History and Development”. |
(10)(5) | Figures for the fertilizers segment for the year ended December 31, 2015 refer to net income (loss) since October 1, 2015 when Pemex Fertilizers was formed. |
(11) | Figures for the ethylene segment for the year ended December 31, 2015 refer to net income (loss) since October 1, 2015 when Pemex Ethylene was formed. |
(12) | Includes intersegment eliminations. |
Source: PEMEX’s consolidated financial statements, prepared in accordance with IFRS. 20172020 compared to 20162019
We present below the results of our operations by business segment. For more information on our operating segments, see “Item 4— Information on the Company—History and Development—Energy Reform—Corporate Reorganization”Structure” and Note 1 to our consolidated financial statements included herein. For a detailed description of the financial results of each segment, see Note 1 and Note 56 to our consolidated financial statements included herein. Exploration and Production In 2017,2020, total intersegment sales which include sales to our industrial transformation segment and the Trading Companies, increaseddecreased by 23.7%26.8%, primarily due to the increase in crude oil export prices. As compared to 2016, our exploration and production segment’s sales of crude oil to the Trading Companies in 2017 increased by 40.0% in U.S. dollar terms, primarily due to an increase in exports to the United States and an increasedecrease 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. $47.26$35.47 in 2017,2019, as compared to U.S. $35.17$55.60 in 2016.2020. Net loss related to exploration and production activities increaseddecreased by 229.2%, or Ps. 105,15823,922 million, from a Ps. 45,879240,844 million loss in 20162019 to a Ps. 151,037216,922 million loss in 2017,2020 primarily due to the net reversal of impairment of our fixed assets in this segment and lower cost of operation partially offset by the foreign exchange loss of the year. Industrial Transformation In 2020, trade sales related to industrial transformation activities decreased by 40.2%, from Ps. 799,256 million in 2019 to Ps. 477,920 million in 2020, primarily due to a decrease in the average sales prices of petroleum products. Intersegment sales decreased by 23.9%, from Ps. 127,888 million in 2019 to Ps. 97,303 million in 2020, primarily due to a decrease in sales of natural gas. In 2020, our net loss related to industrial transformation activities was Ps. 232,426 million, an increase in net loss of Ps. 159,998 million as compared to the Ps. 72,428 million net loss recognized in 2019. The increase in loss was due to a net impairment of our fixed assets in this segment. Industrial Transformation
In 2017, trade sales related to industrial transformation activities increased by 32.1%, from Ps. 653,654 million in 2016 to Ps. 863,573 million in 2017, primarily due to an increase in the average sales prices of petroleum products. Intersegment sales increased by 28.4%, from Ps. 117,096 million in 2016 to Ps. 150,360 million in 2017, primarily due to an increase in the prices of petroleum products sold. In 2017, our net loss related to industrial transformation activities was Ps. 55,787 million, 20.2% lower than the loss of Ps. 69,865 million in 2016. The decrease in loss was primarily due to a decrease in cost and operating expenses.
Drilling and Services
In 2017, total sales related to the drilling and services segment increased by 67.7%, from Ps. 2,052 million in 2016 to Ps. 3,442 million in 2017. This increase was primarily due to an increase in services provided to Pemex Exploration and Production. Net income related to drilling and services increased by Ps. 1,408 million, from a loss of Ps. 142 million in 2016 to a net income of Ps. 1,266 million in 2017, primarily due to an increase in foreign exchange income.
Logistics In 2017,2020, total sales related to the logistics segment increaseddecreased by Ps. 3,256 million,9.2%, from Ps. 71,13193,269 million in 20162019 to Ps. 74,38784,674 million in 2017,2020, primarily due to an increasea decrease in the services provided to Pemex Industrial Transformation. In 2017,2020, our net lossincome related to logistics activities was Ps. 83423,731 million, a 91.7% decrease of Ps. 64,084 million in comparison to our net income of Ps. 87,815 million in 2019. This reduction in net income was primarily the result of lower reversal of impairment of our fixed assets in this segment as compared to the loss of Ps. 10,018 million in 2016. The decrease in net loss was primarily due to our foreign exchange income. Cogeneration2019 and Services
In 2017, total sales related to our cogeneration and services segment increased by Ps. 264 million from Ps. 185 million in 2016 to Ps. 449 million in 2017, primarily due to an increase in the services provided to Pemex Industrial Transformation. In 2017, our net loss related to our cogeneration and services activities increased by Ps. 57 million, from a net loss of Ps. 35 million in 2016 to a net loss of Ps. 92 million in 2017. This increase in loss was primarily due to an increase in costs and operating expenses as well as increased financing costs.administrative expenses.
Fertilizers In 2017,2020, total sales related to the fertilizers segment decreased by Ps. 7 million,11.6%, from Ps. 4,7752,196 million in 20162019 to Ps. 4,7681,941 million in 2017.2020. This decrease was primarily due to a decrease in thelower trade sales of ammonia. In 2017,2020, our net loss related to our fertilizersfertilizer activities increaseddecreased by Ps. 2,611 million,22.9%, from a net loss of Ps. 1,6597,344 million in 20162019 to a net loss of Ps. 4,2705,661 million in 2017,2020, primarily due to the net impairmentlower costs of our fixed assets in this segment. Ethylene
In 2017, total sales related to our ethylene segment decreased by Ps. 3,003 million, from Ps. 17,217 million in 2016 to Ps. 14,214 in 2017, primarily due to aoperation and the decrease in sales of polyethylene, ethylene oxides, acrylonitrileprofit sharing loss in joint ventures and monoethylenglecol products. In 2017, our net income related to our ethylene activities decreased by Ps. 3,538 million, from a net income of Ps. 2,097 million in 2016 to a net loss of Ps. 1,442 in 2017. This decrease in income was primarily due a decrease in total sales.associates.
Trading Companies In 2017,2020, total sales relating to the Trading Companies’ exports of crude oil and petroleum products to third parties (including services income) increased in peso terms,decreased by 8.9%, from Ps. 395,354175,577 million in 20162019 to Ps. 508,606160,016 million in 2017,2020, primarily as a result of an increasea decrease in the prices ofaverage crude oil exports.export prices from U.S. $55.60 in 2019, to U.S. $35.47 in 2020. In 2017,2020, net income related to the Trading Companies increased by 7.9%,decreased Ps. 5,868, from a net income of Ps. 11,1675,186 million in 20162019 to a net loss of Ps. 12,045682 million in 2017,2020, primarily due to an increaseas a result of a net impairment of our fixed assets in this segment and the permanent investmentdecrease in associates that was recognized at fair value.profit sharing in joint ventures and associates. Corporate and Other Subsidiary Companies In 2017,2020, the total sales relating to corporate and other subsidiary companies after inter-company eliminations increaseddecreased from Ps. 1,209,0451,023,622 million in 20162019 to Ps. 1,524,600693,098 million in 2017,2020, primarily due to an increasea decrease in total intercompany sales as a result of an increase in the import of products.sales. Net loss related to corporate and other subsidiary companies after inter-company eliminations decreased by Ps. 3,890 million,increased 41.5%, from a net loss of net loss of Ps. 76,80954,497 million in 20162019 to a net loss of Ps. 80,69977,092 million in 2017,2020, primarily due to unfavorable results from subsidiary companies and a loss in joint ventures and associates.companies. 2016 Compared2019 compared to 20152018
Certain business units and assets that were operated byWe present below the refining, gas and basic petrochemicals and petrochemicals segments were transferred to our industrial transformation segment as a part of Pemex Industrial Transformation, on November 1, 2015. In order to provide investors with comparative information, we have consolidated 2015 results for these prior segments. Accordingly, in the case of our industrial transformation segment below, we present consolidated results for 2015 for the refining, gas and basic petrochemicals and petrochemicals segments under the heading “Industrial Transformation.”operations by business segment. For more information on our corporate restructuring and our operating segments, see “Item 4— Information on the Company—History and Development—Energy Reform—Corporate Reorganization”Structure” and Note 1 to our consolidated financial statements included herein. For a detailed description of the financial results of each segment, see Note 56 to our consolidated financial statements included herein.
Exploration and Production In 2016,2019, total intersegment sales which include sales to our industrial transformation segment and the Trading Companies, decreased by 10.8%15.8%, primarily due to the decrease in crude oil export prices. As compared to 2015, our exploration and production segment’s sales of crude oil to the Trading Companies in 2016 decreased by 0.5% in peso terms and decreased by 16.2% in U.S. dollar terms, primarily due to a decrease in crude oil export prices. The weighted average price of crude oil sold by our exploration and production segment to the Trading Companies for export was U.S. $35.17$55.60 in 2016,2019, as compared to U.S. $42.70$62.29 in 2015.2018. Net loss related to exploration and production activities decreasedincreased by 91.3%, or Ps. 621,515232,915 million, from a Ps. 667,3947,929 million loss in 20152018 to a Ps. 45,879240,844 million loss in 2016,2019, primarily due to a net reversal of impairment of our fixed assets in this segment. For comparison purposes, this discussion of Pemex Exploration and Production presents information of Pemex Drilling and Services, which was merged into Pemex Exploration and Production on July 1, 2019. Industrial Transformation In 2016,2019, trade sales related to industrial transformation activities decreased by 12.6%17.9%, from Ps. 747,739973,927 million in 20152018 to Ps. 653,654799,256 million in 2016,2019, primarily due to a decrease in the average sales prices of petroleum products. Intersegment sales decreased by 7.3%11.0%, from Ps. 126,264143,632 million in 20152018 to Ps. 117,096127,888 million in 2016,2019, primarily due to a decrease in the pricessales of petroleum products sold.natural gas. In 2016,2019, our net loss related to industrial transformation activities was Ps. 69,86572,428 million, 19.9% lowera 16.8% greater loss than the loss of Ps. 87,20962,033 million in 2015.2018. The decreaseincrease in loss was primarily due to a net reversallower sales. For comparison purposes, this discussion of impairmentPemex Industrial Transformation presents information of our fixed assets in this segment and a decrease in cost and operating expenses,Pemex Ethylene, 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 tomerged into 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.Industrial Transformation on July 1, 2019.
Logistics In 2016,2019, total sales related to the logistics segment increased by Ps. 60,176 million,36.4%, from Ps. 10,95568,381 million in 20152018 to Ps. 71,13193,269 million in 2016,2019, primarily due to an increase in the services provided to Pemex Industrial Transformation. In 2016,2019, our net lossincome related to logistics activities was Ps. 10,01887,815 million, 171.9% higher than thea variation of Ps. 150,391 million in comparison to our net loss of Ps. 3,68562,576 million in 2015. The increase in2018. This net lossincome was primarily due to the transfernet reversal of certainimpairment of our fixed assets to CENAGAS, higher operating expenses, an increase in financing cost, and a foreign exchange loss.this segment. Fertilizers In 2016,2019, total sales related to the fertilizers segment increaseddecreased by Ps. 3,071 million,26.9%, from Ps. 1,7053,004 million in 20152018 to Ps. 4,7762,196 million in 2016.2019. This increasedecrease was primarily due to an increasea decrease in the trade sales of ammonia. In 2016,2019 our net loss related to our fertilizersfertilizer activities increased by Ps. 1,514 million,37.8%, from a net loss of Ps. 1455,330 million in 20152018 to a net loss of Ps. 1,6597,344 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 was2019, primarily due to a net reversal of impairment of our plantsdecrease in profit sharing in joint ventures and an increase in sales.associates.
Trading Companies In 2016,2019, total sales relating to the Trading Companies’ exports of crude oil and petroleum products to third parties (including services income) decreased in peso terms, from Ps. 407,876204,168 million in 20152018 to Ps. 395,354175,577 million in 2016,2019, primarily as a result of a decrease in the prices of crude oil exports.export prices. In 2016,2019, net income related to the Trading Companies increased by 28.4%8.5%, from Ps. 8,6974,778 million in 20152018 to Ps. 11,1675,186 million in 2019, primarily due to an increase in the permanent investment in associates that was recognized at fair value.as a result of lower costs of operation. Corporate and Other Subsidiary Companies In 2016,2019, the total sales relating to corporate and other subsidiary companies after inter-company eliminations increaseddecreased from Ps. 1,183,1431,235,474 million in 20152018 to Ps. 1,209,0451,023,622 million in 2016,2019, primarily due to an increasea decrease in total intercompany sales as a result of an increase in the import of products.sales. Net loss related to corporate and other subsidiary companies after inter-company eliminations increased by Ps. 115,335 million,15.1%, from a net incomeloss of Ps. 38,52647,330 million in 20152018 to a net loss of Ps. 76,80954,497 million in 2016,2019, primarily due to unfavorable results from subsidiary companies, an increasecompanies. Research and Development Our research and development activities are focused on developing the Mexican energy sector through advancing products and solutions that are intended to be high quality, high performance and technologically efficient. The Mexican Petroleum Institute (“IMP”) is a public research organization under SENER that is administered by the Mexican Government and has its own legal entity and resources, as well as technical, operative and administrative autonomy with respect to its decisions. The objective of the IMP is to develop the Mexican petroleum, petrochemical and chemical industries and assist us in foreign exchange lossthe development of the Mexican energy sector. We work closely with the IMP on many of our research and an increasedevelopment initiatives. We continue to support different research projects. One of these projects is the implementation of networks of oceanographic observations (physical, geochemical, ecological) for the generation of scenarios in financing costs.the event of possible contingencies related to the exploration and production of hydrocarbons in deep waters of the Gulf of Mexico with Centro de Investigación Científica y de Educación Superior de Ensenada (Ensenada Center for Scientific Research and Higher Education). We also coordinate with other entities outside of Mexico. For example, we have begun discussions with Sinopec and Ecopetrol regarding a potential collaboration. Item 6. | Directors, Senior Management and Employees |
Under the Petróleos Mexicanos Law, Petróleos Mexicanos iswe are governed by aten-member Board of Directors composed as follows: the Secretary of Energy, who serves as the Chairperson and has the right to cast atie-breaking vote; the Secretary of Finance and Public Credit; three Mexican Government representatives, who are appointed by the President of Mexico; and | • | | five independent members, who are appointed by the President of Mexico, subject to ratification by the Senate. Independent members perform their duties on a part-time basis, are not public officials (i.e., individuals holding federal, state or municipal government positions in Mexico) and have not been employed by Petróleos Mexicanos or any of the subsidiary entities during the two years prior to their appointment. |
five independent members, who are appointed by the President of Mexico, subject to ratification by the Senate. Independent members perform their duties on a part-time basis, are not public officials (i.e., individuals holding federal, state or municipal government positions in Mexico) and have not been employed by Petróleos Mexicanos or any of the subsidiary entities during the two years prior to their appointment. The Petróleos Mexicanos Law authorizes only the Secretary of Energy and the Secretary of Finance and Public Credit to designate an alternate to serve in his or her place, provided that the alternate is a public official at the undersecretary level, at minimum. This alternate may attend meetings of the Board of Directors of Petróleos Mexicanos and otherwise assume the duties of the director, except that the Chairperson’s designated alternate may not cast atie-breaking vote. In addition, any ministry-level secretary serving as a member of the Board of Directors of Petróleos Mexicanos may designate an alternate to attend meetings on his or her behalf, provided that such alternate is a public official at the undersecretary level, at minimum. Under the Petróleos Mexicanos Law, all public officials serving as members of the Board of Directors of Petróleos Mexicanos are required to act impartially and for the benefit and in the best interests of Petróleos Mexicanos, separating at all times the interests of the ministry or governmental entity for which they work from their duties as members of the Board of Directors. Except in the case of the independent members first appointed under the Petróleos Mexicanos Law, theThe five independent members will beare appointed to staggered five-year terms, and may be appointed for an additional term of the same length. The remaining members of theour Board of Directors of Petróleos Mexicanos are not appointed for a specific term.
In 2014, the following individuals were appointed to serve as independent members of the Board of Directors of Petróleos Mexicanos for the initial terms set forth below:
Mr. Alberto Tiburcio Celorio, for two years;
Mr. Octavio Francisco Pastrana Pastrana, for three years;
Mr. Jorge José Borja Navarrete, for four years;
Mr. Jaime Lomelín Guillén, for five years; and
Mr. Carlos Elizondo Mayer-Serra, for six years.
On February 17, 2015, Mr. Jaime Lomelín Guillén resigned from his position as independent member of the Board of Directors of Petróleos Mexicanos. On April 29, 2016, the Senate ratified the appointment of Mr. Felipe Duarte Olvera as an independent member to serve for the remainder of Mr. Lomelín Guillén’s term.
Under the Petróleos Mexicanos Law, each of the boards of directors of theour subsidiary entities will consist of not less than five and no more than seven members. The majority of the members of each of the board of directors shall be appointed by and represent the Board of Directors of Petróleos Mexicanos. The Ministry of Energy and the Ministry of Finance and Public Credit may also appoint members to each board of directors of the subsidiary entities, subject to approval by the Board of Directors of Petróleos Mexicanos. On November 17, 2017, the Board of Directors of Petróleos Mexicanos approved theEstatuto Orgánico(Organic Statute) of Petróleos Mexicanos, which was published in the Official Gazette of the Federation on December 5, 2017 and became effective the following day. This Organic Statute establishes theThe structure, organizational basis and functions of the administrative units of Petróleos Mexicanos and also delineateseach of the duties and internal regulations of itssubsidiary entities are established in the Estatuto Orgánico (Organic Statute) approved by the Board of Directors.Directors of each entity.
The following tables set forth certain information with respect to directors and executive officers of Petróleos Mexicanos and each of the subsidiary entities as of April 30, 2018. Petróleos Mexicanos—Directors and Executive OfficersMay 12, 2021.
| | | | | Petróleos Mexicanos—Directors and Executive Officers | Name | | Position with Petróleos Mexicanos | | Year Appointed | | | | Mr. Pedro Joaquín Coldwell Ms. Norma Rocío Nahle García | | ChairmanChairperson of the Board of Directors of Petróleos Mexicanos and Secretary of Energy
Born: 1950Born: 1964
Business experience: Chairman of the National Executive Committee of the PRI;experience: Senator of the LXth and LXIst Legislatures; and ChairmanLXIV Legislature; Federal Deputy of the National ExecutiveLXIII Legislature; Advisor to the Energy Commission of Internal Proceduresthe Chamber of Deputies of the PRI. LIX; and LXI Legislatures and of the Senate of the LXII Legislature. Other board memberships: Chairman of CFE;Chairman of thememberships: CFE (Chairperson); Centro Nacional de Control de Energía; Chairman of CENAGAS; Banco Nacional de Comercio Exterior, S.N.C., Institución de Banca de Desarrollo; Nacional Financiera, S.N.C., Institución de Banca de Desarrollo; Comisión Nacional de Vivienda; anda (Chairperson); CENAGAS (Chairperson); Instituto Nacional de Ecología y Cambio Climático.Investigaciones Nucleares (Chairperson); IMP (Chairperson); and Fondo Mexicano del Petróleo. Family relations: None. | | 20122018 | | | | Mr. Fernando Zendejas Reyes Miguel Ángel Maciel Torres | | Alternate Board Member of Petróleos Mexicanos and Undersecretary of ElectricityHydrocarbons of the Ministry of Energy Born: 1986Born: 1960
Business experience: Chiefexperience: Deputy Director of the Legal Affairs UnitBusinesses Development for Exploration and Production of the MinistryPetróleos Mexicanos; Deputy Director of Energy:Alliances Management of Pemex Exploration and Production; and Deputy Director General of CoordinationField Development of the Secretary of Energy´s Office;Pemex Exploration and Technical Secretary of the National Executive Committee of PRI.Production. Other board memberships:memberships: CFE (Alternate); Centro Nacional de Control de Energía;a (Alternate); CENAGAS (Alternate); Instituto Nacional de Electricidad y Energías Limpias (Chairperson); and Instituto Nacional de Investigaciones Nucleares (Alternate); and IMP (Alternate). Family relations: None. | | 2019 | | | | Mr. Arturo Herrera Gutiérrez | | Board Member of Petróleos Mexicanos and Secretary of Finance and Public Credit Born: 1966 Business experience: Undersecretary of Finance and Public Credit of the Ministry of Finance and Public Credit; Member of Transition Team for the Ministry of Finance and Public Credit; Practice Manager for East Asia at the World Bank; and Practice Manager for Latin America and the Caribbean at the World Bank. Other board memberships: Centro de Investigación y Seguridad Nacional; Casa de Moneda de México (Chairperson); Comisión Nacional para la Protección y Defensa de Vivienda (Alternate)los Usuarios de Servicios Financieros (CONDUSEF) (Chairperson); ComitéFinanciera Nacional de Estrategias e Inversiones of CFE (Alternate)Desarrollo Agropecuario, Rural, Forestal y Pesquero (Chairperson); Comité EjecutivoInstituto para la Protección al Ahorro Bancario (Chairperson); Lotería Nacional para la Asistencia Pública (Chairperson); Pronósticos para la Asistencia Pública (Chairperson); Servicio de Crédito of Nacional Financiera, S.N.C., InstitucióAdministración y Enajenación de Banca de Desarrollo; Comité Ejecutivo de Crédito ofBienes (SAE) (Chairperson); Agroasemex, S.A. (Chairperson); Banco del Bienestar, S.N.C. (Chairperson); Banco Nacional de Comercio Exterior, S.N.C., Institución de Banca de Desarrollo; Instituto (BANCOMEXT) (Chairperson); Banco Nacional de Investigaciones Nucleares; Entidad MexicanaObras y Servicios Públicos, S.N.C. (BANOBRAS) (Chairperson); Banco Nacional del Ejército, Fuerza Aérea y Armada, S.N.C. (BANJERCITO) (Chairperson); Nacional Financiera, S.N.C. (NAFIN) (Chairperson); Seguros de Acreditación;Crédito a la Vivienda SHF, S.A. de C.V. (SCV) (Chairperson); Sociedad Hipotecaria Federal, S.N.C. (SHF) (Chairperson); Fondo de Operación y Financiamiento Bancario a la Vivienda; CNBV; Comisión Nacional de Zonas Áridas; and CentroSeguros y Fianzas (CNSF); Comisión Nacional de Metrología.del | | 20172019 |
| | | | | Petróleos Mexicanos—Directors and Executive Officers | | | | | Name | | Position with Petróleos Mexicanos | | Year Appointed | | | | Mr. Ildefonso Guajardo Villarreal
| | Board Member of Petróleos Mexicanos and Secretary of Economy
Born: 1957
Business experience: Deputy Coordinator of Political Economy forSistema de Ahorro para el Retiro (CONSAR) (Chairperson); Servicio de Administración Tributaria (Tax Administration Service, or the President Elect’s Transition Team; Transition Coordinator to the PRI Candidate’s Presidential Campaign; and Federal Deputy of the LXIst Legislature.
Other board memberships:SAT) (Chairperson); Instituto Nacional de las Personas Adultas Mayores; Consejo Nacional para el Desarrollo y la Inclusión de las Personas con Discapacidad; Coordinación Nacional de PROSPERA, Programa de Inclusión Social; Comisión Nacional Forestal; Instituto Mexicano de Tecnología del Agua; Instituto Nacional de Ecología y Cambio Climático (INECC); CONAGUA; ASEA; Aeropuertos y Servicios Auxiliares; Banco del Ahorro Nacional y Servicios Financieros, S.N.C., Institución de Banca de Desarrollo; Banco Nacional de Comercio Exterior, S.N.C.; Caminos y Puentes Federales de Ingresos y Servicios Conexos; CentroConexos (CAPUFE); Servicio Postal Mexicano (SEPOMEX); Telecomunicaciones de InvestigacióMéxico (TELECOMM); Consejo Nacional de Fomento Educativo; Fondo de Cultura Económica; Instituto Mexicano de la Radio; Instituto Nacional para la Educación de los Adultos; Fideicomiso de los Sistemas Normalizado de Competencia Laboral y de Certificación de Competencia Laboral; Instituto del Fondo Nacional para el Consumo de los Trabajadores (INFONACOT); Instituto Nacional de Ciencias Penales; Comisión Nacional para el Desarrollo de los Pueblos Indígenas; Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado (ISSSTE); Instituto del Fondo Nacional de la Vivienda para los Trabajadores (INFONAVIT); Instituto Mexicano del Seguro Social (IMSS); Instituto Nacional de las Mujeres (INMUJERES); CFE; Comisión de Política Gubernamental en materia de Derechos Humanos; Comisión Intersecretarial de Cambio Climático; Comisión Intersecretarial para el Desarrollo del Gobierno Electrónico; Comisión Intersecretarial de Gasto Público, Financiamiento y Desincorporación; Comisión Intersecretarial para el Conocimiento y Uso de la Biodiversidad; Comisión Intersecretarial para el Otorgamiento de Concesiones y Permisos previstos en la Ley de Aeropuertos; Comisión Intersecretarial para la Instrumentación del Programa de Integración del Registro Nacional de Población; Comisión Intersecretarial para la Prevención y Docencia Económicas, A.C.; CentroCombate a la Economía Ilegal; Consejo Nacional de Metrología; CentroEducación para la Vida y el Trabajo; Consejo Nacional de Gas Natural;para las Comunidades Mexicanas en el Exterior; Comisión Coordinadora para la Negociación de Precios de Medicamentos y otrosOtros Insumos para la Salud; CFE; Chairman of the Comisión Federal de Mejora Regulatoria; Comisión Intersecretarial de Bioseguridad de los Organismos Genéticamente Modificados; Comisión Intersecretarial de Cambio Climático; Chairman of the Comisión Intersecretarial de Compras y Obras de la Administración Pública Federal a la Micro, Pequeña y Mediana Empresa; Comisión Intersecretarial de Desarrollo Social;Bioseguridad y Organismos Genéticamente Modificados; Comisión Intersecretarial de Gasto Público Financiamiento y Desincorporación; Comisión Intersecretarial de Precios y Tarifas de los Bienes y Servicios de la Administración Pública Federal; Comisión Intersecretarial de Vivienda; Comisión Intersecretarial para Asuntos de la Frontera Norte;Desarrollo Social; Comisión Intersecretarial para el Desarrollo de los Bioenergéticos; Comisión Intersecretarial para el Desarrollo del Gobierno Electrónico; Comisión Intersecretarial para el Desarrollo Rural Sustentable; Comisión Intersecretarial para el Manejo Sustentable de Mares y Costas; Comisión Intersecretarial para la Coordinación Operativa en los Puntos de Internación al Territorio Nacional; Comisión Intersecretarial para la Atención de SequiasSequías e Inundaciones; Comisión Intersecretarial para la Instrumentación de la Cruzada contra el Hambre; Comisión Intersecretarial para la Prevención y Combate a la Economía Ilegal; Comisión
| | 2013 |
Petróleos Mexicanos—Directors and Executive Officers
| | | | | Name
| | Position with Petróleos Mexicanos
| | Year
Appointed | | | Intersecretarial para la Prevención y Erradicación del Trabajo Infantil y la Protección de Adolescentes Trabajadores en Edad Permitida en México; Comisión Intersecretarial para la Transición Digital; Comisión Intersecretarial para la Prevención Social de la Violencia y la Delincuencia; Comisión Intersecretarial de Zonas Económicas Especiales; Chairman of theCambios (Chairperson); Comisión Nacional de Inversiones Extranjeras; Comisión Nacional de Vivienda; CONAGUA;Inversiones Extranjeras; Comisión Nacional Forestal; Comisión Nacional para el Conocimiento y UsoAmbiental Metropolitana; Consejo de la Biodiversidad; Comisión Nacional para el DesarrolloEstabilidad del Sistema Financiero; Consejo de los Pueblos Indígenas; ChairmanSeguridad Nacional; Technical Committee of the Comité de Control y Desempeño Institucional; Chairman of the Comité IntersectorialFondo Mexicano del Petróleo para la Innovación; Comité Nacional de Productividad; Comité Nacional para el Desarrollo Sustentable de la Caña de Azúcar; Consejo Consultivo Empresarial para el Crecimiento Económico de México; Chairman of the Consejo Consultivo para el Fomento a la Industria Eléctrica Nacional; Consejo Consultivo de Turismo; Comisión Intersecretarial para el Sector Turístico; Consejo Nacional de NormalizacióEstabilización y Certificación de Competencias Laborales; Consejo Mexicano para el Desarrollo Rural Sustentable; Consejo Nacional contra las Adicciones; Consejo Nacional de Ciencia y Tecnología; Consejo General de Investigación Científica, Desarrollo Tecnológico e Innovación; Consejo Nacional de Fomento Educativo; Consejo Nacional de Infraestructura; Consejo Nacional de Protección Civil; Consejo de Salubridad General; Consejo Nacional de Vivienda; Chairman of theDesarrollo; Consejo Nacional para la Competitividad de la Micro, Pequeña y Mediana Empresa; Consejo Nacional para la Prevención y Control de las Enfermedades Crónicas noNo Transmisibles; CoordinacióComité Técnico Especializado en Información sobre Discapacidad del Sistema Nacional de Prospera, ProgramaInformación Estadística y Geográfica; Comité Nacional de Inclusión Social;Productividad; Comité Nacional de Seguridad Aeroportuaria; and Consejo Nacional para las Comunidades Mexicanas en el Exterior; El Colegio de la Frontera Norte, A.C.; ChairmanProtección Civil. Family relations: Arturo Herrera Gutiérrez is the brother of the Fideicomiso de Fomento Minero; Fideicomiso del Fondo Institucional para el Fomento de la Ciencia, el Fomento de la TecnologíTonatiuh Herrera Gutiérrez, who is also a y el Fomento, Desarrollo y Consolidación demember of Pemex’s Board of Directors. | | |
| | | | | Petróleos Mexicanos—Directors and Executive Officers | | | | | Name | | Position with Petróleos Mexicanos | | Year Appointed | | | Científicos y Tecnólogos; Fideicomisoe-México; Chairman of the Fideicomiso para Promover el Acceso al Financiamiento de MIPYMES y Emprendedores (México Emprende); Chairman of the Fondo de Innovación TecnológicaSE-CONACYT; Gabinete Especializado de México Próspero; Gabinete Especializado de México con Responsabilidad Global; Gabinete Especializado Incluyente; Instituto del Fondo Nacional de la Vivienda de los Trabajadores; Instituto del Fondo Nacional para el Consumo de los Trabajadores; Instituto Mexicano de la Juventud; Chairman of the Instituto Mexicano de la Propiedad Industrial; Instituto Nacional de la Infraestructura Física Educativa; Instituto Nacional de las Mujeres; Chairman of the Instituto Nacional del Emprendedor; Nacional Financiera, S.N.C.; Chairman of the Fideicomiso Público ProMéxico; Chairman of the Servicio Geológico Mexicano; Servicio Nacional de Capacitación y Asistencia Técnica Rural; Servicio Postal Mexicano; Sistema de Investigación Alfonso Reyes; Sistema de Investigación Benito Juárez; Sistema de Investigación Francisco Villa; Sistema de Investigación Golfo de México; Sistema de Investigación Ignacio Zaragoza; Sistema de Investigación José María Morelos; Sistema de Investigación Justo Sierra; Sistema de Investigación Mar de Cortés; Sistema de Investigación Miguel Hidalgo; and Telecomunicaciones de México. | | | | | | Mr. José Rogelio Garza Garza Gabriel Yorio González | | Alternate Board Member of Petróleos Mexicanos and Undersecretary of Industry and Trade of the Ministry of Economy Born: 1971
Business experience: Cámara Nacional de la Industria Electrónica de Telecomunicaciones y Tecnologías de la Información; Secretary of the Ministry of Trade and Industrial Promotion; and Quality Coordinator ofISO-9002 Program of the Ministry of Trade and Industrial Promotion.
Other board memberships: Instituto del Fondo Nacional de la Vivienda para los Trabajadores (Alternate).
| | 2014 |
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: CENAGAS; Consejo de Coordinación del Sector Energético; and Fondo Mexicano del Petróleo para la Estabilización y el Desarrollo (Alternate).
| | 2016 | | | | Mr. José Antonio González Anaya
| | Board Member of Petróleos Mexicanos and Secretary of Finance and Public Credit
Born: 1967
Business experience: Chief Executive Officer of Petróleos Mexicanos; Chief Executive Officer of the Instituto Mexicano del Seguro Social; and Undersecretary of Income of the Ministry of Finance and Public Credit.
Other board memberships: Aeropuertos y Servicios Auxiliares; Caminos y Puentes Federales de Ingresos y Servicios Conexos; Chairman of Casa de Moneda de México; Chairman of Financiera Nacional de Desarrollo Agropecuario, Rural, Forestal y Pesquero;
Fondo de Cultura Económica; Instituto del Fondo Nacional de la Vivienda para los Trabajadores; Instituto del Fondo Nacional para el Consumo de los Trabajadores; Instituto Mexicano de la Radio; Chairman of the Instituto para la Protección al Ahorro Bancario; Chairman of Lotería Nacional para la Asistencia Pública; Chairman of Pronósticos para la Asistencia Pública; Servicio Postal Mexicano; Telecomunicaciones de México; Chairman of Servicio de Administración y Enajenación de Bienes; ; 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 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
| | 2017 |
Petróleos Mexicanos—Directors and Executive Officers
| | | | | Name
| | Position with Petróleos Mexicanos
| | Year
Appointed | | | Aérea y Armada, S.N.C., Institución de Banca de Desarrollo; 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; CFE; Comisión de Estrategja e Inversiones of CFE; Comisión de Recursos Humanos y Remuneraciones of CFE; Fondo de Operación y Financiamiento Bancario a la Vivienda; CNBV; Comisión Nacional de Seguros y Fianzas; Chairman of the Comisión de Cambios; Comisión Nacional de Inversiones Extranjeras; Banco Interamericano de Desarrollo y Corporación Interamericana de Inversiones; Banco Internacional de Reconstrucción y Fomento del Banco Mundial; Organismo Multilateral de Garantía de Inversiones del Banco Mundial; and Banco de Desarrollo del Caribe. | | | | | | Mr. Alberto Torres García
| | Alternate Board Member of Petróleos Mexicanos and Undersecretary of Income of the Ministry of Finance and Public Credit
Born: 1971Born: 1976
Business experience:experience: Head of the Public Credit Unit of the Ministry of Finance and Public Credit; Director General of Economic Research of BancoPublic Sector Specialist at the World Bank; and Financial Management Specialist at the World Bank. Other board memberships: Agencia Mexicana de Cooperación Internacional para el Desarrollo; Casa de Moneda de México; and Director of Economic Studies ofCONDUSEF (Alternate); Financiera Nacional de Desarrollo Agropecuario, Rural, Forestal y Pesquero; Instituto para la Protección al Ahorro Bancario (Alternate); Lotería Nacional para la Asistencia Pública (Alternate); Pronósticos para la Asistencia Pública (Alternate); SAE; Agroasemex, S.A.; Banco del Bienestar, S.N.C.; BANCOMEXT; BANOBRAS; BANJERCITO; NAFIN; SCV; SHF; Fondo de México. Other board memberships:Capitalización e Inversión del Sector Rural; Fondo de Garantía y Fomento para la Agricultura, Ganadería y Avicultura; Fondo de Garantía y Fomento para Actividades Pesqueras; Fondo de Operación y Financiamiento Bancario a la Vivienda; CNBV; CNSF; CONSAR; SAT (Alternate); CENAGAS; Centro Nacional de Control de la Energía; ISSSTE; CFE (Alternate); Comisión de Fomento del as Actividades de las Organizaciones de la Sociedad Civil; Comisión Intersecretarial para el Desarrollo de los Bioenergéticos (Alternate);ticos; Comisión Intersecretarial para la Transición Digital; Comisión de Cambios; Comisión Permanente de Servicios de Salud a la Comunidad; Comisión de Comercio Exterior; Comisión Tripartita encargada de la Evaluación y Seguimiento de las Disposiciones establecidas en la Ley de Ayuda Alimentaria para los Trabajadores; Comité Interinstitucional para la Aplicación del Estímulo Fiscal
| | 2019 | | | a Proyectos de Inversión en la Producción Teatral Nacional; Comité Interinstitucional para la Aplicación del Estímulo Fiscal a Proyectos de Inversión en la Producción Cinematográfica Nacional.Nacional; Comisión Nacional de Inversiones Extranjeras (Alternate); Consejo de Estabilidad del Sistema Financiero; Consejo de Salubridad General; Consejo Nacional de Armonización Contable; Technical Committee of the Fondo Mexicano del Petróleo para la Estabilización y el Desarrollo (Alternate); Consejo Consultivo Nacional del Sistema Nacional de Información Estadística y Geográfica; Comité Nacional de Productividad (Alternate); and Comisión to which Article 15 of the Ley de Ayuda Alimentaria para los Trabajadores (Law of Food Assistance for Workers). Family relations: None. | | 2018 |
| | | | | 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
| | 2015 |
Petróleos Mexicanos—Directors and Executive Officers | | | | | Name | | Position with Petróleos Mexicanos | | Year Appointed | | | Team for the President-Elect of Mexico; and Federal Deputy in the LXI Legislature.
Other board memberships: CFE; Salubridad General; Consejo Consultivo para las Energías Renovables; Consejo Nacional para la Competitividad de la Micro, Pequeña y Mediana Empresa; Comité Intersectorial para la Innovación; and Consejo Técnico de Servicio de Información Agroalimentaria y Pesquera.
| | | | | | Ms. María Luisa Albores González | | Board Member of Petróleos Mexicanos and Secretary of Environment and Natural Resources Born: 1974 Business experience: Secretary of Welfare; and Advisor of Regional Agricultural and Livestock Cooperative Company Tosepan Titataniske. Family relations: None. | | 2020 | | | | Mr. Rodolfo Lacy TamayoTonatiuh Herrera Gutiérrez | | Alternate Board Member of Petróleos Mexicanos and Undersecretary of PlanningPromotion and Environmental PoliciesRegulation of the Ministry of the EnvironmentalEnvironment and Natural Resources Born: 1958
Business experience: Programs and Projects Coordinator of Centro Mario Molina para Estudios Estratégicos en Energía y Medio Ambiente; Executive Director of Special Projects of Colegio de Ingenieros Ambientales de México; and Chief of Staff of the Secretary of the Environmental and Natural Resources.
Other board memberships: CFE (Alternate)Born: 1968
| | 20152020 | | | Business experience: Director of Technical Planning and Coordination at Fideicomiso de Fomento Minero; General Coordinator at Fundación Arturo Herrera Cabañas; and General Coordinator at Centro Histórico Pachuca. Other board memberships: Grupo Aeroportuario de la Ciudad de México (Alternate); Comité de Evaluación para Dictaminación de las Zonas de Desarrollo Turístico Sustentable; ISSSTE (Alternate); IMP; and Comité Consultivo Nacional de Normalización de Seguridad Industrial y Operativa y Protección al Medio Ambiente del Sector Hidrocarburos. Family relations: Tonatiuh Herrera Gutiérrez is the brother of Arturo Herrera Gutiérrez, who is also a member of Pemex’s Board of Directors. | | | Mr. Manuel Bartlett Díaz | | Board Member of Petróleos Mexicanos and Director General of CFE Born: 1936 Business experience: Senator of the LXIII and LXII Legislatures; and Governor of the State of Puebla. Other board memberships: CFE Generación I (Chairperson); CFE Generación II (Chairperson); CFE Generación III (Chairperson); CFE Generación IV (Chairperson); CFE Generación V (Chairperson); CFE Generación VI (Chairperson); CFE Transmisión (Chairperson); CFE Distribución (Chairperson); CFE Suministrador de Servicios Básicos (Chairperson); CFE Telecomunicaciones e Internet Para Todos (Chairperson); CFE Calificados, S.A. de C.V. (Chairperson); CFEnergía, S.A. de C.V. (Chairperson); and CFE International, LLC. (Chairperson). Family relations: None. | | 2018 | | | | Mr. Carlos Elizondo Mayer-Serra | | Independent Board Member of Petróleos Mexicanos
Born: 1962
Business experience: Assistant Professor at the Instituto Tecnológico y de Estudios Superiores de Monterrey, A.C.; Professor and Researcher at the Centro de Investigación y Docencia Económicas, A.C.; and Ambassador of Mexico to the Organización para la Cooperación y Desarrollo Económicos.
Other board memberships: Corporación Interamericana de Entretenimiento, S.A.B. de C.V. (Independent) and Consejo Nacional de Ciencia y Tecnología.
| | 2014 | | | | Mr. Octavio Francisco Pastrana Pastrana Juan José Paullada Figueroa | | Independent Board Member of Petróleos Mexicanos Born: 1952Born: 1951
Business experience:experience: Partner Director of Administradora Ictineo Infraestructura, S.A.P.I. de C.V.Paullada, Guevara y Asociados, S.C.; President and Chief ExecutiveFiscal Attorney Officer of Isolux Mexico of Isolux Corsán, S.A.;the Federation; and Director General of Strategy and Business Development of ARB Arendal.the Fideicomiso Liquidador de Instituciones y Organizaciones Auxiliares de Crédito. Other board memberships: Grupo Machado (Independent Board Member). Family relations: None. | | 20142019 | Mr. José Eduardo Beltrán Hernández | | Independent Board Member of Petróleos Mexicanos Born: 1942 Business experience: President of the Political and Social Sciences of the Academia Mexicana de Ciencias, Tecnologías y Humanidades; Federal Deputy; President of the Energy Commission of the LIII Legislature of the Chamber of Deputies; and General Secretary of Government of the State of Tabasco. Family relations: None. | | 2019 |
| | | | | Petróleos Mexicanos—Directors and Executive Officers | | | | | Name | | Position with Petróleos Mexicanos | | Year Appointed | | | Other board memberships: COREMAR Empresa de Servicios Portuarios, S.A. and Grupo Aeroportuario de la Ciudad de México, S.A. de C.V. (Independent). | | | | | | Mr. Jorge José Borja Navarrete Ms. Laura Itzel Castillo Juárez | | Independent Board Member of Petróleos Mexicanos Born: 1943Born: 1957
Business experience: Professional Memberexperience: Director General of Sistema de Movilidad 1 of the BoardGovernment of Directors of Petróleos Mexicanos; MemberMexico City; Federal Deputy of the Directive BoardLXI Legislature; and Secretary of the Universidad Nacional Autónoma de México;Urban Development and Advisor to Grupo Xignux.Housing. Other board memberships: Grupo Aluminio, Vidrio y Construcciómemberships: Director of Fundación S.A. de C.VHeberto Castillo Martínez, A.C. Family relations: None. | | 20142020 | | | | Ms. MaríMr. Rafael Espino de la Peña Teresa Fernández Labardini
| | Independent Board Member of Petróleos Mexicanos Born: 1967 Born: 1963
Business experience:experience: Partner Founder of White & Case,Fernández, Espino y Asociados México S.C.; Executive Secretary-General Director General and Board Member of the Instituto para la ProteccióHospital Amerimed Cancún, al Ahorro Bancario;S.A. de C.V.; and Director General Technical Director of the CNBV;Hospital Amerimed Playa del Carmen, S.A. de C.V. Other board memberships: Distribuidora Medisur, S.A. de C.V.; Medisur, S.A. de C.V.; lnmobiliaria Medisur, S.A. de C.V.; Operadora Medisur S.A. de C.V.; Promotora Variante S.A. de C.V.; Inmobiliaria Corbeta S.A. de C.V.; Autotransportes del Real S.A. de C.V. (Secretary); RAG Capital Partners S.A.P.I. de C.V.; RAG Capital Sports, S.A.P.I. de C.V.; Concentradora de Recursos Amerimed, S.A. de C.V.; Club de Futbol Atlante, S.A. de C.V.; Hospital Amerimed Cozumel Islamed, S.A. de C.V.; Hospital Amerimed Playa del Carmen, S.A. de C.V.; Hospital Amerimed Cancún, S.A. de C.V.; Espino y Borunda Abogados, S.C. (Sole Manager); and Vice President of Regulation of the CNBV.Fernández, Espino y Asociados México, S.C. Family relations: None. | | 20172019 | | | | Mr. Felipe Duarte Olvera Humberto Domingo Mayans Canabal | | Independent Board Member of Petróleos Mexicanos Born: 1974Born: 1949
Business experience: Assistant Director Generalexperience: Senator of Infrastructurethe LXII 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 TransportationLXIII Legislatures; Coordinator for Migration Affairs in the Southern Border of the Ministry of Communicationsthe Interior; and Transportation.General Secretary of Government of the State of Tabasco. Other board memberships: Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (Independent)Family relations: None.
| | 20162019 | | | | Mr. Carlos Alberto Treviño Medina Octavio Romero Oropeza | | Chief Executive Officer/Director General Born: 1970Born: 1959
Business experience: Corporate Director of Management and Services of Petróleos Mexicanos; Chief Financial Officerexperience: President of the Instituto Mexicano del Seguro Social;MORENA Political State Council of Tabasco; Head Official of the Government of the Federal District; and Chief Executive OfficerFederal Deputy of Financiera Rural.the LVI Legislature. Other board memberships: CFE. Family relations: None. | | 20172018 | | | | Mr. David Ruelas Rodríguez Alberto Velázquez García | | Chief Financial Officer / Corporate Director of Finance
Born: 1977
Born: 1970 Business experience: Deputyexperience: Director of Risk ManagementProjects and ReinsurancePublic Finance of PetróleosGrupo Financiero Banorte, S.A.B. de C.V; Independent Consultant for Financing Structuring and Investment Projects; and Director of Public Policy Analysis of Consultora EF&I, Grupo Financiero Interacciones. Family relations: None. | | 2018 |
| | | | | Petróleos Mexicanos—Directors and Executive Officers | | | | | Name | | Position with Petróleos Mexicanos | | Year Appointed | | | Mexicanos; Associate Managing Director of Corporate Financial Management of Petróleos Mexicanos; and Coordinator of Governmental Programs of Petróleos Mexicanos. | | | | | | Mr. Marco Antonio Murillo
Soberanis Marcos Manuel Herrería Alamina | | Corporate Director of Management and Services Born: 1959Born: 1967
Business experience: Deputyexperience: Director of Labor Relations and Services for Personnel of Petróleos Mexicanos; Acting Corporate DirectorGeneral of Management of Petróleos Mexicanos;the Ministry of Finance of Mexico City; Private Secretary of the Head Official of the Government of the Federal District; and Deputy DirectorAdministrative Coordinator of Human Resourcesthe Procuraduría General de Justicia of Petróleos Mexicanos.the Federal District. Family relations: None. | | 20172019 | | | | Mr. Rodulfo Figueroa Alonso Víctor Manuel Navarro Cervantes | | Corporate Director of Planning, Coordination and Performance Born: 1964 Born: 1963
Business experience: Deputy Director of Planning ofPemex-Gas and Basic Petrochemicals; Associateexperience: Managing Director of PlanningUrvian Servicios de Consultoría para la Administración Pública; General Coordinator ofPemex-Gas and Basic Petrochemicals; and Associate Managing Director Administrative Modernization of Assessment and Informationthe Administrative Office ofPemex-Gas and Basic Petrochemicals. | | 2015 | | | | Mr. Rodrigo Becerra Mizuno
| | Chief Information Officer/Corporate Director of Information Technology
Born: 1975
Business experience: Director General of Public Sector (Asia Region) of Microsoft Corporation; Executive Director of Global the Government of Microsoft Corporation; and Global Manager of Public Sector of Marketing Microsoft Corporation.
| | 2016 | | | | Mr. Jorge Guillermo Lomelín Delgadillo
| | Acting Corporate Director of Alliances and New Businesses
Born: 1975
Family Relationship: Married to Ms. Didier del Valle Toledo, Acting Director of Management of P.M.I. Comercio Internacional, S.A. de C.V.
Business experience: Deputy Director of Industrial Transformation Business Development of Petróleos Mexicanos; Chief of Staff of the Corporate Director of Alliances and New Business of Petróleos Mexicanos; and Associate Managing Director of Administration Control of Petróleos Mexicanos.
| | 2018 |
Petróleos Mexicanos—Directors and Executive Officers
| | | | | Name
| | Position with Petróleos Mexicanos
| | Year
Appointed | 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;Federal District; and Director General of Protection against Administrative ActsManagement and Finance of the Procuraduría FiscalSistema de la Federación. | | 2016 | Mr. José Salvador de la Mora Real
| | HeadTransporte Colectivo of the Institutional Internal Control Unit
Born: 1959Federal District.
Business experience: Operative Secretary of Information Technologies and Communications of the Tribunal Federal de Justicia Administrativa; Head of the Internal Control Body in Financiera Nacional para el Desarrollo Agropecuario, Rural, Forestal y Pesquero; and Associate Managing Director of Planning and Project Management of Petróleos Mexicanos.Family relations: None.
| | 2018 | | | | Ms. Luz María Zarza Delgado | | Mr. Luis Bartolini EsparzaLegal Director
Born: 1968 Business experience: Deputy Director of Legal Consulting of Petróleos Mexicanos; General Counsel of the Universidad Autónoma del Estado de México; Legal Counsel of the State of Mexico; and Magistrate of the Electoral Court of the State of Mexico. Family relations: None. | | 2019 | | | | Mr. Francisco Javier Vega Rodríguez | | HeadInternal Auditor
Born: 1955 Business experience: Advisor “A” of Internal Auditing Born: 1970
Business experience: Head of Petróleos Mexicanos; and Analysis Director of Superior Audit of the Internal Control 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.ASF.
Other board memberships: La Universidad La Salle Nezahualcóyotl.Family relations: None.
| | 20172019 |
| | One position on our Board of Directors is currently vacant. | | | | Pemex Exploration and Production—Directors and Executive Officers | | | | | Name | | Position with Pemex Exploration and Production | | Year Appointed | | | | Mr. Carlos Alberto Treviño Medina Octavio Romero Oropeza | | ChairmanChairperson of the Board of Pemex Exploration and Production (refer to Petróleos Mexicanos) | | 20172018 | | | | Mr. Claudio CésarJorge Luis Basaldúa Ramos | | Board Member of Pemex Exploration and Production and Director General of Pemex Industrial Transformation Born: 1964 Business experience: Undersecretary of Human Capital and Management in the Government of Mexico City; General Manager in the Social Security Fund of the Preventive Police of Mexico City; and General Director of the Social Security Fund of the Auxiliary Police of Mexico City. Other board memberships: Administración Portuaria Integral Dos Bocas; and IMP (Alternate). Family relations: None. | | 2020 |
| | | | | Pemex Exploration and Production—Directors and Executive Officers | Name | | Position with Pemex Exploration and Production | | Year Appointed | Mr. Javier Núñez López | | Board Member of Pemex Exploration and Production and Deputy Director of Supply of Petróleos Mexicanos Born: 1965 Business experience: Acting Operative Director of Procurement and Supply of Petróleos Mexicanos; Director of Management of Xalapa, Veracruz; Chief of Staff of the LXII Legislature of the State of Tabasco Congress; and Director of Management of the Secretaría de la Cerda NegreteSalud of the State of Tabasco. Family relations: None. | | 2019 | | | | Mr. Alberto Velázquez García | | Board Member of Pemex Exploration and Production (refer to Petróleos Mexicanos) | | 2018 | | | | Mr. Jorge Alberto Arévalo Villagrán | | Board Member of Pemex Exploration and Production and Director General of Exploration and Extraction of Hydrocarbons of the Ministry of Energy Born: 1974Born: 1961
Business experience: Assistant Generalexperience: Professor in Engineering of Universidad Nacional Autónoma de México; Technical Director of Investment Promotion and LiaisonSpecial Projects of the Ministry of Energy; Vice-president of Operations and Business Development of Jaguar Exploración y Producción de Hidrocarburos, S.A.P.ISoluciones en Software Especializado Némesis, S.A. de C.V.; and Vice-presidentAssociate Managing Director of GeosciencesStrategies and Plans of Pemex Exploration and Production. Other board memberships: Fondos Sectoriales CONACYT-Secretaría de Energía-Hidrocarburos; and Instituto Nacional de Investigaciones Nucleares (Alternate). Family relations: None. | | 2017 |
Pemex Exploration and Production—Directors and Executive Officers
| | | | | Name
| | Position with Pemex Exploration and Production
| | Year
Appointed | | | Engineering and Director of Technology of Dowell Schlumberger de México, S.A. de C.V. | | 2018 | | | | Mr. Alberto Torres García Gabriel Yorio González | | Board Member of Pemex Exploration and Production and Undersecretary of Income of the Ministry of Finance and Public Credit (refer to Petróleos Mexicanos) | | 20182019 | | | | Mr. David Ruelas Rodríguez | | Board Member of Pemex Exploration and Production (refer to Petróleos Mexicanos) | | 2018 | | | | Mr. Carlos Rafael Murrieta Cummings
| | Board Member of Pemex Exploration and Production and Director General of Pemex Industrial Transformation
Born: 1965
Business experience: Independent Business Consultant of Sendero; Corporate Director of Operations of Petroleos Mexicanos and Director of McKinsey & Co.
| | 2016 | | | | Mr. Miguel Ángel Servín Diago
| | Board Member of Pemex Exploration and Production and Operative Director of Procurement and Supply of Petroleos Mexicanos
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 | | | | Mr. J. Javier Hinojosa Puebla Cid Munguía | | Board Member of Pemex Exploration and Production and Director General of Pemex Exploration and Production Born: 1958 Born: 1961
Business experience:experience: Executive Coordinator of the Director General’s Office of Pemex Exploration and Production; DirectorManager of Development and ProductionSpecialized Technical Resources of Pemex Exploration and Production; and ChiefAdministrator of StaffActivo Integral de Producción Bloque S03 of the Director General of Pemex-ExplorationPemex Exploration and Production.
Family relations: None. | | 20152021 |
| Pemex Industrial Transformation—Directors and Executive Officers | | | | | Name | | Position with Pemex Industrial Transformation | | Year Appointed | Mr. Carlos Alberto Treviño MedinaOctavio Romero Oropeza | | ChairmanChairperson of the Board of Pemex Industrial Transformation (refer to Petróleos Mexicanos) | | 2017 | | | 2018 | Mr. Marco Antonio Murillo
SoberanisMarcos Manuel Herrería Alamina | | Board Member of Pemex Industrial Transformation (refer to Petróleos Mexicanos) | | 20172019 |
| | | | | | | | Mr. Víctor David Eduardo Rosales HernándezPalacios Gutiérrez | | Board Member of Pemex Industrial Transformation and Director General of Natural Gas and Petrochemicals of the Ministry of Energy Born: 1981Born: 1954
Business experience:experience: Acting Associate Managing Director of RegulationsGas Processing Complex La Cangrejera of Pemex Gas and PermitsBasic Petrochemicals; Deputy Manager of Infraestructura Energética Nova, S.A.B. de C.V.Production of Pemex Gas and Basic Petrochemicals; and Project Leader for Maximizing the Impact of Technology in Gas Processing Complex La Cangrejera of Pemex Petrochemicals. Other board memberships: CENAGAS (Alternate); Deputy Director of Energy Projects of Bancoand Centro Nacional de Obras y Servicios Públicos, S.N.C.; and Director of Transportation of the Regulatory Energy Commission.Metrología. Family relations: None. | | 20172019 | | | | Mr. Alberto TorresVelázquez García | | Board Member of Pemex Industrial Transformation (refer to Petróleos Mexicanos) | | 2018 | | | | Mr. David Ruelas Rodríguez | | Board Member of Pemex Industrial Transformation (refer to Petróleos Mexicanos) | | 2018 | | | | Mr. J. Javier Hinojosa PueblaÁngel Cid Munguía. | | Board Member of Pemex Industrial Transformation (refer to Pemex Exploration and Production) | | 20152021 | | | | Mr. Carlos Rafael Murrieta CummingsGabriel Yorio González | | Board Member of Pemex Industrial Transformation and Undersecretary of Income of the Ministry of Finance and Public Credit (refer to Petróleos Mexicanos) | | 2019 | | | | Mr. Jorge Luis Basaldúa Ramos | | Board Member of Pemex Industrial Transformation and Acting Director General of Pemex Industrial Transformation (refer to Pemex Exploration and Production) | | 20162020 |
Pemex Cogeneration and Services—
| Pemex Logistics—Directors and Executive Officers | | | | | Name | | Position with Cogeneration and ServicesPemex Logistics | | Year Appointed | Mr. Carlos Alberto Treviño MedinaOctavio Romero Oropeza | | ChairmanChairperson of the Board of Pemex Cogeneration and Services (refer to Petróleos Mexicanos) | | 2017 | | | | Mr. Rodulfo Figueroa Alonso | | Board Member of Pemex Cogeneration and Services (refer to Petróleos Mexicanos) | | 2015 | | | | Mr. Leonardo Cornejo Serrano | | Board Member of Pemex Cogeneration and Services and Deputy Director of Industrial Projects of Pemex Industrial Transformation
Born: 1969
Business experience: Director of Projects of Pemex Industrial Transformation; Deputy Director of Projects of Pemex-Refining; and Coordinator of
Modernization and Capacity Expansion Projects of Pemex-Refining.
| | 2016 | | | | Mr. David Ruelas Rodríguez | | Board Member of Pemex Cogeneration and ServicesLogistics (refer to Petróleos Mexicanos) | | 2018 | | | | Mr. José Salvador de la Mora Real | | Board Member of Pemex Cogeneration and Services (refer to Petróleos Mexicanos) | | 2018 | | | | Mr. Jorge Lomelín Delgadillo | | Board Member of Pemex Cogeneration and Services (refer to Petróleos Mexicanos) | | 2018 | | | | Ms. Raquel Buenrostro Sánchez . | | Acting Director General of Pemex Cogeneration and Services and Associate Managing Director of Planning and Development of Pemex Cogeneration and Services
Born: 1970
Business experience: Associate Managing Director of Planning of Grupo Adya Select, S. de R.L. de C.V.; Advisor to the Director of Management and Finance of PMI; and Director General of Management of SecretaríMarcos Manuel Herrería de Turismo.
| | 2017 |
Pemex Drilling and Services—Directors and Executive Officers
| | | | | Name
| | Position with Pemex Drilling and Services
| | Year
Appointed | Mr. Carlos Alberto Treviño Medina | | Chairman of the Board of Pemex Drilling and Services (refer to Petróleos Mexicanos) | | 2017 | | | | Mr. Rodulfo Figueroa Alonso | | Board Member of Pemex Drilling and Services (refer to Petróleos Mexicanos) | | 2016 | | | | Mr. Marco Antonio Murillo
Soberanis | | Board Member of Pemex Drilling and Services (refer to Petróleos Mexicanos) | | 2017 | | | | Mr. Rodrigo Becerra Mizuno | | Board Member of Pemex Drilling and Services (refer to Petróleos Mexicanos) | | 2016 | | | | Mr. J. Javier Hinojosa Puebla | | Board Member of Pemex Drilling and Services (refer to Pemex Exploration and Production) | | 2015 | | | | Mr. Jorge Valadez Montoya | | Board Member of Pemex Drilling and Services and Acting Deputy Director of Businesses Development of Exploration and Production of Petróleos Mexicanos
Born: 1973
Business experience: Associate Managing Director of Alliances and New Businesses for Production Support of Petróleos Mexicanos; Deputy Director of Project Analysis of PMI; and Project Leader of Petróleos Mexicanos.
| | 2017 | | | | 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; and Acting Associate Managing Director of Exploration and Production Contracts of Petróleos Mexicanos.
| | 2016 | | | | Mr. Guillermo Edmundo Bernal Miranda | | Director General of Pemex Drilling and Services
Born: 1957
Business experience: Secretary of Finance and Management of the Government of the State of Puebla; Political and Educational Affairs Minister of the Consulate of Mexico in San Francisco, California in the United States of America; General Coordinator of Popular Finances of Instituto Nacional para la Economía Social.
| | 2017 |
Pemex Logistics—Directors and Executive Officers
| | | | | Name
| | Position with Pemex Logistics
| | Year
Appointed | Mr. Carlos Alberto Treviño Medina | | Chairman of the Board of Pemex Logistics (refer to Petróleos Mexicanos) | | 2017 | | | | Mr. Marco Antonio Murillo SoberanisAlamina | | Board Member of Pemex Logistics (refer to Petróleos Mexicanos) | | 20172019 | | | | Ms. Brenda Fierro Cervantes | | Board Member of Pemex Logistics and Deputy Director of Information Technology of Petróleos Mexicanos Born: 1974 Business experience: Acting Chief Information Officer/Acting Corporate Director of Information Technology and Deputy Director of Technologic Alliance of Petróleos Mexicanos; Project Leader of Lingo Systems, S.A. de C.V.; Director of New Technologies of the Government of the Federal District; and Deputy Director of Programming and Design of the Government of the Federal District. Family relations: None. | | 2019 | | | | Mr. Rodrigo Becerra Mizuno | | Board Member of Pemex Logistics (refer to Petróleos Mexicanos) | | 2016 | | | | Ms. Guadalupe Merino BañuelosGuillermo Alejandro Perabeles Garza | | Board Member of Pemex Logistics and Deputy Director of Strategic Planning and Regulatory Analysis of Petróleos Mexicanos Born: 1971Born: 1948
Business experience: Associate Managingexperience: Deputy Manager of Strategy Optimization at Petróleos Mexicanos; Executive Director of Strategic PlanningRegulations Proposal of Petróleos Mexicanos; Deputythe Government of the Federal District; and Director of Programming and BudgetingAdministrative Regulation of Petróleos Mexicanos; and Deputy Directorthe Government of Corporate Services of Petroóleos Mexicanos.the Federal District. Family relations: None. | | 20162019 |
| | | | | Pemex Logistics—Directors and Executive Officers | Name | | Position with Pemex Logistics | | Year Appointed | Mr. Enrique Cházaro AcostaCarlos Fernando Cortez González | | Board Member of Pemex Logistics and Deputy Director of Budget and Accounting of Petróleos Mexicanos Born: 1988Born: 1971
Business experience: Executive Coordinator of theexperience: Acting Manager Director of Management and ServicesBudget of Petróleos Mexicanos; Regulatory Coordinator of the Economic and Social BenefitsAssociate Managing Director of the Instituto Mexicano del Seguro Socia;Programming and Advisor to the Director GeneralFinancial Analysis of Instituto Mexicano del Seguro Social.Petróleos Mexicanos; and Deputy Manager of Income and Operational Outcomes of Petróleos Mexicanos. Family relations: None. | | 20172019 | | | | Mr. José Luis Antonio Gómez GóngoraMs. Francisca Lucía González Gaytán | | Board Member of Pemex Logistics and Coordinator of Procurement and Supply for Pemex Industrial Transformation of Petroleos Mexicanos Born: 1957 Born: 1972
Business experience:experience: Associate Managing Director of Contracts for GasManagement and Basic PetrochemicalsControl of Consumer Goods Warehouses of Petróleos Mexicanos; Associate ManagingStrategy Coordinator of Procurement and Supply of Petróleos Mexicanos; and Acting Director of Material Resources ofPemex-Gas and Basic Petrochemicals; and HeadManagement of the Management UnitCouncil of Petróleos Mexicanos.Xalapa, Veracruz. Family relations: None. | | 2015 |
Pemex Logistics—Directors and Executive Officers
| | | | | Name
| | Position with Pemex Logistics
| | Year
Appointed | | | 2020 | Mr. Antonio LopezLópez Velarde Loera | | Board Member of Pemex Logistics and Deputy Director of Risk Management and Reinsurance of Petróleos Mexicanos Born:Born: 1976
Business experience:experience: Associate Managing Director of Financial Risk Management of Petróleos Mexicanos; Deputy Manager of Capital Markets and Derivatives of Petróleos Mexicanos; and Deputy Manager of Derivative Transactions of Petróleos Mexicanos. Family relations: None. | | 2018 | | | | Mr. Armando David Palacios Hernández | | Director General
Born: 1973
Business experience: Corporate Director of Alliances and New Businesses of Petróleos Mexicanos; Director of Management of Instituto MexicanoJavier Emiliano González del Seguro Social; and Director of Economic and Social Benefits of Instituto Mexicano del Seguro Social.
Other board memberships: Deer Park Refining Limited Partnership.
| | 2018 |
Pemex Fertilizers—Directors and Executive Officers
| | | | | Name
| | Position with Pemex Fertilizers
| | Year
Appointed | Mr. Carlos Alberto Treviño Medina | | Chairman of the Board of Pemex Fertilizers (refer to Petróleos Mexicanos) | | 2017 | | | | Mr. Luis Rodolfo Capitanachi Dagdug | | Board Member of Pemex Fertilizers and Associate Managing Director of Finance, Industrial Processes and Logistics of Petróleos Mexicanos
Born: 1971
Business experience: Associate Managing Director of Accounting for Productive State-Owned Subsidiaries and Other Businesses of Petróleos Mexicanos; Acting Deputy Director of Management and Finance of Pemex-Petrochemicals; and Associate Managing Director of Financial Resources of Pemex-Petrochemicals.
| | 2015 | | | | Ms. Alma Rosa Moreno Razo | | Board Member of Pemex Fertilizers and Deputy Director of Economic-Financial Performance of Petróleos Mexicanos.
Born: 1952
Business experience: Advisor to the Director General of Petróleos Mexicanos; Partner of ITG Consultores; and General Director of Management of Grupo Financiero Banorte, S.A.B. de C.V.
| | 2015 | | | | Mr. Marco Antonio Murillo Soberanis | | Board Member of Pemex Fertilizers (refer to Petróleos Mexicanos) | | 2017 | | | | Mr. Armando David Palacios Hernández | | Board Member of Pemex Fertilizers (refer to Pemex Logistics) | | 2018 | | | | Mr. Jorge Collard de la Rocha | | Board Member of Pemex Fertilizers Deputy Director of Business Performance of Petróleos Mexicanos
Born: 1951
Business experience: Deputy Director of Management and Finance of Pemex-Petrochemicals; Deputy Director of Management and Finance of Pemex-Exploration and Production; and Acting Deputy Director of Supplies of Petróleos Mexicanos
| | 2015 | | | | Mr. Juan Alfredo Lozano TovarVillar | | Director General of Pemex FertilizersLogistics Born: 1968 Born: 1972
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 |
Pemex Ethylene—Directors and Executive Officers
| | | | | Name
| | Position with Pemex Ethylene
| | Year
Appointed | Mr. Carlos Alberto Treviño Medina | | Chairman of the Board of Pemex Ethylene (refer to Petróleos Mexicanos) | | 2017 | | | | Mr. Enrique Cházaro Acosta | | Board Member of Pemex Ethylene (refer to Pemex Logistics) | | 2017 | | | | Mr. Jorge Valadez Montoya | | Board Member of Pemex Ethylene (refer to Pemex Drilling and Services) | | 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 Alfredo Lozano Tovar | | Board Member of Pemex Ethylene (refer to Pemex Fertilizers) | | 2016 | | | | Mr. José Manuel Alvarado Doria | | Board Member of Pemex Ethylene and Deputy Director of Gas and Petrochemicals Process of Pemex Industrial Transformation
Born: 1957
Business experience: Deputy Director of Production ofPemex-Gas and Basic Petrochemicals; Actingexperience: Associate Managing Director of EvaluationPipelines Transportation, Maintenance and ImprovementServices ofPemex-Gas Petróleos Mexicanos; General Inspector of the Federal Police; and Basic Petrochemicals; and Associate Managing DirectorAdvisor of Operative Control, Optimization and Safetythe National Commissioner ofPemex-Gas and Basic Petrochemicals. the Comisión Nacional contra las Adicciones.
Family relations: None. | | 2016 | | | | Mr. Luis Rafael Montanaro Sánchez | | Director General
Born: 1969
Business experience: Deputy Director of Planning of Pemex Petrochemicals, Acting Deputy Director of Operations of Pemex Petrochemicals; and Associate Managing Director of Morelos PC of Pemex-Petrochemicals;.
Other board memberships: Petroquímica Mexicana de Vinilo, S.A. de C.V.; PMV Minera, S.A. de C.V.; and PMV Servicios Administrativas, S.A. de C.V.
| | 20162018 |
Compensation of Directors and Officers For the year ended December 31, 2017,2020, the aggregate compensation of executive officers of Petróleos Mexicanos and the existing subsidiary entities (17(14 people) paid or accrued in that year for services in all capacities was approximately Ps. 50.730.9 million. Except in the case of the independent members, with respect to the previous Board of Directors of Petróleos Mexicanos and the boards of directors of the existing subsidiary entities, and the independent members, with respect to the new Board of Directors of Petróleos Mexicanos, the members of our boards of directors do not receive compensation for their services. The compensation paid or accrued during 20172020 to the professional members of the previous Board of Directors of Petróleos Mexicanos and boards of directors of the existing subsidiary entities was approximately Ps. 7.56.0 million. See “Item 7—Major Shareholders and Related Party Transactions—Related Party Transactions” for information about the salary advances that we offer to our executive officers as an employee benefit. Board Practices Except in the case of the independent members with respect to the Board of Directors of Petróleos Mexicanos, neither the members of the boards of directors nor the executive officers of Petróleos Mexicanos or the productive state-owned subsidiaries are appointed for a specific term. The length of the terms of the Secretary of Energy and the Secretary of Finance and Public Credit is, however, limited by the length of their respective positions in the Mexican Government. Except in the case of the independent members first appointed under the Petróleos Mexicanos Law, theThe five independent members of the Board of Directors of Petróleos Mexicanos will be appointed for five-year terms, and may be appointed for an additional term of the same length. The Mexican Government representatives that serve as members of the boards of directors of Petróleos Mexicanos and each of the existing subsidiary entities may be removed at the discretion of the President of Mexico. The independent members of the Board of Directors of Petróleos Mexicanos may be removed for cause, including failure to carry out the duties and obligations set forth in the Petróleos Mexicanos Law, by the President of Mexico upon Senate approval. On October 14, 2014, theThe Board of Directors of Petróleos Mexicanos appointedappoints members to and convened the fourfive committees established byin accordance with the Petróleos Mexicanos Law to support its work. Unless otherwise specified in the Petróleos Mexicanos Law, the memberships of these committees must consist of at least three, but no more than five, members of the Board of Directors of Petróleos Mexicanos. Each of these committees must include two independent members of the Board of Directors of Petróleos Mexicanos, with the exception of the Audit Committee, which must include three independent members. Each of the Secretary of Energy, the Secretary of Finance and Public Credit and any ministry-level secretary serving as a member of the Board of Directors of Petróleos Mexicanos may designate one or more alternates to take his or her place at committee meetings, provided that these alternates are public officials whose positions are not more than two levels below such secretary’s position in the Mexican Government.
The committees may authorize a representative of the Director General to attend their meetings as a guest with the right to participate, but not vote, when deemed advisable for the performance of their duties. Audit Committee The Audit Committee of the Board of Directors of Petróleos Mexicanos is required to, among other duties, oversee our management, evaluate our financial and operational performance, monitor the status of our internal control systems, as well as nominate our external auditors, whose appointments are approved by the Board of Directors of Petróleos Mexicanos. See “Item 16C—Principal Accountant Fees and Services.” Each of the three members of the Audit Committee is “independent” of Petróleos Mexicanos within the meaning of Rule10A-3 under the Securities Exchange Act of 1934, as amended (the Exchange Act). In accordance with the Petróleos Mexicanos Law, the Audit Committee consists of three independent members of the Board of Directors of Petróleos Mexicanos, each of whom will serve as the chair of the committee on a rotating, annual basis, as determined by the Board of Directors of Petróleos Mexicanos. The Audit Committee consists of the following members: Ms. MaríMr. Rafael Espino de la Peña, Teresa Fernández Labardini, independent member of the Board of Directors of Petróleos Mexicanos and Chairperson of the Audit Committee; Mr. JorgeJuan José Borja Navarrete,Paullada Figueroa, independent member of the Board of Directors of Petróleos Mexicanos; and Mr. Felipe Duarte Olvera,José Eduardo Beltrán Hernández, independent member of the Board of Directors of Petróleos Mexicanos. A representative of the Director General, the Head of the Internal Auditing Area, the Legal Director or any other person may attend the Audit Committee’s meetings as a guest with the right to participate, but not vote, when deemed advisable and appropriate given the subject matter to be discussed. Human Resources and Compensation Committee The Human Resources and Compensation Committee is chaired by an independent member of the Board of Directors of Petróleos Mexicanos and includes the Secretary of Finance and Public Credit as a permanent member. The duties of the Human Resources and Compensation Committee include, among others, proposing the compensation of the Director General and other members of senior management of Petróleos Mexicanos within three levels of the Director General, as well as proposing hiring policies, performance management guidelines and the compensation of all other employees of Petróleos Mexicanos. The Human Resources and Compensation Committee of Petróleos Mexicanos consists of the following members: Mr. Carlos Elizondo Mayer-Serra,Humberto Domingo Mayans Canabal, independent member of the Board of Directors of Petróleos Mexicanos and Chairperson of the Human Resources and Compensation Committee; Mr. Octavio Francisco Pastrana Pastrana,Rafael Espino de la Peña, independent member of the Board of Directors of Petróleos Mexicanos; Mr. José Antonio González Anaya, member of the Board of Directors of Petróleos Mexicanos; Mr. Ildefonso Guajardo Villarreal,Arturo Herrera Gutiérrez, member of the Board of Directors of Petróleos Mexicanos; and
Mr. Rafael Pacchiano Alamán,Ms. María Luisa Albores González, member of the Board of Directors of Petróleos Mexicanos. Strategy and Investment Committee The Strategy and Investment Committee is chaired by an independent member of the Board of Directors of Petróleos Mexicanos on a rotating annual basis and is required to, among other duties, analyze our business plan and assist the Board of Directors of Petróleos Mexicanos in the approval of guidelines, priorities and general policies related to investments made by Petróleos Mexicanos. The Strategy and Investment Committee of Petróleos Mexicanos consists of the following members: Mr. Octavio Francisco Pastrana Pastrana,Juan José Paullada Figueroa, independent member of the Board of Directors of Petróleos Mexicanos and Chairperson of the Strategy and Investment Committee; Mr. Carlos Elizondo Mayer-Serra,Rafael Espino de la Peña, independent member of the Board of Directors of Petróleos Mexicanos; Mr. Pedro Joaquín Coldwell, member of the Board of Directors of Petróleos Mexicanos;
Mr. José Antonio González Anaya,Ms. Norma Rocío Nahle García, member of the Board of Directors of Petróleos Mexicanos; and
Mr. Ildefonso Guajardo Villarreal,Arturo Herrera Gutiérrez, member of the Board of Directors of Petróleos Mexicanos. Acquisitions, Leasing, Public Works and Services Committee The Acquisitions, Leasing, Public Works and Services Committee, is chaired by an independent member of the Board of Directors of Petróleos Mexicanos on a rotating annual basis and, among other duties, reviews, evaluates, monitors and develops recommendations regarding the annual programs of Petróleos Mexicanos for acquisition, construction and services contracts, and determines whether an exception to the public bidding process is applicable in specific cases. The Acquisitions, Leasing, Public Works and Services Committee of Petróleos Mexicanos consists of the following members: Mr. Felipe Duarte Olvera,Juan José Paullada Figueroa, independent member of the Board of Directors of Petróleos Mexicanos and Chairperson of the Acquisitions, Leasing, Public Works and Services Committee; Mr. Jorge José Borja Navarrete,Humberto Domingo Mayans Canabal, independent member of the Board of Directors of Petróleos Mexicanos; Mr. Pedro Joaquín Coldwell,Ms. Norma Rocío Nahle García, member of the Board of Directors of Petróleos Mexicanos; Mr. José Antonio González Anaya,Arturo Herrera Gutiérrez, member of the Board of Directors of Petróleos Mexicanos; and Mr. Rafael Pacchiano Alamán,Ms. María Luisa Albores González, member of the Board of Directors of Petróleos Mexicanos. External Businesses Committee The External Businesses Committee was created by the Board of Directors of Petróleos Mexicanos on June 23, 2020 and, among other duties, assists the Board of Directors of Petróleos Mexicanos in issuing policies, guidelines, procedures and other provisions related to the operation, surveillance, performance evaluation and monitoring of the operating and business results of our affiliates. The External Businesses Committee of Petróleos Mexicanos consists of the following members: Mr. José Eduardo Beltrán Hernández, independent member of the Board of Directors of Petróleos Mexicanos and Chairperson of the External Businesses Committee; Mr. Rafael Espino de la Peña, independent member of the Board of Directors of Petróleos Mexicanos; Mr. Juan José Paullada Figueroa, independent member of the Board of Directors of Petróleos Mexicanos; Ms. Norma Rocío Nahle García, member of the Board of Directors of Petróleos Mexicanos; and Mr. Arturo Herrera Gutiérrez, member of the Board of Directors of Petróleos Mexicanos. Employees Excluding employees employed by us on a temporary basis, at December 31, 2017,2020, Petróleos Mexicanos, its subsidiary entities and subsidiary companies had 127,941123,899 employees, as compared to 130,333125,735 at December 31, 2016.2019. During 2017,2020, Petróleos Mexicanos and the productive state-owned subsidiaries employed an average of 7,2985,921 temporary employees. The following table sets forth our employee numbers for the five years ended December 31, 2017:2020: | Year | | Petróleos Mexicanos and Subsidiary Entities | | | Subsidiary Companies | | | Total | | | Petróleos Mexicanos and Subsidiary Entities | | | Subsidiary Companies | | | Total | | 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 | | | | 126,940 | | | | 3,393 | | | | 130,333 | | 2017 | | | 124,660 | | | | 3,281 | | | | 127,941 | | | | 124,660 | | | | 3,281 | | | | 127,941 | | 2018 | | | | 124,818 | | | | 3,203 | | | | 128,021 | | 2019 | | | | 122,646 | | | | 3,089 | | | | 125,735 | | 2020 | | | | 120,936 | | | | 2,963 | | | | 123,899 | |
Source: Petróleos | Source: Petróleos Mexicanos and the subsidiary companies.
|
As of December 31, 2017,2020, the Petroleum Workers’ Union represented approximately 81.2%81.6% of the work force of Petróleos Mexicanos and the 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), a collective bargaining agreement between Petróleos Mexicanos and the Petroleum Workers’ Union and the Employment Reglamento de Trabajo del Personal de Confianza de Petróleos Mexicanos y Empresas Subsidiarias (Employment Regulation for White Collar Employees of PEMEX and Subsidiary Entities.Entities). The collective bargaining agreement is subject to renegotiation every two years, although salaries are reviewed annually. Since the Petroleum Workers’ Union’sUnion 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 11, 2017,20, 2020, Petróleos Mexicanos and the Petroleum Workers’ Union executed a newamended their collective bargaining agreement. The amendment became effective on August 1, 2020. The amended agreement thatprovides for a 3.37% increase in wages and a 1.80% increase in benefits, and will regulate their labor relations until July 31, 2019. The new collective bargaining agreement provided for a 3.12% increase in wages. 2021.OnAs of November 11, 2015, Petróleos Mexicanos announced that it had signedpursuant to an agreement with the Petroleum Workers’ Union, to modify the pension regime applicable to current and new employees. Pursuant to the agreement, the retirement age for employees with less than 15 years of service has been increased fromis 60 (compared to 55 to 60.for employees with more than 15 years of service). Employees are still required tomust serve for at least 30 years in order to be eligible to receive full retirement benefits. In addition, newNew employees willhired as of that date receive individual defined contributions retirement plans, which will benefit from direct contributions from Petróleos Mexicanos, portabilityplans. Employees who began serving prior to that date are permitted and tax benefits applicable to retirement savings. Current employees will also be permittedincentivized to opt into the new defined contributions retirement plans from their existing defined benefits retirement plans.
On December 18, 2015, the Director General of Petróleos Mexicanos informed the Ministry of Finance and Public Credit that our pension liabilities were expected to decrease by Ps. 186.5 billion as a result of the modifications to our pension regime described above. As of December 31, 2015, our pension liabilities had decreased by Ps. 196.0 billion.
On December 24, 2015, the Ministry of Finance and Public Credit published in the Official Gazette of the Federation theDisposiciones de carácter general relativas a la asunción por parte del Gobierno Federal de obligaciones de pago de pensiones y jubilaciones a cargo de Petróleos Mexicanos y sus empresas productivas subsidiarias (General General provisions regarding the assumption by the Mexican Government of the payment obligations related to pensions and retirement plans of Petróleos Mexicanos and its productive state-owned subsidiaries). subsidiaries. On August 3, 2016, the Ministry of Finance and Public Credit informed us that the Mexican Government would assume Ps. 184.2 billion in payment liabilities related to our pensions and retirement plans, and accordingly replaced the Ps. 5050.0 billion promissory note issued to us on December 24, 2015 with Ps. 184.2 billion in promissory notes. On November 19, 2020, we, along with the Ministry of Finance and Public Credit, agreed to exchange 16 promissory notes in favor of Petróleos Mexicanos (notes 5 to 20) in a total amount of Ps. 128.7 billion. for 18 series of Mexican Government local bonds (the “Government Bonds”). The resources from the Government Bonds will be exclusively transferred to the Fondo Laboral Pemex (Pemex Labor Fund, or “FOLAPE”) for the obligation payment related to its pension and retirement plan obligation. For further information about Government Bonds, see Note 15-A and 15-B to our consolidated financial statements included herein. In accordance with the Federal Labor Law and collective bargaining agreement in effect as of December 31, 2015,2020. Petróleos Mexicanos and the productive 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 certain survivors of retired employees. Retirees are entitled to receive increases in their pensions, of at least the increase in NCPI, whenever salary increases are granted to current employees. We also provide health and medical benefits to employees, retired employees and their beneficiaries and, subject to our overall budgetary constraints, we provide an interest-rate subsidy on employees’ mortgage loans. On November 5, 1997, the Ministry of Finance and Public Credit and the Board of Directors of Petróleos Mexicanos authorized the formation of a trust called the Pemex Labor Fund. This fund is a vehicle to fund labor liabilities, current pension payments and seniority premiums. We have designed a contribution plan to increase the funds held in this trust and to continue to make payments on outstanding labor and pension liabilities. Our contributions to the plan assets for our retirement benefits totaled Ps. 55,69362,929 million in 20162020 and Ps. 51,95254,396 million in 2017.2019. As of December 31, 20162020 and 2017,2019, the balance of the Pemex Labor Fund was Ps. 9,4909.4 million and Ps. 8,485138.7 million, respectively. Item 7. | Major Shareholders and Related Party Transactions |
Major Shareholders Petróleos Mexicanos and the subsidiary entities have no shareholders because they are public entities of the Mexican Government. The Mexican Government controls us and incorporates the consolidated annual budget and financing program of Petróleos Mexicanos and the subsidiary entities into its budget, which must be approved by the Chamber of Deputies each year. Any adjustment proposed by the Board of Directors of Petróleos Mexicanos to change our annual financial balance goal or increase the limit on our wage and salary expenditures budget or our financing program must be approved by the Chamber of Deputies. See “Item 4—Information on the Company—General Regulatory Framework” for more information about the Mexican Government’s authority with respect to our budget. Our operations in the oil and gas sector are also regulated by the Mexican Government and its ministries. Mexican Government officials hold five of the ten seats on the Board of Directors of Petróleos Mexicanos, and the Secretary of Energy is the Chairperson of the Board of Directors of Petróleos Mexicanos with the power to cast atie-breaking vote. An additional five seats on the Board of Directors are held by independent members appointed by the President of Mexico and ratified by the Senate. The Director General of Petróleos Mexicanos is a member of the President of Mexico’s cabinet. See also “Item 3—Key Information—Risk Factors—Risk Factors Related to our Relationship with the Mexican Government.” Related Party Transactions Directors and employees of Petróleos Mexicanos and the Subsidiary Entities are subject to regulations addressing conflicts of interest, including thePetróleos Mexicanos Law,Ley Federal de Responsabilidades Administrativas de los Servidores Públicos (Federal Law of Administrative Responsibilities of Public Officials) and thePolíticas y Lineamientos Anticorrupción para Petróleos Mexicanos, sus Empresas Productivas Subsidiarias y, en su caso, Empresas Filiales (AnticorruptionAnti-corruption Policies and Guidelines for Petróleos Mexicanos, its Subsidiary Productive Companiesproductive subsidiary entities and, where applicable, Subsidiary Companies).affiliated companies. Under these provisions, directors and employees of Petróleos Mexicanos are obligated to “recuse themselves from intervening in any way in the attention to, processing or resolution of matters in which they might have personal, family or business interest, including those where some benefit can result for themselves, their spouse, blood or affinity relatives up to the fourth degree, or civil relatives, or for third parties with which they have professional, labor or business relations, or for partners or partnerships where the public officials or the persons referred above are or have been members thereof.” The Board of Directors of Petróleos Mexicanos, including the independent members who are not public officials, are subject to the duties of loyalty and diligence. In accordance with the Petróleos Mexicanos Law, an independent member of the Board of Directors of Petróleos Mexicanos may be removed from his or her position for, among other causes: (1) utilizing for personal benefit or for the benefit of any third party the information made available to him or her in connection with the exercise of his or her duties as a board member; (2) disclosing such information in violation of applicable law; or (3) not recusing him or herself from discussion of and voting on matters in respect of which he or she has a conflict of interest. A member of the Board of Directors of Petróleos Mexicanos or of the board of directors of an existing subsidiary entity who acts in contravention of the Petróleos Mexicanos Law may be held liable for any damages that he or she caused to Petróleos Mexicanos or an existing subsidiary entity. As an employee benefit, we offer salary advances to all of our eligible Petroleum Workers’ Union andnon-union workers, including our executive officers, pursuant to the programs set forth in the collective bargaining agreement and in the Employment Regulation of White Collar Employees of Petróleos Mexicanos and Subsidiary Entities, respectively. The salary advances, which arenon-interest bearing, are offered to each eligible employee in an amount up to a maximum of four months’ salary and are repaid through salary deductions in equal installments over a period of either one or two years, as elected by the employee. Most of our employees take advantage of this benefit. The largest amount of salary advances outstanding to executive officers at any one time during 20172020 was Ps. 4.50.9 million. As of March 31, 2018,April 30, 2021, the aggregate amount of salary advances outstanding to our executive officers was Ps. 2.40.7 million. For further information about compensation of Directors and Officers, see Note 25 to our consolidated financial statements included herein.SecretaryAdditionally, Mr. Manuel Bartlett Díaz, one of Energy, Mr. Pedro Joaquín Coldwell, Chairmanthe members of the Board of Directors of Petróleos Mexicanos, since December 2012, as well as certain membersis also the Chief Executive Officer of his family, have held ownership interests since prior to Mr. Pedro Joaquín Coldwell’s appointmentCFE and due to the Board of Directors and through October of 2017 in companiesseveral purchase agreements that haveCFE has entered into agreements with Pemex-Refining, now held byour subsidiary, Pemex Industrial Transformation, for the sale and purchase of gasoline and other products by certain retail service stations andwe consider this a wholesale distributor, as well as the performance of other related activities, as provided below:party transaction. For further information about this related party transaction, see Note 25 to our consolidated financial statements included herein.
| | | | | Company
| | Name
| | Ownership
Share | Servicio Cozumel, S.A. de C.V.
(which operates a retail service station)
| | Mr. Pedro Joaquín Coldwell(1)
Mr. Pedro Oscar Joaquín Delbouis
(son of Mr. Joaquín Coldwell)
Mr. Nassim Joaquín Delbouis
(son of Mr. Joaquín Coldwell)
| | 60%
20%
20%
| | | | Planta de Combustible Cozumel, S.A. de C.V.
(which operates as a wholesale distributor)
| | Testamentary Trust(2)
Mr. Pedro Joaquín Coldwell(1)
| | 57%
40%
| | | | Gasolinera y Servicios Juárez, S.A. de C.V.
(which operates a retail service station)
| | Mr. Pedro Joaquín Coldwell(1)
Mr. Ignacio Nassim Ruiz Joaquín
(nephew of Mr. Joaquín Coldwell) Testamentary Trust(3)
| | 40%
20%
40%
| | | | Combustibles Caleta, S.A. de C.V.
(which operates a retail service station)
| | Mr. Pedro Joaquín Coldwell(1)
Mr. Pedro Oscar Joaquín Delbouis
Mr. Nassim Joaquín Delbouis
Mr. Ignacio Nassim Ruiz Joaquín
Testamentary Trust(4)
| | 20%
20%
20%
20%
20%
| | | | Combustibles San Miguel, S.A. de C.V.
(which operates a retail service station)
| | Mr. Pedro Joaquín Coldwell(1)
Mr. Pedro Oscar Joaquín Delbouis
Mr. Nassim Joaquín Delbouis
Mr. Ignacio Nassim Ruiz Joaquín
| | 25%
25%
25%
25%
|
(1) | In Novermber 2017, Mr. Pedro Joaquín Coldwell transmitted all of his shares in these companies to a management and investment trust held at the Banco Mercantil del Norte, S.A, Institución de Banca Múltiple, Grupo Financiero Banorte. |
(2) | 60% of these shares were owned by Fausto Nassim Joaquín Ibarra (father of Pedro Joaquín Coldwell), until his death in June of 2016, after which 57% of these shares became property of an investment, management and testamentary revocable trust, which we refer to as the Testamentary Trust. 50% of the voting rights of these shares are currently exercised by Mr. Pedro Oscar Joaquín Delbouis, and 50% are exercised by Mr. Nassim Joaquín Delbouis. |
(3) | 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. |
(4) | 20% of these shares were owned by Fausto Nassim Joaquín Ibarra until his death in June of 2016, after which these shares became property of the Testamentary Trust. 50% of the voting rights of these shares are currently exercised by Mr. Pedro Oscar Joaquín Delbouis, and 50% are exercised by Mr. Nassim Joaquín Delbouis. |
The rights of these companies to operate retail service stations and distribute gasoline and other products on a wholesale basis in Mexico are dependent on these agreements, the expiration ornon-renewal of which may adversely affect their business. These agreements are based on our standard forms of agreements and contain the standard terms and conditions applicable to all of Pemex Industrial Transformation retail service stations and wholesale distributors.
Item 8. | Financial Information |
Consolidated Statements and Other Financial Information | | | |
See Item 18. “Financial Statements”. Legal Proceedings Labor-Related Proceedings We are a party to various legal actions involving labor claims of former and present employees. These labor disputes relate to severance payments, life insurance benefits, extensions of labor contracts, level of wages, improper termination and employee housing. We do not expect these lawsuits to have a material adverse effect on our financial condition or future results of operations. For information on our negotiations with the Petroleum Workers’ Union and collective bargaining agreements, see “Item 6—Directors, Senior Management and Employees—Employees.” AuditsGovernmental Investigations and Other Investigations by the Mexican GovernmentMonitoring Activities
TheAuditoría Superior de la Federación(Superior Audit Office of the Federation, or the ASF)“ASF”), pursuant to the Petróleos Mexicanos Law, has the authority to annually reviews theCuenta Pública(Public Account) of Mexican Government entities, includingreview Petróleos Mexicanos and ourits subsidiary entities. This review focuses mainly onThe ASF reports directly to the entities’ compliance with budgetary benchmarks and budget and accounting laws.Mexican Congress. The ASF prepares reports of its observations based on thisits review. TheThese 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, as public servants, to legal sanctions. However, in most instances, any observed issues are clarified and disposed of. The Liabilities Unit at Petróleos Mexicanos, which is part of the SFP,Secretaría de la Función Pública (Ministry of Public Function, or the “SFP”), is responsible for receiving complaints and investigating violations of the Federal Law of Administrative Responsibilities of Public Officials and the General Law of Administrative Liabilities, as well as imposing administrative penalties in accordance with the law. The SFP, through theGeneral Law of Administrative Liabilities Unit, provided us with the information below regarding the main investigations and administrative proceedings against our employees and former employees. In March and April 2010, the SFP imposed administrative penalties against severalapplies to all Mexican public officials, including public officers of Pemex-RefiningPetróleos Mexicanos and its subsidiary entities and makes reference to the offenses and applicable sanctions that will be applied to individuals who are linked to serious administrative offenses, as determined under the law.
We have adopted a corporate compliance program that is designed to promote compliance with applicable laws, including an internal control system that aims to prevent risks, foster the exchange of information and communication and anticipate and address operational weaknesses. While we have established measures to identify, monitor, mitigate and remediate irregular or illicit actions, we are subject to the risk that our management, employees, contractors or any person doing business with us may engage in connection with a pipeline rupture in Nanchital, Veracruz. Asfraudulent activity, corruption or bribery, circumvent or override our internal controls and procedures or misappropriate or manipulate our assets for their personal benefit or of the date of this report, the final outstanding appeal was denied, the penalties were confirmed and all legal proceedings relatedthird parties to these matters have concluded. In May 2010, the SFP filed a criminal complaint and initiated two administrative proceedings against María Karen Miyazaki Hara, who served as PMI’s Deputy Director of Trading of Intermediate Distillates, for allegedly committing acts of corruption pursuant to which PMI lost revenues of approximately U.S. $13 million. The alleged acts involved the unauthorized sale of ULSD for the economic benefit of foreign companies, including Blue Oil Trading Ltd. On November 25, 2015, the SFP was notifiedour detriment. This risk is heightened by the Federal Attorney Generalfact that there wouldwe have a large number of complex, valuable contracts with local and foreign third parties. We have implemented a risk management model and internal policies intended to identify, monitor and mitigate those risks. However, our controls may not be no criminal prosecution based on a resolution issued on October 6, 2015. As of the date of this annual report, the criminal complaint has been concluded. In November 2010, the first administrative proceedings concluded, resultingeffective in Ms. Miyazaki Hara being fined Ps. 164.2 million and banned from holding public sector positions for 20 years. Ms. Miyazaki Hara filed a motion before theSéptima Sala Regional Metropolitana(Seventh Regional Metropolitan Court) of the Federal Court of Tax and Administrative Justice seeking that this resolution be declared null and void. On December 6, 2016, theSegunda Sección de la Sala Superior(Second Section of the Superior Court) of the Tax and Administrative Federal Court issued a judgment declaring the resolution null and void. On January 27, 2017, the SFP filed a motion to review this judgment, which was granted (fileR.F.-66/2017-V) by theOctavo Tribunal Colegiado en Materia Administrativa del Primer Circuito (Eighth Administrative Joint Court of the First Circuit). The plantiff also filed a motion to review the resolution
and anamparo, which was considered untimely and was denied on April 10, 2017(D.A.-257/2017-V). The plaintiff filed a complaint against this resolution (No. 9/2017), which was denied on May 10, 2017. As of the date of this report, this proceeding has concluded. 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 Tax and Administrative Justice seeking that this additional resolution also be declared null and void, which was granted on February 20, 2017 (file No.66/2017-V). On January 30, 2017, the SFP filed a motion to review this judgment, which was admitted (fileR.F.-77/2017-II) by the Eighth Administrative Joint Court of the First Circuit. The plaintiff also filed a motion to review the resolution and anamparo, which was considered untimely and was denied on April 11, 2017(D.A.-261/2017-II). The plaintiff filed a complaint against this resolution (No. 11/2017), which was denied on May 12, 2017. As of the date of this annual report, this proceeding has concluded.
In December 2010, the SFP issued a resolution imposing penalties against 15 public sector employees for being involved in irregularities relatedall cases. Further, we are subject to the leasingrisk that these compliance policies and procedures for four vessels. The employees were fined and barred from public sector employment for a period of ten years. The employees appealed the penalties. The penalties imposed by the resolution issued by the SFP were declared null and voidmay not be effective in ten cases and valid in four cases. In the final pending case, Mr. Zermeño Díaz filed anamparo, which was denied on July 10, 2014, by the el Cuarto Tribunal Colegiado en Materia Administrativa del Primer Circuito (Fourth Administrative Joint Court of the First Circuit). As of the date of this annual report, this proceeding has concluded.
On October 11, 2011, the SFP announced that it had fined three former officers of PMI an aggregate amount of Ps. 267.8 million, for allegedly improper contracting practices in the purchase and/preventing intentional misconduct, reckless or sale of petroleum products, which allegedly benefited certain of PMI’s commercial counterparties. The implicated former officers of PMI were also barred from public sector employment for a period of ten years. These former officers appealed the penalties. Two motions were granted and the resolutions declared null and void. On February 8, 2017, a judgment was issued by theSala Superior (Higher Court) of theTribunal Federal de Justicia Administrativa (Federal Court of Administrative Justice) declaring the third resolution null and void. On April 3, 2017, the SFP filed a motion to review this resolution and the former officer filed anamparo (file No. D.A. 198/2017) before theQuinto Tribunal Colegiado en Materia Administrativa del Primer Circuito (Fifth Joint Administrative Court of the First Circuit). On February 15, 2018, a judgment was issued declaring the judgment issued in February 2017 valid. As of the date of this annual report, this matter has concluded.
In July 2011, a criminal complaint was filed against Mario Blenda Ahumada, former Deputy Director of Trade and Refined Products of PMI, after a Ps. 11.0 million increase in his personal assets was detected. The Federal Attorney General’s Office concluded its investigation without filing a criminal complaint. The SFP filed a motion against this resolution, which was granted. As of the date of this annual report, the investigation is ongoing to determine whether criminal charges will be brought.
On April 24, 2014, the SFP issued a resolution imposing penalties against several public sector employees in connection with operations executed with Oceanografía, S.A. de C.V. Four employees of Pemex-Exploration and Production were barred from public sector employment for six months to one year. The employees filed motions (filesNo. 14/8891-19-01-02-08-OT;10781/14-17-10-5;16172/14-17-04-7; and15972/14-17-11-4) before the Regional Court of Chiapas-Tabasco and theDécima Sala Regional Metropolitana (Tenth Regional Metropolitan Court), theCuarta Sala Regional Metropolitana (Fourth Regional Metropolitan Court) and theDécima Primera Sala Regional Metropolitana (Eleventh Regional Metropolitan Court) of the Federal Court of Tax 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). On June 29, 2017, a judgment was issued declaring the resolution null and void. The SFP filed a motion to review this resolution before the Joint Administrative and Labor Court of the Tenth Circuit (file No. R.F. 32/2017). 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. On June 27, 2017, a new resolution was issued declaring the resolution against the employee valid. The employee subsequently filed anamparo before the Eighth Administrative Joint Court of the First Circuit (file D.A. 638/2017). 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. On March 1, 2017, a new judgment was issued declaring the resolution null and void, which was confirmed by the Joint Circuit Court on October 23, 2017. |
On March 19, 2015, a judgment was issued (fileNo. 15972/14-17-11-4) declaring the resolution null and void, which was sustained by the Circuit Court on October 16, 2015.
Key Energy Services
On August 11, 2016, the SEC announced that Key Energy Services, Inc. agreed to pay U.S. $5 million to settle SEC charges that it violated the internal controls andbooks-and-records provisions of the Foreign Corrupt Practices Act. These violations arose from payments allegedly made by its subsidiary, Key Mexico, to onenegligent actions of our executives or employees, to induce him to provide advice, assistance and inside information that was used by Key Energy and Key Mexico in negotiating contractsour contractors or any other individual doing business with us. The Liabilities Unit at Petróleos Mexicanos started an investigationSee “Item 3—Key Information—Risk Factors—Risk Factors Related to Our Operations—We are subject to Mexican and as of the date of this annual report, the investigation is ongoing.
Odebrecht
On December 21, 2016, the U.S. Department of Justice publicly disclosed that Odebrecht, a global construction conglomerate based in Brazil, pled guilty to charges of briberyinternational anti-corruption, anti-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, the Liabilities Unit commenced an investigation into instances of bribery or corruption related to these allegations. On January 25, 2017, we filed a criminal complaint with the Federal Attorney General’s Office against any party for acts that may have been committed against PEMEX.
As a result investigations being conducted by the Liabilities Unit, SFP and Federal Attorney General’s Office, agreements executed by Odebrecht and its affiliates with various public entities of the Mexican Government have been and are continuing to be reviewed. As of the date of this annual report, the SFP has initiated eight administrative sanctioning procedures: four against Odebrecht and its affiliates, two against their legal representatives and two against employees of PEMEX. The results of these investigations have resulted in the following actions:
On June 14, 2017, the Ministry of the Public Function, through the Liabilities Unit, initiated four administrative sanctioning procedures against two affiliates of Odebrecht and its representatives for probable wrongful payments related to a public work contract in our Miguel Hidalgo refinery.
On June 16, 2017, we notified Odebrecht Ingeniería y Construcción Internacional de México, S.A. de C.V. (“ODM”) of the termination of the engineering, procurement and construction contract between ODM and Pemex Industrial Transformation dated November 12, 2015. This contract was valued at Ps. 1.8 billion and covered works related to the construction of access ways and external works for the residual exploitation project for the Miguel Hidalgo refinery. We terminated this contract due to ODM’santi-money laundering laws. Our failure to comply with its obligations.
On September 11, 2017these laws could result in penalties, which could harm our reputation and October 8, 2017, the SFP, through the Liabilities Unit, announced that it had identified additional irregularitieshave an adverse effect on our business, results of operations and financial condition.”We cooperate with investigations by Mexican, U.S. and other government authorities from time to time, including investigations relating to Odebrecht, S.A., Grupo Fertinal, S.A. de C.V., Agro Nitrogenados, S.A. de C.V. and Vitol, Inc. As a policy, we cooperate with government authorities in connection with payments of Ps. 119 millionsuch investigations. In addition, we periodically monitor our compliance with applicable laws and Ps. 2.5 million, respectively, relatedregulations to the execution of public work contracts inenhance our Miguel Hidalgo refinery involving an affiliate of Odebrecht and a public officer of Pemex Industrial Transformation. On December 11, 2017,compliance program. Further, the SFP announced it has banned Constructora Norberto Odebrecht, S.A. from bidding forconducts administrative reviews and, entering into Mexican Government contracts and contracts with PEMEX, for four years and two years, respectively, as a result of having wrongfully received Ps. 119 million pesos in connection with one of the public work contracts executed for our Miguel Hidalgo refinery.
On December 15, 2017, the SFP announced that it had fined an officer of Pemex Industrial Transformation in the amounts of Ps. 119 millionpast, it and Ps. 2.5 millionother government entities have brought proceedings against our senior managers and also barred such officer from public sector employmentemployees for a period of ten years.
On April 17, 2018, the Liabilities Unit announced that it has banned each of ODM and Constructora Norberto Odebrecht, S.A for two years and six months from bidding for and entering into Mexican government contracts, including contracts with PEMEX, and fined each of them in an aggregate amount of Ps. 543.5 million for wrongful acts committed in connection with, and failureactivities detrimental to comply with the requirements of, the contract executed with Pemex Industrial Transformation for the Miguel Hidalgo refinery. The SFP also announced it has banned each of the Director General, Mr. Luis Alberto de Meneses Weyll, and the Director of Management and Finance, Mr. Gleiber José de Faria, of ODM, for two years and three months and fined each of them in an aggregate amount of Ps. 1.26 million for wrongful acts committed in connection with, and failure to comply with the requirements of, the contract executed with Pemex Industrial Transformation for the Miguel Hidalgo refinery.
The administrative sanctions imposed by the SFP are independent of any criminal charges that may be brought as a result of the criminal investigation that is being carried out by the Attorney General’s Office, which, as of the date of this annual report, is still ongoing.
our business. We are committed to collaborating with the SFP, the Liabilities Unit,competent authorities to pursue and the Federal Attorney General’s Office in ordercombat illicit activities and to hold those responsible for theseprotect our interests and reputation. We have a zero tolerance policy regarding acts accountableof bribery and ensure that we recover any damages to which we are entitled.corruption. Actions Against the Illicit Market in Fuels In orderThe illicit market in fuels in Mexico primarily involves the theft, adulteration and illegal transport, storage, distribution and commercialization of the hydrocarbons that we and other companies produce. This criminal activity mainly consists of the following:
Illegal tapping of our pipelines threatens the integrity of our pipeline system, thereby increasing the associated risks for personnel, facilities, the general population and the environment. Illegal tapping of our pipelines has caused volumetric deviations of products, explosions, loss of life, injuries and environmental damages, some of which have been material. Theft and illegal trade in fuels, which reduces our revenues by the amount that would have been generated from the sale of the stolen products and reduces our net income because the production cost of stolen product is included in our cost of sales. The increase in surveillance as well as the actions taken against illegal trade in fuels, have allowed us to counteractprotect 15.6 million liters of hydrocarbons in 2020. Tampering with the product quality, which negatively impacts consumers and our reputation. While in recent years we experienced an increase in theft of and illegal trade in the fuels that we produce, during 2019 and 2020 we reduced these illicit activities. We estimate that the average theft of fuel market,amounted to approximately 4.8 thousand barrels per day in 2020, a decrease of 25.0% as compared to 6.4 thousand barrels per day in 2019. For the years ended December 31, 2020 and 2019, losses resulting from fuel theft amounted to Ps. 4,279.5 million and Ps. 4,644.8 million, respectively. Given the sophistication and breadth of illegal networks, in recent years we have implemented several initiatives to develop a security strategy throughoutsustainable operating model to safeguard our workers, facilities, that seeksassets and values. These initiatives have sought to: integrate a strategic safeguard system, allowing us to respond in a timely manner to risks of illegal activity;
| • | | strengthenStrengthen our Salvaguardia Estratégica (Strategic Safeguard) strategy, which allows us to respond in a timely manner to risks of illegal activity. This strategy likewise relies on federal laws and regulations designed to prevent and punish crimes relating to fuel theft. |
| • | | Strengthen coordination and collaboration between Petróleos Mexicanos and our subsidiary entities, as well as withgovernment authorities, inwhich include, among others, the three ordersFiscalía General de la República (Office of government, including the Federal Attorney General’s Office,General), Procuraduría Federal del Consumidor (Federal Consumer’s Office, TaxOffice), Servicio de Administración Tributaria (Tax Administration System,Service, or the “SAT”), federal, state and municipal police, theSecretaría de la Defensa Nacional (Ministry of National Defense) and the Mexican navy;Navy, the Secretaría de Seguridad Pública y Protección Ciudadana (Ministry of Public Security and Citizen Protection), the Ministry of Energy and the Ministry of Finance and Public Credit. |
optimizeIncrease safety in and around pipelines, ground transportation and company facilities. Indoor and outdoor measurements at our facilities. Incorporate best practices for industrial safety, civil protection and environmental preservation in Strategic Safeguard works. Optimize our human capital and modernize our technology;technology. modernizeModernize our information systems to improve our strategic decisiondecisions making and our response time;time. The Plan Conjunto de Atención a Instalaciones Estratégicas de Pemex (Joint Plan for Attention to Strategic Facilities of Pemex), implemented in December 2019, is aimed at further preventing and revise our security strategy to incorporate innovations from the fields of industrial safety, civil protection, and environmental preservation.
Our initiatives aim to develop a sustainable operating model to safeguard the areas in which we operate, which comprise approximately 2.0 million square kilometers of onshore fields and 3.2 million square kilometers of Mexican territorial waters.
These initiatives are intended to strengthen our ability to combat decreasing the illicit market in fuels,fuels. The Joint Plan for Attention to Strategic Facilities of Pemex was instated to safeguard strategic facilities of Petróleos Mexicanos. As a result, during 2019 and include our increased investments2020 we observed a significant decrease in surveillance technology for our facilities and pipelines, as well as the reinforcementvolumetric deviation of equipment and resources available to protect our personnel, facilities, the general population and the environment. In particular, during 2017, we continued the following strategic measures in order to decrease incidents of criminal activity at our facilities:
| • | | Worked with the judicial and ministerial authorities to identify 6,660 vehicles involved in the illicit market in fuels, as compared to 2,695 vehicles in 2016, which represents a 147.1% increase. The number of individuals brought before judicial authorities in connection with the illicit market in fuels increased to 976, as compared to 583 individuals brought before judicial authorities in 2016, which represents a 67.4% increase, 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. |
Inspected the rights of way and facilities through a total of 19,587,523 kilometers patrolled in 2017, athydrocarbon products, from an average of 52,058 kilometers56.1 thousand barrels per day by vehicle and 1,606 kilometersin 2018 to 6.4 thousand barrels per day by foot, as comparedin 2019, and a further decrease to 305 kilometers4.8 thousand barrels per day by foot and 28,693 kilometers per day by vehicles during 2016, which represents an increase of 87.03% in total kilometers patrolled. These surveillance activities were carried out in coordination with the Ministry of National Defense, the Mexican Navy and other governmental authorities.
Strengthened our collaborations with governmental entities, the Federal Attorney General’s Office, the federal police and the Ministry of the Interior, among others, to share information and provide support to investigative teams focused on theft and illegal trade in fuels. We have also provided training for authorities responsible for the prevention, detection and prosecution of criminal activities in the illicit market in fuels, particularly in the inspection of automobile tanks and the documentation needed to be able to transport fuel, in an effort to support intragovernmental coordination.
Created territorial divisions to best use monitoring technologies along with our ground patrol, which has allowed us to detect a higher number of illegal drillings and to prevent the illegal extraction of fuels.
These measures led to the recovery of 22.6 million liters of hydrocarbon product in 2017, which represents an increase of approximately 72.5% as compared to the 13.1 million liters recovered in 2016.
2020. These efforts also led to the identification and sealing of 10,31611,022 illegal pipeline taps in 2017,2020, as compared to the identification and sealing of 6,87313,137 illegal pipeline taps during 2016, which representsin 2019, a 50.1% increase. This increase resulted from both increased surveillance and an increasedecrease of 16.1%. The principal measures of this plan are: | • | | Strengthen our Strategic Safeguard strategy through the implementation of four principal measures related to hydrocarbon theft, transport, storage and marketing, together with an ancillary measure focused on prosecution and enforcement. We work with many different authorities on these measures, including: the Secretaría de Bienestar (Welfare Ministry), the Ministry of National Defense, the Mexican Navy, the Guardia Nacional (National Guard), the Centro Nacional de Información (National Information Center), the Ministry of Public Security and Citizen Protection, the Office of the Federal Attorney General, the Policía Estatal (State Police), the Agencia de Seguridad, Energía y Ambiente (Security, Energy and Environmental Agency), the CRE, the SAT, the Federal Consumer’s Office and relevant judicial authorities; |
| • | | Increase the security of our pipelines, land transport and facilities by increasing the strength of our department focused on the Strategic Safeguard program, as well as by establishing collaboration agreements with the Fuerzas Armadas de México (Mexican Armed Forces), the National Guard and the Servicio de Protección Federal (Federal Protective Service); |
Removal of personnel involved in the numberillicit market for fuels; Special attention to 56 facilities identified as requiring priority, including 37 storage and dispatch terminals, one of criminal attemptswhich is located in a maritime terminal, 12 repumping stations, six refineries and one control center; Control access points to divert our products. vehicle entrances and exits of priority facilities and monitor control rooms and vertical tank areas; and Strengthen fuel distribution capacity through alternative means of transport to the pipeline. Our renewedcontinued focus on the detection of illegal pipeline taps in 20172020, together with the strict application of ground transportation protocols, enabled us to collect more information and develop more effective strategies to combat fuel theft, which in turn improved our ability to deploy ground patrol for the immediate identification and sealing of pipeline taps and preventavoid additional extraction of our hydrocarbon products. On June 1, 2017, we announced the cancellationAdditionally, some of the franchise contracts of seven gas stations locatedour personnel have been implicated for their involvement in the state of Puebla, which allegedly committed irregularities in theirorganized fuel trade procedurestheft and had tax inconsistencies. The announcement was the result of an operation involving PEMEX, theSecretaría de Hacienda
y Crédito Público (Ministry of Finance and Public Credit) through the Tax Administration Service and its Financial Intelligence Unit, as well as theProcuraduría General de la República (Attorney General’s Office), theSecretaría de la Defensa Nacional (Ministry of National Defense) and theComisión Nacional de Seguridad (National Security Commission), through the federal and state police. Through measures like these, we seektrade. It is our policy to provide certainty to our customers, as well as to combat the illicit market in fuels, tax evasion, money laundering and commercial fraud.
On February 14, 2018,inform the Liabilities Unit at Petróleos Mexicanos imposed penalties on eight employees fromwhen we are aware of information related to the storage and distribution terminal of Pemex Logisticsillicit market in the state of Chihuahua for operating technological devices to alter the measurement parameters to fill fuel tankers and for deviating from expected routes. Three of these employees were dismissed and barred from holding public sector positions for one year and five employees were suspended. On March 14, 2018, thefuels that involves our personnel. The Liabilities Unit at Petróleos Mexicanos dismissed another threehas the authority to investigate, undertake administrative proceedings, impose penalties against employees from Sector Pipelines Bajío of Pemex Logisticsor former employees in connection with this issue and barred them from holding public sector positions for ten years for the tapping of diesel in the Tula-Salamanca pipeline in Celaya, Guanajuato.
On March 27, 2018, the Liabilities Unit at Petróleos Mexicanos suspended an employee from Sector Pipelines Minatitlán of Pemex Logistics. This employee allegedly belongs to an organized network that repeatedly manipulated and altered the valves of theMinatitlán-México pipeline in Acayucan, Veracruz.file criminal complaints through legal representation.
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. AtAs of December 31, 20162019 and 2017,2020, we had accrued a reserve of Ps. 15.18.1 billion and Ps. 7.88.3 billion, respectively, for our contingent liabilities in connection with these lawsuits. Our material legal proceedings are described in Note 25 and Note 27 to our audited financial statements included in this report, and those descriptions are incorporated by reference under this Item. Dividends Pursuant to the Petróleos Mexicanos Law, as of January 1, 2016, Petróleos Mexicanos and its subsidiary entities are subject to a new dividend policy that will requirerequires them to pay a state dividend to the Mexican Government on an annual basis. In accordance with the Federal Revenue Law of 2017 andfor the Federal Revenue Law of 2018, Petróleos Mexicanos wasapplicable year, we were not required to pay a state dividend in 20172016 through 2020, and we will not be required to pay a state dividend in 2018.2021. For more information, see “Item 4—Taxes, Duties and Other Payments to the Mexican Government—Fiscal Regime for PEMEX—Other Payments to the Mexican Government.” Item 9. | The Offer and Listing |
Trading in the debt securities issued by Petróleos Mexicanos takes place primarily in theover-the-counter (OTC) market. All the debt securities issued by Petróleos Mexicanos that are registered pursuant to the U.S. Securities Act of 1933 (which we refer to as the Securities Act) are also listed on the Luxembourg Stock Exchange and traded on the Euro MTF market of the Luxembourg Stock Exchange. Item 10. | Additional Information |
Memorandum and Articles of Association The Mexican Congress established Petróleos Mexicanos by a decree dated June 7, 1938, effective July 20, 1938. None of Petróleos Mexicanos or the subsidiary entities has bylaws or articles of association. Petróleos Mexicanos and the subsidiary entities, are public entities of the Mexican Government and each is a legal entity empowered to own property and carry on business in its own name. The activities of Petróleos Mexicanos and the subsidiary entities are regulated by the Mexican Constitution, the Petróleos Mexicanos Law, Regulations to the Petróleos Mexicanos Law, the Hydrocarbons Law and other federal laws and regulations. See “Item 4—Information on the Company—History and Development.” Under the Petróleos Mexicanos Law, the Board of Directors of Petróleos Mexicanos has the following committees: the Audit Committee, the Human Resources and Compensation Committee, the Strategy and Investment Committee and the Acquisitions, Leasing, Public Works and Services Committee. See “Item 6—Directors, Senior Management and Employees.” Under the Petróleos Mexicanos Law and the Regulations to the Petróleos Mexicanos Law, our directors are obligated to abstain from voting on a proposal, arrangement or contract in which they have a personal, family or business interest. Our directors do not have the power to vote compensation to themselves or any other member of the board. Except in the case of the independent board members, our directors do not receive compensation for their services as members of the boards of directors of Petróleos Mexicanos and the subsidiary entities. Under the Petróleos Mexicanos Law, our directors must perform their duties without obtaining or attempting to obtain any benefits greater than those granted by law. Therefore, our directors do not have borrowing powers exercisable by themselves. There is no requirement for early retirement for our directors. Material Contracts As of December 31, 20162020 and 2017,2019, we have entered into contracts with various contractors for approximate amounts of Ps. 817,994374,157 million and Ps. 698,905621,732 million, respectively. These contracts are for the development of investment projects. See Note 24(e)26 to our consolidated financial statements included herein. On January 27, 2009, Petróleos Mexicanoswe entered into an indenture with Deutsche Bank Trust Company Americas, as Trustee. This agreement provides for theour issuance by Petróleos Mexicanos from time to time of unsecured debt securities. On the same date, Petróleos Mexicanoswe 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 Mexicanoswe established a U.S. $7.0 billion medium-term note, Series C, program. Pursuant to the 1996 guaranty agreement referred to above, Petróleos Mexicanos’our 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 Mexicanoswe 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 Mexicanoswe increased the size of this program to U.S. $12.0 billion and U.S. $22.0 billion, respectively. Petróleos MexicanosWe issued U.S. $3.5 billion of notes and bonds under this program in 2011. In 2012, Petróleos Mexicanoswe issued U.S. $5.3 billion of notes and bonds under this program. In 2013, Petróleos Mexicanoswe increased the size of this program to U.S. $32.0 billion and issued U.S. $6.9 billion of notes and bonds under it. In 2014, Petróleos Mexicanoswe increased the size of this program to U.S. $42.0 billion and issued U.S. $7.9 billion of notes and bonds under it. In 2017, Petróleos Mexicanoswe increased the size of this program to U.S. $92.0 billion and issued €4.3 billion, U.S. $5.0 billion and £450.0 million of notes and bonds under it. During the first three months ofIn 2018, Petróleos Mexicanoswe increased the size of this program to U.S. $102.0 billion and issued U.S. $4.0$6.0 billion, €3.15 billion and Swiss francs 365.0 million of notes and bonds under it. In 2019, we issued U.S. $14.8 billion of notes and bonds under it.this program. See “Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Financing Activities.” In 2020, we issued U.S. $6.5 billion of notes and bonds under this program. Exchange Controls Mexico has had a free market for foreign exchange since 1991, and the Mexican Government has allowed the peso to float freely against the U.S. dollar since December 1994. We have no control over or influence on this exchange rate policy. The Mexican Government has announced that it does not intend to change its floating exchange rate policy, but there is no guarantee that the Mexican Government will not change this policy. See “Item 3—Key Information—Exchange Rates.” Taxation The 1997 Securities, the 1999 Securities, the 2003 Securities, the 2004 Securities, the 2006 Securities, the 2008 Securities, the 2009 Securities, the 2010 Securities, the 2011 Securities, the 2012 Securities, the 2013 Securities, the 2014 Securities, the 2016 Securities, the 2018 Securities and the 20172020 Securities. As of the date of this annual report, we have registered the following securities (the “Registered Securities”) with the Securities and Exchange Commission. Pursuant to a registration statement on FormF-4 (FileNo. 333-7796), which was declared effective by the SEC on October 17, 1997, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $400,000,000 of 9.50% Global Guaranteed Bonds due 2027, which we refer to as the 1997 Securities. In December 2004 and February 2006, an aggregate amount of U.S. $376,250,000 of the 1997 Securities were exchanged for bonds issued by the Pemex Project Funding Master Trust (which we refer to as the Master Trust). Pursuant to a registration statement on FormF-4 (FileNo. 333-10706), which was declared effective by the SEC on October 1, 1999, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $500,000,000 of 9.50% Puttable or Mandatorily Exchangeable Securities (POMESSM)(POMESSM) due 2027, which we refer to as the 1999 Securities. In December 2004 and February 2006, an aggregate amount of U.S. $421,522,000 of the 1999 Securities were exchanged for POMESSMPOMESSM issued by the Master Trust. All outstanding 1999 Securities of Petróleos Mexicanos were, on March 16, 2006, mandatorily exchanged for 9.50% Global Guaranteed Bonds due 2027 issued by Petróleos Mexicanos, thereby increasing the outstanding amount of the 1997 Securities. Pursuant to a registration statement on FormF-4 (FileNo. 333-103197), which was declared effective by the SEC on February 24, 2003, the Master Trust, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $500,000,000 of 8.625% Bonds due 2022. Pursuant to a registration statement on FormF-4 (FileNo. 333-107905), which was declared effective by the SEC on August 21, 2003, the Master Trust, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $510,154,000 of 8.625% Bonds due 2022. We refer to the securities registered in 2003 under these registration statements as the 2003 Securities. Pursuant to a registration statement on FormF-4 (FileNo. 333-118373), which was declared effective by the SEC on August 31, 2004, the Master Trust, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $47,085,000 of 8.625% Bonds due 2022. We refer to the securities registered in 2004 as the 2004 Securities. Pursuant to a registration statement on FormF-4 (FileNo. 333-126941), which was declared effective by the SEC on January 13, 2006, the Master Trust, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $228,735,000 of 8.625% Bonds due 2023, U.S. $354,477,000 of 9.50% Bonds due 2027, U.S. $403,746,000 of POMESSMPOMESSM due 2027 and U.S. $500,000,000 of 6.625% Guaranteed Bonds due 2035. Pursuant to a registration statement on FormF-4 (FileNo. 333-126948), which was declared effective by the SEC on January 13, 2006, the Master Trust, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $21,265,000 of 8.625% Bonds due 2023, U.S. $45,523,000 of 9.50% Bonds due 2027 and U.S. $96,254,000 of POMESSMPOMESSM due 2027. All outstanding POMES registered under these registration statements were, on March 15, 2006, mandatorily exchanged for 9.50% Bonds due 2027. Pursuant to a registration statement on FormF-4 (FileNo. 333-136674), which was declared effective by the SEC on November 3, 2006, the Master Trust, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $751,995,000 of 6.625% Guaranteed Bonds due 2035. We refer to the securities registered in 2006 under these registration statements as the 2006 Securities. Pursuant to a registration statement on FormF-4 (FileNo. 333-152486), which was declared effective by the SEC on December 18, 2008, the Master Trust, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $501,000,000 of 6.625% Guaranteed Bonds due 2035 and up to U.S. $500,000,000 of 6.625% Guaranteed Bonds due 2038. We refer to the securities registered in 2008 as the 2008 Securities. Pursuant to a registration statement on FormF-4 (FileNo. 333-160799), which was declared effective by the SEC on August 25, 2009, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $2,000,000,000 of 8.00% Notes due 2019. We refer to the securities registered in 2009 as the 2009 Securities.
Effective as of September 30, 2009, Petróleos Mexicanos assumed, as primary obligor, all of the Master Trust’s obligations as issuer of the 2001 Securities, the 2003 Securities, the 2004 Securities, the 2006 Securities and the 2008 Securities. As a result, effective as of September 30, 2009, Petróleos Mexicanos is the issuer of all Registered Securities (as defined below). Pursuant to a registration statement on FormF-4 (FileNo. 333-168326), which was declared effective by the SEC on August 31, 2010, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $63,314,000 of 8.00% Notes due 2019, up to U.S. $1,000,000,000 of 6.000% Notes due 2020, up to U.S. $2,000,000,000 of 5.50% Notes due 2021 and up to U.S. $1,000,000,000 of 6.625% Bonds due 2035. We refer to the securities registered in 2010 as the 2010 Securities. Pursuant to a registration statement on FormF-4 (FileNo. 333-175821), which was declared effective by the SEC on August 31, 2011, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $1,000,000,000 of 5.50% Notes due 2021 and up to U.S. $1,250,000,000 of 6.500% Bonds due 2041. We refer to the securities registered in 2011 as the 2011 Securities. Pursuant to a registration statement on FormF-4 (FileNo. 333-182553), which was declared effective by the SEC on July 23, 2012, Petróleos Mexicanos,Pemex-Exploration and Production,Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $2,100,000,000 of 4.875% Notes due 2022 and up to U.S. $1,750,000,000 of 5.500% Bonds due 2044. We refer to the securities registered in 2012 as the 2012 Securities. Pursuant to a registration statement on FormF-4/A (FileNo. 333-189852), which was declared effective by the SEC on July 25, 2013, Petróleos Mexicanos,Pemex-Exploration and Production,Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $1,000,000,000 of 3.500% Notes due 2018, up to U.S. $500,000,000 of Floating Rate Notes due 2018, up to U.S. $2,100,000,000 of 3.500% Notes due 2023, up to U.S. $1,000,000,000 of 4.875% Notes due 2024, up to U.S. $500,000,000 of 6.500% Bonds due 2041 and up to U.S. $1,000,000,000 of 5.50% Bonds due 2044. We refer to the securities registered in 2013 as the 2013 Securities. Pursuant to a registration statement on FormF-4 (FileNo. 333-198588), which was declared effective by the SEC on September 22, 2014, Petróleos Mexicanos,Pemex-Exploration and Production,Pemex-Refining andPemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act up to U.S. $500,000,000 of 3.125% Notes due 2019, up to U.S. $500,000,000 of 4.875% Notes due 2024 and up to U.S. $3,000,000,000 of 6.375% Bonds due 2045. We refer to the securities registered in 2014 as the 2014 Securities. Pursuant to a registration statement on FormF-4 (FileNo. 333-205763), which was declared effective by the SEC on February 22, 2016, Petróleos Mexicanos,Pemex-Exploration Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services and 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 ServicesLogistics registered pursuant to the Securities Act up to U.S. $750,000,000 of 5.500% Notes due 2019, up to U.S. $1,250,000,000 of 6.375% Notes due 2021, up to U.S. $2,069,302,000 of 4.625% Notes due 2023, up to U.S $3,000,000,000 of 6.875% Notes due 2026, and up to U.S.$3,500,000,000 $3,500,000,000 of 6.750% Notes due 2047. We refer to the securities registered in 2016 as the 2016 Securities. Pursuant to a registration statement on FormF-4 (FileNo. 333-220721), which was declared effective by the SEC on February 22, 2018, Petróleos Mexicanos,Pemex-Exploration Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services Pemex Logistics and Pemex Cogeneration and ServicesLogistics registered pursuant to the Securities Act up to U.S. $1,500,000,000 5.375% Notes due 2022, up to U.S. $1,000,000,000 Floating Rate Notes due 2022, up to U.S. $5,500,000,000 6.500% Notes due 2027 and up to U.S. $2,500,000,000 6.750% Bonds due 2047. Pursuant to a registration statement on Form F-4/A (File No. 333-227508), which was declared effective by the SEC on November 16, 2018, Petróleos Mexicanos, Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services and Pemex Logistics registered pursuant to the Securities Act up to U.S. $2,500,000,000 5.350% Notes due 2028, up to U.S. $2,000,000,000 6.500% Notes due 2029 and up to U.S. $3,328,663,000 6.350% Bonds due 2048. We refer to the securities registered in 2018 as the 2018 Securities and, together with the 1997 Securities, the 2003 Securities, the 2004 Securities, the 2006 Securities, the 2008 Securities, the 2009 Securities, the 2010 Securities, the 2011 Securities, the 2012 Securities, the 2013 Securities, the 2014 Securities and the 2016 Securities, as the Registered Securities. Pursuant to a registration statement on Form F-4 (File No. 333-239722), which was declared effective by the SEC on September 11, 2020, Petróleos Mexicanos, Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics registered pursuant to the Securities Act up to U.S. $2,360,430,000 6.490% Notes due 2027, U.S. $4,420,831,000 6.840% Notes due 2030, US $3,800,000,000 5.950% Notes due 2031, U.S. $8,066,405,000 7.690% Bonds due 2050 and U.S. $3,800,000,000 6.950% Bonds due 2060. We refer to the securities registered in 2020 as the 2020 Securities and together with the 1997 Securities, the 2003 Securities, the 2004 Securities, the 2006 Securities, the 2008 Securities, the 2009 Securities, the 2010 Securities, the 2011 Securities, the 2012 Securities, the 2013 Securities, the 2014 Securities, the 2016 Securities and the 2018 Securities, as the Registered Securities. Taxation Generally The following summary contains a description of the principal Mexican and U.S. federal income tax consequences of the ownership and disposition of the Registered Securities, but it does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to invest in, or dispose of, the Registered Securities. This summary is based on the federal tax laws of Mexico and the United States in force on the date of thisForm 20-F, including the provisions of the income tax treaty between the United States and Mexico together with related protocols (which are subject to change), and does not describe any tax consequences arising under the laws of any state or municipality in Mexico, the United States or any other jurisdiction, or the laws of any taxing jurisdiction other than the federal laws of Mexico and the United States. Mexico has also entered into, or is negotiating, tax treaties with various countries that may have effects on holders of Registered Securities. This report does not discuss the consequences (if any) of such treaties. Each holder or beneficial owner of Registered Securities should consult its tax advisor as to the Mexican, United States or other tax consequences of the ownership and disposition of those securities, including the effect of any foreign, state or municipal tax laws, and the consequences of the application of any tax treaty to which Mexico is a party. Mexican Taxation This summary of certain Mexican federal tax considerations refers only to holders of Registered Securities that are not residents of Mexico for Mexican tax purposes and that will not hold the Registered Securities or a beneficial interest therein through a permanent establishment for tax purposes (we refer to any suchnon-resident holder as a Foreign Holder). For purposes of Mexican taxation, an individual is a resident of Mexico if he/she has established his/her domicile in Mexico. When an individual also has a place of residence in another country, that individual will be considered a resident of Mexico for tax purposes, if such individual has his/her center of vital interest in Mexico. An individual would be deemed to have his/her center of vital interest in Mexico if, among other things: (a) more than 50% of his/her total income for the year were derived from Mexican sources, or (b) his/her principal center of professional activities were located in Mexico. A legal entity is a resident of Mexico if: it maintains the principal administration of its business in Mexico; or it has established its effective management in Mexico. A Mexican national is presumed to be a resident of Mexico unless such person can demonstrate the contrary. If a legal entity or individual has a permanent establishment in Mexico, such permanent establishment shall be required to pay taxes in Mexico on income attributable to such permanent establishment in accordance with Mexican federal tax law. Taxation of Interest. Under the Mexican Income Tax Law and rules issued by the Ministry of Finance and Public Credit applicable to PEMEX, payments of interest (which are deemed to include any amounts paid in excess of the original issue price of the relevant securities), made by a Mexican issuer (including Petróleos Mexicanos) in respect of notes or bonds and other debt securities to a Foreign Holder will generally be subject to a Mexican withholding tax assessed at a rate of 4.9%, if the following requirements are met: notice relating to the offering of such notes or bonds is given to the CNBV as required under the Securities Market Law and evidence of such notice is timely filed with the Ministry of Finance and Public Credit; such notes or bonds are placed outside of Mexico through banks or brokerage houses in a country that is party to a treaty to avoid double taxation with Mexico; and the issuer duly complies with the information requirements established in the general rules issued by the Ministry of Finance and Public Credit for such purposes. If the effective beneficiaries, directly or indirectly, individually or jointly with related parties, receive more than 5% of the interest paid on such notes or bonds and are holders, directly or indirectly, individually or jointly, with related parties of more than 10% of the voting stock of the issuer or entities 20% or more of whose stock is owned directly or indirectly, individually or jointly, by parties related to the issuer, the withholding tax rate applicable to payment of interest on such notes or bonds may be significantly higher. Payments of interest made by Petróleos Mexicanos or the subsidiary entities, except for Pemex Fertilizers and Pemex Ethylene, in respect of the Registered Securities tonon-Mexican pension or retirement funds will be exempt from Mexican withholding taxes, provided that: such fund is duly organized pursuant to the laws of its country of origin and is the effective beneficiary of the interest payment; the income from such interest payment is exempt from income tax in its country of residence; and such fund delivers certain information as per rules issued by the Ministry of Finance and Public Credit. Additional Amounts. Petróleos Mexicanos and the subsidiary entities, except for Pemex Fertilizers and Pemex Ethylene, have agreed, subject to specified exceptions and limitations, to: pay Additional Amounts (as defined in the indenture dated as of September 18, 1997, as supplemented, between Petróleos Mexicanos and Deutsche Bank) to the holders of the 1997 Securities in respect of the Mexican withholding taxes mentioned above; pay Additional Amounts (as defined in the indenture dated as of August 7, 1998, as supplemented, between Petróleos Mexicanos and Deutsche Bank) to the holders of the 1998 Securities in respect of the Mexican withholding taxes mentioned above; pay Additional Amounts (as defined in the indenture dated as of July 31, 2000, as supplemented, between Petróleos Mexicanos and Deutsche Bank) to the holders of the 2003 Securities and the 2004 Securities in respect of the Mexican withholding taxes described above; pay Additional Amounts (as defined in the indenture dated as of December 30, 2004, as supplemented, between Petróleos Mexicanos and Deutsche Bank) to the holders of the 2006 Securities and the 2008 Securities in respect of the Mexican withholding taxes described above; and pay Additional Amounts (as defined in the indenture dated as of January 27, 2009, as supplemented, between Petróleos Mexicanos and Deutsche Bank) to the holders of the 2009 Securities, the 2010 Securities, the 2011 Securities, the 2012 Securities, the 2013 Securities, the 2014 Securities and the 2016 Securities in respect of the Mexican withholding taxes described above. If Petróleos Mexicanos pays Additional Amounts in respect of such Mexican withholding taxes, any refunds received with respect to such Additional Amounts will be for the account of Petróleos Mexicanos. Holders or beneficial owners of the Registered Securities may be required to provide certain information or documentation necessary to enable Petróleos Mexicanos and the subsidiary entities to apply the appropriate Mexican withholding tax rate applicable to holders or beneficial owners of the Registered Securities. In the event that the specified information or documentation concerning such holder or beneficial owner, if requested, is not provided on a timely basis, the obligation of Petróleos Mexicanos and the subsidiary entities to pay Additional Amounts may be limited. Taxation of Dispositions. Capital gains resulting from the sale or other disposition of the Registered Securities by a Foreign Holder will not be subject to Mexican income or withholding taxes. Other Mexican Tax Considerations. Under the Mexican Income Tax Law, any discount received by anon-resident upon purchase of the notes or bonds from a Mexican resident or anon-resident with a permanent establishment in Mexico is deemed interest income, and therefore, subject to taxes in Mexico. Such interest income results from the difference between the face value (plus accrued interest not subject to withholding) and the purchase price of such notes or bonds. Transfer and Other Taxes. There 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 Registered Securities and one or more other investments, nonresident aliens present in the United States for more than 182 days in a taxable year, U.S. expatriates, entities taxed as partnerships or the partners therein, persons that have a “functional currency” other than the U.S. dollar, nor does it address the tax treatment of holders that did not acquire the Registered Securities at their issue price as part of the initial distribution. Investors who purchased the Registered Securities at a price other than the issue price should consult their tax advisor as to the possible applicability to them of the amortizable bond premium or market discount rules. In addition, this summary does not discuss the application of state, local, or foreign tax laws, U.S. federal estate or gift tax laws, the Medicare contribution tax on net investment income, or the alternative minimum tax.tax or special timing rules prescribed under section 451(b) of the United States Internal Revenue Code of 1986, as amended (the “Code”). United States Holders should consult their own tax advisers concerning the U.S. federal, state, local, foreign and other tax consequences of purchasing, owning, and disposing of a Registered Security in their particular circumstances. United States Holders that use an accrual method of accounting for tax purposes (“accrual method holders”) generally are required to include certain amounts in income no later than the time such amounts are reflected on certain financial statements (the “book/tax conformity rule”). The application of the book/tax conformity rule thus may require the accrual of income earlier than would be the case under the general tax rules described below, although it is not clear to what types of income the book/tax conformity rule applies. This rule generally is effective for tax years beginning after December 31, 2017 or, for debt securities issued with original issue discount, for tax years beginning after December 31, 2018. Accrual method holders should consult with their tax advisors regarding the potential applicability of the book/tax conformity rule to their particular situation.
Taxation of Interest and Additional Amounts. A United States Holder will treat the gross amount of interest and Additional Amounts (i.e., without reduction for Mexican withholding taxes) as ordinary interest income in respect of the Registered Securities. Mexican withholding taxes paid at the appropriate rate applicable to the United States Holder will be treated as foreign income taxes eligible, subject to generally applicable limitations and conditions, for credit against such United States Holder’s U.S. federal income tax liability, at the election of such United States Holder, or for deduction in computing such United States Holder’s taxable income, provided that the United States Holder does not elect to claim a foreign tax credit for any foreign income taxes paid or accrued for the relevant taxable year. Interest and Additional Amounts will constitute income from sources without the United States and generally will be treated separately along with other items of “passive” income for purposes of determining the credit for foreign income taxes allowed under the Internal Revenue Code of 1986, as amended.Code. The calculation and availability of foreign tax credits or deductions involves the application of rules that depend on a United States Holder’s particular circumstances. United States Holders should consult their own tax advisors regarding the availability of foreign tax credits and the treatment of Additional Amounts. Taxation of Dispositions. Upon the sale, exchange or retirement of a Registered Security, a United States Holder will generally recognize a gain or loss equal to the difference between the amount realized (less any amounts attributable to accrued and unpaid interest not previously includible in gross income, which will be taxable as ordinary income) and the holder’s tax basis in such security, which is generally equal to the cost of the Registered Security to the United States Holder. Gain or loss recognized by a United States Holder on the sale, redemption or other disposition of the Registered Securities generally will 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. Subject to the discussion below under “Backup Withholding and Information Reporting,” holders The deduction of the Registered Securities that are not United States Holders (which we refer to asNon-United States Holders) generally will not becapital losses is subject to U.S. federal income or withholding tax on interest income in respect of the Registered Securities or on any gain realized on the disposition of the Registered Securities.limitations.
Backup Withholding and Information Reporting. Information returns may be filed with the Internal Revenue Service with respect to payments made to certain United States Holders of the Registered Securities. In addition, certain United States Holders may be subject to a backup withholding tax in respect of such payments, unless they (1) provide their accurate taxpayer identification numbers to the principal paying agent and certify that they are not subject to backup withholding or (2) otherwise establish an exemption from the backup withholding tax. Backup withholding is not an additional tax.Non-United States Holders may be required to comply with applicable certification procedures to establish that they are not United States Holders in order to avoid the application of such information reporting requirements and backup withholding tax. The amount of any backup withholding from a payment to a United States Holder or Non-United States Holder will be allowed as a credit against the holder’s U.S. federal income tax liability and may entitle the holder to a refund, provided that the required information is timely furnished to the IRS. Specified Foreign Financial Assets. Certain United States Holders that own “specified foreign financial assets” with an aggregate value in excess of U.S. $50,000 on the last day of the taxable year or U.S. $75,000 at any time during the taxable year are generally required to file an information statement along with their tax returns, currently on Form 8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts held at anon-U.S. financial institution, as well as securities issued by anon-U.S. issuer (which would include the Registered Securities) that are not held in accounts maintained by financial institutions. Higher reporting thresholds apply to certain individuals living abroad and to certain married individuals. Regulations extend this reporting requirement to certain entities that are treated as formed or availed of to hold direct or indirect interests in specified foreign financial assets based on certain objective criteria. United States Holders who fail to report the required information could be subject to substantial penalties. In addition, the statute of limitations for assessment of tax would be suspended, in whole or part. Prospective investors should consult their own tax advisors concerning the application of these rules to their investment in the Registered Securities, including the application of the rules to their particular circumstances. Documents on Display We are subject to the information requirements of the Exchange Act. In accordance with these requirements, we file reports, including annual reports on Form20-F, and other information with the SEC. These materials, including this report, and the exhibits thereto, may be inspected and copied at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at1-800-SEC-0330 for further information on the public reference rooms. In addition, anyAny filings we make electronically with the SEC will be available to the public over the Internet at the SEC’s web sitewebsite at http://www.sec.gov. We maintain an Internet site at the following location: http://www.pemex.com (this website address is for information only and is not intended to be an active link or to incorporate any website information into this annual report). Item 11. | Quantitative and Qualitative Disclosures About Market Risk |
QUALITATIVE DISCLOSURE Policies for Risk Management and the Use of Derivative Financial Instruments We face market risk caused by the volatility of hydrocarbon prices, exchange rates and interest rates, credit risk associated with investments and financial derivatives, as well as liquidity risk. In order to monitor and manage these risks, we have approved general provisions relating to financial risk management, which are comprised of policies and guidelines that promote an integrated framework for risk management, regulate the use of derivative financial instrumentsDerivative Financial Instruments (“DFIs”), and guide the development of risk mitigation strategies. This regulatory framework establishes that DFIs should be used only for the purpose of mitigating financial risk. The use of DFIs for any other purpose must be approved in accordance with our current internal regulation. We have a Financial Risk Working Group (FRWG)(“FRWG”) which is a specialized working group with decision-making authority on financial risk exposure, financial risk mitigation schemes, and DFIs trading of Petróleos Mexicanos, the subsidiary entities, and where applicable, the subsidiary companies. Approved DFIs are mainly traded on the over-the-counter (“OTC”) market; however, exchange traded instruments may also be used. In the case of P.M.I. Trading DAC, DFIs are traded on CME Clearport. The different types of DFIs that we trade are described below in the subsections corresponding to each risk type and as related to the applicable trading markets. See Note 18 to our consolidated financial statements included herein. One of our policies is to contribute to minimizing the impact that unfavorable changes in financial risk factors have on our financial results by promoting an adequate balance between incoming cash flows from operations and outgoing cash flows related to our liabilities. As part of the regulatory framework for financial risk management, we have established the eligible counterparties with which we may trade DFIs and other financial instruments. In addition, certain of the PMI subsidiariesSubsidiaries have implemented a regulatory framework for risk management with respect to its activities, which consists of policies, guidelines and procedures to manage the market risk associated with its commodity trading activities in accordance with industry best practices, such as: 1) the use of DFIs for financial risk mitigation purposes; 2) the segregation of duties; 3) valuation and monitoring mechanisms, such as the generation of a daily portfolio risk report, value at risk (VaR)(“VaR”) computation; and 4) VaR limits, both at a global and business unit level and the implementation of stop loss mechanisms. In addition, PMI Trading also has its own risk management subcommittee that supervises the trading of DFIs. Approved DFIs are mainly traded on the OTC (Over the Counter) market; however, exchange traded instruments may also be used. In the case of PMI Trading, DFIs are traded onCME-ClearPort.
The different types of DFIs that we trade are described below in the subsections corresponding to each type of risk and applicable trading markets. See Note 16 to our consolidated financial statements included herein.
One of our policies is to contribute to minimizing the impact that unfavorable changes in financial risk factors have on our financial results by promoting an adequate balance between expected incoming cash flows from operations and outgoing cash flows related to our liabilities.
As part of the regulatory framework for financial risk management, we have limited and specified the counterparties with which we may trade DFIs and other financial instruments.
Given that the outstanding DFIs of Petróleos Mexicanos have been entered into for risk mitigation purposes, particularly with economic hedging purposes, there is no need to establish and monitor market risk limits. For those portfolios with an open market risk exposure, our financial risk management regulatory framework establishes the implementation and monitoring of market risk metrics and limits such(such as VaR, and capital at risk (an aggregation ofmark-to-market (“MtM”) and profit and loss, or CaR)among others). We have also established credit guidelines for DFIs that Pemex Industrial Transformation offers to its domestic customers, which include the use of guarantees and credit lines. For exchange traded DFIs, we trade under the margin requirements of the corresponding exchange market, and therefore do not have internal policies for these DFIs. DFIs held with financial counterparties do not require collateral exchange clauses. Notwithstanding, our regulatory framework promotes credit risk mitigation strategies such as collateral 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 Fair Value of DFIs We periodically evaluate our exposure to international hydrocarbon prices, interest rates and foreign currencies and we use derivative instruments as a mitigation mechanism when potential sources of market risk are identified. We monitor the fair value of our DFI portfolio on a periodic basis. The fair value represents the price at which one party would assume the rights and obligations of the other, and is calculated for DFIs through models commonly used in the international financial markets, based on inputs obtained from major market information systems and price providers. Our DFI portfolio is composed primarily of swaps, the prices of which are estimated by discounting flows using the appropriate factors and contains no exotic instruments that require numerical approximations for their valuation.
We value our DFIs under standard methodologies commonly applied in the financial markets, thereby Therefore, we do not have an independent third party to value our DFIs. Nonetheless, we
We calculate the fair value of our DFIs through the tools developed by our market information providers such as Bloomberg, and through valuation models implemented in software packages used to integrate all of our business areas and accounting, such as System ApplicableApplications Products (SAP)(“SAP”). We do not have no policies to designate a calculation or valuation agent. BecauseOur DFI portfolio is composed primarily of swaps, for which fair value or Mark-to-Market (“MtM”) is estimated by projecting future cash flows and discounting them by the corresponding discount factor; for currency and interest rate options, this is done through the Black and Scholes model, and for crude oil options, through the Levy model for Asian options.
According to IFRS 13 “Fair Value Measurement”, the MtM value of DFIs must reflect the creditworthiness of the parties. Consequently, the fair value of a DFI takes into account the risk that either party may default on its obligation. Due to the above, we apply the credit value adjustment (“CVA”) method to calculate the fair value of our DFIs Given that our hedges are cash flow hedges, their effectiveness is preserved regardless of the variations in the underlying assets or reference variables, thussince over time asset flows are fully offset by liabilities flows. Therefore, it is not necessary to measure or monitor the hedges’ effectiveness. Fair value hierarchy OurWe value our DFIs using standard methodologies commonly applied in the financial markets. The fair-value assumptions fall under Level 2and inputs utilized are classified in the three levels of the fair value hierarchy for market participant assumptions, as described below.
The fair values determined by Level 1 inputs utilize quoted prices in financial markets for identical assets or liabilities. Fair values determined by Level 2 inputs are based on quoted prices for similar assets or liabilities in financial markets, and inputs other than quoted prices that are observed for assets or liabilities. Level 3 inputs are unobservable inputs for the assets or liabilities, and include situations where there is little, if any, market activity for the assets or liabilities. Management uses appropriate valuation techniques based on the available inputs to measure the fair values of our applicable assets and liabilities. When available, we measure fair value using Level 1 inputs, because they generally provide the most reliable evidence of fair value. The fair-value assumptions and inputs utilized in the valuation of our DFIs’ fair value, fall under Level 2 of the fair value hierarchy. Liquidity Sources Liquidity Risk Our main internal source of liquidity comes from our operations. Additionally, through our debt planning and the purchase and sale of U.S. dollars, we currently preserve a cash balance at a level of liquidity in domestic currency and U.S. dollars that is considered adequate to cover our investment and operating expenses, as well as other payment obligations, such as those related to DFI’s. In order to preserve a cash balance at a suitable level, during the fourth quarter of 2017, we entered into ten FX swaps of the peso against U.S. dollar for an aggregate amount of U.S. $3.0 billion.DFIs. In addition, as of December 31, 2020, we have acquired committed revolving credit lines in order to mitigate liquidity risk, two of which provide access to Ps. 3,50028,000 million and Ps. 20,0009,000 million with expiration dates in JuneNovember 2022 and November 2019, respectively,2023, respectively; and three othersanother that provideprovides access to U.S. $1.5 billion, U.S. $3.3 billion and U.S. $2.0 billion$5,500 million with an expiration datesdate in December 2019, February 2020 and January 2021, respectively. June 2024. Finally, the investment strategies of our portfolios are structured by selecting time horizons that consider each currency’s cash flow requirements in order to preserve liquidity. Certain PMI subsidiariesSubsidiaries mitigate their liquidity risk through several mechanisms, the most important of which is the centralized treasury, or“in-house bank,” which provides access to atwo syndicated credit linelines for up to U.S. $700 million and U.S. $1,500 million (the latter was transferred from Petróleos Mexicanos to PMI during December 2020) and cash surplus capacity in the custody of the centralized structure. In addition, certain PMI subsidiariesSubsidiaries have access to bilateral credit lines from financial institutions for up to U.S. $650$250 million. These companies monitor their cash flow on a daily basis and protect their creditworthiness in the financial markets. Liquidity risk is mitigated by monitoring the maximum/minimum permissiblecertain financial ratios as set forth in the policies approved by each company’s board of directors. Changes in Exposure to Main Risks Market Risk We are exposed to fluctuations in floating interest rate liabilities. We are exposed to U.S. dollar LIBOR and to Mexican peso TIIE. As of December 31, 2017, approximately 15.6 %2020, 14.3% of our total net debt outstanding (including DFIs) consisted of floating rate debt. Moreover, we invest in pesos and U.S. dollars in compliance with applicable internal regulations, through portfolios that have different purposes that seek an adequate return subject to risk parameters that reduce the probability of capital losses. The objective of the investments made through these portfolios is to meet our obligations payable in pesos and U.S. dollars. The investments made through our portfolios are exposed to domestic and international interest rate risk and credit spread risk derived from government and corporate securities, and inflation risk arising from the relationship between UDIs and pesos. However, these risks are mitigated by established limits on exposure to market risk. Interest Rate Swaps Occasionally, for strategic reasons or in order to offset the expected inflows and outflows, we have entered into interest rate swaps. Under our interest rateswaps and options. Through the swap agreements, we acquire the obligationare obligated to make payments based on a fixed interest rate and are entitledin exchange for receiving payments referenced to receivea floating interest rate payments based on LIBOR, TIIE or a rate referenced to or calculated from TIIE.rate. On the other hand, through the option agreements, we acquire protection against possible increases in the floating interest rates of some of our liabilities. As of December 31, 2017,2020, we were a party to four interest rate swap agreements denominated in U.S. dollars for an aggregate notional amount of U.S. $ 1,623.75956.25 million at a weighted average fixed interest rate of 2.35% and a weighted average term of 7.34.3 years. Similarly, in order to eliminate the volatility associated with variable interest rates of long-termits financing operations, PMI NASAPMI-NASA has executed also four interest rate swap agreements denominated in U.S. dollars for an outstanding aggregate notional amount of U.S. $ 71.94$24.19 million, at a weighted average fixed interest rate of 4.17% and a weighted average term of 4.411.41 years.
IBOR reference rates transition As a result of the decision made by the Financial Stability Board (FSB), the Interbank Offered Rates (IBORs), such as the LIBOR in dollars, are expected to cease to be published in 2022, and are expected to be replaced by alternative reference rates, based on risk-free rates obtained from market operations. The cease of publication of these rates was originally scheduled for December 2021. Nevertheless, on November 2020, the ICE Benchmark Administration Limited (“ICE”) announced an extension until June 2023 for the publication of the most common LIBOR rates in dollars. Therefore, we have identified and are reviewing contracts expiring after the applicable cessation dates that could have an impact derived from the change in the aforementioned rates. We plan to continue working on any amendments to the contracts which may be required as a result of the transition. We have a reduced number of financial instruments (debt instruments and DFIs) referenced to floating rates in U.S. dollars with maturity and interest rate fixation after June 2023. To the date, we are monitoring the evolution of the IBORs transition in the market, to anticipate any negative impact that these changes could have. Once the alternative reference rates are defined, as well as the new discount curves and any other valuation parameters, we will be able to estimate the impact that such changes will have on financial instruments’ market value and financial cost. Most of our revenues are denominated in U.S. dollars, a significant amount of which is derived from exports of crude oil and petroleum products, which are priced and payable in U.S. dollars. Moreover,Additionally, our revenues from domestic sales of gasoline and diesel net of IEPS Tax, tax duties, incentives, and other related taxes, as well as domestic sales of natural gas and its byproducts, LPG petrochemicals and our byproductspetrochemicals, 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 We prioritize debt issuances denominated in U.S. dollars; nonetheless, this is not always achievable and henceachievable. Hence, non-U.S. dollar-denominateddollar denominated debt issued in international currencies is hedged through DFIs to mitigate its exchange rate exposure, either with swaps to convert the debtby swapping it into U.S. dollars or through other DFIs to mitigate our exchange rate risk exposure.derivative structures. The rest of the debt is denominated in pesos or in UDIs, and for which most of the debt denominated in UDIs, it has been converted into pesos through DFIs in order to eliminate the inflationary risk exposure. As a consequence of the above, our debt issued in international currencies other than U.S. dollars has exchange rate risk mitigation strategies. Through theseWe have selected strategies we havethat further soughtseek to reduce our cost of funding by leaving, in some cases, part of this exchange rate exposure unhedged when assessed as appropriate. The underlying currencies of our DFIs are the euro, Swiss franc, Japanese yen Poundand pounds sterling and Australian dollar against the U.S. dollar and UDIs against the peso. In 2017,As of December 31, 2020, we did not enter into any DFIs, as no debt in currencies other than U.S. dollars or pesos was issued.
Nonetheless, during 2020 we carried out the restructure of three cross-currency swaps, one of which had a recouponing provision. These DFI hedged the exchange rate exposure of a €1,250 million debt with maturity in 2027. For this restructure, we entered into, variouswithout cost, structures which are composed of a cross-currency swaps to hedge inflation risk arising from debt obligations denominated in UDIs for an aggregate notional amount of Ps. 6,291.97 million. During 2016, 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. $3,459.2 millionswap and the inflation risk arising from debt denominated in UDIs, for an aggregate notional amountsale of Ps. 1,077.1 million.a call option, guaranteeing complete protection up to a certain exchange rate and partial protection above that level. This allowed us to eliminate the recouponing provision without cost. Once this restructure had been carried out, 10% of this issue remained hedged with a cross-currency swap. MostAdditionally, during 2019 we carried out the restructure of oura 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 amountrecouponing provision. This DFI hedged the exchange rate exposure of U.S. $1,146.4 million.
Moreover,a €725 million debt maturing in 20172025. For this restructure we entered into, without cost, three options structures called“Seagull Option” “Seagull Options” to hedge the same notional risk of three debt issues in euros for an aggregate notional amount of € 4,250 million.as the original swap. These structures protect the short exposure in euros against an appreciation of the euro versus the U.S. dollar in a specific range and recognizeresult in a benefit if the euro depreciates up to a certain exchange rate, for each debt issue. Inrate. Additionally, in order to mitigate the exchange rate risk caused byderived from the coupons, of these issues we entered into only coupon swaps.
for the same notional amount. These allowed to eliminate the recouponing provision without cost.Additionally,For the years ended December 31, 2020, 2019 and 2018, we entered into, without cost, a structure which is composed of a cross-currency swap and the sale of a call option, in order to hedge the notional risk of a debt issue in Pounds sterling for £450 million, guaranteeing complete protection up to a certain exchange rate and partial protection above that level.
In 2016, we entered into, without cost, an options structure called “Seagull Option” in order to cover the notional risk of a debt issue in Japanese yen for ¥80,000 million, 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 in a specific range, and recognizes a benefit if the Japanese yen depreciates up to a certain exchange rate.
We recorded a total net foreign exchange gain (loss) of Ps. 23,184.1(128,949.3) million, Ps. 86,930.4 million and Ps. 23,659.5 million, respectively. These gains (loss) include unrealized foreign exchange gains (loss) associated with debt of Ps. (122,099.1) million for the year ended December 31, 2017 and a total net foreign exchange loss of2020, Ps. 254,012.7 million and Ps. 154,765.6 million for the years ended December 31, 2016 and 2015, respectively. These gains and losses include unrealized foreign exchange gains associated with debt of Ps. 16,685.475,967.4 million for the year ended December 31, 2017 and unrealized foreign exchange loss associated with debt of Ps. 243,182.8 million2019, and Ps. 152,554.519,762.2 million for the yearsyear ended December 31, 2016 and 2015, respectively.2018. The appreciationdepreciation of the peso caused a total net foreign exchange gainloss in 20172020 because a significant portion of our debt, 89.4%88.64% (principal only) as of December 31, 2017,2020, is denominated in foreign currency. Unrealized foreign exchange gains and losses 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 gain in 2017 was due to the appreciation of the peso, from Ps. 20.6640 = U.S. $1.00 on December 31, 2016 to Ps. 19.7867 = U.S. $1.00 on December 31, 2017. 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.
Certain of the PMI subsidiariesSubsidiaries face market risks generated by fluctuations in foreign exchange rates. In order to mitigate these risks, the boards of directors of several of these companies have authorized a policy which stipulates that no more than 5% of a company’s total financial assets maymust be denominated in a currency other than itstheir 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’sP.M.I. Trading DAC’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’sP.M.I. Trading DAC’s exposure to foreign currency risk results primarily from the need to fund tax payments denominated in domestic currency, as well as from certain related sales costs denominated in domestic currency. PMIP.M.I. Trading DAC believes it can adequately manage the risk created by the payment of taxes in domestic currency without the need to enter into hedging instruments because the exposure to this risk is marginal relative to the total flows of U.S. dollar. In addition, in the event that a potential foreign exchange risk arises in connection with a commercial transaction, PMIP.M.I. Trading DAC may implement risk mitigation measures by entering into DFIs.DFIs.
| (iii) | Hydrocarbon Price Risk |
We periodically assess our revenues and expenditures structure in order to identify the main market risk factors that our cash flows are exposed to in connection with international hydrocarbon prices. Based on this assessment, we monitor our exposure to the most significant risk factors and quantify their impact on our financial balance. Our exports and domestic sales are directly or indirectly related to international hydrocarbon prices. Therefore, we are exposed to fluctuations in these prices. In terms of crude oil and natural gas, part of this risk is transferred to the Mexican Government under our current fiscal regime. We continuously evaluate the implementation of risk mitigation strategies, including those involving the use of DFIs, while taking into account operational and economic constraints.
Our exposure to hydrocarbon prices is partly mitigated by natural hedges between our inflows and outflows. Since 2016, as a resultAdditionally, we continuously evaluate the implementation of risk mitigation strategies, including those involving the changes in our fiscal regime, our sensitivity to crude oil prices has decreased. Nonetheless, we worked on hedging strategies for the following years in order to reduce our exposure to potential drops in the crude oil price.use of DFIs, taking into consideration their operative and budgetary feasibility.
Commodity Derivatives In April 2017, the Board of Directors of Petróleos Mexicanos approved the establishment of the Programa Anual de Coberturas Petroleras (Annual Oil Hedging Program). Since then, we entered into a crude oil hedgehave implemented hedging strategies to partially protect our cash flows from a decreasefalls in the Mexican crude oil basket price below thatthe one established in the Federal Revenue Law. We hedged 409 thousand barrels per day from May to December 2017 for U.S. $133.5 million. As a result of this strategy, we had an income of U.S. $205.7 million. During the fourth quarter of 2017,2018, we entered into a crude oil hedge to partially protect our cash flows for the fiscal year 2018, from a decrease in the Mexican crude oil basket price below that established in the 2018 Federal Revenue Law. We2019, pursuant to which we hedged 440320 thousand barrels per day from January tofor the period between December 2018 and December 2019, for U.S. $449.9$149.6 million. Afterwards, during 2019 we entered into a crude oil hedge for fiscal year 2020, pursuant to which we hedged 243 thousand barrels per day for the period between December 2019 and December 2020, for U.S. $178.3 million. Finally, during 2020 we entered into a crude oil hedge for fiscal year 2021, pursuant to which we hedged 332.5 thousand barrels per day for the period between December 2020 and June 2021, for U.S. $ 119.92 million. In addition to supplying natural gas, Pemex Industrial Transformation offerscan offer DFIs to its domestic customers in order to provide them with support to mitigate the risk associated with the volatility of natural gas prices. Until 2016, Pemex Industrial Transformation entered into DFIs with Mex Gas Supply, S.L. under the opposite position to those DFIs Since 2017, when this service is offered, to its customers in order to mitigate the market risk it bears under such offered DFIs. Mex Gas Supply, S.L. then transferred the related price risk derived from the DFI position held with Pemex Industrial Transformation to international financial counterparties by entering into these opposite position DFIs with such parties. As of 2017, Pemex Industrial Transformation must enter into DFIs with Petróleos Mexicanos under the opposite position to those DFIs offered to its customers thereby replacing Mex Gas Supply, S.L. However, asin order to mitigate the market risk it would bear under such offered DFIs. Petróleos Mexicanos then transfers the related price risk derived from the DFI position held with Pemex Industrial Transformation to financial counterparties by entering into these opposite position DFIs with such parties. As of December 31, 2017,2020, there were no DFIs had been carried out under this mechanism. Through these mechanisms,since all the DFIs of its portfolios expired in 2019. In case of entering into new trades, Pemex Industrial Transformation maintains a negligible or even null exposure to market risk. TheseDFI portfolios have VaR and CaR limits in order to limit market risk exposure. PMIP.M.I. Trading DAC faces market risk generated by the terms of the purchase and sale of refined products and natural gas liquids, as well as the volatility of oil prices. Accordingly, it frequently enters into DFIs in order to mitigate this risk, thereby reducing the volatility of its financial results.
In accordance with the risk management regulatory framework that PMIP.M.I. Trading DAC 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 |
During 2017, PMI subsidiaries liquidated the total shareholding in Repsol, S.A. (Repsol), which was 23,416,219 shares. As a result, as of December 31, 2017, we do not hold any third-party shares of companies that do not report on the financial markets and, therefore, we do not hold any related DFIs.
Counterparty or Credit Risk When the fair value of a DFI is favorable to us, we face the risk that the counterparty will not be able to meet its obligations. We monitor our counterparties’ creditworthiness and calculate the credit risk exposure for our DFIs. As a risk mitigation strategy, we only enter into DFIs with major financial institutions with a minimum credit rating ofBBB-. These ratings are issued and revised periodically by risk rating agencies. Furthermore, we seek to maintain a diversified portfolio of counterparties. In order to estimate our credit risk exposure to each financial counterparty, the potential future exposure is calculated by projecting the risk factors used in the valuation of each DFI in order to estimate the MtM value for different periods, taking into account any credit risk mitigation provisions. Moreover, we have entered into various long-term cross-currency swaps agreements with “recouponing” provisions (pursuant to which the payments on the swaps are adjusted when the MtM exceeds the relevant threshold specified in the swap), thereby limiting our exposure with our counterparties to a specific threshold amount.amount, as well as the counterparties’ exposure to us. The specified thresholds were reached in threefive cross-currency swaps from the first to the fourth quarter of 2017,during 2020, which were used to hedge the exchange rate exposure to the euro and to the pounds sterling, and in fivethree cross-currency swaps during 2016,2019, which were used to hedge the exchange rate exposure to the Poundeuro and to the pounds sterling. This resulted in the cash settlement of such swaps and the resetting of swap terms to return theirmark-to-market MtM value to zero. During 2017,2020, we did not enter into any cross-currency swap with these characteristics. In addition, during 2016 we have entered into long-term DFIs with mandatory early termination clauses (pursuant to which, at a given date and irrespective of the then current MtM, the DFI will terminate and settle at the corresponding MtM, and we can either enter into a new DFI with the same counterparty or a new counterparty), which reduces the credit risk generated by the term of the DFI by bounding it to a specific date. As of December 31, 2017,2020, we have entered into three euro swaps and two Japanese yen Seagull Option structures, with early termination clauses in 2018July 2021, and 2021, respectively.we intend to renew these trades in order to maintain the hedge. According to IFRS 13 “Fair Value Measurement,” the fair value or MtM value of DFIs must reflect the creditworthiness of the parties. Consequently, the fair value of a DFI takes into account the risk that either party may default on its obligation. In accordance with market best practices,Due to the above, we apply the credit value adjustment (“CVA”)CVA method to calculate the fair value of our DFIs. For each DFI, the CVA is calculated by determining the difference between the MtM and the estimated MtM adjusted for credit risk. In determining the credit risk, the CVA method takes into account the current market perception about the credit risk of both counterparties, using the following inputs: (a) the MtM projection for each payment date based on forward yield curves; (b) the implied default probability obtained from both usour 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.DFIs. In order to qualify for these DFIs, Pemex Industrial Transformation’s customers must be party to a current natural gas supply contract and sign a domestic master derivative agreement. Additionally, beginning on October 2, 2009,according to the credit guidelines, DFIs with these customers must be initially secured by cash deposits, letters of credit or other collateral provisions, as required. The credit guidelines indicate that Pemex Industrial Transformation may offer DFIs with an exemption from collateral requirements up to certain amount, through a credit line approved by the credit committee, based on an internal financial and credit assessment. Moreover, if the credit line is insufficient to cover each client’s exposure, the client is obligated to deposit collateral. In accordance with these guidelines, in the event that a client does not meet its payment obligations, DFIs related to this client arewould be terminated, rights to any available collateral arewould be exercised and, if the collateral iswere insufficient to cover the fair value, or in the absence of collateral, natural gas supply iswould be suspended until the payment is made. On August 20, 2014, certain amendments to the credit guidelines were enacted which allowedPemex-Gas and Petrochemicals, and nowAs of December 31, 2020, Pemex Industrial Transformation to offer tohad no DFIs since all the DFIs of its clients with an adequateportfolios expired in 2019. As such, once the total settlement of the operations was carried out, the exempt credit rating, based on an internal financiallines expired and credit assessment, DFIs with an exemption from collateral requirements up to certain amount through a credit line approvedthe guarantees deposited 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.clients were entirely returned.
PMI Trading’sP.M.I. Trading DAC’s credit risk associated with DFI transactions is minimizedmitigated through the use of futures and standardized instruments that are cleared throughCME-ClearPort. CME Clearport.
Accounting Standards Applied and the Impact on Results We enter into derivatives transactions with the sole purpose of hedging financial risks related to our operations, firm commitments, planned transactions and assets and liabilities recorded on our statement of financial position. Nonetheless, some of these transactions do not qualify for hedge accounting treatment because they do not meet the requirements of the accounting standards for being designated as hedges. They are therefore recorded in the financial statements asnon-hedge instruments or as instruments entered into for trading purposes, despite the fact that their cash flows are offset by the cash flows of the positions (assets or liabilities) to which they are related. As a result, the changes in their fair value are recognized in the “Derivative financial instruments (cost) income—income, net” line item in the consolidated statement of comprehensive income. As of December 31, 20172020 and 2016,2019, the net fair value of our DFIs including(including both DFIs that have not reached maturity and those that have reached maturity but have not been settled,settled), recognized in our consolidated statement of financial position, was Ps. 12,367.516,630.0 million and Ps. (26,010.5)(5,153.8) million, respectively. As of December 31, 20172020 and 2016,2019, we did not have any DFIs designated as hedges. See Note 1618 to our consolidated financial statements included herein. For the yearyears ended December 31, 2017,2020, 2019 and 2018, we recognized a net gain (loss) of Ps. 25,338.317,096.1 million, and for the years ended December 31, 2016 and 2015, we recognized a net loss of Ps. 14,001.0(23,263.9) million and Ps. 21,449.9(19,116.0) million, respectively, in the “Derivative financial instruments (cost) income, net” line item with respect to DFIs treated as instruments entered into for trading purposes. According to established accounting policies, we have analyzed the different contracts that we have entered into and have determined that according to the terms thereof none of these agreements meet the criteria to be classified as embedded derivatives. Accordingly, as of December 31, 20172020 and 2016,2019, 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, 2017.2020. It should be noted that: For debt obligations, these tables present principal cash flow and the weighted average interest rates for fixed rate debt. For interest rate swaps, interest rate options, cross-currency swaps currency options and currency forwards,options, these tables present notional amounts and weighted average interest rates by expected (contractual) maturity dates. Weighted average variable rates are based on implied forward rates obtained from the interbank market yield curve at the reporting date. For natural gas DFIs, volumes are presented in millions of British thermal units (MMBtu), and fixed average and strike prices are presented in U.S. dollars per MMBtu.
For crude oil, volumes are presented in millions of barrels, and fixed average and strike prices are presented in U.S. dollars per barrel. A DFI’s fair value includes CVA and is calculated based on market quotes obtained from market sources such as Bloomberg. Forward curvesBloomberg and implied volatilities for natural gas and crude oil are supplied by the Kiodex Risk Workbench platform.Proveedor Integral de Precios, S.A. de C.V. (“PIP”). For PMIP.M.I. Trading DAC, the prices used in commercial transactions and DFIs are published by reputable sources that are widely used in international markets, such asCME-NYMEX, Platts and Argus, among others. Fair value is calculated internally, either by discounting cash flows with the correspondingzero-coupon yield curve in the original currency, or through other standard methodologies commonly used in financial markets for specific instruments. For all instruments, the tables are based on the contract terms in order to determine the future cash flows that are categorized by expected maturity dates. This information is presented in thousands of pesos (except as noted).
Quantitative Disclosure of Debt Cash Flow’sFlow Maturities as of December 31, 20172020(1) (2) | | | Year of expected maturity date | | 2023 thereafter | | | Total carrying value | | | Fair value | | | Year of expected maturity date | | | | | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | | 2021 | | 2022 | | 2023 | | 2024 | | 2025 | | 2026 Thereafter | | Total Carrying Value | | Fair Value | | Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Outstanding debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fixed rate (U.S. dollars) | | Ps 53,465,817 | | | Ps 59,498,256 | | | Ps 60,290,621 | | | Ps 95,232,448 | | | Ps 84,076,050 | | | Ps 808,836,547 | | | Ps 1,161,399,739 | | | 1,213,404,769 | | | | Ps. 47,898,708 | | | | Ps. 32,956,060 | | | | Ps. 48,471,704 | | | | Ps. 25,996,376 | | | | Ps. 49,333,976 | | | | Ps. 1,116,179,110 | | | | Ps. 1,320,835,934 | | | | Ps. 1,347,156,276 | | Average interest rate (%) | | | | | | | | | | | | | | 5.7747 | % | | | | | | | | | | | | | | | | | 6.37 | % | | | | Fixed rate (Japanese yen) | | | — | | | | — | | | | — | | | | — | | | | — | | | 19,296,607 | | | 19,296,607 | | | 18,040,398 | | | | — | | | | — | | | | 5,799,000 | | | | — | | | | — | | | | 15,444,790 | | | | 21,243,790 | | | | 18,797,463 | | Average interest rate (%) | | | | | | | | | | | | | | 1.3485 | % | | | | | | | | | | | | | | | | | 1.35 | % | | | | Fixed rate (Pounds) | | | — | | | | — | | | | — | | | | — | | | 9,345,839 | | | 11,952,816 | | | 21,298,655 | | | 24,381,394 | | | Fixed rate (pounds sterling) | | | | — | | | | 9,537,663 | | | | — | | | | — | | | | 12,204,125 | | | | — | | | | 21,741,788 | | | | 23,010,709 | | Average interest rate (%) | | | | | | | | | | | | | | 5.7246 | % | | | | | | | | | | | | | | | | | 5.72 | % | | | | Fixed rate (pesos) | | | — | | | | — | | | 10,033,017 | | | 20,376,655 | | | 1,999,098 | | | 88,349,072 | | | 120,757,842 | | | 171,683,692 | | | | 115,284,491 | | | | 1,999,401 | | | | — | | | | 57,433,886 | | | | — | | | | 31,029,696 | | | | 205,747,474 | | | | 199,047,983 | | Average interest rate (%) | | | | | | | | | | | | | | 7.4876 | % | | | | | | | | | | | | | | | | | 7.91 | % | | | | Fixed rate (UDIs) | | | — | | | 18,477,076 | | | 4,764,175 | | | 3,874,313 | | | | — | | | 30,081,647 | | | 57,197,211 | | | 56,536,905 | | | | 4,314,460 | | | | — | | | | — | | | | — | | | | — | | | | 33,031,555 | | | | 37,346,014 | | | | 30,673,537 | | Average interest rate (%) | | | | | | | | | | | | | | 2.7458 | % | | | | | | | | | | | | | | | | | 4.03 | % | | | | Fixed rate (euros) | | 1,043 | | | 32,042,196 | | | 30,801,894 | | | 41,508,857 | | | 23,655,950 | | | 171,255,634 | | | 299,265,574 | | | 330,573,998 | | | | 42,716,224 | | | | 38,987,905 | | | | 34,137,539 | | | | 30,418,586 | | | | 40,230,700 | | | | 117,736,691 | | | | 304,227,645 | | | | 315,417,306 | | Average interest rate (%) | | | | | | | | | | | | | | 3.6736 | % | | | | | | | | | | | | | | | | | 3.77 | % | | | | Fixed rate (Swiss Francs) | | 4,565,075 | | | 6,088,686 | | | 12,149,953 | | | 3,046,567 | | | | — | | | | — | | | 25,850,281 | | | 26,957,785 | | | Average interest rate (%) | | | | | | | | | | | | | | 1.8387 | % | | | | | Fixed rate (Australian dollars) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | Fixed rate (Swiss francs) | | | | 3,385,165 | | | | — | | | | 8,228,615 | | | | — | | | | — | | | | — | | | | 11,613,780 | | | | 11,650,958 | | Average interest rate (%) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | 1.93 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total fixed rate debt | | | 58,031,935 | | | | 116,106,214 | | | | 118,039,660 | | | | 164,038,840 | | | | 119,076,937 | | | | 1,129,772,323 | | | | 1,705,065,909 | | | | 1,841,578,940 | | | | 213,599,047 | | | | 83,481,030 | | | | 96,636,858 | | | | 113,848,848 | | | | 101,768,801 | | | | 1,313,421,841 | | | | 1,922,756,425 | | | | 1,945,754,232 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable rate (U.S. dollars) | | 58,364,536 | | | 15,302,101 | | | 62,289,546 | | | 12,809,666 | | | 31,289,725 | | | 18,379,557 | | | 198,435,131 | | | 206,254,219 | | | | 122,317,252 | | | | 25,979,932 | | | | 11,649,479 | | | | 56,443,974 | | | | 5,602,565 | | | | 9,506,180 | | | | 231,499,382 | | | | 228,630,238 | | Variable rate (Japanese yen) | | | — | | | | — | | | 11,244,800 | | | | — | | | | — | | | | — | | | 11,244,800 | | | 11,361,079 | | | | | | | | | | | | | | | | — | | | | — | | Variable rate (euros) | | | | — | | | | — | | | | 15,842,049 | | | | — | | | | — | | | | — | | | | 15,842,049 | | | | 15,375,645 | | Variable rate (pesos) | | 8,734,371 | | | 27,995,083 | | | 18,341,742 | | | 8,459,163 | | | 8,394,483 | | | 19,125,764 | | | 91,050,606 | | | 94,188,981 | | | | 12,524,115 | | | | 8,471,904 | | | | 7,026,631 | | | | 10,768,263 | | | | 6,856,660 | | | | 325,035 | | | | 45,972,609 | | | | 42,934,001 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total variable rate debt | | | 67,098,907 | | | | 43,297,184 | | | | 91,876,088 | | | | 21,268,829 | | | | 39,684,208 | | | | 37,505,321 | | | | 300,730,537 | | | | 311,804,280 | | | | 134,841,368 | | | | 34,451,836 | | | | 34,518,160 | | | | 67,212,237 | | | | 12,459,225 | | | | 9,831,215 | | | | 293,314,040 | | | | 286,939,885 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total debt | | | 125,130,842 | | | | 159,403,398 | | | | 209,915,748 | | | | 185,307,669 | | | | 158,761,145 | | | | 1,167,277,644 | | | | 2,005,796,446 | | | | 2,153,383,220 | | | | Ps. 348,440,415 | | | | Ps. 117,932,866 | | | | Ps. 131,155,018 | | | | Ps. 181,061,085 | | | | Ps. 114,228,026 | | | | Ps. 1,323,253,056 | | | | Ps. 2,216,070,465 | | | | Ps. 2,232,694,117 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note: | Numbers may not total due to rounding. |
Note: Numbers may not total due to rounding. (1) | The information in this table has been calculated using exchange rates at December 31, 20172020 of: Ps. 19.786719.9487 = U.S. $1.00; Ps. 0.17570.1933 = 1.00 Japanese yen; Ps. 26.772427.2579 = 1.00 Poundpounds sterling; Ps. $ 5.9345516.605597 = 1.00 UDI; Ps. 23.754924.4052 = 1.00 euro; and Ps. 20.299222.5720 = 1.00 Swiss Franc; and Ps. 15.4752 = 1.00 Australian dollar.Franc. |
Source: PEMEX
(2) | Amounts in thousands of pesos. |
Quantitative Disclosure of Cash Flow’sFlow Maturities from Derivative Financial Instruments Held or Issued for Purposes Other than Trading as of December 31, 20172020(1)(2) (3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year of expected maturity date | | | Total Notional Amount | | | Fair Value(3) | | | | 2018 | | | 2019 | | | 2020 | | | 2021 | | | 2022 | | | 2023 Thereafter | | | | Hedging instruments(2)(4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate DFIs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate swaps (U.S. dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable to fixed | | | Ps. 4,704,170 | | | | Ps. 4,717,321 | | | | Ps. 4,730,857 | | | | Ps. 4,686,396 | | | | Ps 4,570,070 | | | | Ps 10,143,209 | | | | Ps. 33,552,022 | | | | Ps. 388,851 | | Average pay rate | | | 3.16 | % | | | 3.18 | % | | | 3.20 | % | | | 3.22 | % | | | 3.26 | % | | | 3.48 | % | | | N.A. | | | | N.A. | | Average receive rate | | | 3.19 | % | | | 3.44 | % | | | 3.69 | % | | | 3.81 | % | | | 3.95 | % | | | 4.48 | % | | | 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 | | | — | | | | 29,898,198 | | | | 28,719,208 | | | | 36,902,690 | | | | 21,302,856 | | | | 161,617,172 | | | | 278,440,124 | | | | 19,065,727 | | Receive Japanese yen/Pay U.S. dollars | | �� | — | | | | — | | | | 13,039,563 | | | | — | | | | — | | | | 4,775,551 | | | | 17,815,114 | | | | (1,670,533 | ) | Receive Pounds sterling/Pay U.S. dollars | | | — | | | | — | | | | — | | | | — | | | | 10,310,216 | | | | 11,706,999 | | | | 22,017,215 | | | | 1,151,096 | | Receive UDI/ Pay pesos | | | — | | | | 23,740,341 | | | | 7,292,520 | | | | 3,000,000 | | | | — | | | | 20,605,166 | | | | 54,638,028 | | | | (4,720,592 | ) | Receive Swiss francs/Pay U.S. dollars | | | 4,535,474 | | | | 6,501,082 | | | | 11,548,658 | | | | 2,994,374 | | | | — | | | | — | | | | 25,579,588 | | | | 400,316 | | Receive Australian dollars/Pay U.S. dollars | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Currency Options | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Buy Put, Sell Put and sell Call on Japanese yen | | | — | | | | — | | | | — | | | | — | | | | — | | | | 14,046,320 | | | | 14,046,320 | | | | 48,715 | | Buy call, Sell call and Sell put on euros | | | — | | | | — | | | | — | | | | — | | | | 41,567,998 | | | | 59,382,855 | | | | 100,950,853 | | | | 4,919,444 | | Sell Call on Pound sterling | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12,031,728 | | | | 12,031,728 | | | | (239,626 | ) | Curency Forward | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Receive U.S. dollars / Pay pesos | | | 59,360,100 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 59,360,100 | | | | (2,006,461 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year of expected maturity date | | | | 2021 | | | 2022 | | | 2023 | | | 2024 | | | 2025 | | | 2026 Thereafter | | | Total Carrying Value | | | Fair Value (5) | | Hedging Instruments (2)(4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest Rate DFI | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest Rate Swaps (U.S. dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable to fixed | | | 4,724,765 | | | | 4,607,486 | | | | 4,466,068 | | | | 3,316,471 | | | | 2,443,716 | | | | — | | | | 19,558,505 | | | | (712,107 | ) | Average pay rate | | | 3.22 | % | | | 3.25 | % | | | 3.37 | % | | | 3.68 | % | | | 4.13 | % | | | 0.00 | % | | | n.a. | | | | n.a. | | Average receive rate | | | 0.90 | % | | | 0.91 | % | | | 1.12 | % | | | 1.67 | % | | | 2.38 | % | | | 0.00 | % | | | n.a. | | | | n.a. | | Interest Rate Options | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Buy Cap, Sell Floor on floating in U.S. dollar LIBOR 1M | | | — | | | | — | | | | — | | | | 49,871,750 | | | | — | | | | — | | | | 49,871,750 | | | | (1,331,188 | ) | Currency DFI | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cross-currency Swaps | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Receive euros/Pay U.S. dollars | | | 37,204,824 | | | | 35,595,644 | | | | 46,550,277 | | | | 26,565,185 | | | | 39,334,093 | | | | 107,601,624 | | | | 292,851,648 | | | | 9,939,110 | | Receive Japanese yen / Pay U.S. dollars | | | — | | | | — | | | | 4,814,650 | | | | — | | | | — | | | | — | | | | 4,814,650 | | | | 505,772 | | Receive pounds sterling / Pay U.S. dollars | | | — | | | | 9,781,187 | | | | — | | | | — | | | | 11,802,848 | | | | — | | | | 21,584,035 | | | | 839,037 | | Receive UDI/ Pay pesos | | | 3,000,000 | | | | — | | | | — | | | | — | | | | 3,063,181 | | | | 27,450,032 | | | | 33,513,214 | | | | 6,834,051 | | Receive Swiss francs/ Pay U.S. dollars | | | 3,018,890 | | | | — | | | | 7,281,276 | | | | — | | | | — | | | | — | | | | 10,300,166 | | | | 913,809 | | Currency Options | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Buy Put, Sell Put and Sell Call on Japanese yen | | | — | | | | — | | | | — | | | | — | | | | — | | | | 15,456,770 | | | | 15,456,770 | | | | 14,918 | | Buy Call, Sell Call and Sell Put on euros | | | 42,647,378 | | | | — | | | | — | | | | 30,462,413 | | | | 17,668,200 | | | | 30,462,413 | | | | 121,240,404 | | | | 3,167,805 | | Sell Call on pounds sterling | | | — | | | | — | | | | — | | | | — | | | | 12,271,443 | | | | — | | | | 12,271,443 | | | | (85,994 | ) | Sell Call on Swiss francs | | | — | | | | — | | | | 8,225,571 | | | | — | | | | — | | | | — | | | | 8,225,571 | | | | (70,196 | ) | Sell Call on Euros | | | — | | | | 14,621,958 | | | | 15,840,455 | | | | — | | | | 15,840,455 | | | | 57,878,585 | | | | 104,181,452 | | | | (2,118,100 | ) |
N.A. = not applicable. Numbers may not total due to rounding. (1) | The information in this table has been calculated using exchange rates at December 31, 20172020 of: Ps. 19.786719.9487 = U.S. $1.00 and Ps. 23.754924.4052 = 1.00 euro. |
(2) | Our management usesWe use these DFIs to hedge market risk; however, these DFIs do not qualify for accounting purposes as hedges and are recorded in the financial statements as entered into for trading purposes. |
(3) | Positive numbers represent a favorable fair value to us.Amounts in thousands of pesos. |
(4) | PMI’sThe PMI Subsidiaries’ risk management policies and procedures establish that DFIs should be used only for hedging purposes; however, DFIs are not recorded as hedges for accounting purposes. |
Source: PEMEX
Quantitative Disclosure of Cash Flow’s Maturities from Derivative Financial Instruments (Natural Gas) Held or Issued for Purposes other than Trading as of December 31, 2017(1)(2)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2018 | | | 2019 | | | 2020 | | | 2021 | | | 2022 | | | 2023 Thereafter | | | Total Volume | | | Fair Value(2) | | | | (in MMBtu, except that average fixed and strike prices are in U.S. $ per MMBtu) | | | (in thousands of nominal pesos) | | Derivatives entered into with Customers of Pemex Industrial Transformation | | Short | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | European Call Option | | | (270,200 | ) | | | (13,750 | ) | | | — | | | | — | | | | — | | | | — | | | | (283,950 | ) | | | (396.97 | ) | Average strike price | | | 3.29 | | | | 3.81 | | | | — | | | | — | | | | — | | | | — | | | | 3.31 | | | | | | Variable to Fixed Swap(3) | | | (721,896 | ) | | | (101,864 | ) | | | — | | | | — | | | | — | | | | — | | | | (823,760 | ) | | | 6,934.34 | | Average fixed price | | | 3.19 | | | | 3.08 | | | | — | | | | — | | | | — | | | | — | | | | 3.17 | | | | | | Long | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | European Call Option | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Average strike price | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | Derivatives entered into with Third Parties to Offset Transactions entered into with Customers | | Short | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | European Call Option | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Average strike price | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Long | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | European Call Option | | | 270,200 | | | | 13,750 | | | | — | | | | — | | | | — | | | | — | | | | 283,950 | | | | 397.56 | | Average strike price | | | 3.29 | | | | 3.81 | | | | — | | | | — | | | | — | | | | — | | | | 3.31 | | | | | | Variable to Fixed Swap(4) | | | 721,896 | | | | 101,864 | | | | — | | | | — | | | | — | | | | — | | | | 823,760 | | | | (6,113.56 | ) | Average fixed price | | | 3.13 | | | | 3.03 | | | | — | | | | — | | | | — | | | | — | | | | 3.12 | | | | | |
Notes: | Numbers may not total due to rounding. |
(1)(5) | The information in this table has been calculated using the exchange rate at December 31, 2017 of: Ps. 19.7867 = U.S. $1.00. |
(2) | Positive numbers represent a favorable fair value to us. |
(3) | Under short variable to fixed swaps entered into with customers of Pemex Industrial Transformation, we will pay a variable price and receive the fixed price specified in the contract. |
(4) | Under long variable to fixed swaps entered into with customers of Pemex Industrial Transformation, we will pay the fixed price specified in the contract and receive a variable price. |
Source: Pemex Industrial Transformation
Quantitative Disclosure of Cash Flows’Flow Maturities from Derivative Financial Instruments (Petroleum Products) Held or Issued for Purposes other than Trading as of December 31, 20172020(1) | | | 2018 | | | 2019 | | | 2020 | | | 2021 | | | 2022 | | | 2023 Thereafter | | | Total Volume | | | Fair Value(2) | | | 2021 | | 2022 | | | 2023 | | | 2024 | | | 2025 | | | 2026 Thereafter | | | Total Volume | | Fair Value (2) | | | | | | | (in thousands of barrels) | | | (in thousands of nominal pesos) | | | (in thousands of barrels) | | (in thousands of nominal pesos) | | Hedging Instruments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Exchange-traded futures(3) (5) | | | 2.1 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2.1 | | | | (141,693 | ) | | | 0.64 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 0.64 | | | | (32,340 | ) | Exchange-traded swaps(4) (5) | | | 1.3 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1.3 | | | | (99,680 | ) | | | (1.48 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (1.48 | ) | | | (95,572 | ) |
Note: Numbers may not total due to rounding. (1) | The information in this table has been calculated using the exchange rate at December 31, 20172020 of: Ps. 19.786719.9487 = U.S. $1.00.$1.00 |
(2) | Positive numbers represent a favorable fair value to PMI Trading.P.M.I. Trading DAC. |
(4) | Swaps registered in CME ClearPortClearport are included in these figures. |
(5) | The balance of these financial instruments is recognized as cash and cash equivalents. PMIP.M.I. Trading DAC considered these financial assets to be fully liquid. |
Source: P.M.I. Trading, Ltd.
Sensitivity Analysis We have entered into DFIs with the purpose to completely mitigate the market risk for specific flows or predetermined volumes associated with our operations. Our DFIs have the same characteristics (e.g. underlying assets, payment dates, amounts, or volumes) as the hedged position, but with the opposite exposure to the market risk factors. As a result of these mitigation strategies, we have a negligible sensitivity to the hedged market risk factors. See Note 1618 from our consolidated financial statements included herein. As discussed above, becauseGiven that our hedges are cash flow hedges, their effectiveness is maintained regardless of variations in the underlying assets or reference variables since, through time, asset flows are fully offset by liabilities flows. Therefore, it is not necessary to measure or monitor the hedge effectiveness.
Natural gas DFIs that Pemex Industrial Transformation offershas offered to its domestic customers arehave been reported as transactions with trading purposes. However, such operations arewere fully compensated by the operations entered into with their financial counterparts through Petróleos Mexicanos, which replaced Mex Gas Supply, S.L. as of 2017. Through this mechanism(back-to-back), Pemex Industrial Transformation maintainscounterparties, maintaining a negligible or even null exposure to market risk exposure, so we do( due to this back-to-back mechanism). As of December 31, 2020, Pemex Industrial Transformation did not considerhave any DFIs to report since all the DFIs of its portfolios expired in 2019. As such, it is not necessary to conduct either a sensitivity analysis or to measure or monitor the hedge effectiveness. Other DFIs seek to hedge the changes in the price of the commercialized products, such that the DFIs’ underlying assets have correlations with the prices of the products involved in commercialization. PMIP.M.I. Trading DAC estimates the Value at Risk (VaR)VaR of these DFIs. Notably, DFIs of PMIP.M.I. Trading DAC (all of them related to petroleum derivatives), are classified under cash and cash equivalents for accounting purposes due to their liquidity. Item 12. | Description of Securities Other than Equity Securities |
Not applicable. PART II Item 13. | Defaults, Dividend Arrearages and Delinquencies |
None. Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds |
None. Item 15. Controls and Procedures Item 15. | Controls and Procedures |
(a) Disclosure Controls and Procedures (a) | Disclosure Controls and Procedures |
We carried out an evaluation under the supervision and with the participation of our management, including ourDirector General (Chief Executive Officer or CEO) and ourDirector Corporativo de Finanzas (Chief Financial Officer or CFO), 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 Securities Exchange Act) as of December 31, 2017.2020. 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 ofdue to the material weakness in internal control over financial reporting as described below, our CEO and CFO concluded that our disclosure controls and procedures as of December 31, 20172020 were not effective to provide reasonable assurance that information required to be disclosed in the reports we file 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 to our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures. (b) Management’s Annual Report on Internal Control over Financial Reporting (b) | Management’s Annual Report on Internal Control over Financial Reporting |
Management is responsible for establishing and maintaining adequate internal control over financial reporting.reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). 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)1. | pertainPertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; |
| (2)2. | provideProvide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS and with Item 18 of Form20-F, and that our receipts and expenditures are being made only in accordance with authorizations of management and directors of the relevant entity; and |
| (3)3. | provideProvide 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 for future periods are subject to the risk that the related controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate. We conducted an assessmentOur management, with participation of the CEO and CFO, under the oversight of our Board of Directors, evaluated the effectiveness of our internal controlscontrol over financial reporting as of December 31, 2017. In making this assessment, management used2020 using the criteria set forframework in the “Internal Control—
Internal Control - Integrated Framework” publishedFramework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, supplemented for information technologies with the guidelines suggested by IT Control Objectives for Sarbanes-Oxley (3rd Edition), published by the Information Systems Audit and Control Association, in effect as of December 31, 2015. Management reliedCommission. Based on Auditing Standard No. 2201 of the PCAOB in order to create an appropriate framework to evaluate the effectiveness of the design and operation of our internal control over financial reporting. Managementthat evaluation, management concluded that our internal control over financial reporting was not effective as of December 31, 2017. Based on our assessment and criteria,2020 due to the material weakness in internal control over financial reporting, described below.
Our management concluded that, as of December 31, 2020, there was a material weakness existed in connection with our internal control over financial reporting related to the estimation of impairment of long-lived assets. Specifically, the review controls over the application of key inputs used in measuring impairment were not designed with a sufficient degree of precision, and there were no adequate controls earlier in the process, to effectively identify errors in the impairment assessment and determine that the value-in-use calculations for the cash-generating units comply with IAS-36. This was due to insufficient knowledge and experience of our personnel responsible for the impairment assessment and the fact that we did not perform an effective risk assessment to identify and evaluate relevant risks of material misstatement associated with long-lived asset impairments in accordance with IAS-36. Our monitoring controls were also not effective at identifying these deficiencies on a timely basis. The control deficiencies resulted in immaterial misstatements to impairment and Wells, pipelines, properties, plant and equipment, net. Furthermore, the control deficiencies described above created a reasonable possibility that a material misstatement to the consolidated financial statements would not be prevented or detected on a timely basis. Therefore, we concluded that the deficiencies represent a material weakness in our internal control over financial reporting and our internal control over financial reporting was not effective as of December 31, 2017 that affected our calculation of recognized deferred taxes at the time that we filed our unaudited consolidated financial statements with the Mexican Stock Exchange. Due to the lack of consistency in the reporting of, and the failure to timely determine, the amounts of the variables used in the calculation of deferred taxes, and the ineffectiveness of controls to review and authorize such calculation, we were unable to ascertain with reasonable assurance the amount of deferred taxes for the fiscal year ended December 31, 2017. In addition, the calculation of deferred taxes included in our unaudited consolidated financial statements did not take into account new regulations issued by the Ministry of Finance and Public Credit. On August 18, 2017, the Ministry of Finance and Public Credit published a decree that increased the amount that could be deducted for investments, costs and expenses when calculating theDerecho por la Utilidad Compartida (“Profit-Sharing Duty”). On November 30, 2017, the Ministry of Finance and Public Credit issued an additional decree that revised the methodology for calculating the value of hydrocarbons, which has an effect on the determination of the volumes and prices of crude oil, gas and condensates used to calculate the Profit-Sharing Duty. These new regulations, which we did not reflect at the time that we presented our unaudited consolidated financial statements to the Mexican Stock Exchange, had an impact on the calculation of deferred taxes.2020. As a result, our unaudited consolidated financial statements as of and for the year ended December 31, 2017 reflected a net loss in the amount of Ps. 333.4 billion. In connection with the preparation of our audited consolidated financial statements, we were able to determine the definitive amounts of the variables used in the calculation of deferred taxes and performed the calculation in accordance with the new regulations. As a result, we reported a net loss of Ps. 280.9 billion, or Ps. 52.5 billion less than the Ps. 333.4 billion we reported in our unaudited consolidated financial statements. This favorable effect was primarily due to the Ps. 37.2 billion increase in deferred taxes resulting from the implementation of the new regulations issued by the Ministry of Finance and Public Credit.
Although the effect is favorable, the difference between the deferred taxes disclosed in our unaudited consolidated financial statements and our audited consolidated financial statements as of and for the year ended December 31, 2017—an amount equal to Ps. 54.3 billion—is material and reflects a failure of our internal controls to include a mechanism to ensure that our calculation of deferred taxes is accurate and that the disclosure of our unaudited financial results in respect of deferred taxes is consistent with the disclosure of our audited results.
In response to the material weakness described above, we are in the process of executing a remediation plan that includes the following actions: 1. Comprehensive review
| 1. | Reinforce training on IAS-36 to the personnel involved in the process of calculating the impairment of long-lived assets; |
| 2. | Enhance risk assessment and prioritize remediation activities that most significantly reduce the risk that a material misstatement to the consolidated financial statements would not be prevented or detected on a timely basis; |
| 3. | Update the internal procedures related to the calculations of value-in-use that are aligned with the approach and requirements of the corresponding regulations; |
| 4. | Design and implement controls that ensure that the cost figures for operating distributions to be considered in the discounted cash flow calculations correspond to those provided by Cost Management; |
| 5. | Reinforce the process of periodic evaluation of the controls designed and implemented; |
| 6. | Update the corresponding internal procedures in which we identify the variables to be considered in the determination of the cash flows for the impairment calculation; and |
| 7. | Report regularly to the audit committee on the progress and results of the remediation plan, including the identification, status, and resolution of internal control deficiencies. |
We believe that the process for consolidating, reviewing and finalizing the financial statements of Petróleos Mexicanos and its subsidiary entities. 2. Automation of our information systems used to calculate deferred taxes, formalization of access control roles and segregation of the relevant duties,above actions, and the preparation, supervision and authorization of deferred tax calculations.
3. Implementation of periodic, rather than annual, calculations ofimprovements we expect to achieve as a result, will effectively remediate the amount of deferred taxes to be recognized inmaterial weakness. However, the financial statements of Petróleos Mexicanos and its subsidiary entities.
4. Update of the relevant internal procedures to ensure the responsibility and oversight of the specific operational areas involved in reporting the underlying information necessary to calculate deferred taxes.
5. Strengthening and periodic monitoring of the existing internal controls in order to ensure the timely and accurate calculation of deferred taxes and to provide our internal control unit time to correct any failure in the internal controls.
We did report a material weakness in our internal control over financial reporting in our annual report on Form20-F forwill not be considered remediated until the years ended December 31, 2015 and 2016, both of which related to the calculation of impairment of our wells, pipelines, properties, plant and equipment.
For the year ended December 31, 2015, we had not, at the relevant time, established an effective design of processes and procedures to effectively respond to the nature and magnitudeoperation 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 asremediated control is sufficiently tested.
(c) Attestation Report 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. For the year ended December 31, 2016, we incorrectly assumed, for purposes of the impairment analysis of our exploration and production cash generating units, the economic landscape related to thetwo-yearlife-of-field for those fields assigned to Petróleos Mexicanos on temporary basis pursuant to Round Zero rather than25-yearlife-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 the25-yearlife-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, a difference, while favorable, of Ps. 85.0 billion.
In response to the material weaknesses described above, we executed remediation plans, with oversight of our audit committee that took, among others, the following actions:
1. We strengthened our controls focused on generating adequate and timely policies related to updated regulatory criteria that may affect our financial reporting.
2. We strengthened our procedures relating to compliance with general policies and designed procedures to ensure that regulatory criteria, legal aspects and business rules are disseminated and implemented in a timely manner.
3. We improved our internal procedures to appropriately prepare documentation that keeps track of the process for impairment calculations.
4. We improved our procedures for the definition of the criteria involved in calculating the impairment of assets in the oil and gas industry, such as, among others, the identification of cash generating units, discount
rates, hydrocarbon prices and exchange rates in order to accurately reflect the operating and economic conditions at the time of our calculations.
5. We updated our oversight and monitoring program, as part of which we submit quarterly reports to our audit committee to keep track of the progress of the implemented actions.
We submitted the “General Policies and Procedures for the Determination of the Impairment Value of Assets in Petróleos Mexicanos and its Subsidiary Productive Enterprises” to the Regulatory Improvement Committee (COMERI), which describes our policy proposals to comply with the InternationalIndependent Registered Public Accounting Standard (NIC) 36. The proposal is currently under review by COMERI.Firm
(c) | Attestation Report of the Independent Registered Public Accounting Firm |
Not applicable. (d) | (d) Changes in Internal Control over Financial Reporting |
As discussed above, during 2017, we completed the design, update and strengthening of controls, procedures and assessment methodology in order to appropriately calculate the impairment of our assets and to ensure that we respond promptly to changes in regulatory criteria and business rules. We also continued to execute on the changes made to our internal controls in 2016 in order to ensure that we effectively respond to the nature and magnitude of the changes in the economic landscape.Internal Control over Financial Reporting
Except for these changes, thereThere has been no change in our internal control over financial reporting during 20172020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 16A. Audit Committee Financial Expert
Item 16A. | Audit Committee Financial Expert |
Ms. Maria Teresa FernáMr. Jose Eduardo Beltrán Hernández, Labardini, member of the Audit Committee of Petróleos Mexicanos, qualifies as an “audit committee financial expert” within the meaning of this Item 16A, and is independent, as defined in Rule10A-3 under the Exchange Act.
In accordance with the Petróleos Mexicanos Law, onin November 2016, we issued theCódigo de Ética para Petróleos Mexicanos, sus empresas productivas subsidiarias y empresas filiales (Code Code of Ethics for Petróleos Mexicanos, its productive subsidiary entities and affiliates, or the Code of Ethics), a code of ethics as defined in Item 16B of Form20-F under the Exchange Act. On November 26, 2019, the Board of Directors of Petróleos Mexicanos approved and issued an updated Code of Ethics. An updated Code of Ethics was published in the Official Gazette of the Federation on December 24, 2019. Our Code of Ethics applies to the members of the Boards Directors of Petróleos Mexicanos and the subsidiary entities and all of our employees, including our Director General, our Chief Financial Officer, our chief accounting officerChief Accounting Officer and all other employees performing similar functions, as well as other individuals and companies whose actions may affect our reputation. The Code of Ethics is an important component of our ethics and integrity program, which is aimed at eradicating corruption. The Code of Ethics defines values such as respect,non-discrimination, honesty, loyalty, responsibility, legality, impartiality, integrity, inclusivity and integrity,human rights, among others, that we expect will help us achieve our goals and which should be reflected in the daily behavior of employees of Petróleos Mexicanos.our employees. Our Code of Ethics is available on our website at http://www.pemex.com. If we amendWaivers cannot be granted to the provisions of ourthis Code. Any amendment to the provisions of the Code of Ethics, or if we grant any waiver of such provisions, we will disclose such amendment or waiverbe disclosed on our website at the same address. On December 7, 2016, our Ethics Committee was formed to monitor the implementation and enforcement of the Code of Ethics. See “Item 4—Information on the Company—Business Overview—PEMEX Corporate Matters—Ethics Committee” for more information. On August 28, 2017,In addition, on November 11, 2019 the newCódigo de Conducta de Petróleos Mexicanos, sus empresas productivas subsidiarias y, en su caso, empresas filiales(Code of Conduct offor Petróleos Mexicanos, its productive subsidiary entities and, where applicable, affiliated companies, or the Code of Conduct) was published ininto the Officialofficial Gazette of the Federation. This Code of Conduct delineates behaviors expected of and banned for our employees, in accordance with the values established in the Code of Ethics approved by the Board of the Directors of Petróleos Mexicanos in November 2016.and contemplates data protection and transparency related matters.
On September 11, 2017, the Políticas y Lineamientos Anticorrupción para Petróleos Mexicanos, sus empresas productivas subsidiarias y, en su caso, Empresas Filiales (Anticorruption Anti-corruption Policies and Guidelines for Petróleos Mexicanos, its productive subsidiary entities and, where applicable, affiliated companies)companies and the Políticas y Lineamientos para el desarrollo de la Debida Diligencia en Petróleos Mexicanos, sus empresas productivas subsidiarias y, en su caso, Empresas Filiales, en Materia de Ética e Integridad Corporativa (Policies Policies and Guidelines to carry out Due Diligence in Petróleos Mexicanos, its productive subsidiary entities and, where applicable, affiliated companies, in Ethics and Corporate Integrity matters)Matters became effective. The Due Diligence policy was revised on November 2018. Additionally, we have now established an Ethics Lineethics tip line and made a telephone number available on our website, as a mechanism to provide advice to address questions on ethics and integrity issues within PEMEX and to facilitate receipt of complaints about possible violations to our Code of Ethics or our Code of Conduct. The information received will beis channeled to the Ethics Committee and the appropriate areas authorized to investigate and, if applicable, pursue cases in accordance with the applicable laws. We believe that the new regulations and mechanisms mentioned above, along with the legal framework applicable to PEMEX,us, will allow us to improve our ability to mitigate our exposure to bribery and corruption risks in our relationships with third parties. See “Item 3—Key Information—Risk Factors—Risk Factors Related to Our Operations—We are subject to Mexican and internationalanti-corruption,anti-bribery andanti-money laundering laws. Our failure to comply with these laws could result in penalties, which could harm our reputation prevent us from obtaining governmental authorizations needed to carry out our operations and have an adverse effect on our business, results of operations and financial condition.” Item 16C. | Principal Accountant Fees and Services |
In its meeting held on October 5, 2017,September 2, 2020, the Board of Directors of Petróleos Mexicanos appointed BDOKPMG Mexico as external auditor of Petróleos Mexicanos, its productive state-owned subsidiaries and subsidiary companies for the fiscal year 20172020 based on the proposal of the Audit Committee. The Board of Directors of Petróleos Mexicanos also appointed KPMG Cárdenas Dosal, S.C. as external auditor of Petróleos Mexicanos, its productive state-owned subsidiaries and subsidiary companies for the fiscal year 2018 based on the proposal of the Audit Committee.audit committee. See “Item 6—Directors, Senior Management and Employees—Audit Committee.” Audit andNon-Audit Fees The following table sets forth the aggregate fees billed to us for the fiscal years 20162019 and 20172020 by BDOKPMG Mexico, our independent registered public accounting firm for the years ended December 31, 20172019 and 2016.2020. | | | | | | | | | | | Year ended December 31, | | | 2016 | | | 2017 | | | | (in thousands of nominal pesos) | | Audit fees | | | Ps. 46,587 | | | | Ps. 44,564 | | Audit-related fees | | | — | | | | — | | Tax Fees | | | — | | | | — | | All other fees | | | — | | | | — | | | | | | | | | | | Total fees | | | Ps. 46,587 | | | | Ps. 44,564 | | | | | | | | | | |
| | | | | | | | | | | Year ended December 31, | | | | 2019 | | | 2020 | | | | (in thousands of nominal pesos) | | Audit fees | | Ps. | 111,431 | | | Ps. | 105,434 | | Audit-related fees | | | 6,345 | | | | 16,003 | | Tax Fees | | | 2,042 | | | | 8,750 | | All other fees | | | — | | | | — | | | | | | | | | | | Total fees | | Ps. | 119,818 | | | Ps. | 130,187 | |
Audit fees in the table above are the aggregate fees billed by BDOKPMG Mexico, in each case for services provided in connection with the audits of our annual financial statements, in each year, statutory filings and statutory audits, filings with financial regulators, regulatory filings, limited review of interim financial information, review of public filings of financial information and reviews of documents related to offerings of securities, as well as comfort and consent letters, and services provided in accordance with the instructions of the Audit Committee.audit committee. Audit Committee Approval Policies and Procedures In accordance with the Petróleos Mexicanos Law, the Audit Committeeaudit committee nominates the external auditor for approval by the Board of Directors of Petróleos Mexicanos and issues an opinion regarding the external auditor’s report on our financial statements. See “Item 6—Directors, Senior Management and Employees—Audit Committee.” On September 27, 2016, the Audit Committee issued criteria for the hiring of an external auditor for activities not related to its audit services in accordance with the Petróleos Mexicanos Law.
Item 16D.
Item 16D. | Exemptions from the Listing Standards for Audit Committees |
Not applicable. Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers |
Not applicable. Item 16F. Change in Registrant’s Certifying Accountant
Item 16F. | Change in Registrant’s Certifying Accountant |
Not applicable. Item 16G. Corporate Governance
Item 16G. | Corporate Governance |
Not applicable. Item 16H. Mine Safety Disclosure
Item 16H. | Mine Safety Disclosure |
Not applicable. | | 1.8 | | Adecuación al Acuerdo de Creación de la Empresa Productiva del Estado Subsidiaria de Petróleos Mexicanos, denominada Pemex Exploración y Producción (Amendment to Creation Resolution of the Productive State-Owned Subsidiary of Petróleos Mexicanos, denominated Pemex Exploration and Production), effective December 29, 2015 (English Translation) (previously filed as Exhibit 3.4 to the Petróleos Mexicanos Registration Statement on Form F-4 (File No. 333-220721) on September 29, 2017 and incorporated by reference herein). | | | 1.81.9 | | Adecuación al Acuerdo de Creación de la Empresa Productiva del Estado Subsidiaria de Petróleos Mexicanos, denominada Pemex Exploración y Producción (Amendment to Creation Resolution of the Productive State-Owned Subsidiary of Petróleos Mexicanos, denominated Pemex Exploration and Production), effective May 12, 2016 (English translation) (previously filed as Exhibit 3.4 to the Petróleos Mexicanos Registration Statement on Form F-4 (File No. 333-213351) on November 30, 2016 and incorporated by reference herein). | | | 1.10 | | Adecuación al Acuerdo de Creación de la Empresa Productiva del Estado Subsidiaria de Petróleos Mexicanos, denominada Pemex Exploración y Producción (Amendment to Creation Resolution of the Productive State-Owned Subsidiary of Petróleos Mexicanos, denominated Pemex Exploration and Production), effective December 29, 2015July 1, 2019 (English Translation) (previously filed as Exhibit 3.4 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-220721) on September 29, 2017 and incorporated by reference herein)translation). | | | 1.91.11 | | Adecuación al Acuerdo de Creación de la Empresa Productiva del Estado Subsidiaria de Petróleos Mexicanos, denominada Pemex Exploración y ProducciónLogística (Amendment to Creation Resolution of the Productive State-Owned Subsidiary of Petróleos Mexicanos, denominated Pemex Exploration and Production)Logistics), effective May 12, 2016July 1, 2019 (English translation). | | | 1.12 | | Adecuación al Acuerdo de Creación de la Empresa Productiva del Estado Subsidiaria de Petróleos Mexicanos, denominada Pemex Transformación Industrial (Amendment to Creation Resolution of the Productive State-Owned Subsidiary of Petróleos Mexicanos, denominated Pemex Industrial Transformation), effective July 1, 2019 (English translation). | | | 1.13 | | Adecuación al Acuerdo de Creación de la Empresa Productiva del Estado Subsidiaria de Petróleos Mexicanos, denominada Pemex Transformación Industrial (Amendment to Creation Resolution of the Productive State-Owned Subsidiary of Petróleos Mexicanos, denominated Pemex Industrial Transformation), effective January 1, 2021 (English translation). | | | 1.14 | | Declaratoria de Liquidación y Extinción de la Empresa Productiva del Estado Subsidiaria de Petróleos Mexicanos, denominada Pemex Cogeneración y Servicios (Declaration of Liquidation and Extinction of Pemex Cogeneration and Services), effective July 27, 2018 (English translation) (previously filed as Exhibit 3.41.10 to the Petróleos Mexicanos Registration StatementAnnual Report on FormF-420-F (FileNo. 333-213351)0-99) on NovemberApril 30, 20162019 and incorporated by reference herein). | | | 1.15 | | Declaratoria de Extinción de la Empresa Productiva del Estado Subsidiaria de Petróleos Mexicanos, denominada Pemex Perforación y Servicios (Declaration of Extinction of Pemex Drilling and Services), effective July 1, 2019 (English translation). |
| | | 2.1 | | Indenture, dated as of September 18, 1997, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company) (previously filed as Exhibit 4.1 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-7796) on October 17, 1997 and incorporated by reference herein).(P) | | | 2.2 | | Indenture, dated as of August 7, 1998, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company) (previously filed as Exhibit 4.1 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-9310) on August 24, 1998 and incorporated by reference herein).(P) | | | 2.3 | | Indenture, dated as of July 31, 2000, among the Pemex Project Funding Master Trust, Petróleos Mexicanos and Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company) (previously filed as Exhibit 2.5 to the Petróleos Mexicanos Annual Report on Form20-F (FileNo. 0-99) on June 28, 2001 and incorporated by reference herein).(P) | | | 2.4 | | First supplemental indenture dated as of September 30, 2009, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of July 31, 2000 (previously filed as Exhibit 2.4 to the Petróleos Mexicanos Annual Report on Form20-F (FileNo. 0-99) on June 29, 2010 and incorporated by reference herein). | | | 2.5 | | Indenture, dated as of December 30, 2004, among the Pemex Project Funding Master Trust, Petróleos Mexicanos and Deutsche Bank Trust Company Americas (previously filed as Exhibit 2.7 to Petróleos Mexicanos’ Annual Report on Form20-F (File(File No. 0-99) on June 30, 2005 and incorporated by reference herein). | | | 2.6 | | First supplemental indenture dated as of September 30, 2009, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of December 30, 2004 (previously filed as Exhibit 2.6 to the Petróleos Mexicanos Annual Report on Form20-F (FileNo. 0-99) on June 29, 2010 and incorporated by reference herein). | | | 2.7 | | Indenture, dated as of January 27, 2009, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas (previously filed as Exhibit 2.5 to the Petróleos Mexicanos Annual Report onForm 20-F (FileNo. 0-99) on June 30, 2009 and incorporated by reference herein). | | | 2.8 | | Fiscal Agency Agreement between Petróleos Mexicanos and Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company), dated as of June 16, 1993, and amended and restated as of February 26, 1998 (previously filed as Exhibit 3.1 to the Petróleos Mexicanos Annual Report onForm 20-F (FileNo. 0-99) on June 29, 2000 and incorporated by reference herein).(P) | | | 2.9 | | Trust Agreement, dated as of November 10, 1998, among The Bank of New York, The Bank of New York (Delaware) and Petróleos Mexicanos (previously filed as Exhibit 3.1 to the Petróleos Mexicanos Annual Report on Form20-F (FileNo. 0-99) on June 30, 1999 and incorporated by reference herein).(P) |
| | | | | 2.10 | | Amendment No. 1, dated as of November 17, 2004, to the Trust Agreement among The Bank of New York, The Bank of New York (Delaware) and Petróleos Mexicanos dated as of November 10, 1998 (previously filed as Exhibit 2.10 to the Petróleos Mexicanos Annual Report on Form20-F (FileNo. 0-99) on June 30, 2005 and incorporated by reference herein). | | | 2.11 | | Amendment No. 2, dated as of December 22, 2004, to the Trust Agreement among The Bank of New York, The Bank of New York (Delaware) and Petróleos Mexicanos dated as of November 10, 1998 (previously filed as Exhibit 2.11 to the Petróleos Mexicanos Annual Report on Form20-F (FileNo. 0-99) on June 30, 2005 and incorporated by reference herein). | | | 2.12 | | Amendment No. 3, dated as of August 17, 2006, to the Trust Agreement among The Bank of New York, The Bank of New York (Delaware) and Petróleos Mexicanos dated as of November 10, 1998 (previously filed as Exhibit 3.4 to the Petróleos Mexicanos Registration Statement on FormF-4/A (FileNo. 333-136674) on October 27, 2006 and incorporated by reference herein). |
| | | 2.13 | | Assignment and Indemnity Agreement, dated as of November 10, 1998, among Petróleos Mexicanos, Pemex-Exploración y Producción, Pemex-Refinación,Pemex-Gas y Petroquímica Básica and the Pemex Project Funding Master Trust (previously filed as Exhibit 3.2 to the Petróleos Mexicanos Annual Report on Form20-F (FileNo. 0-99) on June 30, 1999 and incorporated by reference herein).(P) | | | 2.14 | | Amendment No. 1, dated as of August 17, 2006, to the Assignment and Indemnity Agreement among Petróleos Mexicanos, Pemex-Exploración y Producción, Pemex-Refinación,Pemex-Gas y Petroquímica Básica, Pemex-Petroquímica, and the Pemex Project Funding Master Trust dated as of November 10, 1998 (previously filed as Exhibit 4.7 to the Petróleos Mexicanos Registration Statement on FormF-4/A (FileNo. 333-136674-04) on October 27, 2006 and incorporated by reference herein). | | | 2.15 | | Guaranty Agreement, dated July 29, 1996, among Petróleos Mexicanos, Pemex-Exploración y Producción, Pemex-Refinación andPemex-Gas y Petroquímica Básica (previously filed as Exhibit 4.4 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-7796) on October 17, 1997 and incorporated by reference herein).(P) | | | 2.16 | | Amendment Agreement dated as of June 24, 2014, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, amending the terms and conditions of the Petróleos Mexicanos 8.625% Bonds due 2023 issued pursuant to the Fiscal Agency Agreement between Petróleos Mexicanos and Deutsche Bank Trust Company (as amended and restated) (previously filed as Exhibit 4.9 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-198588) on September 5, 2014 and incorporated by reference herein). | | | 2.17 | | First supplemental indenture dated as of June 24, 2014, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of September 18, 1997 (previously filed as Exhibit 4.10 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-198588) on September 5, 2014 and incorporated by reference herein). | | | 2.18 | | First supplemental indenture dated as of June 24, 2014, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of August 7, 1998 (previously filed as Exhibit 4.11 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-198588) on September 5, 2014 and incorporated by reference herein). | | | 2.19 | | Second supplemental indenture dated as of June 24, 2014, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of July 31, 2000 (previously filed as Exhibit 4.12 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-198588) on September 5, 2014 and incorporated by reference herein). | | | 2.20 | | Second supplemental indenture dated as of June 24, 2014, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of December 30, 2004 (previously filed as Exhibit 4.13 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-198588) on September 5, 2014 and incorporated by reference herein). |
| | | | | 2.21 | | Fourth supplemental indenture dated as of June 24, 2014, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of January 27, 2009 (previously filed as Exhibit 4.14 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-198588) on September 5, 2014 and incorporated by reference herein). | | | 2.22 | | Third supplemental indenture dated as of September 10, 2014, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of July 31, 2000 (previously filed as Exhibit 2.22 to Petróleos Mexicanos’ annual report on Form20-F (FileNo. 0-99) on April 30, 2015 and incorporated by reference herein). | | | 2.23 | | Fifth supplemental indenture dated as of October 15, 2014, between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of January 27, 2009 previously filed as Exhibit 2.23 to Petróleos Mexicanos’ annual report on Form20-F (FileNo. 0-99) on April 30, 2015 and incorporated by reference herein). |
| | | 2.24 | | Sixth supplemental indenture dated as of December 8, 2015 between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of January 27, 2009 (previously filed as Exhibit 4.17 to Amendment No. 1 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-205763) on February 8, 2016 and incorporated by reference herein). | | | 2.25 | | Seventh supplemental indenture dated as of June 14, 2016 between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of January 27, 2009 (previously filed as Exhibit 4.18 to Amendment No. 1 to the Petróleos Mexicanos Registration Statement on FormF-4 (FileNo. 333-213351) on August 26, 2016 and incorporated by reference herein). | | | 2.26 | | Eighth supplemental indenture dated as of February 16, 2018 between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of January 27, 2009. | | | 2.27 | | Ninth Supplemental Indenture dated as of June 4, 2018 between Petróleos Mexicanos and Deutsche Bank Trust Company Americas, to the indenture dated as of January 27, 2009. |
The registrant agrees to furnish to the U.S. Securities and Exchange Commission, upon request, copies of any instruments that define the rights of holders 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 Mexicanos Annual Report on Form20-F (FileNo. 0-99) on June 30, 1999 and incorporated by reference herein).(P) | | | 7.1 | | Computation of Ratio of Earnings to Fixed Charges. | | | 8.1 | | For a list of subsidiaries, their jurisdiction of incorporation and the names under which they do business, see “Consolidated Structure of PEMEX” on page 4. | | | 10.1 | | Consent letters of Ryder Scott Company, L.P.GLJ Petroleum Consultants Ltd. | | | 10.2 | | Reports on Reserves Data by Ryder Scott Company, L.P.GLJ Petroleum Consultants Ltd., Independent Qualified Reserves Evaluator or Auditor, as of December 31, 2017.2020. | | | 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, 2018.2021. | | | 10.5 | | Consent lettersletter of DeGolyer and MacNaughton. | | | 10.6 | | ReportsReport on Reserves Data by DeGolyer and MacNaughton, Independent Qualified Reserves Evaluator or Auditor, as of January 1, 2018.2021. | | | 10.7 | | Consent letters of Sproule International Ltd. | | | 10.8 | | Reports on Reserves Data by Sproule International Ltd., Independent Qualified Reserves Evaluator or Auditor, as of December 31, 2020. | | | 12.1 | | CEO Certification pursuant toRule 13a-14(a)/15d-14(a). | | | 12.2 | | CFO Certification pursuant toRule 13a-14(a)/15d-14(a). | | | 13.1 | | Certification pursuant toRule 13a-14(b)/15d-14(b) and 18 U.S.C. §1350. |
| | | | | 101.INS | | XBRL Instance Document. | | | 101.SCH | | XBRL Taxonomy Extension Schema Document. | | | 101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document. | | | 101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document. | | | 101.LAB | | XBRL Taxonomy Extension Label Linkbase Document. | | | 101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document. |
SIGNATURE Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, as amended, theThe registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| | | PETRÓLEOS MEXICANOS | | | By: | | /s/ DAVID RUELAS RODRÍGUEZAlberto Velázquez García | Name: | | Alberto Velázquez García | Title: | | Chief Financial Officer/Corporate | | | Name: David Ruelas Rodríguez
Title: Chief Financial Officer Director of Finance |
Date: April 30, 2018
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2017, 2016 AND 2015 AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
May 17, 2021
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2017, 2016 AND 2015
Index
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of Petróleos Mexicanos:Mexicanos Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated statements of financial position of Petróleos Mexicanos, Productive State-Owned Subsidiaries and Subsidiary Companies (“PEMEX”)(PEMEX) as of December 31, 20172020 and 2016, and2019, the related consolidated statements of comprehensive income, changes in equity (deficit), and cash flows for each of the three years in the three-year period ended December 31, 2017. 2020, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of PEMEX as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2020, in conformity with International Financial Reporting Standard as issued by the International Accounting Standards Board. Going Concern The accompanying consolidated financial statements have been prepared assuming that PEMEX will continue as a going concern. As discussed in Note 22F to the consolidated financial statements, PEMEX has suffered recurring losses from operations, has a net capital deficiency and an accumulated equity deficit; that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 22F. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the PEMEX’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to PEMEX in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.misstatement, whether due to error or fraud. PEMEX is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. OurAs part of our audits, included considerationwe are required to obtain an understanding of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of PEMEX’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the consolidated financial statements, assessingstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. In our opinion,Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements referredthat were communicated or required to above present fairly, in allbe communicated to the audit committee and that: (1) relate to accounts or disclosures that are material respects,to the financial position of Petróleos Mexicanos, Productive State-Owned Subsidiaries and Subsidiary Companies as of December 31, 2017 and 2016, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2017, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. The accompanying consolidated financial statements have been prepared assuming that PEMEX will continueand (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a going concern. whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Assessment of the impact of estimated oil and gas reserves on amortization expense related to proved oil and gas properties (000’s mxp) As describeddiscussed in Note 2-bnotes 3E iii) and 13 to the consolidated financial statements, PEMEX has suffered recurring losses from operations, has a working capital deficiencyreported depreciation and a net equity deficit. As stated in Note 2-b, these events or conditions,amortization expenses related to producing oil and gas properties of $101,339,417 for the year ended December 31, 2020. PEMEX calculates depreciation and amortization expenses related to producing oil and gas properties using the unit of production method. Under this method, capitalized cost of producing oil and gas properties, along with other matterssupport equipment and facilities, are depreciated or amortized to expense in proportion to the production of proved oil and gas reserves. On an annual basis PEMEX’s internal petroleum reservoir engineers use geological and engineering data as set forth in such Note, indicate that a material uncertainty exists that may cast significant doubtwell as commercial and market information and estimates of development and production costs to estimate the proved oil and gas reserves. PEMEX engages external petroleum reservoir engineering specialists to independently evaluate these estimates. We identified the impact of estimated proved oil and gas reserves on the PEMEX’s abilitydepreciation and amortization expenses related to continueproducing oil and gas properties as a going concern. Management’s planscritical audit matter. Complex auditor judgement was required to evaluate PEMEX’s estimate of proved oil and gas reserves, which is the most significant judgmental input to the depreciation and amortization expenses calculation. The process for evaluating the proved oil and gas reserves is highly complex, involves a number of subjective assumptions and requires specialized skills and knowledge. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design of certain internal controls related to the determination of the estimate of proved oil and gas reserves, including controls related to the forecasted production of proved oil and gas reserves. We assessed the methodology used by PEMEX’s internal petroleum reservoir engineers to estimate proved oil and gas reserves. We evaluated the professional qualifications and the knowledge, skills, and ability of PEMEX’S internal petroleum reservoir engineers and the external petroleum reservoir engineering specialists engaged by PEMEX. We obtained the proved oil and gas reserves reports from the external petroleum reservoir engineering specialists and compared the information with that used by the internal petroleum reservoir engineers. We read the findings of the external petroleum reservoir engineering specialist’s review of the methods and procedures used by PEMEX in regardestimating the proved reserves to these matters are also describedassess compliance with industry and regulatory standards. Impairment of exploration and production and industrial transformation cash generating units (000’s mxp) As discussed in Note 2-b. Thenotes 3H and 13 to the consolidated financial statements, do not include any adjustments that might resultPEMEX recognized a net impairment expense of $ 36,730,030 on the exploration and production and industrial transformation (“upstream”) cash generating units (CGUs) for the year ended December 31, 2020. The carrying amounts of PEMEX’s upstream CGUs are assessed for indicators of impairment at the end of each reporting period. When the carrying amount of a CGU exceeds its recoverable value, PEMEX records an impairment charge in profit or loss. Impairments are reversed in subsequent periods if there has been an increase in the recoverable value since the recognition of the impairment expense. The recoverable amount of a CGU is defined as the higher of its fair value minus the cost of disposal and its value in use. The value in use is the present value of the estimated future net cash flows expected to arise from the outcomecontinuing use of a CGU and from its disposal at the end of its useful life; discounted by applying a pre-tax discount rate. For the upstream CGUs, the recoverable amount was determined as the value in use and required the use of a number of assumptions, including the forecasted production of oil and gas proved and probable reserves, future operating and development cost, future commodity prices, and a discount rate. We identified the assessment of certain assumptions used to determine the recoverable amount of the upstream CGUs as a critical audit matter. The estimation of the recoverable amount of these CGUs requires the use of highly subjective, significant assumptions in relation to the forecasted production of oil and gas proved and probable reserves, future operating and development costs, future commodity prices and the discount rate. It required a high degree of subjective auditor judgment to evaluate these significant, judgmental assumptions. The following are the primary procedures we performed to address this uncertainty.critical audit matter. We evaluated the design of certain internal controls related to the impairment assessment process, including controls related to the forecasted production of oil and gas proved and probable reserves, future operating and development costs, future commodity prices and the discount rate. We evaluated the competence, capabilities and objectivity of PEMEX’s internal petroleum reservoir engineers, who forecast the production of oil and gas proved and probable reserves. We compared the future production quantities forecast by PEMEX’s internal petroleum reservoir engineers to the production used in the estimate of future net cash flows. In addition, we involved a valuation professional with specialized skills and knowledge, who assisted in evaluating the future commodity prices, by comparing them against prices developed independently using available market data, and PEMEX’s discount rate, by comparing it against a discount rate range that was independently developed using publicly available market data for comparable entities. /s/ KPMG CÁRDENAS DOSAL, S.C. We have served as PEMEX’s auditor since 2018 Mexico City, Mexico May 17, 2021 Petróleos Mexicanos, Productive State-Owned Subsidiaries and Subsidiary Companies Consolidated statements of financial position As of December 31, 2020 and 2019 (Figures stated in thousands, except as noted) | CASTILLO MIRANDA Y COMPAÑÍA, S. C. | | /S/ JOSE LUIS VILLALOBOS ZUAZUA | C.P.C. Jose Luis Villalobos Zuazua |
| | | | | | | | | | | | | | | | | Assets | | Note | | | 2020 | | | 2020 | | | 2019 | | | | | | | (Unaudited; U.S. dollars) | | | | | | | | Current assets: | | | | | | | | | | | | | | | | | Cash and cash equivalents | | | 8,9 | | | | 2,004,631 | | | | 39,989,781 | | | | 60,621,631 | | Customers | | | 7,8,10-a | | | | 3,427,913 | | | | 68,382,413 | | | | 89,263,870 | | Other financing receivables | | | 7,8,10-b | | | | 1,584,846 | | | | 31,615,623 | | | | 31,416,091 | | Other non-financing receivables | | | 7,8,10-b | | | | 4,501,017 | | | | 89,789,428 | | | | 59,825,720 | | Inventories | | | 11 | | | | 2,637,047 | | | | 52,605,661 | | | | 82,672,196 | | Current portion of the Government Bonds | | | 15-b | | | | 904,147 | | | | 18,036,557 | | | | — | | Current portion of notes receivable | | | 8,15-a | | | | — | | | | — | | | | 4,909,970 | | Derivative financial instruments | | | 8,18 | | | | 1,300,736 | | | | 25,947,993 | | | | 11,496,330 | | Other current assets | | | 8 | | | | 175,063 | | | | 3,492,283 | | | | 2,829,233 | | | | | | | | | | | | | | | | | | | Total current assets | | | 6 | | | | 16,535,400 | | | | 329,859,739 | | | | 343,035,041 | | | | | | | | | | | | | | | | | | | Non-current assets: | | | | | | | | | | | | | | | | | Investments in joint ventures and associates | | | 8,12 | | | | 602,301 | | | | 12,015,129 | | | | 14,874,579 | | Wells, pipelines, properties, plant and equipment, net | | | 13 | | | | 63,970,561 | | | | 1,276,129,521 | | | | 1,277,548,562 | | Rights of use | | | 17 | | | | 2,967,374 | | | | 59,195,257 | | | | 70,818,314 | | Long-term notes receivable, net of current portion and other | | | 8,15-a | | | | 44,455 | | | | 886,827 | | | | 122,565,306 | | Long-term of the Government Bonds | | | 15-b | | | | 5,589,986 | | | | 111,512,962 | | | | — | | Deferred income taxes and duties | | | 21 | | | | 5,440,415 | | | | 108,529,199 | | | | 136,166,747 | | Intangible assets, net | | | 14 | | | | 1,141,718 | | | | 22,775,784 | | | | 14,584,524 | | Other assets | | | 15-b | | | | 380,151 | | | | 7,583,510 | | | | 4,654,007 | | | | | | | | | | | | | | | | | | | Total non-current assets | | | 6 | | | | 80,136,961 | | | | 1,598,628,189 | | | | 1,641,212,039 | | | | | | | | | | | | | | | | | | | Total assets | | | | | | | 96,672,361 | | | | 1,928,487,928 | | | | 1,984,247,080 | | | | | | | | | | | | | | | | | | |
Mexico City,
April 30, 2018
| | | | | | | | | | | | | | | | | Liabilities | | Note | | | 2020 | | | 2020 | | | 2019 | | | | | | | (Unaudited; U.S. dollars) | | | | | | | | Short-term debt and current portion of long-term debt | | | 8,16 | | | | 19,605,151 | | | | 391,097,267 | | | | 244,924,185 | | Short-term leases | | | 8,17 | | | | 406,389 | | | | 8,106,937 | | | | 5,847,085 | | Suppliers | | | 8 | | | | 14,135,159 | | | | 281,978,041 | | | | 208,034,407 | | Income taxes and duties payable | | | 21 | | | | 2,566,599 | | | | 51,200,314 | | | | 50,692,629 | | Accounts and accrued expenses payable | | | 8,18 | | | | 1,539,423 | | | | 30,709,497 | | | | 26,055,151 | | Derivative financial instruments | | | 8,18 | | | | 467,099 | | | | 9,318,015 | | | | 16,650,171 | | | | | | | | | | | | | | | | | | | Total current liabilities | | | 6 | | | | 38,719,820 | | | | 772,410,071 | | | | 552,203,628 | | | | | | | | | | | | | | | | | | | Long-term liabilities: | | | | | | | | | | | | | | | | | Long-term debt, net of current portion | | | 8,16 | | | | 93,621,642 | | | | 1,867,630,050 | | | | 1,738,249,903 | | Long-term leases | | | 8,17 | | | | 2,760,941 | | | | 55,077,191 | | | | 62,301,542 | | Employee benefits | | | 19 | | | | 76,955,796 | | | | 1,535,168,086 | | | | 1,456,815,367 | | Provisions for sundry creditors | | | 20 | | | | 4,743,461 | | | | 94,625,884 | | | | 98,011,908 | | Other liabilities | | | | | | | 245,209 | | | | 4,891,562 | | | | 4,397,299 | | Deferred income taxes | | | 21 | | | | 171,044 | | | | 3,412,114 | | | | 3,676,735 | | | | | | | | | | | | | | | | | | | Total long-term liabilities | | | 6 | | | | 178,498,093 | | | | 3,560,804,887 | | | | 3,363,452,754 | | | | | | | | | | | | | | | | | | | Total liabilities | | | | | | | 217,217,913 | | | | 4,333,214,958 | | | | 3,915,656,382 | | | | | | | | | | | | | | | | | | | Equity (deficit) | | | 6,22 | | | | | | | | | | | | | | Controlling interest: | | | | | | | | | | | | | | | | | Certificates of Contribution “A” | | | | | | | 26,314,068 | | | | 524,931,447 | | | | 478,675,447 | | Mexican Government contributions | | | | | | | 2,192,152 | | | | 43,730,591 | | | | 43,730,591 | | Legal reserve | | | | | | | 50,235 | | | | 1,002,130 | | | | 1,002,130 | | Accumulated other comprehensive result | | | | | | | (12,596,560 | ) | | | (251,284,990 | ) | | | (240,078,590 | ) | Accumulated deficit: | | | | | | | | | | | | | | | | | From prior years | | | | | | | (111,014,607 | ) | | | (2,214,597,087 | ) | | | (1,933,106,785 | ) | Net loss for the year | | | | | | | (25,509,372 | ) | | | (508,878,813 | ) | | | (281,490,302 | ) | | | | | | | | | | | | | | | | | | Total controlling interest | | | | | | | (120,564,084 | ) | | | (2,405,096,722 | ) | | | (1,931,267,509 | ) | | | | | | | | | | | | | | | | | | Total non-controlling interest | | | | | | | 18,532 | | | | 369,692 | | | | (141,793 | ) | | | | | | | | | | | | | | | | | | Total equity (deficit) | | | | | | | (120,545,552 | ) | | | (2,404,727,030 | ) | | | (1,931,409,302 | ) | | | | | | | | | | | | | | | | | | Commitments and contingencies | | | 26,27 | | | | | | | | | | | | | | Subsequent events | | | 28 | | | | | | | | | | | | | | Total liabilities and equity (deficit) | | | | | | | 96,672,361 | | | | 1,928,487,928 | | | | 1,984,247,080 | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF DECEMBER 31, 2017 AND 2016
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | | | | | Note | | | December 31, 2017 | | | December 31, 2017 | | | December 31, 2016 | | | | | | | (Unaudited; U.S. dollars) | | | | | | | | ASSETS | | | | | | | | | | | | | | | | | Current assets: | | | | | | | | | | | | | | | | | Cash and cash equivalents | | | 6 | | | U.S. $ | 4,945,330 | | | Ps. | 97,851,754 | | | Ps. | 163,532,513 | | Accounts receivable, net | | | 7 | | | | 8,624,239 | | | | 170,645,234 | | | | 133,220,527 | | Inventories, net | | | 8 | | | | 3,227,366 | | | | 63,858,930 | | | | 45,892,060 | | Held-for-sale current non-financial assets | | | 9 | | | | — | | | | — | | | | 7,460,674 | | Available-for-sale financial assets | | | 10-b. | | | | 53,416 | | | | 1,056,918 | | | | 2,852,679 | | Derivative financial instruments | | | 16 | | | | 1,521,904 | | | | 30,113,454 | | | | 4,857,470 | | | | | | | | | | | | | | | | | | | Total current assets | | | | | | | 18,372,255 | | | | 363,526,290 | | | | 357,815,923 | | Non-current assets: | | | | | | | | | | | | | | | | | Available-for-sale financial assets | | | 10 | | | | — | | | | — | | | | 6,027,540 | | Investments in joint ventures and associates | | | 11 | | | | 844,373 | | | | 16,707,364 | | | | 20,737,509 | | Wells, pipelines, properties, plant and equipment, net | | | 12 | | | | 72,599,743 | | | | 1,436,509,326 | | | | 1,667,742,248 | | Long-term notes receivable | | | 14 | | | | 7,504,683 | | | | 148,492,909 | | | | 148,607,602 | | Deferred taxes | | | 20 | | | | 7,388,422 | | | | 146,192,485 | | | | 100,324,689 | | Restricted cash | | | 6 | | | | — | | | | — | | | | 10,478,626 | | Intangible assets | | | 13 | | | | 459,327 | | | | 9,088,563 | | | | 8,639,242 | | Other assets | | | 14 | | | | 580,449 | | | | 11,485,177 | | | | 9,512,645 | | | | | | | | | | | | | | | | | | | Totalnon-current assets | | | | | | | 89,376,997 | | | | 1,768,475,824 | | | | 1,972,070,101 | | | | | | | | | | | | | | | | | | | Total assets | | | | | | U.S. $ | 107,749,252 | | | Ps. | 2,132,002,114 | | | Ps. | 2,329,886,024 | | | | | | | | | | | | | | | | | | | LIABILITIES | | | | | | | | | | | | | | | | | Current liabilities: | | | | | | | | | | | | | | | | | Short-term debt and current portion of long-term debt | | | 15 | | | U.S. $ | 7,945,209 | | | Ps. | 157,209,467 | | | Ps. | 176,166,188 | | Suppliers | | | | | | | 7,073,205 | | | | 139,955,378 | | | | 151,649,540 | | Taxes and duties payable | | | 20 | | | | 2,577,740 | | | | 51,004,960 | | | | 48,839,595 | | Accounts and accrued expenses payable | | | | | | | 1,173,081 | | | | 23,211,401 | | | | 18,666,607 | | Derivative financial instruments | | | 16 | | | | 896,864 | | | | 17,745,979 | | | | 30,867,956 | | | | | | | | | | | | | | | | | | | Total current liabilities | | | | | | | 19,666,099 | | | | 389,127,185 | | | | 426,189,886 | | Long-term liabilities: | | | | | | | | | | | | | | | | | Long-term debt | | | 15 | | | | 95,046,956 | | | | 1,880,665,604 | | | | 1,807,004,542 | | Employee benefits | | | 17 | | | | 63,600,101 | | | | 1,258,436,122 | | | | 1,220,409,436 | | Provisions for sundry creditors | | | 18 | | | | 4,431,129 | | | | 87,677,423 | | | | 88,317,878 | | Other liabilities | | | | | | | 717,363 | | | | 14,194,237 | | | | 16,837,893 | | Deferred taxes | | | 20 | | | | 214,988 | | | | 4,253,928 | | | | 4,134,536 | | | | | | | | | | | | | | | | | | | Total long-term liabilities | | | | | | | 164,010,537 | | | | 3,245,227,314 | | | | 3,136,704,285 | | | | | | | | | | | | | | | | | | | Total liabilities | | | | | | U.S. $ | 183,676,636 | | | Ps. | 3,634,354,499 | | | Ps. | 3,562,894,171 | | | | | | | | | | | | | | | | | | | EQUITY (DEFICIT), NET | | | 21 | | | | | | | | | | | | | | Controlling interest: | | | | | | | | | | | | | | | | | Certificates of Contribution “A” | | | | | | U.S. $ | 18,019,399 | | | Ps. | 356,544,447 | | | Ps. | 356,544,447 | | Mexican Government contributions | | | | | | | 2,210,100 | | | | 43,730,591 | | | | 43,730,591 | | Legal reserve | | | | | | | 50,647 | | | | 1,002,130 | | | | 1,002,130 | | Accumulated other comprehensive result | | | | | | | (7,676,226 | ) | | | (151,887,182 | ) | | | (163,399,441 | ) | Accumulated deficit: | | | | | | | | | | | | | | | | | From prior years | | | | | | | (74,386,461 | ) | | | (1,471,862,579 | ) | | | (1,280,216,973 | ) | Net loss for the year | | | | | | | (14,193,620 | ) | | | (280,844,899 | ) | | | (191,645,606 | ) | | | | | | | | | | | | | | | | | | Total controlling interest | | | | | | | (75,976,160 | ) | | | (1,503,317,492 | ) | | | (1,233,984,852 | ) | Totalnon-controlling interest | | | | | | | 48,776 | | | | 965,107 | | | | 976,705 | | | | | | | | | | | | | | | | | | | Total equity (deficit), net | | | | | | U.S. $ | (75,927,384 | ) | | Ps. | (1,502,352,385 | ) | | Ps. | (1,233,008,147 | ) | | | | | | | | | | | | | | | | | | Total liabilities and equity (deficit), net | | | | | | U.S. $ | 107,749,252 | | | Ps. | 2,132,002,114 | | | Ps. | 2,329,886,024 | | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESPetróleos Mexicanos,
AND SUBSIDIARY COMPANIESProductive State-Owned Subsidiaries and Subsidiary Companies
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEConsolidated statements of comprehensive income
FOR THE YEARS ENDED DECEMBERFor the years periods ended December 31, 2017, 2016 AND 20152020, 2019 and 2018
(Figures stated in thousands, except as noted) | | | Note | | 2017 | | 2017 | | 2016 | | 2015 | | | Note | | | | | 2020 | | 2020 | | 2019 | | 2018 | | | | | | (Unaudited; U.S. dollars) | | | | | | | | | | | | | | (Unaudited; U.S. dollars) | | | | | | | | Net sales: | | | | | | | | | | | | | Net sales | | | | | | | | | | | | | | Domestic | | 5 | | | U.S. $ | 44,340,898 | | | Ps. | 877,360,038 | | | Ps. | 670,000,473 | | | Ps. | 746,235,912 | | | | 6,7 | | | | | | 25,250,369 | | | | 503,712,031 | | | | 807,020,214 | | | | 980,559,538 | | Export | | 5 | | | | 25,701,057 | | | | 508,539,112 | | | 395,118,117 | | | 407,214,445 | | | | 6,7 | | | | | | 22,318,965 | | | | 445,234,329 | | | | 585,842,291 | | | | 691,886,610 | | Services income | | 3-w,5 | | | | 562,528 | | | | 11,130,569 | | | 8,974,642 | | | 8,310,035 | | | | 6,7 | | | | | | 236,381 | | | | 4,715,484 | | | | 9,108,680 | | | | 8,673,002 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total of sales | | | | | 70,604,483 | | | | 1,397,029,719 | | | 1,074,093,232 | | | 1,161,760,392 | | | | | | | | 47,805,715 | | | | 953,661,844 | | | | 1,401,971,185 | | | | 1,681,119,150 | | Impairment (reversal) of wells, pipelines, properties, plant and equipment, net | | 12-e | | | | 7,653,856 | | | | 151,444,560 | | | (331,314,343 | ) | | 477,944,690 | | | Benefit from change in pension plan | | | | | — | | | | — | | | | — | | | (92,177,089 | ) | | (Impairment) reversal of impairment of wells, pipelines, properties, plant and equipment, net | | | | 6,13 e) | | | | | | (1,822,359 | ) | | | (36,353,700 | ) | | | (31,283,154 | ) | | | 21,418,997 | | Cost of sales | | | | | 50,751,509 | | | | 1,004,204,880 | | | 865,822,221 | | | 891,964,606 | | | | 6,23 | | | | | | 41,737,792 | | | | 832,614,690 | | | | 1,122,933,424 | | | | 1,199,511,561 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross income (loss) | | | | | 12,199,118 | | | | 241,380,279 | | | 539,585,354 | | | (115,971,815 | ) | | Other revenues (expenses), net | | 22 | | | | 261,493 | | | | 5,174,076 | | | 22,649,606 | | | (875,487 | ) | | General expenses: | | | | | | | | | | | | Gross income | | | | 6 | | | | | | 4,245,564 | | | | 84,693,454 | | | | 247,754,607 | | | | 503,026,586 | | | | | | | | | | | | | | | | | | | | Other revenues | | | | 6,24-a | | | | | | 589,956 | | | | 11,768,846 | | | | 14,940,447 | | | | 41,517,631 | | Other expenses | | | | 6,24-b | | | | | | (59,889 | ) | | | (1,194,714 | ) | | | (7,211,691 | ) | | | (18,465,120 | ) | Distribution, transportation and sale expenses | | | | | 1,106,282 | | | | 21,889,670 | | | 25,231,240 | | | 28,928,639 | | | | 6,23 | | | | | | 623,411 | | | | 12,436,242 | | | | 21,885,911 | | | | 24,357,209 | | Administrative expenses | | | | | 6,061,620 | | | | 119,939,454 | | | 112,653,533 | | | 112,472,095 | | | | 6,23 | | | | | | 7,313,481 | | | | 145,894,444 | | | | 130,768,822 | | | | 134,321,481 | | Benefit from change in pension plan | | | | | — | | | | — | | | | — | | | (103,860,955 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss) | | | | | 5,292,708 | | | | 104,725,231 | | | 424,350,187 | | | (154,387,081 | ) | | Operating income | | | | 6 | | | | | | (3,161,261 | ) | | | (63,063,100 | ) | | | 102,828,630 | | | | 367,400,407 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Financing income1 | | | | | 817,006 | | | | 16,165,853 | | | 13,749,255 | | | 14,990,859 | | | | 6 | | | | | | 839,255 | | | | 16,742,048 | | | | 29,235,603 | | | | 31,557,122 | | Financing cost2 | | | | | (5,945,638 | ) | | | (117,644,548 | ) | | (98,844,464 | ) | | (67,773,593 | ) | | | 6 | | | | | | (8,109,062 | ) | | | (161,765,242 | ) | | | (132,861,340 | ) | | | (123,869,684 | ) | Derivative financial instruments income (cost), net | | 16 | | | | 1,280,574 | | | | 25,338,324 | | | (14,000,987 | ) | | (21,449,877 | ) | | Foreign exchange income (loss), net | | 16 | | | | 1,171,702 | | | | 23,184,122 | | | (254,012,743 | ) | | (154,765,574 | ) | | Derivative financial instruments (cost) income, net | | | | 6,18 | | | | | | 857,005 | | | | 17,096,141 | | | | (23,263,923 | ) | | | (19,115,951 | ) | Foreign exchange (loss) gain, net | | | | 6,18 | | | | | | (6,464,045 | ) | | | (128,949,304 | ) | | | 86,930,388 | | | | 23,659,480 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Sum of financing (costs) net, derivative instruments (cost) and foreign exchange gains, net | | | | | | | | (12,876,847 | ) | | | (256,876,357 | ) | | | (39,959,272 | ) | | | (87,769,033 | ) | (Loss) profit sharing in joint ventures and associates | | | | 6,12 | | | | | | (177,482 | ) | | | (3,540,533 | ) | | | (1,157,893 | ) | | | 1,527,012 | | | | | | | (2,676,356 | ) | | | (52,956,249 | ) | | (353,108,939 | ) | | (228,998,185 | ) | | | | | | | | | | | | | | | | | Profit sharing in joint ventures and associates | | 11 | | | | 18,216 | | | | 360,440 | | | 2,135,845 | | | 2,318,115 | | | | | | | | | | | | | | | | | | | Income(loss) before duties, taxes and other | | | | | 2,634,569 | | | | 52,129,422 | | | 73,377,093 | | | (381,067,151 | ) | | (Loss) income before duties, taxes and other | | | | | | | | (16,215,590 | ) | | | (323,479,990 | ) | | | 61,711,465 | | | | 281,158,386 | | | | | | | | | | | | | | | | | | Profit sharing duty, net | | 20 | | | | 17,084,416 | | | | 338,044,209 | | | 277,161,804 | | | 377,087,514 | | | | 21 | | | | | | 7,750,336 | | | | 154,609,136 | | | | 372,812,500 | | | | 469,933,595 | | Income tax | | | 20 | | | | (255,938 | ) | | | (5,064,168 | ) | | (12,640,369 | ) | | (45,587,267 | ) | | Income tax expense (benefit), net | | | | 21 | | | | | | 1,552,128 | | | | 30,962,939 | | | | (28,989,011 | ) | | | (8,355,372 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total duties, taxes and other | | | | | 16,828,478 | | | | 332,980,041 | | | 264,521,435 | | | 331,500,247 | | | | 6 | | | | | | 9,302,464 | | | | 185,572,075 | | | | 343,823,489 | | | | 461,578,223 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net loss | | | | | (14,193,909 | ) | | | (280,850,619 | ) | | (191,144,342 | ) | | (712,567,398 | ) | | | 6 | | | | | | (25,518,054 | ) | | | (509,052,065 | ) | | | (282,112,024 | ) | | | (180,419,837 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other comprehensive results: | | | | | | | | | | | | | | | | | | | | | | | Items that will be reclassified subsequently to profit or loss: | | | | | | | | | | | | Available-for-sale financial assets | | 10 | | | | 281,206 | | | | 5,564,130 | | | 207,817 | | | (3,206,316 | ) | | Items that will be reclassified subsequently: | | | | | | | | | | | | | | Currency translation effect | | 19 | | | | (308,109 | ) | | | (6,096,459 | ) | | 21,386,903 | | | 13,262,101 | | | | | | | | 394,861 | | | | 7,876,961 | | | | (2,695,532 | ) | | | 846,191 | | Items that will not be reclassified subsequently to profit or loss: | | | | | | | | | | | | Actuarial gains—employee benefits | | 17 | | | | 608,424 | | | | 12,038,710 | | | 106,277,761 | | | 78,556,569 | | | Items that will not be reclassified | | | | | | | | | | | | | | Actuarial (losses) gains - employee benefits, net of taxes | | | | | | | | (961,585 | ) | | | (19,182,373 | ) | | | (309,327,314 | ) | | | 222,545,556 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total other comprehensive results | | | | | 581,521 | | | | 11,506,381 | | | 127,872,481 | | | 88,612,354 | | | | | | | | (566,724 | ) | | | (11,305,412 | ) | | | (312,022,846 | ) | | | 223,391,747 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total comprehensive loss | | | | U.S. $ | (13,612,388 | ) | | Ps. | (269,344,238 | ) | | Ps. | (63,271,861 | ) | | Ps. | (623,955,044 | ) | | Total comprehensive (loss) income | | | | | U.S. $ | | | | | (26,084,778 | ) | | | (520,357,477 | ) | | | (594,134,870 | ) | | | 42,971,910 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net loss attributable to: | | | | | | | | | | | | | | | | | | | | | | | Controlling interest | | | | U.S. $ | (14,193,620 | ) | | Ps. | (280,844,899 | ) | | Ps. | (191,645,606 | ) | | Ps. | (712,434,997 | ) | | | | U.S. $ | | | | | (25,509,372 | ) | | | (508,878,813 | ) | | | (281,490,302 | ) | | | (180,374,350 | ) | Non-controlling interest | | | | | (289 | ) | | | (5,720 | ) | | 501,264 | | | (132,401 | ) | | | | | | | (8,682 | ) | | | (173,252 | ) | | | (621,722 | ) | | | (45,487 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net loss | | | | U.S. $ | (14,193,909 | ) | | Ps. | (280,850,619 | ) | | Ps. | (191,144,342 | ) | | Ps. | (712,567,398 | ) | | | | U.S. $ | | | | | (25,518,054 | ) | | | (509,052,065 | ) | | | (282,112,024 | ) | | | (180,419,837 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other comprehensive results attributable to: | | | | | | | | | | | | | | | | | | | | | | | Controlling interest | | | | U.S. $ | 581,818 | | | Ps. | 11,512,259 | | | Ps. | 127,650,318 | | | Ps. | 88,571,493 | | | | | U.S. $ | | | | | (561,761 | ) | | | (11,206,400 | ) | | | (312,025,657 | ) | | | 223,834,249 | | Non-controlling interest | | | | | (297 | ) | | | (5,878 | ) | | 222,163 | | | 40,861 | | | | | | | | (4,963 | ) | | | (99,012 | ) | | | 2,811 | | | | (442,502 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total other comprehensive results | | | | U.S. $ | 581,521 | | | Ps. | 11,506,381 | | | Ps. | 127,872,481 | | | Ps. | 88,612,354 | | | | | U.S. $ | | | | | (566,724 | ) | | | (11,305,412 | ) | | | (312,022,846 | ) | | | 223,391,747 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Comprehensive (loss) income: | | | | | | | | | | | | | | | | | | | | | | | Controlling interest | | | | U.S. $ | (13,611,802 | ) | | Ps. | (269,332,640 | ) | | Ps. | (63,995,288 | ) | | Ps. | (623,863,504 | ) | | | | U.S. $ | | | | | (26,071,133 | ) | | | (520,085,213 | ) | | | (593,515,959 | ) | | | 43,459,899 | | Non-controlling interest | | | | | (586 | ) | | | (11,598 | ) | | 723,427 | | | (91,540 | ) | | | | | | | (13,645 | ) | | | (272,264 | ) | | | (618,911 | ) | | | (487,989 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total comprehensive loss | | | | U.S. $ | (13,612,388 | ) | | Ps. | (269,344,238 | ) | | Ps. | (63,271,861 | ) | | Ps. | (623,955,044 | ) | | Total comprehensive (loss) income | | | | | U.S. $ | | | | | (26,084,778 | ) | | | (520,357,477 | ) | | | (594,134,870 | ) | | | 42,971,910 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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 2017, 20162020, 2019 and 2015.2018. |
2 | Mainly interest on debt. |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESPetróleos Mexicanos,
AND SUBSIDIARY COMPANIESProductive State-Owned Subsidiaries and Subsidiary Companies
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT), NETConsolidated statements of changes in equity (deficit)
FOR THE YEARS ENDED DECEMBERFor the years ended December 31, 2017, 2016 AND 20152020, 2019 and 2018
(Figures stated in thousands, except as noted) (See Note 21)22) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Controlling interest | | | | | | | | | | | | | | | | | | | Accumulated other comprehensive income (loss) | | | Accumulated deficit | | | | | | | | | | | | | Certificates of Contribution “A” | | | Mexican Government contributions | | | Legal reserve | | | Available- for sale financial assets | | | Cumulative currency translation effect | | | Actuarial (losses) gains on employee benefits effect | | | For the year | | | From prior years | | | Total | | | Non controlling interest | | | Total Equity (deficit), net | | Balances as of January 1, 2015 | | 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. | — | | | Ps. | (552,808,762 | ) | | Ps. | (768,065,672 | ) | | Ps. | 344,818 | | | Ps. | (767,720,854 | ) | Increase in Certificates of Contribution “A” | | | 60,000,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 60,000,000 | | | | — | | | | 60,000,000 | | Total comprehensive (loss) income | | | — | | | | — | | | | — | | | | (3,206,316 | ) | | | 13,229,927 | | | | 78,547,882 | | | | (712,434,997 | ) | | | — | | | | (623,863,504 | ) | | | (91,540 | ) | | | (623,955,044 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of January 1, 2016 | | 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 (loss) income | | | — | | | | — | | | | — | | | | 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 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Transfer to accumulated deficit | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 191,645,606 | | | | (191,645,606 | ) | | | — | | | | — | | | | — | | Total comprehensive income (loss) | | | — | | | | — | | | | — | | | | 5,564,130 | | | | (6,087,010 | ) | | | 12,035,139 | | | | (280,844,899 | ) | | | — | | | | (269,332,640 | ) | | | (11,598 | ) | | | (269,344,238 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2017 | | Ps. | 356,544,447 | | | Ps. | 43,730,591 | | | Ps. | 1,002,130 | | | Ps. | — | | | Ps. | 44,633,012 | | | Ps. | (196,520,194 | ) | | Ps. | (280,844,899 | ) | | Ps. | (1,471,862,579 | ) | | Ps. | (1,503,317,492 | ) | | Ps. | 965,107 | | | Ps. | (1,502,352,385 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2017 (Unaudited U.S. dollars) | | U.S.$ | 18,019,399 | | | U.S.$ | 2,210,100 | | | U.S $ | 50,647 | | | U.S. | — | | | U.S.$ | 2,255,708 | | | U.S.$ | (9,931,934 | ) | | U.S.$ | (14,193,620 | ) | | U.S.$ | (74,386,461 | ) | | U.S.$ | (75,976,160 | ) | | U.S.$ | 48,776 | | | U.S.$ | (75,927,384 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Controlling interest | | | | | | | | | | | | Accumulated other comprehensive income (loss) | | | Accumulated deficit | | | | | | | | | | | | | | | Certificates of Contribution “A” | | | Mexican Government contributions | | | Legal reserve | | | Cumulative currency translation effect | | | Actuarial (losses) gains on employee benefits effect | | | For the year | | | From prior years | | | Total | | | Non controlling interest | | | Total Equity (deficit) | | Balances January 1, 2018 | | | | | 356,544,447 | | | | 43,730,591 | | | | 1,002,130 | | | | 44,633,012 | | | | (196,520,194 | ) | | | — | | | | (1,752,732,435 | ) | | | (1,503,342,449 | ) | | | 965,107 | | | | (1,502,377,342 | ) | Total comprehensive income (loss) | | | | | — | | | | — | | | | — | | | | 1,287,215 | | | | 222,547,034 | | | | (180,374,350 | ) | | | — | | | | 43,459,899 | | | | (487,989 | ) | | | 42,971,910 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2018 | | Ps. | | | 356,544,447 | | | | 43,730,591 | | | | 1,002,130 | | | | 45,920,227 | | | | 26,026,840 | | | | (180,374,350 | ) | | | (1,752,732,435 | ) | | | (1,459,882,550 | ) | | | 477,118 | | | | (1,459,405,432 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Transfer to accumulated deficit | | | | | | | | | | | | | | | | | | | | | | | | | 180,374,350 | | | | (180,374,350 | ) | | | — | | | | | | | | — | | Increase in Certificates of Contribution “A” | | | | | 122,131,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 122,131,000 | | | | | | | | 122,131,000 | | Total comprehensive loss | | | | | | | | | | | | | | | | | (2,691,157 | ) | | | (309,334,500 | ) | | | (347,289,362 | ) | | | | | | | (659,315,019 | ) | | | (618,911 | ) | | | (659,933,930 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2019 | | Ps. | | | 478,675,447 | | | | 43,730,591 | | | | 1,002,130 | | | | 43,229,070 | | | | (283,307,660 | ) | | | (347,289,362 | ) | | | (1,933,106,785 | ) | | | (1,997,066,569 | ) | | | (141,793 | ) | | | (1,997,208,362 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Non-material adjustment (Notes 4-B and 13-F) | | | | | | | | | | | | | | | | | | | | | | | | | 65,799,060 | | | | | | | | 65,799,060 | | | | | | | | 65,799,060 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance as of December 31, 2019 adjusted | | | | | 478,675,447 | | | | 43,730,591 | | | | 1,002,130 | | | | 43,229,070 | | | | (283,307,660 | ) | | | (281,490,302 | ) | | | (1,933,106,785 | ) | | | (1,931,267,509 | ) | | | (141,793 | ) | | | (1,931,409,302 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Transfer to accumulated deficit | | | | | | | | | | | | | | | | | | | | | | | | | 281,490,302 | | | | (281,490,302 | ) | | | — | | | | | | | | — | | Increase in Certificates of Contribution “A” | | | | | 46,256,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 46,256,000 | | | | | | | | 46,256,000 | | Non-controlling divestment | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | 783,749 | | | | 783,749 | | Total comprehensive loss | | | | | | | | | | | | | | | | | 7,972,187 | | | | (19,178,587 | ) | | | (508,878,813 | ) | | | | | | | (520,085,213 | ) | | | (272,264 | ) | | | (520,357,477 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2020 | | | | | 524,931,447 | | | | 43,730,591 | | | | 1,002,130 | | | | 51,201,257 | | | | (302,486,247 | ) | | | (508,878,813 | ) | | | (2,214,597,087 | ) | | | (2,405,096,722 | ) | | | 369,692 | | | | (2,404,727,030 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2020 (Unaudited U.S. dollars) | | | | $ | 26,314,068 | | | | 2,192,152 | | | | 50,235 | | | | 2,566,646 | | | | (15,163,206 | ) | | | (25,509,372 | ) | | | (111,014,607 | ) | | | (120,564,084 | ) | | | 18,532 | | | | (120,545,552 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements. Petróleos Mexicanos, Productive State-Owned Subsidiaries and Subsidiary Companies Consolidated statements of cash flows For the years ended December 31, 2020, 2019 and 2018 (Figures stated in thousands, except as noted) | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 | | | 2020 | | | 2019 | | | 2018 | | | | | | | (Unaudited; U.S. dollars) | | | | | | | | | | | Operating activities: | | | | | | | | | | | | | | | | | | | | | Net loss | | | | | | U.S. $ | (25,518,054 | ) | | | (509,052,065 | ) | | | (282,112,024 | ) | | | (180,419,837 | ) | Items related to investment activities: | | | | | | | | | | | | | | | | | | | | | Income taxes and duties | | | | | | | 9,302,465 | | | | 185,572,075 | | | | 343,823,489 | | | | 446,612,429 | | Depreciation and amortization of Wells, pipelines, properties, plant and equipment | | | | | | | 6,498,259 | | | | 129,631,820 | | | | 137,187,010 | | | | 153,382,040 | | Amortization of intangible assets | | | | | | | 24,011 | | | | 478,988 | | | | 543,372 | | | | 2,643,326 | | Impairment (Reversal of impairment) of wells, pipelines, properties, plant and equipment | | | | | | | 1,822,359 | | | | 36,353,700 | | | | 31,283,154 | | | | (21,418,997 | ) | Unsuccessful wells from intangible assets | | | | | | | | | | | | | | | | | | | | | Exploration costs | | | | | | | 421,295 | | | | 8,404,284 | | | | 7,990,877 | | | | (2,171,218 | ) | Capitalized unsuccessful wells | | | | | | | 548,793 | | | | 10,947,702 | | | | 71,604,308 | | | | 15,443,086 | | Loss from derecognition of disposal of wells, pipelines, properties, plant and equipment | | | | | | | 265,559 | | | | 5,297,562 | | | | 2,541,558 | | | | 16,885,264 | | Loss from derecognition of intangible assets | | | | | | | 19,857 | | | | 396,118 | | | | — | | | | — | | Depreciation of rights of use | | | | | | | 362,391 | | | | 7,229,231 | | | | 7,429,275 | | | | — | | Cancellation of leases | | | | | | | (55,241 | ) | | | (1,101,987 | ) | | | — | | | | | | Gains on disposal of subsidiary companies | | | | | | | (35,468 | ) | | | (707,533 | ) | | | — | | | | (701,171 | ) | Unrealized foreign exchange (income) loss of reserve for well abandonment | | | | | | | 228,370 | | | | 4,555,692 | | | | (258,816 | ) | | | (6,953,200 | ) | Profit sharing in joint ventures and associates | | | | | | | 177,482 | | | | 3,540,533 | | | | 1,157,893 | | | | (1,527,012 | ) | Items related to financing activities | | | | | | | | | | | | | | | | | | | | | Unrealized foreign exchange income | | | | | | | 6,640,345 | | | | 132,466,243 | | | | (78,244,974 | ) | | | (19,762,208 | ) | Interest expense | | | | | | | 8,109,062 | | | | 161,765,242 | | | | 132,861,340 | | | | 123,869,684 | | Interest income | | | | | | | (839,255 | ) | | | (16,742,048 | ) | | | (29,235,603 | ) | | | (9,520,962 | ) | | | | | | | | | | | | | | | | | | | | | | Funds from operating activities | | | | | | | 7,972,230 | | | | 159,035,557 | | | | 346,570,859 | | | | 516,361,224 | | Profit-sharing duty and income tax paid | | | | | | | (8,640,639 | ) | | | (172,369,522 | ) | | | (347,515,447 | ) | | | (443,785,240 | ) | Derivative financial instruments | | | | | | | (1,091,992 | ) | | | (21,783,819 | ) | | | 11,640,873 | | | | 5,880,442 | | Accounts receivable | | | | | | | (1,020,287 | ) | | | (20,353,395 | ) | | | (8,534,028 | ) | | | (3,429,171 | ) | Inventories | | | | | | | 852,664 | | | | 17,009,543 | | | | (649,629 | ) | | | (18,163,638 | ) | Other assets | | | | | | | — | | | | — | | | | — | | | | (530,711 | ) | Accounts payable and accrued expenses | | | | | | | 233,316 | | | | 4,654,346 | | | | 1,137,483 | | | | 1,706,268 | | Suppliers | | | | | | | 1,154,464 | | | | 23,030,055 | | | | 46,561,282 | | | | 9,887,334 | | Provisions for sundry creditors | | | | | | | 111,410 | | | | 2,222,492 | | | | (5,787,614 | ) | | | (5,950,348 | ) | Employee benefits | | | | | | | 2,966,125 | | | | 59,170,346 | | | | 66,954,701 | | | | 53,604,884 | | Other taxes and duties | | | | | | | 735,790 | | | | 14,678,059 | | | | (25,157,966 | ) | | | 26,205,546 | | | | | | | | | | | | | | | | | | | | | | | Net cash flows from operating activities | | | | | | | 3,273,081 | | | | 65,293,662 | | | | 85,220,514 | | | | 141,786,590 | | Investing activities: | | | | | | | | | | | | | | | | | | | | | Long-term receivables from the Mexican Government | | | | | | | — | | | | — | | | | — | | | | 2,364,053 | | Interest received for long-term receivable from the Mexican Government | | | | | | | — | | | | — | | | | — | | | | 187,615 | | Other receivables | | | | | | | — | | | | — | | | | 68,863 | | | | 1,246,763 | | Resources from the sale of subsidiary companies | | | | | | | 6,753 | | | | 134,716 | | | | — | | | | 4,078,344 | | Other assets | | | | | | | (180,090 | ) | | | (3,592,553 | ) | | | (710,867 | ) | | | — | | Acquisition of wells, pipelines, properties, plant and equipment | | | | | | | (5,763,636 | ) | | | (114,977,051 | ) | | | (109,653,693 | ) | | | (94,003,596 | ) | Interests collected | | | | | | | 46,938 | | | | 936,350 | | | | 16,217,132 | | | | — | | Intangible assets | | | | | | | (1,185,095 | ) | | | (23,641,105 | ) | | | (17,220,238 | ) | | | (14,957,093 | ) | | | | | | | | | | | | | | | | | | | | | | Net cash flows used in investing activities | | | | | | | (7,075,130 | ) | | | (141,139,643 | ) | | | (111,298,803 | ) | | | (101,083,914 | ) | Excess cash to apply in financing activities | | | | | | | (3,802,049 | ) | | | (75,845,981 | ) | | | (26,078,289 | ) | | | 40,702,676 | | Financing activities: | | | | | | | | | | | | | | | | | | | | | Increase in equity due to Certificates of Contribution “A” | | | | | | | 2,318,748 | | | | 46,256,000 | | | | 122,131,000 | | | | — | | Long-term receivables from the Mexican Government | | | | | | | 205,659 | | | | 4,102,622 | | | | 32,493,666 | | | | — | | Interest received for long-term receivable from the Mexican Government | | | | | | | 85,134 | | | | 1,698,318 | | | | 6,211,217 | | | | — | | Lease payments | | | | | | | (400,025 | ) | | | (7,979,972 | ) | | | (10,709,421 | ) | | | — | | Interest of lease paid | | | | | | | (101,803 | ) | | | (2,030,829 | ) | | | — | | | | — | | Loans obtained from financial institutions | | | | | | | 64,572,121 | | | | 1,288,129,868 | | | | 1,167,834,946 | | | | 899,769,012 | | Debt payments, principal only | | | | | | | (57,746,226 | ) | | | (1,151,962,147 | ) | | | (1,185,042,283 | ) | | | (841,033,392 | ) | Interest paid | | | | | | | (6,566,300 | ) | | | (130,989,150 | ) | | | (127,945,203 | ) | | | (115,289,389 | ) | | | | | | | | | | | | | | | | | | | | | | Net cash flows from (used in) financing activities | | | | | | | 2,367,308 | | | | 47,224,710 | | | | 4,973,922 | | | | (56,553,769 | ) | | | | | | | | | | | | | | | | | | | | | | Net decrease in cash and cash equivalents | | | | | | | (1,434,741 | ) | | | (28,621,271 | ) | | | (21,104,367 | ) | | | (15,851,093 | ) | Effects of foreign exchange on cash balances | | | | | | | 400,496 | | | | 7,989,421 | | | | (186,411 | ) | | | (88,252 | ) | Cash and cash equivalents at the beginning of the period | | | | | | | 3,038,876 | | | | 60,621,631 | | | | 81,912,409 | | | | 97,851,754 | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents at the end of the period (Note 9) | | | | | | U.S. $ | 2,004,631 | | | | 39,989,781 | | | | 60,621,631 | | | | 81,912,409 | | | | | | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESPetróleos Mexicanos
AND SUBSIDIARY COMPANIESProductive State-Owned Subsidiaries and Subsidiary Companies
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(Figures stated in thousands, except as noted) | | | | | | | | | | | | | | | | | | | 2017 | | | 2017 | | | 2016 | | | 2015 | | | | (Unaudited; U.S. dollars) | | | | | | | | | | | Operating activities | | | | | | | | | | | | | | | | | Net (loss) | | U.S. $ | (14,193,909 | ) | | | Ps. (280,850,619 | ) | | | Ps. (191,144,342 | ) | | | Ps. (712,567,398 | ) | Depreciation and amortization | | | 7,919,689 | | | | 156,704,513 | | | | 150,439,491 | | | | 167,951,250 | | (Reversal) impairment of wells, pipelines, properties, plant and equipment | | | 7,653,856 | | | | 151,444,560 | | | | (331,314,343 | ) | | | 477,944,690 | | Unsuccessful wells | | | 311,554 | | | | 6,164,624 | | | | 29,106,084 | | | | 23,213,519 | | Exploration costs | | | (73,168 | ) | | | (1,447,761 | ) | | | (2,022,826 | ) | | | (5,698,511 | ) | Disposal of wells, pipelines, properties, plant and equipment | | | 862,381 | | | | 17,063,671 | | | | 3,771,287 | | | | 24,638,537 | | Loss in sale of fixed assets | | | — | | | | — | | | | 27,882,480 | | | | — | | Gain on sale of share in joint ventures and associates | | | (158,647 | ) | | | (3,139,103 | ) | | | (15,211,039 | ) | | | (680,630 | ) | Profit share in joint ventures and associates | | | (18,216 | ) | | | (360,440 | ) | | | (2,135,845 | ) | | | (2,318,115 | ) | Decrease onavailable—for-sale financial assets | | | 68,743 | | | | 1,360,205 | | | | — | | | | — | | Impairment of goodwill | | | — | | | | — | | | | 4,007,018 | | | | — | | Disposal of held—for—sale current non—financial assets | | | 141,932 | | | | 2,808,360 | | | | — | | | | — | | Dividends | | | (9,131 | ) | | | (180,675 | ) | | | (293,397 | ) | | | (359,941 | ) | Effects of net present value of reserve for well abandonment | | | 392,890 | | | | 7,774,000 | | | | 11,968,966 | | | | (608,160 | ) | Net loss onavailable-for-sale financial assets | | | 178,087 | | | | 3,523,748 | | | | — | | | | — | | Unrealized foreign exchange (income) loss | | | (843,265 | ) | | | (16,685,439 | ) | | | 243,182,764 | | | | 152,676,256 | | Interest expense | | | 5,945,638 | | | | 117,644,548 | | | | 98,844,464 | | | | 67,773,593 | | | | | | | | | | | | | | | | | | | | | | 8,178,434 | | | | 161,824,192 | | | | 27,080,762 | | | | 191,965,090 | | Derivative financial instruments | | | (1,939,584 | ) | | | (38,377,961 | ) | | | 310,905 | | | | 9,802,397 | | Accounts receivable | | | (1,370,831 | ) | | | (27,124,228 | ) | | | (55,104,439 | ) | | | 33,003,083 | | Inventories | | | (908,028 | ) | | | (17,966,870 | ) | | | (1,358,879 | ) | | | 6,167,728 | | Long-term receivables | | | 5,796 | | | | 114,693 | | | | (3,277,724 | ) | | | — | | Intangible assets | | | (261,094 | ) | | | (5,166,184 | ) | | | (19,745,821 | ) | | | — | | Other assets | | | (99,690 | ) | | | (1,972,532 | ) | | | (2,104,985 | ) | | | (16,602,365 | ) | Accounts payable and accrued expenses | | | 229,689 | | | | 4,544,794 | | | | 3,097,660 | | | | 1,002,403 | | Taxes and duties payable | | | 19,144,463 | | | | 378,805,745 | | | | 311,015,217 | | | | 384,109,597 | | Taxes and duties paid | | | (19,062,925 | ) | | | (377,192,377 | ) | | | (301,050,325 | ) | | | (351,370,004 | ) | Suppliers | | | (591,011 | ) | | | (11,694,162 | ) | | | (15,664,703 | ) | | | 51,135,948 | | Provisions for sundry creditors | | | (339,351 | ) | | | (6,714,632 | ) | | | (11,413,361 | ) | | | (41,239,700 | ) | Employee benefits | | | 2,530,255 | | | | 50,065,396 | | | | 47,293,069 | | | | (116,022,232 | ) | Deferred taxes | | | (2,312,079 | ) | | | (45,748,404 | ) | | | (43,802,181 | ) | | | (53,014,159 | ) | | | | | | | | | | | | | | | | | | Net cash flows from (used in) operating activities | | | 3,204,044 | | | | 63,397,470 | | | | (41,898,083 | ) | | | 98,937,786 | | | | | | | | | | | | | | | | | | | Investing activities | | | | | | | | | | | | | | | | | Acquisition of wells, pipelines, properties, plant and equipment | | | (4,642,485 | ) | | | (91,859,465 | ) | | | (151,408,480 | ) | | | (253,514,001 | ) | Proceeds fromavailable-for-sale financial assets | | | 405,668 | | | | 8,026,836 | | | | — | | | | — | | Proceeds from the sale of associates | | | 158,779 | | | | 3,141,710 | | | | 22,684,736 | | | | 4,417,138 | | Proceeds from the sale of fixed assets | | | — | | | | — | | | | 560,665 | | | | — | | Investments in associates | | | — | | | | — | | | | — | | | | (36,214 | ) | Business acquisition | | | — | | | | — | | | | (4,329,769 | ) | | | — | | | | | | | | | | | | | | | | | | | Net cash flows used in investing activities | | | (4,078,038 | ) | | | (80,690,919 | ) | | | (132,492,848 | ) | | | (249,133,077 | ) | | | | | | | | | | | | | | | | | | Financing activities | | | | | | | | | | | | | | | | | Increase in equity due to Certificates of Contributions “A” | | | — | | | | — | | | | 73,500,000 | | | | 10,000,000 | | Loans obtained from financial institutions | | | 35,615,614 | | | | 704,715,468 | | | | 841,991,767 | | | | 378,971,078 | | Debt payments, principal only | | | (32,342,434 | ) | | | (642,059,819 | ) | | | (614,987,329 | ) | | | (193,618,498 | ) | Interest paid | | | (5,504,223 | ) | | | (108,910,417 | ) | | | (88,754,141 | ) | | | (62,737,150 | ) | | | | | | | | | | | | | | | | | | Net cash flows from financing activities | | | (2,231,043 | ) | | | (46,254,768 | ) | | | 211,750,297 | | | | 132,615,430 | | | | | | | | | | | | | | | | | | | Net (decrease) increase in cash and cash equivalents | | | (3,211,663 | ) | | | (63,548,217 | ) | | | 37,359,366 | | | | (17,579,861 | ) | Effects of foreign exchange on cash balances | | | (107,776 | ) | | | (2,132,542 | ) | | | 16,804,267 | | | | 8,960,213 | | Cash and cash equivalents at the beginning of the year | | | 8,264,769 | | | | 163,532,513 | | | | 109,368,880 | | | | 117,988,528 | | | | | | | | | | | | | | | | | | | Cash and cash equivalents at the end of the year (Note 6) | | U.S. $ | 4,945,330 | | | | Ps. 97,851,754 | | | | Ps. 163,532,513 | | | | Ps. 109,368,880 | | | | | | | | | | | | | | | | | | |
NOTE 1. | The accompanying notes are an integral part of these consolidated financial statements.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
NOTE 1. STRUCTURE AND BUSINESS OPERATIONS OF PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES
|
Petróleos Mexicanos was created by a decree issued by the Mexican Congress on June 7, 1938. The decree was published in the Diario Oficial de la Federación (“Official Gazette of the Federation”) on July 20, 1938 and came into effect on that date. On December 20, 2013, theDecreto por el que se reforman y adicionan diversas disposiciones de la Constitución Política de los Estados Unidos Mexicanos, en Materia de Energía (Decree that amends and supplements various provisions of the Mexican Constitution relating to energy matters), was published in the Official Gazette of the Federation andFederation. This Decree came into effect on December 21, 2013 (the “Energy Reform Decree”). In accordance withand includes transitional articles setting forth the Energy Reform Decree,general framework and timeline for implementing legislation relating to the Mexican Government will carry out the exploration and extraction of hydrocarbons in the United Mexican States (“Mexico”) through assignments to productive state-owned companies, as well as through agreements with productive state-owned companies and with other companies.energy sector. As part of the secondary legislation enacted in accordance with the Energy Reform Decree, onOn August 11, 2014, the Ley de Petróleos Mexicanos (the ���Petró(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, the Disposiciones 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 thereafterthe following day the special regime for acquisitions, leases, services and public works matters came into effect.
Once the Petróleos Mexicanos Law came into effect, Petróleos Mexicanos was transformed from a decentralized public entity to a productive state-owned company. Petróleos Mexicanos is a legal entity empowered to own property and carry on business in its own name with the purpose of carrying out exploration and extraction of crude oil and other hydrocarbons in Mexico. In addition, Petróleos Mexicanos performs activities related tothe United Mexican States (“Mexico”), as well as refining, gas processing, storing, transporting, selling and engineering and research projects to create economic value and to increase the income of the Mexican Government, as its owner, while adhering to principles of equity and social and environmental responsibility.trading in these products. The Subsidiary Entities, Pemex Exploración y Producción (Pemex (“Pemex Exploration and Production)Production”), Pemex Transformación Industrial (Pemex(“Pemex Industrial Transformation)Transformation”), Pemex Perforación y Servicios (Pemex Drilling and Services), Pemex Logística (Pemex Logistics), (“Pemex Cogeneración y Servicios (Pemex CogenerationLogistics”) and, Services), until January 1, 2021, Pemex Fertilizantes (Pemex Fertilizers) and (“Pemex Etileno (Pemex Ethylene),Fertilizers”) are productive state-owned subsidiaries empowered to own property and carry on business in their own name, subject to the direction and coordination of Petróleos Mexicanos (the “Subsidiary Entities”). The Subsidiary EntitiesAs of Petróleos Mexicanos prior toDecember 31, 2020, the Corporate Reorganization (defined below) were Pemex-Exploración y Producción, Pemex-Refinación (Pemex-Refining),Pemex-Gas and Petroquímica Básica(Pemex-Gas and Basic Petrochemicals) and Pemex-Petroquímica (Pemex-Petrochemicals), which were
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
decentralized public entities with a technical, industrial and commercial nature with their own corporate identity and equity, with the legal authority to own property and conduct business in their own names, and were 100% owned by Petróleos Mexicanos and controlled by the Mexican Government; they had been consolidated into and had the characteristics of subsidiaries of Petróleos Mexicanos.
The Board of Directors of Petróleos Mexicanos, in its meeting held on November 18, 2014, approved the Corporate Reorganization proposed by the Chief Executive Officer of Petróleos Mexicanos.
Pursuant to the corporate reorganization, the existing four Subsidiary Entities were transformed into two new productive state-owned subsidiaries, which 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 theEstatuto Orgánico de Petróleos Mexicanos (Organic Statute of Petróleos Mexicanos) and theacuerdos de creación (creation resolutions) of each productive state-owned subsidiary. The Subsidiary Entities and their primary purposes, are as follows:
Pemex Exploration and Production: This entity is in charge of exploration and extraction of crude oil and solid, liquid or gaseous hydrocarbons in Mexico, in the exclusive economic zone of Mexico and abroad.abroad, as well as drilling services and repair and services of wells; Pemex Industrial Transformation: This entity performs activities related to refining, processing, importing, exporting, trading and the sale of hydrocarbons.hydrocarbons, as well as commercializes, distributes and trades methane, ethane and propylene, directly or through others; 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 PEMEX (as defined below) and other companies, through pipelines and maritime and terrestrial means, and provides guard and management services.services; and Petróleos Mexicanos Pemex CogenerationProductive State-Owned Subsidiaries and Services: This entity generates, supplies and trades electric and thermal energy, including but not limitedSubsidiary Companies Notes to the energy and thermal power producedconsolidated financial statements (Figures stated in power plants and cogeneration plants,thousands, except as well as performing technical and management services related to these activities to PEMEX and other companies, by itself or through companies in which it participates directly or indirectly. noted) 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, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
On April 28, 2015 the creation resolutions of the seven productive state-owned subsidiaries were published in the Official Gazette of the Federation. Each creation resolution included a provision establishing that the creation resolution would come into effect once the required administrative procedures to start operations were in place and the Board of Directors of Petróleos Mexicanos issued and published a statement related to each creation resolution in the Official Gazette of the Federation.
On May 29, 2015 the statements related to the creation resolution of the productive state-owned subsidiary Pemex Exploration and Production and the productive state-owned subsidiary Pemex Cogeneration and Services issued by the Board of Directors of Petróleos Mexicanos were published in the Official Gazette of the Federation and, accordingly, these creation resolutions came into effect on June 1, 2015. On December 29, 2015 and May 12, 2016, modifications to the creation resolution of the productive state-owned subsidiary Pemex Exploration and Production were published in the Official Gazette of the Federation and became effective that same date, respectively.
On July 31, 2015, the statements related to the creation resolution of the productive state-owned subsidiary Pemex Drilling and Services, the productive state-owned subsidiary Pemex Fertilizers and the productive state-owned subsidiary Pemex Ethylene issued by the Board of Directors of Petróleos Mexicanos were published in the Official Gazette of the Federation and, accordingly, these creation resolutions came into effect on August 1, 2015.
On October 1, 2015, the statement related to the creation resolution of the productive state-owned subsidiary Pemex Logistics issued by the Board of Directors of Petróleos Mexicanos was published in the Official Gazette of the Federation and, accordingly, these creation resolutions came into effect on October 1, 2015.
On October 6, 2015, the statement related to the creation resolution of the productive state-owned subsidiary Pemex Industrial Transformation issued by the Board of Directors of Petróleos Mexicanos was published in the Official Gazette of the Federation and, accordingly, these creation resolutions came into effect on November 1, 2015.
As of the date of this report, all of the creation resolutions of the productive state-owned subsidiaries have come into effect.
| • | | Pemex Fertilizers: This entity produces, distributes and commercializes ammonia, fertilizers and its derivatives, as well as provides related services. (see Note 28 “Subsequent events” in connection with the Declaratoria de Extinción de la Empresa Productiva del Estado Subsidiaria de Petróleos Mexicanos, denominada Pemex Fertilizantes (Declaration of Extinction of Pemex Fertilizers) effective as of January 1, 2021). |
The principal distinction between the Subsidiary Entities and the Subsidiary Companies (as defined below) is that the Subsidiary Entities are productive state-owned entities, whereas the Subsidiary Companies are affiliate companies that were formed in accordance with the applicable laws of each of the respective jurisdictions in which they were incorporated. The “Subsidiary Companies” are defined as those companies which are controlled, directly or indirectly, by Petróleos Mexicanos (see Note 3 a).Mexicanos. “Associates,” as used herein, means those companies in which Petróleos Mexicanos doeshas significant influence but not have effective control (see Note 3 a). or joint control over its financial and operating policies. Petróleos Mexicanos, the Subsidiary Entities and the Subsidiary Companies are referred to collectively herein as “PEMEX.”“PEMEX”. PEMEX’s address and its principal place of business is: Av. Marina Nacional No. 329, Col. Verónica Anzures, DelegaciónAlcaldía Miguel Hidalgo, 11300, Ciudad de México, México. Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) NOTE 2. BASIS OF PREPARATION
a.NOTE 2. | Statement of complianceAUTHORIZATION AND BASIS OF PREPARATION |
PEMEX prepared its consolidated financial statements as of December 31, 2017 and 2016, and for the years ended December 31, 2017, 2016 and 2015, in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).Authorization –
On April 27, 2018,May 14, 2021, these consolidated financial statements under IFRS and the notes hereto were authorized for issuance by the following officers: Mr. Carlos Alberto Treviño Medina,Octavio Romero Oropeza, Chief Executive Officer, Mr. David Ruelas Rodríguez,Alberto Velázquez García, Chief Financial Officer, Mr. Manuel Salvador Cruz Flores,Carlos Fernando Cortez González, Deputy Director of AccountingBudgeting and Tax Matters,Accounting, and Mr. Oscar René Orozco Piliado, Associate Managing Director of Accounting. These consolidated financial statements and the notes hereto as of December 31, 2017 were approved by the Board of Petróleos Mexicanos on April 17, 2018 with prior approval from the Audit Committee of the report of the Independent Registered Public Accountant,are issued pursuant to the terms of Article 13 Fraction VI of the Petróleos Mexicanos Law, Article 104 Fraction III, paragraph a, of theLey del Mercado de Valores (Securities Market Law), and of Article 33 Fraction I, paragraph a, section 3 and Article 78 of theDisposiciones de carácter general aplicables a las emisoras de valores y a otros participantes del mercado de valores (General(“General provisions applicable to securities´securities’ issuers and other participants of the securities market)market”). Basis of preparation – A. | Statement of compliance |
PEMEX prepared its consolidated financial statements as of December 31, 2020 and 2019, and for the years ended December 31, 2020, 2019 and 2018, in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). b.B. | Basis of measurement and going concernaccounting |
These consolidated financial statements have been prepared using the historical cost basis method, except where it is indicated that certainwith the exception of the following items, which have been measured using an alternative basis. | | | ITEM | | BASIS OF MEASUREMENT | Derivative Financial Instruments (“DFIs”) | | Fair Value | Employee Benefits | | Fair Value of plan assets less present value of the obligation (defined benefit plan) |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the fair value model, amortized cost, present value or valueconsolidated financial statements (Figures stated 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.thousands, except as noted) Going concern
The consolidated financial statements have been prepared on a going concern basis, which assumes that PEMEX will be able to continue its operations and can meet its payment obligations. For the years ended December 31, 2017 and 2016, PEMEX recognizedobligations for a net loss of Ps. 280,850,619 and Ps. 191,144,342, respectively, caused mainly by sustained low international oil prices, the high tax burden applicable to the industry, the depreciation of the peso relative to the U.S. dollar and an impairment ofreasonable period. (See Note non-financial22-F). assets. In addition, as of December 31, 2017 and 2016, PEMEX had a negative equity of Ps. 1,502,352,385 and Ps. 1,233,008,147, respectively; a negative working capital of Ps. 25,600,895 and Ps. 68,373,963, respectively; and net cash flows used in operating activities of Ps. 41,898,083 for the year ended December 31, 2016. However, net cash flows from operating activities were Ps. 63,397,470, for the year ended December 31, 2017.
PEMEX believes net cash flows from its operating and financing activities, including its availability 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 the date of issuance of these consolidated financial statements.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
PEMEX continues to implement actions and business strategies that enable it to operate competitively and efficiently and take advantage of benefits of the Energy Reform Decree, 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 strategic alliances and partnerships, including an intensivefarm-out program. The business plan was prepared conservatively and does not include additional income from the disposal of assets.
Plan for 2017: The 2017 actions under the business plan established certain objectives with respect to its Subsidiary Entities that were implemented as follows:
Pemex Exploration and Production’s investments focused on the most profitable projects, as well as on farm-outs and other partnerships aimed at increasing hydrocarbon production.
On March 3, 2017, Pemex Exploration and Production signed the firstfarm-out project withBHP-Billiton for the Trion project and entered into a partnership with Chevron Energía de Mexico, S. de R.L. de C.V. (“Chevron”) and INPEX Corporation (“INPEX”) for the rights to block 3 North of the Cinturón Plegado Perdido in the Gulf of Mexico, both in deep waters.
| • | | On May 2, 2017, Pemex Exploration and Production entered into an agreement with theComisión Nacional de Hidrocarburos, (National Hydrocarbon Commission, or “NHC”) for crude oil drilling under the shared shallow-water production scheme forEk-Balam field in the Campeche Basin. |
On May 30, 2017, Petróleos Mexicanos obtained approval from the NHC for the assignment of a new area that includes Chachiquin, located in the Cinturón Plegado Perdido region in the deep waters of the Gulf of Mexico south of the maritime border with the U.S., and an area southwest of the Nobilis field.
Similarly, on June 19, 2017, Pemex Exploration and Production was awarded exploration and production fields bidding process (“Rounds”) in Round 2.1 the rights to develop two blocks in shallow waters: Block 2, in partnership DEA Deutsche Erdoel Ag (“DEA”) and Block B in partnership with Ecopetrol Global Energy, S.L.U. (“Ecopetrol”). On September 25, 2017, Pemex Exploration and Production signed the corresponding contracts for the exploration and extraction of hydrocarbons with DEA and Ecopetrol.
On October 4, 2017, Pemex Exploration and Production finalized two farm-outs for the optimization of the development of the onshore fields of Cárdenas-Mora and Ogarrio, with Cheiron Holdings Limited (“Cheiron”) and DEA companies, respectively.
| • | | On November 3, 2017, Petróleos Mexicanos announced the discovery of onshore light crude oil and gas reservoirs at theIxachi-1 well in the state of Veracruz, Mexico, which PEMEX believes may contain over 1,500 million barrels of oil equivalent in place, representing 3P reserves of around 350 million barrels of oil equivalent. PEMEX believes that this discovery represents its largest onshore discovery in 15 years and that production can be accelerated due to the proximity of the reservoirs to existing infrastructure and to the Sistema Nacional de Gasoductos (National Gas Pipeline System.) |
On December 18, 2017, Pemex Exploration and Production and Petrofac México, S.A. de C.V., together with the NHC, signed the exploration and extraction contract for the onshore fields Santuario and El Golpe, which are located in the state of Tabasco.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Pemex Industrial Transformation worked in partnerships for auxiliary services and the reconfiguration of certain refineries. On September 1, 2017, Pemex Industrial Transformation executed the auxiliary services contract with Air Liquide México. S.A. de R.L. de C.V. for ensuring and efficient hydrogen supply for the Miguel Hidalgo Refinery in Tula, Hidalgo.
In September, 2017, Pemex Industrial Transformation began the selection process for partners for the hydrogen supply projects for the Héctor R. Lara Sosa Refinery in Cadereyta, Nuevo León and the Francisco I. Madero Refinery in Ciudad Madero, Tamaulipas. In April 2018, Pemex Industrial Transformation entered into a long-term agreement with the German company Linde AG for the supply of hydrogen to its Madero refinery.
Pemex Logistics is being transformed from a company designed to ensure that Petróleos Mexicanos and its subsidiaries are properly supplied to one that provides profitable and competitive services to multiple customers. On May 2, 2017, PEMEX announced the results of the first Open Season Public Auction held by Pemex Logistics whereby, on July 18, 2017, PEMEX signed the contracts with Andeavor (formerly Tesoro Corporation). Under the contracts, Andeavor may use PEMEX’s pipeline transportation and storage system in the northwest of Mexico. On December 18, 2017, the Comisión Reguladora de Energía (the Energy Regulatory Commission, or “ERC”) approved Phase 2 of the Open Season.
PEMEX’s business plan also describes its goal to increase the profitability of Pemex Fertilizers, Pemex Ethylene and Pemex Drilling and Services through service contracts and partnerships for the modernization of their facilities. On July 6, 2017, Pemex Ethylene, successfully concluded ane-auction to allocate quantities of ethylene oxide, in which 100% of the volume available was placed at a market price and was higher than the historical price.
Plan for 2018: The 2018 actions under the business plan also set out certain objectives that PEMEX expects to achieve with respect to its Subsidiary Entities as follows:
On January 31, 2018, PEMEX successfully participated in bidding Round 2.4, and was awarded the assignment of four blocks, all of which are located in deep waters in the Gulf of Mexico. Pemex Exploration and Production and Royal Dutch Shell PLC (“Shell”) were awarded Block 2 of the Perdido area. The consortium formed by Pemex Exploration and Production, Chevron and INPEX was awarded area 22 of the Cuenca Salina province. Finally, PEMEX was assigned on an individual basis, Block 5 in the Perdido area and area 18 of the Mexican Range province.
On March 27, 2018, Petróleos Mexicanos successfully participated in bidding Round 3.1 of the NHC tenders, and was awarded seven contractual areas in shallow waters, six of them in a consortium and one on an individual basis. Pemex Exploration and Production won four blocks in the Southeast Basins: two in consortium with French Total S.A., one with Shell and one on an individual basis, as well as three blocks corresponding to the province of Tampico-Misantla-Veracruz: two in partnership with Compañía Española de Petróleos (“CEPSA”) and DEA and one more in partnership with CEPSA.
These contracts are intended to contribute to increase the reserves and hydrocarbon production with the respective economic benefits.
Pemex Exploration and Production will focus on maintaining production levels and developing farm-outs and associations with the aim of increasing its operations and, with
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
D. | time, the production of hydrocarbons in themid-term. Pemex Exploration and Production will also accelerate the migration of integrated E&P contracts and financed public works contracts to Exploration and Extraction Contracts (“EEC”) and will focus on the rehabilitation and reincorporation activities of wells with production possibilities. In 2018, Pemex Exploration and Production will continue to promote actions that encourage efficiency and optimize costs.
|
In order to continue to take advantage of the benefits of the Energy Reform and to ensure the economic sustainability of PEMEX, in 2018 and in theup-coming years, Pemex Exploration and Production will be focusing its efforts on the following strategies: (1) establishing a model of exploration that allows it to achieve the objective of incorporating and increasing proved reserves; (2) developing a master plan for the development of shales; (3) containing and reversing declines in the production of wells through reactivation and maintenance activities performed on closed wells through integrated services; (4) continuing with farm-outs to develop complex fields and leverage third-party resources; (5) establishing schemes, including strategic partnerships and alliances, to attract additional investment; (6) increasing revenues from hydrocarbons trading; and (7) strengthening operational efficiency and cost control.
Pemex Industrial Transformation will continue to perform reconfiguration and auxiliary services for its refineries and to focus on the following strategies: (1) keeping its facilities safe and reliable, (2) improving the financial balance, (3) maintaining a market share in Mexico of over 65%; and (4) eliminating debts, which will help to improve its refining margin.
In addition to taking advantage of new business opportunities and arrangements provided by the Energy Reform, such as farm-outs, PEMEX also continues to take certain specific measures to improve its financial position, including the following:
2016 Budget Adjustment: In 2017, PEMEX developed actions from its Plan de Ajuste Presupuestal 2016 (“2016 Budget Adjustment Plan”) to reduce expenses which were included in its 2017-2021 Business Plan.
Pension Reform. As of January 1, 2016, new employees are entitled to 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, in August 2017, PEMEX began the process of inviting existing employees to migrate from a defined benefit plan to a defined contribution plan, which will allow Pemex to decrease its employee benefits service cost and its employee benefits liability.
Asset Sales. PEMEX continues to evaluate the divestiture ofnon-essential assets to obtain working capital and to focus on those activities considered as the most profitable. These projects include:
On October 5, 2017, PEMEX announced the divestiture of its participation in the Ramones II Norte gas pipeline (50% interest of Pemex Industrial Transformation in Ductos y Energéticos del Norte, S. de R.L. de C.V., and 5% indirect interest of Pemex Industrial Transformation TAG Norte Holding, S. de R.L. de C.V.). On November 10, 2017, the Comisión Federal de Competencia Económica (the Federal Commission for Financial Competence) authorized the divestiture in Ductos y Energéticos del Norte, S. de R.L. de C.V., closing the operation on
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| November 16, 2017. PEMEX estimates that TAG Norte Holding, S. de R.L. de C.V. divestiture will conclude in the first semester of 2018.
|
Decreased Debt Financing: PEMEX decreased its financing during 2017 from Ps. 231,618,067 of net indebtedness in 2016 to a net indebtedness of Ps. 72,412,672 in 2017. In addition, PEMEX developed liability management transactions in accordance with market conditions and in order to improve its financial profile, with longer due dates and better interest rates, as described in Note 15 to these consolidated financial statements. As a result of this strategy, Standard & Poor’s and Fitch increased PEMEX’s ratings outlook from negative to stable. For the fiscal year of 2018, the Federal Income Law applicable to PEMEX authorized for Petróleos Mexicanos and its Subsidiary Entities an internal net debt up to Ps. 30,000,000 and an external net debt up to U.S.$ 6,182,800. In addition, PEMEX will continue to assess opportunities for liability management in accordance with market conditions. In addition, as of December 31, 2017, PEMEX has five syndicated lines of credit to manage its liquidity for U.S.$6,700,000 and Ps.23,500,000.
New Budget: On July 14, 2017, the Board of Directors of Petróleos Mexicanos approved a proposal for the annual consolidated budget of Petróleos Mexicanos and its Subsidiaries Entities for 2018, which was subsequently approved by the Chamber of Deputies on November 9, 2017.
The consolidated annual budget of Petróleos Mexicanos and its Subsidiary Entities for 2018 is approximately Ps. 391,946,000, a 1.7% increase as compared to the Ps. 385,211,257 consolidated annual adjusted budget for 2017.
The structural changes arising from the Energy Reform, and the actions taken by management are aimed at ensuring the continuity of PEMEX’s operations, reducing costs, generating more revenue and operating more efficiently.
In 2017, PEMEX entered into a crude oil hedge program to partially protect its cash flows from decreases in the price of Mexican crude oil.
Petróleos Mexicanos and its Subsidiary Entities are not subject to the Ley de Concursos Mercantiles (the Bankruptcy Law) and none of PEMEX’s existing financing agreements include any clause that could lead to the demand for immediate payment of the respective debt due to having negative equity.
PEMEX prepared its consolidated financial statements as of December 31, 2017 and 2016 on a going concern basis. There are certain conditions that have generated important uncertainty and significant doubts concerning the entity’s ability to continue operating, including recurring net losses, negative working capital and negative equity. These financial statements do not contain any adjustments that would be required if they were not prepared on a going concern basis.
c. | Functional and reporting currency and translation of foreign currency operations |
These consolidated financial statements are presented in Mexican pesos, which is both PEMEX’s functional currency and reporting currency, due to the following: | i. | theThe economic environment in which PEMEX operates is Mexico, where the legal currency is the Mexican peso; |
| ii. | The budget through which Petróleos Mexicanos and its Subsidiary Entities have budgetary autonomy, subject only to maintaining the financial balance (the difference between income and total net spending, including the financial |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| cost of the public debtoperate as entities of the Mexican Government, andincluding the entities directly controlled by the Mexican Government) and the spending cap ofceiling for personnel services, proposed by SHCPis elaborated, approved and approved by the Mexican Congress,exercised in Mexican pesos. |
| iii. | Employee benefits provision was approximately 35% and 34%37% of PEMEX’s total liabilities as of December 31, 20172020 and 2016,2019, respectively. This provision is computed, denominated and payable in Mexican pesos; and |
| iv. | cashCash flows for payment of general expenses, taxes and duties are realized in Mexican pesos. |
Although the sales prices of severalcertain products are based on international U.S. dollar-indices, final domestic selling prices are governed by the economic and financial policies established by the Mexican Government. Accordingly, cash flows from domestic sales are generated and received in Mexican pesos. Mexico’s monetary policy regulator, the Banco de México (“Mexican Central Bank”), requires that Mexican Government entities other than financial entities sell their foreign currency to the Banco de MéxicoMexican Central Bank in accordance with its terms, receiving Mexican pesos in exchange, which is the currency of legal tender in Mexico. Translation of financial statements of foreign operationsTerms definition –
The financial statements of foreign subsidiaries and associates are translated into the reporting currency by first identifying if the functional currency is different from the currency for recording the foreign operations, and, if so, the recording currency is translated into the functional currency and then into the reporting currency using theyear-end exchange rate of each period for assets and liabilities reported in the consolidated statements of financial position; the historical exchange rate at the date of the transaction for equity items; and the weighted average exchange rate of the year for income and expenses reported in the statement of comprehensive income.
References in these consolidated financial statements and the related notes to “pesos” or “Ps.” refers to Mexican pesos, “U.S. dollars” or “US$”“U.S. $” refers to dollars of the United States of America, “yen” or “¥” refers to Japanese yen, “euro” or “€” refers to the legal currency of the European Economic and Monetary Union, “Pounds“pounds sterling” or “£” refers to the legal currency of the United Kingdom and “Swiss francs” or “CHF” refers to the legal currency of the Swiss Confederation, “Canadian dollars” or “CAD” refers to the legal currency of Canada and “Australian dollars” or “AUD” refers to the legal currency of Australia.Confederation. Figures in all currencies are presented in thousands of the relevant currency unit, except exchange rates and product and share prices. e.E. | Use of judgments and estimates |
The preparation of the consolidated financial statements in accordance with IFRS requires the use of estimates and assumptions made by PEMEX’s management that affect the recorded amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of these consolidated financial statements, as well as the recorded amounts of income, costs and expenses during the year. Actual results may differ from these estimates. Significant estimates and underlying assumptions are reviewed, and the effects of such revisions are recognized in the years in which any estimates are revised and in any future periods affected by such revision. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) Information about estimates, assumptions and critical accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements are described in the following notes: i. | Judgments, assumptions and estimation uncertainties |
Note 3-C Financial instruments – Fair Value and expected credit losses Note 3-E Wells, pipelines, properties, plant and equipment – Useful lifes Note 3-F Intangible assets, wells not assigned to a reserve and oil and natural gas exploration and license, appraisal and development expenditure – successful efforts method Note 3-H Impairment of non-financial assets – fair values, cash flow estimates and discount rates determination Note 3-I Leases – Early cancellation or renewal options Note 3-J Provisions – Environmental liabilities and retirement of assets Note 3-K Employee benefits – Actuarial assumptions Note 3-L Income taxes, duties and royalties – Recoverability assessment of deferred tax assets Note 3-M Contingencies – Probability assessment ii. | Measurement of fair values |
Some of PEMEX’ s accounting policies and disclosures require the measurement of the fair values of financial assets and liabilities, as well as non-financial assets and liabilities. PEMEX has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values. The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which the valuations should be classified. When measuring the fair value of an asset or a liability, PEMEX uses market observable data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows. Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair value of an asset or a liability might be categorized in different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. PEMEX recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) F. | Convenience translations |
These consolidated financial statements are presented in Mexican pesos (reporting currency), which is the same as the recording currency and the functional currency of PEMEX. The U.S. dollar amounts shown in the consolidated statements of financial position, the consolidated statements of comprehensive income, the consolidated statements of changes in equity (deficit) and the consolidated statements of cash flows have been included solely for the convenience of the reader and are unaudited. Such amounts have been translated from amounts in pesos, as a matter of arithmetic computation only, at the exchange rate for the settlement of obligations in foreign currencies provided by Bancothe Mexican Central Bank and the Secretaría de MéxicoHacienda y Crédito Público (“Ministry of Finance and SHCPPublic Credit” or “SHCP”) at December 31, 20172020 of Ps. 19.786719.9487 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. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
NOTE 3. | SIGNIFICANT ACCOUNTING POLICIES |
NOTE 3. SignificantPEMEX has consistently applied the following accounting policies
The to each of the periods presented in the preparation of theits consolidated financial statements, except for what is mentioned in accordance with IFRS requires the useNote 4, Accounting changes, splits, adjustments, reclassifications and corrections of estimates and assumptions made by PEMEX’s management that affect the recorded amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of these consolidated financial statements, as well as the recorded amounts of income, costs and expenses during the year.
Significant estimates and underlying assumptions are reviewed, and the effects of such revisions are recognized in the years in which any estimates are revised and in any future periods affected by such revision.
Information about estimates, assumptions and critical accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements are described in the following notes:
Note 3(e) Financial instruments—determination of fair values
Note 3(h) Wells, pipelines, properties, plant and equipment, including the successful efforts method—economic feasibility determining to capitalize assets
Note 3(j) Impairment ofnon-financial assets—cash flow estimates and discount rates determination
Note 3(l) Provisions—environmental liabilities and retirement of assets
Note 3(m) Employee benefits—actuarial assumptions and hypothesis
Note 3(n) Income taxes and duties—assessment of deferred income tax asset recovery
Note 3(p) Contingencies—assessment of likelihood of contingency
Actual results could differ from those estimates and assumptions.non-material errors.
Below is a summary of the principal accounting policies, which have been consistently applied to each of the years presented and followed by PEMEX in the preparation of its consolidated financial statements:policies: a.A. | Basis of consolidation |
The consolidated financial statements include thosethe financial statements of Petróleos Mexicanos the Subsidiary Entities and the Subsidiary Companies. All intercompany balances and transactionsthose of the consolidated companies; income and expenses, as well as unrealized profits and losses resulting from operations between them have been eliminated in the preparation of the consolidated financial statements pursuant to IFRS 10, “Consolidated Financial Statements” (“IFRS 10”). Unrealized gains arising from transactions with entities whose investment is accounted for using the equity method are eliminated against the investment to the extent of PEMEX’s participation in such entities. Unrealized losses are eliminated in the same way as unrealized gains but only to the extent that there is no evidence of impairment of the investment. If such evidence exists, PEMEX recognizesits subsidiaries over which it in its consolidated financial statements.
Investment in subsidiaries
The Subsidiary Entities and Subsidiary Companies are consolidated from the date that control commences until the date that control ceases.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)has control.
Petróleos Mexicanos controls a subsidiarySubsidiaries are entities controlled by PEMEX. PEMEX “controls” an entity when it is exposed to, or has rights to, variable returns from its involvement with the companyentity and has the ability to affect those returns through its power over the company.
entity. The financial statements of subsidiaries are included in the Subsidiary Entities and Subsidiary Companies have been prepared based on the same period of Petróleos Mexicanos’ consolidated financial statements applyingfrom the same accounting policies.date on which control commences until the date on which control ceases. For more information about the Subsidiary Companies, see Note 4.5. Investments
ii. | Non-controlling interests (NCI) |
NCI are measured initially at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition. Changes in the ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. When PEMEX loses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, and any related NCI and other components of equity. Any resulting gain or loss is recognized in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) iv. | Interests in equity-accounted investees |
PEMEX’s interests in equity-accounted investees comprise interests in associates and a joint arrangementsventure. Associates are those entities in which PEMEX has significant influence, but not control or joint control, over the power to control financial and operational decisions. Itoperating policies. A joint venture is presumed that there is significant influence whenan arrangement in which PEMEX owns directly or indirectly between 20% and 50% of voting rights in another entity. Joint arrangements are those arrangements whereby two or more parties havehas joint control, of an arrangement. A joint arrangement is either a joint venture, where both of the parties havewhereby PEMEX has rights to the net assets of the arrangements, or a joint operation, where the parties have botharrangement, rather than rights to theits assets and obligations for theits liabilities relating to the arrangements.(joint operation).
InvestmentsInterests in associates and the joint venturesventure are recognized based onaccounted for using the equity method and recordedmethod. They are initially recognized at cost, including any goodwill identified on acquisition. With respect to joint operations, the assets, liabilities, income and expenses are recognized in relation to the share of each party and in accordance with the applicable IFRS for each of those items. The investment costwhich includes transaction costs.
These Subsequent to initial recognition, the consolidated financial statements include PEMEX’s share of the proportion of gains, lossesprofit or loss and other comprehensive income corresponding to PEMEX’s share in each investee, once these items are adjusted to align with the accounting policies(OCI) of PEMEX, fromequity accounted investees, until the date thaton which significant influence and joint control begins to the date that such influence or joint control ceases.
When the value of the share of losses exceeds the value of PEMEX’s investment in an associate or joint venture, the carrying value of the investment, including any long-term investment, is reduced to zero and PEMEX ceases to recognize additional losses, except in cases where PEMEX is liable for obligations incurred by those associates and joint ventures. For more information about associatesjoint ventures and joint arrangements,associates, see Note 11.12. Non-controlling interests
v. | Transactions eliminated on consolidation |
The equity interestsIntra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated. Unrealized gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of third parties who do not have a controllingthe PEMEX interest in the equity or comprehensive resultinvestee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of subsidiariesimpairment.
i. | Foreign currency transactions |
Transactions in foreign currencies are translated into the respective functional currencies of PEMEX companies at the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign currency differences are generally recognized in consolidated statements of comprehensive income and presented within foreign exchange. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) The financial statements of foreign subsidiaries and associates are translated into the reporting currency by first identifying if the functional currency is different from the currency for recording the foreign operations, and, if so, the recording currency is translated into the functional currency and then into the reporting currency using the year-end exchange rate of each period for assets and liabilities reported in the consolidated statements of financial position,position; the consolidated statementshistorical exchange rate at the date of changes inthe transaction for equity (deficit) as“non-controlling interests”items; and as “netthe exchange rate at the date of the transaction for income and comprehensive income for the period, attributable tonon-controlling interests,”expenses reported in the consolidated statementsstatement of comprehensive income. ChangesForeign currency differences are recognized in OCI and accumulated in the currency translation effect, except to the extent that the translation difference is allocated to NCI.
When a parent’s ownershipforeign operation is disposed of in its entirety or partially such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to the consolidated statement of comprehensive income as part of the gain or loss on disposal. If PEMEX disposes of part of its interest in a subsidiary that do not result in a loss ofbut retains control, are accounted for as equity transactions. In such circumstances,then the carrying amountsrelevant proportion of the controllingcumulative amount is reattributed to NCI. When PEMEX disposes of only part of an associate or joint venture while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss. i. | Recognition and initial measurement |
Financial assets andnon-controlling interests shall be adjusted to reflect the changes in their relative interests liabilities, including accounts receivable and payable, are initially recognized when these assets are contractually originated or acquired, or when these liabilities are contractually issued or assumed. Financial assets and financial liabilities (unless it is an account receivable or account payable without a significant financing component) are measured and initially recognized at fair value, in the subsidiary. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Dividends in cash andcase of financial assets other than cash
A liability for distributions of dividends in cash andnon-cash assetsor liabilities not measured at fair value with changes through OCI, plus the transaction costs directly attributable to third partiesacquisition or issuance, when subsequently measured at amortized cost. An account receivable or account payable without a significant financing component is recognized when the distribution is authorized by the Board of Directors. The corresponding amount is recognized directly in equity.
Distributions of dividends innon-cash assets areinitially measured at the fair value of the assets to be distributed. Changes relating to these measurements oftransaction price. If PEMEX determines that the fair value betweenat the date on whichinitial recognition differs from the distribution is declared andtransaction price, PEMEX shall recognize the date when the assets are transferred, are recognized directly in equity.
When distributingnon-cash assets, any difference between the carrying amount offair value at initial the liability for distribution of dividendsrecognition and the carrying amount of the assets distributed is recognizedtransaction price in the consolidated statements of comprehensive income.
b.ii. | Business combinationsClassification and goodwillsubsequent measurement
|
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.Financial Assets –
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 isOn initial recognition, 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 thatasset is classified as measured at: Amortized Cost; Fair Value Through Other Comprehensive Income (“FVTOCI”)-debt investment; FVTOCI–equity isinvestment; or Fair Value Through Profit or Loss (“FVTPL”).
Financial assets are not remeasured,reclassified subsequent to their initial recognition unless PEMEX changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model. Petróleos Mexicanos Productive State-Owned Subsidiaries and subsequent settlement is accounted for within equity.Subsidiary Companies Goodwill, which is initiallyNotes to the consolidated financial statements
(Figures stated in thousands, except as noted) | | | FINANCIAL ASSETS | | MEASUREMENT | | | Amortized cost | | A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL: • it is held within a business model that has the objective of holding assets to collect contractual cash flows; and • its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. | | | Debt investment | | A debt instrument is measured at FVTOCI only if it meets both of the following conditions and is not designated as at FVTPL: • it is held within a business model that has the objective of both collecting contractual cash flows and selling financial assets; and • its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. | | | Equity investment | | On initial recognition of an equity investment that is not held for trading, PEMEX may irrevocably elect to present subsequent changes in fair value in OCI. This election is made on an investment-by-investment basis. |
All financial assets not classified as measured at amortized cost isor FVTOCI (as described above) are measured at FVTPL. This includes all derivative financial assets (see Note 18). On initial recognition, PEMEX may irrevocably designate a financial asset that otherwise meets the excessrequirements to be measured at amortized cost or at FVOCI as FVTPL, if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise. Financial assets: Business model assessment – PEMEX makes an assessment of the aggregateobjective of the consideration transferredbusiness model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes: the stated policies and objectives for the portfolio and the amount recognized fornon-controllingoperation of those policies in practice, which include whether management’s strategy focuses on earning contractual interest overincome, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets; how the performance of the portfolio is evaluated and reported to PEMEX management; the risk that affects the performance of the business model (and the financial assets held within that business model) and how those risks are managed; how managers of the business are compensated (e.g., whether compensation is based on the fair value of the identifiable net assets acquiredmanaged or the contractual cash flows collected); and liabilities assumed. If the frequency, volume and timing of sales in prior periods, the reasons for such sales and expectations about future sales activity. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with PEMEX’s continuing recognition of the assets. Financial assets that are held for trading or managed and the performance of which is evaluated on a fair value basis are measured at FVTPL. Financial Asset: Assessment whether contractual cash flows are solely payments of principal and interest – For the purposes of this assessment, principal is defined as the fair value of the netfinancial assets on initial recognition. Interest is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during the relevant period of time and for the basic lending risks and costs (e.g., liquidity risk and administrative costs), as well as profit margin. In assessing whether the contractual cash flows are solely payments of principal and interest, PEMEX considers the contractual terms of the instrument, which includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, PEMEX considers: contingent events that would change the amount or timing of cash flows; terms that may adjust the contractual coupon rate, including variable rate features; prepayment and extension features; and terms that limit PEMEX’s claim to cash flows from specified assets (for example, non-recourse features). A prepayment feature is consistent solely with the payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a significant discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is greater than the aggregate consideration 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 oftreated as consistent with this criterion if the fair value of net assets acquired over the aggregate consideration transferred, then the gainprepayment feature is recognized ininsignificant at initial recognition. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements of comprehensive income. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) 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 unitFinancial assets: Subsequent measurement 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.losses –
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 and recorded at exchange rates at the dates of the transactions and/or of the presentation of financial information.
Exchange differences arising from the settlement of monetary items or from the translation of monetary items into rates different from those at which they were translated on their initial recognition, are recognized in the results of operations in the reporting period in which they arise. When a gain or loss from anon-monetary item is recognized in other comprehensive results, any exchange difference included in that gain or loss is recognized in other comprehensive results. Conversely, when a gain or loss from anon-monetary item is recognized in the results of operations, any exchange difference included in that gain or loss is recognized in the results of operations for the period.
d.Financial assets at FVTPL | Fair value measurement |
PEMEX measures certain financial instruments such as DFIs at fair value as of the closing date of the relevant reporting period.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A measurement at fair value assumes that the sale of the asset or transfer of a liability occurs:
| i.Financial assets at FVTPL are measured at fair value and changes therein, including any interest or dividend income, are recognized in profit or loss. | | in the principal market for the asset or liability; or |
Financial assets at amortized cost | | ii.These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss. | | | Debt investments at FVOCI | | These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss. | | | Equity investments at FVOCI | | These assets are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the absencedividend clearly represents a recovery of a principal market,part of the cost of the investment. Other net gains and losses are recognized in the most advantageous market for the assetOCI and are never reclassified to profit 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 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.
e. | Financial instrumentsloss. |
Financial instrumentsliabilities: Classification, subsequent measurement and gains and losses – Financial liabilities are classified as: (i) financial instrumentsas measured at fair value through profitamortized cost or loss; (ii) financial instruments held to maturity;(iii) available-for-sale financial assets; (iv) investments in equity instruments; (v) loans and receivables; and (vi) DFIs. PEMEX determines the classification of its financial instruments at the time of initial recognition. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
PEMEX’s financial instruments include cash and short-term deposits,available-for-sale financial assets, accounts receivable, other receivables, loans, accounts payable to suppliers, other accounts payable, borrowings and debts, as well as DFIs.
Below are descriptions of the financial instruments policies employed by PEMEX:
Financial instruments measured at fair value through profit or loss
FVTPL. A financial instrumentliability is measured at fair value through profit or lossclassified as FVTPL if it is classified as held for tradingheld-for-trading, it is a derivative or it is designated as such uponon initial recognition. Financial assetsliabilities at FVTPL 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 year. These financial instruments are recognizedmeasured at fair value and corresponding changes relating to dividend incomenet gains and losses, including any interest expense, are recognized in the consolidated statements of comprehensive income. Available-for-sale financial assets
Available-for-sale financial assets arenon-DFIs that are designated asavailable-for-sale or are not classified in any of the previous categories. PEMEX’s investments in certain equity securities and debt securities are classified asavailable-for-sale financial assets.Available-for-sale financial assets are recognized initially at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition,available-for-sale financial assets are measured at fair value. In addition, any gains or losses associated with such instruments, as well as foreign exchange differences are recognized in other comprehensive results and presented in the fair value reserve in equity. When an investment is derecognized, any gains or losses accumulated in the equity are reclassified to profit or loss.
Sales and purchases of Other financial assets that require the delivery of such assets within a period of time established by market practiceliabilities are recognized as of the negotiation date (the date on which PEMEX commits to purchase or sell the asset).
Loans and receivables
Loans and receivables are initially recognized at fair value. After initial recognition, loans and debt securities that bear interest aresubsequently measured at amortized cost using the effective interest rate (“EIR”) method, less impairment losses.method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.
The amortized cost is calculated
Financial assets – PEMEX derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which PEMEX neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. PEMEX enters into transactions whereby it transfers assets recognized in its statement of financial position but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized. Financial liabilities – PEMEX derecognizes a financial liability when its contractual obligations are discharged, cancelled or expired. PEMEX also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value. On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any discountnon-cash assets transferred or premium on acquisitionliabilities assumed) is recognized in profit or loss. Petróleos Mexicanos Productive State-Owned Subsidiaries and fees and costs that are an integral part of the EIR method. Amortization of costs is included under the heading of financing cost inSubsidiary Companies Notes to the consolidated financial statements of comprehensive income. Derivative(Figures stated in thousands, except as noted)
Financial assets and financial instruments DFIsliabilities are offset, and the net amount is presented in the consolidated statementsstatement of financial position when, and only when, PEMEX has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.
v. | Derivative financial instruments and hedge accounting |
PEMEX uses DFIs to hedge the risk exposure in foreign currency, interest rate and the price of commodities related to its products. Embedded derivatives are carried at fair value. Inseparated from the case ofhost contract and accounted for separately if the host contract is not a financial asset and certain criteria are met. These contracts are not accounted as designated hedging instruments. DFIs heldare accounted for trading, changes inas financial assets when the fair value is positive and as a financial liability when the fair value is negative. Financial instruments and contract assets – PEMEX recognizes loss allowances for Estimated Credit Losses (“ECLs”) on: financial assets measured at amortized cost; debt investments measured at FVOCI; and PEMEX measures loss allowances at an amount equal to lifetime ECL, except for the following, which are recordedmeasured as 12-month ECLs: debt securities that are determined to have low credit risk at the reporting date; and other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition. PEMEX considers a financial asset to be in profit or loss;default when the debtor is unlikely to pay its credit obligations to PEMEX in full, without recourse by PEMEX to actions such as guarantee redemption (if any is held). PEMEX considers that a debt instrument has a low credit risk, when its credit rating is classified as “investment grade”. The investment grade classification is based on minimum credit ratings of Baa3 (Moody’s) and BBB- (S&P and Fitch), as well as its equivalent in other rating agencies. Lifetime ECLs are the casecredit losses that result from all possible default events over the expected life of DFIs formally designated a financial instrument.PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).
AND SUBSIDIARY COMPANIESThe maximum period considered when estimating ECLs is the maximum contractual period over which PEMEX is exposed to credit risk.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Petróleos Mexicanos FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Productive State-Owned Subsidiaries and Subsidiary Companies
Notes to the consolidated financial statements (FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) Measurement of ECLs – ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as and that qualify for hedging, changes in fairthe present value are recorded inof all cash shortfalls (for example, the consolidated statements of comprehensive income usingdifference between the cash flow or fair value hedge accounting, with gains or losses classifiedflows due to the entity in accordance with the earnings treatment ofcontract and the hedge transaction.cash flows that PEMEX expects to receive). Embedded derivatives
PEMEX evaluates the potential existence of embedded derivatives, which may be found in the terms of its contracts, or combined with other host contracts, which could be structured financial instruments (debt or equity instruments with embedded derivatives). Embedded derivatives have terms that implicitly or explicitly meet the characteristics of a DFI. In some instances, these embedded derivatives must be segregated from the underlying contracts and measured, recognized, presented and disclosed as DFIs, such as when the economic risks and terms of the embedded derivative are not clearly and closely related to the underlying contract.
Impairment ofCredit-impaired financial assets –
At each reporting date, PEMEX evaluatesassesses whether there is objective evidence that a financial asset or group of financial assets is impaired, in which case the value of the recoverable amount of the asset is calculated.carried at amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is impaired if objective evidence indicates‘credit-impaired’ when one or more events that have a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effectdetrimental impact on the estimated future cash flows of the financial asset.asset have occurred. Objective evidenceEvidence that a financial asset or group of assets is impairedcredit-impaired includes the following observable data:
significant financial difficulty of the issuerborrower or obligor, issuer; a breach of contract such as a default or delinquency in interestbeing more than 90 days past due; the restructuring of a loan or principal payments; the lender, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concessionadvance by PEMEX on terms that the lenderit would not otherwise consider; consider otherwise; it becomingis probable that the borrower will enter bankruptcy or other financial reorganization; or | �� | | the disappearance of an active market for a security because of financial difficulties. |
Presentation of allowance for ECL in the disappearance of an active market for that financial asset becausestatement of financial difficulties; or observable data indicating that there is a measurable decrease in the estimated future cash flows. Impairments by asset are:position – Impairment ofLoss allowances for financial assets carried at amortized cost
The impairment of financial assets carriedmeasured at amortized cost is measured asare deducted from the difference between the assetsgross carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The amount of the loss shall be recognized in profit or loss.assets.
If, in a subsequent period, theWrite-off –
The gross carrying amount of a financial asset is written off when PEMEX has no reasonable expectation of recovering a financial asset in its entirety or a portion thereof. In the impairment loss decreases andcase of individual customers, PEMEX’s policy is to cancel 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
In addition to the above-mentioned, a significant or prolonged decline in the fair value of an investment in an available—for—sale equity instrument is also objective evidence of impairment.
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 thoughgross carrying amount when the financial asset has not been derecognized.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
If,met the uncollectibility report as established in the PolíticasGenerales y Procedimientos para CancelarAdeudos (Procedure to write-off financial assets). For corporate customers, PEMEX individually makes an assessment with respect to the timing and amount of write-off based on whether there is a subsequent period,reasonable expectation of recovery. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the impairment loss decreases, the reversal shall be reflected as a reversal in other comprehensive income.PEMEX’s procedures for recovery of amounts due.
f.D. | 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.
Cash subject to restrictions or that cannot be exchanged or used to settle a liability within 12 months is presented asnon-current assets.
g. | Inventories and cost of sales |
Inventories are valued at the lower of cost or net realizable value. Cost is determined based on the cost of production or acquisition of inventory and other costs incurred in transporting such inventory to its present location and in its present condition, using the average cost formula.method. 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. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) Advance payment to suppliers for inventory purchases are recognized as part of inventory when the risks and benefits of the ownership of the inventory have been transferred to PEMEX. h.E. | Wells, pipelines, properties, plant and equipment |
Wells,
i. | Recognition and measurement |
Items of wells, pipelines, properties, plant and equipment are recorded at acquisition or construction cost, which includes capitalized borrowing cost, less accumulated depreciation and accumulated impairment losses. PEMEX uses the successful efforts method for the exploration and production of crude oil and gas activities, considering the criteria mentioned in IFRS 6, “Exploration for and Evaluation of Mineral Resources” in relation to the recognition of exploration and drilling assets. Costs of development wells and related plant, property and equipment involved in the exploitation of oil and gas are recorded as part of the cost of assets. The costs of exploratory wells in areas that have not yet been designated as containing proved reserves are recorded as intangible assets until it is determined whether they are commercially viable to capitalize as fixed assets, otherwise they are recognized as exploration expenses. Other expenditures on exploration are recognized as exploration expenses as they are incurred.
In accordance with IAS 16, “Property, Plant and Equipment” (“IAS 16”), initialInitial costs of wells, pipelines, properties, plant and equipment are initially recorded at cost, which includes their original purchase price or construction cost, any costs attributable to bringing the assets to a working condition for their intended use and the costs of dismantling and removing the items and restoring the site on which they are located, including the estimated cost of plugging and abandoning wells.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The cost of financing projects that require large investments and financing incurred for projects, net of interest revenues from the temporary investment of these funds, is recognized as part of wells, pipelines, properties, plant and equipment when the cost is directly attributable to the construction or acquisition of a qualifying asset. The capitalization of these costs is suspended during periods in which the development of construction is interrupted, and its capitalization ends when the activities necessary for the use of the qualifying asset are substantially completed. All other financing costs are recognized in the consolidated statements of comprehensive income in the period in which they are incurred. The cost of self-constructed assets includes the cost of materials and direct labor, interest on financing and any other costs directly attributable to start up. In some cases, the cost also includes the costcosts of plugging of wells and removal.removal at present value. Expenditures related to the construction of wells, pipelines, properties, plant and equipment during the stage prior to commissioning are stated at cost as intangible assets or construction in progress, in accordance with the characteristics of the asset. Once the assets are ready for use, they are transferred to the respective component of wells, pipelines, properties, plant and equipment and depreciation or amortization begins. If significant parts of an item of wells, pipelines, properties, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment. Any gain or loss on disposal of an item of wells, pipelines, properties, plant and equipment is recognized in profit or loss. Advance payments for the acquisition of pipelines, properties, plant and equipment are also recognized in the line item of wells, pipelines, properties, plant and equipment when the risks and benefits of the ownership have been transferred to PEMEX. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) ii. | Subsequent expenditure |
The costs of major maintenance or replacement of a significant component of an item of wells, pipelines, properties, plant and equipment are recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to PEMEX and its cost can be measured reliably. The costs of recurring maintenance, repairs and renovations of wells, pipelines, properties, plant and equipment carried out to maintain the facilities in normal operation conditions are recognized in profit or loss as incurred. Depreciation and amortization of capitalized costs in wells are determined based on the estimated economic life of the field to which the wells belong, considering the relationship between the production of barrels of oil equivalent for the period and proved developed reserves of the field, as of the beginning of the period, with quarterly updates for new development investments. Depreciation of other elements of pipelines, properties, plant and equipment is recognized in profit or loss on a straight-line basis over the estimated useful life of the asset, beginning as of the date that the asset is available for use, or in the case of construction, from the date that the asset is completed and ready for use. When parts of an item of wells, pipelines,Until December 2018, properties, and equipment are significant relative to the total cost of the item, the part is depreciated separately.
Estimated useful lives of items of properties, plant and equipment are reviewed if expectations differ from previous estimates.
Pipelines, properties, and equipment received from customers are initially recognized at fair value as revenue from ordinary operating activities if PEMEX has no future obligations to the customer who transferred the item. In contrast, if PEMEX does have future obligations to such a customer, the initial recognition is recorded as a deferred liability based on the period in which the assets will provide services to the customers.
The capitalized value of finance leases is also included in the line item of wells, pipelines, properties, plant and equipment. Properties, plant and equipment acquired through financial leases arewere depreciated over the shorter of the lease term or the useful life of the asset.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Advance payments for the acquisition of pipelines, properties, plant and equipment are also recognized in the line itemThe estimated useful lives of wells, pipelines, properties, plant and equipment when the risksfor current and benefitscomparative periods are described in Note 13.
Estimated useful lives of the ownership have been transferred to PEMEX.items of properties, plant and equipment are reviewed and updated prospectively if expectations differ from previous estimates. F. | Intangible assets and oil and natural gas exploration and license, appraisal and development expenditure |
Intangible assets acquired separately are measured at initial recognition at their acquisition cost. After the initial recognition, intangible assets are valued at their acquisition cost, less: (i) accumulated amortization, under the straight-line method during the estimated useful life of the intangible asset and (ii) accumulated impairment losses. Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognized in profit or loss as incurred. Software licenses are amortized over the lesser of their contract period or the remaining life of the asset to which they are associated. The estimated useful lives of elements of intangible assets for current and comparative periods are described in Note 14. The estimated useful lives and residual values of intangible assets are reviewed at each reporting date and adjusted if appropriate. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) ii. | Wells not assigned to a reserve, oil and natural gas exploration, appraisal and development expenditure |
a. | Wells not assigned to a reserve |
Wells not assigned to a reserve mainly include drilling, evaluation and development costs for oil and natural gas, and rights-of-way. b. | Oil and natural gas exploration, appraisal and development expenditures |
Oil and natural gas exploration, evaluation and development expenses are accounted for using the principles of the successful efforts method of accounting, as described below: Successful Efforts Method – Pemex Exploration and Production applies IFRS 6 - Exploration and Evaluation of Mineral Resources, which allows an entity to develop an accounting policy for exploration and evaluation assets. Therefore, Pemex Exploration and Production uses the method of successful efforts, which requires a cause and effect relationship between the costs incurred and the recognition of specific reserves. Generally, if a cost is incurred without an identifiable future benefit, it is charged to expenses. Before PEMEX is able to determine the accounting treatment of a cost, it must be classified as a property acquisition, exploration, development or production cost. Exploration and appraisal expenditure – Geological and geophysical exploration costs including topographic costs, geological studies, property access rights, remuneration and expenses of geologists and geophysicists are charged to expenses as incurred. Costs directly associated with an exploration well, other than the costs mentioned in the preceding paragraph, are initially capitalized as an intangible asset (wells not assigned to a reserve) until the drilling of the well is complete and the results have been evaluated. These costs include employee compensation, materials and fuel used, platform costs and payments made to contractors. If potentially commercial quantities of hydrocarbons are not found, the exploration well costs are written off against profit or loss. If hydrocarbons are found and, subject to additional assessment activity, are likely to be capable of commercial development, the costs continue to be carried as an asset. If it is determined that development will not occur, then the costs are expensed against profit or loss. Costs directly associated with the evaluation activity performed to determine the size, characteristics and commercial potential of a reserve after the initial hydrocarbon discovery, including the costs of evaluation of wells where no hydrocarbons were found, are initially capitalized as an intangible asset (wells not assigned to a reserve). When proved reserves of oil and natural gas are determined and development is approved by management, the relevant expenditure is transferred to wells, pipelines, properties, plant and equipment. Exploration wells more than 12 months old are recognized as an expense unless: (a)(i) they are in an area requiring major capital expenditure before production can begin, (ii) commercially productive quantities of reserves have been found, and (iii) they are subject to further exploration or appraisal activity, in that, either drilling or additional exploration wells are underway or firmly planned for the near future or (b) proved reserves are recorded within 12 months of completion of the exploratory drilling. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) PEMEX periodically assesses the amounts included within fixed assets to determine whether capitalization is initially appropriate and can continue. Exploration wells capitalized beyond 12 months are subject to additional scrutiny as to whether the facts and circumstances have changed and therefore whether the conditions described in the preceding paragraph no longer apply. Development expenditure – Expenditure on the construction, installation and completion of infrastructure facilities such as platforms, pipelines and the drilling of development wells, including service and unsuccessful development or delineation wells, is capitalized within wells, pipelines, properties, plant and equipment and is depreciated from the commencement of production as described in the accounting policy for wells, pipelines, properties, plant and equipment. Exploration – Exploration includes all expenses related to the search for oil and / or gas reserves, including depreciation and applicable costs of supporting equipment and facilities, and the costs of drilling exploratory wells and exploratory stratigraphic wells. Some exploration costs are charged directly to expenses when they occur, such as the costs of maintaining unexploited properties, since such costs do not increase the possibilities that said lands contain proven reserves. The costs of geologists, topographers and geophysicists, including wages and other related expenses, are also charged directly to expenses when they occur because they do not represent the acquisition of an identifiable asset since these studies represent research expenses. All costs for drilling exploratory wells are capitalized and classified as wells, pipelines, property, plant and equipment, not associated with a reserve, until it is determined whether or not a well has proven reserves. Once the exploratory wells are completed, the future treatment of these costs is determined. Development – Development costs are associated with previously discovered proven reserves, with previously known future benefits. Therefore, all costs incurred in development activities must be capitalized. Development includes all costs incurred in creating a system of productive wells, related equipment, and facilities in proven reserves so that oil and / or gas can be extracted. Developmental costs are related to specific proven reserves. The cost of building roads to gain access to proven reserves is a development cost, as is the cost of providing facilities for the extraction, treatment, collection and storage of oil and / or gas. Developmental costs also include depreciation and operating costs of equipment and facilities used in developmental activities. Likewise, non-productive development wells are capitalized, since they are considered as a cost of creating the total production system for proven reserves. Production – Production includes the costs incurred to raise oil and / or gas to the surface, its collection, treatment, processing and field storage. The production function ends in the storage tank of the production field or, in exceptional circumstances, at the first point of delivery of the oil and / or gas to the main line, refinery, marine terminal or common transport. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) G. | Crude oil and natural gas reserves |
Under Mexican law, all crude oil and other hydrocarbon reserves located in the subsoil of Mexico are owned by the Mexican nation and not by PEMEX. In accordance with the aforementioned and based on the applicable regulation as of the date of these consolidated financial statements, the reserves assigned to PEMEX by the Mexican Government are not registered for accounting purposes because they are not PEMEX’s property. PEMEX estimates total proved oil and natural gas reserve volumes in accordance with the definitions, methods and procedures established in Rule4-10(a) of RegulationS-X (“Rule4-10(a)”) of the U.S. Securities and Exchange Commission (“SEC”), as amended, and where necessary, in accordance with the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers (the “SPE”) as of February 19, 2007. These procedures are consistent with international reserves reporting practice. The estimation of these reserves depends on assumptions made and the interpretation of the data available and may vary among analysts. The results of drilling activities, test wells and production after the date of estimation are utilized in future revisions of reserves estimates. Although PEMEX does not own the oil and other hydrocarbon reserves within Mexico, these procedures allow PEMEX to record the effects that such oil and other hydrocarbon reserves have on its consolidated financial statements, including, for example, in the depreciation and amortization line item. j.H. | Impairment ofnon-financial assets |
The carrying amounts of PEMEX’snon-financial assets, other than inventories and deferred taxes, are assessed for indicators of impairment at the end of each reporting period. If the net carrying value of the asset or its cash-generating unit exceeds the recoverable amount, PEMEX records an impairment charge in its consolidated statement of comprehensive income.profit or loss. A cash-generating unit is the smallest identifiable group of assets which can generate cash flows independently from other assets or groups of assets. The recoverable amount of an asset or a cash-generating unitCash-Generating Unit (“CGU”) is defined as the higher of its fair value minus the costs of disposal and its value in use. The value in use is the discounted present value of the net future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. In measuring value in use, the discount rate applied is thepre-tax rate that reflects current market assessments of the time value of money and the risks specific to the asset. Fair value is calculated using discounted cash flows determined by the assumptions that market participants would apply in order to estimate the price of an asset or cash generating unit,CGU, assuming that such participants were acting in their best economic interest. In the case of cash-generating assets or items dedicated to the exploration and evaluation of hydrocarbons reserves, the recoverable amount is determined using the value in use based on the proved reserves and probable reserves, in some cases, for the risk factor associated with such reserves. Both impairment losses and reversals are recognized in the statement of comprehensive income in the costs and expenses line items in which the depreciation and amortization are recognized. Impairment losses may not be PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
presented as part of the costs that have been capitalized in the value of any asset. Impairment losses related to inventories are recognized as part of cost of sales. Impairment losses on investments in associates, joint ventures and other investments are recognized as profit (loss) sharing in associates. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) An impairment loss shall be reversed if there has been a change in the estimates used since the date when the impairment loss was recognized. These reversals will not exceed the carrying value of the asset as though no impairment had been recognized. Impairment losses and reversals are presented in a separate line item in the consolidated statement of comprehensive income. PEMEX has applied IFRS 16 using the modified retrospective approach and therefore the comparative information for 2018 has not been restated and continues to be reported under IAS 17 and IFRIC 4. The determinationdetails of accounting policies under IAS 17 and IFRIC 4 are disclosed separately. Policy applicable after January 1, 2019 At the inception of a contract, PEMEX assesses whether an agreementa contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, PEMEX uses the definition of a lease in IFRS 16. As a lessee – At commencement or on modification of a contract that contains a lease component, PEMEX allocates the consideration in the contract to each lease component on the basis of its relative stand-alone prices. However, PEMEX has elected for some leases not to separate non-lease components and to account for the lease and non-lease components as a single lease component. PEMEX recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to PEMEX by the end of the lease term or the cost of the right-of-use asset reflects that PEMEX will exercise a purchase option. In that case, the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. Useful lives are shown in Note 17. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, PEMEX’s incremental borrowing rate. Generally, PEMEX uses its incremental borrowing rate as the discount rate. PEMEX determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) Lease payments included in the measurement of the lease liability comprise the following: fixed payments, including in-substance fixed payments; variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; amounts expected to be payable under a residual value guarantee; and the exercise price under a purchase option that PEMEX is reasonably certain to exercise, lease payments in an optional renewal period if PEMEX is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless PEMEX is reasonably certain not to terminate early. The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in PEMEX’s estimate of the amount expected to be payable under a residual value guarantee, if PEMEX changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero. PEMEX presents separately the right-of-use assets and lease liabilities in the statement of financial position. Short-term leases and leases of low-value assets – PEMEX has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets and short-term leases. PEMEX recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term. Policy applicable before January 1, 2019 – For contracts entered into before January 1, 2019, PEMEX determined whether the arrangement was or contained a lease based on the economic substanceassessment of whether: fulfilment of the agreement at the date of execution. An agreement contains a lease if performance under the agreement depends uponarrangement was dependent on the use of a specific asset or assets, or if assets; and the agreement grantsarrangement had conveyed a right to use the asset. An arrangement conveyed the right to use the asset.asset if one of the following was met: the purchaser had the ability or right to operate the asset while obtaining or controlling more than an insignificant amount of the output; the purchaser had the ability or right to control physical access to the asset while obtaining or controlling more than an insignificant amount of the output; or facts and circumstances indicated that it was remote that other parties would take more than an insignificant amount of the output, and the price per unit was neither fixed per unit of output nor equal to the current market price per unit of output. Petróleos Mexicanos FinanceProductive State-Owned Subsidiaries and Subsidiary Companies
Notes to the consolidated financial statements (Figures stated in thousands, except as noted) As a lessee – As a lessee, PEMEX classified leases which transfer to PEMEXthat transferred substantially all the inherent benefits and risks of the risks and rewards of ownership as finance leases. When this was the case, the leased property, are capitalizedassets were measured initially at the date the lease commences, and the value is recorded asan amount equal to the lower of thetheir fair value of the leased property and the present value of the minimum lease payments. Payments onMinimum lease payments were the payments over the lease are divided betweenterm that the financial costslessee was required to make, excluding any contingent rent. Subsequent to initial recognition, the assets were accounted for in accordance with the accounting policy applicable to that asset. Assets held under other leases were classified as operating leases and the amortization of the remaining debt principal in order to achieve a constant effective interest rate for the outstanding liability. The financing costs arewere not recognized in thePEMEX’s statement of comprehensive income. Operating lease payments arefinancial position. Payments made under operating leases were recognized as expenses in the statement of comprehensive incomeprofit or loss on a straight linestraight-line basis over the term of the lease. Lease incentives received were recognized as an integral part of the total lease and variable rent payments are recognized inexpense, over the operating results on an accrued basis.term of the lease.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost. PEMEX recognizes provisions when, as a result of a past event, PEMEX has incurred a legal or assumed present obligation for which a future disbursement is probable and the value of such disbursement is reasonably estimable. In certain cases, such amounts are recorded at their present value. Environmental liabilities – In accordance with applicable legal requirements and accounting practices, an environmental liability is recognized when the cash outflows are probable and the amount is reasonably estimable. Disbursements related to the conservation of the environment that are linked to revenue from current or future operations are accounted as expenses or assets, depending on the circumstances of each disbursement. Disbursements related to past operations, which no longer contribute to current or future revenues, are accounted for as current period expenses. 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, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(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 wells, pipelines, properties, plant and equipment and their components are recognized at the date that the retirement obligation is incurred, based on the discounted cash flow method. The determination of the fair value is based on existing technology and regulations. If a reliable estimation of fair value cannot be made at the time the obligation is incurred, the accrual will be recognized when there is sufficient information to estimate the fair value. The obligations related to the costs of future retirement of assets associated with the principal refining processes for gas and petrochemicals are not recognized. These assets are considered to have an indefinite useful life due to the potential for maintenance and repairs. The abandonment costs related to wells currently in production and wells temporarily closed are recorded in the statement of comprehensive income based on the units of production method. Total cost of abandonment and plugging fornon-producing wells is recognized in the statement of comprehensive income at the end of each period. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) All estimations are based on the useful lives of the wells, considering their discounted present value. Salvage values are not considered, as these values commonly have not traditionally existed. Beginning January 1, 2016, Petróleos Mexicanos
i. | Short-term employee benefits |
Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if PEMEX has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the Subsidiary Entities have operated both aobligation can be estimated reliably. ii. | Defined contribution plans |
Obligations for contributions to defined contribution plan and a defined benefit pension plan. Until December 31, 2015, PEMEX only operated a defined benefit pension plan. Defined contribution pension plan
In this plan, both Petróleos Mexicanos andplans are expensed as the Subsidiary Entities and their respective employees contribute to the worker’s individual account. PEMEX’srelated service is provided. Prepaid contributions are recognized onas an accrual basis as cost, expense or asset and are credited to liability.
Contributions to the defined contribution planextent that are not expected to be fully settled within 12 months after the enda cash refund or a reduction in future payments is available.
PEMEX’s net obligation in respect of the annual reporting period in which the employee rendered related services will be discounted using the defined benefit plan discount rate. Defined benefit plan
Under the defined benefit plan, Petróleos Mexicanos and the Subsidiary Entities are the only parties that contribute to a trust, which is managed separately. Petróleos Mexicanos and the Subsidiary Entities recognize the cost for defined benefit plans based on independent actuarial computations applyingis calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. Actuarial gains and losses areWhen the calculation results in a potential asset for PEMEX, the recognized within other comprehensive results for the period in which they are determined. The costs of prior services are recognized within profit or loss for the period in which they are determined.
The asset or liability in the defined benefit plan comprises the present value of the defined benefit obligation less the fair value of plan assets for which obligations have to be settled. The value of any asset is limited to the present value of economic benefits available in the form of any economic benefit represented byfuture refunds from the plan reimbursements or reductions of thein future contributions to the plan.
To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESNew remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in OCI. PEMEX determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability (asset) at such time, taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. PEMEX recognizes gains and losses from the settlement of a defined benefit plan when the settlement occurs.
iv. | Other long-term employee benefits |
In addition, other long termPEMEX’s net obligation in respect of long-term employee benefits includeis the seniority premiums payableamount of future benefit that employees have earned in return for disability, deaththeir service in the current and survivors benefits, medical services, gas and basic food basket for beneficiaries.
Termination benefitsprior periods. That benefit is discounted to determine its present value. New remeasurements are recognized in profit or loss forin the yearperiod in which they are incurred.arise.
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) Termination benefits are expensed at the earlier of when PEMEX can no longer withdraw its offer of those benefits and when PEMEX recognizes costs for a restructuring. If benefits are not expected to be settled in full within 12 months of the reporting date, then they are discounted. L. | Income taxes, duties and dutiesroyalties |
Income tax expense comprises current and deferred tax. It is recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in OCI. The interest and penalties related to income taxes, including uncertain tax treatments, do not meet the definition of income taxes, and are therefore accounted for under IAS 37 “Provisions, Contingent Liabilities and Contingent Assets.” Current income tax assetscomprises the expected tax payable or liabilitiesreceivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current and prior years are measured astax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to be recovered from the tax authorities,income taxes, if any. It is measured using either the tax rates in forceenacted or substantively enacted at the reporting date. Current tax rates which are in the process of being approved and are substantially completed by the end of the year.also includes any tax arising from dividends. Current income taxes related with items that are recognized as equity are presented in the other comprehensive income of the year. Periodically, PEMEX evaluates the positions taken in its tax returns for those regulations that are subject to interpretation and books corresponding provisions, if it is deemed necessary. Deferred income taxes
Deferred taxes are recorded based on the assets and liabilities method, which consists of the recognition of deferred taxes by applying tax rates applicable to theare offset only if certain criteria are met.
Deferred income tax to theis recognized in respect of temporary differences between the carrying value and tax valuesamounts of assets and liabilities atfor financial reporting purposes and the date of these consolidated financial statements. amounts used for taxation purposes. Deferred tax liabilities areis not recognized for all taxable temporary differences, except to the extent that the deferred tax liability arises from:for: temporary differences on the initial recognition of goodwillassets or the initial recognition of an asset or liabilityliabilities in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit or tax loss; and taxable temporary differences associated with investments in subsidiaries, branches and associates, and interest in joint arrangements, when the parent, investor, joint venture or joint operator is able to control the timing of reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences and the carry forward of both unused tax credits and unused tax losses to the extent that it is probable that taxable profit will be available against deductible temporary differences, and that the carry forward of both unused tax credits and unused tax losses can be utilized, unless:
the deferred tax asset relating to deductible temporary difference arises from the initial recognition of asset or liability derived from a transaction that is not a business combination and at the time of the transaction,that affects neither accounting profit nor taxable profit or tax loss; and
in respect of deductible temporary differences associated withrelated to investments in subsidiaries, associates and interestsjoint arrangements to the extent that PEMEX is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in joint ventures, deferredthe foreseeable future; and taxable temporary differences arising from the initial recognition of goodwill. Deferred tax assets are recognized onlyfor unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profitprofits will be available against which they can be used. Future taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of taxable temporary differences can be utilized. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The carrying amount ofis insufficient to recognize a deferred tax asset isin full, then future taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the business plans of PEMEX. Deferred tax assets are reviewed at the end of each reporting period. PEMEX reduces the carrying amount of a deferred tax assetdate and are reduced to the extent that it is no longer probable that a sufficient taxable profitthe related tax benefit will be available to allowrealized. Such reductions are reversed when the benefitprobability of that deferred tax asset to be utilized in whole or in part. future taxable profits improves.
Unrecognized deferred tax assets are revaluedreassessed at each reporting date and will be recognized to the extent that it ishas become probable that future taxable incomeprofits will be sufficient to allow for the recovery of the deferred tax asset.available against which they can be used. Deferred tax assets and liabilities areis measured at the tax rates that are expected to applybe applied to the periodtemporary differences when the asset is realized or the liability is settled, based onthey reverse, using tax rates (and tax laws) that have been enacted or substantively enacted by the end ofat the reporting period.date. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) The measurement of deferred tax reflects the tax consequences that would follow from the manner in which PEMEX expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and deferred tax liabilities related with items that are recognized in equity shall be presented directly in other comprehensive income. Deferred tax assets and deferred tax liabilities are offset only if PEMEX has a legal right to set off current tax assets against current tax liabilities andcertain criteria are levied by the same taxation authority or the same taxable entity.met.
Income taxes and duties
iii. | Duties, royalties and considerations |
Duties – PEMEX is subject to taxes and special duties, which are based on the value of hydrocarbons extracted, with certain deductions. These taxes and duties are recognized in accordance with IAS 12, “Income Taxes” (IAS 12), when they have the characteristics of income tax, which occurs when such taxes are set by a government authority and are determined based on a formula that considers the balance of income (or extraction valued at a selling price) less expenses. Taxes and duties that meet thisthese criteria should beare recognized for current and deferred income tax based on the above paragraphs. Taxes and duties that do not meet thisthese criteria are recognized as liabilities, affecting thein costs and expenses relating to the transactions that gave rise to them. o. | Impuesto Especial sobre Producción y Servicios |
(Special Tax on ProductionRoyalties and Services, or “IEPS Tax”)considerations –
The IEPS Tax chargedRoyalties and considerations are payable pursuant to customers is a withholding tax on domestic sales of gasoline, diesellicense agreements. These royalties are recognized as liabilities and fossil fuels. The applicable quotas depend on, among other factors, the product, producer’s price, freight costs, commissions and the region in which the respective product is sold. The withholding tax does not affect the resultsitems of PEMEX.costs and expenses related to the operations that gave rise to them.
Contingency losses are recorded when it is probable that a liability has been incurred and the amount thereof can be reasonably estimated. When a reasonable estimation cannot be made, qualitative disclosure is provided in the notes to the consolidated financial statements. Contingent revenues, earnings or assets are not recognized until realization is assured. ‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which PEMEX has access at that date. The fair value of a liability reflects its non-performance risk. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESA number of PEMEX accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities (see Note 8).
AND SUBSIDIARY COMPANIESWhen one is available, PEMEX measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as ‘active’ if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSIf there is no quoted price in an active market, then PEMEX uses valuation techniques that maximize the use of relevant observable inputs and minimize the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) If an asset or a liability measured at fair value has a bid price and an ask price, then PEMEX measures assets and long positions at the bid price and liabilities and short positions at the ask price. The best evidence of the fair value of a financial instrument on initial recognition is normally the transaction price (i.e., the fair value of the consideration given or received in a third-party transaction). If PEMEX determines that the fair value on initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique for which any unobservable inputs are judged to be insignificant in relation to the measurement, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value on initial recognition and the transaction price. Subsequently, that difference is recognized in profit or loss on an appropriate basis over the life of the instrument but no later than when the valuation is fully supported by observable market data or the transaction is closed out. q.O. | Revenue recognitionfrom contracts with customers |
SalesRevenue is measured based on the consideration specified in a contract with a customer. PEMEX recognizes revenue is recognized at the moment when the risks and benefits of ownership of crude oil, refinedit transfers control over a good or gas products, and derivative and petrochemical products are transferredservice to the customers who acquire them, which occurs as follows:
in accordance with contractual terms;
the moment at which thea customer picks up product at PEMEX’s facilities; or
the moment at which PEMEX delivers the product to the delivery point.
Services rendered are recognized as services income when the customers accept the receipt of the services.(see Note 7).
r.P. | Presentation of consolidated statements of comprehensive income |
The costs and expenses shown in PEMEX’s consolidated statements of comprehensive income are presented based on their function, which allows for a better understanding of the components of PEMEX’s operating income. This classification allows for a comparison to the industry to which PEMEX belongs.
Revenues
Represents revenues from sale or products or services.
Cost of sales
Cost of sales represents the acquisition and production costs of inventories at the time of sale. Cost of sales mainly includes depreciation, amortization, salaries, wages and benefits, a portion of the cost of the reserve for employee benefits and operating expenses related to the production process.
Other revenues (expenses), net
Other revenues (expenses), net consist primarily of income and expenses that are not related directly to the operation of PEMEX.
Transportation, distribution and sale expenses
Transportation, distribution and sale expenses are costs in connection with the storage, sale and delivery of products, such as the depreciation and operating expenses associated with these activities.
Administrative expenses
Administrative expenses are costs related to PEMEX’s areas that provide administrative support.
Financing income
Financing income is comprised of interest income, financial income and other income from financial operations between PEMEX and third parties.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Financing cost
Financing cost is comprised of interest expenses, commissions and other expenses related to PEMEX’s financing operations less any portion of the financing cost that is capitalized.
Derivative financial instruments (cost) income, net
Derivative financial instruments (cost) income represents the net effect of the profit or loss for the year associated with DFIs.
Foreign exchange loss, net
Exchange rate variations relating to assets or liabilities governed by contracts denominated in foreign currencies are recorded in income (loss) for the year.
Operating segments are identifiable components of PEMEX that pursue business activities from which PEMEX earns revenues and incurs expenses including those revenues and expenses from transactions with other segments of PEMEX, and for which information is available to management on a segmented basis and is assessed by the Board of Directors in order to allocate resources and assess the profitability of the segments. t.Q. | Non-current assets held for sale,non-current assets held for distribution to owners and discontinued operationsPresentation of consolidated statements of comprehensive income |
Costs and expenses shown in PEMEX’s consolidated statements of 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. Operating profit is the result generated from the continuing principal revenue-producing activities of PEMEX as well as other income and expenses related to operating activities. Operating profit excludes net finance costs, share of profit of equity-accounted investees and income taxes and duties. Revenues – Represents revenues from the sale of products or services. Cost of sales – Cost of sales represents the acquisition and production costs of inventories, depreciation, amortization, salaries, wages and benefits, a portion of the cost of the reserve for employee benefits and operating expenses related to the production process, production taxes and duties, exploration costs, Non-currentnon-operating costs, among others. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) Other revenues and other expenses – Other revenues and other expenses consist primarily of income and expenses that are not related directly to the operation of PEMEX. Transportation, distribution and sale expenses – Transportation, distribution and sale expenses are costs in connection with the storage, sale and delivery of products, such as the depreciation and operating expenses associated with these activities. Administrative expenses – Administrative expenses are costs related to PEMEX’s areas that provide administrative support. ii. | Financing income and financing cost and derivative financial instruments income (cost), net |
Financing income – Financing income is comprised of interest income, financial income and other income from financial operations between PEMEX and third parties. Financing cost – Financing cost is comprised of interest expenses, commissions and other expenses related to PEMEX’s financing operations less any portion of the financing cost that is capitalized. When calculating interest income and expenses, the effective interest rate is applied to the gross carrying amount of the asset (when the asset has no credit impairment), to the amortized cost of the liability or to the present value lease liabilities. However, for financial assets heldwith credit impairment after initial recognition, interest income is calculated by applying the effective interest rate at the amortized cost of the financial asset. If the asset ceases to be impaired, the interest income calculation returns to the gross base. Derivative financial instruments income (cost), net – Includes the result of changes in the fair value of derivative financial instruments. NOTE 4. | ACCOUNTING CHANGES, SPLITS, ADJUSTMENTS, RECLASSIFICATIONS AND CORRECTIONS OF NON-MATERIAL ERRORS- |
Accounting changes as of January 1, 2020 The following new standards were effective as of January 1, 2020, but they did not have a material effect on PEMEX’s consolidated financial statements: Amendments to References to Conceptual Framework in IFRS Standards. Definition of a Business (Amendments to IFRS 3). Definition of Material (Amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors). The interest rate benchmark reform amendments retrospectively to hedging relationships. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) Accounting changes as of January 1, 2019 a. | IFRS 16 “Leases” (“IFRS 16”) |
In January 2016, the IASB published IFRS 16, which replaced IAS 17, “Leases” and related interpretations, including IFRIC 4 “Determining whether an Arrangement contains a Lease” (“IFRIC 4”). From January 1, 2019, PEMEX applied IFRS 16 for salethe first time. Several other amendments and interpretations began to apply for the first time in 2019, but do not have a material impact on the consolidated financial statements of PEMEX. IFRS 16 introduces a single, on balance sheet accounting model for lessees. A lessee recognizes a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There are recognition exemptions for short-term leases and leases of low-value assets. Lessor accounting remains similar to previous accounting policies. PEMEX applied IFRS 16 initially on January 1, 2019 using the modified retrospective approach. There was no impact on retained earnings because as of January 1, 2019 the rights of use and the lease liability were for the same amount (in addition to a reclassification of the previously recognized finance leases). Accordingly, the comparative information presented for 2018 has not been restated and it is presented, as previously reported, under IAS 17 and related interpretations. The details of the changes in accounting policies are disclosed below. i. Definition of a lease Previously, PEMEX determined at contract inception whether an arrangement was or contained a lease under IFRIC 4. PEMEX now assesses whether a contract is or contains a lease based on the new definition of a lease under IFRS 16. Under IFRS 16, a contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. On transition to IFRS 16, PEMEX elected to apply the practical expedient to adopt the definition of lease at the time of transition. This means it applied IFRS 16 to all contracts entered into before January 1, 2019 and identified as leases in accordance with IAS 17 and IFRIC 4. The definition of a lease under IFRS 16 has been applied only to contracts entered into or modified on or after January 1, 2019. ii. As a lessee PEMEX classifiesrecognizes assets and liabilities for its operating leases, which primarily consist of transportation and railway equipment, docks, hydrogen supply plants, electric power and steam gas storage facilities. As a lessee, PEMEX previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under IFRS 16, PEMEX recognizes non-currentright-of-use assets and lease liabilities for most leases, and these leases are on-balance sheet. PEMEX has elected not to recognize right-of-use and lease liabilities for some leases of short-term leases. PEMEX recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) Significant accounting policy – PEMEX recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, PEMEX’s incremental borrowing rate. PEMEX uses its incremental borrowing rate as the discount rate. The lease liability is subsequently measured as increased by the interest cost on the lease liability and decreased by lease payments made. It is remeasured when there is a disposal groupchange in future lease payments arising from a change in an index or rate, a change in the estimate of assets, as held for sale if (a) its carryingthe amount will be recovered principally through a sale transaction rather than through continuing use; (b) the asset or group of assets is available in its present condition for immediate sale and (c) the sale is expected to be completed within one year frompayable under a residual value guarantee or, as appropriate, changes in the assessment of whether a purchase or extension option or reasonably certain to be exercised or a termination option is reasonably certain not to be exercised. PEMEX has applied judgement to determine the lease term for some lease contracts in which it is a lessee that include renewal options. The assessment of whether PEMEX is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and right-of-use assets recognized. Transition – Previously, PEMEX classified a number of leases as operating leases under IAS 17. These leases included transportation and railway equipment, docks, hydrogen supply plants, electric power and steam gas storage facilities. The leases typically ran for a period of up to 20 years. Some leases included an option to renew the lease for an additional 5 years or an undefined term after the end of the non-cancellable period. At transition, for leases classified as operating leases under IAS 17, lease liabilities were measured at the present value of the remaining lease payments, discounted at PEMEX’s incremental borrowing rate as at January 1, 2019. Right-of-use assets are measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments. PEMEX applied this approach to all operating leases. PEMEX used the following practical expedients when applying IFRS 16 to leases previously classified as operating leases under IAS 17: Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term. Excluded initial direct costs when measuring the right-of-use asset at the date of classification,initial application. Used hindsight when determining the lease term if the contract contains options to extend or more, withterminate the lease. PEMEX leases certain exceptions. Non-current assetsproduction equipment that were classified as held for sale are measured at the lower of its carrying amount, and fair value less 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 the classification as held for sale.
The liabilities of a 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 offset and are presented as a single amount.
Non-current asset held for distribution to owners
When PEMEX agrees to distribute anon-current asset, or a disposal group of assets, to owners, this asset or disposal group of assets, is classified as held for distribution to owners if: a) anon-current asset or disposal group of assets is available for immediate distribution in its present condition and b) the distribution must be highly expected to be completed within one year from the date of classification, with certain exceptions.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Non-current assets classified as held for distribution are measured at the lower of their carrying amount and fair value less cost of distribution and are presented in a separate line item in the consolidated financial statements.Non-current assets classified as held for distribution are not subject to depreciation or amortization after the classification as held for distribution.
The liabilities of a disposal group classified as held for distribution to owners are presented separately from other liabilities in the statement of financial position. Those assets and liabilities shall not be offset and shall be presented as a single amount.
Discontinued operations
A discontinued operation is a component of an entity that either has been disposed of or is classified as held for sale, and either:
represents a separate major line of business or geographical area of operations;
is part or a single coordinated plan to dispose of a separated major line of business or geographical area of operations; or
is a subsidiary acquired exclusively with a view to resale.
The revenues or expenses from discontinued operations, including profits or losses from previous years, are presented in a specific line item in the consolidated statements of comprehensive income.
The IASB issued new amendments to the IFRS mentioned below, which are applicable to PEMEX and are effective for annual periods beginning January 1, 2017:
a)finance leases under 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:
Unrealized losses on debt instruments measured at fair value for accounting purposes and measured at cost for tax purposes give rise to deductible temporary differences regardless of whether the debt instrument’s holder expects to recover17. For these leases, the carrying amount of the debt instrument by sale or by use.
Theright-of use asset and the lease liability at January 1, 2019 were determined at the carrying amount of anthe lease asset does not limit the estimationand lease liability under IAS 17 immediately before that date.PEMEX reclassified intangible assets to rights of probable future taxable profits. Estimates of future taxable profits exclude tax deductions resulting from the reversal of deductible temporary differences.
An entity assesses a deferred tax asset in combination with other deferred tax assets. Where tax law restricts the utilization of tax losses, an entity would assess a deferred tax asset in combination with other deferred tax assetsuse of the same type.
rights of way that they had registered in that concept until December 31, 2018.PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESPetróleos Mexicanos
AND SUBSIDIARY COMPANIESProductive State-Owned Subsidiaries and Subsidiary Companies
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) The amendments are to be applied retrospectively and are effective for annual periods beginningiii. Impacts on or after January 1, 2017. Earlier application is permitted.
These amendments had no impact on these consolidated financial statements.
b) Amendments to IAS 7 “Statement of Cash Flows” (“IAS 7”)statements
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.
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, classifiedImpact 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.transition –
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.
Impacts on this amendments are disclosed in Note 15.
c) IFRS 12 “Disclosure of Interest in Other Entities” (“IFRS 12”)—Annual ImprovementsOn transition to IFRS 2014—2016 Cycle.
As of December 2016, the IASB published Annual Improvements to IFRS 2014—2016 Cycle, which clarified the scope of IFRS 12, by specifying that the disclosure requirements apply to all subsidiaries, joint arrangements, associates and unconsolidated structured entities classified as held for sale, held for distribution or as discontinued operations in accordance with IFRS 5, with certain exceptions.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The amendments are going to be applied restrospectively and are effective for annual periods beginning on or after January 1, 2017.
These improvements 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 December 31, 2017 but that could have an impact on subsequent PEMEX financial statements.
Amendments effective for periods beginning in 2018:
a) IFRS 15, “Revenue from Contracts with Customers” (“IFRS 15”)
The core principle of the new IFRS 15 is that an entity should recognize revenue as the promised transfer of goods or services to the customer, valued at the amount that the entity expects to be entitled in exchanged for those goods or services.
Pursuant to IFRS 15, an entity should:
identify customer contracts that fall within the scope of the new standard;
identify the separate performance obligations in the contract based on the following criteria: (i) sales of goods or services, separately, (ii) sales that are dependent or interrelated with other products or services; and (iii) homogeneous and consistent sales pattern;
determine the price of the transaction by applying the following considerations: (i) variable consideration and constraining estimates of variable consideration; (ii) the existence of a significant financing component in the contract; (iii) anynon-cash consideration; and (iv) the consideration payable to the customer;
allocate the transaction price to each separate performance obligation; and
recognize revenue when (or as) each performance obligation is satisfied either over time or at a point in time.
The new IFRS 15 enhances disclosures of revenue. This standard must be applied for periods beginning on or after January 1, 2018, and early application is permitted. During the year of application, entities may apply the rule retrospectively or use a modified approach.
PEMEX will adopt IFRS 15 retrospectively with the cumulative effect of applying the new standard recognized at the date of initial adoption (January 1, 2018) as an adjustment to the opening balance of retained earnings or other component of equity, as applicable. Under this transition method, PEMEX elected to apply this standard retrospectively only to contracts that were not completed contracts at January 1, 2018. For contracts that have been completed before December 31, 2017, with revenues not fully recognized as of that date, the current accounting policies under IAS 18 will continue to apply when recognizing revenue of those contracts during 2018. For contracts that take effect from January 1, 2018, revenue will be recognized in accordance with IFRS 15.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
As part of the implementation of IFRS 15, different types of revenue from contracts with customers have been identified, evaluated and documented, as well as the main changes in accounting policies that will be reflected16 (effective as of January 1, 2018 with respect to new contracts.2019), PEMEX recognized additional right-of-use assets and additional lease liabilities. The main changes in accounting policies are as follows:impact on transition is summarized below.
| i. | Sale of products with other services: |
The adoption of IFRS 15 will affect the manner in which PEMEX records the sale of products including oil, refined products, gas, petrochemicals, fertilizers and other sales. Until December 31, 2017, freight and other services, for example were recognized separately from products sold. Under IFRS 15, revenue is recognized with respect to the performance obligation under the contract, and so certain services that are currently accounted for separately, will now be presented as a single performance obligation together with the sale of the product.
Services include transportation and storage of hydrocarbons, petroleum, petrochemicals, refined products, gas, petrochemical derivatives and others.
Rental services and some transportation services are currently presented in the revenues from services line item in the income statement. In many cases of services with components of leases are less than one year operating leases. Revenues corresponding to leasing have not been presented separately from revenues from services.
Under IFRS 15, leases cannot be presented in the same line item as revenues from service. The main change in accounting policy will be the separation and presentation of service and lease components.
| iii. | Determination of the transaction price: |
Refunds, discounts, quantity and quality claims (in favor or against) and penalties (to customers or PEMEX) or breaches related to the sale of certain products were previously recognized as revenues. However, under IFRS 15, revenues will only be recognized if it is highly probable that there will not be a significant reversal in the revenue received. As a result, PEMEX will put in place mechanisms to approximate the refunds, discounts, quantity and quality claims and penalties at the time that the control of the product is transferred.
Revenue recognition
Revenues are currently recognized when the risks and benefits of the product are transferred, which occurs when the customer picks up or receives the product at PEMEX´s facilities or at a specific point of sale, accepts the products and assumes the risks and benefits related to the transfer of ownership.
Under IFRS 15, revenues from sale of products are recognized when the contractual obligation is satisfied, and control of the products is transferred to the customer. There will be changes in the revenue recognition of gas sale and certain services from “one point in time” to “over time”. However, a significant change is not expected because in some cases the practical expedient “right to invoice” will be applied to measure progress towards completion of the transaction.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
As of December 31, 2017, PEMEX did not identify any significant uncompleted contracts. As a result, PEMEX has determined that the changes to amounts in prior years will not be significant. Nonetheless, there will be important changes in accounting policies for contracts issued as of January 1, 2018.
b) IFRS 9, “Financial Instruments” (“IFRS 9”(2014))
In July 2014, the IASB finalized the accounting reform of financial instruments and issued IFRS 9 (revised in 2014), which contains the requirements for, a) the classification and measurement of financial assets and liabilities, b) impairment methodology, and c) general information about hedge accounting. IFRS 9 (revised in 2014) replaces IAS 39 Financial Instruments: Recognition and Measurement as of its effective date.
These requirements should be applied retrospectively and, as permitted by IFRS 9 transitional provisions, it is not necessary for companies to restate comparative figures. Any adjustment in the carrying amounts of the financial assets and liabilities at the transition date is recognized by affecting the cumulative effect in the initial opening period.
The classification criteria depends on a combination of two important factors:
| i. | the business model within the financial asses is held (the business model test); and |
| ii. | the contractual cashflow of the financial asset (the SPPI test). Based on these two tests, the asset can be measured as follows: |
Amortized cost: Financial Instruments under a business model whose objective is only the collection of contractual cash flows which are composed of principal and interest payments and where there are no significant sales unjustified and fair value is not a key factor in the management of these financial assets and the characteristics of cash flows represent substantially a “basic loan agreement” or SPPI. Unjustified sales are different from sales related to an increase in the credit risk of an asset or unexpected financing needs.
Fair value with changes through other comprehensive income (“FVOCI”): Financial Instruments in a business model whose objective is to obtain cash flows and the sale of those assets, where fair value is a key factor in its management. In addition, the characteristics of the contractual cash flows represent substantially a “basic loan agreement”.
Fair value with changes through profit or loss (“FVPL”): Financial instruments in a business model whose objective is not the aforementioned models, where fair value is a key factor in the management of these assets, and the financial instruments whose contractual cash flow characteristics do not substantially represent a “basic loan agreement”.
IFRS also replaces the impairment model of IAS 39 (the “loss incurred model”) with a new impairment model called the “expected credit loss” model. This impairment model will be applicable to financial assets that are not measured at FVPL. Changes in fair value of financial assets through FVOCI to the point of disposal are recorded in OCI.
The expected credit loss recognized for impairment purposes under IFRS 9 will be equivalent to a12-month reserve, except when the financial instrument presents a “significant increase in credit risk” or presents objective evidence of impairment, recognizing a reserve equivalent to the remaining life of the financial instrument, based on the definition of general approach under IFRS 9.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
IFRS 9 Implementation and government strategy
PEMEX has established a multidisciplinary working group with the objective to adapt its processes to the new standard in relation to the classification and measurement of financial instruments and the impairment estimation of credit risk, ensuring that these processes have been applied and adopted in accordance with IFRS 9.
Regarding classification and measurement, PEMEX carried out an analysis of its financial assets in order to identify those that could trigger a change in the accounting methodology, due to the definition of the business model and a failure to satisfy the SPPI test.
IFRS 9 Implementation analysis
PEMEX has defined January 1, 2018 as the initial date of adoption of IFRS 9 “Financial Instruments” and according to the transitional standard in IFRS 9, PEMEX will not restate previous periods for comparison purposes and any difference that may arise as a result of the adoption of IFRS 9 between the previous carrying amount and the carrying amount at the beginning of the reporting period shall be recognized in accumulated results over the opening initial period.
PEMEX has concluded that most of its financial assets will continue to be classified in the same way:
| | | | | | | | | | | ClassificationTotal | | Assets
| | IAS 39 | | IFRS 9 | | Change | | Cash and cash equivalents
| | FVPL | | FVPLRight of use assets | | | NoPs. 72,760,580 | * | Available—for—sale financial assets
| | FVOCI | | FVOCILease liability | | | NoPs. 70,651,797 | | Derivative financial instruments
| | FVPL | | FVPL | | | No | | Long—term notes receivable
| | Amortized Cost | | Amortized Cost | | | No | |
Capital or debt instruments classified asavailable-for-sale financial assets will continue to be measured at FVOCI.
PEMEX has concluded that the financial assets most affected by the impairment estimate under the expected credit loss model will be its accounts receivables, in relation to PEMEX’s holding of the long-term notes issued by the Mexican Government. The evaluation of the possible impairment of the notes will be made using the general approach for calculating impairment of the notes will be made using the general approach for calculating impairment contemplated under IFRS 9.
PEMEX considers it probable that impairment losses increase and present more volatility for instruments under the new methodology of expected credit losses. Furthermore, PEMEX considers that most of its accounts receivable are short-term without a significant financial component, so the simplified approach will be applied.
The preliminary evaluation of PEMEX indicates that the application of the new impairment requirements of IFRS 9 as of December 31, 2017 will impact the accounts receivable reserves as of January 1, 2018. An increase between 39.0% and 51.1% is expected in the accounts receivable reserves as compared to impairment losses incurred in accordance with IAS 39.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Hedge accounting
PEMEX, as part of the initial adoption, elected to continue applying the hedge accounting requirements of IAS 39 instead of IFRS 9. PEMEX uses DFI’s to cover the exposure of foreign currency risk, interest rate risk and fluctuations in the price of its products, but these contracts are not accounted for as designated hedges. DFI’s are initially recognized at fair value on the date the derivative contract is entered into and after initial recognition are measured again at fair value.
As a result, PEMEX has determined that the changes to amounts in prior years will not be significant.
c) 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.
According to the interpretations, an entity must recognize foreign currency transactions when:
| i. | there is consideration that is denominated or priced in a foreign currency; |
* | ii. | Includes the entity recognizes a prepayment asset or a deferred incomereclassification of rights of way that were presented as intangible assets. The liability in respect of that consideration, in advance of the recognition of the related asset, expense or income; andis not recognized due to prepayments made. |
When measuring lease liabilities for leases that were classified as operating leases, PEMEX discounted lease payments using its incremental borrowing rate at January 1, 2019. The weighted-average rate applied was 7.7%. | iii. | | | | | | 2019 | | Operating lease commitment at December 31, 2018 | | | Ps. 62,723,909 | | Undisclosed leases in 2018 Financial statements | | | 40,186,551 | | | | | | | Operating lease commitment | | | 102,910,460 | | | | | | | Operating lease commitment discounted using the prepayment asset or deferred income liability isnon-monetary.incremental borrowing rate at January 1, 2019 | | | Ps. 65,608,174 | | Lease liabilities from financial leases previously recognized up to December 31, 2018 | | | 6,053,280 | | Recognition exemption for: | | | | | Short-term leases | | | (1,009,657 | ) | | | | | | Lease liabilities recognized at January 1, 2019 | | | Ps. 70,651,797 | | | | | | |
The Interpretations Committee concluded that:
The dateSome other accounting standards were effective as of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of thenon- monetary prepayment asset or deferred income liability.
If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt.
IFRIC 22 is effective for annual reporting periods beginning on or after January 1, 2018. Entities may apply the rule retrospectively, or prospectively, in accordance with IAS 8 with certain exemptions.
PEMEX believes that these standards will2019 but did not have ana significant impact on itsPEMEX’s consolidated financial statements.
Standards effective for periods beginning in 2019
B. | Reclassifications and correction of non-material errors |
a) 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:
IFRS 16 provides a comprehensive model for the identification of the lease arrangements and their treatmentPEMEX reclassified certain non-material amounts reported in the financial statements of both lessees and lessors;
the new standard applies a control model to the identification of leases, distinguishing between leases and service contracts on the basis of whether there is an identified asset controlled by the customer;
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
the distinction between financial and operating leasing is removed, therefore, the assets and liabilities are recognized in respect of all leases, with some exceptions for short-term leases and leases oflow-value assets; and
the standard does not include significant changes to the requirements for accounting by lessors.
The standard is effective for annual periods beginning on or after January 1, 2019, with earlier application permitted for entities that have also adopted IFRS 15, “Revenue from Contracts with Customers.”
PEMEX has established a multidisciplinary working group with the objective to adapt its processes to the new standard in the following phases: (i) training, (ii) obtaining information, (iii) diagnostic, (iv) determination of initial adjustments and (v) integration of change. As of the date of these consolidated financial statements, the training phase for the accounting staff is complete and PEMEX is in the process of analyzing leasing contracts in order to determine necessary changes to its procedures and reports. PEMEX has not determined the impact of IFRS 16 on its net income (loss) for the year. PEMEX estimates that it will conclude the implementation of IFRS 16 in February 2019.
b) Annual improvements—2015-2017 Cycle
In December 2017, the IASB published “the Annual Improvements to the IFRS of the 2015-2017 Cycle” through which it clarifies the following IFRS:
IFRS 3 Business Combinations and IFRS 11 Joint Arrangements
IFRS 3 Business Combinations clarifies how an entity should recognize an increase of its interest in a joint operation:
When a party to a joint arrangement obtains control of a business that was a part of that joint arrangement, and where that party had assumed a portion of the rights to the assets and obligations to the liabilities of that business prior to the acquisition date, the acquisition will be considered a business combination that is achieved in stages. The acquiriting entity must therefore apply the requirements for a business combination achieved in stages, including by measuring its previously held interest in the joint arrangement.
When a party participates in, but does not share in the control of a joint operation, and subsequently takes joint control of that joint operation, this will constitute the acquisition of a business and previously held interest in the joint operation are not measured.
IAS 12 Income Tax
All income tax consequence of dividends (including payments on financial instruments classified as equity) are recognized consistently with the transactions that generated the distributable profits (i. e. in profit or loss, other comprehensive income or equity basis).
IAS 23 Borrowing Costs
With respect to the treatment of costs for loans subject to capitalization, the amendments clarify that:
To the extent that an entity borrows funds generally and uses them for the purpose of obtaining a qualifying asset, that entity shall determine the amount of borrowing costs eligible for
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| capitalization by applying a capitalization rate to the expenditures on that asset. The capitalization rate shall be the weighted average of the borrowing costs applicable to all borrowings of the entity that are outstanding during the period.
|
However, an entity shall exclude from this calculation borrowing cost applicable to borrowing made specifically for the purpose of obtaining a qualifying asset until substantially all the activities necessary to prepare that asset for its intended used or sale are complete.
The amount of borrowing costs that an entity capitalizes during a period shall not exceed the amount of borrowing costs it incurred during that period.
The amendments are effective for annual periods beginning on or after January 1, 2019.
PEMEX is in the process of evaluating the impact that these amendments will have on its consolidated financial statements.
c) IFRIC 23—Uncertainty over Income Tax Treatments
In June 2017, the IASB published a new accounting interpretation to be applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, where there is uncertainty over income tax treatments under IAS 12.
In order to make these tax assessments, an entity must consider whether it is probable that the relevant taxing authority will accept each tax treatment, or group of tax treatments, that the entity has used or plans to use in its next income tax filing:
If the entity concludes that it is probable that a particular tax treatment will be accepted by the relevant taxing authority, that entity must determine taxable profit (tax loss), tax bases, unused tax losses, unused tax credits or tax rates consistently with the tax treatment included in its income tax filings.
If the entity concludes that it is not probable that a particular tax treatment is accepted by the relevant taxing authority, the entity must use the most likely amount or the expected value of the tax treatment when determining taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates. That calculation should be based on which method provides better predictions of the resolution of the uncertainty.
IFRIC 23 is effective for annual reporting periods beginning on or after January 1, 2019. Earlier application is permitted. PEMEX does not anticipate being impacted by IFRIC 23 because all tax positions are discussed and agreed with the SHCP prior to releasing quarterly or annual financial statements.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Due to a significant loss of control over TAG Norte Holdings, S. de R.L. de C.V. and TAG Pipelines Sur, S. de R.L. de C.V., whose investment in these companies was presented in investments in joint ventures and associates in the past was reclassified toavailable-for-sale financial assets as of December 31, 2017. Accordingly the balance as of these investments as of December 31, 2016 was reclassified for purposes of improving its presentation the consolidated statementsstatement of financial position as follows:
| | | | | | | | | | | | | | | 2016 | | Line item | | As previously (reported) | | | Reclassification | | | Following reclassification | | Available—for—sale financial assets | | | Ps. 435,556 | | | | Ps. 2,417,123 | | | | Ps. 2,852,679 | | Total current assets | | | 355,398,800 | | | | 2,417,123 | | | | 357,815,923 | | Investments in joint ventures and associates | | | 23,154,632 | | | | (2,417,123 | ) | | | 20,737,509 | | Totalnon-current assets | | | 1,974,487,224 | | | | (2,417,123 | ) | | | 1,972,070,101 | |
These reclassifications had no impact on PEMEX’s total assets.
Due to the fact that reinsurance premiums from KOT Insurance Company, AG., from which PEMEX derives revenue, are not part of the core services provided by PEMEX, they are included in other income (expenses), net. Therefore, for comparison purposes, the consolidated statementsand statement of comprehensive income for the years ended December 31, 20162019 and 20152018 to conform their presentation to the statement of financial position and statement of comprehensive income for 2020.
The reclassifications were reclassified as follow: | | | | | | | | | | | | | | | 2016 | | Line item | | As previously (reported) | | | Reclassification | | | Following reclassification | | Services income | | | Ps. 14,427,081 | | | | Ps. (5,452,439 | ) | | | Ps. 8,974,642 | | Total of sales | | | 1,079,545,671 | | | | (5,452,439 | ) | | | 1,074,093,232 | | Cost of sales | | | 867,580,634 | | | | (1,758,413 | ) | | | 865,822,221 | | Gross income (loss) | | | 543,279,380 | | | | (3,694,026 | ) | | | 539,585,354 | | Other income (expenses), net | | | 18,955,580 | | | | 3,694,026 | | | | 22,649,606 | |
| | | | | | | | | | | | | | | 2015 | | Line item | | As previously (reported) | | | Reclassification | | | Following reclassification | | Services income | | | Ps. 12,912,112 | | | | Ps. (4,602,077 | ) | | | Ps. 8,310,035 | | Total of sales | | | 1,166,362,469 | | | | (4,602,077 | ) | | | 1,161,760,392 | | Cost of sales | | | 895,068,904 | | | | (3,104,298 | ) | | | 891,964,606 | | Gross income (loss) | | | (114,474,036 | ) | | | (1,497,779 | ) | | | (115,971,815 | ) | Other income (expenses), net | | | (2,373,266 | ) | | | 1,497,779 | | | | (875,487 | ) |
These reclassifications had no impact on PEMEX’s net income.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
In order to provide a better presentation in Duties, taxes and other, certain amounts in Income Tax line item, were reclassified to Hydrocarbon extraction duties and others line item, as follows:
| | | | | | | | | | | | | | | 2016 | | Line item | | As previously (reported) | | | Reclassification | | | Following reclassification | | Hydrocarbon extraction duties and others | | | Ps. 304,813,375 | | | | Ps. (27,651,571 | ) | | | Ps. 277,161,804 | | Income tax | | | (40,291,940 | ) | | | 27,651,571 | | | | (12,640,369 | ) |
i. | To report other accounts receivable in two separate line items, other financing receivables and other non-financing receivables. |
These reclassifications had no impact on PEMEX’s net income.
Petróleos Mexicanos NOTE 4. Productive State-Owned Subsidiaries and Subsidiary Companies
Notes to the consolidated financial statements (Figures stated in thousands, except as noted) ii. | To reclassify insurance, from other non-current assets to other current assets. |
iii. | To reclassify derivative financial instruments (cost) income, net to finance income and finance cost. |
The correction of non-material error was the following: iv. | During 2020, PEMEX detected errors in certain costs and expenses used for the determination of the value in use of certain CGUs in the exploration and production segment as of December 31, 2019. This resulted in a different value in use in some CGUs and thus, an increase in the value of wells, pipelines, plants and platforms as of December 31, 2019 in the amount of Ps. 65,799,060 and a favorable impact in the results of operation of PEMEX for 2019, for the same amount. |
Consolidated Statement of Financial Position | | | | | | | | | | | | | | | | | | | | | | | | | Line item | | Note | | | | | | 2019 Previously Reported | | | Reclassification | | | Adjustment of non-material error | | | 2019 Updated | | Other accounts receivable (i) | | | | | | | Ps. | | | | 91,241,811 | | | | (91,241,811 | ) | | | — | | | | — | | Other financing receivables | | | 10-B | | | | | | | | — | | | | 31,416,091 | | | | — | | | | 31,416,091 | | Other non-financing receivables | | | 10-B | | | | | | | | — | | | | 59,825,720 | | | | — | | | | 59,825,720 | | Other current assets (ii) | | | | | | | | | | | 346,563 | | | | 2,482,670 | | | | — | | | | 2,829,233 | | | | | | | | | | | | | | | | | | | | | | | | | | | Total current assets | | | | | | | | | | | 340,552,371 | | | | 2,482,670 | | | | — | | | | 343,035,041 | | | | | | | | | | | | | | | | | | | | | | | | | | | Wells, pipelines, properties, plant and equipment, net | | | | | | | | | | | 1,211,749,502 | | | | — | | | | 65,799,060 | | | | 1,277,548,562 | | Other assets(ii) | | | | | | | | | | | 7,136,677 | | | | (2,482,670 | ) | | | — | | | | 4,654,007 | | | | | | | | | | | | | | | | | | | | | | | | | | | Total non-current assets | | | | | | | | | | | 1,577,895,649 | | | | (2,482,670 | ) | | | 65,799,060 | | | | 1,641,212,039 | | | | | | | | | | | | | | | | | | | | | | | | | | | Accumulated deficit from prior years | | | | | | | | | | | (1,933,106,785 | ) | | | — | | | | — | | | | (1,933,106,785 | ) | Net loss for the year | | | | | | | | | | | (347,289,362 | ) | | | — | | | | 65,799,060 | | | | (281,490,302 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | Total equity (deficit) | | | | | | | | | | | (1,997,208,362 | ) | | | — | | | | 65,799,060 | | | | (1,931,409,302 | ) | | | | | | | | | | | | | | | | | | | | | | | | | |
Consolidated Statement of Comprehensive income | | | | | | | | | | | | | | | | | | | | | Line item | | | | | 2019 Previously Reported | | | Reclassification | | | Adjustment of non-material correction | | | 2019 Updated | | | | | | | | Cost of sales | | | Ps. | | | | 1,122,933,424 | | | | — | | | | — | | | | 1,122,933,424 | | (Impairment) reversal of impairment of wells, pipelines, properties, plant and equipment, net | | | | | | | (97,082,214 | ) | | | — | | | | 65,799,060 | | | | (31,283,154 | ) | | | | | | | | | | | | | | | | | | | | | | Total cost of sales, net | | | | | | | 1,220,015,638 | | | | — | | | | 65,799,060 | | | | 1,154,216,578 | | | | | | | | | | | | | | | | | | | | | | | Finance income | | | | | | | 24,483,706 | | | | 4,751,897 | | | | — | | | | 29,235,603 | | | | | | | | | | | | | | | | | | | | | | | Derivative financial instruments (cost) income, net | | | | | | | (18,512,026 | ) | | | (4,751,897 | ) | | | — | | | | (23,263,923 | ) | | | | | | | | | | | | | | | | | | | | | | Sum of financing (costs) net, derivative instruments (cost) and foreign exchange gains, net | | | | | | | (39,959,272 | ) | | | — | | | | — | | | | (39,959,272 | ) | | | | | | | | | | | | | | | | | | | | | | Net loss | | | | | | | (347,911,084 | ) | | | — | | | | 65,799,060 | | | | (282,112,024 | ) | | | | | | | | | | | | | | | | | | | | | |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) Consolidated Statement of Comprehensive income | | | | | | | | | | | | | | | | | Line item | | | | | 2018 Previously Reported | | | Reclassification | | | 2018 Updated | | | | | | | Finance cost | | | Ps. | | | | (120,727,022 | ) | | | (3,142,662 | ) | | | (123,869,684 | ) | Derivative financial instruments (cost) income, net | | | | | | | 22,258,613 | | | | 3,142,662 | | | | (19,115,951 | ) | | | | | | | | | | | | | | | | | | Sum of financing (costs) net, derivative instruments (cost) and foreign exchange gains, net | | | | | | | (87,769,033 | ) | | | — | | | | (87,769,033 | ) | | | | | | | | | | | | | | | | | | Net loss | | | | | | | (180,419,837 | ) | | | — | | | | (180,419,837 | ) | | | | | | | | | | | | | | | | | |
Consolidated Statement of cash flows | | | | | | | | | | | | | | | | | | | | | Line item | | | | | 2019 Previously Reported | | | Reclassification | | | Adjustment of non-material correction | | | 2019 Updated | | | | | | | | Net loss | | | Ps. | | | | (347,911,084 | ) | | | — | | | | 65,799,060 | | | | (282,112,024 | ) | (Impairment) reversal of impairment) deterioration of wells, pipelines, properties, plant and equipment, net | | | | | | | 97,082,214 | | | | — | | | | (65,799,060 | ) | | | 31,283,154 | | Interest income | | | | | | | (24,483,706 | ) | | | (4,751,897 | ) | | | — | | | | (29,235,603 | ) | | | | | | | | | | | | | | | | | | | | | | Funds from operating activities | | | | | | | 351,322,756 | | | | (4,751,897 | ) | | | — | | | | 346,570,859 | | | | | | | | | | | | | | | | | | | | | | | Accounts receivable | | | | | | | (13,285,925 | ) | | | 4,751,897 | | | | — | | | | (8,534,028 | ) | | | | | | | | | | | | | | | | | | | | | | Net cash flows from operating activities | | | | | | | 85,220,514 | | | | — | | | | — | | | | 85,220,514 | | | | | | | | | | | | | | | | | | | | | | |
Consolidated Statement of cash flows | | | | | | | | | | | | | | | | | Line item | | | | | 2018 Previously Reported | | | Reclassification | | | 2018 Updated | | Interest expense | | | | | | | 120,727,022 | | | | 3,142,662 | | | | 123,869,684 | | Funds from operating activities | | | | | | | 513,218,562 | | | | 3,142,662 | | | | 516,361,224 | | | | | | | | | | | | | | | | | | | Accounts receivable | | | | | | | (286,509 | ) | | | (3,142,662 | ) | | | (3,429,171 | ) | | | | | | | | | | | | | | | | | | Net cash flows from operating activities | | | | | | | 141,786,590 | | | | — | | | | 141,786,590 | | | | | | | | | | | | | | | | | | |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) NOTE 5. | SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES |
As of December 31, 2017,2020 and 2019, the Subsidiary Entities consolidated in these financial statements include Pemex Exploration and Production, Pemex Industrial Transformation, Pemex CogenerationLogistics and Services,Pemex Fertilizers. Former Subsidiary Entities Pemex Drilling and Services Pemex Logistics, Pemex Fertilizers and Pemex Ethylene.Ethylene were also consolidated in these financial statements until June 30, 2019 and Pemex Cogeneration and Services was also consolidated in these financial statements until July 27, 2018. TheAs of December 31, 2020 and 2019, the consolidated Subsidiary Companies are as follows:
| • | | P.M.I.PEP Marine DAC. (PMI Mar)DAC (PEP DAC) (i)(vii)(x) |
| • | | P.M.I. Services B.V. (PMI SHO)(i)(iv) |
| • | | P.M.I. Holdings B.V. (PMI HBV)(i)(x)(ix)(xiv) |
| • | | P.M.I. Trading Ltd.DAC (PMI Trading)(i)(ix)(xiii) |
| • | | PEMEX InternacionalP.M.I. Holdings Petróleos España, S. A. (PMI SES)L. (HPE) (i)(viii)(ix)(x) |
| • | | P.M.I. Holdings Petróleos España, S. L. (HPE)Services North America, Inc. (PMI SUS) (i)(ix)(xii) |
| • | | P.M.I. Services North America, Inc.Norteamérica, S.A. de C.V. (PMI SUS)NASA) (i)(ix) (x) |
| • | | P.M.I. Holdings North America, Inc.Comercio Internacional, S.A. de C.V. (PMI HNA)CIM) (i)(ix)(ii) (x) |
| • | | P.M.I. Norteamérica,PMI Campos Maduros SANMA, S. A. de C. V. (PMI NASA)R.L. de C.V. (SANMA) (i)(ix) (x) |
| • | | P.M.I. Comercio Internacional, S. A.Pro-Agroindustria, S.A. de C. V. (PMI CIM)C.V. (AGRO) (i)(ii)(ix) (x) |
| • | | PMI Field Management Resources, S. L. (FMR)PTI Infraestructura de Desarrollo, S.A. de C.V. (PTI ID) (i)(xi)(iii) (ix) (x) |
| • | | PMI Campos Maduros SANMA, S.Cinturón Transoceánico Gas Natural, S.A. de R. L. de C. V. (SANMA)C.V. (PMI CT) (i)(v) |
Pro-Agroindustria, S. A. de C. V. (AGRO)
| • | | PMI Azufre Industrial, S. A. de C. V. (PMI AZIND)(i) |
| • | | PMI InfraestructuraTransoceánico Gas LP, S.A. de Desarrollo, S. A. de C. V.C.V. (PMI ID)TG)(i)(v) |
| • | | PMI CinturónP.M.I. Servicios Portuarios Transoceánico, Gas Natural, S. A.S.A. de C. V.C.V. (PMI CT)SP) (i)(ix) (x) |
| • | | PMI Transoceánico Gas LP, S. A. de C. V. (PMI TG)(i) |
PMI Servicios Portuarios Transoceánicos, S. A. de C. V. (PMI SP)
| • | | PMIP.M.I. Midstream del Centro, S. A.S.A. de C. V.C.V. (PMI MC)(i)(viii) |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
PEMEX Procurement International, Inc. (PPI)
| • | | Hijos de J. Barreras, S. A. (HJ BARRERAS)(ii) |
| • | | PEMEX Finance, Ltd. (FIN)Pemex Procurement International, Inc. (PPI)(ii) (ix)(xii) |
Mex Gas Internacional, S. L. (MGAS)
Pemex Desarrollo e Inversión Inmobiliaria, S. A. de C. V. (PDII)
Kot Insurance Company, AG. (KOT)
PPQ Cadena Productiva, S.L. (PPQCP)
III Servicios, S. A. de C. V. (III Servicios)
| • | | Hijos de J. Barreras, S. A. (HJ BARRERAS) (ii) (vi) |
| • | | Pemex Finance Limited (FIN) (ix)(xvi) |
| • | | Mex Gas Internacional, S.L. (MGAS) (ix) (x) |
| • | | Pemex Desarrollo e Inversión Inmobiliaria, S.A. de C.V. (PDII) (ix) (x) |
| • | | Kot Insurance Company AG. (KOT) (ix)(xv) |
| • | | PPQ Cadena Productiva, S.L. (PPQCP) (ix) (x) |
| • | | III Servicios, S.A. de C.V. (III Servicios) (ix) (x) |
| • | | PMI Ducto de Juárez, S. de R.L. de C.V. (PMI DJ)(i)(iii) (ix) (x) |
| • | | PMX Cogeneración Internacional, S.L. (MG COG)Fertilizantes Holding, S.A de C.V. (PMX FH)(iv)(vi)(xii) (ix) (x) |
| • | | PMX Cogeneración S.A.P.I.Fertilizantes Pacífico, S.A. de C.V. (PMX COG)FP)(iv) (xii) (ix) (x) |
| • | | PMX Fertilizantes Holding, S.AGrupo Fertinal, S.A. de C.V. (PMX FH)(GP FER)(iv) (ix) (x) |
| • | | PMX Fertilizantes Pacífico,Compañía Mexicana de Exploraciones, S.A. de C.V. (PMX FP)(COMESA) (iv)(ii) (x) |
| • | | Grupo Fertinal (GP FER)P.M.I Trading México, S.A. de C.V. (TRDMX) (iv)(i) (ix) (x) |
| • | | Compañía Mexicana de Exploraciones, S.A. de C.V. (COMESA)(v) |
| • | | P.M.I Trading Mexico, S.A. de C.V. (TRDMX)(vii) |
| • | | Holdings Holanda Services, B.V. (HHS)(x)(ix)(xiv) |
| i. | Member Company of the “PMI Subsidiaries”. |
| ii. | Non-controlling Interest Company.interest company (98.33% in PMI CIM and 60.0% in COMESA). |
| iii. | As of January 2016, this company started operations and was included in the consolidated financial statements of PEMEX.Formerly P.M.I. Infraestructura de Desarrollo, S.A. de C.V. until March 5, 2019. On May 30, 2019 these shares were transferred to Pemex Industrial Transformation. |
| iv. | As of June 2016, thisThis company was includedliquidated in the consolidated financial statements of PEMEX.December 2019. |
| v. | As of July 2016, this company was includedThese companies were merged into PMI NASA in the consolidated financial statements of PEMEX.2020. |
| vi. | Until October 2016, formerly Mex Gas Cogeneración S.L.As of May 2020, this company is not included in the consolidation (see Note 22-G). |
| vii. | As of January 2017, thisThis company started operations and was includedliquidated in the consolidated financial statements of PEMEXAugust 2020. |
| viii. | As of February 2017, thisThis company merged with HPE.was liquidated in April 2020. |
| ix. | AsPEMEX owns 100.0% of June 2017,the interests in this company merged with SUS.Subsidiary Company |
| x. | As of October 2017, PMI HBV was divided and HHS was created and includedOperates in the consolidated financial statements of PEMEX.México |
| xi. | This Company was liquidated.Operates in Spain |
| xii. | AsOperates in United States of December 2017, PEMEX acquired sharesAmerica |
| xiii. | Operates in these companies and they were includedIreland |
| xiv. | Operates in the consolidated financial statements of PEMEX.Netherlands |
| xv. | Operates in Switzerland |
| xvi. | Operates in Cayman Islands |
NOTE 5. Segment
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial informationstatements (Figures stated in thousands, except as noted) NOTE 6. | SEGMENT FINANCIAL INFORMATION |
PEMEX’s primary business is the exploration and production of crude oil and natural gas, as well as the production, processing, marketing and distribution of petroleum and petrochemical products. After the Corporate Reorganization,As of December 31, 2020, PEMEX’s operations have beenwere conducted through ninesix business segments: explorationExploration and production, industrial transformation, cogeneration and services, drilling and services, logistics, ethylene, fertilizers,Production, Industrial Transformation, Logistics, Fertilizers, the Trading Companies and corporateCorporate and other operating subsidiary companies.Subsidiary Companies. Until June 30, 2019, PEMEX’s operations were also conducted through the additional two business segments: Drilling and Services (merged into Pemex Exploration and Production as of July 1, 2019) and Ethylene (merged into Pemex Industrial Transformation as of July 1, 2019). Prior to July 27, 2018, PEMEX’s operations were also conducted through the Cogeneration and Services business segment (liquidated company as of July 27, 2018). Due to PEMEX’s structure, there are significant quantitiesamounts of inter-segment sales among the reporting segments, which are made at internal transfer prices established by PEMEX reflecting international market prices. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The primary sources of revenue for PEMEX’s business segments are as described below: The exploration and production segment earns revenues from domestic sales of crude oil and natural gas, and from exporting crude oil through certain of the Trading Companies. ExportCrude oil export sales are made through the agent subsidiary company PMI CIM, to approximately 3219 major customers in various foreign markets. Approximately half of PEMEX’s crude oil is sold to Pemex Industrial Transformation. The industrial transformation segment earns revenues from sales of refined petroleum products and derivatives, mainly to third parties within the domestic market. This segment also sells a significant portion of the fuel oil it produces to the Comisión Federal de Electricidad (Federal Electricity Commission, or “CFE”) and a significant portion of jet fuel produced to Aeropuertos y Servicios Auxiliares (the Airports and Auxiliary Services Agency). The refining segment’s most important products are different types of gasoline and diesel.
| • | | The industrial transformation segment earns revenues from sales of refined petroleum products and derivatives, mainly to third parties within the domestic market. This segment also sells a significant portion of the fuel oil it produces to the Comisión Federal de Electricidad (Federal Eletricity Commission, or “CFE”) and a significant portion of jet fuel produced to the Aeropuertos y Servicios Auxiliares (Airports and Auxiliary Services Agency). The refining segment’s most important products are different types of gasoline and diesel. |
The industrial transformation segment also earns revenues from domestic sources generated by sales of natural gas, liquefied petroleum gas, naphtha, butane and ethane and certain other petrochemicals such as methane derivatives, ethane derivatives, aromatics and derivatives. The cogeneration segment receives income from the cogeneration, supply and sale of electricity and thermal energy and also provides technical and management activities associated with these services.
The drilling segment receives income from drilling services, and servicing and repairing wells.
The logistics segment earns income from transportation and storage of crude oil, petroleum products and petrochemicals, as well as related services, which it provides by employing pipelines and offshore and onshore resources, and from providing services related to the maintenance, handling, guarding and management of these products. The ethylene segment earns revenues from the distribution and trade of methane, ethane and propylene in the domestic market.
The fertilizers segment earns revenues from trading ammonia, fertilizers and its derivatives, mostly in the domestic market.market (merged as of January 1, 2021, see Note 28-E). Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) The trading companies segment, which consist of PMI CIM, PMI NASA, PMI Trading and MGAS (the “Trading Companies”), earnearns revenues from trading crude oil, natural gas and petroleum and petrochemical products in international markets. The segment related to corporate and other operatingthe Subsidiary Companies provides administrative, financing, consulting and logistical services, as well as economic, tax and legal advice andre-insurance services to PEMEX’s subsidiary entities and companies. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The drilling segment receives income from drilling services, and servicing and repairing wells. This entity was merged into Pemex Exploration and Production on July 1, 2019. The ethylene segment earns revenues from the distribution and trade of methane, ethane and propylene in the domestic market. This entity was merged into Pemex Industrial Transformation on July 1, 2019. The following tables present the condensed financial information of these segments, after elimination of unrealized intersegment gain (loss), and include only select line items. The columns before intersegment eliminations include unconsolidated figures. As a result, the line items presented below may not total. These reporting segments are those which PEMEX’s management evaluates in its analysis of PEMEX and on which it bases its decision-making. These reporting segments are presented in PEMEX’s reporting currency. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) | As of/for the year ended December 31, 2017 | | Exploration and Production | | Industrial Transformation | | Cogeneration and Services(1) | | Drilling and Services | | Logistics | | Fertilizers | | Ethylene | | Trading Companies | | Corporate and Other Operating Subsidiary Companies | | Intersegment eliminations | | Total | | | As of/ for the year ended December 31, 2020 | | | Exploration and Production | | Industrial Transformation | | Logistics | | Fertilizers (1) | | Trading Companies | | Corporate and Other Operating Subsidiary Companies | | Intersegment eliminations | | Total | | | Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trade | | Ps. | — | | | Ps. 857,456,146 | | | Ps. | — | | | Ps. | — | | | Ps. | — | | | Ps. 4,123,006 | | | Ps. 12,621,648 | | | Ps. 508,539,112 | | | Ps. 3,159,238 | | | Ps. | — | | | Ps. 1,385,899,150 | | | | 301,393,451 | | | | 477,729,504 | | | | — | | | | 1,515,464 | | | | 159,786,736 | | | | 8,521,205 | | | | — | | | | 948,946,360 | | Intersegment | | 762,637,362 | | | 150,360,283 | | | 114,233 | | | 3,400,456 | | | 70,671,871 | | | 642,965 | | | 1,565,757 | | | 539,193,190 | | | 79,031,944 | | | (1,607,618,061 | ) | | | — | | | | 242,454,754 | | | | 97,303,328 | | | | 80,575,471 | | | | 425,374 | | | | 280,924,383 | | | | 98,451,594 | | | | (800,134,904 | ) | | | — | | Services income | | | — | | | 6,116,937 | | | 334,755 | | | 41,741 | | | 3,714,941 | | | 2,339 | | | 26,733 | | | 66,621 | | | 826,502 | | | | — | | | 11,130,569 | | | | 133,315 | | | | 190,748 | | | | 4,099,000 | | | | 919 | | | | 229,140 | | | | 62,362 | | | | — | | | | 4,715,484 | | (Reversal) impairment of wells pipelines, properties, plant and equipment, net | | 129,350,315 | | | 15,952,092 | | | | — | | | | — | | | | — | | | 1,935,500 | | | | — | | | | — | | | 4,206,653 | | | | — | | | 151,444,560 | | | (Impairment) reversal of wells, pipelines, properties, plant and equipment, net | | | | 35,031,541 | | | | (71,761,571 | ) | | | 426,560 | | | | (92,444 | ) | | | 42,214 | | | | — | | | | — | | | | (36,353,700 | ) | Cost of sales | | 391,089,410 | | | 1,004,683,554 | | | 472,732 | | | 468,171 | | | 50,926,263 | | | 6,001,259 | | | 14,272,340 | | | 1,031,997,901 | | | 33,033,923 | | | (1,528,740,673 | ) | | 1,004,204,880 | | | | 391,513,815 | | | | 655,617,229 | | | | 43,614,768 | | | | 3,070,962 | | | | 430,672,407 | | | | 27,536,221 | | | | (719,410,712 | ) | | | 832,614,690 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross income (loss) | | 242,197,637 | | | (6,702,280 | ) | | (23,744 | ) | | 2,974,026 | | | 23,460,549 | | | (3,168,449 | ) | | (58,202 | ) | | 15,801,022 | | | 45,777,108 | | | (78,877,388 | ) | | 241,380,279 | | | | 187,499,246 | | | | (152,155,220 | ) | | | 41,486,263 | | | | (1,221,649 | ) | | | 10,310,066 | | | | 79,498,940 | | | | (80,724,192 | ) | | | 84,693,454 | | Other revenues (expenses), net | | 10,204,045 | | | 1,515,538 | | | 2,646 | | | (31,454 | ) | | (24,134,436 | ) | | 9,013 | | | 23,030 | | | 307,212 | | | (5,344,872 | ) | | 22,623,354 | | | 5,174,076 | | | Other revenue | | | | 2,162,510 | | | | 4,092,943 | | | | 513,076 | | | | 13,355 | | | | 874,412 | | | | 4,112,550 | | | | — | | | | 11,768,846 | | Other expenses | | | | (896,526 | ) | | | (130,926 | ) | | | (7,445 | ) | | | 6,204 | | | | (86,960 | ) | | | (113,590 | ) | | | 34,529 | | | | (1,194,714 | ) | Distribution, transportation and sales expenses | | | — | | | 26,049,566 | | | 13,581 | | | | — | | | 73,526 | | | 528,370 | | | 334,663 | | | 375,482 | | | 59,043 | | | (5,544,561 | ) | | 21,889,670 | | | | 251,625 | | | | 14,423,570 | | | | 107,691 | | | | 400,170 | | | | 1,277,980 | | | | 209,676 | | | | (4,234,470 | ) | | | 12,436,242 | | Administrative expenses | | 58,539,119 | | | 38,994,887 | | | 37,679 | | | 888,776 | | | 7,459,928 | | | 352,537 | | | 1,105,554 | | | 1,564,859 | | | 62,001,641 | | | (51,005,526 | ) | | 119,939,454 | | | | 72,457,241 | | | | 51,017,304 | | | | 15,762,946 | | | | 1,099,456 | | | | 2,106,780 | | | | 79,922,661 | | | | (76,471,944 | ) | | | 145,894,444 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss) | | 193,862,563 | | | (70,231,195 | ) | | (72,358 | ) | | 2,053,796 | | | (8,207,341 | ) | | (4,040,343 | ) | | (1,475,389 | ) | | 14,167,893 | | | (21,628,448 | ) | | 296,053 | | | 104,725,231 | | | | 116,056,364 | | | | (213,634,077 | ) | | | 26,121,257 | | | | (2,701,716 | ) | | | 7,712,758 | | | | 3,365,563 | | | | 16,751 | | | | (63,063,100 | ) | Financing income | | 121,293,404 | | | 11,427,907 | | | 147 | | | 57,313 | | | 1,622,827 | | | 2,248 | | | 46,113 | | | 905,405 | | | 145,907,795 | | | (265,097,306 | ) | | 16,165,853 | | | | 77,700,999 | | | | 223,712 | | | | 3,340,622 | | | | 245,510 | | | | 307,229 | | | | 162,801,375 | | | | (227,877,399 | ) | | | 16,742,048 | | Financing cost | | (136,378,338 | ) | | (2,398,643 | ) | | (19,882 | ) | | (795,947 | ) | | (2,307,427 | ) | | (211,004 | ) | | (1,964 | ) | | (1,328,827 | ) | | (239,003,771 | ) | | 264,801,255 | | | (117,644,548 | ) | | | (164,419,519 | ) | | | (11,491,708 | ) | | | (450,802 | ) | | | (674,869 | ) | | | (812,552 | ) | | | (211,776,436 | ) | | | 227,860,644 | | | | (161,765,242 | ) | Derivative financial instruments (cost) income, net | | (1,613,874 | ) | | 5,835 | | | | — | | | | — | | | | — | | | | — | | | | — | | | (772,143 | ) | | 27,718,506 | | | | — | | | 25,338,324 | | | | 24,939,748 | | | | 22,862 | | | | — | | | | — | | | | (1,794,243 | ) | | | (6,072,226 | ) | | | — | | | | 17,096,141 | | Foreign exchange (loss) income, net | | 10,043,316 | | | 4,924,209 | | | | — | | | 227,365 | | | 613,099 | | | (20,925 | ) | | (10,486 | ) | | (4,318 | ) | | 7,411,862 | | | | — | | | 23,184,122 | | | Profit (loss) sharing in joint ventures and associates | | (75,195 | ) | | 485,224 | | | | — | | | | — | | | (74 | ) | | | — | | | | — | | | 1,049,809 | | | (212,666,494 | ) | | 211,567,170 | | | 360,440 | | | Foreign exchange (loss), net | | | | (116,528,387 | ) | | | (8,893,829 | ) | | | (442,139 | ) | | | (166,971 | ) | | | (750,041 | ) | | | (2,167,937 | ) | | | — | | | | (128,949,304 | ) | (Loss) profit sharing in joint ventures and associates | | | | (61,956 | ) | | | 1,346,829 | | | | 3,813 | | | | (2,362,891 | ) | | | (1,931,323 | ) | | | (441,711,566 | ) | | | 441,176,561 | | | | (3,540,533 | ) | Taxes, duties and other | | 338,169,260 | | | | — | | | | — | | | 276,967 | | | (7,444,967 | ) | | | — | | | | — | | | 1,972,718 | | | 6,063 | | | | — | | | 332,980,041 | | | | 154,609,136 | | | | — | | | | 4,842,171 | | | | — | | | | 3,413,999 | | | | 22,706,769 | | | | — | | | | 185,572,075 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income | | (151,037,384 | ) | | (55,786,663 | ) | | (92,093 | ) | | 1,265,560 | | | (833,949 | ) | | (4,270,024 | ) | | (1,441,726 | ) | | 12,045,101 | | | (292,266,613 | ) | | 211,567,172 | | | (280,850,619 | ) | | | (216,921,887 | ) | | | (232,426,211 | ) | | | 23,730,580 | | | | (5,660,937 | ) | | | (682,171 | ) | | | (518,267,996 | ) | | | 441,176,557 | | | | (509,052,065 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total current assets | | 1,036,063,541 | | | 570,380,888 | | | 179,807 | | | 6,871,148 | | | 49,391,784 | | | 3,155,476 | | | 3,994,381 | | | 158,414,445 | | | 506,187,594 | | | (1,971,112,774 | ) | | 363,526,290 | | | | 937,017,021 | | | | 152,553,067 | | | | 166,202,857 | | | | 2,960,958 | | | | 168,261,357 | | | | 906,149,787 | | | | (2,003,285,308 | ) | | | 329,859,739 | | Investments in joint ventures and associates | | 64,328 | | | 4 | | | | — | | | | — | | | 18,336 | | | | — | | | | — | | | 15,805,506 | | | (465,026,224 | ) | | 465,845,414 | | | 16,707,364 | | | Wells, pipelines, properties, plant and equipment, net | | 945,945,889 | | | 286,423,735 | | | | — | | | 18,956,882 | | | 119,647,553 | | | 5,713,998 | | | 19,008,822 | | | 6,739,231 | | | 34,073,216 | | | | — | | | 1,436,509,326 | | | Total assets | | 2,058,036,405 | | | 857,196,306 | | | 179,807 | | | 26,220,748 | | | 191,895,993 | | | 8,923,456 | | | 23,142,045 | | | 186,808,899 | | | 2,111,740,735 | | | (3,332,142,280 | ) | | 2,132,002,114 | | | Total non-current assets | | | | 884,741,960 | | | | 328,449,091 | | | | 167,498,268 | | | | 3,404,696 | | | | 40,084,813 | | | | 750,322,623 | | | | (575,873,262 | ) | | | 1,598,628,189 | | Total current liabilities | | 284,656,058 | | | 459,130,165 | | | 531,580 | | | 2,201,936 | | | 44,521,371 | | | 6,455,246 | | | 2,183,654 | | | 112,046,527 | | | 1,439,097,882 | | | (1,961,697,234 | ) | | 389,127,185 | | | | 464,163,895 | | | | 388,367,873 | | | | 39,568,364 | | | | 17,328,604 | | | | 129,161,357 | | | | 1,734,633,918 | | | | (2,000,813,940 | ) | | | 772,410,071 | | Long-term debt | | 1,826,843,268 | | | 25,437,147 | | | | — | | | 11,258,734 | | | 2,814,640 | | | | — | | | | — | | | 2,712,654 | | | 1,837,690,559 | | | (1,826,091,398 | ) | | 1,880,665,604 | | | Employee benefits | | 372,032,958 | | | 588,573,518 | | | | — | | | 333,212 | | | 1,842,892 | | | 98,361 | | | 105,033 | | | (966,238 | ) | | 296,416,386 | | | | — | | | 1,258,436,122 | | | Total liabilities | | 2,570,412,398 | | | 1,077,108,748 | | | 531,580 | | | 13,886,424 | | | 56,706,251 | | | 6,556,050 | | | 2,308,890 | | | 116,842,881 | | | 3,587,988,972 | | | (3,797,987,695 | ) | | 3,634,354,499 | | | Total non-current liabilities | | | | 2,363,252,154 | | | | 714,289,669 | | | | 90,624,955 | | | | 453,465 | | | | 1,121,488 | | | | 2,218,921,311 | | | | (1,827,858,155 | ) | | | 3,560,804,887 | | Equity (deficit), net | | (512,375,993 | ) | | (219,912,442 | ) | | (351,773 | ) | | 12,334,324 | | | 135,189,742 | | | 2,367,406 | | | 20,833,155 | | | 69,966,018 | | | (1,476,248,237 | ) | | 465,845,415 | | | (1,502,352,385 | ) | | | (1,005,657,068 | ) | | | (621,655,384 | ) | | | 203,507,806 | | | | (11,416,415 | ) | | | 78,063,325 | | | | (2,297,082,819 | ) | | | 1,249,513,525 | | | | (2,404,727,030 | ) | Depreciation and amortization | | 127,742,568 | | | 17,935,112 | | | | — | | | 2,368,123 | | | 4,562,140 | | | 422,930 | | | 1,688,493 | | | (19,798 | ) | | 2,004,945 | | | | — | | | 156,704,513 | | | | 101,126,295 | | | | 19,734,723 | | | | 5,917,668 | | | | 10,137 | | | | 317,241 | | | | 2,525,756 | | | | — | | | | 129,631,820 | | Net periodic cost of employee benefits | | 32,794,386 | | | 52,538,989 | | | | — | | | 39,697 | | | (4,954 | ) | | (1,999 | ) | | (12,561 | ) | | 16,166 | | | 22,703,351 | | | | — | | | 108,073,075 | | | Acquisition of wells, pipelines, properties, plant and equipment | | 67,845,989 | | | 14,678,182 | | | | — | | | 418,283 | | | 5,189,409 | | | 219,152 | | | 475,196 | | | 321,145 | | | 4,832,461 | | | | — | | | 93,979,817 | | | Depreciation of rights of use | | | | 313,008 | | | | 4,679,723 | | | | 460,957 | | | | 35,515 | | | | 992,148 | | | | 747,880 | | | | — | | | | 7,229,231 | | Net periodic cost of employee benefits excluding items recognized in other comprehensive income | | | | 35,356,366 | | | | 51,176,601 | | | | 8,927,651 | | | | 669,076 | | | | (1,156 | ) | | | 32,680,002 | | | | — | | | | 128,808,540 | |
(1) | CertainMerged as of January 1, 2021, see Note 28-E. |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of/ for the year ended December 31, 2019 | | Exploration and Production (1) | | | Industrial Transformation (2) | | | Logistics | | | Fertilizers | | | Trading Companies | | | Corporate and Other Operating Subsidiary Companies | | | Intersegment eliminations | | | Total | | | | | | | | | | | Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trade | | | 409,059,838 | | | | 797,167,115 | | | | — | | | | 1,634,300 | | | | 175,509,189 | | | | 9,492,063 | | | | — | | | | 1,392,862,505 | | Intersegment | | | 333,735,644 | | | | 127,887,636 | | | | 88,604,529 | | | | 560,987 | | | | 484,139,042 | | | | 100,021,336 | | | | (1,134,949,174 | ) | | | — | | Services income | | | 473,324 | | | | 2,088,771 | | | | 4,663,770 | | | | 853 | | | | 67,982 | | | | 1,813,980 | | | | — | | | | 9,108,680 | | (Impairment) reversal of wells, pipelines, properties, plant and equipment, net (3) | | | (104,035,887 | ) | | | 42,243,942 | | | | 34,119,240 | | | | (2,298,775 | ) | | | (1,311,674 | ) | | | — | | | | — | | | | (31,283,154 | ) | Cost of sales | | | 472,489,346 | | | | 970,522,186 | | | | 51,298,858 | | | | 3,380,826 | | | | 646,671,417 | | | | 49,979,372 | | | | (1,071,408,581 | ) | | | 1,122,933,424 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross income (loss) | | | 166,743,573 | | | | (1,134,722 | ) | | | 76,088,681 | | | | (3,483,461 | ) | | | 11,733,122 | | | | 61,348,007 | | | | (63,540,593 | ) | | | 247,754,607 | | Other revenue | | | 6,796,590 | | | | 3,110,226 | | | | 202,800 | | | | 22,575 | | | | 444,289 | | | | 4,363,967 | | | | — | | | | 14,940,447 | | Other expenses | | | (6,134,114 | ) | | | (551,926 | ) | | | (311,878 | ) | | | (7,147 | ) | | | — | | | | (130,791 | ) | | | (75,835 | ) | | | (7,211,691 | ) | Distribution, transportation and sales expenses | | | 262,642 | | | | 24,007,852 | | | | 22,467 | | | | 288,347 | | | | 1,323,007 | | | | 31,323 | | | | (4,049,727 | ) | | | 21,885,911 | | Administrative expenses | | | 59,171,975 | | | | 50,652,341 | | | | 8,504,381 | | | | 615,830 | | | | 2,575,536 | | | | 68,791,707 | | | | (59,542,948 | ) | | | 130,768,822 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss) | | | 107,971,432 | | | | (73,236,615 | ) | | | 67,452,755 | | | | (4,372,210 | ) | | | 8,278,868 | | | | (3,241,847 | ) | | | (23,753 | ) | | | 102,828,630 | | Financing income (3) | | | 87,737,456 | | | | 1,938,163 | | | | 697,130 | | | | 65,049 | | | | 801,046 | | | | 156,297,750 | | | | (218,300,991 | ) | | | 29,235,603 | | Financing cost | | | (134,241,910 | ) | | | (6,346,480 | ) | | | (434,392 | ) | | | (770,869 | ) | | | (971,573 | ) | | | (208,419,002 | ) | | | 218,322,886 | | | | (132,861,340 | ) | Derivative financial instruments (cost) income, net (3) | | | (7,014,529 | ) | | | (9,231 | ) | | | — | | | | — | | | | (1,471,566 | ) | | | (14,768,593 | ) | | | (4 | ) | | | (23,263,923 | ) | Foreign exchange (loss) income, net | | | 78,315,007 | | | | 3,674,481 | | | | 214,157 | | | | 48,226 | | | | (212,619 | ) | | | 4,891,136 | | | | — | | | | 86,930,388 | | Profit (loss) sharing in joint ventures and associates | | | 28,770 | | | | 105,447 | | | | (17,682 | ) | | | (2,314,587 | ) | | | 1,195,058 | | | | (295,764,002 | ) | | | 295,609,103 | | | | (1,157,893 | ) | Taxes, duties and other | | | 373,640,107 | | | | (1,446,202 | ) | | | (19,902,667 | ) | | | — | | | | 2,433,349 | | | | (10,901,098 | ) | | | — | | | | 343,823,489 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income | | | (240,843,881 | ) | | | (72,428,033 | ) | | | 87,814,635 | | | | (7,344,391 | ) | | | 5,185,865 | | | | (350,103,460 | ) | | | 295,607,241 | | | | (282,112,024 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total current assets (3) | | | 987,717,368 | | | | 220,885,024 | | | | 111,906,985 | | | | 7,783,507 | | | | 161,329,297 | | | | 718,398,444 | | | | (1,864,985,584 | ) | | | 343,035,041 | | Total non-current assets (3) | | | 833,264,268 | | | | 385,174,767 | | | | 160,050,916 | | | | 1,710,361 | | | | 43,098,566 | | | | 1,001,349,312 | | | | (783,436,151 | ) | | | 1,641,212,039 | | Total current liabilities | | | 393,129,182 | | | | 290,128,797 | | | | 28,995,291 | | | | 12,648,563 | | | | 125,341,872 | | | | 1,564,317,345 | | | | (1,862,357,422 | ) | | | 552,203,628 | | Total non-current liabilities | | | 2,210,050,053 | | | | 682,521,743 | | | | 78,111,581 | | | | 6,121,684 | | | | 3,382,236 | | | | 2,080,349,970 | | | | (1,697,084,513 | ) | | | 3,363,452,754 | | Equity (deficit), net (3) | | | (782,197,599 | ) | | | (366,590,749 | ) | | | 164,851,029 | | | | (9,276,379 | ) | | | 75,703,755 | | | | (1,924,919,559 | ) | | | 911,020,200 | | | | (1,931,409,302 | ) | Depreciation and amortization | | | 103,328,661 | | | | 25,260,746 | | | | 6,521,380 | | | | (323,902 | ) | | | 93,193 | | | | 2,306,932 | | | | — | | | | 137,187,010 | | Depreciation of rights of use | | | 352,286 | | | | 4,858,427 | | | | 228,929 | | | | 35,515 | | | | 1,288,306 | | | | 665,812 | | | | — | | | | 7,429,275 | | Net periodic cost of employee benefits excluding items recognized in other comprehensive income | | | 34,534,805 | | | | 54,347,829 | | | | 243,330 | | | | (6,361 | ) | | | 37,512 | | | | 27,019,834 | | | | — | | | | 116,176,949 | |
(1) | On July 1, 2019 Pemex Drilling and Services was merged into Pemex Exploration and Production. For comparison purposes all operations for periods prior to the assets of merger are presented in the Pemex Exploration and Production segment. |
(2) | On July 1, 2019 Pemex Ethylene was merged into Pemex Industrial Transformation. For comparison purposes all operations for periods prior to the merger are presented in the Pemex Industrial Transformation segment. |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | For the year ended December 31, 2018 | | Exploration and Production (1) | | | Industrial Transformation (2) (3) | | | Logistics | | | Fertilizers | | | Trading Companies | | | Corporate and Other Operating Subsidiary Companies | | | Intersegment eliminations | | | Total | | | | | | | | | | | Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trade | | | 482,262,631 | | | | 973,367,343 | | | | — | | | | 2,933,424 | | | | 204,103,954 | | | | 9,778,796 | | | | — | | | | 1,672,446,148 | | Intersegment | | | 400,613,623 | | | | 143,632,442 | | | | 63,672,574 | | | | 65,802 | | | | 640,382,216 | | | | 119,762,378 | | | | (1,368,129,035 | ) | | | — | | Services income | | | 221,885 | | | | 559,515 | | | | 4,708,217 | | | | 4,742 | | | | 64,038 | | | | 3,114,605 | | | | — | | | | 8,673,002 | | Reversal (impairment) of wells, pipelines, properties, plant and equipment, net | | | 65,013,616 | | | | 659,610 | | | | (40,288,338 | ) | | | (2,246,264 | ) | | | (1,719,627 | ) | | | — | | | | — | | | | 21,418,997 | | Cost of sales | | | 401,629,016 | | | | 1,107,749,282 | | | | 42,694,683 | | | | 4,509,881 | | | | 837,820,025 | | | | 54,148,722 | | | | (1,249,040,048 | ) | | | 1,199,511,561 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross income (loss) | | | 546,482,739 | | | | 10,469,628 | | | | (14,602,230 | ) | | | (3,752,177 | ) | | | 5,010,556 | | | | 78,507,057 | | | | (119,088,987 | ) | | | 503,026,586 | | Other income | | | 23,734,616 | | | | 6,784,333 | | | | 178,431 | | | | 81,808 | | | | 1,703,304 | | | | 7,683,041 | | | | 1,352,098 | | | | 41,517,631 | | Other expenses | | | (15,057,062 | ) | | | (1,263,087 | ) | | | (40,248,271 | ) | | | (10,389 | ) | | | 87,697 | | | | (911,091 | ) | | | 38,937,083 | | | | (18,465,120 | ) | Distribution, transportation and sales expenses | | | 106,573 | | | | 26,867,986 | | | | 82,755 | | | | 387,397 | | | | 280,407 | | | | 94,457 | | | | (3,462,366 | ) | | | 24,357,209 | | Administrative expenses | | | 68,953,644 | | | | 53,474,193 | | | | 11,592,604 | | | | 785,883 | | | | 1,541,092 | | | | 74,525,804 | | | | (76,551,739 | ) | | | 134,321,481 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss) | | | 486,100,076 | | | | (64,351,305 | ) | | | (66,347,429 | ) | | | (4,854,038 | ) | | | 4,980,058 | | | | 10,658,746 | | | | 1,214,299 | | | | 367,400,407 | | Financing income | | | 94,359,725 | | | | 7,502,075 | | | | 1,351,514 | | | | 4,916 | | | | 702,471 | | | | 142,481,311 | | | | (214,844,890 | ) | | | 31,557,122 | | Financing cost (4) | | | (131,257,815 | ) | | | (1,990,001 | ) | | | (220,721 | ) | | | (478,044 | ) | | | (1,379,583 | ) | | | (202,865,030 | ) | | | 214,321,510 | | | | (123,869,684 | ) | Derivative financial instruments (cost) income, net (4) | | | (15,989,398 | ) | | | (11,304 | ) | | | — | | | | — | | | | 382,568 | | | | (3,497,812 | ) | | | (5 | ) | | | (19,115,951 | ) | Foreign exchange income (loss), net | | | 28,066,138 | | | | (1,736,100 | ) | | | 167,982 | | | | (2,577 | ) | | | 920,488 | | | | (3,756,451 | ) | | | — | | | | 23,659,480 | | Profit (loss) sharing in joint ventures and associates | | | 54,149 | | | | — | | | | (1,092 | ) | | | — | | | | 1,012,490 | | | | (124,094,148 | ) | | | 124,555,613 | | | | 1,527,012 | | Taxes, duties and other | | | 469,262,312 | | | | 1,446,202 | | | | (2,474,189 | ) | | | — | | | | 1,840,409 | | | | (8,496,511 | ) | | | — | | | | 461,578,223 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income | | | (7,929,437 | ) | | | (62,032,837 | ) | | | (62,575,557 | ) | | | (5,329,743 | ) | | | 4,778,083 | | | | (172,576,873 | ) | | | 125,246,527 | | | | (180,419,837 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Depreciation and amortization | | | 126,154,366 | | | | 20,569,085 | | | | 4,409,226 | | | | (246,697 | ) | | | 403,122 | | | | 2,092,938 | | | | — | | | | 153,382,040 | | Net periodic cost of employee benefits excluding items recognized in other comprehensive income | | | 33,715,993 | | | | 51,247,894 | | | | 191,132 | | | | 9,162 | | | | (321,683 | ) | | | 26,861,666 | | | | 2,917,450 | | | | 114,621,614 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | On July 1, 2019 Pemex Drilling and Services was merged into Pemex Exploration and Production. For comparison purposes all operations for periods prior to the merger are presented in the Pemex Exploration and Production segment. |
(2) | On July 1, 2019 Pemex Ethylene was merged into Pemex Industrial Transformation. For comparison purposes all operations for periods prior to the merger are presented in the Pemex Industrial Transformation segment. |
(3) | Pemex Cogeneration and Services have beenwas liquidated on July 27, 2018. Except for certain expenses incurred in the liquidation, all operations were transferred to Pemex Industrial Transformation. For comparison purposes all operations for periods prior to the merger are presented in the Pemex Industrial Transformation segment. |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of/for the year ended December 31, 2016 | | Exploration and Production | | | Industrial Transformation | | | Cogeneration and Services | | | Drilling and Services | | | Logistics | | | Fertilizers | | | Ethylene | | | Trading Companies | | | Corporate and Other Operating Subsidiary Companies | | | Intersegment eliminations | | | Total | | Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trade | | Ps. | — | | | Ps. | 648,088,013 | | | Ps. | — | | | Ps. | — | | | Ps. | — | | | Ps. | 3,873,403 | | | Ps. | 15,392,552 | | | Ps. | 395,118,117 | | | Ps. | 2,646,505 | | | Ps. | — | | | Ps. | 1,065,118,590 | | Intersegment | | | 616,380,615 | | | | 117,096,378 | | | | 51,913 | | | | 1,981,754 | | | | 68,316,958 | | | | 900,464 | | | | 1,764,438 | | | | 405,293,283 | | | | 50,683,175 | | | | (1,262,468,978 | ) | | | — | | Services income | | | — | | | | 5,565,604 | | | | 132,521 | | | | 70,112 | | | | 2,813,887 | | | | 1,908 | | | | 60,141 | | | | 236,230 | | | | 473,415 | | | | (379,176 | ) | | | 8,974,642 | | (Reversal) impairment of wells pipelines, properties, plant and equipment, net | | | (271,709,433 | ) | | | (52,498,881 | ) | | | — | | | | — | | | | (5,829,520 | ) | | | — | | | | (1,276,509 | ) | | | — | | | | — | | | | — | | | | (331,314,343 | ) | Cost of sales | | | 359,064,884 | | | | 823,763,927 | | | | 166,721 | | | | 143,956 | | | | 61,248,584 | | | | 5,506,198 | | | | 13,936,213 | | | | 783,691,245 | | | | 7,260,043 | | | | (1,188,959,550 | ) | | | 865,822,221 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross income (loss) | | | 529,025,164 | | | | (515,051 | ) | | | 17,713 | | | | 1,907,910 | | | | 15,711,781 | | | | (730,423 | ) | | | 4,557,427 | | | | 16,956,385 | | | | 46,543,052 | | | | (73,888,604 | ) | | | 539,585,354 | | Other revenues (expenses), net | | | 27,346,794 | | | | 19,964,654 | | | | — | | | | 591,704 | | | | (27,189,969 | ) | | | 32,710 | | | | 63,989 | | | | 3,412,711 | | | | (906,183 | ) | | | (666,804 | ) | | | 22,649,606 | | Distribution, transportation and sales expenses | | | — | | | | 50,792,317 | | | | 8,232 | | | | 6 | | | | 148,215 | | | | 185,168 | | | | 481,727 | | | | 229,432 | | | | 49,162 | | | | (26,663,019 | ) | | | 25,231,240 | | Administrative expenses | | | 54,509,047 | | | | 34,183,846 | | | | 32,126 | | | | 983,560 | | | | 7,175,451 | | | | 731,479 | | | | 2,101,834 | | | | 1,157,182 | | | | 60,497,232 | | | | (48,718,224 | ) | | | 112,653,533 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss) | | | 501,862,911 | | | | (65,526,560 | ) | | | (22,645 | ) | | | 1,516,048 | | | | (18,801,854 | ) | | | (1,614,360 | ) | | | 2,037,855 | | | | 18,982,482 | | | | (14,909,525 | ) | | | 825,835 | | | | 424,350,187 | | Financing income | | | 56,040,129 | | | | 11,056,345 | | | | — | | | | 72,995 | | | | 373,301 | | | | 4,358 | | | | 64,582 | | | | 1,098,079 | | | | 125,964,466 | | | | (180,925,000 | ) | | | 13,749,255 | | Financing cost | | | (109,946,363 | ) | | | (3,188,892 | ) | | | (12,055 | ) | | | (642,711 | ) | | | (481,741 | ) | | | (20,217 | ) | | | (2,980 | ) | | | (1,342,351 | ) | | | (163,400,779 | ) | | | 180,193,625 | | | | (98,844,464 | ) | Derivative financial instruments (cost) income, net | | | — | | | | 3,172 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (1,951,959 | ) | | | (12,052,200 | ) | | | — | | | | (14,000,987 | ) | Foreign exchange (loss) income, net | | | (217,166,718 | ) | | | (12,858,875 | ) | | | — | | | | (1,570,317 | ) | | | (1,118,537 | ) | | | (29,263 | ) | | | (2,843 | ) | | | 174,866 | | | | (21,441,056 | ) | | | — | | | | (254,012,743 | ) | Profit (loss) sharing in joint ventures and associates | | | (21,164 | ) | | | 649,520 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,586,503 | | | | (117,426,818 | ) | | | 117,347,804 | | | | 2,135,845 | | Taxes, duties and other | | | 276,647,448 | | | | — | | | | — | | | | (481,581 | ) | | | (10,010,686 | ) | | | — | | | | — | | | | 7,380,870 | | | | (9,014,616 | ) | | | — | | | | 264,521,435 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income | | | (45,878,653 | ) | | | (69,865,290 | ) | | | (34,700 | ) | | | (142,404 | ) | | | (10,018,145 | ) | | | (1,659,482 | ) | | | 2,096,614 | | | | 11,166,750 | | | | (194,251,296 | ) | | | 117,442,264 | | | | (191,144,342 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total current assets | | | 983,260,710 | | | | 795,237,287 | | | | 388,422 | | | | 6,032,213 | | | | 22,087,801 | | | | 1,724,967 | | | | 5,817,262 | | | | 125,081,531 | | | | 613,881,578 | | | | (2,195,695,848 | ) | | | 357,815,923 | | Investments in joint ventures and associates | | | 139,523 | | | | 257,159 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 17,568,893 | | | | (247,349,711 | ) | | | 250,121,645 | | | | 20,737,509 | | Wells, pipelines, properties, plant and equipment, net | | | 1,176,504,263 | | | | 311,432,174 | | | | — | | | | 21,023,629 | | | | 86,695,514 | | | | 7,771,634 | | | | 20,086,650 | | | | 6,691,813 | | | | 37,536,571 | | | | — | | | | 1,667,742,248 | | Total assets | | | 2,206,418,541 | | | | 1,107,094,580 | | | | 388,423 | | | | 27,673,598 | | | | 130,824,921 | | | | 9,556,469 | | | | 26,007,319 | | | | 155,376,864 | | | | 2,359,024,145 | | | | (3,692,478,836 | ) | | | 2,329,886,024 | | Total current liabilities | | | 340,011,451 | | | | 666,467,674 | | | | 472,236 | | | | 3,894,121 | | | | 19,824,792 | | | | 2,995,088 | | | | 3,879,828 | | | | 78,894,485 | | | | 1,497,612,971 | | | | (2,187,862,760 | ) | | | 426,189,886 | | Long-term debt | | | 1,737,109,328 | | | | 31,495,027 | | | | — | | | | 12,489,423 | | | | 4,382,109 | | | | — | | | | — | | | | 3,597,938 | | | | 1,757,315,685 | | | | (1,739,384,968 | ) | | | 1,807,004,542 | | Employee benefits | | | 362,312,386 | | | | 575,277,374 | | | | 191,876 | | | | 441,127 | | | | 571,702 | | | | 20,362 | | | | 21,893 | | | | (749,034 | ) | | | 282,321,750 | | | | — | | | | 1,220,409,436 | | Total liabilities | | | 2,533,221,665 | | | | 1,278,138,290 | | | | 664,829 | | | | 16,853,202 | | | | 29,336,417 | | | | 3,015,450 | | | | 3,901,722 | | | | 86,885,889 | | | | 3,553,477,189 | | | | (3,942,600,482 | ) | | | 3,562,894,171 | | Equity (deficit), net | | | (326,803,124 | ) | | | (171,043,710 | ) | | | (276,406 | ) | | | 10,820,396 | | | | 101,488,504 | | | | 6,541,019 | | | | 22,105,597 | | | | 68,490,975 | | | | (1,194,453,044 | ) | | | 250,121,646 | | | | (1,233,008,147 | ) | Depreciation and amortization | | | 124,329,921 | | | | 17,425,472 | | | | — | | | | 2,559,357 | | | | 2,230,557 | | | | 481,241 | | | | 1,395,232 | | | | 86,707 | | | | 1,931,004 | | | | — | | | | 150,439,491 | | Net periodic cost of employee benefits | | | 32,617,215 | | | | 52,886,397 | | | | 5,860 | | | | 31,491 | | | | 30,340 | | | | (1,178 | ) | | | 1,424 | | | | (552,735 | ) | | | 24,719,602 | | | | — | | | | 109,738,416 | | Acquisition of wells, pipelines, properties, plant and equipment | | | 70,418,370 | | | | 32,254,531 | | | | — | | | | 2,053,139 | | | | 26,344,495 | | | | 889,420 | | | | 1,724,690 | | | | 1,019,484 | | | | 21,031,214 | | | | — | | | | 155,735,343 | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of/for the year ended December 31, 2015 | | Exploration and Production | | | Industrial Transformation | | | Cogeneration and Services | | | Drilling and Services | | | Logistics | | | Fertilizers | | | Ethylene | | | Trading Companies | | | Corporate and Other Operating Subsidiary Companies | | | Intersegment eliminations | | | Total | | Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trade | | Ps. | — | | | Ps. | 740,190,020 | | | Ps. | — | | | Ps. | — | | | Ps. | — | | | Ps. | 1,494,478 | | | Ps. | 4,551,413 | | | Ps. | 407,214,446 | | | Ps. | — | | | Ps. | — | | | Ps. | 1,153,450,357 | | Intersegment | | | 690,642,133 | | | | 126,294,195 | | | | — | | | | 1,511,970 | | | | 598,853 | | | | 209,970 | | | | 473,990 | | | | 353,137,149 | | | | 18,296,515 | | | | (1,191,164,775 | ) | | | — | | Services income | | | — | | | | 7,549,061 | | | | — | | | | — | | | | 10,355,988 | | | | 236 | | | | 17,893 | | | | 661,683 | | | | 505,032 | | | | (10,779,858 | ) | | | 8,310,035 | | Impairment of wells, pipelines, properties, plant and equipment | | | 394,396,580 | | | | 76,442,079 | | | | — | | | | — | | | | 5,829,519 | | | | — | | | | 1,276,512 | | | | — | | | | — | | | | — | | | | 477,944,690 | | Benefit from change in pension plan | | | (46,368,308 | ) | | | (45,808,781 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (92,177,089 | ) | Cost of sales | | | 427,158,621 | | | | 876,531,944 | | | | 2,793 | | | | 706,896 | | | | 10,727,462 | | | | 1,707,548 | | | | 4,965,414 | | | | 749,655,199 | | | | 2,791,350 | | | | (1,182,282,621 | ) | | | 891,964,606 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross income (loss) | | | (84,544,760 | ) | | | (33,131,966 | ) | | | (2,793 | ) | | | 805,074 | | | | (5,602,140 | ) | | | (2,864 | ) | | | (1,198,630 | ) | | | 11,358,079 | | | | 16,010,197 | | | | (19,662,012 | ) | | | (115,971,815 | ) | Other revenues (expenses), net | | | (7,957,202 | ) | | | 1,243,040 | | | | — | | | | 38 | | | | 26,941 | | | | 14,680 | | | | 19,909 | | | | 1,666,783 | | | | 2,219,539 | | | | 1,890,785 | | | | (875,487 | ) | Distribution, transportation and sales expenses | | | — | | | | 35,292,527 | | | | 1,448 | | | | — | | | | 3,009 | | | | 4,416 | | | | 62,071 | | | | 428,613 | | | | 254 | | | | (6,863,699 | ) | | | 28,928,639 | | Administrative expenses | | | 18,454,281 | | | | 40,529,587 | | | | 47,670 | | | | 8,553 | | | | 104,794 | | | | 152,404 | | | | 519,351 | | | | 1,967,581 | | | | 61,609,813 | | | | (10,921,939 | ) | | | 112,472,095 | | Benefit from change in pension plan | | | (17,853,725 | ) | | | (39,975,450 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (46,031,780 | ) | | | — | | | | (103,860,955 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss) | | | (93,102,518 | ) | | | (67,735,590 | ) | | | (51,911 | ) | | | 796,559 | | | | (5,683,002 | ) | | | (145,004 | ) | | | (1,760,143 | ) | | | 10,628,668 | | | | 2,651,449 | | | | 14,411 | | | | (154,387,081 | ) | Financing income | | | 25,852,078 | | | | 2,789,535 | | | | — | | | | 43,690 | | | | 37 | | | | 3,503 | | | | 7,728 | | | | 1,147,870 | | | | 110,816,691 | | | | (125,670,273 | ) | | | 14,990,859 | | Financing cost | | | (90,822,360 | ) | | | (13,738,104 | ) | | | 2,110 | | | | (95,280 | ) | | | (61,153 | ) | | | — | | | | — | | | | (1,299,580 | ) | | | (87,289,616 | ) | | | 125,530,390 | | | | (67,773,593 | ) | Derivative financial instruments (cost) income, net | | | — | | | | 6,463 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,347,323 | | | | (22,803,663 | ) | | | — | | | | (21,449,877 | ) | Foreign exchange (loss), net | | | (132,165,427 | ) | | | (7,364,486 | ) | | | (7,509 | ) | | | (92,046 | ) | | | (11,090 | ) | | | (3,600 | ) | | | (2,802 | ) | | | (49,190 | ) | | | (15,069,424 | ) | | | — | | | | (154,765,574 | ) | (Loss) profit sharing in joint ventures and associates | | | (473,082 | ) | | | 671,868 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,056,259 | | | | (749,900,890 | ) | | | 749,963,960 | | | | 2,318,115 | | Taxes, duties and other | | | 376,682,705 | | | | 1,839,021 | | | | — | | | | 197,491 | | | | (2,069,848 | ) | | | — | | | | — | | | | 5,134,176 | | | | (50,283,298 | ) | | | — | | | | 331,500,247 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income | | | (667,394,014 | ) | | | (87,209,335 | ) | | | (57,310 | ) | | | 455,432 | | | | (3,685,360 | ) | | | (145,101 | ) | | | (1,755,217 | ) | | | 8,697,174 | | | | (711,312,155 | ) | | | 749,838,488 | | | | (712,567,398 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total current assets | | | 709,252,019 | | | | 313,801,630 | | | | 655,239 | | | | 2,171,717 | | | | 49,162,929 | | | | 1,594,643 | | | | 4,988,511 | | | | 73,116,155 | | | | 275,582,816 | | | | (1,163,125,162 | ) | | | 267,200,497 | | Investments in joint ventures and associates | | | 919,654 | | | | 6,687,977 | | | | — | | | | — | | | | — | | | | 8,500 | | | | — | | | | 11,845,489 | | | | (242,233,405 | ) | | | 246,937,384 | | | | 24,165,599 | | Wells, pipelines, properties, plant and equipment, net | | | 966,144,619 | | | | 246,463,069 | | | | — | | | | 22,647,454 | | | | 58,078,603 | | | | 7,405,969 | | | | 18,480,684 | | | | 3,045,704 | | | | 22,217,529 | | | | — | | | | 1,344,483,631 | | Total assets | | | 1,698,909,240 | | | | 567,486,579 | | | | 655,240 | | | | 24,917,981 | | | | 111,307,038 | | | | 9,034,376 | | | | 23,705,118 | | | | 93,266,620 | | | | 1,443,189,885 | | | | (2,196,817,877 | ) | | | 1,775,654,200 | | Total current liabilities | | | 278,507,394 | | | | 104,569,842 | | | | 469,524 | | | | 1,981,652 | | | | 14,698,159 | | | | 1,486,468 | | | | 4,534,980 | | | | 34,749,438 | | | | 1,157,183,570 | | | | (1,154,773,306 | ) | | | 443,407,721 | | Long-term debt | | | 1,252,239,594 | | | | 16,707,005 | | | | — | | | | 12,031,849 | | | | 4,850,905 | | | | — | | | | — | | | | 3,607,840 | | | | 1,285,676,066 | | | | (1,274,240,092 | ) | | | 1,300,873,167 | | Employee benefits | | | 379,150,943 | | | | 609,492,623 | | | | 61,171 | | | | 417,817 | | | | 368,036 | | | | 12,533 | | | | 3,611 | | | | (59,581 | ) | | | 289,938,288 | | | | — | | | | 1,279,385,441 | | Total liabilities | | | 1,985,557,185 | | | | 735,280,560 | | | | 530,696 | | | | 14,431,318 | | | | 19,917,100 | | | | 1,499,001 | | | | 4,538,591 | | | | 41,420,792 | | | | 2,747,910,113 | | | | (2,443,755,258 | ) | | | 3,107,330,098 | | Equity (deficit), net | | | (286,647,945 | ) | | | (167,793,981 | ) | | | 124,544 | | | | 10,486,663 | | | | 91,389,938 | | | | 7,535,375 | | | | 19,166,527 | | | | 51,845,828 | | | | (1,304,720,228 | ) | | | 246,937,381 | | | | (1,331,675,898 | ) | Depreciation and amortization | | | 144,567,149 | | | | 20,916,796 | | | | — | | | | 612,741 | | | | 337,364 | | | | 158,505 | | | | 442,504 | | | | 84,493 | | | | 831,698 | | | | — | | | | 167,951,250 | | Net periodic cost of employee benefits | | | 23,608,485 | | | | 21,392,600 | | | | (298 | ) | | | — | | | | (310 | ) | | | — | | | | — | | | | (119,819 | ) | | | 17,668,484 | | | | — | | | | 62,549,142 | | Acquisition of wells, pipelines, properties, plant and equipment | | | 184,786,051 | | | | 68,935,841 | | | | — | | | | — | | | | 1,544,224 | | | | 320,762 | | | | 1,882,108 | | | | 677,314 | | | | 6,711,511 | | | | — | | | | 264,857,811 | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
PEMEX’s management measures the performance of the segments based on operating income and net segment income before elimination of unrealized intersegment gain (loss), as well as by analyzing the impact of the results of each segment onNotes to the consolidated financial statements. For certain of the itemsstatements
(Figures stated in these consolidated financial statements to conform 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:thousands, except as noted) The following tables present accounting reconciliations between individual and consolidated information.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of/for the year ended December 31, 2017 | | 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. 762,637,362 | | | | 1,015,157,118 | | | | 448,988 | | | | 6,679,132 | | | | 74,386,812 | | | | 4,795,196 | | | | 14,214,138 | | | | 1,047,874,453 | | | | 83,017,684 | | Less unrealized intersegment sales | | | — | | | | (1,223,752 | ) | | | — | | | | (3,236,935 | ) | | | — | | | | (26,886 | ) | | | — | | | | (75,530 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated sales | | | Ps. 762,637,362 | | | | 1,013,933,366 | | | | 448,988 | | | | 3,442,197 | | | | 74,386,812 | | | | 4,768,310 | | | | 14,214,138 | | | | 1,047,798,923 | | | | 83,017,684 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | By segment | | | Ps. 194,814,292 | | | | (59,989,652 | ) | | | (72,358 | ) | | | 882,692 | | | | (61,696,313 | ) | | | (7,148,431 | ) | | | (4,698,838 | ) | | | 14,490,017 | | | | (21,628,448 | ) | Less unrealized intersegment sales | | | — | | | | (1,223,752 | ) | | | — | | | | (3,236,935 | ) | | | — | | | | (26,886 | ) | | | — | | | | (75,530 | ) | | | — | | Less unrealized gain due to production cost valuation of inventory | | | (496,329 | ) | | | (9,017,791 | ) | | | — | | | | 2,932,663 | | | | — | | | | — | | | | — | | | | (246,594 | ) | | | — | | Less capitalized refined products | | | (574,381 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Less amortization of capitalized interest | | | 118,981 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Less depreciation and impairment of revaluated transferred assets | | | — | | | | — | | | | — | | | | 1,475,376 | | | | 53,488,972 | | | | 3,134,974 | | | | 3,223,449 | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated operating income (loss) | | | Ps. 193,862,563 | | | | (70,231,195 | ) | | | (72,358 | ) | | | 2,053,796 | | | | (8,207,341 | ) | | | (4,040,343 | ) | | | (1,475,389 | ) | | | 14,167,893 | | | | (21,628,448 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | By segment | | | Ps. (150,388,699 | ) | | | (44,599,751 | ) | | | (358,862 | ) | | | 345,913 | | | | (40,300,942 | ) | | | (8,616,130 | ) | | | (5,866,542 | ) | | | 5,200,268 | | | | (292,266,613 | ) | Less unrealized intersegment sales | | | — | | | | (1,223,752 | ) | | | — | | | | (3,236,935 | ) | | | — | | | | (26,886 | ) | | | — | | | | (75,530 | ) | | | — | | Less unrealized gain due to production cost valuation of inventory | | | (496,329 | ) | | | (9,017,791 | ) | | | — | | | | 2,932,663 | | | | — | | | | — | | | | — | | | | (246,594 | ) | | | — | | Less capitalized refined products | | | (574,381 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Less equity method elimination | | | 303,044 | | | | (945,369 | ) | | | 266,769 | | | | — | | | | 333 | | | | 1,238,018 | | | | 1,201,367 | | | | 7,166,957 | | | | — | | Less amortization of capitalized interest | | | 118,981 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Less depreciation and impairment of revaluated transferred assets, net of deferred taxes | | | — | | | | — | | | | — | | | | 1,223,919 | | | | 39,466,660 | | | | 3,134,974 | | | | 3,223,449 | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated net (loss) income | | | Ps. (151,037,384 | ) | | | (55,786,663 | ) | | | (92,093 | ) | | | 1,265,560 | | | | (833,949 | ) | | | (4,270,024 | ) | | | (1,441,726 | ) | | | 12,045,101 | | | | (292,266,613 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of/for the year ended December 31, 2017 | | Exploration and Production | | | Industrial Transformation | | | Cogeneration and Services | | | Drilling and Services | | | Logistics | | | Fertilizers | | | Ethylene | | | Trading Companies | | | Corporate and Other Operating Subsidiary Companies | | Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | By segment | | | Ps. 2,084,553,745 | | | | 912,770,881 | | | | 179,807 | | | | 28,256,876 | | | | 276,537,764 | | | | 17,689,305 | | | | 35,498,783 | | | | 195,538,239 | | | | 2,111,740,735 | | Less unrealized intersegment sales | | | 858,094 | | | | (5,389,977 | ) | | | — | | | | — | | | | 7,183 | | | | — | | | | (5,303 | ) | | | (408,059 | ) | | | — | | Less unrealized gain due to production cost valuation of inventory | | | (3,657,242 | ) | | | (42,379,229 | ) | | | — | | | | — | | | | — | | | | (26,886 | ) | | | — | | | | (7,163,664 | ) | | | — | | Less capitalized refined products | | | (574,381 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Less depreciation and impairment of revaluated transferred assets, net of deferred taxes | | | (22,503,168 | ) | | | — | | | | — | | | | (2,036,128 | ) | | | (84,557,831 | ) | | | (2,165,068 | ) | | | (9,522,686 | ) | | | (424,849 | ) | | | — | | Less equity method for unrealized profits | | | (759,624 | ) | | | (7,813,492 | ) | | | — | | | | — | | | | (91,123 | ) | | | (6,573,895 | ) | | | (2,828,749 | ) | | | (732,768 | ) | | | — | | Less amortization of capitalized interest | | | 118,981 | | | | 8,123 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated assets | | | Ps. 2,058,036,405 | | | | 857,196,306 | | | | 179,807 | | | | 26,220,748 | | | | 191,895,993 | | | | 8,923,456 | | | | 23,142,045 | | | | 186,808,899 | | | | 2,111,740,735 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | By segment | | | Ps. 2,570,412,398 | | | | 1,081,528,677 | | | | 531,580 | | | | 13,186,297 | | | | 56,706,251 | | | | 6,556,050 | | | | 2,308,890 | | | | 116,648,398 | | | | 3,587,988,972 | | Less unrealized intersegment sales | | | — | | | | (4,419,929 | ) | | | — | | | | 700,127 | | | | — | | | | — | | | | — | | | | 194,483 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated liabilities | | | Ps. 2,570,412,398 | | | | 1,077,108,748 | | | | 531,580 | | | | 13,886,424 | | | | 56,706,251 | | | | 6,556,050 | | | | 2,308,890 | | | | 116,842,881 | | | | 3,587,988,972 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of/for the year ended December 31, 2016 | | Exploration and Production | | | Industrial Transformation | | | Cogeneration and Services | | | Drilling and Services | | | Logistics | | | Fertilizers | | | Ethylene | | | Trading Companies | | | Corporate and Other Operating Subsidiary Companies | | 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 | | | | 53,803,095 | | 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 | | | | 53,803,095 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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 | | | | (14,909,525 | ) | 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 and impairment 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 | | | | (14,909,525 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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 | | | | (194,251,296 | ) | 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 | | | | (194,251,296 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of/for the year ended December 31, 2016 | | Exploration and Production | | | Industrial Transformation | | | Cogeneration and Services | | | Drilling and Services | | | Logistics | | | Fertilizers | | | Ethylene | | | Trading Companies | | | Corporate and Other Operating Subsidiary Companies | | Assets: By segment | | | Ps.2,232,052,453 | | | | 1,151,907,566 | | | | 425,141 | | | | 30,990,147 | | | | 254,615,026 | | | | 10,421,225 | | | | 43,067,636 | | | | 170,782,928 | | | | 2,359,024,145 | | Less unrealized intersegment sales | | | 483,230 | | | | (4,158,101 | ) | | | — | | | | — | | | | — | | | | — | | | | (5,304 | ) | | | (332,529 | ) | | | — | | Less unrealized gain due to production cost valuation of inventory | | | (3,246,782 | ) | | | (33,361,438 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (5,688,341 | ) | | | — | | Less capitalized refined products | | | (1,661,986 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Less depreciation of revalued assets | | | (20,585,300 | ) | | | — | | | | — | | | | (3,316,549 | ) | | | (123,790,105 | ) | | | (5,300,044 | ) | | | (12,746,136 | ) | | | (652 | ) | | | — | | Less equity method for unrealized profits | | | (742,055 | ) | | | (7,293,447 | ) | | | (36,718 | ) | | | — | | | | — | | | | 4,435,288 | | | | (4,308,877 | ) | | | (8,960,344 | ) | | | — | | Less amortization of capitalized interest | | | 118,981 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (424,198 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated assets | | | Ps.2,206,418,541 | | | | 1,107,094,580 | | | | 388,423 | | | | 27,673,598 | | | | 130,824,921 | | | | 9,556,469 | | | | 26,007,319 | | | | 155,376,864 | | | | 2,359,024,145 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | By segment | | | Ps.2,533,221,665 | | | | 1,282,558,220 | | | | 664,829 | | | | 16,457,347 | | | | 29,336,417 | | | | 3,015,450 | | | | 3,901,722 | | | | 85,392,123 | | | | 3,553,477,189 | | Less unrealized intersegment sales | | | — | | | | (4,419,930 | ) | | | — | | | | 395,855 | | | | — | | | | — | | | | — | | | | 1,493,766 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated liabilities | | | Ps.2,533,221,665 | | | | 1,278,138,290 | | | | 664,829 | | | | 16,853,202 | | | | 29,336,417 | | | | 3,015,450 | | | | 3,901,722 | | | | 86,885,889 | | | | 3,553,477,189 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of/for the year ended December 31, 2015 | | Exploration and Production | | | Industrial Transformation | | | Cogeneration and Services | | | Drilling and Services | | | Logistics | | | Fertilizers | | | Ethylene | | | Trading Companies | | | Corporate and Other Operating Subsidiary Companies | | Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | By segment | | Ps. | 690,642,133 | | | | 874,630,488 | | | | — | | | | 1,511,970 | | | | 10,954,841 | | | | 1,704,684 | | | | 5,048,600 | | | | 761,213,475 | | | | 18,801,547 | | Less unrealized intersegment sales | | | — | | | | (597,212 | ) | | | — | | | | — | | | | — | | | | — | | | | (5,304 | ) | | | (200,197 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated sales | | Ps. | 690,642,133 | | | | 874,033,276 | | | | — | | | | 1,511,970 | | | | 10,954,841 | | | | 1,704,684 | | | | 5,043,296 | | | | 761,013,278 | | | | 18,801,547 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | By segment | | Ps. | (89,473,302 | ) | | | (88,819,558 | ) | | | (51,911 | ) | | | 700,748 | | | | (6,875,252 | ) | | | (262,145 | ) | | | (2,288,747 | ) | | | 10,334,138 | | | | 2,651,449 | | Less unrealized intersegment sales | | | — | | | | (597,212 | ) | | | — | | | | — | | | | — | | | | — | | | | (5,304 | ) | | | (200,197 | ) | | | — | | Less unrealized gain due to production cost valuation of inventory | | | (251,995 | ) | | | 21,681,180 | | | | — | | | | — | | | | — | | | | — | | | | 2,163 | | | | 494,727 | | | | — | | Less capitalized refined products | | | (3,496,201 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Less amortization of capitalized interest | | | 118,980 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Less depreciation and impairment of revaluated assets | | | — | | | | — | | | | — | | | | 95,811 | | | | 1,192,250 | | | | 117,141 | | | | 531,745 | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated operating (loss) income | | Ps. | (93,102,518 | ) | | | (67,735,590 | ) | | | (51,911 | ) | | | 796,559 | | | | (5,683,002 | ) | | | (145,004 | ) | | | (1,760,143 | ) | | | 10,628,668 | | | | 2,651,449 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | By segment | | Ps. | (663,719,119 | ) | | | (107,164,261 | ) | | | (57,310 | ) | | | 359,621 | | | | (4,877,610 | ) | | | (262,242 | ) | | | (2,314,774 | ) | | | 8,402,644 | | | | (711,312,155 | ) | Less unrealized intersegment sales | | | — | | | | (597,212 | ) | | | — | | | | — | | | | — | | | | — | | | | (5,304 | ) | | | (200,197 | ) | | | — | | Less unrealized gain due to production cost valuation of inventory | | | (251,995 | ) | | | 21,681,180 | | | | — | | | | — | | | | — | | | | — | | | | 2,163 | | | | 494,727 | | | | — | | Less capitalized refined products | | | (3,496,201 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | Less equity method elimination | | | (45,679 | ) | | | (1,129,042 | ) | | | — | | | | — | | | | — | | | | — | | | | 30,953 | | | | — | | | | — | | Less amortization of capitalized interest | | | 118,980 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Less depreciation of revaluated assets | | | — | | | | — | | | | — | | | | 95,811 | | | | 1,192,250 | | | | 117,141 | | | | 531,745 | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total consolidated net (loss) income | | Ps. | (667,394,014 | ) | | | (87,209,335 | ) | | | (57,310 | ) | | | 455,432 | | | | (3,685,360 | ) | | | (145,101 | ) | | | (1,755,217 | ) | | | 8,697,174 | | | | (711,312,155 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Supplemental geographic information:information – | | | | | | | | | For the years ended December 31, | | | | For the years ended December 31, | | | 2020 | | | 2019 | | | 2018 | | | | 2017 | | | 2016 | | | 2015 | | | Domestic sales | | Ps. | 877,360,038 | | | Ps. | 670,000,473 | | | Ps. | 746,235,912 | | | Ps. | 503,712,031 | | | Ps. | 807,020,214 | | | Ps. | 980,559,538 | | | | | | | | | | | | | | | | | | | | | Export sales: | | | | | | | | | | | | | United States | | | 302,912,999 | | | | 221,954,461 | | | | 266,826,499 | | | | 304,344,028 | | | | 372,134,617 | | | | 434,838,159 | | Canada, Central and South America | | | 13,943,080 | | | | 14,058,897 | | | | 11,027,813 | | | | 2,105,703 | | | | 3,102,066 | | | | 11,274,714 | | Europe | | | 71,470,613 | | | | 64,348,997 | | | | 58,707,787 | | | | 45,254,008 | | | | 131,498,445 | | | | 158,900,339 | | Other | | | 120,212,420 | | | | 94,755,762 | | | | 70,652,346 | | | | 93,530,590 | | | | 79,107,163 | | | | 86,873,398 | | | | | | | | | | | | | Total export sales | | | 508,539,112 | | | | 395,118,117 | | | | 407,214,445 | | | | 445,234,329 | | | | 585,842,291 | | | | 691,886,610 | | | | | | | | | | | | | | | | | | | | | Services income | | | 11,130,569 | | | | 8,974,642 | | | | 8,310,035 | | | Services income* | | | | 4,715,484 | | | | 9,108,680 | | | | 8,673,002 | | | | | | | | | | | | | | | | | | | | | Total sales | | Ps. | 1,397,029,719 | | | Ps. | 1,074,093,232 | | | Ps. | 1,161,760,392 | | | Ps. | 953,661,844 | | | Ps. | 1,401,971,185 | | | Ps. | 1,681,119,150 | | | | | | | | | | | | | | | | | | | | |
* | Services income as of December 31, 2020, 2019 and 2018 represent approximately 97%, 80% and 63%, from domestic sales, respectively. |
PEMEX does not have significant long-lived assets outside of Mexico. The following table shows incomeIncome by product:product –
| | | | | | | | | | | | | | | For the years ended December 31, | | | | 2017 | | | 2016 | | | 2015 | | Domestic sales | | | | | | | | | | | | | Refined petroleum products and derivatives (primarily gasolines) | | | Ps. 784,048,048 | | | | Ps. 578,718,674 | | | | Ps. 660,573,780 | | Gas | | | 70,930,855 | | | | 59,648,576 | | | | 54,497,824 | | Petrochemical products | | | 22,381,135 | | | | 31,633,223 | | | | 31,164,308 | | | | | | | | | | | | | | | Total domestic sales | | | Ps. 877,360,038 | | | | Ps. 670,000,473 | | | | Ps. 746,235,912 | | | | | | | | | | | | | | | Export sales | | | | | | | | | | | | | Crude oil | | | Ps. 380,461,147 | | | | Ps. 288,625,794 | | | | Ps. 288,170,451 | | Refined petroleum products and derivatives (primarily gasolines) | | | 109,615,457 | | | | 92,705,248 | | | | 118,129,615 | | Gas | | | 21,675 | | | | 20,995 | | | | 27,283 | | Petrochemical products | | | 18,440,833 | | | | 13,766,080 | | | | 887,096 | | | | | | | | | | | | | | | Total export sales | | | Ps. 508,539,112 | | | | Ps. 395,118,117 | | | | Ps. 407,214,445 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | For the years ended December 31, | | | | 2020 | | | 2019 | | | 2018 | | Domestic sales | | | | | | | | | | | | | Refined petroleum products and derivatives (primarily gasolines) | | Ps. | 409,240,569 | | | Ps. | 725,759,040 | | | Ps. | 850,342,124 | | Gas | | | 79,176,837 | | | | 66,303,063 | | | | 110,219,691 | | Petrochemical products | | | 15,294,625 | | | | 14,958,111 | | | | 19,997,723 | | Total domestic sales | | Ps. | 503,712,031 | | | Ps. | 807,020,214 | | | Ps. | 980,559,538 | | | | | | | | | | | | | | | Export sales | | | | | | | | | | | | | Crude oil | | Ps. | 301,199,114 | | | Ps. | 408,771,392 | | | Ps. | 482,259,045 | | Refined petroleum products and derivatives (primarily gasolines) | | | 107,391,773 | | | | 118,495,443 | | | | 167,796,526 | | Gas | | | 32,192,334 | | | | 53,353,075 | | | | 34,446,277 | | Petrochemical products | | | 4,451,108 | | | | 5,222,381 | | | | 7,384,762 | | | | | | | | | | | | | | | Total export sales | | Ps. | 445,234,329 | | | Ps. | 585,842,291 | | | Ps. | 691,886,610 | | | | | | | | | | | | | | |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) NOTE 6. CASH, CASH EQUIVALENTS AND RESTRICTED CASH7. REVENUE a. As of December 31, 20172020, 2019 and 2016,2018, the revenues were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | For the year ended December 31, | | Exploration and Production(1) | | | Industrial Transformation (2)(3) | | | Logistics | | | Fertilizers (4) | | | Trading Companies | | | Corporate and Other Operating Subsidiary Companies | | | Total | | | | | | | | | | Geographical market 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | United States | | | 171,640,991 | | | | — | | | | — | | | | — | | | | 131,653,920 | | | | 1,049,117 | | | | 304,344,028 | | Other | | | 85,271,096 | | | | — | | | | — | | | | — | | | | 8,259,494 | | | | 2,124,601 | | | | 95,655,191 | | Europe | | | 44,287,027 | | | | — | | | | — | | | | — | | | | 966,982 | | | | — | | | | 45,254,009 | | Local | | | 327,652 | | | | 477,920,252 | | | | 4,099,000 | | | | 1,516,383 | | | | 19,135,480 | | | | 5,409,849 | | | | 508,408,616 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 301,526,766 | | | | 477,920,252 | | | | 4,099,000 | | | | 1,516,383 | | | | 160,015,876 | | | | 8,583,567 | | | | 953,661,844 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | United States | | | 226,689,583 | | | | — | | | | — | | | | — | | | | 144,578,641 | | | | 866,393 | | | | 372,134,617 | | Other | | | 57,106,954 | | | | — | | | | — | | | | — | | | | 21,001,222 | | | | 4,101,054 | | | | 82,209,230 | | Europe | | | 124,974,855 | | | | — | | | | — | | | | — | | | | 6,409,388 | | | | 1,903,942 | | | | 133,288,185 | | Local | | | 761,770 | | | | 799,255,886 | | | | 4,663,770 | | | | 1,635,153 | | | | 3,587,920 | | | | 4,434,654 | | | | 814,339,153 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 409,533,162 | | | | 799,255,886 | | | | 4,663,770 | | | | 1,635,153 | | | | 175,577,171 | | | | 11,306,043 | | | | 1,401,971,185 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | United States | | | 276,785,650 | | | | — | | | | — | | | | — | | | | 158,713,210 | | | | — | | | | 435,498,860 | | Other | | | 51,708,232 | | | | — | | | | — | | | | — | | | | 40,743,480 | | | | 5,660,310 | | | | 98,112,022 | | Europe | | | 153,765,163 | | | | — | | | | — | | | | — | | | | 4,647,265 | | | | 2,905,858 | | | | 161,318,286 | | Local | | | 225,471 | | | | 973,926,858 | | | | 4,708,217 | | | | 2,938,166 | | | | 64,037 | | | | 4,327,233 | | | | 986,189,982 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 482,484,516 | | | | 973,926,858 | | | | 4,708,217 | | | | 2,938,166 | | | | 204,167,992 | | | | 12,893,401 | | | | 1,681,119,150 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Major products and services 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Crude oil | | | 301,199,114 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 301,199,114 | | Gas | | | 194,337 | | | | 60,076,159 | | | | — | | | | — | | | | 51,098,675 | | | | — | | | | 111,369,171 | | Refined petroleum products | | | — | | | | 409,240,569 | | | | — | | | | — | | | | 107,391,773 | | | | — | | | | 516,632,342 | | Other | | | — | | | | 8,412,776 | | | | — | | | | 1,515,464 | | | | 1,296,288 | | | | 8,521,205 | | | | 19,745,733 | |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Services | | | 133,315 | | | | 190,748 | | | | 4,099,000 | | | | 919 | | | | 229,140 | | | | 62,362 | | | | 4,715,484 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 301,526,766 | | | | 477,920,252 | | | | 4,099,000 | | | | 1,516,383 | | | | 160,015,876 | | | | 8,583,567 | | | | 953,661,844 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Crude oil | | | 408,771,392 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 408,771,392 | | Gas | | | 288,446 | | | | 66,014,617 | | | | — | | | | — | | | | 53,353,075 | | | | — | | | | 119,656,138 | | Refined petroleum products | | | — | | | | 722,239,101 | | | | — | | | | — | | | | 121,028,417 | | | | 986,965 | | | | 844,254,483 | | Other | | | — | | | | 8,913,397 | | | | — | | | | 1,634,300 | | | | 1,127,697 | | | | 8,505,098 | | | | 20,180,492 | | Services | | | 473,324 | | | | 2,088,771 | | | | 4,663,770 | | | | 853 | | | | 67,982 | | | | 1,813,980 | | | | 9,108,680 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 409,533,162 | | | | 799,255,886 | | | | 4,663,770 | | | | 1,635,153 | | | | 175,577,171 | | | | 11,306,043 | | | | 1,401,971,185 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Crude oil | | | 482,259,045 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 482,259,045 | | Gas | | | 3,586 | | | | 110,216,105 | | | | — | | | | — | | | | 34,446,277 | | | | — | | | | 144,665,968 | | Refined petroleum products | | | — | | | | 850,342,124 | | | | — | | | | — | | | | 167,796,526 | | | | — | | | | 1,018,138,650 | | Other | | | — | | | | 12,809,114 | | | | — | | | | 2,933,424 | | | | 1,861,151 | | | | 9,778,796 | | | | 27,382,485 | | Services | | | 221,885 | | | | 559,515 | | | | 4,708,217 | | | | 4,742 | | | | 64,038 | | | | 3,114,605 | | | | 8,673,002 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 482,484,516 | | | | 973,926,858 | | | | 4,708,217 | | | | 2,938,166 | | | | 204,167,992 | | | | 12,893,401 | | | | 1,681,119,150 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Timing of revenue recognition 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Products transferred at a point in time | | | 301,526,766 | | | | 477,729,504 | | | | 4,099,000 | | | | 1,515,464 | | | | 159,786,736 | | | | 8,521,205 | | | | 953,178,675 | | Products and services transferred over the time | | | — | | | | 190,748 | | | | — | | | | 919 | | | | 229,140 | | | | 62,362 | | | | 483,169 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 301,526,766 | | | | 477,920,252 | | | | 4,099,000 | | | | 1,516,383 | | | | 160,015,876 | | | | 8,583,567 | | | | 953,661,844 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Products transferred at a point in time | | | 409,059,838 | | | | 797,167,115 | | | | 4,663,770 | | | | 1,634,300 | | | | 175,509,189 | | | | 9,492,063 | | | | 1,397,526,275 | | Products and services transferred over the time | | | 473,324 | | | | 2,088,771 | | | | — | | | | 853 | | | | 67,982 | | | | 1,813,980 | | | | 4,444,910 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 409,533,162 | | | | 799,255,886 | | | | 4,663,770 | | | | 1,635,153 | | | | 175,577,171 | | | | 11,306,043 | | | | 1,401,971,185 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Products transferred at a point in time | | | 482,262,631 | | | | 973,367,343 | | | | 4,708,217 | | | | 2,933,424 | | | | 204,103,954 | | | | 9,778,796 | | | | 1,677,154,365 | | Products and services transferred over the time | | | 221,885 | | | | 559,515 | | | | — | | | | 4,742 | | | | 64,038 | | | | 3,114,605 | | | | 3,964,785 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 482,484,516 | | | | 973,926,858 | | | | 4,708,217 | | | | 2,938,166 | | | | 204,167,992 | | | | 12,893,401 | | | | 1,681,119,150 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | On July 1, 2019 Pemex Drilling and Services was merged into Pemex Exploration and Production. For comparison purposes all operations for periods prior to the merger are presented in the Pemex Exploration and Production segment. |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) (2) | On July 1, 2019 Pemex Ethylene was merged into Pemex Industrial Transformation. For comparison purposes all operations for periods prior to the merger are presented in the Pemex Industrial Transformation segment. |
(3) | Pemex Cogeneration and Services was liquidated on July 27, 2018. Except for certain expenses incurred in the liquidation, all operations were transferred to Pemex Industrial Transformation. For comparison purposes all operations for periods prior to the merger are presented in the Pemex Industrial Transformation segment. |
(4) | Merged as of January 1, 2021, see Note 28-E. |
Nature, performance obligations and timing of revenue recognition- Revenue is measured based on the consideration specified in a contract with a customer. PEMEX recognizes revenue when it transfers control over a good or service to a customer. The following table provides information about the nature and timing of the satisfaction of performance obligations in contracts with customers, including significant payment terms and the related revenue. | | | | | Products / services | | Nature, performance obligations | | Timing of revenue recognition | Crude oil sales | | Export sales of crude oil are based on delivery terms established in contracts or orders. All sales are performed by the Free on Board International commercial term (“FOB” Incoterm). Crude oil sale contracts consider possible customers’ claims due to product quality, volume or delays in boarding, which are estimated in the price of the transaction. For orders that have variations in price, revenue is adjusted on the closing date of each period. The subsequent variations in the fair value at the different reporting dates are recognized according to IFRS 9. The price of the product is determined based on a market components formula and the sale of crude oil. | | Revenue is recognized at a point in time when control of the crude oil has transferred to the customer, which occurs when the product is delivered at the point of shipping. Invoices are generated at that time and are mostly payable within the deadlines established in contracts or orders. Payments in respect of crude oil sold and delivered shall be made within 30 days after the date of the bill of lading therefor. For international market crude oil sales, revenue is recognized with a provisional price, which undergoes subsequent adjustments until the product has arrived at the port of destination. There may be a period of up to 2 months in determining the final sale price, such as in the case of sales to some regions. Revenue is measured initially estimating variables such as quality and volume claims, delays in boarding etc. | Sale of petroleum products | | For all petroleum products, there is only one performance obligation that includes transport and handling services to the point of delivery. The price is determined based on the price at the point of delivery, adding the price of the services rendered (freight, handling of jet fuel, etc.) with the provisions and terms established by the Comisión Reguladora de Energía (Energy Regulatory Commission or “CRE”). There are penalties for delivery failures and/or payment obligations, as well as quality and volume claims, which are known days after the transaction. | | Revenue is recognized at a point in time when control is transferred to the customer, which occurs either at the point of shipping or when it is delivered at the customer’s facilities. Therefore, transportation fees can be included in the price of sale of the product and are considered part of a single performance obligation since transportation is rendered before control is transferred. Revenue is initially measured by estimating variables such as quality and volume claims, etc. Invoices are usually payable within 30 days. |
| | | | | Sales of natural gas | | There is only one performance obligation that includes transport and handling services to the point of delivery. The transaction price is established at the time of sale, including the estimation of variable considerations such as capacity, penalties, adjustments for quality or volume claims, and incentives for the purchase of products; which are known days after the transaction. Such variable consideration is recognized to the extent that it is probable that it will not be reversed in a future period. | | Revenue is recognized at a point in time when control is transferred to the customer, which occurs when it is delivered at the customer’s facilities. Therefore, transportation fees can be included in the price of sale of the product and are considered part of a single performance obligation since transportation is rendered before control is transferred. Revenue initially is measured estimating variables as quality and volume claims, etc. Invoices are usually payable within 30 days. | Services | | In cases where within the same service order there are transportation and storage services, there could exist more than one performance obligation, depending on the term of the service. Price is not distributed when there is a performance obligation, except, when there is more than one performance obligation, in which case, the price of the transaction will be assigned according to the service price established in the service order. When there is a performance obligation, the price is not distributed, but if it is considered that there is more than one performance obligation, the price of the transaction is considered based on the prices established in the service orders and which also include penalties such as quality and volume claims. | | Income is recognized over time as the service is rendered. Invoices are usually payable within 22 days. | Other products | | There is only one performance obligation that includes transportation for delivery to destination. The sale and delivery of the product are made at the same time and because they are FOB, transportation fees are included in the price of sale of the product. The transaction price is established at the time of sale, including the estimation of variable considerations such as capacity, penalties, extraordinary sales not included in contracts, adjustments for quality or volume claims, and incentives for the purchase of products; which are known days after the transaction. | | The price of the product is estimated on the date of sale and considers variables such as quality and volume claims, etc. Invoices are usually payable within 30 days. |
B. | Accounts receivable in the statement of financial position |
As of December 31, 2020 and 2019, PEMEX had accounts receivable derived from customer contracts in the amounts of Ps. 68,382,413 and Ps. 89,263,870, respectively (see Note 10). As of December 31, 2020 and 2019, advance of customers was Ps. 8,548,260 and Ps. 6,627,033, respectively. The amount of Ps. 6,627,033 and Ps. 6,154,333 included in advance from customers as of December 31, 2019 and 2018, were recognized as revenue in 2020 and 2019, respectively. i. | Significant financial component, less than one year |
PEMEX does not need to adjust the amount committed in consideration for goods and services to account for the effects of a significant financing component, since the transfer and the time of payment of a good or service committed to the customer is less than one year. PEMEX applied the practical expedient, so disclosure about remaining performance obligations that conclude in less than one year is not needed. When PEMEX is entitled to consideration for an amount that directly corresponds to the value of the performance that PEMEX has completed, it may recognize an income from ordinary activities for the amount to which it has the right to invoice. D. | COVID-19 pandemic impacts |
Decline in international crude oil prices and other impacts of the Covid-19 pandemic On March 6, 2020, the Organization of the Petroleum Exporting Countries (“OPEC”), led by Saudi Arabia, Russia and other groups of petroleum producers, did not come to an agreement to reduce crude oil production in order to support crude oil prices, which resulted in a significant drop in global crude oil prices. On March 11, 2020, the World Health Organization declared the Covid-19 outbreak a pandemic. The Covid-19 pandemic has resulted in numerous deaths and governments across the world have instituted measures to address the pandemic, including mandatory quarantines, social distancing guidelines, travel restrictions and declaration of health emergencies. The effects of the Covid-19 pandemic have led to a worldwide economic slowdown, and as a result a decrease in global demand for crude oil and derivatives. In order to address the drop in crude oil prices that began in March 2020, on April 12, 2020, OPEC and other non-OPEC oil exporting countries, including, among others, Mexico and Russia, reached an agreement to reduce world crude oil supply. Pursuant to this agreement, these countries, which are known as OPEC+, agreed to reduce their overall crude oil production by 9.7 million barrels per day from May 1, 2020 through June 30, 2020, by 7.7 million barrels per day from July 1, 2020 through December 31, 2020 and by 5.8 million barrels per day from January 1, 2021 through April 30, 2022. In particular, Mexico agreed to reduce its crude oil production by 100,000 barrels per day for a period of two months beginning on May 1, 2020. During May, June, July, August, September, October and November 2020, PEMEX decreased its crude oil production to 1,676.6, 1,654.7, 1,647.3, 1,687.9, 1,697.8, 1,680.2 and 1,688.8 thousand barrels per day, respectively. On April 20, 2020, Mexican crude oil experienced an unprecedented drop below U.S. $0.00 to negative U.S. $2.37 per barrel. This drastic drop in price was due to low oil demand as a result of Covid-19 and the lack of oil storage. As of December 31, 2020, the weighted average Mexican crude oil price was U.S. $47.16 per barrel, a decrease of U.S. $10.52 per barrel as compared to the 2019 weighted average Mexican crude oil export price. Any future decline in international crude oil and natural gas prices will have a similar negative impact on PEMEX’s results of operations and financial condition. PEMEX has been affected by these developments and in order to address these adverse effects on its budget results to comply with its budget financial goal established in the approved budget, PEMEX is taking actions to offset the expected decrease in revenue for the year (see Notes 22 and 28). PEMEX prepared its budget for 2020 based on a Mexican crude oil basket price of U.S. $49.00 per barrel and contracted financial derivative instruments to hedge PEMEX’s risk exposure to declines in the price of Mexican crude oil price, when it falls below the average price of U.S. $49.00 per barrel, up to a floor of U.S. $44.00 per barrel (see Note 18). Despite the presence of Covid-19 in Mexico, PEMEX has continued to develop its hydrocarbon exploration, production and trading activities. In some cases, PEMEX has allowed its personnel to work remotely. The greatest economic impact for PEMEX has been the decline in its domestic sales of petroleum products due to the stoppage of economic activities and the confinement of the population in their homes. Decrease in demand for refined products As a result of the Covid-19 pandemic, the Mexican Government, through the Secretaría de Salud (Mexican Ministry of Health), has implemented actions to protect against Covid-19. Some of these actions consist of, among others, directives to avoid places of work, crowded public areas, public buildings or unnecessary social activities during this time. These preventative measures caused a decrease in demand of certain goods and services, including petroleum products. Primarily as a result of the worldwide economic slowdown and, in particular, the decrease in fuel demand, PEMEX had a 32% decrease in its domestic sales of petroleum products as of December 31, 2020 as compared to 2019. NOTE 8. FINANCIAL INSTRUMENTS A. | Accounting classifications and fair values of financial instruments |
The following tables present information about PEMEX’s carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy, as of December 31, 2020 and 2019. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. Additionally, as of December 31, 2020 and 2019, the disclosure of the fair value of lease liabilities is also not required. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Carrying amount | | | Fair value hierarchy | | | | | | | | As of December 31, 2020 | | FVTPL | | | FVOCI – debt instruments | | | FVOCI – equity instruments | | | Financial assets at amortized cost | | | Other financial liabilities | | | Total carrying amount | | | Level 1 | | | Level 2 | | | Level 3 | | | Total | | | | | | | | | | | | | Financial assets measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Derivative financial instruments | | | 25,947,993 | | | | — | | | | — | | | | — | | | | — | | | | 25,947,993 | | | | — | | | | 25,947,993 | | | | — | | | | 25,947,993 | | Equity instruments(i) | | | — | | | | — | | | | 384,665 | | | | — | | | | — | | | | 384,665 | | | | — | | | | 384,665 | | | | — | | | | 384,665 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 25,947,993 | | | | — | | | | 384,665 | | | | — | | | | — | | | | 26,332,658 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Financial assets not measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | | — | | | | — | | | | — | | | | 39,989,781 | | | | — | | | | 39,989,781 | | | | — | | | | — | | | | — | | | | — | | Customers | | | — | | | | — | | | | — | | | | 68,382,413 | | | | — | | | | 68,382,413 | | | | — | | | | — | | | | — | | | | — | | Other non-financing accounts receivable | | | — | | | | — | | | | — | | | | 1,944,413 | | | | — | | | | 1,944,413 | | | | — | | | | — | | | | — | | | | — | | Officials and employees | | | — | | | | — | | | | — | | | | 3,539,505 | | | | — | | | | 3,539,505 | | | | — | | | | — | | | | — | | | | — | | Sundry debtors | | | — | | | | — | | | | — | | | | 28,076,118 | | | | — | | | | 28,076,118 | | | | — | | | | — | | | | — | | | | — | | Investments in joint ventures and associates | | | — | | | | — | | | | — | | | | 12,015,129 | | | | — | | | | 12,015,129 | | | | — | | | | — | | | | — | | | | — | | Notes receivable | | | — | | | | — | | | | — | | | | 886,827 | | | | — | | | | 886,827 | | | | — | | | | — | | | | — | | | | — | | Government Bonds | | | — | | | | — | | | | — | | | | 129,549,519 | | | | — | | | | 129,549,519 | | | | 129,320,536 | | | | — | | | | — | | | | 129,320,536 | | Other assets | | | — | | | | — | | | | — | | | | 3,824,923 | | | | — | | | | 3,824,923 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | — | | | | — | | | | — | | | | 288,208,618 | | | | — | | | | 288,208,618 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Financial liabilities measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Derivative financial instruments | | | (9,318,015 | ) | | | — | | | | — | | | | — | | | | — | | | | (9,318,015 | ) | | | — | | | | (9,318,015 | ) | | | — | | | | (9,318,015 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | (9,318,015 | ) | | | — | | | | — | | | | — | | | | — | | | | (9,318,015 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Financial liabilities not measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Suppliers | | | — | | | | — | | | | — | | | | — | | | | (281,978,041 | ) | | | (281,978,041 | ) | | | — | | | | — | | | | — | | | | — | | Accounts and accrued expenses payable | | | — | | | | — | | | | — | | | | — | | | | (30,709,497 | ) | | | (30,709,497 | ) | | | — | | | | — | | | | — | | | | — | | Leases | | | — | | | | — | | | | — | | | | — | | | | (63,184,128 | ) | | | (63,184,128 | ) | | | — | | | | — | | | | — | | | | — | | Debt | | | — | | | | — | | | | — | | | | — | | | | (2,258,727,317 | ) | | | (2,258,727,317 | ) | | | — | | | | (2,232,694,117 | ) | | | — | | | | (2,232,694,117 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | — | | | | — | | | | — | | | | — | | | | (2,634,598,983 | ) | | | (2,634,598,983 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(i) | Refers to the participation in TAG Pipelines Sur, S. de R.L. de C.V. |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Carrying amount | | | Fair value hierarchy | | | | | | | | As of December 31, 2019 | | FVTPL | | | FVOCI – debt instruments | | | FVOCI – equity instruments | | | Financial assets at amortized cost | | | Other financial liabilities | | | Total carrying amount | | | Level 1 | | | Level 2 | | | Level 3 | | | Total | | Financial assets measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Derivative financial instruments | | | 11,496,330 | | | | — | | | | — | | | | — | | | | — | | | | 11,496,330 | | | | — | | | | 11,496,330 | | | | — | | | | 11,496,330 | | Equity instruments (i) | | | — | | | | — | | | | 346,563 | | | | — | | | | — | | | | 346,563 | | | | — | | | | 346,563 | | | | — | | | | 346,563 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 11,496,330 | | | | — | | | | 346,563 | | | | — | | | | — | | | | 11,842,893 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Financial assets not measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | | — | | | | — | | | | — | | | | 60,621,631 | | | | — | | | | 60,621,631 | | | | — | | | | — | | | | — | | | | — | | Customers | | | — | | | | — | | | | — | | | | 89,263,870 | | | | — | | | | 89,263,870 | | | | — | | | | — | | | | — | | | | — | | Officials and employees | | | — | | | | — | | | | — | | | | 3,667,242 | | | | — | | | | 3,667,242 | | | | — | | | | — | | | | — | | | | — | | Sundry debtors | | | — | | | | — | | | | — | | | | 27,748,849 | | | | — | | | | 27,748,849 | | | | — | | | | — | | | | — | | | | — | | Investments in joint ventures and associates | | | — | | | | — | | | | — | | | | 14,874,579 | | | | — | | | | 14,874,579 | | | | — | | | | — | | | | — | | | | — | | Notes receivable | | | — | | | | — | | | | — | | | | 127,475,276 | | | | — | | | | 127,475,276 | | | | — | | | | — | | | | — | | | | — | | Other assets | | | — | | | | — | | | | — | | | | 3,451,096 | | | | — | | | | 3,451,096 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | — | | | | — | | | | — | | | | 327,102,543 | | | | — | | | | 327,102,543 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Financial liabilities measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Derivative financial instruments | | | (16,650,171 | ) | | | — | | | | — | | | | — | | | | — | | | | (16,650,171 | ) | | | — | | | | (16,650,171 | ) | | | — | | | | (16,650,171 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | (16,650,171 | ) | | | — | | | | — | | | | — | | | | — | | | | (16,650,171 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Financial liabilities not measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Suppliers | | | — | | | | — | | | | — | | | | — | | | | (208,034,407 | ) | | | (208,034,407 | ) | | | — | | | | — | | | | — | | | | — | | Accounts and accrued expenses payable | | | — | | | | — | | | | — | | | | — | | | | (26,055,151 | ) | | | (26,055,151 | ) | | | — | | | | — | | | | — | | | | — | | Leases | | | — | | | | — | | | | — | | | | — | | | | (68,148,627 | ) | | | (68,148,627 | ) | | | — | | | | — | | | | — | | | | — | | Debt | | | — | | | | — | | | | — | | | | — | | | | (1,983,174,088 | ) | | | (1,983,174,088 | ) | | | — | | | | (2,035,079,540 | ) | | | — | | | | (2,035,079,540 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | — | | | | — | | | | — | | | | — | | | | (2,285,412,273 | ) | | | (2,285,412,273 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(i) | Refers to the participation in TAG Pipelines Sur, S. de R.L. de C.V. |
As of December 31, 2020 and 2019, PEMEX has monetary assets and liabilities denominated in foreign currency as indicated below: | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2020 | | | | Foreign currency | | | | Assets | | | Liabilities | | | Net position Asset/(Liability) | | | Exchange rate | | | Equivalent to Mexican peso | | U.S. dollar | | | 7,293,404 | | | | 87,866,609 | | | | (80,573,205 | ) | | | 19.9487 | | | Ps. | (1,607,330,695 | ) | Euro | | | 2,564 | | | | 13,501,943 | | | | (13,499,379 | ) | | | 24.4052 | | | | (329,455,044 | ) | Pounds sterling | | | 30 | | | | 819,590 | | | | (819,560 | ) | | | 27.2579 | | | | (22,339,485 | ) | Japanese yen | | | — | | | | 110,165,166 | | | | (110,165,166 | ) | | | 0.1933 | | | | (21,294,927 | ) | Swiss francs | | | — | | | | 515,348 | | | | (515,348 | ) | | | 22.5720 | | | | (11,632,435 | ) | | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | Ps. | (1,992,052,586 | ) | | | | | | | | | | | | | | |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2019 | | | | Foreign currency | | | | Assets | | | Liabilities | | | Net position Asset /(Liability) | | | Exchange rate | | | Equivalent to Mexican peso | | U.S. dollar | | | 11,817,320 | | | | 76,053,967 | | | | (64,236,647 | ) | | | 18.8452 | | | | Ps. (1,210,552,460 | ) | Euro | | | 1,974 | | | | 27,932,908 | | | | (27,930,934 | ) | | | 21.1537 | | | | (590,842,599 | ) | Pounds sterling | | | 29 | | | | 1,575,918 | | | | (1,575,889 | ) | | | 24.9586 | | | | (39,331,983 | ) | Japanese yen | | | — | | | | 221,975,145 | | | | (221,975,145 | ) | | | 0.1734 | | | | (38,490,490 | ) | Swiss francs | | | — | | | | 1,666,864 | | | | (1,666,864 | ) | | | 19.4596 | | | | (32,436,507 | ) | | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | | Ps. (1,911,654,039 | ) | | | | | | | | | | | | | | |
Debt is valued and registered at amortized cost and the fair value of debt is estimated using quotes from major market sources which are then adjusted internally using standard market pricing models. As a result of relevant assumptions, the estimated fair value does not necessarily represent the actual terms at which existing transactions could be liquidated or unwound. The information related to “Cash and cash equivalents”, “Customers and other accounts receivable”, “Investments in joint ventures and associates”, “Long-term notes receivable, government bonds and other assets”, “Debt”, “Leases” and “Derivative financial instruments” is described in the following notes, respectively: Note 9, Cash and cash equivalents. Note 10, Customers and other financing and non-financing accounts receivable. Note 12, Investments in joint ventures and associates. Note 15, Long-term notes receivable, government bonds and other assets. Note 18, Derivative financial instruments. PEMEX values the fair value of its financial instruments under standard methodologies commonly applied in the financial markets. PEMEX’s related assumptions and inputs therefore fall under the three Levels of the fair value hierarchy for market participant assumptions, as described below. The fair values determined by Level 1 inputs utilize quoted prices in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs are based on quoted prices for similar assets or liabilities in active markets, and inputs other than quoted prices that are observed for assets or liabilities. Level 3 inputs are unobservable inputs for the assets or liabilities, and include situations where there is little, if any, market activity for the assets or liabilities. Management uses appropriate valuation techniques based on the available inputs to measure the fair values of PEMEX’s applicable financial assets and financial liabilities. When available, PEMEX measures fair value using Level 1 inputs, because they generally provide the most reliable evidence of fair value. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) NOTE 9. CASH AND CASH EQUIVALENTS As of December 31, 2020 and 2019, cash and cash equivalents were as follows: | | | 2017 | | | 2016 | | | 2020 | | | 2019 | | Cash on hand and in banks(i) | | Ps. | 55,871,127 | | | Ps. | 71,430,427 | | | | Ps. 20,211,875 | | | | Ps. 27,502,675 | | Highly liquid investments(ii) | | | 41,980,627 | | | | 92,102,086 | | | | 19,777,906 | | | | 33,118,956 | | | | | | | | | | | | | | | | | Ps. | 97,851,754 | | | Ps. | 163,532,513 | | | | Ps. 39,989,781 | | | | Ps. 60,621,631 | | | | | | | | | | | | | | |
(i) | (i) | Cash on hand and in banks is primarily composed of cash in banks. |
(ii) | (ii) | Mainly composed of short-term Mexican Government investments. |
b. At December 31, 2017 and 2016, restricted cash was as follows:
| | | | | | | | | | | 2017 | | | 2016 | | Restricted cash | | | Ps. — | | | Ps. | 10,478,626 | | | | | | | | | | |
Restricted cash as of December 31, 2016 was primarily composed of the deposit made by Pemex Exploration and Production in the amount of U.S. $465,060, plus interests as a result of an arbitration claim filed by Corporación Mexicana de Mantenimiento Integral, S. de R.L. de C.V. (“COMMISA”) before the International Court of Arbitration of the International Chamber of Commerce (the “ICA”). On April 6, 2017, Pemex Exploration and Production and Petróleos Mexicanos executed a settlement agreement with COMMISA and agreed to pay COMMISA U.S. $435,000, plus the applicable VAT with the funds deposited by Pemex Exploration and Production in a bank account as a guarantee before the U.S. District Court for the Southern District of New York and through a wire transfer.
During 2016, PMI HBV made deposits of U.S. $41,319, in an account in Banco Santander, S.A. as additional collateral for a credit agreement in accordance with the terms of the agreement. The credit agreement required that PMI HBV maintain aloan-to-value ratio based on the ratio between the principal amount of debt and the market value in U.S. dollars of the Repsol S. A. (“Repsol”) shares owned by PMI HBV. Due to the increase in the value of Repsol shares, the deposit was reimbursed to PMI HBV; therefore, beginning June 30, 2017, no restricted cash was held. On October 20, 2017, PMI HBV prepaid the balance of the credit agreement in order to sell all of its shares in Repsol.
NOTE 7.10. CUSTOMERS AND OTHER FINANCING AND NON-FINANCING ACCOUNTS RECEIVABLE NET As of December 31, 20172020 and 2016,2019, accounts receivable and other receivables were as follows: | | | | | | | | | | | 2017 | | | 2016 | | Domestic customers, net | | Ps. | 60,057,141 | | | Ps. | 41,884,579 | | Export customers, net | | | 54,428,883 | | | | 34,859,341 | | Sundry debtors | | | 26,105,703 | | | | 18,736,922 | | Taxes to be recovered and prepaid taxes | | | 23,039,023 | | | | 29,361,303 | | Employees and officers | | | 5,681,478 | | | | 6,054,251 | | Advances to suppliers | | | 1,250,846 | | | | 2,246,437 | | Other accounts receivable | | | 82,160 | | | | 77,694 | | | | | | | | | | | | | Ps. | 170,645,234 | | | Ps. | 133,220,527 | | | | | | | | | | |
| | | | | | | | | | | 2020 | | | 2019 | | Domestic customers, net | | | Ps. 35,049,717 | | | | Ps. 46,792,824 | | Export customers, net | | | 33,332,696 | | | | 42,471,046 | | | | | | | | | | | Total customers | | | Ps. 68,382,413 | | | | Ps. 89,263,870 | | | | | | | | | | |
Customers and other accounts receivable are presented separately in the statement of financial position to conform the financial position more clearly. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESPetróleos Mexicanos
AND SUBSIDIARY COMPANIESProductive State-Owned Subsidiaries and Subsidiary Companies
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) The following table shows a breakdown of accounts receivable based on their credit history at December 31, 20172020 and 2016:2019, as well as the relation between the breakdown and the impaired amount: | | | Domestic customers | | | Domestic customers | | | | 2017 | | | 2016 | | | 2020 | | | 2019 | | Current | | | | Ps. 34,034,116 | | | | Ps. 44,898,986 | | 1 to 30 days | | Ps. | 10,188,070 | | | | Ps.1,767,718 | | | | 535,938 | | | | 801,299 | | 31 to 60 days | | | 4,081,862 | | | | 658,456 | | | | 110,911 | | | | 302,817 | | 61 to 90 days | | | 777,409 | | | | 263,447 | | | | 19,614 | | | | 604,025 | | More than 90 days(i) | | | 11,345,933 | | | | 1,016,553 | | | More than 90 days | | | | 1,531,867 | | | | 1,285,883 | | | | | | | | | | | | | | | Past due | | | 26,393,274 | | | | 3,706,174 | | | Total | | | | 36,232,446 | | | | 47,893,010 | | Impaired (reserved) | | | (951,932 | ) | | | (458,428 | ) | | | (1,182,729 | ) | | | (1,100,186 | ) | | | | | | | | | Unimpaired | | | 25,441,342 | | | | 3,247,746 | | | Current | | | 34,615,799 | | | | 38,636,833 | | | | | | | | | | | | | | | | Total | | Ps. | 60,057,141 | | | | Ps.41,884,579 | | | | Ps. 35,049,717 | | | | Ps. 46,792,824 | | | | | | | | | | | | | | | | | | | Export customers | | | | | 2020 | | | 2019 | | Current | | | | Ps. 30,346,622 | | | | Ps. 36,037,725 | | 1 to 30 days | | | | 2,925,807 | | | | 5,895,862 | | 31 to 60 days | | | | 73,026 | | | | 11,120 | | 61 to 90 days | | | | 8,063 | | | | 31,182 | | More than 90 days | | | | 190,541 | | | | 677,980 | | | | | | | | | | Total | | | | 33,544,059 | | | | 42,653,869 | | Impaired (reserved) | | | | (211,363 | ) | | | (182,823 | ) | | | | | | | | | Total | | | | Ps. 33,332,696 | | | | Ps. 42,471,046 | | | | | | | | | |
| (i) | The increase in 2017 in accounts receivable invoices more than 90 days old is primarily due to the termination of the outstanding balances compensation system in place between Mexican Government owned companies. |
| | | | | | | | | | | Export customers | | | | 2017 | | | 2016 | | 1 to 30 days | | Ps. | 334,155 | | | Ps. | 341,184 | | 31 to 60 days | | | — | | | | 6,824 | | 61 to 90 days | | | — | | | | 35,372 | | More than 90 days | | | 315,888 | | | | 624,157 | | | | | | | | | | | Past due | | | 650,043 | | | | 1,007,537 | | Impaired (reserved) | | | (272,813 | ) | | | (374,699 | ) | | | | | | | | | | Unimpaired | | | 377,230 | | | | 632,838 | | Current | | | 54,051,653 | | | | 34,226,503 | | | | | | | | | | | Total | | Ps. | 54,428,883 | | | Ps. | 34,859,341 | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBERAs of December 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
2020 and 2019, PEMEX has exposure to credit risk related to accounts receivable, see contractual payment terms in Note 7. Additionally, the reconciliation for impaired accounts receivable is as follows: | | | | Domestic customers | | | | | 2020 | | | 2019 | | Balance at the beginning of the year | | | Ps. | (1,100,186 | ) | | Ps. | (1,409,014 | ) | Impairment accounts receivable | | | | (82,543 | ) | | | 308,828 | | | | | | | | | | Balance at the end of the year | | | Ps. | (1,182,729 | ) | | Ps. | (1,100,186 | ) | | | | | | | | | | | | | | Domestic customers | | | | | | Export customers | | | | 2017 | | 2016 | | | 2020 | | | 2019 | | Balance at the beginning of the year | | | Ps. (458,428 | ) | | Ps. (667,883 | ) | | Ps. | (182,823 | ) | | Ps. | (321,438 | ) | Additions against income | | | (493,514 | ) | | (218,836 | ) | | Amount used | | | 10 | | | 428,291 | | | | | | | | | | | Balance at the end of the year | | | Ps. (951,932 | ) | | Ps. (458,428 | ) | | | | | | | | | | | | Export customers | | | | | 2017 | | 2016 | | | Balance at the beginning of the year | | | Ps. (374,699 | ) | | Ps. (312,004 | ) | | Additions against income | | | (204,713 | ) | | (25,931 | ) | | Amount used | | | 297,047 | | | | — | | | Impairment accounts receivable | | | | (20,353 | ) | | | 111,674 | | Translation effects | | | 9,552 | | | (36,764 | ) | | | (8,187 | ) | | | 26,941 | | | | | | | | | | | | | | | Balance at the end of the year | | | Ps. (272,813) | | | Ps. (374,699) | | | Ps. | (211,363 | ) | | Ps. | (182,823 | ) | | | | | | | | | | | | | |
NOTE 8. INVENTORIES, NET
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) Methodology to determine the estimation of the impairment of the accounts receivable PEMEX allocates each exposure to a credit risk grade based on data that is determined to be predictive of the risk of loss (including but not limited to, audited financial statements, management accounts and cash flow projections and available information about customers) and applying experienced credit judgment. Credit risk grades are defined using qualitative and quantitative factors that are indicative of the risk of default. Exposures within each credit risk grade are segmented by each Subsidiary Entity and its commercial business lines, so the expected credit loss rate is calculated for each segment based on actual credit loss experienced over the past two years. These rates are multiplied by scale factors to reflect differences between the economic conditions during the period over which historical data has been collected, current conditions and PEMEX’s view of economic conditions over the expected lives of the receivables. As of December 31, 20172020, the expected percentage of credit loss for accounts receivable for each Subsidiary Entity and 2016,Subsidiary Company was: 0.02% for Pemex Fertilizers, 2.42% for Pemex Industrial Transformation, 4.79% for Pemex Corporate, 1.44% for Pemex Logistics, 0.17% for PMI CIM and 0.63% for PMI TRD. As of December 31, 2019, the expected percentage of credit loss for accounts receivable for each Subsidiary Entity and Subsidiary Company was: 1.72% for Pemex Fertilizers, 1.06% for Pemex Industrial Transformation, 1.53% for Corporate, 1.20% for Pemex Logistics, 0.07% for PMI CIM and 0.47% for PMI TRD. The amount of (impairment) of domestic and export customers recognized in the income statement for 2020 and 2019 was Ps. (102,896) and Ps. (447,441), respectively. B. Other financial and non-financial accounts receivable | | | | | | | | | | | 2020 | | | 2019 | | Financial assets: | | | | | | | | | Sundry debtors(1) | | | Ps. 28,076,118 | | | | Ps. 27,748,849 | | Employees and officers | | | 3,539,505 | | | | 3,667,242 | | | | | | | | | | | Total financial assets | | | Ps. 31,615,623 | | | | Ps. 31,416,091 | | Non-financial assets: | | | | | | | | | Taxes to be recovered and prepaid taxes | | | Ps. 55,187,272 | | | | Ps. 26,162,225 | | Special Tax on Production and Services | | | 32,657,743 | | | | 31,587,018 | | Advances to suppliers | | | — | | | | 565,817 | | Other accounts receivable | | | 1,944,413 | | | | 1,510,660 | | | | | | | | | | | Total non-financial assets: | | | Ps. 89,789,428 | | | | Ps. 59,825,720 | | | | | | | | | | |
(1) | Includes Ps. (197,215) and Ps. (37,139) of impairment, as of December 31, 2020 and 2019, respectively. |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) NOTE 11. INVENTORIES As of December 31, 2020 and 2019, inventories were as follows: | | | | | | | | | | | 2017 | | | 2016 | | Refined and petrochemicals products | | | Ps. 27,862,384 | | | | Ps. 21,534,846 | | Products in transit | | | 19,112,606 | | | | 7,735,163 | | Crude oil | | | 11,445,780 | | | | 11,391,310 | | Materials and products in stock | | | 5,172,779 | | | | 4,721,834 | | Materials in transit | | | 180,711 | | | | 419,547 | | Gas and condensate products | | | 84,670 | | | | 89,360 | | | | | | | | | | | | | | Ps. 63,858,930 | | | | Ps. 45,892,060 | | | | | | | | | | |
NOTE 9. HELD—FOR—SALENON-FINANCIAL ASSETS
Pursuant to Round Zero, PEMEX was provisionally assigned titles to certain blocks in escrow. The ownership of the fixed assets located in those blocks is transferred when the blocks are awarded to third parties in subsequent rounds.
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 addressed in transitory article 6 of the Energy Reform Decree, certain assignments that Pemex Exploration and Production received from the Mexican Government were affected. The Mexican Government will compensate PEMEX for these investments at fair value pursuant to the terms determined by the Ministry of Energy.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
In 2016, pursuant to Round 1.3, the Ministry of Energy awarded certain contractual areas for the exploration and extraction of oil and solid hydrocarbons to third parties and their respective fixed assets have been 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, receiving resolution in 2017.
All the assets that are part of unassigned areas to PEMEX as part of Round Zero continue to be classified as long-lived assets, subject to all regulations applicable to such assets, provided PEMEX (1) obtains the economic benefits derived from the use thereof and (2) at the same time exercises control over them and assumes the benefits and risks associated with such assets.
Assets that are part of the areas that were not assigned to PEMEX as part of Round Zero, and from which PEMEX does not obtain economic benefits derived from use of such assets, are written down, affecting the results for that year.
As a result, of the Ps. 7,460,674held-for-sale, thenon-financial assets at December 31, 2016, Ps.4,652,314 were reclassified to fixed assets and the remaining Ps. 2,808,360, were transferred to the results of the year.
| | | | | | | | | | | 2020 | | | 2019 | | Refined and petrochemicals products | | | Ps. 32,175,910 | | | | Ps. 41,211,837 | | Crude oil | | | 11,997,570 | | | | 14,087,218 | | Materials and products in stock | | | 4,736,659 | | | | 4,381,628 | | Products in transit | | | 3,476,807 | | | | 22,719,635 | | Gas and condensate products | | | 142,136 | | | | 144,284 | | Materials in transit | | | 76,579 | | | | 127,594 | | | | | | | | | | | | | | Ps. 52,605,661 | | | | Ps. 82,672,196 | | | | | | | | | | |
NOTE 10. AVAILABLE—FOR—SALE—FINANCIAL ASSETS | a. | On January 1, 2016, PEMEX had a total of 20,724,331 shares of Repsol valued at Ps. 3,944,696, which represented approximately 1.48% of Repsol’s share capital. |
On January 15, 2016, PMI HBV received 942,015 new Repsol shares valued at Ps. 188,490 as anin-kind dividend that was declared on 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, they were not included in the loan agreement obtained by PMI HBV in August 2015 and these shares are presented as short-termavailable-for-sale financial assets amounting to Ps. 435,556. These shares were sold in January 2017.
On December 14, 2016, Repsol declared flexible dividends to its shareholders, of which PMI HBV received 584,786 new Repsol shares as anin-kind dividend in January 23, 2017. This amount was recognized as an account receivable of Ps.165,346 as of December 31, 2016.
As of December 31, 2016, the investment in 20,724,331 shares of Repsol held by PMI HBV was valued at Ps. 6,027,540. These shares are presented undernon-current assets. The effect of the valuation on the investment at fair value was recorded in other comprehensive result in the consolidated statement of changes in equity (deficit) as a profit of Ps. 207,817 at December 31, 2016.
On January 24, 2017 and January 25, 2017, PMI HBV sold a total of 2,082,348 Repsol shares at an average price of € 14.17 per share, for a total amount of Ps. 684,029. These shares were not included as collateral on the loan agreement.
On June 7, 2017, Repsol declared flexible dividends to its shareholders, of which PMI HBV received 609,539 new Repsol shares as anin-kind dividend on July 13, 2017. This amount was recognized as an account receivable of Ps. 180,729.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
On October 26, 2017, PMI HBV sold 21,333,870 Repsol shares for a total amount of Ps. 7,342,807 pursuant to a share forward transaction with Credit Agricole CIB. This sale, together with the sale on January 24 and 25, 2017, resulted in a total loss of Ps. 3,523,748.
As a result of the above, PEMEX does not have an equity interest in Repsol as of December 31, 2017.The 2016 balance allocated in other comprehensive income for Ps. 5,564,130 was transferred to the results of the year.
| b. | As of December 31, 2016, due to the loss of significant influence in TAG Norte Holding, S. de R. L. de C. V. and TAG Pipelines Sur, S. de R. L. de C. V., these companies were valued at fair value and are presented as short-termavailable-for-sale financial assets in the amount of Ps.2,417,123. |
As of December 31, 2017, PEMEX is in the process of selling its shares of TAG Norte Holding, S. de R.L. de C.V. and TAG Pipeline Sur, S. de R.L. de C.V. These shares have been classified asavailable-for-sale-financial-assets and have been valued at their net realizable value, which as of December 31, 2017 has resulted in a negative value that has been recognized in the profit or loss at the end of the year. As of the date of these consolidated financial statements, PEMEX is in the process of selling these shares. As of December 31, 2017,available-for-sale currentnon-financial assets amounted Ps. 1,056,918.
NOTE 11.12. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES
The investments in joint ventures and associates as of December 31, 20172020 and 2016,2019, were as follows: | | | | | | | | | | | | | | | | | | | Percentage of investment | | | December 31, | | | | | 2017 | | | 2016 | | Deer Park Refining Limited | | | | | 49.99% | | | | Ps.14,405,542 | | | | Ps.14,039,384 | | Petroquímica Mexicana de Vinilo, S. A. de C. V. | | (i) | | | 44.09% | | | | — | | | | 4,309,050 | | Sierrita Gas Pipeline LLC | | | | | 35.00% | | | | 1,084,169 | | | | 1,112,338 | | Frontera Brownsville, LLC. | | | | | 50.00% | | | | 471,085 | | | | 478,414 | | CH4 Energía, S. A. | | | | | 50.00% | | | | 315,713 | | | | 194,868 | | Texas Frontera, LLC. | | | | | 50.00% | | | | 239,782 | | | | 260,828 | | Administración Portuaria Integral de Dos Bocas, S.A. de C.V. | | | | | 40.00% | | | | 64,328 | | | | 139,523 | | PMV Minera, S.A. de C.V. | | | | | 44.09% | | | | 45,133 | | | | 61,779 | | Ductos el peninsular, S.A.P.I de C. V. | | | | | 50.00% | | | | 18,336 | | | | 18,626 | | Other-net | | | | | Various | | | | 63,276 | | | | 122,699 | | | | | | | | | | | | | | | | | | | | | | | | | | Ps.16,707,364 | | | | Ps.20,737,509 | | | | | | | | | | | | | | | | |
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 U.S. $ 461,000 in damages. Chorinated Plant 3 incurred the greatest amount of damage, 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. On December 20, 2017, Petroquímica Mexicana de Vinilo permanently closed the plant, and-the full book value waswritten-off impacting the value of this investment. |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | Percentage of investment | | | December 31, | | | | 2020 | | | 2019 | | Deer Park Refining Limited | | 49. | 99 | % | | Ps. | 9,635,176 | | | Ps. | 12,652,599 | | Sierrita Gas Pipeline LLC | | 35. | 00 | % | | | 1,232,464 | | | | 1,171,593 | | Frontera Brownsville, LLC. | | 50. | 00 | % | | | 479,520 | | | | 446,202 | | Texas Frontera, LLC. | | 50. | 00 | % | | | 197,708 | | | | 199,923 | | CH 4 Energía, S. A. de C.V. | | 50. | 00 | % | | | 141,339 | | | | 192,614 | | Administración Portuaria Integral de Dos Bocas, S. A. de C.V. | | 40. | 00 | % | | | 208,152 | | | | 165,370 | | Other-net | | | Various | | | | 120,770 | | | | 46,278 | | | | | | | | | | | | | | | | | | | | | Ps. | 12,015,129 | | | Ps. | 14,874,579 | | | | | | | | | | | | | | |
Profit (loss) sharing in joint ventures and associates: | | | | | | | | | | | | | | | 2017 | | | 2016 | | | 2015 | | Deer Park Refining Limited | | | Ps. 920,409 | | | | Ps. 1,437,850 | | | | Ps. 1,913,835 | | Ductos y Energéticos del Norte, S.A. de C.V.(i) | | | 360,092 | | | | — | | | | — | | CH4 Energía S.A. de C.V. | | | 125,132 | | | | — | | | | — | | Sierrita Gas Pipeline LLC | | | 129,401 | | | | 105,825 | | | | 152,445 | | PMV Minera, S.A. de C.V. | | | 6,253 | | | | — | | | | — | | Petroquímica Mexicana de Vinilo, S. A. de C. V. | | | (1,223,640 | ) | | | (190,468 | ) | | | (61,952 | ) | Administración Portuaria Integral de Dos Bocas, S.A. de C.V. | | | (75,195 | ) | | | — | | | | — | | Gasoductos de Chihuahua, S. de R. L. de C. V. (ii) | | | — | | | | 638,126 | | | | 666,779 | | Compañía Mexicana de Exploraciones, S. A. de C. V.(iii) | | | — | | | | — | | | | (496,774 | ) | Other, net | | | 117,988 | | | | 144,512 | | | | 143,782 | | | | | | | | | | | | | | | Profit sharing in joint ventures and associates, net | | | Ps. 360,440 | | | | Ps. 2,135,845 | | | | Ps. 2,318,115 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | December 31, | | | | 2020 | | | 2019 | | | 2018 | | Deer Park Refining Limited | | Ps. | (4,056,037 | ) | | Ps. | (1,438,308 | ) | | Ps. | 872,885 | | Sierrita Gas Pipeline LLC | | | 182,805 | | | | 118,959 | | | | 124,209 | | Frontera Brownsville, LLC. | | | 55,738 | | | | 47,719 | | | | 59,973 | | Administración Portuaria Integral de Dos Bocas, S.A. de C.V. | | | 42,782 | | | | 46,893 | | | | 54,149 | | Texas Frontera, LLC. | | | 34,486 | | | | 47,585 | | | | 55,316 | | CH4 Energía S.A. de C.V. | | | 21,224 | | | | 36,864 | | | | 15,395 | | Ductos el Peninsular, S. A. P. I. de C. V. | | | (1,097 | ) | | | (17,605 | ) | | | (1,092 | ) | PMV Minera, S.A. de C.V. (i) | | | — | | | | — | | | | 6,863 | | Petroquímica Mexicana de Vinilo, S. A. de C. V. (i) | | | — | | | | — | | | | 352,816 | | Other, net | | | 179,566 | | | | — | | | | (13,502 | ) | | | | | | | | | | | | | | (Loss) profit sharing in joint ventures and associates, net | | Ps. | (3,540,533 | ) | | Ps. | (1,157,893 | ) | | Ps. | 1,527,012 | | | | | | | | | | | | | | |
i.(i) | InOn November 2017,30, 2018, PEMEX soldreceived the payment for the sale of its 50%total 44.09% interest in Ductos y Energéticos del Norte, S.Petroquímica Mexicana de R.L.Vinilo, S.A. de C. V., to Infraestructura Energética Nova, S.A.B. of C.V. and 44.09% interest in PMV Minera, S.A. de C.V. which were recorded as investments in joint ventures and associates. The sale price was Ps. 3,198,597 and Ps. 53,701, respectively, for a total of U.S. $ 3,141,710, yielding a profitgain of Ps. 3,139,103.689,268 and Ps. 1,646, respectively. |
ii. | On September 28, 2016, PEMEX completed the divestiture of its 50% ownership interest in the Gasoductos de Chihuahua S. de R.L. de C.V. joint venture with Infraestructura Energética Nova, S.A.B. de C.V. The stock was sold for Ps. 22,684,736, yielding a profit of Ps. 15,211,039. |
iii. | Beginning July 1, 2016 this company was included in the consolidated financial statements of PEMEX. Until June 30, 2016 this Company was accounted for as an investment in an associate under the equity method (see Note3-a). |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) The following tables show condensed financial information of major investments recognized under the equity method during 2017as of December 31, 2020 and 2016:2019 and for the years ended December 31, 2020, 2019 and 2018: | | | | | | | | | | | | | | | | | Condensed statements of financial position | | | | Deer Park Refining Limited | | | Sierrita Gas Pipeline, LLC | | | | 2017 | | | 2016 | | | 2017 | | | 2016 | | Total assets | | | Ps. 41,075,547 | | | | Ps. 42,428,275 | | | | Ps.3,518,036 | | | | Ps.3,244,811 | | | | | | | | | | | | | | | | | | | Total liabilities | | | Ps. 12,261,581 | | | | Ps. 14,346,643 | | | | Ps. 420,410 | | | | Ps. 66,703 | | Total equity | | | 28,813,966 | | | | 28,081,632 | | | | 3,097,626 | | | | 3,178,108 | | | | | | | | | | | | | | | | | | | Total liabilities and equity | | | Ps.41,075,547 | | | | Ps. 42,428,275 | | | | Ps.3,518,036 | | | | Ps.3,244,811 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Condensed statements of financial position | | Deer Park Refining Limited | | | | December 31, | | | | 2020 | | | 2019 | | Cash and cash equivalents | | | Ps. 29,504 | | | | Ps. 24,536 | | Other current assets | | | 294,742 | | | | 1,476,541 | | | | | | | | | | | Current assets | | | 324,246 | | | | 1,501,077 | | Non-current assets | | | 43,348,665 | | | | 42,458,405 | | Total assets | | | 43,672,911 | | | | 43,959,482 | | | | | | | | | | | | | | Current financial liabilities | | | 11,617,624 | | | | 8,008,343 | | Other current liabilities | | | 523,354 | | | | 410,524 | | | | | | | | | | | Current liabilities | | | 12,140,978 | | | | 8,418,867 | | Non-current financial liabilities | | | 11,158,305 | | | | 8,373,280 | | Other liabilities | | | 1,101,348 | | | | 1,859,607 | | | | | | | | | | | Non-current liabilities | | | 12,259,653 | | | | 10,232,887 | | | | | | | | | | | Total liabilities | | | 24,400,631 | | | | 18,651,754 | | Total equity | | | 19,272,280 | | | | 25,307,728 | | | | | | | | | | | | | | Total liabilities and equity | | | Ps. 43,672,911 | | | | Ps. 43,959,482 | | | | | | | | | | |
| | | | | | | | | | | | | Condensed statements of comprehensive income | | Deer Park Refining Limited | | | | December 31, | | | | 2020(1) | | | 2019(2) | | | 2018 | | Sales and other income | | | Ps. 8,114,474 | | | | Ps.��13,560,847 | | | | Ps. 17,519,219 | | Costs and expenses | | | 10,770,248 | | | | 11,775,836 | | | | 11,159,617 | | Depreciation and amortization | | | 4,776,575 | | | | 4,088,972 | | | | 4,094,308 | | Interest paid | | | 674,504 | | | | 565,392 | | | | 503,978 | | Income tax | | | 6,028 | | | | 7,551 | | | | 15,371 | | | | | | | | | | | | | | | Net result | | | Ps. (8,112,881 | ) | | | Ps. (2,876,904 | ) | | | Ps. 1,745,945 | |
(1) | The net loss in 2020, was the result of the economic slowdown and the decline in consumption of refined products caused by Covid-19. |
(2) | 2019 net loss was due to the major maintenance of the Refinery that produced a decrease in the processing of crude oil in refined products. |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Condensed statements of comprehensive income | | | | Deer Park Refining Limited | | | Sierrita Gas Pipeline, LLC | | | Gasoductos de Chihuahua, S. de R. L. de C. V. | | | | December 31, | | | December 31, | | | August 31, | | | December 31, | | | | 2017 | | | 2016 | | | 2015 | | | 2017 | | | 2016 | | | 2016 | | | 2015 | | Sales and other income | | | Ps.16,427,064 | | | | Ps.16,750,155 | | | | Ps.16,658,705 | | | | Ps. 840,414 | | | | Ps. 717,351 | | | | Ps.3,798,666 | | | | Ps.4,617,982 | | Costs and expenses | | | 14,586,061 | | | | 13,874,172 | | | | 12,830,653 | | | | 470,697 | | | | 414,994 | | | | 2,522,415 | | | | 3,284,424 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net result | | | Ps. 1,841,003 | | | | Ps. 2,875,983 | | | | Ps. 3,828,052 | | | | Ps. 369,717 | | | | Ps. 302,357 | | | | Ps.1,276,251 | | | | Ps.1,333,558 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Condensed statements of financial position | | Sierrita Gas Pipeline, LLC | | | | | | December 31, | | | | 2020 | | | 2019 | | Current assets | | Ps. | 186,919 | | | Ps. | 331,694 | | Non-current assets | | | 3,417,052 | | | | 3,222,956 | | | | | | | | | | | Total assets | | | 3,603,971 | | | | 3,554,650 | | | | | | | | | | | Current liabilities | | | 82,648 | | | | 207,241 | | | | | | | | | | | Total liabilities | | | 82,648 | | | | 207,241 | | Total equity | | | 3,521,324 | | | | 3,347,409 | | | | | | | | | | | Total liabilities and equity | | Ps. | 3,603,971 | | | Ps. | 3,554,650 | | | | | | | | | | |
| | | | | | | | | | | | | Condensed statements of comprehensive income | | Sierrita Gas Pipeline, LLC | | | | | | December 31, | | | | 2020 | | | 2019 | | | 2018 | | Sales and other income | | Ps. | 942,024 | | | Ps. | 669,579 | | | Ps. | 615,150 | | Costs and expenses | | | 419,729 | | | | 329,695 | | | | 260,272 | | | | | | | | | | | | | | | Net result | | Ps. | 522,295 | | | Ps. | 339,884 | | | Ps. | 354,878 | | | | | | | | | | | | | | |
Additional information about the significant investments in joint ventures and associates is presented below: | • | | Deer Park Refining Limited (Joint venture).On. On March 31, 1993, PMI NASA acquired 50%49.99% 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 (installed capacity of approximately 340,000 barrels per day of crude oil).Management decisions are made jointly with respect to investment in or disposal of assets, distribution of dividends, indebtedness and equity operations. In accordance with the purposeinvestment contract and the operation of which isthe agreement, the participants have the rights to provide oil refinery services to PMI NASA and Shell for a processing fee. Shell is responsible for determining the crude oil and production materials requirements and both partners are required to contribute in equal amounts. Deer Park returns to PMI NASA and Shell productsnet assets in the same amounts. Shell is responsible for purchasing the total amountproportion of finished products in stock at market prices.their participation. This joint venture is recorded under the equity method. |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) Associates | • | | 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 has been responsible for operational and financial decisions for Petroquímica Mexicana de Vinilo. This investment is recorded under the equity method. Due to the damage caused by an accident that occurred in April 2016, Petroquímica Mexicana de Vinilo decided to permanently close the plant. |
| • | | Sierrita Gas Pipeline LLC.This company was created on June 24, 2013. Its main activity is the developing of projects related to the transportation infrastructure of gas in the United States. This investment is recorded under the equity method. |
| • | | 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, United States, and has the corporate power to own and operate certain facilities for the storage and treatment of clean petroleum products. This investment is recorded under the equity method. |
| • | | Texas Frontera, LLC. This company was constituted on July 27, 2010, and its principal activity is the lease of tanks for the storage of refined product. PMI SUS, which owns 50% interest in Texas Frontera, entered into a joint venture with Magellan OLP, L.P. (Magellan), and together they are entitled to the results in proportion of their respective investment. As of December 31, 2016, theThe company has seven tanks with a capacity of 120,000 barrels per tank. This joint venture is recorded under the equity method. |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| • | | CH4 Energía, S.A. de C.V. This company was constituted on December 21, 2000. CH4 Energía engages in the purchase and sale of natural gas and in activities related to the trading of natural gas, such as transport and distribution in Valle de Toluca, México. This joint venture is recorded under the equity method. |
| • | | Administración Portuaria Integral de Dos Bocas, S.A. de C.V.This company was constituted on August 12, 1999. Its primary activity is adminitratingadministrating the Dos Bocas port, which is in Mexico’s public domain, promoting the port’s infrastructure and providing related port services. This investment is recorded under the equity method. |
• | | Ductos el Peninsular S.A.P.I. de C.V.This company was created on September 22, 2014. Its primary activity is the construction and operation of an integral transportation system and storage of petroleum products in the Peninsula of Yucatán. |
• | | Petroquímica Mexicana de Vinilo, S.A. de C.V. On September 13, 2013, Pemex-Petrochemicals (now Pemex Industrial Transformation), through its subsidiary PPQ Cadena Productiva, S.L. and Mexichem, S.A.B. de C.V. (“Mexichem”) founded Petroquímica Mexicana de Vinilo, S.A. de C.V. (“Mexicana de Vinilo”). The principal activity of Mexicana de Vinilo is the production and sale of chemicals. Mexicana de Vinilo’s main products are chlorine, caustic soda, ethylene and monomers of vinyl chloride. Mexichem has been responsible for operational and financial decisions for Mexicana de Vinilo. On December 20, 2017, Petroquímica Mexicana de Vinilo permanently closed the plant. In November 2018, PEMEX sold its total ownership interest in this company. |
• | | PMV Minera, S.A. de C.V. 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 (formerly 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. 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 In November 2018, PEMEX completed the divestiture of this company as describedsold its total ownership interest in footnote (ii) to the table above. |
| • | | Compañía Mexicana de ExploracionesPMV Minera, 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. 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 the exploration process. Until June 30, 2016 this company was accounted under the equity method. As of July 1, 2016 this company is included in the consolidated results. |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) NOTE 12.13. 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 | | | Plants | | Drilling equipment | | Pipelines | | Wells | | Buildings | | Offshore platforms | | Furniture and equipment | | Transportation equipment | | Construction in progress (1) | | Land | | Unproductive fixed assets | | Other fixed assets | | Total fixed assets | | Investment | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of January 1, 2016 | | | 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 | | | Balances as of January 1, 2019 | | | Ps.811,270,391 | | | 20,080,965 | | | 421,235,950 | | | 1,379,323,723 | | | 64,845,163 | | | 326,482,265 | | | 52,020,042 | | | 15,159,952 | | | 129,352,513 | | | 44,351,625 | | | | — | | | 32,659 | | | 3,264,155,248 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Transfers to rights of use | | | | — | | | (7,005,141 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | (7,005,141 | ) | Acquisitions | | | 8,337,019 | | | 252,382 | | | 1,251,488 | | | 29,072,723 | | | 316,499 | | | 5,436,425 | | | 184,863 | | | 1,735,581 | | | 82,520,111 | | | 182,563 | | | | — | | | | — | | | 129,289,654 | | Reclassifications | | | (1,381,310 | ) | | | — | | | 428,738 | | | | — | | | (51,885 | ) | | (614,430 | ) | | (234,643 | ) | | 47,110 | | | (106,429 | ) | | (16,161 | ) | | 35,403 | | | | — | | | (1,893,607 | ) | Unsuccessful wells | | | | — | | | | — | | | | — | | | (69,231,587 | ) | | | — | | | | — | | | | — | | | | — | | | (7,922,365 | ) | | | — | | | | — | | | | — | | | (77,153,952 | ) | Capitalization | | | 6,830,064 | | | | — | | | 6,538,540 | | | 35,251,706 | | | 143,312 | | | 13,013,199 | | | 2,566 | | | 955,134 | | | (62,722,409 | ) | | (12,112 | ) | | | — | | | | — | | | | — | | (Impairment) | | | (21,207,717 | ) | | | — | | | (53,718,547 | ) | | (101,683,066 | ) | | (500,745 | ) | | (43,001,652 | ) | | | — | | | (2,076,680 | ) | | (2,249,951 | ) | | | — | | | | — | | | | — | | | (224,438,358 | ) | Reversal of impairment | | | 48,389,246 | | | | — | | | 85,500,267 | | | 31,086,852 | | | 1,023 | | | 25,167,135 | | | | — | | | 646,603 | | | 2,364,078 | | | | — | | | | — | | | | — | | | 193,155,204 | | Disposals | | | (3,396,366 | ) | | (235,382 | ) | | (301,359 | ) | | (151,405 | ) | | (1,435,140 | ) | | | — | | | (1,565,266 | ) | | (112,482 | ) | | (1,310,108 | ) | | (356,379 | ) | | (35,403 | ) | | (32,659 | ) | | (8,931,949 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2019 | | | Ps.848,841,327 | | | 13,092,824 | | | 460,935,077 | | | 1,303,668,946 | | | 63,318,227 | | | 326,482,942 | | | 50,407,562 | | | 16,355,218 | | | 139,925,440 | | | 44,149,536 | | | | — | | | | — | | | 3,267,177,099 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Acquisitions | | | 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 | | | 13,934,129 | | | 246,351 | | | 1,911,502 | | | 15,602,539 | | | 1,118,794 | | | 3,696,726 | | | 294,329 | | | 552,865 | | | 131,963,334 | | | 543,472 | | | | — | | | | — | | | 169,864,041 | | Reclassifications | | | 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 | ) | | (1,446,201 | ) | | | — | | | 228,056 | | | | — | | | 361,131 | | | | — | | | 410,240 | | | 7,586 | | | (1,234,963 | ) | | 115,107 | | | 24,601 | | | | — | | | (1,534,443 | ) | Capitalization | | | 15,943,630 | | | | — | | | 11,851,378 | | | 40,825,973 | | | 1,085,323 | | | 17,318,279 | | | 2,769 | | | 2,918,621 | | | (89,945,973 | ) | | | — | | | | — | | | | — | | | | — | | | 9,906,725 | | | | — | | | 19,022,425 | | | 42,183,243 | | | 616,006 | | | 15,695,486 | | | 8,835 | | | 1,532 | | | (87,150,784 | ) | | (283,468 | ) | | | — | | | | — | | | | — | | Impairment | | | 81,135,967 | | | | — | | | 31,967,407 | | | 198,974,994 | | | | — | | | 35,640,491 | | | 438,979 | | | 8,743 | | | (16,852,238 | ) | | | — | | | | — | | | | — | | | 331,314,343 | | | (Impairment) | | | (66,031,126 | ) | | | — | | | (9,392,862 | ) | | (48,028,474 | ) | | (65,964 | ) | | (16,210,995 | ) | | | — | | | | — | | | (20,210,911 | ) | | | — | | | | — | | | | — | | | (159,940,332 | ) | Reversal of impairment | | | 9,797,281 | | | 153,456 | | | 11,943,047 | | | 73,801,995 | | | 1,563,299 | | | 25,872,979 | | | 8,159 | | | 426,560 | | | 19,856 | | | | — | | | | — | | | | — | | | 123,586,632 | | Disposals | | | (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 | ) | | (3,297,113 | ) | | | — | | | (2,855,580 | ) | | | — | | | (6,599,754 | ) | | (1,184,109 | ) | | (2,300,115 | ) | | (514,229 | ) | | (1,441,548 | ) | | (298,828 | ) | | (24,601 | ) | | | — | | | (18,515,877 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2016 | | | 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 | | | Acquisitions | | | 10,018,030 | | | 418,283 | | | 7,054,793 | | | 14,937,882 | | | 802,300 | | | 7,811,374 | | | 1,183,679 | | | 284,445 | | | 51,410,469 | | | 58,563 | | | | — | | | | — | | | 93,979,818 | | | Reclassifications | | | 3,146,955 | | | | — | | | (53,349 | ) | | | — | | | 98,245 | | | (10,199,213 | ) | | (96,899 | ) | | (75,674 | ) | | (812,943 | ) | | (560 | ) | | | — | | | 4,072,464 | | | (3,920,974 | ) | | Capitalization | | | 43,033,864 | | | | — | | | 21,357,074 | | | 36,564,811 | | | 1,265,246 | | | 8,677,765 | | | 30,879 | | | 3,746,395 | | | (114,700,828 | ) | | 29,248 | | | | — | | | (4,454 | ) | | | — | | | Impairment | | | (48,020,616 | ) | | | — | | | 2,226,771 | | | (83,236,991 | ) | | | — | | | (15,564,190 | ) | | | — | | | | — | | | (6,849,534 | ) | | | — | | | | — | | | | — | | | (151,444,560 | ) | | Disposals | | | (10,598,983 | ) | | (244,283 | ) | | (8,862,541 | ) | | (19,340,709 | ) | | (208,353 | ) | | | — | | | (806,694 | ) | | (226,375 | ) | | (6,724,930 | ) | | (112,170 | ) | | | — | | | (4,440,865 | ) | | (51,565,902 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2017 | | | Ps. 756,025,360 | | | 23,443,116 | | | 481,868,176 | | | 1,267,747,910 | | | 64,700,471 | | | 313,429,941 | | | 51,057,652 | | | 23,171,636 | | | 129,736,382 | | | 44,546,699 | | | | — | | | 118,651 | | | 3,155,845,995 | | | Balances as of December 31, 2020 | | | Ps.811,705,022 | | | 13,492,631 | | | 481,791,665 | | | 1,387,228,249 | | | 60,311,739 | | | 354,353,029 | | | 48,829,010 | | | 16,829,532 | | | 161,870,424 | | | 44,225,819 | | | | — | | | | — | | | 3,380,637,120 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Accumulated depreciation and amortization | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of January 1, 2016 | | | 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 | ) | | Balances as of January 1, 2019 | | | (436,603,123 | ) | | (5,998,481 | ) | | (173,264,040 | ) | | (973,467,746 | ) | | (42,924,256 | ) | | (179,831,090 | ) | | (42,161,378 | ) | | (7,419,050 | ) | | | — | | | | — | | | | — | | | | — | | | (1,861,669,164 | ) | | Transfers to rights of use | | | | — | | | 943,639 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 943,639 | | Depreciation and amortization | | | (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 | ) | | (49,473,592 | ) | | (591,168 | ) | | (16,380,653 | ) | | (51,574,532 | ) | | (2,131,913 | ) | | (13,820,275 | ) | | (2,556,539 | ) | | (658,338 | ) | | | — | | | | — | | | | — | | | | — | | | (137,187,010 | ) | Reclassifications | | | (10,521 | ) | | | — | | | (166,632 | ) | | (3,077 | ) | | (108,718 | ) | | | — | | | 166,914 | | | 454,492 | | | | — | | | | — | | | | — | | | | — | | | 332,458 | | | 1,303,186 | | | | — | | | 41,225 | | | | — | | | 205,661 | | | 116,278 | | | 220,301 | | | 6,956 | | | | — | | | | — | | | | — | | | | — | | | 1,893,607 | | Disposals | | | 5,826,891 | | | | — | | | 2,286,691 | | | | — | | | 492,557 | | | | — | | | 2,560,988 | | | 550,554 | | | | — | | | | — | | | | — | | | | — | | | 11,717,681 | | | 3,308,366 | | | 128,561 | | | 184,172 | | | 817 | | | 1,226,345 | | | | — | | | 1,449,659 | | | 92,471 | | | | — | | | | — | | | | — | | | | — | | | 6,390,391 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2016 | | | (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 | ) | | Balances as of December 31, 2019 | | | Ps.(481,465,163 | ) | | (5,517,449 | ) | | (189,419,296 | ) | | (1,025,041,461 | ) | | (43,624,163 | ) | | (193,535,087 | ) | | (43,047,957 | ) | | (7,977,961 | ) | | | — | | | | — | | | | — | | | | — | | | (1,989,628,537 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Depreciation and amortization | | | (45,709,123 | ) | | (2,198,867 | ) | | (15,095,115 | ) | | (74,673,473 | ) | | (1,906,164 | ) | | (13,192,369 | ) | | (2,890,563 | ) | | (1,038,839 | ) | | | — | | | | — | | | | — | | | | — | | | (156,704,513 | ) | | (42,071,837 | ) | | (384,993 | ) | | (14,042,861 | ) | | (56,325,342 | ) | | (1,989,834 | ) | | (11,671,929 | ) | | (2,249,987 | ) | | (895,037 | ) | | | — | | | | — | | | | — | | | | — | | | (129,631,820 | ) | Reclassifications | | | 2,799,244 | | | | — | | | (72,841 | ) | | | — | | | (69,236 | ) | | 1,146,904 | | | 102,375 | | | 14,532 | | | | — | | | | — | | | | — | | | | — | | | 3,920,978 | | | 1,782,525 | | | | — | | | (90,590 | ) | | | — | | | (103,562 | ) | | | — | | | (203,053 | ) | | 149,123 | | | | — | | | | — | | | | — | | | | — | | | 1,534,443 | | Disposals | | | 8,902,711 | | | 127,458 | | | 7,573,769 | | | 16,810,591 | | | 59,022 | | | | — | | | 805,916 | | | 222,764 | | | | — | | | | — | | | | — | | | | — | | | 34,502,231 | | | 1,172,277 | | | | — | | | 2,576,418 | | | | — | | | 5,824,019 | | | 968,552 | | | 2,164,127 | | | 512,922 | | | | — | | | | — | | | | — | | | | — | | | 13,218,315 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balances as of December 31, 2017 | | | Ps.(394,024,147 | ) | | (5,013,984 | ) | | (159,959,414 | ) | | (908,399,636 | ) | | (41,041,009 | ) | | (165,207,235 | ) | | (38,972,938 | ) | | (6,718,306 | ) | | | — | | | | — | | | | — | | | | — | | | (1,719,336,669 | ) | | Balances as of December 31, 2020 | | | Ps.(520,582,198 | ) | | (5,902,442 | ) | | (200,976,329 | ) | | (1,081,366,803 | ) | | (39,893,540 | ) | | (204,238,464 | ) | | (43,336,870 | ) | | (8,210,953 | ) | | | — | | | | — | | | | — | | | | — | | | (2,104,507,599 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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 | | | Wells, pipelines, proper0ties, plant and equipment—net as of December 31,2019 | | | Ps.367,376,164 | | | 7,575,375 | | | 271,515,781 | | | 278,627,485 | | | 19,694,064 | | | 132,947,855 | | | 7,359,605 | | | 8,377,257 | | | 139,925,440 | | | 44,149,536 | | | | — | | | | — | | | 1,277,548,562 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Wells, pipelines, properties, plant and equipment—net as of December 31, 2017 | | | Ps. 362,001,214 | | | 18,429,132 | | | 321,908,762 | | | 359,348,274 | | | 23,659,462 | | | 148,222,706 | | | 12,084,714 | | | 16,453,330 | | | 129,736,382 | | | 44,546,699 | | | | — | | | 118,651 | | | 1,436,509,326 | | | Wells, pipelines, properties, plant and equipment—net as of December 31,2020 | | | Ps.291,122,824 | | | 7,590,189 | | | 280,815,336 | | | 305,861,446 | | | 20,418,199 | | | 150,114,565 | | | 5,492,140 | | | 8,618,579 | | | 161,870,424 | | | 44,225,819 | | | | — | | | | — | | | 1,276,129,521 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Depreciation rates | | | 3 to 5 | % | | 5 | % | | 2 to 7 | % | | | — | | | 3 to 7 | % | | 4 | % | | 3 to 10 | % | | 4 to 20 | % | | | — | | | | — | | | | — | | | | — | | | | — | | | 3 to 5 | % | | 5 | % | | 2 to 7 | % | | | — | | | 3 to 7 | % | | 4 | % | | 3 to 10 | % | | 4 to 20 | % | | | — | | | | — | | | | — | | | | — | | | | — | | Estimated useful lives | | | 20 to 35 | | | 20 | | | 15 to 45 | | | | — | | | 33 to 35 | | | 25 | | | 3 to 10 | | | 5 to 25 | | | | — | | | | — | | | | — | | | | — | | | | — | | | 20 to 35 | | | 20 | | | 15 to 45 | | | | — | | | 33 to 35 | | | 25 | | | 3 to 10 | | | 5 to 25 | | | | — | | | | — �� | | | | — | | | | — | | | | — | |
a.(1) | Mainly wells, pipelines and plants. |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) During 2020, PEMEX detected errors in certain costs and expenses used for the determination of the value in use of certain cash-generating units in the exploration and production segment as of December 31, 2019. This resulted in a different value in use in some cash-generating units and thus, an increase in the value of wells, pipelines, plants and platforms1 as of December 31, 2019 in the amount of Ps. 65,799,060 and a favorable impact in the results of operation of PEMEX for 2019, for the same amount (see Note 4-B). A. | As of December 31, 2017, 20162020, 2019 and 2015,2018, the financing cost identified with fixed assets in the construction or installation stage, capitalized as part of the value of such fixed assets, was Ps. 3,060,963,3,893,248, Ps. 3,667,7522,959,025 and Ps. 5,258,854,2,198,191, respectively. Financing cost rates during 2020, 2019 and 2018 were 5.75% to 7.08%, 5.27% to 6.84% and 4.94% to 6.07%, respectively. |
b.B. | The combined depreciation of fixed assets and amortization of wells for the fiscal years ended December 31, 2017, 20162020, 2019 and 2015,2018, recognized in operating costs and expenses, was Ps.156,704,513, Ps. 150,439,491129,631,820, Ps. 137,187,010 and Ps. 167,951,250, respectively, which includes153,382,040, respectively. These figures include Ps. 101,339,417, Ps. 103,173,593 and Ps. 124,790,099 for oil and gas production assets and costs related to the plugging and abandonment of wells in the amounts of Ps. 2,731,317, Ps. 4,700,151 and Ps. 983,438, for the years ended December 31, 2017, 20162020, 2019 and 2015 of Ps. 850,015, Ps. 1,698,312, and Ps. 1,401,870,2018, respectively. |
c.C. | As of December 31, 20172020 and 2016,2019, provisions relating to future plugging of wells costs amounted to Ps. 68,797,60077,125,513 and Ps. 64,967,710,80,849,900, respectively, and are presented in the “Provisions for plugging of wells” (see Note 18)20). |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
d.D. | As of December 31, 20172020, 2019 and 2016,2018, acquisitions of property, plant and equipment include transfers from wells unassigned to a reserve for Ps. 16,440,6456,229,356, Ps. 5,986,055 and Ps. 16,393,773,6,726,769 respectively (see Note 13)14) and Ps. 4,652,3141,072,537 fromavailable-for-salenon-financial assets as of December 31, 2017 (see Note 9).2019. |
e.E. | As of December 31, 20172020, 2019 and 2016, PEMEX recognized2018, the translation effect of property, plant and equipment items from a net impairment ofdifferent currency than the presentation currency was Ps. 151,444,560490,203, Ps. (1,776,684) and a net reversal of impairment of Ps. 331,314,343,(238,422), respectively, which is presented as a separate line item in the consolidated statement of comprehensive income as follows:was mainly plant. |
F. | i. | AsAt the end of December 31, 2017,2020, PEMEX had impairment impacts mainly due to the net impairment was as follows:long reduction in crude oil prices and the decrease in demand for products, resulting from the Covid-19 pandemic. |
| | | | | | | | | | | | | | | Impairment | | | Reversal of impairment | | | Net Impairment | | Pemex Exploration and Production | | Ps. | (129,350,315 | ) | | Ps. | — | | | Ps. | (129,350,315 | ) | Pemex Industrial Transformation | | | (19,751,882 | ) | | | 3,799,790 | | | | (15,952,092 | ) | AGRO | | | (4,206,653 | ) | | | — | | | | (4,206,653 | ) | Pemex Fertilizers | | | (1,935,500 | ) | | | — | | | | (1,935,500 | ) | | | | | | | | | | | | | | Total | | Ps. | (155,244,350 | ) | | Ps. | 3,799,790 | | | Ps. | (151,444,560 | ) | | | | | | | | | | | | | |
Cash Generating Unit of Pemex Exploration and Production
Pemex Exploration and Production recognized an impairment in the amount of Ps. 129,350,315 asAs of December 31, 2017, arising from: (i) the deferral2020, 2019 and 2018, PEMEX recognized a net impairment of the development investmentsPs. (36,353,700), Ps. (31,283,154) and a net reversal of impairment of Ps. 21,418,997, respectively, which is presented as a separate line item in the first 5 yearsconsolidated statement of comprehensive income as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 | | 2019 | | | 2018 | | | | (Impairment) | | | Reversal of impairment | | (Impairment) / Reversal of impairment, net | | (Impairment) | | | Reversal of impairment | | | (Impairment) / Reversal of impairment, net | | | (Impairment) | | | Reversal of impairment | | | Reversal of impairment / (Impairment) , net | | Pemex Industrial Transformation | | | (71,761,571 | ) | | — | | (71,761,571) | | | (1,275,480 | ) | | | 43,519,422 | | | | 42,243,942 | | | | (13,788,470 | ) | | | 14,448,080 | | | | 659,610 | | Pemex Exploration and Production(1) | | | (31,882,681 | ) | | 66,914,222 | | 35,031,541 | | | (133,523,711 | ) | | | 29,487,824 | | | | (104,035,887 | ) | | | (63,252,635 | ) | | | 128,266,251 | | | | 65,013,616 | | Pemex Logistics | | | — | | | 426,560 | | 426,560 | | | — | | | | 34,119,240 | | | | 34,119,240 | | | | (40,288,338 | ) | | | — | | | | (40,288,338 | ) | Pemex Fertilizers | | | (92,444 | ) | | — | | (92,444) | | | (2,298,775 | ) | | | — | | | | (2,298,775 | ) | | | (2,246,264 | ) | | | — | | | | (2,246,264 | ) | PMI Azufre Industrial | | | — | | | 42,214 | | 42,214 | | | (796,263 | ) | | | — | | | | (796,263 | ) | | | — | | | | — | | | | — | | PMI NASA | | | — | | | — | | — | | | (1,162,014 | ) | | | 646,603 | | | | (515,411 | ) | | | (1,719,627 | ) | | | — | | | | (1,719,627 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | (103,736,696 | ) | | 67,382,996 | | (36,353,700) | | | (139,056,243 | ) | | | 107,773,089 | | | | (31,283,154 | ) | | | (121,295,334 | ) | | | 142,714,331 | | | | 21,418,997 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | See Note 4 for the correction of error in the impairment of Pemex- Exploration and Production CGUs for 65,799,060. |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the economic horizonconsolidated financial statements (Figures stated in thousands, except as noted) Cash-Generating Units of Pemex Industrial Transformation As of December 31, 2020, 2019 and 2018, Pemex Industrial Transformation recognized a net impairment, a net reversal of impairment and a net reversal of impairment of Ps. (71,761,571), Ps. 42,243,942 and Ps. 659,610, respectively. The net reversal of impairment was in the proved reserves, which causedfollowing CGUs: | | | | | | | | | | | | | | | 2020 | | | 2019 | | | 2018 | | Minatitlán Refinery | | Ps. | (37,432,703 | ) | | | — | | | | — | | Madero Refinery | | | (18,412,687 | ) | | | — | | | | (733,307 | ) | Salamanca Refinery | | | (5,386,525 | ) | | | — | | | | — | | Tula Refinery | | | (2,820,750 | ) | | | — | | | | (5,099,635 | ) | Cadereita Refinery | | | (2,083,755 | ) | | | | | | | — | | Morelos Petrochemical Complex | | | (2,048,039 | ) | | | — | | | | — | | New Pemex Gas Processor Complex | | | (1,080,831 | ) | | | — | | | | — | | Cangrejera Petrochemical Complex | | | (1,484,489 | ) | | | — | | | | — | | Ciudad Pemex Gas Processing Complex | | | (709,127 | ) | | | — | | | | — | | Morelos Ethylene Processor Complex | | | (302,665 | ) | | | — | | | | — | | Pajaritos Petrochemical Complex | | | — | | | | (1,275,480 | ) | | | — | | Salina Cruz Refinery | | | — | | | | — | | | | (7,955,528 | ) | | | | | | | | | | | | | | Impairment | | | (71,761,571 | ) | | | (1,275,480 | ) | | | (13,788,470 | ) | | | | | | | | | | | | | | Salina Cruz Refinery | | Ps. | — | | | | 13,535,526 | | | | — | | Minatitlán Refinery | | | — | | | | 9,391,433 | | | | 14,448,080 | | Madero Refinery | | | — | | | | 7,721,233 | | | | — | | Morelos Petrochemical Complex | | | — | | | | 7,547,233 | | | | — | | Cangrejera Petrochemical Complex | | | — | | | | 3,143,924 | | | | — | | Tula Refinery | | | — | | | | 2,180,073 | | | | — | | | | | | | | | | | | | | | Reversal of impairment | | | — | | | | 43,519,422 | | | | 14,448,080 | | | | | | | | | | | | | | | Net (impairment) reversal of impairment | | Ps. | (71,761,571 | ) | | | 42,243,942 | | | | 659,610 | | | | | | | | | | | | | | |
As of December 31, 2020, the impairment of Ps. (71,761,571) was mainly due to (i) lower production levels, mainly at the Madero, Minatitlan and Tula Refineries due to a lower crude oil processing rate than previously projected; (ii) decrease in the price of products; (iii) a decrease in productionthe discount rate of CGUs of refined products and consequentlygas by 0.64% and 0.46% respectively, and increase in income, as well aspetrochemicals by 1.15% and ethylene by 0.26%; and (iv) there-categorization of part depreciation of the proved reserves as probable reserve, as a consequence of budget adjustments in the strategic investments in the Cantarell, Aceite terciario del Golfo, Crudo Ligero Marino, Antonio J. Bermúdez and Tzimin Xux projects, (ii) insufficient cash flows to make up for costs recovery at the Burgos and Lakach projects as a resulting from the appreciation of the Mexican peso against the U.S. dollar, by 4.3%, from a peso—peso/U.S. dollar exchange rate of Ps. 20.6640 to18.8452 = U.S. $1.00 as of December 31, 20162019 to Ps. 19.9487 = U.S. $1.00 as of December 31, 2020, which are used as cash flows when U.S. dollars are taken as reference. In 2019, the net reversal of impairment was mainly due to (i) important maintenance plans to recover assets use levels; (ii) a peso—greater supply of light crude oil by Pemex Exploration and Production improving the quality of refined products such as gasoline, turbosines and decreasing residual products such as fuel oil; (iii) an increase in the discount rate of CGUs of refined products, gas, petrochemicals and a decrease in ethylene by 0.03%, 0.09%, 0.06%, and 0.5% respectively, due to the effect of weighting of elements with which the references are determined; and (iv) the appreciation of the peso against the U.S. dollar, from a peso/U.S. dollar exchange rate of Ps. 19.786719.6829 = U.S. $1.00 as of December 31, 2018 to Ps. 18.8452 = U.S. $1.00 as of December 31, 2019, which are used as cash flows when U.S. dollars are taken as reference. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) In 2018, the net reversal of impairment was mainly due to (i) an increase in processing of refined products due to higher imports of crude oil and humid gas resulting in an increase in income related to transportation fees; (ii) the appreciation of the U.S. dollar against the peso, from a peso/U.S. dollar exchange rate of Ps.19.7867 = U.S. $1.00 as of December 31, 2017 givento Ps. 19.6829 = U.S. $1.00 as of December 31, 2018; (iii) a decrease in the discount rate of CGUs of refined products and gas and petrochemicals by 0.1% and 8.1%, respectively; and (iv) an increase in maintenance of the refineries and a decrease in gas production. To determine the value in use of long-lived assets associated with the CGUs of Pemex Industrial Transformation, the net present value of cash flows was determined based on the following assumptions: | | | | | | | | | | | | | | | | | | | | | | | As of December 31, | | | 2020 | | 2019 | | 2018 | | 2020 | | 2019 | | 2018 | | 2020 | | 2019 | | 2018 | | 2019 | | | Refining | | Gas | | Petrochemicals | | Ethylene** | Average crude oil Price | | 48.89 usd | | 54.13 usd | | 53.98 usd | | N.A. | | N.A. | | N.A. | Processed volume | | 920 mbd | | 723 mbd | | 680 mbd | | 2,134 mmpcd
of humid gas | | 2,056 mmpcd
of humid gas | | 2,717mmpcd
of humid gas | | Variable because the load inputs are diverse | Rate of U.S. dollar | | $19.9487 | | $18.8452 | | $19.6829 | | $19.9487 | | $18.8452 | | $19.68 | | 19.9487 | | $18.8452 | | $19.6829 | | $18.8452 | Useful lives of the cash-generating units (year average) | | 12 | | 12 | | 14 | | 7 | | 7 | | 8 | | 7 | | 7 | | 7 | | 6 | Discount rate | | 10.83% | | 11.47% | | 11.52% | | 9.76% | | 10.22% | | 10.22% | | 9.76% | | 8.61% | | 8. 92% | | 8.03% | Period* | | 2020-2032 | | 2020-2032 | | 2019-2034 | | 2020-2027 | | 2020-2027 | | 2019-2027 | | 2020-2027 | | 2020-2027 | | 2019-2026 | | 2020-2026 |
* | The first 5 years are projected and stabilize at year 6. |
** | This entity was merged into Pemex Industrial Transformation on July 1, 2019. |
CGUs in Pemex Industrial Transformation are processing centers grouped according to their types of processes as refineries, gas complex processors, and petrochemical centers. These centers produce various finished products for direct sale to customers or intermediate products that can be processed in another of its CGUs or by a third party. Each processing center of Pemex Industrial Transformation represents the smallest unit that has distinguishable revenues, with clear costs and expenses that enable future cash inflowsflows (value in use) to be determined. Cash flow determinations are denominated in U.S. dollars and then translatedmade based on PEMEX’s business plans, operating financial programs, forecasts of future prices of products related to the reporting currency usingprocesses of the CGUs, budget programs and various statistical models that consider historical information of processes and the capacity of various processing centers. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) 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 discounted cash flows, taking into consideration the volumes to be produced and sales to be carried out. As of December 31, 2020, 2019 and 2018, the value in use for the impairment of fixed assets was as follows: | | | | | | | | | | | | | | | 2020 | | | 2019 | | | 2018 | | Salamanca Refinery | | Ps. | 44,777,784 | | | | — | | | | — | | Cadereyta Refinery | | | 40,793,541 | | | | — | | | | — | | Salina Cruz Refinery | | | 30,422,588 | | | | — | | | | 9,428,152 | | Minatitlán Refinery | | | 18,819,247 | | | | 61,673,158 | | | | 54,846,565 | | Cangrejera Ethylene Processor Complex | | | 11,493,567 | | | | | | | | | | Tula Refinery | | | 34,829,922 | | | | 40,450,717 | | | | 39,429,897 | | Madero Refinery | | | 6,799,072 | | | | 27,840,687 | | | | 21,083,328 | | Morelos Complex (Ethylene) | | | 9,396,765 | | | | 13,731,548 | | | | — | | Pajaritos Complex (Ethylene) | | | — | | | | 1,275,480 | | | | — | | | | | | | | | | | | | | | Total value in use | | Ps. | 197,332,486 | | | | 144,971,590 | | | | 124,787,942 | | | | | | | | | | | | | | |
Cash-Generating Unit of Pemex Exploration and Production As of December 31, 2020, 2019 and 2018, Pemex Exploration and Production recognized a net reversal of impairment, and net impairment and a net reversal of impairment of Ps. 35,031,541, Ps. (104,035,887), and Ps. 65,013,616, respectively. See Note 4 for correction of non-material error in 2019 figures. The net reversal of impairment was in the following CGUs: | | | | | | | | | | | | | | | 2020 | | | 2019 | | | 2018 | | Aceite Terciario del Golfo | | Ps. | 29,954,188 | | | | — | | | | 29,592,864 | | Cantarell | | | 23,218,889 | | | | — | | | | 98,673,388 | | Burgos | | | 9,084,982 | | | | 7,929,552 | | | | — | | Tsimin Xux | | | 3,920,244 | | | | — | | | | 627,426 | | Cuenca de Macuspana | | | 735,919 | | | | — | | | | — | | Crudo Ligero Marino | | | — | | | | 949,645 | | | | — | | Yaxche | | | — | | | | 20,608,627 | | | | — | | Antonio J. Bermúdez | | | — | | | | — | | | | 6,811,344 | | Tamaulipas Constituciones | | | — | | | | — | | | | 140,125 | | | | | | | | | | | | | | | Reversal of impairment | | | 66,914,222 | | | | 29,487,824 | | | | 135,845,147 | | | | | | Chuc | | | (11,321,001 | ) | | | (25,431,950 | ) | | | (6,608,047 | ) | Antonio J. Bermúdez | | | (9,705,730 | ) | | | (3,562,021 | ) | | | — | | Ayín Alux | | | (3,269,173 | ) | | | (2,220,696 | ) | | | — | | Tamaulipas Constituciones | | | (2,819,337 | ) | | | — | | | | — | | Crudo Ligero Marino | | | (2,213,428 | ) | | | — | | | | (31,004,065 | ) | Lakach | | | (1,269,083 | ) | | | (56,119 | ) | | | (841,718 | ) | Arenque | | | (803,256 | ) | | | — | | | | — | | Ixtal – Manik | | | (481,673 | ) | | | (5,047,793 | ) | | | — | | Aceite Terciario del Golfo | | | — | | | | (46,284,407 | ) | | | — | | Cantarell | | | — | | | | (48,664,886 | ) | | | — | | Tsimin Xux | | | — | | | | (1,062,635 | ) | | | — | | Cuenca de Macuspana | | | — | | | | (166,013 | ) | | | (1,343,836 | ) | Poza Rica | | | — | | | | (1,027,191 | ) | | | — | | Yaxche | | | — | | | | — | | | | (20,491,627 | ) | Burgos | | | — | | | | — | | | | (10,542,238 | ) | | | | | | | | | | | | | | (Impairment) | | | (31,882,681 | ) | | | (133,523,711 | ) | | | (70,831,531 | ) | | | | | | | | | | | | | | Reversal of impairment (Impairment), net | | Ps. | 35,031,541 | | | | (104,035,887 | ) | | | 65,013,616 | | | | | | | | | | | | | | |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) As of December 31, 2020, Pemex Exploration and Production recognized a net reversal of impairment of Ps. 35,031,541 mainly due to: (i) an increase in crude oil prices, generating a positive effect of Ps. 50,763,557 mainly in the Cantarell and Aceite Terciario del Golfo (ATG) CGUs (ii) an increase in the volume of barrels of crude oil equivalent, generating an effect of Ps. 33,784,306 mainly in the ATG, Burgos and Crudo Ligero Marino CGUs. Additionally, there were increases in proven reserves in new fields, including Ixachi, Xikin, Jaatsul, Cheek, Uchbal, Tetl, Teekit, Suuk, Pokche and Mulach; (iii) the positive effect due to an exchange rate atof Ps. 21,067,337, mainly in Cantarell, ATG and Burgos CGUs, from Ps. 18.8452 = U.S. $1.00 as of December 31, 2019 to Ps. 19.9487 = U.S. $1.00 as of December 31, 2020; (iv) an increase in taxes of Ps. 3,844,410 was recognized due to a lower income in the date of report; (iii) a 0.3%production and price profiles as compared to December 31, 2019, impacting Antonio J. Bermúdez, Chuc and Tsimin Xux CGUs, among others. These effects were partially offset by an increase in the discount rate; (iv)rate of Ps. 74,428,069, or in percentage terms, from 6.18% in 2019 to 6.23% in 2020, which motivated the CGUs with higher revenues, sales volume, price and exchange rates to recognize this effect. As of December 31, 2019, Pemex Exploration and Production recognized a 7.2%net impairment of Ps. (104,035,887) mainly due to: (i) a decrease in production profiles volume in the barrel of crude oil equivalent generating a negative effect of Ps. (225,019,093), mainly in the Aceite Terciario del Golfo (“ATG”), Cantarell Chuc and Crudo Ligero Marino CGU. There were increases in the volume production profiles of new fields located in the CGU Yaxche (Xikin, Tetl, Teekit, Suuk, Pokche and Mulach fields) and Cuenca the Veracruz CGU (Ixachi field); however, these effects were only offset by those CGUs that presented a decrease in their production profiles; (ii) a decrease in crude oil forwardand gas prices, generating a negative effect of Ps. (58,110,000) mainly in Cantarell, ATG, Chuc and Tsimin Xux ; (iii) a decrease in exchange rate from 60.24 usd/blPs. 19.6829 = U.S. $1.00 as of December 31, 2018 to Ps. 18.8452 = U.S. $1.00 of December 31, 2019 resulting in 2016a negative effect of Ps. (15,307,000) mainly in Cantarell, Yaxché, Chuc and Tsimin Xux CGUs; (iv) derived from the application of the Energy Reform in 2013, which defined that the exploratory wells of Round 1.3 will not contribute resources to 55.89 usd/blPemex Exploration and Production, and for that reason, an impairment of Ps. (9,477,854) was recognized. These effects were offset by (i) an increase in 2017discount rate of Ps. 120,821,000 due to the updating of comparable companies taken as reference to the determination of the discount rate with the same risk profile, mainly in the ATG, Cantarell and (v)Chuc; (ii) a net benefit from lower income in production profile of Ps. 17,258,000, mainly in ATG, Cantarell and Chuc as a result of lower income in their production profiles; and (iii) during 2020 Pemex Exploration and Production carried out an analysis of the distribution of costs used for the determination of the value in use of some of the CGUs, resulting in changes associated with the distribution of costs of internal services, as well as an improvement in the determination of cost-sharing factors, resulting in Ps. 65,799,060 of reversal of impairment. As of December 31, 2018, Pemex Exploration and Production recognized a net reversal of impairment in the amount of Ps. 65,013,616 mainly due to (i) an advance of production in Cantarell for rethinking physical goals for the period from 2024 to 2029 with a recovery of Ps. 98,673,388. This computation was projected using a discount rate of 7.03% and a tax rate of 30% (observable market) on the operating profit with an economic horizon of 25 years, compared to a discount rate of 14.40% that includes the cost of financing and the pyramiding of taxes and observable rights in similar companies, including the Profit-sharing Duty; (ii) application in the fourth quarter of the relevant discount rate and tax rate (observable market), a net benefit was generated in most of the projects with respect to the previous year, mainly in the Aceite Terciario del Golfo project in the amount of Ps. 29,592,863. The foregoing was partially offset by an impairment of Ps. (63,252,635), mainly in (i) the Aguas Someras 2 projects in the amount of Ps. (58,318,030), (ii) the Crudo Ligero Marino projects, mainly due to higher water and salt content in the hydrocarbons reserves, (iii) the Yaxche Project, due to operating impacts in the fields directly related to production, and (iv) the Tsimin Xux and Chuc projects, mainly due to the natural decline of proved hydrocarbon reserves. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in production in the Macuspana project.thousands, except as noted) The cash generating unitsCGUs of Pemex Exploration and Production are investment projects in productive fields with hydrocarbon reserves associated with proved reserves (1P).reserves. These productive hydrocarbon fields contain varying degrees of heating power consisting of a set of wells and are supported by fixed assets associated directly with production, such as pipelines, production facilities, offshore platforms, specialized equipment and machinery. Each project represents the smallest unit which can concentrate the core revenues, with clear costs and expenses that enable future cash flows (value in use) to be determined. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
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:
| | | Average crude oil price | | 55.89 U.S. dollars/bl | Average gas price | | 4.92 U.S. dollars /mpc | Average condensates price | | 38.33 U.S. dollars /bl | Discount rate | | 14.40% annually |
The total forecast production, calculated with a horizon of 25 years is 7,091 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).reserves. The recoverable amount on each asset is the value in use. Cash Generating Units of Pemex Industrial Transformation
As of December 31, 2017, Pemex Industrial Transformation recognized a net impairment of Ps. (15,952,092).
The impairment was in the following cash generating units:
| | | | | Minatitlán Refinery | | Ps. | (5,691,005 | ) | Madero Refinery | | | (8,480,880 | ) | Salina Cruz Refinery | | | (5,579,997 | ) | | | | | | Total impairment of assets | | | (19,751,882 | ) | Cangrejera Petrochemical Center | | | 3,565,355 | | Independencia Petrochemical Center | | | 112,292 | | Arenque gas processor complex | | | 57,039 | | Matapionche gas processor complex | | | 65,104 | | | | | | | Reversal of impairment | | | 3,799,790 | | | | | | | Net impairment | | Ps. | (15,952,092 | ) | | | | | |
The impairment was mainly due to (i) an increase in capitalizable maintenance expenses in refining; (ii) the appreciation of the Mexican peso against the U.S. dollar, from a peso—U.S. dollar exchange rate of Ps. 20.6640 to U.S. $1.00 as of December 31, 2016 to a peso—U.S. dollar exchange rate of Ps. 19.7867 to U.S. $1.00 as of December 31, 2017; partially offset by (i) an increase in the transportation fees; (ii) an increase in the processing of wet gas due to higher imports of this product and redistribution by Pemex Exploration and Production; (iii) an increase in prices arising from the price liberalization in 2017; and (iv) a decrease in the discount rate of cash generating units of refined products, gas and petrochemicals of 4.4%, 4.5%, and 5.6%, respectively.
Cash-generating units in Pemex Industrial Transformation are processing centers grouped according to their types of processes as refineries, gas complex processors, and petrochemical centers. These centers produce various finished products for direct sale to customers or intermediate products that can be processed in another of its cash generating units or by a third party. Each processing center of Pemex Industrial Transformation
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
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 flow determinations are made based on PEMEX’s business plans, operating financial programs, forecasts of future prices of products related to the processes of the cash generating units, budget programs and various statistical models that consider historical information of processes and the capacity of the various processing centers.
To determine the value in use of long-lived assets associated with the cash-generating units of Pemex Industrial Transformation,to hydrocarbon extraction, the net present value of cash flows wasreserves is determined based on the following assumptions: | | | | | | | | | Refining | | Gas | | Petrochemicals | Average crude oil Price | | | | | | | | | | | | | | | 2020 | | | 2019 | | | 2018 | | Average crude oil price | | | 52.96 USD/bl | | | | 48.69 USD/bl | | | | 58.02 USD/bl | | Average gas price | | | 5.21 USD/mpc | | | | 5.07 USD/mpc | | | | 4.89 USD/mpc | | Average condensates price | | | 61.09 USD/bl | | | | 57.67 USD/bl | | | | 43.21 USD/bl | | Discount rate | | | 6.23% annual | | | | 6.18% annual | | | | 7.03% annual | |
For 2020, 2019 and 2018 the total forecast production, calculated with a horizon of 25 years was 6,731 million, 7,123 million and 6,192 million barrels per day of crude oil equivalent, respectively. Pemex Exploration and Production, in compliance with practices observed in the industry, estimates the recovery value of an asset by determining its value in use, based on cash flows associated with proved reserves after taxes and using a discount rate, also after taxes. Cash flows related to plugging wells provision costs are excluded in this computation of discounted cash flows. As of December 31, 2020, 2019 and 2018, values in use for CGU with impairment or reversal of impairment are: | | | | | | | | | | | | | | | 2020 | | | 2019 | | | 2018 | | Cantarell | | Ps. | 125,953,979 | | | | 101,446,620 | | | | 157,526,000 | | Chuc | | | 63,880,611 | | | | 72,301,156 | | | | 97,970,000 | | Aceite Terciario del Golfo | | | 39,947,448 | | | | 12,667,016 | | | | 80,713,000 | | Tsimin Xux | | | 25,910,556 | | | | 28,116,300 | | | | 38,152,000 | | Crudo Ligero Marino | | | 24,233,795 | | | | 18,935,146 | | | | 23,540,000 | | Antonio J. Bermúdez | | | 24,027,588 | | | | 39,195,252 | | | | — | | Burgos | | | 17,487,412 | | | | 10,731,645 | | | | 2,124,000 | | Ixtal – Manik | | | 12,647,284 | | | | 19,024,166 | | | | — | | Ayín Alux | | | 6,213,753 | | | | 2,705,441 | | | | — | | Tamaulipas Constituciones | | | 5,416,487 | | | | — | | | | — | | Arenque | | | 4,908,009 | | | | — | | | | — | | Cuenca de Macuspana | | | 1,096,972 | | | | 432,365 | | | | 680,000 | | Lakach | | | (169,119 | ) | | | (2,426,036 | ) | | | (1,658,000 | ) | Yaxche | | | — | | | | 93,677,507 | | | | 516,000 | | Poza Rica | | | — | | | | 15,029,941 | | | | — | | | | | | | | | | | | | | | Total | | Ps. | 351,554,775 | | | | 411,836,519 | | | | 399,563,000 | | | | | | | | | | | | | | |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) Cash-Generating Units of Pemex Logistics As of December 31, 2020, 2019 and 2018, Pemex Logistics recognized a reversal of impairment and impairment for Ps. 426,560, Ps. 34,119,240 and Ps. (40,288,338), respectively. The net reversal of impairment and impairment were in the following CGUs: | | | | | | | | | | | | | | | 2020 | | | 2019 | | | 2018 | | Vessel | | Ps. | 303,516 | | | | — | | | | — | | Land transport (white pipelines) | | | 123,044 | | | | — | | | | — | | Pipelines | | | — | | | | 34,119,240 | | | | — | | | | | | | | | | | | | | | Reversal of impairment | | | 426,560 | | | | 34,119,240 | | | | — | | | | | | Pipelines | | | — | | | | — | | | | (40,288,338 | ) | | | | | | | | | | | | | | (Impairment) | | | — | | | | — | | | | (40,288,388 | ) | | | | | | | | | | | | | | | | | | Reversal (impairment) net | | Ps. | 426,560 | | | | 34,119,240 | | | | (40,288,388 | ) | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, | | | | 2020 | | | 2019 | | | 2018 | | | 2020 | | | 2019 | | | 2018 | | | 2020 | | | 2019 | | | 2018 | | | | Pipelines | | | Landing transport | | | Vessel | | Discount rate | | | 11.97 | % | | | 11.94 | % | | | 13.55 | % | | | 11.97 | % | | | 11.94 | % | | | 13.55 | % | | | 11.97 | % | | | 11.94 | % | | | 13.55 | % | Useful life | | | 22 | | | | 23 | | | | 26 | | | | 5 | | | | 5 | | | | 6 | | | | 19 | | | | 19 | | | | 21 | |
As of December 31, 2020, Pemex Logistics recognized a reversal of impairment in land transport and vessel CGUs for Ps. 426,560, mainly due to an increase in projected cash inflows. | | 51.30 U.S. dollars | | N.A. | | N.A. | Processed volume
| | 767 mbd | | 3,085 mmpcd or sour gas | | Variable because the
load inputs are
diverse | Rate of U.S. dollar
| | Ps.19.7867 mxp/usd | | Ps.19.7867 mxp/usd | | Ps.19.7867 mxp/usd | Useful lives of the cash generating units
| | Average of 16 years | | Average of 9 years | | Average of 6 years | Discount rate
| | 11.53% annually | | 10.24% annually | | 9.71% annually | Period
| | 2018-2034 | | 2018-2029 | | 2016-2024 |
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 the volumes to be produced and sales to be carried out. As of December 31, 2017, the value in use for the impairment or2019, Pemex Logistics recognized a reversal of impairment in the CGU of fixedpipelines for Ps. 34,119,240 mainly due to (i) a decrease in the projected cost of losses from fuels subtraction from Ps. 39,388,055 as of December 31, 2018 to Ps. 4,644,846 as of December 31, 2019, which led to an improvement in future cash flows. Furthermore, the CRE established a mechanism that allowed Pemex Logistics to recover, through the pipeline transportation fee, a significant amount of the losses derived from fuel subtraction. Finally, a decrease in the discount rate from 13.55% at the end of 2018 to 11.94% at the end of 2019 due to the differences in curves used in reference rates between Mexican pesos and U.S. dollars. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) As of December 31, 2018, Pemex Logistics recognized an impairment in the CGU of pipelines for Ps. (40,288,338), mainly due to a decrease in projected cash inflows of 46%, from an annual average of Ps. 47,219,903 at the end of 2017 to Ps. 25,271,404 at the end of 2018, in addition to an increase in the cost of losses from fuels subtraction of 40%. This increase was partially offset by a decrease in direct operating costs of 58%, from annual average costs at the end of 2017 of Ps. 16,485,969 to Ps. 6,880,967 at the end of December 2018, as well as a decrease in the discount rate, from 15.41% at the end of 2017 to 13.55% at the end of 2018. CGU in Pemex Logistics are pipelines and transport equipment. The recoverable amounts of the assets wasas of December 31, 2019 and 2018, corresponding to the discounted cash flows at the rate of 11.97%, 11.94% and 13.55%, respectively, as follows: | | | | | Minatitlán Refinery
| | | Ps. 32,531,925 | | Madero Refinery
| | | 11,420,952 | | Salina Cruz Refinery
| | | 12,051,597 | | Cangrejera Petrochemical Center
| | | 17,544,825 | | Independencia Petrochemical Center
| | | 3,146,413 | | Arenque gas processor complex
| | | 1,283,201 | | Matapionche gas processor complex
| | | 1,074,729 | | | | | | | Total value in use
| | | Ps. 79,053,642 | | | | | | |
| | | | | | | | | | | | | | | 2020 | | | 2019 | | | 2018 | | | | | | TAD, TDGL, TOMS (Storage terminals) | | Ps. | 95,169,597 | | | Ps. | 147,249,859 | | | Ps. | 92,772,003 | | Pipelines | | | 88,740,662 | | | | 105,319,693 | | | | — | | Primary logistics | | | 108,036,325 | | | | 73,821,371 | | | | 111,941,265 | | Land Transport (white pipes) | | | — | | | | — | | | | 445,377 | | | | | | Total | | Ps. | 291,946,584 | | | Ps. | 326,390,923 | | | Ps. | 205,158,645 | | | | | | | | | | | | | | |
Pro-Agroindustria, S.A. de C.V.
Pro-Agroindustria, S.A. de C.V. recognized an impairment for Ps. (4,206,653) related to its nitric acid, amonium nitrate and UAN 32 acquired plants, the rehabilitation of which has not yet commenced. The company will not be able to develop an alternate plan for the rehabilitation of these plants in the following five years due to its financing commitments.
Cash GeneratingCash-Generating Units of Pemex Fertilizers
Cash generating units are plantsCGU is a plant used in the ammonia process.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Pemex Fertilizers recognized an impairment of Ps. (1,935,500) for the year ended December 31, 2017 resulting from (i) a decrease in the production capacity in fertilizers plants due to a shortage of raw material; (ii) an increase in raw material prices; and (iii) a decrease in ammonia sale prices.
The recoverable amount of assets is based on each asset’s value in use. To determine cash flows, volumes to be produced and sales to be carried out were taken into consideration. The value in use for the impairment of fixed assets was Ps. 2,744,600. Discount rate The discount raterates used was 9.71%. | ii. | As of December 31, 2016, the net reversal of impairment was as follows: |
| | | | | | | | | | | | | | | Impairment | | | Reversal of impairment | | | Reversal of impairment | | Pemex Exploration and Production | | | Ps. (16,872,238 | ) | | | Ps. 288,581,670 | | | | Ps. 271,709,432 | | Pemex Industrial Transformation | | | (2,768,267 | ) | | | 55,267,148 | | | | 52,498,881 | | Pemex Logistics | | | — | | | | 5,829,520 | | | | 5,829,520 | | Pemex Ethylene | | | — | | | | 1,276,510 | | | | 1,276,510 | | | | | | | | | | | | | | | Total | | | Ps. (19,640,505 | ) | | | Ps. 350,954,848 | | | | Ps. 331,314,343 | | | | | | | | | | | | | | |
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 mainly2020, 2019 and 2018 were 9.51%, 10.15% and 8.92%, respectively, due to the reallocationupdating 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 incomparable companies taken as reference to the Aceite Terciario del Golfo, Crudo Ligero Marino, Burgos, Cantarell and Antonio J. Bermudez crude oil projects, (ii) the appreciationdetermination 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) the authorization, with respect to the assignments that are to be safeguarded for two years, to consider such assignments for 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 production, such as pipelines, production facilities, offshore platforms, specialized equipment and machinery.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
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 |
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 Unit of Pemex Industrial Transformationrate.
As of December 31, 2016,2020, 2019 and 2018, Pemex Fertilizers recognized an impairment of Ps. (92,444), Ps. (2,298,775) and Ps. (2,246,264), respectively in CGUs mentioned above. The impairment was mainly caused from (i) the decrease in projected production due to the lack of raw material, (ii) increase in raw material prices, and (iii) decrease in ammonia prices. | | | | | | | | | | | | | | | As of December 31, | | | | 2020 | | | 2019 | | | 2018 | | | | Plant | | Exchange rate | | | 19.9487 | | | | 18.8452 | | | | 19.6829 | | Discount rate | | | 9.51 | % | | | 10.15 | % | | | 8.92 | % | Useful life | | | 22 | | | | 23 | | | | 26 | |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) Cash-Generating Unit of Pemex Azufre Industrial Transformation(PMI AZIND) PMI AZIND, a 99% subsidiary of MGAS, has, as a principal asset, a sulfur solidifying plant, located in the maritime sulfur storage terminal in the integral port administration of Coatzacoalcos, Veracruz; this plant is considered the CGU of this company. As of December 31, 2020, PMI AZIND recognized a net reversal of impairment of Ps. 52,498,881. The net reversal42,214, due to an appraisal on the sulfur solidifying plant which resulted in an increase of impairment was in the following cash generating units:its value.
| | | | | Minatitlán Refinery
| | | Ps. 33,165,095 | | Madero Refinery
| | | 21,833,892 | | Arenque gas processor complex
| | | 268,161 | | | | | | | Reversal of impairment
| | | 55,267,148 | | Cangrejera Petrochemical Center
| | | (2,590,870 | ) | Independencia Petrochemical Center
| | | (112,292 | ) | Matapionche gas processor complex
| | | (65,105 | ) | | | | | | Total impairment of assets
| | | (2,768,267 | ) | | | | | | Net reversal of impairment
| | | Ps. 52,498,881 | | | | | | |
As of December 31, 2016, Pemex Industrial Transformation2019, PMI AZIND recognized a net reversal ofan impairment of Ps. 52,498,881 mainly(796,263), due to (1)an appraisal on the sulfur solidifying plant which resulted in a decrease of its value. The recoverable amount is the fair value less costs of disposition. As of December 31, 2020 and 2019, the recoverable amounts were Ps. 528,577 and Ps. 513,882, respectively. The estimated useful life was 9 years in 2020 and 10 years in 2019. Cash-Generating Units of PMI NASA As of December 31, 2020, PMI NASA did not recognize any impairment change. Cash-Generating Unit are flotating hotels (“Flotels”) “Reforma Pemex” and “Cerro de la Pez” which provide food and hospitality services. As of December 31, 2019, PMI NASA recognized an impairment of Ps. (515,411), due to (i) an impairment in the Flotel Reforma Pemex of Ps. (1,146,278) as a result of rate adjustments; and (ii) a reversal of impairment of Ps. 55,267,148 corresponding to the Madero and Minatitlán refineries due to higher prices than were forecasted in 2015 during the market decline, a decrease630,866 in the discount rateCerro de la Pez Flotel, as a consequence of the recovery in the National Refinery System from 13.72%development of projects. The cash flow methodology was used 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) a reversal of impairment of the cash generating units of the Arenque gas processor complex of Ps. 268,161 due to an increase in the prices, the appreciation of the U.S. dollar against the Mexican peso and, improved efficiency in operating expenses and (3) impairment of three additional cash generating units, including Ps. (65,105) in the Matapionche gas processor complex, 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. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
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 various statistical models that consider historical information of processes and the capacity of the various processing centers.
To determine the value in use of long-lived assets associatedthe flotels, applying discount rates of 15.81% and 16.94% with the cash-generating unitsan average useful life of Pemex Industrial Transformation, the net present value of cash flows was determined based on the following assumptions:
| | | | | | | | | Refining | | Gas | | Petrochemicals | Average crude oil price
| | 52.30 U.S. dollars | | N.A. | | N.A. | Processed volume
| | 1,100 mbd | | 3,085 mmpcd or sour gas | | Variable because the
load inputs are
diverse | Rate of U.S. dollar
| | Ps.20.6640 mxp/usd | | Ps.20.6640 mxp/usd | | Ps.20.6640 mxp/usd | Useful lives of the cash generating units
| | Average of 14 years | | Average of 10 years | | Average of 4 years | Discount rate
| | 12.06% annually | | 10.72% annually | | 10.29% annually | Period
| | 2018-2034 | | 2018-2029 | | 2016-2024 |
17 years. The recoverable amount of assetsthe flotels is based on each asset’s value in use. The value in use for each asset is calculated based on cash flows, taking into consideration the volumes to be produced and sales to be carried out. As of December 31, 2017, the value in use for the impairment or reversal of impairment of fixed assets was as follows: | | | | | Minatitlán Refinery
| | | Ps. 43,856,284 | | Madero Refinery
| | | 33,961,120 | | Salina Cruz Refinery
| | | 36,057,410 | | Cangrejera Petrochemical Center
| | | 2,441,686 | | Independencia Petrochemical Center
| | | 1,706,687 | | Arenque gas processor complex
| | | 473,499 | | Matapionche gas processor complex
| | | 572,909 | | | | | | | Total value in use
| | | Ps. 119,069,595 | | | | | | |
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.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
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, 2016, the value in usewhich 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%.3,747,142.
As of December 31, 2016, reversal2018, PMI NASA recognized an impairment of impairment amounted Ps. 5,829,520, mainly(1,719,627), due to improvementsthe disuse of the Cerro de la Pez Flotel, as a consequence of the reduction in operating costs. Cash generating unitthe development of ethylene
Pemex Ethylene calculatesprojects in recent months. This impairment was calculated by comparing the recoverable amount that would have been required to acquire a flotel with similar characteristics to the replacement cost of assets based on the value in use.a similar flotel constructed by a specialized company. The value in use for each asset is calculated based on cash flows, taking into consideration services income. Asreplacement cost as of December 31, 2016 reversal of impairment amounted to Ps.1,276,510. During 2016 the discount rate used2018 was 10.29%.Ps. 1,476,218.
f.G. | PEMEX entered into certainAs of December 31, 2019, drilling equipment that was acquired through 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, 2017 and 2016, assets acquired through these capital leases were as follows:
| | | | | | | | | | | 2017 | | | 2016 | | Investment in tankers and drilling equipment | | Ps. | 11,142,197 | | | Ps. | 11,142,197 | | Less accumulated depreciation | | | (1,696,089 | ) | | | (1,274,314 | ) | | | | | | | | | | | | Ps. | 9,446,108 | | | Ps. | 9,867,883 | | | | | | | | | | |
The liabilities relating to the assets listed above are payable in the years following December 31, 2017 as presented below:
| | | | | | | | | Year | | Pesos | | | U.S. dollars | | 2018 | | | Ps. 1,867,411 | | | | 94,377 | | 2019 | | | 1,192,496 | | | | 60,268 | | 2020 | | | 1,192,496 | | | | 60,268 | | 2021 | | | 1,192,496 | | | | 60,268 | | 2022 | | | 1,192,496 | | | | 60,268 | | 2023 and thereafter | | | 2,158,559 | | | | 109,091 | | | | | | | | | | | | | | 8,795,954 | | | | 444,540 | | Less: short-term unaccrued interest | | | 331,412 | | | | 16,749 | | Less: long-term unaccrued interest | | | 843,480 | | | | 42,630 | | | | | | | | | | | Total capital leases | | | 7,621,062 | | | | 385,161 | | Less: current portion of leases (excluding interest) | | | 1,543,881 | | | | 78,026 | | | | | | | | | | | Total long-term capital leases | | | Ps. 6,077,181 | | | U.S. $ | 307,135 | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The interest expense from capital leases for the years ended December 31, 2017, 2016 and 2015 was Ps. 418,883, Ps. 500,654 and Ps. 450,760, respectively.
The discount rates applied to the calculation of capital leases were as follows:
| i. | 7.96 % rate in nominal terms (1.11% in real terms)were classified as rights of December 31, 2017.use that amounted to Ps. 6,223,655 (see Note 17). |
H. | ii. | 7.96 % rate in nominal terms (4.45% in real terms) as of December 31, 2016. |
| iii. | 7.96 % rate in nominal terms (5.71% in real terms) as of December 31, 2015. |
g. | Certain infrastructure assets used for oil and gas activities are guarantees 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. | PEMEX can conduct exploration and extraction activities through Exploration and Extraction Contracts (EEC)(“EECs”). The EECs are awarded individually, through associations or joint ventures based on guidelines approved by the NHCComisión Nacional de Hidrocarburos (“National Hydrocarbons Commission” or “CNH”) and are classified into: |
| a. | Production-sharing contracts; |
| b. | Profit-sharing contracts; |
| c. | License agreements; and |
Certain of the EECs are operated though joint arrangements, for which PEMEX recognizes in its financial statements both the rights to the assets and the obligations for the liabilities, as well as profits and losses relating to the arrangements. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) EECs as of December 31, 20172020 are: a. | Production-sharing contracts |
contracts: | i. | Hydrocarbon Extraction Contract (Shallow Water),Ek-Balam contractual area. |
The object of the contractproduction-sharing contracts is the execution of oil activities under shared production contracts between,among Mexico through the Mexican Government via the NHCCNH and Pemex Exploration and Production as a contractor,(as contractor), for the contractual area and all the sharing of costs, risks, and terms and conditions involved in the contract and in accordance with the applicable regulations and best practices of the Industryindustry receiving, in exchange, benefits in favor of the contractor. I. | Production contracts without a partner |
Hydrocarbons Exploration and Extraction Contract for Block 29, Cuenca del Sureste, in which Pemex Exploration and Production gotowns 100% of the project. Hydrocarbon Extraction Contract for the Ek-Balam (shallow water) Block. Pemex Exploration and Production owns 100% of this contractual area. II. | ii. | Exploration and Extraction Contract related to Area 2 Tampico Misantla, with the association formed by Pemex Exploration and Production and DEA.contracts in consortium |
Exploration and Extraction Contract related to Block 2 Tampico Misantla, pursuant to a consortium formed by Pemex Exploration and Production and Deutsche Erdoel AG (“DEA”) and Compañía Española de Petróleos, S. A. U., (jointly liable). The object of the contract is the realization of oil activities, under shared production contracts, by the contractor for the contractual area and all the sharing of costs, risks, terms and conditions involved in the contract and in accordance with the applicable regulations and best practices of the Industryindustry, receiving in exchange, benefits in favor of the contractor. Pemex Exploration and Production owns 70% ofand DEA each have a 50% interest in this contractual area, while DEA has the 30% of this contractual area, respectively. The condition of operator will be in charge ofarea. Pemex Exploration and Production.Production is the operator under this contract. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
This contract requiresExploration and Extraction Contract, related to Block 8 Cuencas del Sureste, pursuant to a total investment of U.S. $ 45,230 million, of which U.S. $ 36,520 million correspond to exploratory activities to be carried out in the period of 2017-2021.
| iii. | Exploration and Extraction Contract, related to Area 8 Cuencas del Sureste, pursuant to consortium formed by Pemex Exploration and Production and EPC Hidrocarburos México, S. A. de C. V. company (EPC). |
consortium formed by Pemex Exploration and Production, EPC Hidrocarburos México, S. A. de C. V. (EPC). and Ecopetrol Global Energy, S. L. U. (jointly liable). Pemex Exploration and Production was designated by all the participating companies and with the approval of the NHCCNH as the operator of this contract and all operational aspects of the petroleum activities will be carried out only by the operator on behalf of all participating companies. Pemex Exploration and Production and EPC each have a 50% interest in this contractual area. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) Exploration and Extraction Contract, related to Block 16, Tampico Misantla, pursuant to a consortium by Pemex Exploration and Production, Deutsche Erdoel México S. de R.L. de C.V. (as operator) and CEPSA E.P. México S. de R.L. de C.V., as jointly liable. Pemex Exploration and Production owns 40% of this contractual area, DEUTSCHE Erdoel México S. de R.L. de C.V. owns 40%, and CEPSA E.P. México S. de R.L. de C.V. owns 20%. Exploration and Extraction Contract, related to Block 17, Tampico Misantla, pursuant to a consortium by Pemex Exploration and Production, Deutsche Erdoel México S. de R.L. de C.V. (as operator) and CEPSA E.P. México S. de R.L. de C.V., as jointly liable. Pemex Exploration and Production owns 40% of this contractual area, Deutsche Erdoel México S. de R.L. de C.V. owns 40%, and CEPSA E.P. México S. de R.L. de C.V. owns 20%. Exploration and Extraction Contract, related to Block 18, Tampico Misantla, pursuant to a consortium by Pemex Exploration and Production (as operator) and CEPSA E.P. México S. de R.L. de C.V. (as partner). Pemex Exploration and Production owns 80% of this contractual area, and CEPSA E.P. México S. de R.L. de C.V. owns 20%. Hydrocarbons Exploration and Extraction Contract for Block 32, Cuenca del Sureste, by Pemex Exploration and Production (as operator) and Total E&P México, S.A. de C.V. (as partner). Pemex Exploration and Total E&P México, S.A. de C.V each have a 50% interest in this contractual area. Hydrocarbons Exploration and Extraction Contract for Block 33, Cuenca del Sureste, by Pemex Exploration and Production (as operator) and Total E&P México, S.A. de C.V. Pemex Exploration and Total E&P México, S.A. de C.V each have a 50% interest in this contractual area. Hydrocarbons Exploration and Extraction Contract for Block 35, Cuenca del Sureste, by Shell Exploración y Extracción de México, S.A. de C.V (as operator) and Pemex Exploration and Production. Shell Exploración y Extracción de México, S.A. de C.V. and Pemex Exploration each have a 50% interest in this contractual area. Exploration and Extraction Contract, related to the Santuario El Golpe Block, pursuant to a consortium formed by Pemex Exploration and Production (as partner) and Petrofac México, S.A. de C.V. (PETROFAC), as operator. Pemex Exploration and Production owns 64% of this contractual area and PETROFAC owns 36%. Exploration and Extraction Contract, related to the Misión Block, pursuant to a consortium formed by Pemex Exploration and Production (as partner) and Servicios Múltiples de Burgos, S.A. de C.V. (as operator). Pemex Exploration and Production owns 51% of this contractual area and Servicios Múltiples de Burgos, S.A. de C.V. owns 49%. Exploration and Extraction Contract, related to Ébano Block, pursuant to a consortium formed by Pemex Exploration and Production (as partner), DS Servicios Petroleros, S.A. de C.V. (as operator) and D&S Petroleum S.A. de C.V. (as partner). Pemex Exploration and Production owns 45% of this contractual area, Servicios Múltiples de Burgos owns 54.99%, while D&S Petroleum S.A. de C.V. owns 0.01%. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) The nature of the contract relationship is the execution of oil activities, under the license contracting modality, under which the contractor is granted the right to explore and extract at its exclusive cost and risk hydrocarbons owned by the Mexican nation, who must comply with the obligations arising from the contract in the name and representation of each of the signatory companies in the contractual area in accordance with the applicable regulations, industry best practices and the terms and conditions of the contract. The contractor shall be entitled to payment for hydrocarbons produced, in accordance with the terms of the contracts, and after payments to the Mexican Government are made. I. | License contracts without association |
Hydrocarbons Exploration and Extraction Contract for Block 5, Plegado Perdido, in which Pemex Exploration and Production owns 100% of the project. Hydrocarbons Exploration and Extraction Contract for Block 18, Cordilleras Mexicanas, in which Pemex Exploration and Production owns 100% of the project. II. | i. | A licensing contract with BHP Billiton Petróleo Operaciones de México, S. de R.L. (BHP Billiton) for the Trión block, under which BHP Billiton has the right to explore and extract hydrocarbons owned by MexicoLicense contracts in the contractual area and bears the costs and risks associated with such exploration and extraction activities.association |
Hydrocarbons Exploration and Extraction Contract for Block 3 “Plegado Perdido”, in deep waters, formed by INPEX Corporation (“INPEX”) (as partner), Chevron Energía de Mexico, S. de R.L. de C.V. (“Chevron”) (as operator) and Pemex Exploration and Production, (as partner). Chevron, Pemex Exploration and Production and INPEX have a 37.50%, 27.50% and 35.00% interest in this project, respectively, and will be jointly liable for all obligations of the contractors according to this contract regardless of their participation interest. Hydrocarbons Exploration and Extraction Contract for Block 2, Plegado Perdido, formed by Pemex Exploration and Production (as partner) and Shell Exploración y Extracción de México, S.A. de C.V. (as operator). Pemex Exploration and Production and Shell Exploración y Extracción de México, S.A. de C.V. each have a 50% interest in this project. Hydrocarbons Exploration and Extraction Contract for Block 22, Cuenca Salina, formed by Pemex Exploration and Production, Inpex E&P México, S.A. de C.V., (as partners), and Chevron (as operator). Chevron, Pemex Exploration and Production and Inpex E&P México, S.A. de C.V., have a 37.5%, 27.5% and 35% interest in this project, respectively. A licensing contract with BHP Billiton Petróleo Operaciones de México, S. de R.L. (“BHP Billiton”) for the Trión Block. BHP Billiton owns 60% of the contractual area, while Pemex Exploration and Production owns 40%. | ii. | Hydrocarbons Exploration, and Extraction Contract for the contractual area 3 “Plegado Perdido”, in deep waters, formed by Inpex, Chevron and Pemex Exploration and Production. |
A licensing contract that permits the exploration and extraction of hydrocarbons owned by Mexico in the contractual area. Chevron was appointed by the participating companies, with the approval of the NHC, as the operator of this contract on behalf of each of the participating companies.signatory companies are jointly liable for all obligations of the contractors.
Chevron,
Hydrocarbons Exploration and Extraction Contract for the Cárdenas Mora Block, for onshore fields, formed by Pemex Exploration and Production (as partner), Petrolera Cárdenas Mora, S. A. P. I. de C. V. (as operator) and Cheiron Holding Limited (jointly liable). Pemex Exploration and Production and InpexPetrolera Cárdenas Mora, S. A. P. I. de C. V. each have a 33.3334%50% of interest in this project. Hydrocarbons Exploration and Extraction Contract for the Ogarrio Block, for onshore fields, formed by Pemex Exploration and Production (as partner), 33.3333%Deutche Erdoel México, S. de R.L. de C.V. (as operator) and 33.3333%DEA Deutche Erdoel, A.G. (“DEA”) (jointly liable). Pemex Exploration and Production and DEA each have a 50% interest in this project. Hydrocarbons Exploration and Extraction Contract for the Miquetla Block, for onshore fields, formed by Pemex Exploration and Production (as partner) and Operadora de Campos DWF, S.A. de C.V. (as operator). Pemex Exploration and Production has a 49% interest in this project respectively.while Operadora de Campos DWF, S.A. de C.V. has a 51% interest. Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) See below for a condensed statement of comprehensive income and condensed statement of financial position, summarizing the projects listed above: | | | Profit-sharing | | License | | | | | | | | | Production-sharing contracts | | As of /For the year ended December 31, 2017 | | EK / Balam | | Block 2 | | Block 8 | | Trion | | Block 3 | | Total | | | As of /For the year ended December 31, 2020 | | | EK-Balam | | Block 2 | | Block 8 | | Block 16 | | Block 17 | | Block 18 | | Block 29 | | Block 32 | | Block 33 | | Block 35 | | Santuario El Golpe | | Misión | | Ébano | | | Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net sales | | Ps. | 7,009,464 | | | Ps. | — | | | Ps. | — | | | Ps. | — | | | Ps. | — | | | Ps. | 7,009,464 | | | | 11,838,057 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,559,644 | | | | 942,514 | | | | 374,118 | | Cost of sales | | 5,447,955 | | | 5,953 | | | 4,845 | | | | — | | | 511 | | | 5,459,264 | | | | 10,893,808 | | | | 50,159 | | | | 45,229 | | | | 18,443 | | | | 19,522 | | | | 65,343 | | | | 17,783 | | | | 51,238 | | | | 107,548 | | | | 274,445 | | | | 673,887 | | | | 1,273,269 | | | | 637,905 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross income (loss) | | 1,561,509 | | | (5,953 | ) | | (4,845 | ) | | | — | | | (511 | ) | | 1,550,200 | | | | 944,249 | | | | (50,159 | ) | | | (45,229 | ) | | | (18,443 | ) | | | (19,522 | ) | | | (65,343 | ) | | | (17,783 | ) | | | (51,238 | ) | | | (107,548 | ) | | | (274,445 | ) | | | 885,757 | | | | (330,755 | ) | | | (263,787 | ) | Other income (loss), net | | 4,852 | | | | — | | | | — | | | | — | | | | — | | | 4,852 | | | | (128,602 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Administrative expenses | | 34,338 | | | | — | | | | — | | | | — | | | | — | | | 34,338 | | | | 62,964 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss) | | 1,532,023 | | | (5,953 | ) | | (4,845 | ) | | | — | | | (511 | ) | | 1,520,714 | | | | 752,683 | | | | (50,159 | ) | | | (45,229 | ) | | | (18,443 | ) | | | (19,522 | ) | | | (65,343 | ) | | | (17,783 | ) | | | (51,238 | ) | | | (107,548 | ) | | | (274,445 | ) | | | 885,757 | | | | (330,755 | ) | | | (263,787 | ) | Taxes, duties and other | | 158,347 | | | | — | | | | — | | | | — | | | | — | | | 158,347 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss) | | Ps. | 1,373,676 | | | Ps. | (5,953 | ) | | Ps. | (4,845 | ) | | Ps. | — | | | Ps. | (511 | ) | | Ps. | 1,362,367 | | | | 752,683 | | | | (50,159 | ) | | | (45,229 | ) | | | (18,443 | ) | | | (19,522 | ) | | | (65,343 | ) | | | (17,783 | ) | | | (51,238 | ) | | | (107,548 | ) | | | (274,445 | ) | | | 885,757 | | | | (330,755 | ) | | | (263,787 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | Ps. | — | | | Ps. | 20 | | | Ps. | 25 | | | Ps. | — | | | Ps. | — | | | Ps. | 45 | | | | 9 | | | | 22,852 | | | | 17,089 | | | | — | | | | — | | | | 5,431 | | | | 16 | | | | 13,868 | | | | — | | | | — | | | | 15,213 | | | | 5 | | | | — | | Accounts receivable | | | — | | | 1,013 | | | 1,804 | | | | — | | | 327 | | | 3,144 | | | | 11,838,057 | | | | 161,079 | | | | 7,848 | | | | 17,040 | | | | (907 | ) | | | — | | | | — | | | | — | | | | (31,348 | ) | | | (21,559 | ) | | | 1,640,681 | | | | 1,290,282 | | | | 374,118 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total current assets | | | — | | | 1,033 | | | 1,829 | | | | — | | | 327 | | | 3,189 | | | | 11,838,066 | | | | 183,931 | | | | 24,937 | | | | 17,040 | | | | (907 | ) | | | 5,431 | | | | 16 | | | | 13,868 | | | | (31,348 | ) | | | (21,559 | ) | | | 1,655,894 | | | | 1,290,287 | | | | 374,118 | | | | | | | | | | | | | | | | | | | | | | Wells, pipelines, properties, plant and equipment, net | | 14,869,906 | | | | — | | | | — | | | 4,498,234 | | | 1,107,311 | | | 20,475,451 | | | | 39,477,424 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,344,617 | | | | 802,194 | | | | 1,317,055 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total assets | | 14,869,906 | | | 1,033 | | | 1,829 | | | 4,498,234 | | | 1,107,638 | | | 20,478,640 | | | | 51,315,490 | | | | 183,931 | | | | 24,937 | | | | 17,040 | | | | (907 | ) | | | 5,431 | | | | 16 | | | | 13,868 | | | | (31,348 | ) | | | (21,559 | ) | | | 3,000,511 | | | | 2,092,481 | | | | 1,691,173 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Suppliers | | 796,300 | | | | — | | | | — | | | | — | | | | — | | | 796,300 | | | | 4,340,715 | | | | — | | | | — | | | | 18,443 | | | | 19,522 | | | | — | | | | 670 | | | | — | | | | 107,548 | | | | 274,445 | | | | 930,246 | | | | 615,457 | | | | 602,659 | | Taxes and duties payable | | 973 | | | | — | | | | — | | | | — | | | | — | | | 973 | | | | 462 | | | | 999 | | | | 1,067 | | | | — | | | | — | | | | 1,481 | | | | 857 | | | | 1,871 | | | | — | | | | — | | | | — | | | | — | | | | — | | Other current liabilities | | 4,391 | | | 1,809 | | | 2,369 | | | | — | | | | — | | | 8,569 | | | | 474,670 | | | | 233,091 | | | | 69,099 | | | | 17,040 | | | | (907 | ) | | | 69,293 | | | | 16,272 | | | | 63,235 | | | | (31,348 | ) | | | (21,559 | ) | | | 96,251 | | | | 347,774 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total current liabilities | | 801,664 | | | 1,809 | | | 2,369 | | | | — | | | | — | | | 805,842 | | | | | | | | | | | | | | | | | | | | | | | Total liabilities | | Ps. | 801,664 | | | Ps. | 1,809 | | | Ps. | 2,369 | | | Ps. | — | | | Ps. | — | | | Ps. | 805,842 | | | | 4,815,847 | | | | 234,090 | | | | 70,166 | | | | 35,483 | | | | 18,615 | | | | 70,774 | | | | 17,799 | | | | 65,106 | | | | 76,200 | | | | 252,886 | | | | 1,026,497 | | | | 963,231 | | | | 602,659 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Equity (deficit), net | | Ps. | 14,068,242 | | | Ps. | (776 | ) | | Ps. | (540 | ) | | Ps. | 4,498,234 | | | Ps. | 1,107,638 | | | Ps. | 19,672,798 | | | | 46,499,643 | | | | (50,159 | ) | | | (45,229 | ) | | | (18,443 | ) | | | (19,522 | ) | | | (65,343 | ) | | | (17,783 | ) | | | (51,238 | ) | | | (107,548 | ) | | | (274,445 | ) | | | 1,974,014 | | | | 1,129,250 | | | | 1,088,514 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NOTE 13. INTANGIBLE ASSETS
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | License contracts | | As of /For the year ended December 31, 2020 | | Trion | | | Block 3 | | | Block 2 | | | Block 5 | | | Block 18 | | | Block 22 | | | Cárdenas Mora | | | Ogarrio | | | Miquetla | | | | | | | | | | | | Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net sales | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,005,967 | | | | 1,184,356 | | | | 167,504 | | Cost of sales | | | 9,360 | | | | 32,908 | | | | 89,762 | | | | 100,050 | | | | 106,755 | | | | 92,633 | | | | 606,463 | | | | 674,421 | | | | 189,557 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross income (loss) | | | (9,360 | ) | | | (32,908 | ) | | | (89,762 | ) | | | (100,050 | ) | | | (106,755 | ) | | | (92,633 | ) | | | 399,504 | | | | 509,935 | | | | (22,053 | ) | Other income (loss), net | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Administrative expenses | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss) | | | (9,360 | ) | | | (32,908 | ) | | | (89,762 | ) | | | (100,050 | ) | | | (106,755 | ) | | | (92,633 | ) | | | 399,504 | | | | 509,935 | | | | (22,053 | ) | Taxes, duties and other | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss) | | | (9,360 | ) | | | (32,908 | ) | | | (89,762 | ) | | | (100,050 | ) | | | (106,755 | ) | | | (92,633 | ) | | | 399,504 | | | | 509,935 | | | | (22,053 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | | — | | | | — | | | | — | | | | 20 | | | | 20 | | | | — | | | | 146 | | | | 512 | | | | — | | Accounts receivable | | | — | | | | (32,908 | ) | | | (36,216 | ) | | | — | | | | — | | | | (48,872 | ) | | | 1,892,736 | | | | 1,648,777 | | | | 167,505 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total current assets | | | — | | | | (32,908 | ) | | | (36,216 | ) | | | 20 | | | | 20 | | | | (48,872 | ) | | | 1,892,882 | | | | 1,649,289 | | | | 167,505 | | Wells, pipelines, properties, plant and equipment, net | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,774,845 | | | | 1,345,902 | | | | 97,546 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total assets | | | — | | | | (32,908 | ) | | | (36,216 | ) | | | 20 | | | | 20 | | | | (48,872 | ) | | | 3,667,727 | | | | 2,995,191 | | | | 265,051 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Suppliers | | | 9,360 | | | | — | | | | 85,698 | | | | 670 | | | | — | | | | 92,633 | | | | 690,174 | | | | 980,727 | | | | 181,605 | | Taxes and duties payable | | | — | | | | — | | | | — | | | | 4,976 | | | | 5,312 | | | | — | | | | — | | | | — | | | | — | | Other current liabilities | | | — | | | | — | | | | (32,152 | ) | | | 94,424 | | | | 101,463 | | | | (48,872 | ) | | | 886,914 | | | | 464,933 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total liabilities | | | 9,360 | | | | — | | | | 53,546 | | | | 100,070 | | | | 106,775 | | | | 43,761 | | | | 1,577,088 | | | | 1,445,660 | | | | 181,605 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Equity (deficit), net | | | (9,360 | ) | | | (32,908 | ) | | | (89,762 | ) | | | (100,050 | ) | | | (106,755 | ) | | | (92,633 | ) | | | 2,090,639 | | | | 1,549,531 | | | | 83,446 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) NOTE 14. | INTANGIBLE ASSETS, NET |
At December 31, 20172020 and 2016,2019, intangible assets, net are mainly wells unassigned to a reserve and other components of intangible assets, which amounted to Ps. 9,088,56322,775,784 and Ps. 8,639,242,Ps.14,584,524, respectively as follows: | | | | | | | | | | | 2017 | | | 2016 | | Wells unassigned to a reserve: | | | | | | | | | Balance at the beginning of period | | Ps. | 8,639,242 | | | Ps. | 14,304,961 | | Additions to construction in progress | | | 20,553,952 | | | | 20,526,300 | | Transfers against expenses | | | (3,663,986 | ) | | | (9,798,246 | ) | Transfers against fixed assets | | | (16,440,645 | ) | | | (16,393,773 | ) | | | | | | | | | | Balance at the end of period | | Ps. | 9,088,563 | | | Ps. | 8,639,242 | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)A. Wells unassigned to a reserve
| | | | | | | | | | | 2020 | | | 2019 | | Wells unassigned to a reserve: | | | | | | | | | Balance at the beginning of period | | Ps. | 12,831,281 | | | Ps. | 9,779,239 | | Additions to construction in progress | | | 23,237,519 | | | | 17,028,974 | | Transfers against expenses | | | (8,404,284 | ) | | | (7,990,877 | ) | Transfers against fixed assets | | | (6,229,356 | ) | | | (5,986,055 | ) | | | | | | | | | | Balance at the end of period | | Ps. | 21,435,160 | | | Ps. | 12,831,281 | | | | | | | | | | |
In addition, as of December 31, 20172020 and 2016,2019, PEMEX recognized expenses related to unsuccessful wells of Ps. 2,500,63819,351,986 and Ps. 19,307,838,79,595,185, respectively, directly in its statement of comprehensive income. NOTE 14. B. Other intangible assets
| | | | | | | | | | | | | As of December 31, 2020 | | Licenses | | | Exploration expenses, evaluation of assets and concessions | | | Total | | Cost | | | | | | | | | | | | | Balance at the beginning of the year | | Ps. | 4,593,100 | | | | 2,174,063 | | | | 6,767,163 | | Additions | | | 375,801 | | | | 27,785 | | | | 403,586 | | Disposals | | | (139,663 | ) | | | (527,489 | ) | | | (667,152 | ) | Effects of foreign exchange | | | 56,067 | | | | 94,741 | | | | 150,808 | | | | | | | | | | | | | | | | | Ps. | 4,885,305 | | | | 1,769,100 | | | | 6,654,405 | | | | | | Amortization accumulated | | | | | | | | | | | | | Balance at the beginning of the year | | Ps. | (4,232,303 | ) | | | (781,617 | ) | | | (5,013,920 | ) | Disposals | | | 138,099 | | | | 132,935 | | | | 271,034 | | Amortization | | | (441,229 | ) | | | (37,759 | ) | | | (478,988 | ) | Effects of foreign exchange | | | (56,681 | ) | | | (35,226 | ) | | | (91,907 | ) | | | | | | | | | | | | | | | | | (4,592,114 | ) | | | (721,667 | ) | | | (5,313,781 | ) | | | | | Balance at the end of the year | | Ps. | 293,191 | | | | 1,047,433 | | | | 1,340,624 | | | | | | | | | | | | | | | Useful lives | | | 1 to 3 years | | | | Up to 36 years | | | | | |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) | | | | | | | | | | | | | As of December 31, 2019 | | Licenses | | | Exploration expenses, evaluation of assets and concessions | | | Total | | Cost | | | | | | | | | | | | | Balance at the beginning of the year | | | 4,391,069 | | | | 2,255,551 | | | | Ps. 6,646,620 | | Additions | | | 201,853 | | | | 28,850 | | | | 230,703 | | Effects of foreign exchange | | | (13,436 | ) | | | (96,724 | ) | | | (110,160 | ) | | | | | | | | | | | | | | | | | 4,579,486 | | | | 2,187,677 | | | | 6,767,163 | | Amortization accumulated | | | | | | | | | | | | | Balance at the beginning of the year | | | (3,871,442 | ) | | | (743,865 | ) | | | Ps. (4,615,307 | ) | Amortization | | | (386,414 | ) | | | (70,617 | ) | | | (457,031 | ) | Effects of foreign exchange | | | 25,553 | | | | 32,865 | | | | 58,418 | | | | | | | | | | | | | | | | | | (4,232,303 | ) | | | (781,617 | ) | | | (5,013,920 | ) | Balance at the end of the year | | | 347,183 | | | | 1,406,060 | | | | Ps. 1,753,243 | | | | | | | | | | | | | | | Useful lives | | | 1 to 3 years | | | | Up to 36 years | | | | | |
NOTE 15. | LONG-TERM NOTES RECEIVABLE, GOVERNMENT BONDS AND OTHER ASSETS a. | Long-term notes receivable |
As of December 31, 20172020 and 2016,2019, the balance of long-term notes receivable was as follows: | | | | | | | | | | | 2017 | | | 2016 | | Promissory notes issued by the Mexican Government | | Ps | . 147,274,076 | | | Ps | .140,578,871 | | Other long-term notes receivable(1) | | | 1,218,833 | | | | 8,028,731 | | | | | | | | | | | Total long-term notes receivable | | Ps | . 148,492,909 | | | Ps | .148,607,602 | | | | | | | | | | |
A. | Long-term notes receivable |
| | | | | | | | | | | 2020 | | | 2019 | | Promissory notes issued by the Mexican Government | | | Ps. — | | | | Ps. 121,624,852 | | Other long-term notes receivable (1) | | | 886,827 | | | | 940,454 | | | | | | | | | | | | | | Total long-term notes receivable | | | Ps. 886,827 | | | | Ps. 122,565,306 | | | | | | | | | | |
(1) | (1) | For 2016, primarily CENAGAS.Mainly collection rights related to Value Added Tax from the non-recourse factoring contract between Pemex Logistics and Banco Mercantil del Norte, S.A. |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) Promissory notes issued by the Mexican Government | | | | | | | | | | | 2017 | | | 2016 | | Total promissory notes | | Ps | .149,796,282 | | | Ps | .142,124,620 | | Less: current portion of notes receivable(1) | | | 2,522,206 | | | | 1,545,749 | | | | | | | | | | | Long-term promissory notes | | Ps | .147,274,076 | | | Ps | .140,578,871 | | | | | | | | | | |
| | | | | | | | | | | 2020 | | | 2019 | | Total promissory notes issued by the Mexican Government | | | Ps. — | | | | Ps. 126,534,822 | | Less: current portion of notes receivable issued by the Mexican Government, net of expected credit losses (2) | | | — | | | | 4,909,970 | | Long-term promissory notes | | | Ps. — | | | | Ps. 121,624,852 | | | | | | | | | | |
(2) | (1) | The current portion ofamount reflects the principal and interest from promissory notes and the total yield payments are allocated under sundry debtorsnote 4 in accounts receivable, net (see Note 7).2019 matured on March 31, 2020. |
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 PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
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 Mexican Government or “BONDES D”). Petróleos Mexicanos then sold the BONDES D to Mexican development banks at market prices. Petróleos Mexicanos recognized a Ps. 135,439,612 increase in equity as a result of the Ps. 184, 230,586184,230,586 of the promissory notes as of June 29, 2016, minus the Ps. 50,000,000 promissory note received by Petróleos Mexicanos on December 24, 2015, plus a Ps. 1,209,026 increase in the value of the promissory notes from June 29, 2016 to August 15, 2016, the date on which PEMEX received the promissory notes (see Note 21).notes. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) As of December 31, 2017 and 2016, these2019, PEMEX held promissory notes amounted towith a discounted value of Ps. 147,274,076 and Ps. 140,578,871, respectively. PEMEX intends is to hold them to maturity.126,534,822. These promissory notes will be converted into cash withhad annual maturity dates ranging from 20182020 to 20422036 and annualyielding rates ranging from 4.65%5.39% to 7.03% with annual maturity dates in 2017 and ranging from 2017 to 2042 and annual rates ranging from 4.35% to 7.04% in 2016,7.00%, as follows: | | | | | | | | | As of December 31, 2017 | | Number of Promissory Notes | | Maturity | | Yield Rate Range | | Principal Amount | | 1 | | 2018 | | 4.65% | | Ps. | 2,522,206 | | 1 | | 2019 | | 5.14% | | | 3,580,302 | | 1 | | 2020 | | 5.39% | | | 4,421,320 | | 1 | | 2021 | | 5.57% | | | 5,238,081 | | 1 | | 2022 | | 5.74% | | | 5,804,485 | | 5 | | 2023 to 2027 | | 5.87% to 6.32% | | | 34,196,434 | | 5 | | 2028 to 2032 | | 6.47% to 6.81% | | | 35,338,617 | | 5 | | 2033 to 2037 | | 6.85% to 7.03% | | | 32,789,697 | | 5 | | 2038 to 2042 | | 7.02% to 6.94% | | | 25,905,140 | | | | | | | | | | | | | Total promissory notes | | | 149,796,282 | | | | Less: current portion | | Ps. | 2,522,206 | | | | | | | | | | | Long-term notes receivable | | Ps. | 147,274,076 | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | As of December 31, 2019 | | Number of Promissory Notes | | Maturity | | Yield Rate Range | | | Principal Amount | | 1 | | 2020 | | | 5.39% | | | | Ps. 4,909,970 | (1) | 1 | | 2021 | | | 5.57% | | | | 5,846,979 | | 1 | | 2022 | | | 5.74% | | | | 6,500,329 | | 1 | | 2023 | | | 5.88% | | | | 7,112,804 | | 1 | | 2024 | | | 5.99% | | | | 7,534,758 | | 5 | | 2025 to 2029 | | | 6.06% to 6.62% | | | | 40,018,603 | | 5 | | 2030 to 2034 | | | 6.70% to 6.90% | | | | 39,692,547 | | 2 | | 2035 to 2036 | | | 6.95% to 7.00% | | | | 14,918,832 | | | | | | | | | | | | | | | Total promissory notes | | | | | | | Ps. 126,534,822 | | | | Less: current portion | | | | | | | 4,909,970 | | | | | | | | | | | | Long-term notes receivable | | | | | | | Ps. 121,624,852 | |
| | | | | | | | | As of December 31, 2016 | | Number of Promissory Notes | | Maturity | | Yield Rate Range | | Principal Amount | | 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 | | | | | | | | |
(1) | The amount of the promissory note is Ps. 4,917,970, less an impairment of Ps. 8,000. |
During 2017 and 2016,From January 1 to November 19, 2020 PEMEX receivedrecognized Ps. 9,233,950 and Ps. 3,597,654, respectively,7,097,040 in accrued yieldsinterest from these promissory notes, whichnotes. This amount was recognized as financing income in the consolidated statement of comprehensive income.
Yield rates for these promissory notes arepre-determined andwere fixed all throughout their lifespans and up to their maturities. Accordingly, fixed rates may not reflect market interest rate conditions as of the due date of each promissory note. In addition, PEMEX believes the promissory notes do not have a credit risk because they are issued by the Mexican Government in Mexican pesos. As of December 31, 2017, the remaining Ps. 22,217,300 corresponding to Ps. 47,000,0002019, as part of the Mexican Government contribution was transferredGovernment’s strategy to theFondo Laboralfinance PEMEX, (Pemex Labour Trust or “FOLAPE”), for Petróleos Mexicanos received the period from January 2017 to June 2017 in accordance with the authorized expenditure budget framework for the fiscal year 2017. In addition, theprepayment of 7 promissory notenotes (one maturing in 2017 was contributed to the FOLAPE2019 and 6 in June 2017anticipated form) in the amount of Ps. 1,562,288.38,705,497 (Ps. 32,493,666 of principal and Ps. 6,211,831 of interest), which was transferred to the Fideicomiso Fondo Laboral Pemex (“Pemex Labor Fund” or “FOLAPE”) for the obligation payment related to its pension and retirement plan obligation. The monetization of 2 promissory notes took place after the document’s expiration date, resulting in additional interest of Ps. 614.
On March 31, 2020, Petróleos Mexicanos received the payment of promissory note No. 4 in the amount of Ps. 4,983,670 (Ps. 4,102,622 of principal and Ps. 881,048 of interest), which was transferred to the FOLAPE. On November 19, 2020, Petróleos Mexicanos and the SHCP agreed to exchange 16 promissory notes in favor of Petróleos Mexicanos (notes 5 to 20) in a total amount of Ps. 128,656,192 for 18 series of Mexican Government local bonds (the “Government Bonds”). The resources from the Government Bonds will be exclusively transferred to the FOLAPE for the payments related to its pension and retirement plan obligations. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) The roll-forward related to the promissory notes is as follows: | | | | | | | | | | | December 31, | | | | 2020(i) | | | 2019 | | Balance at the beginning of the year | | Ps. | 126,534,822 | | | | 156,981,745 | | Long-term receivable from the Mexican Government | | | (4,102,622 | ) | | | (32,493,666 | ) | Accrued interests | | | 7,097,040 | | | | 8,266,574 | | Interests received from promissory notes | | | (881,048 | ) | | | (6,211,831 | ) | Reversal of (impairment) of the promissory notes | | | 8,000 | | | | (8,000 | ) | Exchange from promissory notes to Bonds | | | (128,656,192 | ) | | | — | | | | | | | | | | | Balance at the end of the year | | Ps. | — | | | | 126,534,822 | | | | | | | | | | |
(i) | Until November 19, 2020. |
B. Government bonds As of December 31, 2020, the balance of Government Bonds (see Note 15-A), includes Government Bonds valued at amortized cost as follows: b. | | | | | | | 2020 | | Government bonds | | Ps. | 129,549,519 | | Less: current portion of Government Bonds, net of expected credit losses (1) | | | 18,036,557 | | | | | | | Total long-term notes receivable | | Ps. | 111,512,962 | | | | | | |
(1) | Includes an expected credit loss of Ps. 17,581. |
As of November 19, 2020, the value of the Government Bonds was Ps. 128,786,611, and the liability was Ps. 95,597,610. On November 20, 2020, Petróleos Mexicanos monetized the whole of the Government Bonds by entering into a three-year financial arrangement to partially raise an equivalent of Ps. 95,597,610 at an annual rate of 8.56275%, maturing November 24, 2023. Petróleos Mexicanos retains the risks, benefits and economic rights of the Government Bonds, which were delivered to a financial institution. Petróleos Mexicanos will continue to collect coupon and principal payments from the securities throughout the term of the transaction. Therefore, Petróleos Mexicanos recognizes these Government Bonds as restricted assets and recognizes short-term debt for the monetization. The resources from the Government Bonds will be transferred to the FOLAPE for payments related to its pension and retirement plan obligations. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) Income interest generated by the Government Bonds amounted Ps. 2,103,099 during 2020, which were recognized as financial income in the consolidated statement of comprehensive income and of which Petróleos Mexicanos received the payment of Ps. 817,270. The Government Bonds consist of 18 series of development bonds (D Bonds, M Bonds and UDI Bonds) issued by the SHCP with maturities between 2021 and 2026, with a notional amount of Ps. 118,280,727 and Ps. 913,482 in UDIs. As of December 31, 2020, the fair value of the transferred assets is Ps. 129,320,536, and the fair value of the associated liabilities is Ps. 95,630,214, resulting in a net position of Ps. 33,690,322. As of December 31, 2020, the recorded liability is Ps 95,597,610 (see Note 16). The roll-forward of the Mexican Bonds is as follows: | | | | | | | 2020 | | Promissory notes value at the beginning of the exchange as of November 19, 2020 | | Ps. | 128,656,192 | | Financial income from the Exchange of promissory notes to Bonds | | | 130,419 | | | | | | | Initial value of Mexican Bonds as of November 19, 2020 | | | 128,786,611 | | Accrued interests | | | 2,103,099 | | Interests received from bonds | | | (817,270 | ) | Impact of the valuation of bonds in UDIS | | | (505,339 | ) | (Impairment) of bonds | | | (17,582 | ) | | | | | | Balance at the end of the year | | Ps. | 129,549,519 | | | | | | |
At December 31, 20172020 and 2016,2019, the balance of other assets was as follows: | | | | | | | | | | | 2017 | | | 2016 | | Payments in advance | | Ps. | 4,683,117 | | | Ps. | 2,558,767 | | License | | | 2,162,151 | | | | 1,813,605 | | Rights-of-way | | | 1,967,304 | | | | 1,940,157 | | Other | | | 2,672,605 | | | | 3,200,116 | | | | | | | | | | | Total other assets | | Ps. | 11,485,177 | | | Ps. | 9,512,645 | | | | | | | | | | |
| | | | | | | | | | | December 31, | | | | 2020 | | | 2019 | | Payments in advance | | Ps. | 5,223,679 | | | | 2,650,251 | | Other(1) | | | 1,680,934 | | | | 1,518,801 | | Insurance | | | 678,897 | | | | 484,955 | | | | | | | | | | | Total other assets | | Ps. | 7,583,510 | | | | 4,654,007 | | | | | | | | | | |
(1) | Includes restricted cash for Ps. 50,661 as of December 31, 2020, as a result of a cash retention ordered by the court in a commercial judgement promoted by OPCO Soluciones, S.A. de C.V. against PEMEX’s subsidiary company AGRO, due to lack of payment by this subsidiary company. |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) The Ley de Ingresos de la Federación (“Federal Income LawLaw”) applicable to PEMEX as of January 1, 2017,2020, published in the Official Gazette of the Federation on November 17, 2016,25, 2019, authorized Petróleos Mexicanos and its Subsidiary Entities to incur an internal net debt up to Ps. 28,000,00010,000,000 and an external net debt up to U.S. $7,100,000.$1,250,000. PEMEX can incur additional internal or external debt, as long as the total amount of net debt (Ps. 150,000,00034,875,000, equivalent to U.S. $8,055,900)$1,851,000) does not exceed the ceiling established by the Federal Income Law. On July 8, 2016, theThe Board of Directors approves the global financing proposal of Petróleos Mexicanos approved policies and general requirements for obligations that constitute public debt of Petróleos Mexicanos and Subsidiary Entities,in order to incorporate it into the Federal Income Law for the fiscal year 2020, in accordance with Article 106 section I of the Petroleos Mexicanos Law.
Subsequently, the Board of Directors of PEMEX, approved the debt program for fiscal year 2017 in accordance with Article 13 section XXVI of the Petróleos Mexicanos Law.Law and the Reglamento de la Ley de Petróleos Mexicanos (Regulations to the Petróleos Mexicanos Law).
During the period from January 1 to December 31, 2017,2020, PEMEX participated in the following financing activities: On January 21, 2020 Petróleos Mexicanos increased its Medium-Term Notes Program from U.S. $102,000,000 to U.S. $112,000,000. On January 28, 2020, Petróleos Mexicanos issued U.S. $5,000,000 of debt securities under its U.S. $112,000,000 Medium-Term Notes Program, Series C, in two tranches: (1) U.S. $2,500,000 5.950% Notes due 2031 (2) U.S. $2,500,000 6.950% Notes due 2060 All debt securities under this program are jointly and severally guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics and their respective successors and assignees. On January 30, 2020, Petróleos Mexicanos repurchased a total of U.S. $61,992 notes due 2020. On February 6, 2020, Petróleos Mexicanos consummated the early settlement of its waterfall exchange offer pursuant to which it exchanged: A) | a. | On February 14, 2017, Petróleos Mexicanos issued € 4,250,000a total of debt securities under its Medium-Term Notes Program, Series C in three tranches: (i) € 1,750,000U.S. $1,252,303 of its 2.50% Notes due August 2021;(ii) € 1,250,000 of its 3.75% Notes due February 2024;notes and (iii) € 1,250,000 of its 4.875% Notes due February 2028.bonds with maturity dates between 2021 and 2026 as follows: |
(1) U.S. $264,752 aggregate principal amount of its outstanding 5.500% Notes due 2021, (2) U.S. $171,662 aggregate principal amount of its outstanding 6.375% Bonds due 2021, (3) U.S. $148,535 aggregate principal amount of its outstanding 4.875% Notes due 2022, (4) U.S. $63,854 aggregate principal amount of its outstanding Floating Rate Notes due 2022, (5) U.S. $157,487 aggregate principal amount of its outstanding 5.375% Notes due 2022, (6) U.S. $216,727 aggregate principal amount of its outstanding 3.500% Notes due 2023, (7) U.S. $117,333 aggregate principal amount of its outstanding 4.625% Notes due 2023 and (8) U.S. $111,953 aggregate principal amount of its outstanding 4.500 % Notes due 2026, for U.S. $1,300,000 aggregate principal amount of its new 5.950% Notes due 2031. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) B) | a total of U.S. $1,374,426 of notes and bonds with maturity dates between 2044 and 2048 as follows: |
(1) U.S. $179,332 aggregate principal amount of its outstanding 5.500% Notes due 2044, (2) U.S. $750,969 aggregate principal amount of its outstanding 5.625% Bonds due 2046 and (3) U.S. $444,125 aggregate principal amount of its outstanding 6.350% Notes due 2048, for U.S. $1,300,000 aggregate principal amount of its new 6.950% Bonds due 2060. The 5.950% Notes due 2031 and 6.950% Bonds due 2060 are jointly and severally guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics and their respective successors and assignees and represent reopenings of the 5.950% Notes due 2031 and 6.950% Bonds due 2060, respectively, originally issued on January 29, 2020. On May 26, 2020, Petróleos Mexicanos partially renewed a credit line of U.S. $400,000 maturing on May 2020 for U.S. $200,000 maturing in 2021 linked to three-month LIBOR plus 350 basis points. On August 24, 2020, Petróleos Mexicanos entered into a U.S. $150,000 term loan due August 2022, which bears interest at a floating rate linked to three-month LIBOR plus 425 basis points. On October 16, 2020, Petróleos Mexicanos issued U.S. $1,500,000 of its 6.875% Notes due October 2025 under its U.S. $112,000,000 Medium Term Notes Program, Series C. On November 20, 2020, Petróleos Mexicanos monetized the Government Bonds by entering into a three-year financial arrangement to raise Ps. 95,597,610 at a rate of 8.56275% per annum, with a maturity of November 24, 2023. Petróleos Mexicanos retains the economic rights of the New Government Bonds, accordingly Petróleos Mexicanos accounts for them as restricted assets and recognizes debt for this transaction. (See Note 15-B) On December 7, 2020, PMI Trading, as borrower, and Petróleos Mexicanos, as guarantor, entered into a U.S. $1,500,000 revolving credit facility maturing in 2023, which bears interest at a floating rate linked to LIBOR plus 300 to 475 basis points. | b.• | On April 6, 2017, Petróleos Mexicanos executed a U.S. $132,000,non-revolving bilateral credit line from Banco Mercantil del Norte, S.A., Institución de Banca Múltiple, Grupo Financiero Banorte, due on April 6, 2024, which bears a fixed interest rate of 5.25%. |
| c. | On MayDecember 15, 2017, Petróleos Mexicanos entered into2020, PEMEX implemented a simple credit line in thefinancial factoring transaction to support its suppliers for an amount of U.S. $400,000Ps. 4,067,650 for 180 days at a floating interest rate linked to LIBOR plus 165 basis points, due May 2020 and was used in two tranches of U.S. $200,000 (on May 24, 2017 and July 14, 2017, respectively). |
| d. | On June 16, 2017, Petróleos Mexicanos increased its Medium-Term Notes Program, Series C, from U.S. $72,000,000 to U.S. $92,000,000. |
| e. | On July 17, 2017, Petróleos Mexicanos entered into a revolving credit facility in the amount of U.S. $1,950,000 and matures in 2020. |
| f. | On July 18, 2017, Petróleos Mexicanos issued under its U.S.$92,000,000 Medium-Term Notes Program, Series C: (i) U.S. $2,500,000 of its 6.500% Notes due 2027; and (ii) U.S. $2,500,000 of its 6.75% Bonds due 2047. |
| g. | On July 21, 2017, Petróleos Mexicanos consummated a tender offer pursuant to which it purchased U.S. $922,485 aggregate principal amount of its outstanding 5.750% Notes due 2018, U.S. $644,374 aggregate principal amount of its outstanding 3.500% Notes due 2018 and U.S. $172,591 aggregate principal amount of its outstanding 3.125% Notes due 2019. |
| h. | On November 16, 2017, Petróleos Mexicanos issued £ 450,000Tasa de Interés Interbancaria de Equilibrio (“TIIE”) or for 91 days at a rate interest of its 3.750% Notes due 2025 under its U.S.$92,000,000 Medium-Term Notes Program, Series C.172 to 247 basis points. |
| i. | On December 15, 2017, AGRO refinanced a credit line for U.S. $390,000, prepaying U.S. $140,000 and entering into a new credit line for the outstanding U.S. $250,000, which bears interest at a floating rate linked to LIBOR plus 250 basis points on a quarterly basis and matures on June 29, 2018. |
| j. | On December 18, 2017, Petróleos Mexicanos entered into a bilateral credit line facility in the amount of U.S. $200,000, which bears interest at a floating rate linked to LIBOR plus 165 basis points and matures on December 18, 2020. |
Petróleos Mexicanos renewed and restructured one of its liquidity management lines for which it entered into a new revolving credit contract with a banking union. This new line was made available to PMI Trading, with Petróleos Mexicanos’ corporate guarantee to meet its financial needs and strengthen PEMEX’s liquidity.PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESAs of December 31, 2020, Petróleos Mexicanos and PMI Trading (previously managed by HHS) had U.S. $7,700,000 and Ps. 37,000,000 in available credit lines in order to provide liquidity, of which U.S. $1,900,000 and Ps. 37,000,000 are available.
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| k. | On December 21, 2017, Petróleos Mexicanos borrowed U.S. $300,000 from a bilateral credit line which bears interest at a floating rate linked to LIBOR plus 175 basis points, which matures on December 21, 2022. |
All of the financing activities mentioned above were guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogenerationtheir respective sucessors and Services.assignees. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) On December 1, 2020, credit lines operated by HHS were transferred to PMI Trading. From January 1 to December 31, 2017,2020, PMI HBVTrading obtained U.S. $15,141,500 in financing$28,489,000 from its revolving credit line and repaid U.S. $14,914,000.$27,657,935. As of December 31, 2017,2019, the outstanding amount under this revolving credit line was U.S. $227,500. $1,556,000. As of December 31, 2017, Petróleos Mexicanos had2020, the outstanding amount under this revolving credit line was U.S. $6,700,000 and Ps. 23,500,000 in available credit lines in order to ensure liquidity. The available amounts are U.S. $5,400,000 and Ps. 23,500,000, respectively.$2,387,065. The Federal Income Law that was applicable to PEMEX as of January 1, 2016,2019, published in the Official Gazette of the Federation on November 18, 2015,December 28, 2018, authorized Petróleos Mexicanos and its Subsidiary Entities to incur an internal net debt up to Ps. 110,500,0004,350,000 and an external net debt up to U.S. $8,500,000.$5,422,500. PEMEX was entitled tocan incur additional internal or external debt, as long as the total amount of net debt (Ps.240,550,000(Ps. 112,000,000 equivalent to U.S. $15,722,000) did$5,640,000) does not exceed the ceiling established by the Federal Income Law. On November 18, 2014, theThe Board of Directors approves the global financing proposal of Petróleos Mexicanos approved policies and general requirements for obligations that constitute public debt of Petróleos Mexicanos and Subsidiary Entities,in order to incorporate it into the Federal Income Law for the fiscal year 2019, in accordance with the Article 107 ofPetróleos Mexicanos Law and the PetroleosReglamento de la Ley de Petróleos Mexicanos Law.
Subsequently, the Board of Directors of PEMEX, approved the debt program for fiscal year 2016 in accordance with Article 13 section XXVI of (Regulations to the Petróleos Mexicanos Law.Law).
During 2016,the period from January 1 to December 31, 2019, PEMEX participated in the following financing activities: On June 28, 2019, Petróleos Mexicanos entered into a U.S. $5,500,000 revolving credit facility due 2024 and a U.S. $2,500,000 term loan facility due 2024. On July 29, 2019, Petróleos Mexicanos entered into a credit line by Export Credit Agency in the amount of U.S. $206,901 which bears interest at a rate linked to six-month LIBOR due 2028. From September to October 2019, Petróleos Mexicanos conducted financing and liability management transactions pursuant to which On September 23, 2019, Petróleos Mexicanos issued the following debt securities under its U.S. $102,000,000 Medium-Term Notes Program, Series C: (1) U.S. $1,250,000 6.490% Notes due 2027; (2) U.S. $3,250,000 6.840% Notes due 2030; and (3) U.S. $3,000,000 7.690% Bonds due 2050. All debt securities under this program are jointly and severally guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics and their respective successors and assignees. On September 23, 2019, Petróleos Mexicanos consummated a tender offer pursuant to which it purchased | a.(1) | On January 25, 2016, Petróleos Mexicanos increasedU.S. $491,803 aggregate principal amount of its Medium-Termoutstanding 6.000% Notes Program from U.S. $52,000,000 to U.S. $62,000,000.due 2020; |
| b.(2) | 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$242,511 aggregate principal amount of its 5.500%outstanding 3.500% 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.2020; |
| c.(3) | On February 5, 2016, Petróleos Mexicanos obtained a loan from a lineU.S. $1,897,615 aggregate principal amount 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.its outstanding 5.500% Notes due 2021; |
| d.(4) | 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$883,977 aggregate principal amount of its 3.750%outstanding 6.375% 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.2021; |
| e.(5) | 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. |
U.S. $17,316 aggregate principal amount of its outstanding 8.625% Bonds due 2022; PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| 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.(6) | On March 23, 2016, Petróleos Mexicanos issued Ps. 5,000,000U.S. $96,970 aggregate principal amount of Certificados Bursátilesits outstanding Floating Rate Notes 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.2022; |
| h.(7) | 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.U.S. $235,177 aggregate principal amount of its outstanding 5.375% Notes due 2022; |
| i.(8) | On April 19, 2016, Petróleos Mexicanos borrowed €500,000 from a credit line at fixed rateU.S. $361,601 aggregate principal amount of 5.11%, which matures on March 2023.its outstanding 4.875% Notes due 2022; |
| j.(9) | On May 31, 2016, Petróleos Mexicanos obtained a U.S. $300,000 bilateral credit line from Export Development Canada (EDC),$344,853 aggregate principal amount of its outstanding 3.500% Notes due on May 2021, which bears interest at a floating rate linked to LIBOR.2023; and |
| k.(10) | 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 225,000U.S. $433,946 aggregate principal amount of its 1.50%outstanding 4.625% Notes due to June 2018 and (2) CHF 150,0002023. |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) On September 27, 2019, Petróleos Mexicanos consummated an exchange offer pursuant to which it exchanged | (1) | U.S. $940,618 aggregate principal amount of its 2.35%outstanding 4.875% 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.2022, |
| l.(2) | On June 17, 2016, Pemex Exploration and Production obtained approximately U.S. $1,100,000 in connection with the sale and leaseback$53,310 aggregate principal amount of certain infrastructure assets used for oil and gas activities (see Note12-g). 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 activityits outstanding 8.625% Bonds 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.2022, |
| m.(3) | On July 8, 2016, Pemex Industrial Transformation obtained approximately U.S. $600,000 in connection with the sale and leaseback$334,442 aggregate principal amount 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 activityits outstanding Floating Rate Notes 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.2022, |
| n.(4) | On July 26, 2016, Petróleos Mexicanos issued ¥80,000,000 Bonds at 0.54%U.S. $654,668 aggregate principal amount of its outstanding 5.375% Notes due July 2026. The Bonds are guaranteed by the Japan Bank for International Cooperation.2022, |
| o.(5) | On September 21, 2016, Petróleos Mexicanos issued U.S. $4,000,000$389,985 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%outstanding 3.500% 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
|
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services. |
| p.(6) | On October 3, 2016, Petróleos Mexicanos consummated a tender and exchange offer pursuant to which it (i) purchased U.S. $687,725$612,735 aggregate principal amount of its outstanding 8.000%4.625% Notes due 2019 and 2023, |
| (7) | U.S. $657,050$58,982 aggregate principal amount of its outstanding 5.750% Notes8.625% Guaranteed Bonds due 2018 and (ii) exchanged (a) 2023, |
| (8) | U.S. $73,288$466,787 aggregate principal amount of its outstanding 5.750%4.875% Notes due 2018 for 2024, |
| (9) | U.S. $69,302$208,769 aggregate principal amount of its 4.625%outstanding 4.250% Notes due 2023 and 2025, |
| (10) | U.S. $8,059$1,439,479 aggregate principal amount of its 6.750%outstanding 6.500% Bonds due 2047 and (b) 2041, |
| (11) | U.S. $1,591,961$730,486 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.(12) | On December 6, 2016, Petróleos Mexicanos increasedU.S. $1,439,519 aggregate principal amount of its Medium-Term Notes Program, Series C, from U.S. $ 62,000,000 to U.S. $72,000,000.outstanding 6.375% Bonds due 2045 and |
| r.(13) | On December 13, 2016, Petróleos Mexicanos issued U.S. $5,500,000$277,215 aggregate principal amount of its debt securities underoutstanding 5.625% Bonds due 2046 |
for U.S. $1,102,232 aggregate principal amount of its new 6.490% Notes due 2027, U.S. $1,163,586 aggregate principal amount of its new 6.840% Notes due 2030 and U.S. $5,065,788 aggregate principal amount of its new 7.690% Bonds due 2050. On October 11, 2019, Petróleos Mexicanos consummated an exchange offer pursuant to which it exchanged | (1) | U.S. $7,698 aggregate principal amount of its Medium-Termoutstanding 4.875% 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.(2) | U.S. $10 aggregate principal amount of its outstanding 8.625% Bonds due 2022, |
| (3) | U.S. $120 aggregate principal amount of its outstanding Floating Rate Notes due 2022, |
| (4) | U.S. $500 aggregate principal amount of its outstanding 5.375% Notes due 2022, |
| (5) | U.S. $4,247 aggregate principal amount of its outstanding 3.500% Notes due 2023, |
| (6) | U.S. $3,050 aggregate principal amount of its outstanding 4.625% Notes due 2023, |
| (7) | U.S. $20 aggregate principal amount of its outstanding 8.625% Guaranteed Bonds due 2023, |
| (8) | U.S. $595 aggregate principal amount of its outstanding 4.875% Notes due 2024 and |
| (9) | U.S. $273 aggregate principal amount of its outstanding 4.250% Notes due 2025 |
for U.S. $8,198 aggregate principal amount of its new 6.490% Notes due 2027, U.S. $7,245 aggregate principal amount of its new 6.840% Notes due 2030 and U.S. $617 aggregate principal amount of its new 7.690% Bonds due 2050. On November 14, 2019, Petróleos Mexicanos entered into a Ps. 28,000,000 syndicated revolving credit line due in 2022. | • | | On December 14, 2016,23, 2019, Petróleos Mexicanos entered into a term loan credit facility in theissued Ps. 5,100,368 aggregate principal amount of U.S. $300,000Certificados Bursatiles due 2024 at floatinga rate linked to LIBOR, matures on December 2019.the TIIE plus 1%. These Certificados Bursatiles were issued under Petróleos Mexicanos’ Ps. 100,000,000 or Unidades de Inversión (“UDI”) equivalent Certificados Bursátiles Program. |
Between January 1
Petróleos Mexicanos Productive State-Owned Subsidiaries and December 31, 2016, PMI HBV obtained and paid U.S. $11,369,800Subsidiary Companies Notes to the consolidated financial statements (Figures stated in revolving credit lines. As of December 31, 2016 there was no outstanding amount.thousands, except as noted) As of December 31, 2016,2019, Petróleos Mexicanos had U.S. $4,750,000$7,450,000 and Ps. 23,500,00037,000,000 in available credit lines in order to ensure liquidity. The available amounts areprovide liquidity, of which U.S. $4,630,000$6,780,000 and Ps. 3,500,000, respectively.16,000,000 are available. All the financing activities mentioned above were guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services (until July 1, when merged, see Note 1) and Pemex Logistics. From January 1 to December 31, 2019, HHS obtained U.S. $22,456,000 from its revolving credit line and repaid U.S. $21,600,000. As of December 31, 2018, the outstanding amount under this revolving credit line was U.S. $700,000. As of December 31, 2019, the outstanding amount under this revolving credit line was U.S. $1,556,000. Various financial transactions (including credit facilities and bond issuances) require compliance with various covenants that, among other things, place restrictions on the following types of transactions by PEMEX, subject to certain exceptions: The sale of substantial assets essential for the continued operations of its business. The incurrence of liens against its assets. Transfers, sales or assignments of rights to payment not yet earned under contracts for the sale of crude oil or natural gas, accounts receivable or other negotiable instruments. As of December 31, 20172020 and 2019 and as of the date of the issuance of these consolidated financial statements, PEMEX was in compliance with the covenants described above. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
As of December 31, 2017, long-term2020 and 2019, debt was as follows: | | | | | | | | | | | | | | | | | | | | | | Pesos | | | Foreign currency | | | | Rate of interest(1) | | Maturity | | | (thousands) | | | (thousands) | | U.S. dollars | | | | | | | | | | | | | | | Bonds | | Fixed from 1.7% to 9.5% and LIBOR plus 0.35% to 3.65% | | | Various to 2047 | | | | Ps. 1,138,845,231 | | | US$ | 57,556,097 | | Purchasing loans | | LIBOR plus 0.85% | | | Various to 2018 | | | | 25,722,710 | | | | 1,300,000 | | Project financing | | Fixed from 2.35% to 3.81% and LIBOR plus 0.24% to 1.75% | | | Various to 2025 | | | | 64,974,389 | | | | 3,283,741 | | Direct loans | | Fixed from 5.25% to 5.44% and LIBOR plus 1.65% | | | Various to 2020 | | | | 43,141,231 | | | | 2,180,315 | | Syndicated loans | | LIBOR plus 0.85% | | | Various to 2020 | | | | 39,347,774 | | | | 1,988,597 | | Bank loans | | Fixed from 3.5% to 5.28% | | | Various to 2023 | | | | 3,451,629 | | | | 174,442 | | Financial leases | | Fixed from 0.38% to 1.99% | | | Various to 2025 | | | | 7,621,062 | | | | 385,161 | | Lease-back (See Financing activities for 2016 l) and m))(4) | | Fixed from 0.45% to 0.7% | | | Various to 2036 | | | | 32,677,268 | | | | 1,651,476 | | | | | | | | | | | | | | | | | Total financing in U.S. dollars | | | | | | | | | 1,355,781,294 | | | US$ | 68,519,829 | | | | | | | | | | | | | | | | | Euros | | | | | | | | | | | | | | | Bonds | | Fixed from 1.875% to 5.5% | | | Various to 2030 | | | | 287,386,195 | | | € | 12,097,975 | | Project financing | | Fixed from 2.1% to 5.11% | | | Various to 2023 | | | | 11,879,379 | | | | 500,081 | | | | | | | | | | | | | | | | | Total financing in Euros | | | | | | | | | 299,265,574 | | | € | 12,598,056 | | | | | | | | | | | | | | | | | Japanese yen: | | | | | | | | | | | | | | | Bonds | | Fixed from 0.54% to 3.5% and LIBOR yen plus 0.75% | | | Various to 2026 | | | | 30,541,407 | | | ¥ | 173,827,018 | | | | | | | | | | | | | | | | | Pesos | | | | | | | | | | | | | | | Certificados bursátiles | | Mexican Government Treasury Certificates (“Cetes”) , TIIE(1) less 0.06% to 1.35%, and fixed at 7.19% to 9.1% | | | Various to 2026 | | | | Ps. 149,564,918 | | | | | | Direct loans | | Fixed at 6.55% and TIIE plus 0.85% to 1.25% | | | Various to 2025 | | | | 28,597,423 | | | | | | Syndicated loans | | TIIE plus 0.95 | | | Various to 2025 | | | | 33,646,107 | | | | | | | | | | | | | | | | | | | | | Total financing in pesos | | | | | | | | | Ps. 211,808,448 | | | | | | Unidades de Inversión Certificados bursátiles | | | | | | | | | | | | | | | Certificados bursátiles | | Zero rate and Fixed at 3.02% to 5.23% | | | Various to 2035 | | | | 57,197,211 | | | | | | | | | | | | | | | | | | | | | Other currencies: | | | | | | | | | | | | | | | Bonds | | Fixed from 1.5% to 8.25% | | | Various to 2025 | | | | 47,148,936 | | | | | | | | | | | | | | | | | | | | | Total principal in pesos(2) | | | | | | | | | 2,001,742,870 | | | | | | Plus: accrued interest | | | | | | | | | 32,078,624 | | | | | | Notes payable to contractors(3) | | | | | | | | | 4,053,577 | | | | | | | | | | | | | | | | | | | | | Total principal and interest | | | | | | | | | 2,037,875,071 | | | | | | Less: short-term maturities | | | | | | | | | 122,957,558 | | | | | | Current portion of notes payable to contractors(3) | | | | | | | | | 2,173,285 | | | | | | Accrued interest | | | | | | | | | 32,078,624 | | | | | | | | | | | | | | | | | | | | | Total short-term debt and current portion of long-term debt | | | | | | | | | 157,209,467 | | | | | | | | | | | | | | | | | | | | | Long-term debt (Note 16(c)) | | | | | | | | | Ps. 1,880,665,604 | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | 2020 | | | | Rate of interest (1) | | Maturity | | Pesos | | | Foreign currency | | U.S. dollars | | | | | | | | | | | | | Bonds | | Fixed from 1.7% to 9.5% and LIBOR plus 0.35% to 3.65% | | Various to 2060 | | | 1,290,409,906 | | | U.S. $ | 64,686,416 | | Project financing | | Fixed from 2.45% and LIBOR plus 0.24% to 1.75% | | Various to 2028 | | | 34,345,097 | | | | 1,721,671 | | Direct loans | | Fixed to 5.25% and LIBOR plus 1.75% to 4.25% | | Various to 2031 | | | 28,275,087 | | | | 1,417,390 | | Syndicated loans | | LIBOR plus 2.35% | | Various to 2024 | | | 49,871,676 | | | | 2,499,996 | | Bank loans | | LIBOR plus 3.50% to 5.28% | | Various to 2023 | | | 1,170,542 | | | | 58,678 | | Revolving credit lines | | LIBOR plus 2.00% to 3.75% and Fed effective plus 1.30% | | 2021 | | | 119,110,538 | | | | 5,970,842 | | Financing of Infrastructure asset | | Fixed from 5.4% and 8.4% | | Various to 2036 | | | 28,131,267 | | | | 1,410,180 | | Total financing in U.S. dollars | | | | | | | 1,551,314,113 | | | U.S. $ | 77,765,173 | | | | | | | | | | | | | | | Euros | | | | | | | | | | | | | Bonds | | Fixed from 1.875% to 5.5% and EURIBOR plus 2.4% | | Various to 2030 | | | 307,867,094 | | | € | 12,614,815 | | Direct loans | | Fixed to 5.11% | | Various to 2023 | | | 12,202,600 | | | | 500,000 | | | | | | | | | | | | | | | Total financing in Euros | | | | | | | 320,069,694 | | | € | 13,114,815 | | | | | | | | | | | | | | | Japanese yen: | | | | | | | | | | | | | Bonds | | Fixed from 0.54% to 3.5% | | Various to 2026 | | | 21,243,790 | | | ¥ | 109,900,621 | | | | | | | | | | | | | | | Pesos | | | | | | | | | | | | |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) | | | | | | | | | | | | | 2020 | | | | Rate of interest (1) | | Maturity | | Pesos | | | Foreign currency | | Certificados bursátiles | | TIIE plus 1.00%, and fixed at 7.19% to 7.65% | | Various to 2026 | | | 113,253,512 | | | | | | Direct loans | | Fixed at 6.55% and TIIE plus 0.85% to 4.1% | | Various to 2029 | | | 19,061,275 | | | | | | Plus Factoring | | TIIE plus 1.25% to 2.0% | | In 2021 | | | 4,067,650 | | | | | | Syndicated loans | | TIIE plus 0.95% | | Various to 2025 | | | 19,740,035 | | | | | | Monetization of Mexican Government Bonds | | Fixed at 8.56275% | | Various to 2023 | | | 95,597,610 | | | | | | Total financing in pesos | | | | | | | 251,720,082 | | | | | | UDIs | | | | | | | | | | | | | Certificados bursátiles | | Zero rate and Fixed at 3.02% to 5.23% | | Various to 2035 | | | 37,346,014 | | | | | | Other currencies: | | | | | | | | | | | | | Bonds | | Fixed from 1.75% to 8.25% | | Various to 2025 | | | 33,355,569 | | | | | | Total principal in pesos(2) | | | | | | | 2,215,049,262 | | | | | | Plus: accrued interest | | | | | | | 42,656,852 | | | | | | Notes payable to contractors(3) | | | | | | | 1,021,203 | | | | | | | | | | | | | | | | | | | Total principal and interest | | | | | | | 2,258,727,317 | | | | | | Less: short-term maturities | | | | | | | 347,755,237 | | | | | | Current portion of notes payable to contractors(3) | | | | | | | 685,178 | | | | | | Accrued interest | | | | | | | 42,656,852 | | | | | | | | | | | | | | | | | | | Total short-term debt and current portion of long-term debt | | | | | | | 391,097,267 | | | | | | | | | | | | | | | | | | | Long-term debt | | | | | | | 1,867,630,050 | | | | | | | | | | | | | | | | | | | | 2019 | | | | Rate of interest (1) | | Maturity | | Pesos | | | Foreign currency | | U.S. dollars | | | | | | | | | | | | | Bonds | | Fixed from 1.7% to 9.5% and LIBOR plus 0.35% to 3.65% | | Various to 2050 | | | 1,118,518,559 | | | U.S. $ | 59,352,968 | | Project financing | | Fixed from 2.45% and LIBOR plus 0.24% to 1.75% | | Various to 2028 | | | 41,154,129 | | | | 2,183,799 | | Direct loans | | Fixed from 2.50% to 5.25% and LIBOR plus 1.65% to 3.50% | | Various to 2031 | | | 62,698,930 | | | | 3,327,050 | | Syndicated loans | | LIBOR plus 2.35% | | Various to 2024 | | | 47,107,647 | | | | 2,499,716 | | Bank loans | | LIBOR plus 1.19% to 3.50% | | Various to 2023 | | | 1,862,411 | | | | 98,827 | | Revolving credit lines | | LIBOR plus 1.85% | | 2020 | | | 12,626,284 | | | | 670,000 | | Financing of Infrastructure asset | | Fixed from 5.4% and 8.4% | | Various to 2036 | | | 28,143,335 | | | | 1,493,395 | | Total financing in U.S. dollars | | | | | 1,312,111,295 | | | U.S. $ | 69,625,755 | | | | | | | | | | | | | Euros | | | | | | | | | | | | | Bonds | | Fixed from 1.875% to 5.5% and EURIBOR plus 2.4% | | Various to 2030 | | | 293,984,741 | | | € | 13,897,557 | | Direct loans | | Fixed to 5.11% and EURIBOR plus 2.5% | | Various to 2023 | | | 11,561,660 | | | | 546,554 | | | | | | | | | | | | | | | Total financing in Euros | | | | | 305,546,401 | | | € | 14,444,111 | | | | | | | | | | | | | | | Japanese yen: | | | | | | | | | | | | |
As
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) | | | | | | | | | | | | | | 2019 | | | | Rate of interest (1) | | Maturity | | Pesos | | | Foreign currency | | Bonds | | Fixed from 0.54% to 3.5% and LIBOR yen plus 0.75% | | Various to 2026 | | | 30,148,292 | | | ¥ | 173,865,582 | | | | | | | | | | | | | | | Pesos | | | | | | | | | | | | | Certificados bursátiles | | Mexican Government Treasury Certificates (“Cetes”) , TIIE(1) plus 0.15% to 1.00%, and fixed at 7.19% to 9.1% | | Various to 2026 | | | 133,409,581 | | | | | | Direct loans | | Fixed at 6.55% and 7.01% and TIIE plus 0.85% to 4.01% | | Various to 2029 | | | 38,558,166 | | | | | | Syndicated loans | | TIIE plus 0.95% | | Various to 2025 | | | 24,270,589 | | | | | | Revolving credit lines | | TIIE plus 1.50% and 1.95% | | Various to 2020 | | | 21,000,000 | | | | | | | | | | | | | | | | | | | Total financing in pesos | | | | | | | 217,238,336 | | | | | | UDIs | | | | | | | | | | | | | Certificados bursátiles | | Zero rate and Fixed at 3.02% to 5.23% | | Various to 2035 | | | 41,388,521 | | | | | | | | | | | | | | | | | | | Other currencies: | | | | | | | | | | | | | Bonds | | Fixed from 1.5% to 8.25% | | Various to 2025 | | | 41,553,990 | | | | | | | | | | | | | | | | | | | Total principal in pesos(2) | | | 1,947,986,835 | | | | | | Plus: accrued interest | | | 33,146,807 | | | | | | Notes payable to contractors(3) | | | 2,040,446 | | | | | | | | | | | | | | | Total principal and interest | | | 1,983,174,088 | | | | | | Less: short-term maturities | | | 210,530,524 | | | | | | Current portion of notes payable to contractors(3) | | | 1,246,854 | | | | | | Accrued interest | | | 33,146,807 | | | | | | | | | | | | | | | Total short-term debt and current portion of long-term debt | | | 244,924,185 | | | | | | | | | | | | | | | Long-term debt | | | 1,738,249,903 | | | | | | | | | | | | | | |
The following table presents the roll-forward of total debt of PEMEX for each of the year ended December 31, 2016,2020 and 2019, which includes short and long-term debt was as follows:debt: | | | | | | | | | | | | | | | Rate of interest(1) | | Maturity | | Pesos (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. 1,131,389,914 | | | U.S. $ | 54,751,738 | | Purchasing loans | | LIBOR plus 0.8% to 0.85% | | Various to 2016 | | | 2,479,680 | | | | 120,000 | | Project financing | | Fixed from 2.35% to 5.45% and LIBOR plus 0.01% to 1.71% | | Various to 2021 | | | 84,711,684 | | | | 4,099,481 | | Direct loans | | Fixed at 5.44% and LIBOR plus 1.0% | | Various to 2018 | | | 33,100,587 | | | | 1,601,848 | | Syndicated loans | | LIBOR plus 0.85% | | Various to 2020 | | | 41,056,571 | | | | 1,986,865 | | Bank loans | | Fixed from 3.5% to 5.28% | | Various to 2023 | | | 4,339,826 | | | | 210,019 | | Financial leases | | Fixed from 0.38% to 1.99% | | Various to 2025 | | | 9,559,060 | | | | 462,595 | | Lease-back (See Financing activities for 2016 l) and m))(4) | | Fixed from 0.45% to 0.7% | | Various to 2036 | | | 35,513,114 | | | | 1,718,598 | | | | | | | | | | | | | | | Total financing in U.S. dollars | | | | | | | 1,342,150,436 | | | U.S. $ | 64,951,144 | | | | | | | | | | | | | Euros | | | | | | | | | | | | | Bonds | | Fixed from 3.125% to 6.375% | | Various to 2030 | | | 196,317,016 | | | € | 9,058,388 | | Project financing | | Fixed at 2% | | Various to 2016 | | | 10,836,200 | | | | 500,000 | | | | | | | | | | | | | | | Total financing in Euros | | | | | | | 207,153,216 | | | € | 9,558,388 | | | | | | | | | | | | | | | Japanese yen: | | | | | | | | | | | | | Bonds | | Fixed at 3.5% and LIBOR yen plus 0.75% | | Various to 2023 | | | 30,800,746 | | | ¥ | 173,809,300 | | Project financing | | Fixed at 1.56% and Prime Rate yen plus 2.56% | | Various to 2017 | | | 517,286 | | | | 2,919,056 | | | | | | | | | | | | | | | Total financing in yen | | | | | | | 31,318,032 | | | ¥ | 176,728,356 | | | | | | | | | | | | | | | Pesos | | | | | | | | | | | | | Certificados bursátiles | | Mexican Government Treasury Certificates (“Cetes”) , TIIE(1) less 0.06% to 0.35%, and fixed at 7.19% to 9.15% | | Various to 2026 | | Ps. | 173,151,985 | | | | | | Direct loans | | Fixed at 6.55% and TIIE plus 0.55% to 1.25% | | Various to 2025 | | | 45,563,848 | | | | | | Syndicated loans | | TIIE plus 0.95 | | Various to 2025 | | | 38,538,961 | | | | | | Revolved loans | | TIIE plus 0.55 | | To 2016 | | | 20,000,000 | | | | | | | | | | | | | | | | | | | Total financing in pesos | | | | | | Ps. | 277,254,794 | | | | | | Unidades de Inversión Certificados bursátiles | | | | | | | | | | | | | | | | | | | | | | | | | | Certificados bursátiles | | Zero rate and Fixed at 3.02% to 5.23% | | Various to 2035 | | | 53,703,421 | | | | | | | | | | | | | | | | | | | 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 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | 2020 (i) | | | 2019 (i) | | Changes in total debt: | | | | | | | | | At the beginning of the year | | Ps. | 1,983,174,088 | | | Ps. | 2,082,286,116 | | Transfers to lease liabilities | | | — | | | | (6,053,280 | ) | Loans obtained - financing institutions | | | 1,292,197,518 | | | | 1,167,834,946 | | Debt payments | | | (1,151,962,147 | ) | | | (1,185,042,283 | ) | Accrued interest(ii) | | | 144,207,950 | | | | 128,061,187 | | Interest paid | | | (130,989,150 | ) | | | (127,945,203 | ) | Foreign exchange | | | 122,099,058 | | | | (75,967,395 | ) | | | | | | | | | | At the end of the year | | Ps. | 2,258,727,317 | | | Ps. | 1,983,174,088 | | | | | | | | | | |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) (1)(i) | These amounts include accounts payable by Financed Public Works Contracts (“FPWC”) (formerly known as Multiple Services Contracts), which do not generate cash flows. |
(ii) | For 2020 and 2019, includes Ps. 1,555,266 and Ps. (1,476,826), respectively, of income (expenses) consisting of Ps. 1,868,501 and Ps. (958,142), respectively, of expenses and discounts related to issuance of debt and Ps. (313,275) and Ps. (518,684), respectively, of fees to the issuance of debt. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2021 | | | 2022 | | | 2023 | | | 2024 | | | 2025 | | | 2026 and thereafter | | | Total | | | | | | | | | | Maturity of the total principal outstanding and accrued interest as of December 31, 2020, for each of the years ending December 31. | | | 391,097,267 | | | | 117,932,866 | | | | 131,155,018 | | | | 181,061,085 | | | | 114,228,026 | | | | 1,323,253,055 | | | | 2,258,727,317 | |
(1) | As of December 31, 20172020 and 2016,2019, interest rates were as follows: 3 month LIBOR of 1.69428%0.23838% and 0.99789%1.90838%, respectively; 6 month LIBOR of 1.83707%0.25763% and 1.31767%1.91213%, respectively; TIIE rate of 7.6241%4.4842% and 6.1066%7.5555%, respectively, for 28 days; TIIE rate of 7.6556%4.4660% and 6.1875%7.4465%, respectively, for 91 days; Cetes rate of 7.22% and 5.69%, respectively, for 28 days; Cetes rate of 7.36% and 5.96%, respectively, for 91 days; Cetes rate of 7.53% and 6.09%, respectively, for 182 days. |
(2) | Includes financing from foreign banks of Ps. 1,701,363,4061,992,963,415 and Ps. 1,600,968,832,1,648,779,936, as of December 31, 20172020 and 2016,2019, respectively. |
(3) | The total amounts of notes payable to contractors as of December 31, 20172020 and 2016,2019, current and long-term, are as follows: |
| | | 2017 | | | 2016 | | | 2020 | | | 2019 | | Total notes payable to contractors(a)(b) | | | Ps.4,053,577 | | | | Ps.6,988,699 | | | | Total notes payable to contractors (a) (b) | | | Ps. | 1,021,204 | | | Ps. | 2,040,446 | | Less: current portion of notes payable to contractors | | | 2,173,285 | | | | 4,181,102 | | | | 685,179 | | | | 1,246,854 | | | | | | | | | | | | | | | Notes payable to contractors (long-term) | | | Ps.1,880,292 | | | | Ps.2,807,597 | | | Ps. | 336,025 | | | Ps. | 793,592 | | | | | | | | | | | | | | |
(a) | (a) | PEMEX has entered into FPWCs pursuant to which the hydrocarbons and construction in progress are property of Pemex Exploration and Production. Pursuant to the FPWC, the contractors manage the work in progress, classified as development, infrastructure and maintenance. As of December 31, 20172020 and 2016,2019, PEMEX had an outstanding amount payable of Ps. 1,678,84381,364 and Ps. 3,986,565,755,860, respectively. |
(b) | (b) | During 2007, Pemex-ExplorationPemex 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, 20172020 and 2016,2019, the outstanding balances owed to the contractor were Ps. 2,374,734939,839 (U.S. $120,017)$47,112) and Ps. 3,002,1341,284,587 (U.S. $145,283)$68,165), respectively. In accordance with the contract, the estimated future payments are as follows: |
| Year | | Amount | | | Amount | | 2018 | | U.S.$ | 25,267 | | | 2019 | | | 25,267 | | | 2020 | | | 25,267 | | | | 2021 | | | 25,267 | | | | 33,005 | | 2022 | | | 18,949 | | | | 17,265 | | | | | | | | | Less accrued interest | | | | 3,158 | | Total | | U.S $ | 120,017 | | | | 47,112 | | | | | | | | |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) (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.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The outstanding liability for this transaction is payable as follows:
| | | | | | | | | Years | | Pesos | | | U.S. dollars | | 2018 | | | Ps. 3,957,317 | | | U.S. $ | 199,999 | | 2019 | | | 3,886,037 | | | | 196,396 | | 2020 | | | 3,886,037 | | | | 196,396 | | 2021 | | | 3,886,037 | | | | 196,396 | | 2022 | | | 3,886,037 | | | | 196,396 | | 2023 and thereafter | | | 39,450,325 | | | | 1,993,781 | | | | | | | | | | | | | | 58,951,790 | | | | 2,979,364 | | Less: short-term unaccrued interest | | | 2,399,475 | | | | 121,267 | | Less: long-term unaccrued interest | | | 23,875,047 | | | | 1,206,621 | | | | | | | | | | | Total financing | | | 32,677,268 | | | | 1,651,476 | | Less: short-term portion of financing (excluding interest) | | | 1,557,842 | | | | 78,732 | | | | | | | | | | | Total long term financing | | | Ps. 31,119,426 | | | U.S.$ | 1,572,744 | | | | | | | | | | |
(5) | As of December 31, 20172020 and 2016,2019, PEMEX used the following exchange rates to translate the outstanding balances in foreign currencies to pesos in the statement of financial position: |
| | | | | | | 2020 | | | 2019 | | | | 2017 | | | 2016 | | | U.S. dollar | | | Ps. 19.7867 | | | | Ps. 20.6640 | | | Ps. | 19.9487 | | | Ps. | 18.8452 | | Japanese yen | | | 0.1757 | | | | 0.1772 | | | | 0.1933 | | | | 0.1734 | | Pounds sterling | | | 26.7724 | | | | 25.3051 | | | | 27.2579 | | | | 24.9586 | | Euro | | | 23.7549 | | | | 21.6724 | | | | 24.4052 | | | | 21.1537 | | Swiss francs | | | 20.2992 | | | | 20.1974 | | | | 22.5720 | | | | 19.4596 | | Canadian dollar | | | 15.7858 | | | | 15.2896 | | | Australian dollar | | | 15.4752 | | | | 14.8842 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2018 | | | 2019 | | | 2020 | | | 2021 | | | 2022 | | | 2023 and thereafter | | | Total | | Maturity of the total principal outstanding and accrued interest as of December 31, 2017, for each of the years ending December 31. | | | Ps.157,209,467 | | | | Ps.159,403,397 | | | | Ps,209,915,748 | | | | Ps.185,307,669 | | | | Ps.158,761,145 | | | | Ps.1,167,277,645 | | | | Ps.2,037,875,071 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PEMEX leases plants, transportation and storage equipment, port facilities, buildings and land. Leases generally run for a period of 1 to 20 years, in some cases with an option to renew the lease after that date. Some lease payments are renegotiated every five years to reflect that the rent payments are market compliant. Some of the leases provide for additional rental payments that are based on changes in local price indexes. For certain leases, PEMEX has restrictions to enter into a sublease agreement. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESPlants, transport and storage equipment, port facilities, buildings and land leases were entered into in previous years as service, transportation and building leases.
AND SUBSIDIARY COMPANIESPEMEX has rights of use assets for equipment whose contractual terms are from one to three years. These leases are short-term and / or low-value item leases. PEMEX has decided not to recognize the right-of-use assets and lease liabilities for these leases.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Lease information where PEMEX is a lessee is presented as follows:
| i. | Rights of use assets are as follow: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Rights of use assets | | | | Transportation and storage equipment | | | Plants | | | Drilling equipment (1) | | | Rights of use | | | Port facilities | | | Buildings | | | Lands | | | Total | | Balance as of January 1, 2019 | | U.S. $ | 40,029,595 | | | | 24,099,662 | | | | 6,223,655 | | | | 1,922,291 | | | | 371,348 | | | | 75,771 | | | | 38,258 | | | | 72,760,580 | | Depreciation of the year | | | (5,377,668 | ) | | | (1,854,894 | ) | | | (162,153 | ) | | | (86,342 | ) | | | (33,949 | ) | | | (16,015 | ) | | | (3,028 | ) | | | (7,534,049 | ) | Additions | | | 895,291 | | | | 3,448,691 | | | | — | | | | — | | | | 1,286,054 | | | | 5,456 | | | | — | | | | 5,635,492 | | Currency translation effect | | | (43,709 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (43,709 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance as of December 31, 2019 | | | 35,503,509 | | | | 25,693,459 | | | | 6,061,502 | | | | 1,835,949 | | | | 1,623,453 | | | | 65,212 | | | | 35,230 | | | | 70,818,314 | | Depreciation of the year | | | (4,868,961 | ) | | | (1,869,775 | ) | | | (122,874 | ) | | | (84,399 | ) | | | 355,505 | | | | (17,567 | ) | | | (2,951 | ) | | | (6,611,022 | ) | Cancellations | | | (5,476,350 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (5,476,350 | ) | Additions | | | 97,891 | | | | — | | | | — | | | | — | | | | 438,951 | | | | — | | | | 579 | | | | 537,421 | | Currency translation effect | | | 12,292 | | | | — | | | | — | | | | — | | | | — | | | | 1,116 | | | | 511 | | | | 13,919 | | Impairment | | | — | | | | — | | | | — | | | | (87,025 | ) | | | — | | | | — | | | | — | | | | (87,025 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance as of December 31, 2020 | | | 25,268,381 | | | | 23,823,684 | | | | 5,938,628 | | | | 1,664,525 | | | | 2,417,909 | | | | 48,761 | | | | 33,369 | | | | 59,195,257 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated useful life | | | 1 to 10 years | | | | 14 years | | | | 10 years | | | | 23 years | | | | 20 years | | | | 1to 5 years | | | | 5 years | | | | | |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) | ii. | Leases liabilities are as follows: |
| | | | | | | | | | | 2020 | | | 2019 | | Lease liabilities recognized at January 1, 2020 | | Ps. | 68,148,627 | | | | 70,651,797 | | Additions | | | 625,410 | | | | 5,683,676 | | Cancellations | | | (6,578,337 | ) | | | — | | Payments of principal | | | (7,979,972 | ) | | | (10,709,421 | ) | Accrued interest | | | 5,398,964 | | | | 4,800,153 | | Interests paid | | | (2,030,829 | ) | | | — | | Foreign exchange | | | 5,600,265 | | | | (2,277,578 | ) | | | | | | | | | | Lease liabilities at December 31, 2020 | | Ps. | 63,184,128 | | | | 68,148,627 | | | | | | | | | | |
The following table presents the roll-forwardobligation recognized as of total debt of PEMEX for each of the year ended December 31, 20172020 and 2016,2019, amounted to Ps. 63,184,128 and Ps. 68,148,627, of which includes shortPs. 8,106,937 and long-term debt:Ps. 5,847,085 were recognized in current liabilities and Ps. 55,077,191 and Ps. 62,301,542 in non-current liabilities, respectively. | | | | | | | | | | | 2017(i) | | | 2016(i) | | Changes in total debt: | | | | | | | | | At the beginning of the year | | | Ps.1,983,170,730 | | | | Ps.1,493,381,835 | | Cash flows: | | | | | | | | | Loans obtained—financing institutions | | | 704,715,468 | | | | 829,579,084 | | Loans obtained—financing lease | | | — | | | | 21,924,053 | | Debt payments | | | (642,059,819 | ) | | | (614,987,329 | ) | Interest paid | | | (108,910,417 | ) | | | (88,757,428 | ) | Non-cash flows: | | | | | | | | | Foreign exchange | | | (16,685,439 | ) | | | 243,182,764 | | Accrued interest | | | 117,644,548 | | | | 98,847,751 | | | | | | | | | | | At the end of the year | | | Ps.2,037,875,071 | | | | Ps.1,983,170,730 | | | | | | | | | | |
| iii. | Amounts recognized in the statement of comprehensive Income |
NOTE 16.
| | | | | | | | | | | Total | | | 2020 | | | 2019 | | Depreciation of rights of use | | Ps. | 7,229,231 | | | | 7,429,275 | | Interests from lease liabilities | | | 5,784,476 | | | | 5,360,072 | | Expenses related to short-term leases | | | 7,631 | | | | 58,701 | |
| iv. | Amounts recognized in the statement of cash flows |
| | | | | | | | | | | Total | | | 2020 | | | 2019 | | Lease payments (principal and interests) | | Ps. | (10,010,801 | ) | | | (10,709,421 | ) |
NOTE 18. | DERIVATIVE FINANCIAL INSTRUMENTS |
PEMEX faces market risk caused by the volatility of hydrocarbon prices, exchange rates and interest rates, credit risk associated with investments and financial derivatives, as well as liquidity risk. In order to monitor and manage these risks, PEMEX has approved general provisions relating to financial risk management, which are comprised of policies and guidelines that promote an integrated framework for risk management, regulate the use of derivative financial instruments (“DFIs”),DFIs, and guide the development of risk mitigation strategies. This regulatory framework establishes that DFIs should be used only for the purpose of mitigating financial risk. The use of DFIs for any other purpose must be approved in accordance with PEMEX’s current internal regulation. PEMEX has a Financial Risk Working Group (FRWG) which is a specialized working group with decision-making authority on financial risk exposure, financial risk mitigation schemes, and DFIs trading of Petróleos Mexicanos, the subsidiary entities, and where applicable, the subsidiary companies. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) Approved DFIs are mainly traded on the OTC (Over the Counter) market. Howevermarket; however, exchange traded instruments may also be used. In the case of PMI Trading, DFIs are traded onCME-ClearPort.CME-Clearport. The different types of DFIs that PEMEX trades are described below in the subsections corresponding to each risk type and as related to the applicable trading markets. One of PEMEX’s policies is to contribute to minimizing the impact that unfavorable changes in financial risk factors have on its financial results by promoting an adequate balance between expected incoming cash flows from operations and outgoing cash flows related to its liabilities. As part of the regulatory framework for financial risk management, PEMEX has established in its internal procedures the eligible counterparties towith which it may trade DFIs and other financial instruments. In addition, certain PMI subsidiariesSubsidiaries have implemented a regulatory framework for risk management with respect to its activities, which consists of policies, guidelines and procedures to manage the market risk associated with its commodity trading activities in accordance with industry best practices, such as: 1) the use of DFIs for financial risk mitigation purposes; 2) the segregation of duties; 3) valuation and monitoring mechanisms, such as the generation of a daily portfolio risk report, value at risk (VaR)(“VaR”) computation; and 4) VaR limits, both at a global and business unit level and the implementation of stop loss mechanisms. In addition, PMI Trading also has its own risk management subcommittee that supervises the trading of DFIs. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Given that PEMEX’s outstanding DFIs have been entered into for risk mitigation purposes, particularly with economic hedging purposes, itthere is unnecessaryno need to establish and monitor market risk limits. For those portfolios with an open market risk exposure, PEMEX’s financial risk management regulatory framework establishes the implementation and monitoring of market risk metrics and limits such(such as VaR, and capital at risk (an aggregation of fair value ormark-to-market (“MtM”) and profit and loss, or CaR)among others). PEMEX has also established credit guidelines for DFIs that Pemex Industrial Transformation offers to its domestic customers, which include the use of guarantees and credit lines. For exchange traded DFIs, PEMEX trades under the margin requirements of the corresponding exchange market, and therefore does not have internal policies for these DFIs. DFIs held with financial counterparties do not includerequire collateral exchange clauses. Notwithstanding, PEMEX’s regulatory framework promotes credit risk mitigation strategies such as collateral exchangeexchange. PEMEX does not have an independent third party to verify compliance with these internal standards; however, PEMEX has internal control procedures that certify compliance with existing policies and guidelines. 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, 2017,2020, approximately 15.6%14.3% of PEMEX’s total net debt outstanding (including DFIs) consisted of floating rate debt. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (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 rateswaps and options. Through the swap agreements, PEMEX acquires the obligation to make payments based on a fixed interest rate and is entitledin exchange for receiving payments referenced to receivea floating interest rate payments based on LIBOR, TIIE or a rate referenced to or calculated from TIIE.rate. On the other hand, under the option agreements, PEMEX acquires protection against possible raises in the floating interest rates of some of its liabilities. As of December 31, 2017, PEMEX2020, Petróleos Mexicanos was a party to four interest rate swap agreements denominated in U.S. dollars for an aggregate notional amount of U.S. $1,623,750$956,250 at a weighted average fixed interest rate of 2.35% and a weighted average term of 7.34.3 years. Similarly, in order to eliminate the volatility associated with variable interest rates of long-term financing operations, PMI NASA has also executed four interest rate swap agreements denominated in U.S. dollars for an aggregate notional amount of U.S. $71,936,$24,190, at a weighted average fixed interest rate of 4.17% and a weighted average term of 4.411.41 years. Moreover, PEMEX invests in pesos and U.S. dollars in compliance with applicable internal regulations, through portfolios that have different purposes that seek an adequate return subject to risk parameters that reduce the probability of capital losses. The objective of the investments made through these portfolios is to meet PEMEX’s obligations payable in pesos and U.S. dollars. The investments made through PEMEX’s portfolios are exposed to domestic and international interest rate risk and credit spread risk derived from government and corporate securities, and inflation risk arising from the relationship between UDIs and pesos. However, these risks are mitigated by established limits on exposure to market risk. IBOR reference rates transition PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESAs a result of the decision made by the Financial Stability Board (FSB), the Interbank Offered Rates (IBORs), such as the LIBOR in dollars, will cease to be published in 2022, and are expected to be replaced by alternative reference rates, based on risk-free rates obtained from market operations.
AND SUBSIDIARY COMPANIESThe discontinuation of the publication of these rates was scheduled for December 2021, nevertheless, on November 2020 the ICE Benchmark Administration Limited (known as “ICE”) announced an extension until June 2023 for the publication of the most common LIBOR rates in dollars.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSTherefore, PEMEX has identified and is reviewing contracts expiring after the applicable cessation dates, which could have an impact derived from the change in the aforementioned rates. PEMEX will continue working on amendments to any contracts which may be required as a result of the transition.
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015PEMEX has a reduced number of financial instruments referenced to floating rates in U.S. dollars with maturity and interest rate fixation after June 2023. This portfolio is composed of debt instruments and DFIs as shown below:
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) | | | | | Notional Amounts (in thousands of each Currency) | | U.S. $ | | Debt | | | (3,972,777 | ) | DFIs | | | | | Interest Rate Swaps | | | 400,000 | | Interest Rate Options | | | (2,500,000 | ) |
ii. figures not audited
To the date, PEMEX is monitoring the evolution of the IBORs transition in the market, to anticipate any negative impact that these changes could have. Once the alternative reference rates are defined, as well as the new discount curves and any other valuation parameters, PEMEX will be able to estimate the impact that such changes will have on financial instruments’ market value and financial cost. Most of PEMEX’s revenues are denominated in U.S. dollars, a significant amount of which is derived from exports of crude oil and petroleum products, which are priced and payable in U.S. dollars. Additionally, PEMEX’s revenues from domestic sales of gasoline and diesel net of IEPS Tax, tax duties, incentives, and other related taxes, as well as domestic sales of natural gas and its byproducts, LPG and petrochemicals, are referenced to international U.S. dollar-denominated prices. PEMEX’s expenses related to hydrocarbon duties are calculated based on international U.S. dollar-denominated prices and the cost of hydrocarbon imports that PEMEX acquires for resale in Mexico or use in its facilities are indexed to international U.S. dollar-denominated prices. By contrast, PEMEX’s capital expenditure and operating expenses are established in pesos. As a result of this cash flow structure, the depreciation of the peso against the U.S. dollar increases PEMEX’s financial balance. The appreciation of the peso relative to the U.S. dollar has the opposite effect. PEMEX manages this risk without the need for hedging instruments, because the impact on PEMEX’s revenues of fluctuations in the exchange rate between the U.S. dollar and the peso is offset in whole or in part by its impact on its obligations. Therefore, PEMEX prioritizes debt issuances denominated in U.S. dollars; nonetheless, this is not always achievable, hencenon-U.S. dollar denominated debt issued in international currencies areis hedged through DFIs to mitigate their exchange rate exposure, either by swapping themit into U.S. dollars or through other derivative structures. The rest of the debt is denominated in pesos or in UDIs, and for which most of the debt denominated in UDIs, it has been converted into pesos through DFIs in order to eliminate the inflationary risk exposure.
As a consequence of the above, PEMEX’s debt issued in international currencies other than U.S. dollars has exchange rate risk mitigation strategies. PEMEX has selected strategies that further seek to reduce its cost of funding by leaving, in some cases, part of this exchange rate exposure unhedged when assessed as appropriate. The underlying currencies of PEMEX’s DFIs are the euro, Swiss franc, Japanese yen Poundand pounds sterling and Australian dollar versusagainst the U.S. dollar and UDIs versusagainst the peso. In 2017,
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) As of December 31, 2020, PEMEX entereddid not enter into variousany DFIs, since no debt in currencies other than U.S. dollars or pesos was issued. Nonetheless, during 2020, PEMEX carried out the restructure three cross-currency swaps, to hedge inflation risk arising from debt denominated in UDIs, for an aggregate notional amountone of Ps. 6,291,969. During 2016, PEMEX entered into the same kind of instruments to hedge currency risk arising from debt obligations denominated in euros and Swiss francs for an aggregate notional amount of U.S. $3,459,236 and the inflation risk arising from debt denominated in UDIs, for an aggregate notional amount of Ps. 1,077,101. Most of PEMEX’s cross-currency swaps are plain vanilla except for one swap entered into in 2004 to hedge its exposure to the euro, which expired in 2016. This swap was referred to as an “extinguishing swap” and was obtained in order to hedge long-term obligations. The main characteristic of extinguishing swaps was that these DFIs terminate upon the occurrence of any of the credit default events specified in the DFI contract confirmation, without any payment obligation for either party. This swap had a notional amountrecouponing provision. These DFIs hedged the exchange rate exposure of U.S. $1,146,410.
In 2016,a €1,250,000 debt with maturity in 2027. For this restructuring PEMEX entered into, without cost, an options structure called “Seagull Option” in order to cover the notional riskstructures which are composed of a debt issue in Japanese yen for ¥80,000,000, keepingcross-currency swap and the coupons in the original currency
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
(0.5% annual coupon rate). This structure protects the short exposure in Japanese yen against an appreciationsale of the Japanese yen versus the U.S. dollar from JPY 83.70 anda call option, guaranteeing complete protection up to JPY 75.00a certain exchange rate and recognizespartial protection above that level. This allowed PEMEX to eliminate the recouponing provision without cost. Once this restructure had been carried out, 10% of this debt remains hedged with a benefit ifcross-currency swap.
Additionally, during 2019 PEMEX restructured a cross-currency swap which had a recouponing provision. This DFI hedged the Japanese yen depreciates to an averageexchange rate exposure of 117.39 JPY/USD. Moreover,a €725,000 debt with maturity in 20172025. For this restructure PEMEX entered into, without cost, three more Seagull Optionsoptions structures called “Seagull Options” to hedge the same notional risk of three debt issues in euros for an aggregate notional amount of € 4,250,000.as the original swap. These structures protect the short exposure in euros against an appreciation of the euro versus the U.S. dollar in a specific range and PEMEX recognizesresult in a benefit if the euro depreciates up to a certain exchange rate, for each debt issue. Whereas,rate. In addition, in order to mitigate the exchange rate risk caused byderived from the coupons, of these issues PEMEX entered into coupon-only swaps.
Additionally, PEMEX entered into,only coupon swaps for the same notional amount. These eliminated the recouponing provision without cost, a structure which is composed of a cross-currency swap and the sale of a call option, in order to hedge the notional risk of a debt issue in Pound sterling for £450,000, guaranteeing complete protection up to a certain exchange rate and partial protection above that level.cost.
PEMEX recorded a total net foreign exchange (loss) gain (loss) of Ps. 23,184,122,(128,949,304), Ps. (254,012,743)86,930,388 and Ps. (154,765,574),23,659,480, for the years ended December 31, 2017, 20162020, 2019 and 2015,2018, respectively; these amounts include the unrealized foreign exchange gain (loss) associated with debt of Ps. 16,685,439,122,099,058, Ps. (243,182,764)75,967,395 and Ps. (152,554,454)19,762,208 for the years ended December 31, 2017, 20162020, 2019 and 2015,2018, respectively. Unrealized foreign exchange gains and losses do not impact PEMEX’s cash flows. The appreciationdepreciation of the peso during 2020 caused a total net foreign exchange gainloss because a significant part of PEMEX’s debt, 89.4%88.64% (principal only), as of December 31, 20172020 is denominated in foreign currency. Unrealized foreign exchange gainslosses and lossesgains do not impact PEMEX’s cash flows. Due to the cash flow structure described above, the depreciation of the peso relative to the U.S. dollar does not affect PEMEX’s ability to meet U.S. dollar-denominated financial obligations and improves PEMEX’s ability to meetpeso-denominated financial obligations. On the other hand, the appreciation of the peso relative to the U.S. dollar may increase PEMEX’s peso debt service costs on a U.S. dollar basis. PEMEX’s foreign exchange gain in 2017 was due to the appreciation of the peso, from Ps. 20.6640 = U.S. $1.00 on December 31, 2016 to Ps. 19.7867 = U.S. $1.00 on December 31, 2017. PEMEX’s 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. 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. Certain of the PMI subsidiariesSubsidiaries face market risks generated by fluctuations in foreign exchange rates. In order to mitigate these risks, the boards of directors of several of these companies have authorized a policy which stipulates that no more than 5% of a company’s total financial assets maymust be denominated in a currency other than its functional currency, unless the company owes a duty or expected payment in a currency other than its functional one. Accordingly, certain PMI subsidiaries will, from time to time, enter into DFIs in order to mitigate the risk associated with financing operations denominated in currencies other than their respective functional currency. Finally, a significant amount of PMI Trading’s income and expenses, including the cost of sales and related sales costs, is derived from the trade of refined products, petrochemicals and gas liquids to PEMEX subsidiaries and third parties, whose prices are determined and are payable in U.S. dollars. PMI Trading’s exposure to foreign currency risk results primarily from the need to fund tax payments denominated in domestic currency, as well as from certain related sales costs denominated in domestic currency. PMI Trading believes it can adequately manage the risk created by the payment of taxes in domestic currency without the need to enter into hedging instruments because the exposure to this risk is marginal relative PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
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. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) | iii. | iii. Hydrocarbon Price Risk
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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 hydrocarbon prices is partly mitigated by natural hedges between its inflows and outflows. Since 2016, as a resultAdditionally, PEMEX continuously evaluates the implementation of risk mitigation strategies, including those involving the changes in the PEMEX’s fiscal regime, its sensitivity to crude oil prices decreased. Nonetheless, PEMEX worked on a hedging strategy for the following years in order to reduce its exposure to drops in crude oil price.use of DFIs, taking into consideration their operative and budgetary feasibility.
In April 2017, the Board of Directors of Petróleos Mexicanos approved the establishment of an Annual Oil Hedging Program. Since then, PEMEX entered into a crude oil hedgehas implemented hedging strategies to partially protect its cash flows from decreases in the Mexican crude oil basket price below that established in theLey de Ingresos de la Federación (“Federal Revenue Law”). PEMEX hedged 409 thousand barrels per day from May to December 2017 for U.S. $133,503. As a result of this strategy PEMEX had an income of U.S. $205,705. During the fourth quarter of 2017, PEMEX entered into a crude oil hedge to partially protect cash flows for the fiscal year 2018 from decreasesfalls in the Mexican crude oil basket price below the one established in the 2018 Federal Revenue Law.
During 2018, PEMEX entered into a crude oil hedge for fiscal year 2019, pursuant to which PEMEX hedged 440320 thousand barrels per day from January tofor the period between December 2018 and December 2019, for U.S. $449,898.$149,588. In 2015,Afterwards, during 2019 PEMEX entered into various swaps in ordera crude oil hedge for fiscal year 2020, pursuant to which PEMEX hedged 243 thousand barrels per day for the period between December 2019 and December 2020, for U.S. $178,268.
Finally, during 2020 PEMEX entered into a crude oil hedge for fiscal year 2021, pursuant to which PEMEX hedged 332.5 thousand barrels per day for 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. During 2017period between December 2020 and 2016, PEMEX did not enter into any propane import price swaps.June 2021, for U.S. $119,920. In addition to supplying natural gas, Pemex Industrial Transformation offerscan offer DFIs to its domestic customers in order to provide them with support to mitigate the risk associated with the volatility of natural gas prices. Until 2016, Since 2017, when this service began to be offered, Pemex Industrial Transformation enteredmust enter into DFIs with Mex Gas Supply, S.L.Petróleos Mexicanos under the opposite position to those DFIs offered to its customers in order to mitigate the market risk it bearswould bear under such offered DFIs. Mex Gas Supply, S.L.Petróleos Mexicanos then transferredtransfers the related price risk derived from the DFI position held with Pemex Industrial Transformation to international financial counterparties by entering into thesethe opposite position DFIsof such DFI with such parties.the counterparty. As of 2017,December 31, 2020, there were no DFIs since all the DFIs in its portfolio expired in 2019. In the event that Pemex Industrial Transformation must enterenters into DFIs with Petróleos Mexicanos under the PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
opposite position to those DFIs offered tonew trades, its customers, thereby replacing Mex Gas Supply, S.L. However, as of December 31, 2017, no DFIs have been entered into under this mechanism. Due to the above, Pemex Industrial Transformation maintains a negligible or even null exposure to market risk. These portfolios haveDFI portfolio has VaR and Capital at RiskCaR limits in order to limit market risk exposure.
PMI Trading faces market risk generated by the terms of the purchase and sale of refined products and natural gas liquids, as well as the volatility of oil prices. Accordingly, it frequently enters into DFIs in order to mitigate this risk, thereby reducing the volatility of its financial results. iv. 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 portfolio of third-party sharesmaximum applicable limits in order to implement risk mitigation mechanisms as necessary.
As of December 31, 2017,
Petróleos Mexicanos does not hold any third-party shares of companies that do not participate Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in financial markets and, therefore, does not hold any related DFIs.thousands, except as noted) During 2017, PMI HBV liquidated the total shareholding in Repsol, S.A. (Repsol), which was 23,416,219 shares. Therefore, as of December 31, 2017, PEMEX does not hold any third-party shares and does not hold any related DFIs.
| iv. | 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, 2017,2020, the VaRVaRs of PEMEX’s investment portfolios waswere Ps. (10.82)(7.81) for the Peso Treasury Portfolio, Ps. (44.95)0.00 for the Fondo Laboral Pemex Portfolio (“FOLAPE”), Ps. (7.17) for the Fideicomiso de Cobertura Laboral y de Vivienda Portfolio (“FICOLAVI”), Ps. (544.32) for the Mexican Peso Treasury Portfolio managed by Operadora de Fondos Nafinsa, S.A. de C.V. (“OFINSA”),FOLAPE, and U.S. $0$0.00 for the U.S. Dollar Treasury Portfolio. Additionally, PEMEX has a portfolio of Mexican Government bonds. These securities are classified for accounting purposes as restricted assets. These securities are considered not to be exposed to market risk, unlike the investment portfolios’ securities. Therefore, there is no need to calculate a VaR. In addition to the exposure to interest rate fluctuations of the DFIs in which PEMEX is obligated to paymake payments referenced to floating rates, PEMEX’s DFIs are exposed to MtMmark-to-market (“MtM”) volatility as a result of changes in the interest rate curves used in their valuation. Interest rate risk quantification was calculated for DFIs in conjunction with the interest rate risk quantification for the debt portfolio. The following table shows the sensitivity of PEMEX’s DFIs and debt portfolio to a parallel shift of 10 basis points (bp) over the zero coupon rate curves. The 10bp parallel shift may be used to estimate in a simple manner the impact for proportional values to this shift and was selected in accordance with market practices for financial risk management. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
For the debt portfolio, interest rate risk sensitivity was calculated taking into account both the DFI interbank market yield curves and the PEMEX curves (which were also used to estimate the debt portfolios’ fair value). These metrics were calculated solely for informational purposes and are not used for portfolio management purposes because PEMEX does not intend to prepay its debt or terminate its DFIs early. Therefore, there is no interest rate risk arising from fixed rate obligations. INTEREST RATE
Petróleos Mexicanos Productive State-Owned Subsidiaries and CURRENCY DFIsSubsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) | | | | | | | | | | | | | | | | | Interest rate sensitivity to + 10 bp | | | | Interbank Yield Curves | | | | | | PEMEX Curves Sensitivity debt | | Currency | | Sensitivity debt | | | Sensitivity DFIs | | | Sensitivity net | | | in thousands U.S. dollars | | CHF | | | 3,144 | | | | (3,144 | ) | | | — | | | | 3,030 | | Euro | | | 100,081 | | | | (84,962 | ) | | | 15,119 | | | | 82,839 | | Pound Sterling | | | 7,691 | | | | (7,073 | ) | | | 618 | | | | 6,587 | | Yen | | | 8,542 | | | | (3,972 | ) | | | 4,570 | | | | 6,877 | | Peso | | | 43,774 | | | | 2,039 | | | | 45,813 | | | | 42,012 | | UDI | | | 16,496 | | | | (11,586 | ) | | | 4,910 | | | | 15,453 | | U.S. dollar | | | 785,508 | | | | 89,880 | | | | 875,388 | | | | 416,052 | |
FX swaps were included in the calculation of the figures in the previous table, which were not traded as debt hedging.
| | | | | | | | | | | | | | | | | INTEREST RATE and CURRENCY DFIs Interest rate sensitivity to + 10 bp
| | | | | | | | | | | | | | | | | | | Interbank Yield Curves | | | PEMEX Curves | | Currency | | Sensitivity debt | | | Sensitivity DFIs | | | Sensitivity net | | | Sensitivity debt | | CHF | | | 1,472 | | | | (1,318 | ) | | | 154 | | | | 1,352 | | Euro | | | 75,107 | | | | (59,653 | ) | | | 15,454 | | | | 56,790 | | Pound Sterling | | | 4,123 | | | | (3,845 | ) | | | 278 | | | | 3,469 | | Yen | | | 5,478 | | | | (2,202 | ) | | | 3,276 | | | | 4,314 | | Peso | | | 32,446 | | | | 731 | | | | 33,177 | | | | 25,855 | | UDI | | | 12,935 | | | | (12,935 | ) | | | 0 | | | | 7,093 | | U.S. dollar | | | 1,425,168 | | | | 198,150 | | | | 1,623,318 | | | | 482,311 | | | | | | | | | | | | | Figures not audited | |
In addition, PEMEX performed a retrospective sensitivity analysis of the impact on its financial statements for the years ended December 31, 2017, 20162020, 2019 and 2015,2018, in which PEMEX assumed either an increase or decrease of 25 basis points in the floating interest rates of its debt and corresponding hedges. At December 31, 2017, 20162020, 2019 and 2015,2018, had market interest rates been 25 basis points higher, with all other variables remaining constant, net incomeloss for the year would have been Ps. 704,011,606,839, Ps. 841,024644,506 and Ps. 922,268 lower649,339 higher for December 31, 2017, 20162020, 2019 and 2015,2018, respectively, primarily as a result of an increase in interest expense. Conversely, had market interest rates been 25 basis points lower, net incomeloss for the year would have been Ps. 704,011,606,839, Ps. 841,024644,506 and Ps. 922,268 greater649,339 lower at December 31, 2017, 20162020, 2019 and 2015,2018, respectively, primarily as a result of a decrease in interest expense. Exchange rate risk quantification The investments of PEMEX’s portfolios do not face foreign exchange rate risk because the funds of such portfolios are used to meet obligations in pesos and U.S. dollars. Currency DFIs are entered into in order to hedge exchange rate risk arising from debt flows in currencies other than pesos and U.S. dollars or inflation risk arising from debt flows in UDIs. However, due to the accounting treatment, net income is exposed tomark-to-market MtM volatility, mainly 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, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Exchange rate risk quantification was calculated for DFIs in conjunction with the exchange rate risk quantification for the debt portfolio. The following table shows the sensitivity of PEMEX’s DFIs and debt portfolio to an increase of 1% to the exchange rates of currencies against the U.S. dollar. The 1% may be used to estimate in a simple manner the impact for proportional values to this increase and was selected in accordance with market practices for financial risk management. For the debt portfolio, exchange rate risk sensitivity was calculated taking into account both, interbank market yield curves and the PEMEX curves. In addition, the table shows theone-day horizon historical VaR of the remaining open position, with a confidence level of 95%, over a period of one year. These metrics were calculated solely for informational purposes. Nevertheless, in order to carry out management activities related to its debt portfolio, PEMEX periodically conducts quantitative analyses in order to estimate the exchange rate risk exposure generated by its debt issuances. Based on these analyses, PEMEX has elected to enter into DFIs as an exchange rate risk mitigation strategy. These DFIs along with the debt that they hedge are shown in the following table: INTEREST RATE
Petróleos Mexicanos Productive State-Owned Subsidiaries and CURRENCY DFIsSubsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) | INTEREST RATE and CURRENCY DFIs Exchange rate sensitivity +1% and VaR 95% | | | | | | | | | | | | | | Interbank Yield Curves | | | | PEMEX Curves 1% Debt | | | Interbank Yield Curves | | PEMEX Curves | | Currency | | 1% Debt | | 1% DFIs | | | 1% Net | | VaR 95% Net | | | Sensitivity Debt | | Sensitivity DFIs | | Sensitivity Net | | VaR 95% Net | | Sensitivity Debt | | in thousands U.S. dollars | | | CHF | | | (13,943 | ) | | 13,943 | | | | — | | | | — | | | (13,624 | ) | | | (6,206 | ) | | | 6,168 | | | | (38 | ) | | | (29 | ) | | | (5,840 | ) | Euro | | | (187,988 | ) | | 165,894 | | | | (22,094 | ) | | (19,744 | ) | | (167,068 | ) | | | (195,594 | ) | | | 133,604 | | | | (61,990 | ) | | | (47,729 | ) | | | (165,822 | ) | Pound Sterling | | | (13,822 | ) | | 13,042 | | | | (780 | ) | | (666 | ) | | (12,322 | ) | | | (12,857 | ) | | | 12,804 | | | | (54 | ) | | | (53 | ) | | | (11,535 | ) | Yen | | | (16,914 | ) | | 11,470 | | | | (5,444 | ) | | (4,398 | ) | | (14,859 | ) | | | (11,453 | ) | | | 3,123 | | | | (8,330 | ) | | | (6,304 | ) | | | (9,423 | ) | Peso | | | (135,974 | ) | | 1,409 | | | | (134,565 | ) | | (162,336 | ) | | (133,525 | ) | | | (138,257 | ) | | | (18,326 | ) | | | (156,583 | ) | | | (247,424 | ) | | | (121,302 | ) | UDI | | | (29,485 | ) | | 25,358 | | | | (4,127 | ) | | (5,038 | ) | | (28,573 | ) | | | (21,795 | ) | | | 21,795 | | | | (0 | ) | | | (0 | ) | | | (15,376 | ) | Figures not audited | | Figures not audited | |
As shown in the table above, exchange rate risk derived from debt denominated in currencies other than pesos and U.S. dollars is almost fully hedged by DFIs. The exchange rate risk exposure to the Swiss franc, euro, Poundpound sterling and Japanese yen is a result of the delta of the structures described above (Seagull Options and Calls). FX swaps which were not traded as part of debt, and considering the current exchange rate levels, represents a lower funding cost than the hedging were included in the calculation of the figures in the table above.strategies carried out through swaps.
In addition, PEMEX performed a retrospective sensitivity analysis of the impact on its financial statements of the years ended December 31, 2017, 20162020, 2019 and 2015,2018, in which PEMEX assumed either an increase or decrease of 10% in the exchange rate between the U.S. dollar and peso in order to determine the impact on net income and equity as a result of applying these new rates to the monthly balances of assets and liabilities denominated in U.S. dollars. At December 31, 2017, 20162020, 2019 and 2015,2018, had the peso depreciated against the U.S. dollar by 10% with other variables remaining constant, net income would have been Ps.149,669, Ps.124,512Ps. 168,334, Ps.180,408 and Ps.105,915Ps.192,025 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.149,669, Ps.124,512Ps. 168,334, Ps.180,408 and Ps.105,915,Ps. 192,025, 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, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Hydrocarbon price risk quantification Pemex Industrial Transformation occasionally faces market risk due to open positions arising from the mismatch between the DFI portfolio offered to domestic customers and hedges with international counterparties. As of December 31, 2017,2020, Pemex Industrial Transformation’s natural gas DFI portfolioportfolios had no market risk exposure.exposure, as all the DFIs in its portfolios expired in 2019. MarketOpen market risk exposure iswould be measured using the20-day Delta-Gamma VaR methodology, with a confidence level of 95%, based on 500 daily observations; VaR and CaR arewould be monitored and mitigated bypre-established limits.
It should be noted that sensitivity analyses were not carried out for other financial instruments, such as accounts receivable and payable (as defined in the financial reporting standards). Such accounts are cleared in short-term, and therefore market risk is considered to be nonexistent. Most of these accounts are related to hydrocarbon prices. In accordance with the risk management regulatory framework that PMI Trading has implemented, VaR and the change in profit and loss by portfolio are calculated daily and compared to the maximum applicable limits in order to implement risk mitigation mechanisms as necessary. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) PMI Trading’s global VaR associated with commodities market risk was U.S. $(8,789)$(17,102) as of December 31, 2017.2020. This VaR was calculated using the historical method with a 99% confidence level,two-year history and aone-day horizon. The minimum VaR recorded on the year was U.S. $(4,720)$(7,055) (registered on October 17, 2017)November 12, 2020) and the maximum VaR recorded on the year was U.S. $(19,695)$(28,196) (registered on January 4, 2017)August 21, 2020). As of December 31, 2016,2019, the global VaR was U.S. $(23,198)$(15,016). The quantification of crude oil price risk is carried out by using theone-day horizon historical VaR, with a confidence level of 95%, over a period of one year. As of December 31, 2017,2020, this was U.S. $0 as a result of the rise in the price of crude oil.$(18,921). When the fair value of a DFI is favorable to PEMEX, PEMEX faces the risk that the counterparty will not be able to meet its obligations. PEMEX monitors its counterparties’ creditworthiness and calculates the credit risk exposure for its DFIs. As a risk mitigation strategy, PEMEX only enters into DFIs with major financial institutions with a minimum credit rating ofBBB-. These ratings are issued and revised periodically by risk rating agencies. Furthermore, PEMEX seeks to maintain a diversified portfolio of counterparties. In order to estimate PEMEX’s credit risk exposure to each financial counterparty, the potential future exposure is calculated by projecting the risk factors used in the valuation of each DFI in order to estimate the MtM value for different periods, taking into account any credit risk mitigation provisions. Moreover, PEMEX has entered into various long-term cross-currency swaps agreements with “recouponing” provisions (pursuant to which the payments on the swaps are adjusted when the MtM exceeds the relevant threshold specified in the swap), thereby limiting the exposure withto its counterparties to a specific threshold amount.amount, as well as the counterparties’ exposure to PEMEX. The specified thresholds were reached in threefive cross-currency swaps from the first to the fourth quarter of 2017,during 2020, which were used to hedge the exchange rate exposure to the euro and to the pounds sterling, and in fivethree cross-currency swaps during 2016,2019, which were used to hedge the exchange rate exposure to the Poundeuro and to the pounds sterling. This resulted in the cash settlement of such swaps and the resetting of swap terms to return theirmark-to-market MtM value to zero. During 2017,2020, PEMEX did not enter into any cross-currency swap with these characteristics. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
In addition, during 2016 PEMEX has entered into long-term DFIs with mandatory early termination clauses (pursuant to which, at a given date and irrespective of the current MtM, the DFI will terminate and settle at the corresponding MtM, and PEMEX can either enter into a new DFI with the same counterparty or a new counterparty), which reduces the credit risk generated by the term of the DFI by bounding it to a specific date. As of December 31, 2017,2020, PEMEX has entered into three euro swaps and two Japanese yen Seagull Option structures, with early termination clauses in 2018 and 2021, respectively.July 2021. PEMEX intends to renew these trades in order to maintain the hedge. According to IFRS 13 “Fair Value Measurement,” the fair value or MtM value of DFIs must reflect the creditworthiness of the parties. Consequently, the fair value of a DFI takes into account the risk that either party may default on its obligation. In accordance with market best practices,Due to the above, PEMEX applies the credit value adjustment (“CVA”) method to calculate the fair value of its DFIs. For each DFI, the CVA is calculated by determining the difference between the MtM and the estimated MtM adjusted for credit risk. In determining the credit risk, the CVA method takes into account the current market perception about the credit risk of both counterparties, using the following inputs: a) the MtM projection for each payment date based on forward yield curves; b) the implied default probability obtained from both, PEMEX and the counterpartycounterparty’s credit default swaps’,swaps, at each payment date; and c) the default recovery rates of each counterparty. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (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 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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 | | in thousands U.S. dollars | | A | | | 257,424 | | | | 976,230 | | | | 1,298,110 | | | | 1,314,296 | | | | 578,548 | | | | 482,959 | | | | — | | A- | | | 138,850 | | | | 235,594 | | | | 191,681 | | | | 228,801 | | | | 223,751 | | | | 257,465 | | | | — | | BBB+ | | | 310,705 | | | | 1,010,356 | | | | 1,540,015 | | | | 1,349,311 | | | | 1,243,898 | | | | 1,115,559 | | | | 78,831 | | BBB | | | 2,183 | | | | 18,626 | | | | 20,064 | | | | 18,092 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Rating | | Current | | | Less than 1 year | | | 1-3 years | | | 3-5 years | | | 5-7 years | | | 7-10 years | | | More than 10 years | | A+ | | | 159,107 | | | | 688,392 | | | | 558,981 | | | | 306,952 | | | | 117,716 | | | | 119,358 | | | | — | | A | | | 18,079 | | | | 248,971 | | | | 338,829 | | | | 301,736 | | | | 167,414 | | | | 100,000 | | | | — | | A- | | | (19,996 | ) | | | 365,910 | | | | 294,322 | | | | 131,104 | | | | 122,823 | | | | — | | | | — | | BBB+ | | | 397,989 | | | | 546,936 | | | | 720,605 | | | | 613,680 | | | | 556,650 | | | | 261,542 | | | | 174,457 | | BBB | | | 211,862 | | | | 466,967 | | | | 767,225 | | | | 867,931 | | | | 648,179 | | | | 438,457 | | | | 320,565 | | BBB- | | | (10,213 | ) | | | 99,334 | | | | 178,698 | | | | 175,904 | | | | 136,312 | | | | 139,725 | | | | — | | | | | | | | | | | | | | | | | | | | | Figures not audited | |
PEMEX also faces credit risk derived from its investments. As of December 31, 2017,2020, all the notional amounts of investmentspositions in domestic currency organized by the credit ratings of the issuances, were as follows: | | | | | Credit rating of
issuances*
| | Notional
amount | | mxAAA
| | | Ps. 811,548 | | mxAA
| | | 200,876 | | mxA
| | | 271,275 | | * Minimum S&P, Moody’s and Fitch credit rating.
| | National Credit Rating Scale.
| | Does not include investments in Mexican Government bonds.
| |
The table above does not include domestic currency Mexican Government bonds because these issuances are considered not to carryin pesos. Given the current credit rating, the default riskprobability in this currency.
PEMEX held an investment in a note linkedcurrency is zero according to United Mexican States’ credit risk that was issued by a U.S. financial institution with a BBB+ credit rating. This note matured in June 2016 and had a face valuethe default’s frequency matrices from rating agencies, therefore no quantification or disclosure of U.S. $108,000. As of December 31, 2017, PEMEX does not hold an investment in structured notes.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
this exposure is made. Furthermore, by means of its credit guidelines for DFI operations, Pemex Industrial Transformation significantly 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.DFIs. In order to qualify for these DFIs, Pemex Industrial Transformation’s customers must be party to a current natural gas supply contract and sign a domestic master derivative agreement. Additionally, beginning on October 2, 2009,according to the credit guidelines, DFIs with these customers must be initially secured by cash deposits, letters of credit or other collateral provisions, as required. The credit guidelines indicate that Pemex Industrial Transformation may offer DFIs with an exemption from collateral requirements up to certain amounts through a credit line approved by the credit committee, based on an internal financial and credit assessment. Moreover, if the credit line is insufficient to cover each client’s exposure, the client is obligated to deposit collateral. In accordance with these guidelines, in the event that a client does not meet its payment obligations, DFIs related to this client arewould be terminated, rights to any available collateral arewould be exercised and, if the collateral iswere insufficient to cover the fair value, or in the absence of collateral, 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 iswould be suspended until the payment is made.
As of December 31, 2017, Pemex Industrial Transformation’s DFIs had a fair value of U.S. $1,464 (deferred premiums included) for clients with exempted credit lines and U.S. $8,183 for clients with guaranteed credit lines. The total amount of exempt credit lines rose to U.S. $117,956, representing 1% usage of available exempt credit lines, while the total amount of guaranteed credit lines rose to U.S. $930,199, representing a 1% usage of available guaranteed credit lines. As of December 31, 2017, the overdue accounts of natural gas customers in the industrial and distribution sectors accounted for less than 1.00% of the total sales of Pemex Industrial Transformation.
As of December 31, 2017,2020, Pemex Industrial Transformation had openno DFIs with 8 customers. Ofsince all the DFIs of its portfolios expired in 2019. As such, once the total volume (in millionssettlement of British thermal units or MMBtu) of DFIs, industrial customers represented 100%.
As of December 31, 2017the operations was carried out, the exempt credit lines expired and 2016, 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 belowguarantees deposited by the strike price, which has kept the credit limits within the set limits; and (ii) when certain DFIs matured,Pemex-Gas and Basic Petrochemicals, and now Pemex Industrial Transformation, had used domestic customers’ payments to meet its international obligations.
The potential future exposure of Mex Gas Supply, S.L.’s DFI portfolio was calculated in an analogous manner to the analysis of Petróleos Mexicanos’ DFI positions. The current and potential exposure, aggregated by credit rating, is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Maximum Credit Exposure by term in Pemex Industrial Transformation | | | | | | | | | | Rating | | Current | | | Less than 1 year | | | 1-3 years | | | 3-5 years | | | 5-7 years | | | 7-10 years | | | More than 10 years | | in thousands U.S. dollars | | A | | | 27 | | | | 27 | | | | — | | | | — | | | | — | | | | — | | | | — | | A- | | | 541 | | | | 541 | | | | 306 | | | | — | | | | — | | | | — | | | | — | | BBB+ | | | 25 | | | | 25 | | | | 1 | | | | — | | | | — | | | | — | | | | — | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
clients were entirely returned. PMI Trading’s credit risk associated with DFI transactions is mitigated through the use of futures and standardized instruments that are cleared throughCME-ClearPort.CME-Clearport. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) ThroughPEMEX’s main internal source of liquidity comes from its operations. Additionally, through its debt planning and the purchase and sale of U.S. dollars, PEMEX currently preserves a cash balance at a level of liquidity in domestic currency and U.S. dollars that is considered adequate to cover its investment and operating expenses, as well as other payment obligations. In orderobligations, such as those related to preserve a cash balance at a suitable level, in December of 2017, PEMEX entered into ten FX swaps of the peso against U.S. dollar for an aggregate amount of U.S. $3,000,000.DFIs.
In addition, as of December 31, 2020, PEMEX has acquired committed revolving credit lines in order to mitigate liquidity risk, two of which provide access to Ps. 3,500,00028,000,000 and Ps. 20,000,0009,000,000 with expiration dates in JuneNovember 2022 and November 2019,2023, respectively; and three others that each provideanother revolving credit line provides access to U.S. $1,500,000, U.S. $3,250,000 and U.S. $1,950,000$5,500,000 with expiration datesdate in December 2019, February 2020 and January 2021, respectively.June 2024. Finally, the investment strategies of PEMEX’s portfolios are structured by selecting time horizons that consider each currency’s cash flow requirements in order to preserve liquidity. Certain PMI subsidiariesSubsidiaries mitigate their liquidity risk through several mechanisms, the most important of which is the centralized treasury, or“in-house bank,” which provides access to atwo syndicated credit linelines for up to U.S. $700,000 and U.S. $1,500,000 (this last credit line was transferred from Petróleos Mexicanos to PMI during December 2020) and cash surplus capacity in the custody of the centralized structure. In addition, certain PMI subsidiariesSubsidiaries have access to bilateral credit lines from financial institutions for up to U.S. $650,000.$250,000. These companies monitor their cash flow on a daily basis and protect their creditworthiness in the financial markets. Liquidity risk is mitigated by monitoring the maximum/minimum permissiblecertain financial ratios as set forth in the policies approved by each company’s board of directors. The following tables show the cash flow maturities as well as the fair value of PEMEX’s debt and DFI portfolios as of December 31, 20172020 and 2016.2019. It should be noted that: For debt obligations, these tables present principal cash flow and the weighted average interest rates for fixed rate debt. For interest rate swaps, cross currencyinterest rate options, cross-currency swaps currency options and currency forwards,options, these tables present notional amounts and weighted average interest rates by expected (contractual) maturity dates. Weighted average variable rates are based on implied forward rates obtained from the interbank market yield curve at the reporting date. For natural gas DFIs, volumes are presented in millions of British thermal unit (MMBtu), and fixed average and strike prices are presented in U.S. dollars per MMBtu.
For crude oil, volumes are presented in millions of barrels, and fixed average and strike prices are presented in U.S. dollars per barrel. A DFI’s fair value includes CVA and is calculated based on market quotes obtained from market sources such as Bloomberg. Forward curves and implied volatilities for natural gas and crude oil are supplied by the Kiodex Risk Workbench platform.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| • | | DFIs’ fair value includes CVA and is calculated based on market quotes obtained from market sources such as Bloomberg and Proveedor Integral de Precios, S.A. de C.V. (“PIP”). |
For PMI Trading, the prices used in commercial transactions and DFIs are published by reputable sources that are widely used in international markets, such asCME-NYMEX, Platts and Argus, among others. Fair value is calculated internally, either by discounting cash flows with the correspondingzero-coupon yield curve in the original currency, or through other standard methodologies commonly appliedused in financial markets for specific instruments. For all instruments, the tables are based on the contract terms in order to determine the future cash flows that are categorized by expected maturity dates. This information is presented
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, of pesos, except as noted.noted) PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Quantitative Disclosure of Debt Cash Flow’sFlow Maturities as of December 31, 20172020(1) | | | Year of expected maturity date | | | Year of expected maturity date | | | | | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | 2023 thereafter | | Total carrying value | | Fair value | | | 2021 | | 2022 | | 2023 | | 2024 | | 2025 | | 2026 Thereafter | | Total Carrying Value | | Fair Value | | Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Outstanding debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fixed rate (U.S. dollars) | | Ps | 53,465,817 | | | Ps | 59,498,256 | | | Ps | 60,290,621 | | | Ps | 95,232,448 | | | Ps | 84,076,050 | | | Ps | 808,836,547 | | | Ps | 1,161,399,739 | | | Ps | . 1,213,404,769 | | | Ps. | 47,898,708 | | | Ps. | 32,956,060 | | | Ps. | 48,471,704 | | | Ps. | 25,996,376 | | | Ps. | 49,333,976 | | | Ps. | 1,116,179,110 | | | Ps. | 1,320,835,934 | | | Ps. | 1,347,156,276 | | Average interest rate (%) | | | | | | | | | | | | | | 5.7747 | % | | | | | | | | | | | | | | | | | 6.37 | % | | | Fixed rate (Japanese yen) | | | — | | | | — | | | | — | | | | — | | | | — | | | 19,296,607 | | | 19,296,607 | | | 18,040,398 | | | | — | | | | — | | | | 5,799,000 | | | | — | | | | — | | | | 15,444,790 | | | | 21,243,790 | | | | 18,797,463 | | Average interest rate (%) | | | | | | | | | | | | | | 1.3485 | % | | | | | | | | | | | | | | | | | 1.35 | % | | | Fixed rate (Pounds) | | | — | | | | — | | | | — | | | | — | | | 9,345,839 | | | 11,952,816 | | | 21,298,655 | | | 24,381,394 | | | Fixed rate (pounds sterling) | | | | — | | | | 9,537,663 | | | | — | | | | — | | | | 12,204,125 | | | | — | | | | 21,741,788 | | | | 23,010,709 | | Average interest rate (%) | | | | | | | | | | | | | | 5.7246 | % | | | | | | | | | | | | | | | | | 5.72 | % | | | Fixed rate (pesos) | | | — | | | | — | | | 10,033,017 | | | 20,376,655 | | | 1,999,098 | | | 88,349,072 | | | 120,757,842 | | | 171,683,692 | | | | 115,284,491 | | | | 1,999,401 | | | | — | | | | 57,433,886 | | | | — | | | | 31,029,696 | | | | 205,747,474 | | | | 199,047,983 | | Average interest rate (%) | | | | | | | | | | | | | | 7.4876 | % | | | | | | | | | | | | | | | | | 7.91 | % | | | Fixed rate (UDIs) | | | — | | | 18,477,076 | | | 4,764,175 | | | 3,874,313 | | | | — | | | 30,081,647 | | | 57,197,211 | | | 56,536,905 | | | | 4,314,460 | | | | — | | | | — | | | | — | | | | — | | | | 33,031,555 | | | | 37,346,014 | | | | 30,673,537 | | Average interest rate (%) | | | | | | | | | | | | | | 2.7458 | % | | | | | | | | | | | | | | | | | 4.03 | % | | | Fixed rate (euros) | | 1,043 | | | 32,042,196 | | | 30,801,894 | | | 41,508,857 | | | 23,655,950 | | | 171,255,634 | | | 299,265,574 | | | 330,573,998 | | | | 42,716,224 | | | | 38,987,905 | | | | 34,137,539 | | | | 30,418,586 | | | | 40,230,700 | | | | 117,736,691 | | | | 304,227,645 | | | | 315,417,306 | | Average interest rate (%) | | | | | | | | | | | | | | 3.6736 | % | | | | | | | | | | | | | | | | | 3.77 | % | | | Fixed rate (Swiss Francs) | | 4,565,075 | | | 6,088,686 | | | 12,149,953 | | | 3,046,567 | | | | — | | | | — | | | 25,850,281 | | | 26,957,785 | | | Average interest rate (%) | | | | | | | | | | | | | | 1.8387 | % | | | | Fixed rate (Australian dollars) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | Fixed rate (Swiss francs) | | | | 3,385,165 | | | | — | | | | 8,228,615 | | | | — | | | | — | | | | — | | | | 11,613,780 | | | | 11,650,958 | | Average interest rate (%) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | 1.93 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total fixed rate debt | | 58,031,935 | | | 116,106,214 | | | 118,039,660 | | | 164,038,840 | | | 119,076,937 | | | 1,129,772,323 | | | 1,705,065,909 | | | 1,841,578,940 | | | | 213,599,047 | | | | 83,481,030 | | | | 96,636,858 | | | | 113,848,848 | | | | 101,768,801 | | | | 1,313,421,841 | | | | 1,922,756,425 | | | | 1,945,754,232 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable rate (U.S. dollars) | | 58,364,536 | | | 15,302,101 | | | 62,289,546 | | | 12,809,666 | | | 31,289,725 | | | 18,379,557 | | | 198,435,131 | | | 206,254,219 | | | | 122,317,252 | | | | 25,979,932 | | | | 11,649,479 | | | | 56,443,974 | | | | 5,602,565 | | | | 9,506,180 | | | | 231,499,382 | | | | 228,630,238 | | Variable rate (Japanese yen) | | | — | | | | — | | | 11,244,800 | | | | — | | | | — | | | | — | | | 11,244,800 | | | 11,361,079 | | | | | | | | | | | | | | | | — | | | | — | | Variable rate (euros) | | | | — | | | | — | | | | 15,842,049 | | | | — | | | | — | | | | — | | | | 15,842,049 | | | | 15,375,645 | | Variable rate (pesos) | | 8,734,371 | | | 27,995,083 | | | 18,341,742 | | | 8,459,163 | | | 8,394,483 | | | 19,125,764 | | | 91,050,606 | | | 94,188,981 | | | | 12,524,115 | | | | 8,471,904 | | | | 7,026,631 | | | | 10,768,263 | | | | 6,856,660 | | | | 325,035 | | | | 45,972,609 | | | | 42,934,001 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total variable rate debt | | 67,098,907 | | | 43,297,184 | | | 91,876,088 | | | 21,268,829 | | | 39,684,208 | | | 37,505,321 | | | 300,730,537 | | | 311,804,280 | | | | 134,841,368 | | | | 34,451,836 | | | | 34,518,160 | | | | 67,212,237 | | | | 12,459,225 | | | | 9,831,215 | | | | 293,314,040 | | | | 286,939,885 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total debt | | Ps | . 125,130,842 | | | Ps | . 159,403,398 | | | Ps | . 209,915,748 | | | Ps | . 185,307,669 | | | Ps | . 158,761,145 | | | Ps | .1,167,277,644 | | | Ps | . 2,005,796,446 | | | Ps | .2,153,383,220 | | | Ps. | 348,440,415 | | | Ps. | 117,932,866 | | | Ps. | 131,155,018 | | | Ps. | 181,061,085 | | | Ps. | 114,228,026 | | | Ps. | 1,323,253,056 | | | Ps. | 2,216,070,465 | | | Ps. | 2,232,694,117 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note: Numbers may not total due to rounding. Note: | Numbers may not total due to rounding. |
(1) | The information in this table has been calculated using exchange rates at December 31, 20172020 of: Ps. 19.786719.9487 = U.S. $1.00; Ps. 0.17570.1933 = 1.00 Japanese yen; Ps. 26.772427.2579 = 1.00 Poundpound sterling; Ps. $ 5.9345516.605597 = 1.00 UDI; Ps. 23.754924.4052 = 1.00 euro; and Ps. 20.299222.5720 = 1.00 Swiss Franc; and Ps. 15.4752 = 1.00 Australian dollar.franc. |
Source: PEMEX
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) Quantitative Disclosure of Debt Cash Flow’sFlow Maturities as of December 31, 20162019(1) | | | Year of expected maturity date | | | Year of expected maturity date | | | | 2017 | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 thereafter | | Total carrying value | | Fair value | | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | 2025 Thereafter | | Total Carrying Value | | Fair Value | | Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Outstanding debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fixed rate (U.S. dollars) | | | Ps 15,759,027 | | | Ps | 86,161,096 | | | Ps | 65,642,616 | | | Ps | 62,440,943 | | | Ps | 98,858,992 | | | Ps | 826,093,574 | | | Ps | 1,154,956,248 | | | Ps | 1,137,936,275 | | | | Ps. 52,874,594 | | | | Ps. 36,474,941 | | | | Ps. 36,288,484 | | | | Ps. 51,814,555 | | | | Ps. 24,377,105 | | | | Ps. 959,097,000 | | | | Ps. 1,160,926,679 | | | | Ps. 1,233,260,685 | | Average interest rate (%) | | | | | | | | | | | | | | | 5.6541 | % | | | | | | | | | | | | | | | | | 6.2535 | % | | | Fixed rate (Japanese yen) | | | 517,286 | | | | — | | | | — | | | | — | | | | — | | | | 19,459,306 | | | | 19,976,592 | | | | 17,336,203 | | | | — | | | | — | | | | — | | | | 5,202,000 | | | | — | | | | 13,848,692 | | | | 19,050,692 | | | | 17,812,094 | | Average interest rate (%) | | | | | | | | | | | | | | | 1.3665 | % | | | | | | | | | | | | | | | | | 1.3483 | % | | | Fixed rate (Pounds) | | | — | | | | — | | | | — | | | | — | | | | — | | | | 8,825,434 | | | | 8,825,434 | | | | 11,373,345 | | | Fixed rate (pounds sterling) | | | | — | | | | — | | | | 8,725,102 | | | | — | | | | — | | | | 11,157,892 | | | | 19,882,994 | | | | 21,733,929 | | Average interest rate (%) | | | | | | | | | | | | | | | 8.2500 | % | | | | | | | | | | | | | | | | | 5.7247 | % | | | Fixed rate (pesos) | | | — | | | | — | | | | — | | | | 10,048,950 | | | | 20,457,671 | | | | 90,393,507 | | | | 120,900,128 | | | | 160,930,040 | | | | 10,009,595 | | | | 20,004,204 | | | | 1,999,293 | | | | — | | | | 57,381,081 | | | | 30,985,764 | | | | 120,379,937 | | | | 114,148,170 | | Average interest rate (%) | | | | | | | | | | | | | | | 7.4878 | % | | | | | | | | | | | | | | | | | 7.4867 | % | | | Fixed rate (UDIs) | | | — | | | | — | | | | 17,319,897 | | | | 4,464,787 | | | | 3,630,557 | | | | 28,288,180 | | | | 53,703,421 | | | | 50,809,979 | | | | 5,137,194 | | | | 4,183,481 | | | | — | | | | — | | | | — | | | | 32,067,846 | | | | 41,388,521 | | | | 37,209,163 | | Average interest rate (%) | | | | | | | | | | | | | | | 4.0559 | % | | | | | | | | | | | | | | | | | 4.0514 | % | | | Fixed rate (euros) | | | 26,006,880 | | | | — | | | | 29,198,138 | | | | 28,061,554 | | | | — | | | | 123,886,644 | | | | 207,153,216 | | | | 216,100,006 | | | | 27,490,652 | | | | 36,993,461 | | | | 33,752,122 | | | | 29,564,507 | | | | 26,321,684 | | | | 136,705,664 | | | | 290,828,090 | | | | 314,159,720 | | Average interest rate (%) | | | | | | | | | | | | | | | 3.9581 | % | | | | | | | | | | | | | | | | | 3.7095 | % | | | Fixed rate (Swiss Francs) | | | — | | | | 4,539,022 | | | | 6,056,338 | | | | 12,102,748 | | | | 3,031,480 | | | | — | | | | 25,729,588 | | | | 26,469,543 | | | Average interest rate (%) | | | | | | | | | | | | | | | 1.8385 | % | | | | Fixed rate (Australian dollars) | | | 2,232,195 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,232,195 | | | | 2,346,390 | | | Fixed rate (Swiss francs) | | | | 11,669,169 | | | | 2,920,578 | | | | — | | | | 7,081,249 | | | | — | | | | — | | | | 21,670,996 | | | | 22,167,273 | | Average interest rate (%) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 6.1250 | % | | | — | | | | | | | | | | | | | | | | 1.6996 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total fixed rate debt | | | 44,515,388 | | | | 90,700,118 | | | | 118,216,989 | | | | 117,118,982 | | | | 125,978,700 | | | | 1,096,946,645 | | | | 1,593,476,822 | | | | 1,623,301,781 | | | | 107,181,204 | | | | 100,576,665 | | | | 80,765,001 | | | | 93,662,311 | | | | 108,079,870 | | | | 1,183,862,858 | | | | 1,674,127,909 | | | | 1,760,491,034 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable rate (U.S. dollars) | | | 38,811,320 | | | | 27,907,661 | | | | 15,984,547 | | | | 52,726,647 | | | | 13,366,336 | | | | 45,385,885 | | | | 194,182,396 | | | | 195,838,382 | | | | 37,129,938 | | | | 14,165,499 | | | | 23,671,360 | | | | 10,931,702 | | | | 53,275,137 | | | | 14,051,426 | | | | 153,225,062 | | | | 153,747,749 | | | | | | | | | | | | | | | | | | | | | Variable rate (Japanese yen) | | | — | | | | — | | | | — | | | | 11,341,440 | | | | — | | | | — | | | | 11,341,440 | | | | 11,025,531 | | | | 11,097,600 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 11,097,600 | | | | 11,112,957 | | | | | | | | | | | | | | | | | | | | | Variable rate (euros) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 983,647 | | | | — | | | | — | | | | 13,734,663 | | | | — | | | | — | | | | 14,718,310 | | | | 14,969,735 | | | | | | | | | | | | | | | | | | | | | Variable rate (pesos) | | | 65,024,075 | | | | 8,742,191 | | | | 28,007,709 | | | | 18,347,822 | | | | 8,468,176 | | | | 27,764,693 | | | | 156,354,666 | | | | 158,109,920 | | | | 55,384,990 | | | | 8,456,465 | | | | 8,435,081 | | | | 6,991,763 | | | | 10,600,586 | | | | 6,989,516 | | | | 96,858,401 | | | | 96,135,647 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total variable rate debt | | | 103,835,395 | | | | 36,649,852 | | | | 43,992,256 | | | | 82,415,909 | | | | 21,834,512 | | | | 73,150,578 | | | | 361,878,502 | | | | 364,973,833 | | | | 104,596,175 | | | | 22,621,964 | | | | 32,106,441 | | | | 31,658,128 | | | | 63,875,723 | | | | 21,040,942 | | | | 275,899,373 | | | | 275,966,088 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total debt | | Ps. | 148,350,783 | | | Ps. | 127,349,970 | | | Ps. | 162,209,245 | | | Ps. | 199,534,891 | | | Ps. | 147,813,212 | | | Ps. | 1,170,097,223 | | | Ps. | 1,955,355,324 | | | Ps. | 1,988,275,614 | | | | Ps. 211,777,379 | | | | Ps. 123,198,629 | | | | Ps. 112,871,442 | | | | Ps. 125,320,439 | | | | Ps. 171,955,593 | | | | Ps. 1,204,903,800 | | | | Ps. 1,950,027,282 | | | | Ps. 2,036,457,122 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note: Numbers may not total due to rounding. Note: | Numbers may not total due to rounding. |
(1) | The information in this table has been calculated using exchange rates at December 31, 20162019 of: Ps. 20.66418.8452 = U.S. $1.00; Ps. 0.177210.1734 = 1.00 Japanese yen; Ps. 25.3051324.9586 = 1.00 Poundpound sterling; Ps. $ 5.5628836.399018 = 1.00 UDI; Ps. 21.672421.1537 = 1.00 euro; and Ps. 20.19744=19.4596 = 1.00 Swiss Franc; and Ps. 14.88428 = 1.00 Australian dollar.franc. |
Source: PEMEX
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) Quantitative Disclosure of Cash Flow’sFlow Maturities from Derivative Financial Instruments Held or Issued for Purposes Other than Trading as of December 31, 20172020(1)(2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year of expected maturity date | | | Total Notional Amount | | | Fair Value(3) | | | | 2018 | | | 2019 | | | 2020 | | | 2021 | | | 2022 | | | 2023 Thereafter | | | | Hedging instruments(2)(4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate DFIs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate swaps (U.S. dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable to fixed | | | Ps. 4,704,170 | | | | Ps. 4,717,321 | | | | Ps. 4,730,857 | | | | Ps. 4,686,396 | | | | Ps 4,570,070 | | | | Ps 10,143,209 | | | | Ps. 33,552,022 | | | | Ps. 388,851 | | Average pay rate | | | 3.16 | % | | | 3.18 | % | | | 3.20 | % | | | 3.22 | % | | | 3.26 | % | | | 3.48 | % | | | N.A. | | | | N.A. | | Average receive rate | | | 3.19 | % | | | 3.44 | % | | | 3.69 | % | | | 3.81 | % | | | 3.95 | % | | | 4.48 | % | | | 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 | | | — | | | | 29,898,198 | | | | 28,719,208 | | | | 36,902,690 | | | | 21,302,856 | | | | 161,617,172 | | | | 278,440,124 | | | | 19,065,727 | | Receive Japanese yen/ Pay U.S. dollars | | | — | | | | — | | | | 13,039,563 | | | | — | | | | — | | | | 4,775,551 | | | | 17,815,114 | | | | (1,670,533 | ) | Receive Pounds sterling/ Pay U.S. dollars | | | — | | | | — | | | | — | | | | — | | | | 10,310,216 | | | | 11,706,999 | | | | 22,017,215 | | | | 1,151,096 | | Receive UDI/ Pay pesos | | | — | | | | 23,740,341 | | | | 7,292,520 | | | | 3,000,000 | | | | — | | | | 20,605,166 | | | | 54,638,028 | | | | (4,720,592 | ) | Receive Swiss francs/ Pay U.S. dollars | | | 4,535,474 | | | | 6,501,082 | | | | 11,548,658 | | | | 2,994,374 | | | | — | | | | — | | | | 25,579,588 | | | | 400,316 | | Receive Australian dollars/ Pay U.S. dollars | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Currency Options | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Buy Put, Sell Put and Sell Call on Japanese yen | | | — | | | | — | | | | — | | | | — | | | | — | | | | 14,046,320 | | | | 14,046,320 | | | | 48,715 | | Buy call, Sell call and Sell Put on euros | | | — | | | | — | | | | — | | | | 41,567,998 | | | | — | | | | 59,382,855 | | | | 100,950,853 | | | | 4,919,444 | | Sell Call on Pound sterling | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12,031,728 | | | | 12,031,728 | | | | (239,626 | ) | Currency Forwards | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Receive U.S. dollars / Pay pesos | | | 59,360,100 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 59,360,100 | | | | (2,006,461 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year of expected Maturity Date | | | | 2021 | | | 2022 | | | 2023 | | | 2024 | | | 2025 | | | 2026 Thereafter | | | Total Carrying Value | | | Fair Value (3) | | | | | | | | | | | Hedging Instruments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest Rate DFI (2) (4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest Rate Swaps (U.S. dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable to fixed | | | Ps. 4,724,765 | | | | Ps. 4,607,486 | | | | Ps. 4,466,068 | | | | Ps. 3,316,471 | | | | Ps. 2,443,716 | | | | Ps. — | | | | Ps. 19,558,505 | | | | Ps. (712,107 | ) | Average pay rate | | | 3.22 | % | | | 3.25 | % | | | 3.37 | % | | | 3.68 | % | | | 4.13 | % | | | 0.00 | % | | | n.a. | | | | n.a. | | Average receive rate | | | 0.90 | % | | | 0.91 | % | | | 1.12 | % | | | 1.67 | % | | | 2.38 | % | | | 0.00 | % | | | n.a. | | | | n.a. | | Interest Rate Options | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Buy Cap, Sell Floor on floating in U.S. dollar LIBOR 1M | | | — | | | | — | | | | — | | | | 49,871,750 | | | | — | | | | — | | | | 49,871,750 | | | | (1,331,188 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Currency DFI | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cross-currency swaps | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Receive euros/Pay U.S. dollars | | | 37,204,824 | | | | 35,595,644 | | | | 46,550,277 | | | | 26,565,185 | | | | 39,334,093 | | | | 107,601,624 | | | | 292,851,648 | | | | 9,939,110 | | Receive Japanese yen / Pay U.S. dollars | | | — | | | | — | | | | 4,814,650 | | | | — | | | | — | | | | — | | | | 4,814,650 | | | | 505,772 | | Receive pounds sterling / Pay U.S. dollars | | | — | | | | 9,781,187 | | | | — | | | | — | | | | 11,802,848 | | | | — | | | | 21,584,035 | | | | 839,037 | | Receive UDI/ Pay pesos | | | 3,000,000 | | | | — | | | | — | | | | — | | | | 3,063,181 | | | | 27,450,032 | | | | 33,513,214 | | | | 6,834,051 | | Receive Swiss francs/ Pay U.S. dollars | | | 3,018,890 | | | | — | | | | 7,281,276 | | | | — | | | | — | | | | — | | | | 10,300,166 | | | | 913,809 | | Currency Options | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Buy Put, Sell Put and Sell Call on Japanese yen | | | — | | | | — | | | | — | | | | — | | | | — | | | | 15,456,770 | | | | 15,456,770 | | | | 14,918 | | Buy Call, Sell Call and Sell Put on euros | | | 42,647,378 | | | | — | | | | — | | | | 30,462,413 | | | | 17,668,200 | | | | 30,462,413 | | | | 121,240,404 | | | | 3,167,805 | | Sell Call on pounds sterling | | | — | | | | — | | | | — | | | | — | | | | 12,271,443 | | | | — | | | | 12,271,443 | | | | (85,994 | ) | Sell Call on Swiss francs | | | — | | | | — | | | | 8,225,571 | | | | — | | | | — | | | | — | | | | 8,225,571 | | | | (70,196 | ) | Sell Call on Euros | | | — | | | | 14,621,958 | | | | 15,840,455 | | | | — | | | | 15,840,455 | | | | 57,878,585 | | | | 104,181,452 | | | | (2,118,100 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
N.A. = not applicable. Numbers may not total due to rounding. (1) | The information in this table has been calculated using exchange rates at December 31, 20172020 of: Ps. 19.786719.9487 = U.S. $1.00 and Ps. 23.754924.4052 = 1.00 euro. |
(2) | PEMEX’s management uses these DFIs to hedge market risk; however, these DFIs do not qualify for accounting purposes as hedges and are recorded in the financial statements as entered into for trading purposes. |
(3) | Positive numbers represent a favorable fair value to PEMEX. |
(4) | PMI’s risk management policies and procedures establish that DFIs should be used only for hedging purposes; however, DFIs are not recorded as hedges for accounting purposes. |
Source: PEMEX
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) Quantitative Disclosure of Cash Flow’sFlow Maturities from Derivative Financial Instruments Held or Issued for Purposes Other than Trading as of December 31, 20162019(1)(2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year of expected maturity date | | | Total Notional Amount | | | Fair Value(3) | | | | 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 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year of expected maturity date | | | | | | | 2020 | | | 2021 | | | 2022 | | | 2023 | | | 2024 | | | 2025 Thereafter | | | Total Notional Amount | | | Fair Value (3) | | | | | | | | | | | Hedging instruments (2) (4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate DFIs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate swaps (U.S. dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Variable to fixed | | | Ps. 4,505,751 | | | | Ps. 4,463,405 | | | | Ps. 4,352,614 | | | | Ps. 4,219,019 | | | | Ps. 3,133,015 | | | | Ps. 2,308,537 | | | | Ps. 22,982,341 | | | | Ps. (99,231) | | Average pay rate | | | 3.20% | | | | 3.22% | | | | 3.25% | | | | 3.37% | | | | 3.68% | | | | 4.13% | | | | n.a. | | | | n.a. | | Average receive rate | | | 3.00% | | | | 2.80% | | | | 2.94% | | | | 3.17% | | | | 3.67% | | | | 4.36% | | | | n.a. | | | | n.a. | | Currency DFIs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cross-currency swaps | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Receive euros/Pay U.S. dollars | | | 27,352,677 | | | | 35,146,769 | | | | 33,626,604 | | | | 43,975,261 | | | | 25,095,682 | | | | 141,792,559 | | | | 306,989,551 | | | | (6,129,828 | ) | Receive Japanese yen / Pay U.S. dollars | | | 12,419,108 | | | | — | | | | — | | | | 4,548,319 | | | | — | | | | — | | | | 16,967,427 | | | | (1,087,602 | ) | Receive pounds sterling / Pay U.S. dollars | | | — | | | | — | | | | 9,204,373 | | | | — | | | | — | | | | 11,149,951 | | | | 20,354,324 | | | | 516,780 | | Receive UDI/ Pay pesos | | | 7,292,520 | | | | 3,000,000 | | | | — | | | | — | | | | — | | | | 27,450,032 | | | | 37,742,553 | | | | 3,116,439 | | Receive Swiss francs/ Pay U.S. dollars | | | 10,999,144 | | | | 2,851,895 | | | | — | | | | 6,878,498 | | | | — | | | | — | | | | 20,729,537 | | | | 797,159 | | Currency Options | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Buy Put, Sell Put and Sell Call on Japanese yen | | | — | | | | — | | | | — | | | | — | | | | — | | | | 13,881,133 | | | | 13,881,133 | | | | 123,244 | | Buy Call, Sell Call and Sell Put on euros | | | — | | | | 36,978,146 | | | | — | | | | — | | | | 26,412,961 | | | | 41,732,479 | | | | 105,123,586 | | | | 360,731 | | Sell Call on pounds sterling | | | — | | | | — | | | | — | | | | — | | | | — | | | | 11,242,387 | | | | 11,242,387 | | | | (81,137 | ) | Sell Call on Swiss francs | | | — | | | | — | | | | — | | | | 7,116,252 | | | | — | | | | — | | | | 7,116,252 | | | | (74,535 | ) | Sell Call on Euros | | | — | | | | — | | | | 12,678,221 | | | | 13,734,740 | | | | — | | | | 40,147,701 | | | | 66,560,662 | | | | (1,223,283 | ) |
N.A. = not applicable. Numbers may not total due to rounding. (1) | The information in this table has been calculated using exchange rates at December 31, 20162019 of: Ps. 20.66418.8452 = U.S. $1.00 and Ps. 21.672421.1537 = 1.00 euro. |
(2) | PEMEX’s management uses these DFIs to hedge market risk; however, these DFIs do not qualify for accounting purposes as hedges and are recorded in the financial statements as entered into for trading purposes. |
(3) | Positive numbers represent a favorable fair value to PEMEX. |
(4) | PMI’s risk management policies and procedures establish that DFIs should be used only for hedging purposes; however, DFIs are not recorded as hedges for accounting purposes. |
Source: PEMEX
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) The following tables show the estimated amount of principal and interest cash flow maturities of PEMEX’s financial liabilities as of December 31, 2020 and 2019 (DFIs are not included): Financial Liabilities Interest and Principal Cash Flow Maturities as of December 31, 2020(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year of expected maturity date | | | | Total Carrying Value | | | 2021 | | | 2022 | | | 2023 | | | 2024 | | | 2025 | | | 2026 Thereafter | | | Total | | | | | | | | | | | Financial Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Suppliers | | | 281,978,041 | | | | 281,978,041 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 281,978,041 | | Accounts and accrued expenses Payable | | | 30,709,497 | | | | 30,709,497 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 30,709,497 | | Leases | | | 63,184,128 | | | | 12,899,935 | | | | 8,695,992 | | | | 8,660,013 | | | | 8,151,473 | | | | 7,392,278 | | | | 54,962,972 | | | | 100,762,663 | | Debt | | | 2,258,727,317 | | | | 386,573,778 | | | | 230,702,075 | | | | 322,593,741 | | | | 277,735,672 | | | | 203,016,590 | | | | 2,243,851,381 | | | | 3,664,473,237 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | Ps.2,634,598,983 | | | | Ps.712,161,251 | | | | Ps.239,398,067 | | | | Ps.331,253,754 | | | | Ps.285,887,145 | | | | Ps.210,408,868 | | | | Ps.2,298,814,353 | | | | Ps.4,077,923,438 | |
Note: Numbers may not total due to rounding. (1) | The information in this table has been calculated using exchange rates on December 31, 2020 of: Ps. 19.9487 = U.S. $1.00; Ps. 0.1933 = 1.00 Japanese yen; Ps. 27.2579 = 1.00 pound sterling; Ps. 6.605597 = 1.00 UDI; Ps. 24.4052 = 1.00 euro; and Ps. 22.5720 = 1.00 Swiss franc. | |
Financial Liabilities Interest and Principal Cash Flow Maturities as of December 31, 2019(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year of expected maturity date | | | | Total Carrying Value | | | 2020 | | | 2021 | | | 2022 | | | 2023 | | | 2024 | | | 2025 Thereafter | | | Total | | | | | | | | | | | Financial Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Suppliers | | | 208,034,407 | | | | 208,034,407 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 208,034,407 | | Accounts and accrued expenses Payable | | | 26,055,151 | | | | 26,055,151 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 26,055,151 | | Leases | | | 68,148,628 | | | | 11,424,336 | | | | 9,982,471 | | | | 9,507,408 | | | | 9,493,269 | | | | 9,361,805 | | | | 62,776,808 | | | | 112,546,097 | | Debt | | | 1,983,174,088 | | | | 312,757,186 | | | | 222,227,670 | | | | 205,355,068 | | | | 213,879,603 | | | | 254,613,606 | | | | 2,104,560,030 | | | | 3,313,393,163 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | Ps.2,285,412,274 | | | | Ps.558,271,080 | | | | Ps.232,210,141 | | | | Ps.214,862,476 | | | | Ps.223,372,872 | | | | Ps.263,975,411 | | | | Ps.2,167,336,838 | | | | Ps.3,660,028,818 | |
Note: Numbers may not total due to rounding. (1) | The information in this table has been calculated using exchange rates at December 31, 2019 of: Ps. 18.8452 = U.S. $1.00; Ps. 0.1734 = 1.00 Japanese yen; Ps. 24.9586 = 1.00 pound sterling; Ps. 6.399018 = 1.00 UDI; Ps. 21.1537 = 1.00 euro; and Ps. 19.4596 = 1.00 Swiss franc. | |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) B. | Fair value of derivative financial instruments |
PEMEX periodically evaluates its exposure to international hydrocarbon prices, interest rates and foreign currencies and uses derivative instruments as a mitigation mechanism when potential sources of market risk are identified. PEMEX monitors the fair value of its DFI portfolio on a periodic basis. The fair value represents the price at which one party would assume the rights and obligations of the other and is calculated for DFIs through models commonly used in the international financial markets, based on inputs obtained from major market information systems and price providers. As a result of this monitoring,Therefore, PEMEX does not employhave an independent third party to performvalue its DFIs. PEMEX calculates the valuation.fair value of its DFIs through the tools developed by its market information providers such as Bloomberg, and through valuation models implemented in software packages used to integrate all of PEMEX´s business areas and accounting, such as SAP (System Applications Products). PEMEX does not have policies to designate a calculation or valuation agent. PEMEX’s DFIsDFI portfolio is composed primarily of swaps, the prices offor which arefair value is estimated by projecting future cash flows and discounting them with the corresponding discount factor; for currency and interest rate options, this is done through the Black and Scholes model, and for crude oil options, through the Levy model for Asian options. According to IFRS 13 “Fair Value Measurement”, the MtM value of DFIs must reflect the creditworthiness of the parties. Consequently, the fair value of a DFI takes into account the risk that either party may default on its obligation. Due to the above, PEMEX applies the credit value adjustment (“CVA”) method to calculate the fair value of its DFIs. Given that PEMEX’s hedges are cash flow hedges, their effectiveness is preserved regardless of variations in the underlying assets or reference variables since, through time, asset flows usingare fully offset by liabilities flows. Therefore, it is not necessary to measure or monitor the appropriate factorshedges’ effectiveness. PEMEX’s assumptions and contains no exotic instruments that require numerical approximationsinputs considered in the calculation of the fair value of its DFIs fall under Level 2 of the fair value hierarchy for their valuation.market participant assumptions. Embedded derivatives In accordance with established accounting policies, PEMEX has analyzed the different contracts itthat PEMEX has entered into and has determined that according to the terms thereof none of these agreements meet the criteria necessary to be classified as embedded derivatives. Accordingly, as of December 31, 20172020 and 2016,2019, PEMEX did not recognize any embedded derivatives (foreign currency or index). Accounting treatment PEMEX enters into derivatives transactions with the sole purpose of hedging financial risks related to its operations, firm commitments, planned transactions and assets and liabilities recorded on its statement of financial position. Nonetheless, some of these transactions do not qualify for hedge accounting treatment because they do not meet the requirements of the accounting standards for designation as hedges. They are therefore recorded in the financial statements asnon-hedge instruments or as instruments entered into for trading purposes, despite the fact that their cash flows are offset by the cash flows of the positions (assets or liabilities) to which they relate. As a result, the changes in their fair value are recognized in the “Derivative financial instruments (cost) income, net” line item in the consolidated statement of comprehensive income. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) As of December 31, 20172020 and 2016,2019, 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. 12,367,47516,629,978 and Ps. (26,010,486)(5,153,841), respectively. As of December 31, 20172020 and 2016,2019, PEMEX did not have any DFIs designated as hedges. The following table shows the fair values and notional amounts of PEMEX’s OTC DFIs, including those with an open position and those that have matured but that have not been settled, which were designated asnon-hedges for accounting purposes and entered into for trading purposes as of December 31, 20172020 and 2016.2019. It should be noted that: A DFI’s fair value includes CVA and is calculated based on market quotes obtained from market sources such as Bloomberg. Forward curvesBloomberg and implied volatilities for natural gas and crude oil are supplied by the Kiodex Risk Workbench platform.PIP. Fair value is calculated internally, either by discounting cash flows with the correspondingzero-coupon yield curve, in the original currency, or through other standard methodologies commonly appliedused in the financial markets for certain specific instruments. The information is presented | | | | | | | | | | | | | | | | | | | | | | | December 31, 2020. | | | December 31, 2019 | | DFI | | Position | | Notional Amount | | | Fair Value | | | Notional Amount | | | Fair Value | | Interest rate swaps | | PEMEX pays fixed in U.S. dollar and receives floating in 3-month U.S. dollar LIBOR + spread. | | | 9,350,953 | | | | (330,814 | ) | | | 11,189,338 | | | | (79,096 | ) | Interest rate swaps | | PEMEX pays fixed in U.S. dollar and receives floating in 6-month U.S. dollar LIBOR + spread. | | | 9,724,991 | | | | (370,094 | ) | | | 11,024,442 | | | | (9,181 | ) | Cross-currency swaps | | PEMEX pays the 28-day TIIE + spread in pesos and receives fixed in UDI. | | | 33,513,214 | | | | 6,834,051 | | | | 37,742,553 | | | | 3,116,439 | | Cross-currency swaps | | PEMEX pays floating in 6-month U.S. dollar LIBOR + spread and receives floating in 6-month yen LIBOR + spread. | | | — | | | | — | | | | 12,419,108 | | | | (1,403,975 | ) | Cross-currency swaps | | PEMEX pays fixed in U.S. dollar and receives fixed in Japanese yen. | | | 4,814,650 | | | | 505,772 | | | | 4,548,319 | | | | 316,373 | | Cross-currency swaps | | PEMEX pays floating in 3-month U.S. dollar LIBOR + spread and receives floating in 3-month euro LIBOR + spread. | | | 15,277,498 | | | | 761,958 | | | | 14,432,394 | | | | (523,552 | ) | Cross-currency swaps | | PEMEX pays fixed in U.S. dollar and receives fixed in euro. | | | 277,574,150 | | | | 9,177,152 | | | | 292,557,157 | | | | (5,606,276 | ) | Cross-currency swaps | | PEMEX pays floating in 6-month U.S. dollar LIBOR + spread and receives fixed in pound sterling. | | | 9,781,187 | | | | 712,072 | | | | 9,204,373 | | | | 526,632 | |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, of pesos (exceptexcept as noted). PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | December 31, 2017 | | December 31, 2016 | | | | | December 31, 2020. | | | December 31, 2019 | | DFI | | POSITION | | Notional Amount | | Fair Value | | Notional Amount | | Fair Value | | | 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. | | Ps.16,695,028 | | | Ps. 79,448 | | | Ps.20,018,250 | | | Ps. | (90,451 | ) | | Interest rate swaps | | PEMEX pays fixed in U.S. dollar and receives floating in6-month U.S. dollar LIBOR + spread. | | 15,433,626 | | | 332,273 | | | 18,132,660 | | | 312,210 | | | Cross-currency swaps | | PEMEX pays fixed in pesos and receives notional in UDI. | | 23,740,341 | | | (4,504,151 | ) | | 23,740,341 | | | (4,815,373 | ) | | PEMEX pays fixed in U.S. dollar and receives fixed in pound sterling. | | | 11,802,848 | | | | 126,965 | | | | 11,149,951 | | | | (9,852 | ) | Cross-currency swaps | | PEMEX pays the28-day TIIE + spread in pesos and receives fixed in UDI. | | 30,897,687 | | | (216,441 | ) | | 20,853,418 | | | 2,683,138 | | | PEMEX pays fixed in U.S. dollar and receives fixed in CHF. | | | 10,300,166 | | | | 913,809 | | | | 20,729,537 | | | | 797,159 | | Cross-currency swaps | | PEMEX pays fixed in U.S. dollar and receives fixed in Japanese yen. | | 4,775,551 | | | 134,461 | | | 5,520,000 | | | (116,507 | ) | | Cross-currency swaps | | PEMEX pays floating in6-month U.S. dollar LIBOR + spread and receives floating in6-month yen LIBOR + spread. | | 13,039,563 | | | (1,804,993 | ) | | 17,697,534 | | | (6,016,126 | ) | | Cross-currency swaps | | PEMEX pays fixed in U.S. dollar and receives fixed in euro. | | 278,440,124 | | | 19,065,727 | | | 229,016,488 | | | (16,484,533 | ) | | Cross-currency swaps | | PEMEX pays fixed in U.S. dollar and receives fixed in Pound sterling. | | 11,706,999 | | | 590,113 | | | | — | | | | — | | | Cross-currency swaps | | PEMEX pays floating in6-month U.S. dollar LIBOR + spread and receives fixed in Pound sterling. | | 10,310,216 | | | 560,982 | | | 10,767,349 | | | (211,207 | ) | | Cross-currency swaps | | PEMEX pays fixed in U.S. dollar and receives fixed in CHF. | | 25,579,588 | | | 400,316 | | | 26,713,732 | | | (789,449 | ) | | Cross-currency swaps | | PEMEX pays fixed in U.S. dollar and receives fixed in AUD. | | | — | | | | — | | | 2,459,429 | | | (126,796 | ) | | Interest Rate Options | | | PEMEX Buy Cap, Sell Floor on floating in U.S. dollar LIBOR 1M. | | | 49,871,750 | | | | (1,331,187 | ) | | | — | | | | — | | Currency Options | | PEMEX Buy Put, Sell Put and Sell Call on Japanese yen. | | 14,046,320 | | | 48,715 | | | 14,133,580 | | | (301,131 | ) | | PEMEX Buy Put, Sell Put and Sell Call on Japanese yen | | | 15,456,770 | | | | 14,918 | | | | 13,881,133 | | | | 123,244 | | Currency Options | | PEMEX Buy call, Sell call and Sell Put on euros. | | 100,950,853 | | | 4,919,444 | | | | — | | | | — | | | PEMEX Buy call, Sell Call and Sell Put on euro | | | 121,240,404 | | | | 3,167,805 | | | | 105,123,586 | | | | 360,731 | | Currency Options | | PEMEX Sell Call on Pound sterling | | 12,031,728 | | | (239,626 | ) | | | — | | | | — | | | PEMEX Sell Call on pound sterling | | | 12,271,443 | | | | (85,994 | ) | | | 11,242,387 | | | | (81,137 | ) | Currency Forward | | PEMEX pays Pesos and receives U.S. dollar. | | 59,360,100 | | | (2,006,461 | ) | | | — | | | | — | | | Natural gas swaps | | PEMEX receives fixed. | | (51,724 | ) | | 6,934 | | | (160,214 | ) | | (25,145 | ) | | Natural gas swaps | | PEMEX receives floating. | | 50,846 | | | (6,114 | ) | | 157,545 | | | 27,869 | | | Natural gas options | | PEMEX Long Call. | | 18,625 | | | 398 | | | 73,653 | | | 11,548 | | | Natural gas options | | PEMEX Short Call. | | (18,625 | ) | | (397 | ) | | (73,653 | ) | | (11,488 | ) | | Currency Options | | | PEMEX Sell Call on CHF | | | 8,225,571 | | | | (70,196 | ) | | | 7,116,252 | | | | (74,535 | ) | Currency Options | | | PEMEX Sell Call on euro | | | 104,181,452 | | | | (2,118,100 | ) | | | 66,560,662 | | | | (1,223,283 | ) | Interest rate swaps | | PEMEX pays fixed in U.S. dollar and receives floating in U.S. dollar LIBOR 1M. | | 1,423,368 | | | (22,870 | ) | | 1,788,382 | | | (57,043 | ) | | PEMEX pays fixed in U.S. dollar and receives floating in U.S. dollar LIBOR 1M. | | | 482,561 | | | | (11,199 | ) | | | 768,561 | | | | (10,954 | ) | | | | | | | | | | | | | | | | Subtotal | | | | | | | | 17,896,918 | | | | | | (3,781,263 | ) | | | | | | | Ps.17,337,760 | | | | | Ps. | (26,010,486 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | December 31, 2017 | | | December 31, 2016 | | DFI | | Volume (MMb) | | | Fair Value | | | Volume (MMb) | | | Fair Value | | Crude Oil Options | | | 153.56 | | | Ps. | (5,010,187 | ) | | | — | | | | — | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | | | | | | | | | December 31, 2020 | | | December 31, 2019 | | IFD | | | | Volume (MMb) | | | Fair Value | | | Volume (MMb) | | | Fair Value | | | | | | | | Crude oil Options | | PEMEX buys Put and sells Put | | | 55.20 | | | | (1,266,940 | ) | | | 85.05 | | | | (1,372,577 | ) | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | December 31, 2017 | | | December 31, 2016 | | DFI | | Market | | | Volume (MMb) | | | Fair value | | | Volume (MMb) | | | Fair value | | Futures | | | Exchange traded | | | | 2.1 | | | Ps | . (141,693 | ) | | | — | | | Ps. | — | | Petroleum Products Swaps | | | Exchange traded | | | | 1.3 | | | Ps | . (99,680 | ) | | | 4.1 | | | Ps. | (688,016 | ) |
| | | | | | | | | | | | | | | | | | | | | December 31, 2020 | | | December 31, 2019 | | DFI | | Market | | Volume (MMb) | | | Fair value | | | Volume (MMb) | | | Fair value | | | | | | | | Futures | | Exchange traded | | | 0.64 | | | | Ps.(32,340 | ) | | | 2.4 | | | | Ps.(124,835 | ) | | | | | | | Petroleum Products Swaps | | Exchange traded | | | (1.48 | ) | | | Ps.(95,572 | ) | | | 4.3 | | | | Ps.(318,410 | ) |
Notes: NumbersAmounts may not total due to rounding. (1) | The fair value of the Futures and the Petroleum Products Swaps was recognized as “Cash and cash equivalents” in the statement of financial position because PEMEX considered these financial assets to be fully liquid. |
The exchange rate for U.S. dollars as of December 31, 20172020 and 20162019 was Ps. 19.786719.9487 and Ps. 20.664018.8452 per U.S. dollar, respectively. The exchange rate for euros as of December 31, 20172020 and 20162019 was Ps. 23.754924.4052 and Ps. 21.672421.1537 per euro, respectively. For the years ended December 31, 2017, 20162020, 2019 and 2015,2018, PEMEX recognized a net gain (loss) of Ps. 25,338,324,17,096,141, Ps. (14,000,987)(23,263,923) and Ps. (21,449,877)(19,115,951), respectively, in the “Derivative financial instruments (cost) income, net” line item with respect to DFIs treated as instruments entered into for trading purposes. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) The following table presents the fair value of PEMEX’s DFIs that are showed onincluded in the consolidated statement of financial position in derivativeDerivative financial instruments (including both DFIs that have not reached maturity and those that have reached maturity but have not been settled), as of December 31, 20172020 and 2016:2019: | | | | | | | | | | | Derivatives assets Fair value | | | | 2017 | | | 2016 | | Derivatives not designated as hedging instruments | | | | | | | | | Crude oil options | | Ps. | 397,630 | | | Ps. | — | | Currency options | | | 4,968,159 | | | | — | | Natural gas options | | | 398 | | | | 11,548 | | Cross-currency swaps | | | 24,126,452 | | | | 4,503,550 | | Natural gas swaps | | | 7,003 | | | | 30,162 | | Propane swaps | | | — | | | | — | | Interest rate swaps | | | 411,721 | | | | 312,210 | | Others | | | 202,091 | | | | — | | | | | | | | | | | Total derivatives not designated as hedging instruments | | | 30,113,454 | | | | 4,857,470 | | | | | | | | | | | Total assets | | Ps. | 30,113,454 | | | Ps. | 4,857,470 | | | | | | | | | | |
| | | | | | | | | | | Derivatives assets Fair value | | | | December 31, 2020 | | | December 31, 2019 | | | | | Derivatives not designated as hedging instruments | | | | | | | | | Crude oil options | | | Ps. — | | | | Ps. — | | Currency options | | | 3,184,942 | | | | 559,751 | | Natural gas options | | | — | | | | — | | Cross-currency swaps | | | 22,763,051 | | | | 10,936,579 | | Natural gas swaps | | | — | | | | — | | Interest rate swaps | | | — | | | | — | | Others | | | — | | | | — | | | | | | | | | | | Total derivatives not designated as hedging instruments | | | 25,947,993 | | | | 11,496,330 | | | | | | | | | | | Total assets | | | Ps. 25,947,993 | | | | Ps. 11,496,330 | | | | | | | | | | |
| | | | | | | | | | | Derivatives liabilities Fair value | | | | December 31, 2020 | | | December 31, 2019 | | | | | Derivatives not designated as hedging instruments | | | | | | | | | Crude oil options | | | Ps.(1,266,940 | ) | | | Ps.(1,372,577 | ) | Currency options | | | (2,219 | ) | | | (75,776 | ) | Natural gas options | | | — | | | | — | | Interest rate options | | | (1,331,187 | ) | | | — | | Cross-currency swaps | | | (6,005,562 | ) | | | (15,102,586 | ) | Natural gas swaps | | | — | | | | — | | Interest rate swaps | | | (712,107 | ) | | | (99,232 | ) | Others | | | — | | | | — | | | | | | | | | | | Total derivatives not designated as hedging instruments | | | (9,318,015 | ) | | | (16,650,171 | ) | | | | | | | | | | Total liabilities | | | Ps. (9,318,015 | ) | | | Ps. (16,650,171 | ) | | | | | | | | | | Net total | | | Ps. 16,629,978 | | | | Ps. (5,153,841 | ) | | | | | | | | | |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) | | | | | | | | | | | Derivatives liabilities Fair value | | | | 2017 | | | 2016 | | Derivatives not designated as hedging instruments | | | | | | | | | Forwards | | Ps. | (2,006,461 | ) | | Ps. | — | | Futures | | | — | | | | — | | Crude oil options | | | (5,407,817 | ) | | | — | | Currency options | | | — | | | | (301,131 | ) | Natural gas options | | | (397 | ) | | | (11,488 | ) | Cross-currency swaps | | | (10,301,983 | ) | | | (30,380,405 | ) | Natural gas swaps | | | (6,182 | ) | | | (27,438 | ) | Propane swaps | | | — | | | | — | | Interest rate swaps | | | (22,870 | ) | | | (147,494 | ) | Others | | | (269 | ) | | | — | | | | | | | | | | | Total derivatives not designated as hedging instruments | | | (17,745,979 | ) | | | (30,867,956 | ) | | | | | | | | | | Total liabilities | | Ps. | (17,745,979 | ) | | Ps. | (30,867,956 | ) | | | | | | | | | | Net total | | Ps. | 12,367,475 | | | Ps. | (26,010,486 | ) | | | | | | | | | |
The following tables presentpresents the net gain (loss) recognized in income on PEMEX’s DFIs for the years ended December 31, 2017, 20162020, 2019 and 2015,2018, in the consolidated statement of comprehensive income which is presented in the line “Derivative financial instruments (cost) income, net”: line item: | Derivatives not designated as hedging instruments | | Amount of gain (loss) recognized in the Statement of comprehensive income | | | Amount of gain (loss) recognized in the Statement of operations on derivatives | | | | 2017 | | 2016 | | 2015 | | | December 31, 2020 | | | December 31, 2019 | | | December 31, 2018 | | Forwards | | Ps. | (1,976,241 | ) | | Ps. | — | | | Ps. | — | | | Ps. | — | | | Ps. | — | | | Ps. | 2,007,393 | | Futures | | | (779,950 | ) | | (1,925,969 | ) | | 1,387,177 | | | | (1,612,650 | ) | | | (1,460,990 | ) | | | 374,112 | | Crude oil options | | | (3,771,604 | ) | | | — | | | | — | | | | 4,996,014 | | | | (2,762,358 | ) | | | 2,329,051 | | Currency options | | | 5,255,931 | | | (298,789 | ) | | | — | | | | 2,698,749 | | | | (2,447,050 | ) | | | (2,210,301 | ) | Natural gas options | | | 673 | | | (671 | ) | | 4,786 | | | | — | | | | 49 | | | | 185 | | Interest rate options | | | | (1,802,514 | ) | | | — | | | | — | | Cross-currency swaps | | | 27,747,290 | | | (11,633,605 | ) | | (21,358,898 | ) | | | 13,770,848 | | | | (16,019,238 | ) | | | (21,902,567 | ) | Crude oil futures swaps | | | | (176,341 | ) | | | — | | | | — | | Natural gas swaps | | | 1,780 | | | 831 | | | 4,355 | | | | — | | | | 2 | | | | 117 | | Propane swaps | | | — | | | (3,805 | ) | | (1,136,188 | ) | | Interest rate swaps | | | (34,306 | ) | | (138,979 | ) | | (351,109 | ) | | | (777,965 | ) | | | (574,338 | ) | | | 286,059 | | Others | | | (1,105,249 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | Total | | Ps. | 25,338,324 | | | Ps. | (14,000,987 | ) | | Ps. | (21,449,877 | ) | | Ps. | 17,096,141 | | | Ps. | (23,263,923 | ) | | Ps. | (19,115,951 | ) | | | | | | | | | | | | | | | | | | | |
C.NOTE 19. | 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 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
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
financial markets, and inputs other than quoted prices that are observed for the assets or liabilities. Level 3 inputs are unobservable inputs for the assets or liabilities, and include situations where there is little, if any, market activity for the assets or liabilities.
Management uses appropriate valuation techniques based on the available inputs to measure the fair values of PEMEX’s applicable assets and liabilities.
When available, PEMEX measures fair value using Level 1 inputs, because they generally provide the most reliable evidence of fair value.
The following tables present information about PEMEX’s financial assets and liabilities measured at fair value and indicate the fair value hierarchy of the inputs utilized to determine the fair values as of December 31, 2017 and 2016.
| | | | | | | | | | | | | | | | | | | Fair value hierarchy | | | Total as of 2017 | | | Level 1 | | | Level 2 | | | Level 3 | | | Assets: | | | | | | | | | | | | | | | | | Derivative financial instruments | | Ps. | — | | | Ps. | 30,113,454 | | | Ps. | — | | | Ps. | 30,113,454 | | Available-for-sale financial assets | | | — | | | | 1,056,918 | | | | — | | | | 1,056,918 | | | | | | | Liabilities: | | | | | | | | | | | | | | | | | Derivative financial instruments | | | — | | | | (17,745,979 | ) | | | — | | | | (17,745,979 | ) | | | | | | Fair value hierarchy | | | Total as of 2016 | | | Level 1 | | | Level 2 | | | Level 3 | | | Assets: | | | | | | | | | | | | | | | | | Derivative financial instruments | | Ps. | — | | | Ps. | 4,857,470 | | | Ps. | — | | | Ps. | 4,857,470 | | Available-for-sale financial assets | | | 6,463,096 | | | | 2,417,123 | | | | — | | | | 8,880,219 | | | | | | | Liabilities: | | | | | | | | | | | | | | | | | Derivative financial instruments | | | — | | | | (30,867,956 | ) | | | — | | | | (30,867,956 | ) |
When market quotes are not available to measure the fair value of PEMEX’s DFIs, PEMEX uses Level 2 inputs to calculate the fair value based on quotes from major market sources. These market quotes are then adjusted internally using standard market pricing models for interest rate, currency, equity and commodities derivatives.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(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, 2017 and 2016:
| | | | | | | | | | | | | | | | | | | 2017 | | | 2016 | | | | Carrying value | | | Fair value | | | Carrying value | | | Fair value | | Assets: | | | | | | | | | | | | | | | | | Cash and cash equivalents | | Ps. | 97,851,754 | | | Ps. | 97,851,754 | | | Ps. | 163,532,513 | | | Ps. | 163,532,513 | | Accounts receivable, net | | | 170,645,234 | | | | 170,645,234 | | | | 133,220,527 | | | | 133,220,527 | | Long-term notes receivable | | | 148,492,909 | | | | 148,492,909 | | | | 148,607,602 | | | | 148,607,602 | | | | | | | Liabilities: | | | | | | | | | | | | | | | | | Suppliers | | | 139,955,378 | | | | 139,955,378 | | | | 151,649,540 | | | | 151,649,540 | | Accounts and accrued expenses payable | | | 23,211,401 | | | | 23,211,401 | | | | 18,666,607 | | | | 18,666,607 | | Short-term debt and current portion of long-term debt | | | 157,209,467 | | | | 157,209,467 | | | | 176,166,188 | | | | 176,166,188 | | Long-term debt | | | 1,880,665,604 | | | | 1,996,173,753 | | | | 1,807,004,542 | | | | 1,812,109,426 | |
The fair values of the financial current assets and current liabilities presented in the table above are included for informational purposes.
The fair values of current financial assets and short-term liabilities are equal to their nominal values because, due to their short-term maturities, their nominal values are very close to their corresponding fair values.
The fair value of long-term debt is estimated using quotes from major market sources which are then adjusted internally using standard market pricing models. As a result of relevant assumptions, estimated fair values do not necessarily represent the actual terms at which existing transactions could be liquidated or unwound.
The information related to “Cash and cash equivalents”, “Accounts receivable, net”,“Available-for-sale financial assets”, “Long-term notes receivable” and “Debt” is described in the following notes, respectively:
Note 6, Cash, cash equivalents and restricted cash;
Note 7, Accounts receivable, net;
Note 10,Available-for-sale financial assets;
Note 14, Long-term notes receivable and other; and
Note 15, Debt.
NOTE 17. EMPLOYEE BENEFITS
|
Until December 31, 2015, Petróleos Mexicanos and Subsidiary Entities only had defined benefit pension plans for the retirement of its employees, to which only Petróleos Mexicanos and the Subsidiary Entities contribute. Benefits under these plans are based on an employee’s salary and years of service completed at retirement. As of January 1, 2016, Petróleos Mexicanos and the Subsidiary Entities also hashave a defined contribution pension plan, in which both Petróleos Mexicanos and the Subsidiary Entities and the employee contribute to an employee’s individual account. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Benefits under the defined benefit plan are mainly based on the years of service completed by the employee, and their remuneration at the date of retirement. The obligations and costs of these plans are recognized based on an actuarial valuation prepared by independent experts. Within the regulatory framework of plan assets, there are no minimum funding requirements. Petróleos Mexicanos and the Subsidiary Entities have established additional plans to cover post-employment benefits, which are based on actuarial studies prepared by independent experts and which include disability, post-mortem pension and the death of retired employees.employees, as well as medical services for retired employees and beneficiaries. As of December 31, 2017,2019, Petróleos Mexicanos and Subsidiary Entities funded its employees benefits through Mexican trusts, the resources of which come from the retirement line item of PEMEX’s annual budget (an operating expense), or any other line item that substitutes or relates to this line item, or that is associated towith the same line item and the interests, dividends or capital gains obtained from the investments of the trusts. In 2019, the Board of Directors of Petróleos Mexicanos approved modifications to the organic structure of PEMEX. As a result of this, the Subsidiary Entities and Petróleos Mexicanos transferred and / or received active personnel through the figure of employer substitution, with which the Subsidiary Entities and Petróleos Mexicanos recognized the retirement obligations of the transferred personnel whose impact was calculated in the actuarial study carried out by the independent experts. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) The following table show the amounts associated with PEMEX’s labor obligations: | | | December 31, | | | December 31, | | Defined Benefits Liabilities | | 2017 | | | 2016 | | | | | | 2020 | | | 2019 | | Liability for defined benefits at retirement and post-employment at the end of the year | | | Ps. 1,241,072,307 | | | | Ps. 1,202,624,665 | | | Ps. | 1,516,671,029 | | | Ps. | 1,438,849,732 | | Liability for other long-term benefits | | | 17,363,815 | | | | 17,784,771 | | | | 18,497,057 | | | | 17,965,635 | | | | | | | | | | | | | | | Total liability for defined benefits recognized in the consolidated statement of financial position at the end of the year | | | Ps. 1,258,436,122 | | | | Ps. 1,220,409,436 | | | Ps. | 1,535,168,086 | | | Ps. | 1,456,815,367 | | | | | | | | | | | | | | |
The amount reflected in the Employee Benefit Reserve at the end of the year includes both the defined benefit plan (DB) and the defined contribution plan (DC). As for the defined contribution scheme, the Assets (liabilities) recognized in the balance sheet (DC-warranty) went from Ps. 2,023,220 in 2019 to Ps. 3,051,044 in 2020. The expense in the Income Statement (net cost for the period, DC-guarantee) was Ps. 356,880 and Ps. 316,915 for the year December 31, 2020 and 2019, respectively. The following tables contain detailed information regarding PEMEX’s retirement and post-employment benefits: | | | | | | | | | | | December 31, | | Changes in the liability for defined benefits | | 2017 | | | 2016 | | Liability for defined benefits at the beginning of the year | | | Ps. 1,202,624,665 | | | | Ps. 1,258,480,019 | | Recognition of the modifications in pensions plan | | | 8,327 | | | | (571,713 | ) | Current Service cost | | | 13,079,341 | | | | 23,111,918 | | Net interest | | | 95,402,917 | | | | 90,527,624 | | Past service costs | | | — | | | | (33,244 | ) | Defined benefits paid by the fund | | | (5,105,669 | ) | | | (4,892,767 | ) | Actuarial (gains) losses in other comprehensive results due to: | | | | | | | | | Change in financial assumptions | | | 47,182,448 | | | | (149,533,263 | ) | Change in demographic assumptions | | | (70,012,604 | ) | | | 4,842,109 | | For experience during the year | | | 10,272,231 | | | | 36,103,857 | | In plan assets during the year | | | (453,206 | ) | | | 285,123 | | Remeasurements | | | 26,417 | | | | (1,742 | ) | Contributions paid to the fund | | | (51,952,560 | ) | | | (55,693,256 | ) | | | | | | | | | | Defined benefit liabilities at end of year | | | Ps. 1,241,072,307 | | | | Ps. 1,202,624,665 | | | | | | | | | | |
| | | | | | | | | | | December 31, | | Changes in the liability for defined benefits | | 2020 | | | 2019 | | Liability for defined benefits at the beginning of the year | | Ps. | 1,438,849,732 | | | Ps. | 1,067,317,120 | | Current Service cost | | | 22,742,631 | | | | 15,871,004 | | Net interest | | | 105,699,575 | | | | 95,643,572 | | Defined benefits paid by the fund | | | (5,168,608 | ) | | | (5,759,721 | ) | Actuarial losses (gains) in other comprehensive results due to: | | | | | | | | | Change in financial assumptions(1) | | | 77,094,827 | | | | 304,527,285 | | Change in demographic assumptions (1) | | | (18,581,935 | ) | | | (9,012,031 | ) | For experience during the year (1) | | | (41,069,054 | ) | | | 25,228,095 | | Assets of the plan during the year (1) | | | 32,531 | | | | (43,628 | ) | Effect of the liability ceiling * | | | — | | | | (127,137 | ) | Real interest, excluding earned interests * | | | — | | | | (363,873 | ) | Adjustment to the Defined Contribution Plan * | | | — | | | | 61,583 | | Remeasurements | | | — | | | | (96,828 | ) | Contributions paid to the fund | | | (62,928,670 | ) | | | (54,395,709 | ) | | | | | | | | | | Defined benefit liabilities at end of year | | Ps. | 1,516,671,029 | | | Ps. | 1,438,849,732 | | | | | | | | | | |
* | The concepts come from the valuation of PMI CIM´s liabilities. |
(1) | The amount of actuarial losses corresponding to retirement and post-employment benefits recognized in other comprehensive income net of deferred income tax for Ps. (19,182,373) in the year ended December 31, 2020, corresponded mainly to the decrease in the discount rate, from 7.53% in 2019 to 7.08% in 2020, as well as the decrease in the salary increase rate, from 5.02% in 2019 to 4.47% in 2020, and the gradual increase in the rate of mortality for non-disabled retirees. Other factors included changes in the population, age, seniority, salary, pensions and employee benefits. |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) | | | | | | | | | | | December 31, | | Changes in pension plan assets | | 2020 | | | 2019 | | Plan assets at the beginning of year | | Ps. | 2,585,007 | | | Ps. | 7,200,471 | | Return on plan assets | | | 262,273 | | | | 833,638 | | Payments by the pension fund | | | (63,204,515 | ) | | | (59,967,278 | ) | Company contributions to the fund | | | 62,928,670 | | | | 54,395,709 | | Actuarial (gains) losses in plan assets | | | (32,531 | ) | | �� | 43,683 | | Effect of the liability ceiling | | | — | | | | 157,774 | | Adjustment to the Defined Contribution Plan * | | | (100,180 | ) | | | (61,582 | ) | Clearance Price* | | | — | | | | (17,408 | ) | | | | | | | | | | Pension plan assets at the end of year | | Ps. | 2,438,724 | | | Ps. | 2,585,007 | | | | | | | | | | |
* | The concepts come from the valuation of PMI CIM´s liabilities. |
The Labor Fund reduction was due to budgetary requirements derived from the need to meet a financial balance goal in cash flow. In 2017this sense, during 2020 PEMEX’s administration implemented a strategy and 2016, the net actuarial gains recognized in other comprehensive income (loss) netcontributions to the Fund are scheduled and executed taking into account the initial balance plus the cost of income deferred tax werepayrolls and retirements for the year, maintaining a minimum operating balance without the operational continuity risk or payment to personnel. Contributions from PEMEX to FOLAPE include a promissory note for Ps. 12,038,7104,983,670 (Ps. 4,102,622 of principal and Ps. 106,387,640, respectively, related to retirement and post-employment benefits, not including881,048 of interest) in the normal year to year increase in obligations based on changes in population, age, seniority, wages, pensions and benefits. The decrease in losses in 2017 was mainlymonth of April derived from the Federal Government Contribution due to the decrease inModification of the discount and return on plan assets rates, from 8.17% in 2016 to 7.89% in 2017. | | | | | | | | | | | December 31, | | Changes in pension plan assets | | 2017 | | | 2016 | | Plan assets at the beginning of year | | Ps. | 9,489,666 | | | Ps. | 5,228,909 | | Return on plan assets | | | 902,550 | | | | 742,477 | | Payments by the pension fund | | | (54,312,270 | ) | | | (51,889,821 | ) | Company contributions to the fund(1) | | | 51,952,559 | | | | 55,693,256 | | Actuarial (gains) losses in plan assets | | | 453,187 | | | | (285,155 | ) | | | | | | | | | | Pension plan assets at the end of year | | Ps. | 8,485,692 | | | Ps. | 9,489,666 | | | | | | | | | | |
(1) | Includes proceeds from the collected amountsPension Plan of the Promissory Notes, contributed by the Mexican Government (See Note 14). |
PEMEX’s plan assets are held in two trusts, the FOLAPE and the Fideicomiso de Cobertura Laboral y de Vivienda (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 its Subsidiary Entities. Interest income generated by the trusts.Government Bonds amounted Ps. 2,103,099 during 2020 of which Petróleos Mexicanos received the payment of Ps. 817,270. (see Note 15-A and B).
The expected contribution to the fund for 2018 amounts to Ps. 63,500,000 and the expectedExpected payments for 2018 isfiscal year 2021 are Ps. 62,337,560.75,776,059.
As of December 31, 20172020 and 2016,2019, the amounts and types of plan assets are as follows: | | | December 31, | | | December 31, | | Plan Assets | | 2017 | | | 2016 | | | 2020 | | | 2019 | | | Cash and cash equivalents | | Ps. | 135,757 | | | Ps. | 5,906,660 | | | Ps. | 10,845 | | | Ps. | 138,795 | | Equity instruments | | | 1,034,178 | | | | 2,694,291 | | | Debt instruments | | | 7,315,757 | | | | 888,715 | | | | 2,427,879 | | | | 2,446,212 | | | | | | | | | | | | | | | Total plan assets | | Ps. | 8,485,692 | | | Ps. | 9,489,666 | | | Ps. | 2,438,724 | | | Ps. | 2,585,007 | | | | | | | | | | | | | | |
| | | | | | | | | | | December 31, | | Changes in Defined Benefit Obligations (DBO) | | 2017 | | | 2016 | | Defined benefit obligations at the beginning of the year | | Ps. | 1,212,114,331 | | | Ps. | 1,263,708,928 | | Service costs | | | 19,762,661 | | | | 23,107,851 | | Financing costs | | | 96,331,015 | | | | 91,270,383 | | Past service costs | | | | | | | (33,244 | ) | Payments by the fund | | | (59,417,940 | ) | | | (56,778,359 | ) | Amount of (gains) and losses recognized through other comprehensive income: | | | (12,594,541 | ) | | | (108,589,515 | ) | Modifications to the pension plan | | | (6,609,657 | ) | | | (571,713 | ) | Remeasurements | | | (1,471 | ) | | | — | | Reductions | | | (26,399 | ) | | | — | | | | | | | | | | | Defined benefit obligations at the end of year | | Ps. | 1,249,557,999 | | | Ps. | 1,212,114,331 | | | | | | | | | | |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) | | | | | | | | | | | December 31, | | Changes in Defined Benefit Obligations (DBO) | | 2020 | | | 2019 | | Defined benefit obligations at the beginning of the year | | Ps. | 1,441,356,415 | | | Ps. | 1,074,233,038 | | Service costs | | | 20,793,204 | | | | 14,516,102 | | Financing costs | | | 105,802,122 | | | | 96,350,258 | | Past service costs | | | — | | | | 77,045 | | Payments by the fund | | | (68,295,593 | ) | | | (65,727,000 | ) | Actuarial (losses) gains due to: | | | | | | | | | Change in financial assumptions | | | 77,094,827 | | | | 304,527,285 | | Change in demographic assumptions | | | (18,581,935 | ) | | | (9,012,031 | ) | For experience during the year | | | (41,069,054 | ) | | | 25,228,095 | | Obligations settled | | | — | | | | (14,237 | ) | Reductions | | | 34,789 | | | | (129,909 | ) | Modifications to the pension plan | | | 1,949,427 | | | | 1,307,769 | | | | | | | | | | | Defined benefit obligations at the end of year | | Ps. | 1,519,084,202 | | | Ps. | 1,441,356,415 | | | | | | | | | | |
The asset ceiling test was not applied because there was a deficit of labor liabilitieseffects on the Defined Benefits Liability upon retirement and post-employment at the beginning and end of the year.period are: The effect of an increase or decrease of one percentage point in the discount rate is a-12.46%-12.25% increase or a 15.72%15.42% decrease in defined benefit obligations. The effect of an increase or decrease of one percentage point in the increase rate in medical services with respect to the cost and obligations related to medical services point is a 21.93%3.23% increase or a-16.80%-2.47% decrease in defined benefit obligations. The effect of an increase or decrease of one percentage point in the inflation is 9.58% and -8.08%, respectively in defined benefit obligations. The effect of an increase or decrease of one percentage point in the wage is a 1.37% and -1.20%, respectively in defined benefit obligations. The effects previously mentioned were determined using the projected unit credit method which was the same method used in the prior valuation. Assumptions regarding future mortality are based on EMSSA2009 to Unique Circular of the Comisión Nacional de Seguros y Fianzas (National Commission of Insurance and Bonds) and include changesimprovements to the mortality rate established in 2017.2020. For the December valuation, the mortality table for retired personnel was updated using an actuarial proposal based on the experience of Petróleos Mexicanos and its Subsidiary Entities. The mortality table for the incapacitated personnel is the EMSSInc-IMSS2012 and for the disabled personnel the EMSSInv-IMSS2012. PEMEX’s plan assets are held in the FOLAPE trusts, 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. As of December 31, 2020, FOLAPE has a balance of Ps. 9,382, the remaining Ps. 2,429,342 belong to affiliate companies that are in charge of managing their own funds. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) The following tables present additional fair value disclosure about plan assets and indicate their rank, in accordance with IFRS 13, as of December 31, 20172020 and 2016:2019: | | | | | | | | | | | | | | | | | | | Fair value measurements as of December 31, 2017 | | 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. | 135,757 | | | Ps. | — | | | Ps. | — | | | Ps. | 135,757 | | Equity instruments | | | 1,034,178 | | | | — | | | | — | | | | 1,034,178 | | Debt instruments | | | 7,315,757 | | | | — | | | | — | | | | 7,315,757 | | | | | | | | | | | | | | | | | | | Total | | Ps. | 8,485,692 | | | Ps. | — | | | Ps. | — | | | Ps. | 8,485,692 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | Fair value measurements as of December 31, 2016 | | 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 | | Equity instruments | | | 2,694,291 | | | | — | | | | — | | | | 2,694,291 | | Debt instruments | | | 888,715 | | | | — | | | | — | | | | 888,715 | | | | | | | | | | | | | | | | | | | Total | | Ps. | 9,489,666 | | | Ps. | — | | | Ps. | — | | | Ps. | 9,489,666 | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | | | | | Fair value measurements as of December 31, 2020 | | 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. | 10,845 | | | Ps. | — | | | Ps. | — | | | Ps. | 10,845 | | Debt instruments | | | 2,427,879 | | | | — | | | | — | | | | 2,427,879 | | | | | | | | | | | | | | | | | | | Total | | Ps. | 2,438,724 | | | Ps. | — | | | Ps. | — | | | Ps. | 2,438,724 | | | | | | | | | | | | | | | | | | | | | | | Fair value measurements as of December 31, 2019 | | Plan assets | | Quoted prices in active markets for identical assets (level 1) | | | Significant observable inputs (level 2) | | | Significant unobservable inputs (level 3) | | | Total | | | | | | | Cash and cash equivalents | | Ps. | 138,795 | | | Ps. | — | | | Ps. | — | | | Ps. | 138,795 | | Debt instruments | | | 2,446,212 | | | | — | | | | — | | | | 2,446,212 | | | | | | | | | | | | | | | | | | | Total | | Ps. | 2,585,007 | | | Ps. | — | | | Ps. | — | | | Ps. | 2,585,007 | | | | | | | | | | | | | | | | | | |
As of December 31, 20172020 and 2016,2019, the principal actuarial assumptions used in determining the defined benefit obligation for the plans are as follows: | | | | | | | December 31, | | | | December 31, | | | 2020 | | 2019 | | | | 2017 | | 2016 | | | Rate of increase in salaries | | | 4.77 | % | | 4.77 | % | | | 4.47 | % | | | 5.02 | % | Rate of increase in pensions | | | 3.75 | % | | 3.75 | % | | | 4.00 | % | | | 4.00 | % | Rate of increase in post-mortem pensions | | | | 0.00 | % | | | 0.00 | % | Rate of increase in medical services | | | 7.65 | % | | 7.65 | % | | | 7.65 | % | | | 7.65 | % | Inflation assumption | | | 3.75 | % | | 3.75 | % | | | 4.00 | % | | | 4.00 | % | Discount and return on plan assets rate | | | 7.89 | % | | 8.17 | % | | Rate of increase in basic basket for active personnel | | | | 5.00 | % | | | 5.00 | % | Rate of increase in basic basket for retired personnel | | | | 4.00 | % | | | 4.00 | % | Rate of increase in gas and gasoline | | | | 4.00 | % | | | 4.00 | % | Discount and return on plan assets rate (1) | | | | 7.08 | % | | | 7.53 | % | Average length of obligation (years) | | | 18.40 | | | 17.67 | | | | 17.52 | | | | 17.52 | |
In accordance with IAS 19, the discount rate used is determined by considering the government zero coupon curve generated from the fixed rate bonds issued by the Mexican Government (“Bonds M”) and Cetes, as well as the flow of payments expected to cover contingent liabilities.
(1) | In accordance with IAS 19, the discount rate was determined using as a reference the interest rates observed in Mexican Government bonds denominated in pesos (Cetes and M bonds), as well as the flow of payments expected to cover contingent obligations. As a result of the performance in financial instruments mentioned above, the discount rate for 2020 had a decrease in respect to discount rate of 2019. |
Other long-term benefits Petróleos Mexicanos and the Subsidiary Entities hashave established other long-term benefit plans for itstheir employees, to which employees do not contribute, which correspond to the seniority premiums payable for disability, death and survivorssurvivor benefits (payable to the widow and beneficiaries of worker), medical service, gas and basic basket for beneficiaries. Benefits under these plans are based on an employee’s salary and years of service completed at separation date. Obligations and costs of such plans are recorded in accordance with actuarial valuations performed by independent actuaries. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) The amounts recognized for long-term obligations for the years ended December 31, 20172020 and 20162019 are as follows: | | | | | | | | | | | December 31, | | Change in the liability for defined benefits | | 2017 | | | 2016 | | Liabilities defined benefit at the beginning of year | | Ps. | 17,784,771 | | | Ps. | 20,905,422 | | Charge to income for the year | | | 3,277,847 | | | | 3,420,158 | | Actuarial (gains) losses recognized in income due to: | | | | | | | | | Change in financial assumptions | | | 878,516 | | | | (3,028,211 | ) | Change in demographic assumptions | | | (1,015,274 | ) | | | (119,982 | ) | For experience during the year | | | (3,558,599 | ) | | | (3,390,396 | ) | Benefits paid | | | (3,446 | ) | | | (2,220 | ) | | | | | | | | | | Liabilities defined benefit at the end of year | | Ps. | 17,363,815 | | | Ps. | 17,784,771 | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | December 31, | | Change in the liability for defined benefits | | 2020 | | | 2019 | | Liabilities defined benefit at the beginning of year | | Ps. | 17,965,635 | | | Ps. | 13,224,926 | | Charge to income for the year | | | 2,865,809 | | | | 2,164,866 | | Actuarial losses (gains) recognized in income due to: | | | | | | | | | Change in financial assumptions | | | 912,673 | | | | 5,007,261 | | Change in demographic assumptions | | | (439,969 | ) | | | (245,829 | ) | For experience during the year | | | (2,806,112 | ) | | | (2,418,954 | ) | Real interest, excluding earned interests * | | | — | | | | 264,917 | | Effect of the liability ceiling * | | | — | | | | (30,638 | ) | Adjustment to the Defined Contribution Plan * | | | — | | | | (914 | ) | Benefits paid | | | (979 | ) | | | — | | | | | | | | | | | Liabilities defined benefit at the end of year | | Ps. | 18,497,057 | | | Ps. | 17,965,635 | | | | | | | | | | |
* | The concepts come from the valuation of PMI CIM´s liabilities. |
The expected long-term benefit payments amount to Ps. 359,746. The principal actuarial assumptions used in determining the defined benefit obligation for the plans are as follows:are: | | | | | | | | | | | December 31, | | | | 2017 | | | 2016 | | Rate of increase in salaries | | | 4.77 | % | | | 4.77 | % | Inflation assumption | | | 3.75 | % | | | 3.75 | % | Discount and return on plan assets rate | | | 7.89 | % | | | 8.17 | % | Average length of obligation (years) | | | 18.40 | | | | 17.67 | |
The effect of an increase or decrease of one percentage point in the discount rate is a -17.30% increase or a 23.25% decrease, respectively, in defined benefit obligations. The effect of an increase or decrease of one percentage point in the increase rate in medical services with respect to the cost and obligations related to medical services is a 8.53% increase or a -5.90%, decrease, respectively, in defined benefit obligations. The effect of an increase or decrease of one percentage point in the inflation is a 0.40% increase or a -0.35% decrease, in defined benefit obligations. The effect of an increase or decrease of one percentage point in the wage is a 4.51% increase or a -3.99% decrease, respectively in defined benefit obligations. The effects previously mentioned, were determined using the projected unit credit method which was the same used in the prior valuation. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) | | | | | | | | | | | December 31, | | | | 2020 | | | 2019 | | Rate of increase in salaries | | | 4.47 | % | | | 5.02 | % | Inflation assumption | | | 4.00 | % | | | 4.00 | % | Rate of increase in basic basket for active personnel | | | 5.00 | % | | | 5.00 | % | Rate of increase in basic basket for retired personnel | | | 4.00 | % | | | 4.00 | % | Rate of increase in gas and gasoline | | | 4.00 | % | | | 4.00 | % | Discount and return on plan assets rate | | | 7.08 | % | | | 7.53 | % | Average length of obligation (years) | | | 17.52 | | | | 17.52 | |
In accordance with IAS 19, the discount rate used iswas determined by consideringusing as a reference the government zero coupon curve generated from Bondsinterest rates observed in Mexican Government bonds denominated in pesos (Cetes and M and Cetes,bonds), as well as the flow of payments expected to cover contingent liabilities.obligations. As a result of the performance in financial instruments mentioned above, the discount rate for 2020 had a decrease in respect to discount rate of 2019. NOTE 18.
NOTE 20. | PROVISIONS FOR SUNDRY CREDITORS |
At December 31, 20172020 and 2016,2019, the provisions for sundry creditors and others is as follows: | | | | | | | | | | | 2017 | | | 2016 | | Provision for plugging of wells (Note 12) | | Ps. | 68,797,600 | | | Ps. | 64,967,710 | | Provision for trails in process (Note 25) | | | 7,812,689 | | | | 15,119,692 | | Provision for environmental costs | | | 11,067,134 | | | | 8,230,476 | | | | | | | | | | | | | Ps. | 87,677,423 | | | Ps. | 88,317,878 | | | | | | | | | | |
| | | | | | | | | | | 2020 | | | 2019 | | Provision for plugging of wells (Note 13) | | Ps. | 77,125,513 | | | Ps. | 80,849,900 | | Provision for trails in process (Note 27) | | | 8,321,816 | | | | 8,075,031 | | Provision for environmental costs | | | 9,178,555 | | | | 9,086,977 | | | | | | | | | | | | | Ps. | 94,625,884 | | | Ps. | 98,011,908 | | | | | | | | | | |
The following tables show the allowance account for plugging of wells, trials in progress and environmental costs: | | | Plugging of wells | | | Plugging of wells | | | | 2017 | | | 2016 | | | 2020 | | | 2019 | | Balance at the beginning of the year | | Ps. | 64,967,710 | | | Ps. | 56,894,695 | | | Ps. | 80,849,900 | | | Ps. | 84,050,900 | | Decrease capitalized in fixed assets | | | (3,791,482 | ) | | | (3,878,503 | ) | | (Decrease) Increase capitalized in fixed assets | | | | (12,816,336 | ) | | | (2,826,003 | ) | Unwinding of discount against income | | | 7,774,000 | | | | 11,968,966 | | | | 4,555,692 | | | | 3,318,384 | | Unrealized foreign exchange loss (gains) | | | | 4,766,921 | | | | (3,577,200 | ) | Amount used | | | (152,628 | ) | | | (17,448 | ) | | | (230,664 | ) | | | (116,181 | ) | | | | | | | | | | | | | | Balance at the end of the year | | Ps. | 68,797,600 | | | Ps. | 64,967,710 | | | Ps. | 77,125,513 | | | Ps. | 80,849,900 | | | | | | | | | | | | | | |
| | | | | | | | | | | Trials in progress | | | | 2017 | | | 2016 | | Balance at the beginning of the year | | Ps. | 15,119,692 | | | Ps. | 12,775,263 | | Additions against income | | | 2,835,357 | | | | 3,049,202 | | Provision cancellation | | | (1,973,153 | ) | | | (632,806 | ) | Amount used | | | (8,169,207 | ) | | | (71,967 | ) | | | | | | | | | | Balance at the end of the year | | Ps. | 7,812,689 | | | Ps. | 15,119,692 | | | | | | | | | | |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) | | | Environmental costs | | | Trials in progress | | | | 2017 | | | 2016 | | | 2020 | | | 2019 | | Balance at the beginning of the year | | Ps. | 8,230,476 | | | Ps. | 3,521,838 | | | Ps. | 8,075,031 | | | Ps. | 6,483,078 | | Additions against income | | | 3,203,982 | | | | 6,118,454 | | | Additions against expenses | | | | 972,692 | | | | 1,901,930 | | Provision cancellation | | | (312,937 | ) | | | (1,347,285 | ) | | | (724,026 | ) | | | (309,977 | ) | Amount used | | | (54,387 | ) | | | (62,531 | ) | | | (1,881 | ) | | | — | | | | | | | | | | | | | | | Balance at the end of the year(1) | | Ps. | 11,067,134 | | | Ps. | 8,230,476 | | | Ps. | 8,321,816 | | | Ps. | 8,075,031 | | | | | | | | | | | | | | |
| (1) | 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. |
| | | | | | | | | | | Environmental costs | | | | 2020 | | | 2019 | | Balance at the beginning of the year | | Ps. | 9,086,977 | | | Ps. | 11,219,278 | | Additions against expenses | | | 1,669,063 | | | | 4,745,835 | | Cancellation against expenses | | | (1,574,810 | ) | | | (6,873,905 | ) | Amount used | | | (2,675 | ) | | | (4,231 | ) | | | | | | | | | | Balance at the end of the year(1) | | Ps. | 9,178,555 | | | Ps. | 9,086,977 | | | | | | | | | | |
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. Present value is determined based on discount rates ranging from 4.0% to 10.5% in 2017. The plugging provision represents the present value of plugging costs related to oil and gas properties. These provisions have been created based on internal estimates of PEMEX. PEMEX has made certain assumptions based on the current economic environment that PEMEX believes provide a reasonable basis on which to estimate the future liability. These estimates are reviewed regularly to take into account any material changes in the assumptions. However, actual plugging costs in the long run will depend on future market prices for the necessary plugging work, which reflect market conditions at the time the work is being performed. The calculation of this provision considers the year-end exchange rate, the projected inflation rate for the United States, interpolated discount rates based on the maturity date of long-term debt instruments in U.S. markets, as well as unit costs obtained from current contracts as of the valuation date, the current status of PEMEX’s wells and the limit of proved and developed reserves as of January 1, 2021. The decrease in the provision in 2020 and 2019 against fixed assets corresponded to a decrease in the foreign exchange effect of direct costs reported (due to foreign exchange rates) in the current contracts for the plugging of wells, as well as decreases in the reserve limits and adjustments to the discount rate. This includes the effect of the discount rate over time of Ps. 4,555,692 and Ps. 3,318,348 for 2020 and 2019, respectively. The discount rate ranges used during 2020 and 2019 were from 3.268% to 7.799% and 3.279% to 6.960% for U.S. dollar denominated assets, respectively, and from 9.517% to 15.051% and 9.178% to 11.834% for peso denominated assets, respectively. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) 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: Well plugging of works will be carried out as follows:
| | | | | | | | | | | | | | | For the years ended December 31, | | | | 2017 | | | 2016 | | | 2015 | | Operating activities | | | | | | | | | | | | | Employee benefits equity effect(i) | | | Ps. 12,038,710 | | | | Ps. 106,277,761 | | | | Ps. 78,556,569 | | Net (benefits) cost of the year for employee benefits(i) | | | 108,073,074 | | | | 109,738,416 | | | | (62,549,142 | ) | Investing activities(ii) | | | | | | | | | | | | | Available-for-sale financial assets | | | 5,564,130 | | | | 207,817 | | | | (3,206,316 | ) | Financing activities | | | | | | | | | | | | | Financed Public Works Contracts | | | — | | | | 146,217,292 | | | | 2,001,093 | | Currency translation effect | | | (7,597,283 | ) | | | 21,386,902 | | | | 13,262,101 | | Accrued interest | | | 8,734,131 | | | | 9,326,945 | | | | 4,816,784 | |
| | | | | Year | | Amount | | 2021 | | Ps. | 2,858,989 | | 2022 | | | 2,197,972 | | 2023 | | | 3,167,257 | | 2024 | | | 3,456,396 | | 2025 | | | 6,110,317 | | More than 5 years | | | 59,334,582 | | | | | | | Total | | Ps. | 77,125,513 | | | | | | |
Provision for environmental costs PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
PEMEX is subject to the provisions of the Ley 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 to implement environmental remediation and improve environmental plans. Such plans will be sent to the Agencia Nacional de Seguridad Industrial y de Protección al Medio Ambiente del Sector Hidrocarburos (National Agency for Industrial Safety and Environmental Protection of the Hydrocarbons Sector or “ASEA”). The period of execution of these works is not defined, as they are subject to the budgets that may be granted to PEMEX. NOTE 21. | (i) | Items that do not impact cash flows but that reflect the actuarial valuation at the end of the year. |
| (ii) | Non-cash investing transactions are included in Note 12-d.INCOME TAXES AND DUTIES |
Material changes in liabilities from financing activities are disclosed in Note 15.
NOTE 20. INCOME TAXES AND FEDERAL DUTIES
TheLey de Ingresos sobre Hidrocarburos (“Hydrocarbons Revenue Law”) was published in the Official Gazette of the Federation on August 11, 2014, and came into effect, on January 1, 2015. The Hydrocarbons Revenue Law sets forth the new fiscal regime for Petróleos Mexicanos applicable to the assignments and the contracts that were established on such date. Likewise, every year the Federal Revenue Law is published in the Official Gazette of the Federation and includes specific regulations for PetroleosPetróleos Mexicanos and the Subsidiary Entities. Tax regime applicable to Assignments The tax regime applicable to the exploration and production for the assignments granted to PEMEX by the Mexican Government includes the following taxes and duties: a.A. | Derecho por la Utilidad Compartida “DUC” (Profit-sharing Duty). |
As of January 1, 2015, Pemex Exploration and Production is obligated to pay a Profit-sharing Duty. As of January 1, 20172020 and 2016,2019, the applicable rate of this duty was 67.50%58% and 68.75%65%, respectively. The computation of this duty is based on the excess of the value of hydrocarbons produced during the fiscal year (including self-consumption, shrinkage and burning), minus certain permitted deductions by the Hydrocarbons Revenue Law, including part of the investments and some costs, expenses and duties. Pursuant to the Hydrocarbons Revenue Law, this duty decreaseshas been decreased on an annual basis. As of January 1, 2019,2021, this duty will bewas set at 65%54%. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) During 2017,2020, this duty totaledwas Ps. 372,902,629218,912,687 from annual payments presented on March 31, 20182021 paid as follows: Ps. 377,192,377,153,292,899, in monthly installment payment and a tax credit of Ps. 65,000,000 and offset by a favorable balance of Ps. 149,715; resulting in a balance of Ps. 470,073 as of December 31, 2020. During 2019, this duty was Ps. 343,242,476 from annual payments presented on March 10, 2020 paid as follows: Ps. 347,515,447, in monthly installment payments, andresulting in a favorable balance amounting toof Ps. 4,289,748,4,272,971, presented in accounts receivable, net line item in the statement of financial position. During 2016, this duty totaled Ps. 304,299,019 from annual payments presented on April 3, 2017Duties and income tax paid as follows:of December 31, 2020, 2019 and 2018 were Ps. 301,050,325, in monthly installment payments172,369,522, Ps. 347,515,447 and a payable balance amounting to Ps. 3,248,694.443,785,240, respectively.
The accounting result differs from the tax result mainly due to differences in depreciation,non-deductible expenses and others. Such differences generate a deferred DUC. Total DUC and other as of December 31, 20172020, 2019 and 20162018 are integrated as follows: | | | | | | | | | | | 2017 | | | 2016 | | DUC | | Ps. | 372,902,629 | | | Ps. | 304,299,019 | | DUC from prior years | | | 2,095,429 | | | | — | | Other | | | 260,775 | | | | 514,356 | | Deferred DUC benefit | | | (37,214,624 | ) | | | (27,651,571 | ) | | | | | | | | | | Total DUC and other | | Ps. | 338,044,209 | | | Ps. | 277,161,804 | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| | | | | | | | | | | | | | | 2020 | | | 2019 | | | 2018 | | DUC | | Ps. | 218,912,687 | | | Ps. | 343,242,476 | | | Ps. | 443,294,170 | | Fiscal credit | | | (65,000,000 | ) | | | — | | | | — | | DUC from prior years | | | — | | | | (39 | ) | | | 14,883 | | Other | | | — | | | | — | | | | 446,464 | | Deferred DUC expense | | | 696,449 | | | | 29,570,063 | | | | 26,178,078 | | | | | | | | | | | | | | | Total DUC and other | | Ps. | 154,609,136 | | | Ps. | 372,812,500 | | | Ps. | 469,933,595 | | | | | | | | | | | | | | |
The principal factors generating the deferred DUC are the following: | | | | | | | | | | | 2017 | | | 2016 | | Deferred DUC asset: | | | | | | | | | Provisions | | Ps. | 541,360,940 | | | Ps. | 570,544,863 | | | | | | | | | | | Total deferred DUC asset | | | 541,360,940 | | | | 570,544,863 | | | | | | | | | | | Deferred Profit-sharing duty liability: | | | | | | | | | Wells, pipelines, properties, plant and equipment | | | (455,697,786 | ) | | | (473,406,721 | ) | | | | | | | | | | Deferred DUC liability | | | (455,697,786 | ) | | | (473,406,721 | ) | | | | | | | | | | Deferred asset net | | | 85,663,154 | | | | 97,138,142 | | Valuation reserve(1) | | | (20,796,959 | ) | | | (69,486,571 | ) | | | | | | | | | | Net, deferred DUC asset | | Ps. | 64,866,195 | | | Ps. | 27,651,571 | | | | | | | | | | | (1) PEMEX added to its valuation reserve since it estimates that some allowed deductions will not materialize in future years. | |
| | | | | | | | | | | 2020 | | | 2019 | | Deferred DUC asset: | | | | | | | | | Tax credits | | Ps. | 572,796,156 | | | Ps. | 546,317,620 | | | | | | | | | | | Deferred Profit-sharing duty liability: | | | | | | | | | Wells, pipelines, properties, plant and equipment | | | (208,999,954 | ) | | | (151,479,977 | ) | | | | | | | | | | Deferred DUC asset net | | | 363,796,202 | | | | 394,837,643 | | Unrecognized Deferred DUC | | | (355,374,599 | ) | | | (385,719,589 | ) | | | | | | | | | | Net, deferred DUC asset | | Ps. | 8,421,603 | | | Ps. | 9,118,054 | | | | | | | | | | |
The expected expense for DUC isin 2020 was different from that which would result from applying the 65%58.0% rate to the tax base, as a result of the line items mentioned below:in the tables below. The expected expense for DUC in 2019 was different from that which would result from applying the 65.0% rate to the tax base, as a result of the line items mentioned in the next table. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) | | | 2017 | | | 2016 | | | 2020 | | | 2019 | | | 2018 | | Expected expense: | | | Ps. 127,436,912 | | | | Ps. 159,897,683 | | | Expected (benefit) expense: | | | Ps. | (20,837,768 | ) | | Ps. | 43,432,712 | | | Ps. | 307,269,035 | | Increase (decrease) resulting from: | | | | | | | | | | | Non-cumulative profit | | | (514,780,219 | ) | | | (423,761,673 | ) | | Non-deductible expenses | | | 387,343,306 | | | | 263,863,990 | | | Expected benefit contract | | | | (496,643 | ) | | | (4,948,542 | ) | | | (5,797,144 | ) | Duties from prior year | | | | — | | | | (26 | ) | | | 9,860 | | Non-cumulative profit(1) | | | | (2,291,937,519 | ) | | | (1,130,442,995 | ) | | | (593,158,584 | ) | Non-deductible expenses(1) | | | | 2,313,271,930 | | | | 1,091,958,851 | | | | 291,676,831 | | Production value | | | 518,433,469 | | | | 441,655,000 | | | | 321,353,133 | | | | 495,394,906 | | | | 610,206,103 | | Deductible duties | | | (39,503,110 | ) | | | (29,918,201 | ) | | | (21,850,672 | ) | | | (39,891,325 | ) | | | (55,005,397 | ) | Deferred DUC reserve | | | (48,689,612 | ) | | | 69,486,571 | | | DUC tax credit(2) | | | | (65,000,000 | ) | | | — | | | | — | | Deferred DUC expense | | | | 696,449 | | | | 29,570,063 | | | | 26,178,078 | | Deductions cap | | | (94,552,741 | ) | | | (204,575,922 | ) | | | (80,589,774 | ) | | | (112,261,105 | ) | | | (111,906,534 | ) | DUC from prior years | | | 2,095,429 | | | | — | | | | — | | | | (39 | ) | | | 14,883 | | Other | | | 260,775 | | | | 514,356 | | | | — | | | | — | | | | 446,464 | | | | | | | | | | | | | | | | | | DUC-Profit-sharing duty expense | | | Ps. 338,044,209 | | | | Ps. 277,161,804 | | | Ps. | 154,609,136 | | | Ps. | 372,812,500 | | | Ps. | 469,933,595 | | | | | | | | | | | | | | | | | |
(1) | For 2020, fluctuations changes are included which have no effect on the determination of the DUC. |
(2) | Corresponds to the tax credit granted by the Mexican Government on April 21, 2020. |
On August 18, 2017, the Official Gazette of the Federation published a decree, granting tax benefits for extraction activities in assignments with mature and / or marginal fields, substantially increasing the percentage of costs, expenses and investments that PEMEX could deduct for purposes of calculating the DUC. As a result, PEMEX received a tax benefit of Ps. 7,769,915.8,677,891 and Ps. 11,110,177, as of December 31, 2019 and 2018, respectively. Beginning January 1, 2020, this decree was derogated. On November 30, 2017, theAcuerdo por el que se reforman y adicionan diversas disposiciones de las Reglas de carácter general para definir los métodos de ajuste del valor de los hidrocarburos de los derechos sobre hidrocarburos (Agreement by which various provisions of the general rules are reformed and added to define the methods of adjusting the value of hydrocarbons and hydrocarbon rights)was published inMay 24, 2019, the Official PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Gazette of the Federation resultingpublished a decree, granting tax benefits through the application of higher deduction limits on concepts such as costs, expenses and investments stated in new calibrations and adjustments of existing formulas of calculating the value of hydrocarbons and hydrocarbon rights.Hydrocarbons Revenue Law on the DUC assessment in assignments other than those applied in the previous paragraph. As a result, PEMEX received an estimateda tax benefit of Ps. 8,854,391. The compensation17,110,177 as of Ps. 2,186,963December 31, 2019. Beginning January 1, 2020, this decree was also authorized for the recognition of the fair economic value of the investments affected as a result of the allocation process for assignments to carry out hydrocarbon exploration and extraction activities, in accordance with the provisions of Transitory Article 21 of the Federation Income Law of 2017.derogated.
On April 18, 2016,21, 2020, the Mexican Government published a decree granting a fiscal benefit to Pemex Exploration and Production (assignee) was published in the Official Gazette of the Federation, and increases the limit ongranting a tax benefit for the amount Pemex Exploration and Production can deduct for costs, expenses and investmentsof Ps. 65,000,000 to PEMEX, which resulted in the calculationa decrease of itsPEMEX’s DUC for onshore areas or in offshore areas with water depths lower than 500 meters.payments. The tax benefit was granted due to further the Mexican Government’s strategic hydrocarbon explorationweakened financial environment due to changes in economic and extraction activities through assignments, in light of historically low international hydrocarbons prices in late 2015business conditions resulting from geopolitical and early 2016 combined with historically low oil production in Mexico, thereby, together with other actions avoiding thateconomic events and 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, 2016 of Ps. 28,439,379. This benefit consisted of a tax credit against the DUC as a measure to mitigate the impact generatedglobal health emergency caused by the financial environmentCovid-19 pandemic. This decrease in the Profit-sharing Duty is incremental to the one resulting from the decrease of the Mexican hydrocarbons explorationrate from 65% to 58% in 2020 in accordance with amendments to the 2020 Hydrocarbons Revenue Law. Petróleos Mexicanos Productive State-Owned Subsidiaries and extraction companies (assignees),Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as international energy prices continued to be depressed, which impacted the economies of several countries, including Mexico.noted) b.B. | Derecho de Extracción de Hidrocarburos (Hydrocarbons Extraction Duty). |
SHCP considers the effects of variations in the U.S. producer price index, or another alternative index, when it determines the rate to be published in the Official Gazette of the Federation. This duty is to be calculated using a rate based on a formula applicable to each type of hydrocarbon, the volume of production and utilizing the relevant market price for hydrocarbons in U.S. Dollars. During 20172020 Pemex Exploration and Production made payments of Ps. 58,523,125,37,673,573, which are included in the cost of sales line item. c.C. | Derecho de Exploración de Hidrocarburos (Exploration Hydrocarbons Duty). |
Pemex Exploration and Production as “assignee” must make monthly payments for this duty. The Mexican Government is entitled to collect a monthly payment of Ps. 1,214.21rates for 2020 were 1,396.09 pesos per square kilometer ofnon-producing areas. After 60 months, this tax increases to Ps. 2,903.543,338.46 pesos per square kilometer for each additional month that the area is not producing. These amounts will be updated on an annual basis in accordance with the national consumer price index. During 2017,2020, Pemex Exploration and Production made payments under this duty, totaling Ps. 980,843,1,068,598, which are included in the cost of sales line item. d.D. | Impuesto por la actividad de Exploración y Extracción de Hidrocarburos (Exploration and Extraction Hydrocarbons Duty). |
The assignments granted by the Mexican Government create a tax on the exploration and extraction activities carried out in the corresponding area. The monthly tax paid during the exploration phase and until the extraction phase begins is Ps. 1,583.741,820.97 pesos per square kilometer. During the extraction phase theof a project, a monthly tax from the start of the extraction phase and7,283.92 pesos per square kilometer is payable until the relevant contract for exploration and extraction or assignment ends is Ps. 6,334.98 per square kilometer. terminated. During 20172020 payments for this tax amounted Ps. 3,986,112,4,288,716, which are included in the cost of sales line item. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Tax Regime applicable to contracts: As of January 1, 2015, the tax regime applicable to Pemex Exploration and Production for contracts is set forth in the Hydrocarbons Revenue lawLaw which regulates, among other things, the fiscal terms applicable to the exploration and extraction contracts (license, profit sharing contracts, production sharing and services) and sets duties and other taxes paid to the Mexican Government. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) 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 Ps. 1,175.421,396.09 pesos per square kilometer ofnon-producing areas. After 60 months, this fee increases to Ps. 2,810.783,338.47 pesos per square kilometer for each additional month that the area is not producing. The fee amount will be updated on an annual basis in accordance with the national consumer price index. 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 volume of production and the market price. Royalties are payable in connection with licensing contracts, production-sharing contracts and profit-sharing contracts. | • | | Pago del Valor Contractual (Contractual Value Payment) |
Licensing contracts require a payment to the Mexican Government calculated as a percentage of the “contractual value” of the hydrocarbons produced, as determined by the SHCP 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 shall be madein-kind through delivery of the hydrocarbons produced. In the case of profit-sharing contracts, this payment shall be made in cash. | • | | 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. | • | | 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. AThe monthly tax of Ps. 1,583.74 per square kilometer is payablepaid during the exploration phase and until the extraction phase begins.begins is 1,820.97 pesos per square kilometer. During the extraction phase of a project, a monthly tax of Ps. 6,334.987,283.92 pesos per square kilometer is payable from the starting date until the relevant contract for exploration and extraction or assignment is terminated. During 2020 payments for this tax amounted Ps. 204,293.PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Other applicable taxes Beginning with the creation of theThe Subsidiary Entities during 2015, they becameare subject to the Income Tax Law and the Value Added Tax Law. Pemex Industrial Transformation is also subject to the Special Tax on Production and Services (IEPS Tax).
2017
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) 2020 indirect taxes are as listed below: IEPS Sobre la Venta de los Combustibles Automotrices (IEPS Tax on the saleSale of automotive fuels:Automotive Fuels): This tax is a tax imposedfee on domestic sales of automotive fuels, including gasoline and diesel, whichdiesel. Pemex Industrial Transformation collects the fee on behalf of the Mexican Government. The applicable quotasfees for 2017 were: 4.30this tax are Ps. 4.95 per liter of gasoline with an octane rating lower than 91; 4.18 pesos per liter of Magna gasoline; 3.64 pesos per liter of Premium gasoline with an octane rating greater than or equal to 91 and 4.735.44 pesos per liter of diesel. ThisThe amount of the fee will depend on the class of fuel. The fee is updated annually according to inflationfixed yearly and adjusted monthlyon a weekly basis by the tax authorities.SHCP. The fees apply to sales in Mexico and imports. IEPS Beneficio de Entidades Federativas, Municipios y Demarcaciones Territoriales (IEPS Tax to benefit Mexican statesin Favor of States, Municipalities and municipalities:Territories): This tax is a quotafee on domestic sales of automotive fuels, including gasoline and diesel, whichdiesel. Pemex Industrial Transformation collects the fee on behalf of the Mexican Government. The applicable quotasfees for 2017 were 38.00this tax are 43.69 cents per liter of Magna gasoline 46.37with an octane rating of less than 91, 53.31 cents per liter of premium gasoline with an octane rating greater than or equal to 91 and 31.5436.26 cents per liter of diesel. This rate is updated annuallyThese fees change yearly in accordance with inflation. The funds raisedFunds gathered by this quotafee are allocated to theMexican states and municipalities as provided for in the TaxLey de Coordinación Fiscal (Tax Coordination Law.Law). The fees only apply to sales in Mexico and are not subject to VAT. IEPS a los Combustibles Fósiles (IEPS Tax on Fossil Fuels:Fuels): This tax is a quotafee on the internaldomestic sales of fossil fuels, whichfuels. Pemex Industrial Transformation collects the fee on behalf of the Mexican Government. The applicable quotasfees for 2017 were 6.50this tax are 7.48 cents per liter forof propane, 8.429.68 cents per liter forof butane, 11.4113.12 cents per liter for jetof gasoline and otheraviation fuel, 13.6415.67 cents per liter for turbosineof jet fuel and other kerosene, 13.8415.92 cents per liter forof diesel, 14.7816.99 cents per liter forof fuel oil, Ps. 19.72 per ton of petroleum coke, Ps. 46.23 per ton of coal coke, Ps. 34.81 per ton of mineral carbon and Ps. 17.1550.32 per ton for petroleum coke. This rate is updated annually accordingof carbon from other fossil fuels. These fees change yearly in accordance with inflation and apply to inflation.imports to Mexico. b.B. | Value AddedValue-Added Tax (“VAT”)
|
For VAT purposes, final monthly payments are determined based on PEMEX’s cash flow, in accordance with the provisions of the Value Added Tax Law, applicable to payers of this tax. The general rate to be applied is 16%. Certain activities with incentives will have the rate of 0%. The Beginning on January 1, 2019, a new Decree of fiscal incentives began to apply to the northern border region, which consisted of a credit equivalent to 50% of the general rate, applicable directly at the time of the sale or service. This incentive is applicable in 6 states in the northern border region and includes 43 municipalities in those states.
Petróleos Mexicanos and its Subsidiary Entities apply this tax benefit to the operations they carry out within the municipalities of the States included in the Decree. VAT is caused byapplied to the salessale of goods, the rendering of services, the granting of the temporary use of goods in the national territory and by the importation of goods and services to the national territory. VAT taxpayers transfer VAT to their customers and are entitled to credit the VAT paid to their suppliers and on their imports. The net balance between VAT transferred to customers and paid to suppliers and on imports results each month in the VAT to be paid to the tax authorities or in an amount in favor of the taxpayer. The taxpayer has the right to credit VAT in favor against VAT payable in future months, to request a refund or to offset it against other payable federal taxes. Taxes on Income are described below: As of January 1, 2015, Petróleos Mexicanos, the Subsidiary Entities and the subsidiary companiesSubsidiary Companies residing in Mexico for tax purposes are subject to the Income Tax Law. Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) This tax is calculated by applying a rate of 30% to the tax result. Tax result is the excess of total revenues over the allowed deductions and tax losses from previous years. Accounting income differs from taxable income primarily due to the effects of inflation and differences between depreciation and other non-deductible expenses. For the years ended December 31, 2017, 20162020, 2019 and 2015, Petroleos2018, Petróleos Mexicanos and its Subsidiary Companies incurred the following income tax expense (benefit): | | | 2017 | | | 2016 | | | 2015 | | | 2020 | | | 2019 | | | 2018 | | Current income tax | | Ps. | 3,546,912 | | | Ps. | 6,201,842 | | | Ps. | 7,426,892 | | | Ps. | 5,370,822 | | | Ps. | 4,247,998 | | | Ps. | 3,109,971 | | Deferred income tax | | | (9,334,064 | ) | | | (18,842,211 | ) | | | (53,014,159 | ) | | | 25,592,117 | | | | (33,237,009 | ) | | | (11,465,343 | ) | | | | | | | | | | | | | | | | | | | | Total | | Ps. | (5,787,152 | ) | | Ps. | (12,640,369 | ) | | Ps. | (45,587,267 | ) | | Total expense (benefit) income tax, net | | | Ps. | 30,962,939 | | | Ps. | (28,989,011 | ) | | Ps. | (8,355,372 | ) | | | | | | | | | | | | | | | | | | | | Income tax REFIPRE (Preferent Fiscal Regime) | | Ps. | 722,984 | | | Ps. | — | | | Ps. | — | | | | | | | | | | | | | |
As of December 31, 2020 and 2019, Pemex Exploration and Production and Pemex Industrial Transformation did not recognize deferred income assets of Ps. 743,263,723 and Ps. 647,629,937, respectively, due to their expectation that future tax income will not correspond to such benefits. These amounts are mainly from fiscal losses to be amortized amounting with an expiration year from 2026 to 2031. The principal factors generating the deferred income tax are the following: | | | | | | | | | | | | | | | | | | | 2016 | | | Recognized in profit and loss | | | Recognized in OCI | | | 2017 | | | | | | | Deferred income tax asset: | | | | | | | | | | | | | | | | | Provisions | | Ps. | 5,906,581 | | | Ps. | 2,393,237 | | | Ps. | — | | | Ps. | 8,299,818 | | Employee benefits provision | | | 125,973,332 | | | | 4,902,275 | | | | (800,284 | ) | | | 130,075,323 | | Advance payments from clients | | | 1,046,010 | | | | 1,728,296 | | | | — | | | | 2,774,306 | | Accrued liabilities | | | 2,269,561 | | | | (1,897,574 | ) | | | — | | | | 371,987 | | Non-recoverable accounts receivable | | | 778,179 | | | | (38,431 | ) | | | — | | | | 739,748 | | Derivative financial instruments | | | 223,518 | | | | (144,263 | ) | | | — | | | | 79,255 | | Wells, pipelines, properties and equipment | | | 458,273,897 | | | | (52,834,079 | ) | | | — | | | | 405,439,818 | | Tax loss carryforwards(1) | | | 43,327,737 | | | | (9,216,777 | ) | | | — | | | | 34,110,960 | | | | | | | | | | | | | | | | | | | Total deferred income tax asset | | | 637,798,815 | | | | (55,107,316 | ) | | | (800,284 | ) | | | 581,891,215 | | Valuation reserve(2) | | | (565,125,697 | ) | | | 64,560,772 | | | | — | | | | (500,564,925 | ) | | | | | | | | | | | | | | | | | | Net deferred income tax asset | | | 72,673,118 | | | | 9,453,456 | | | | (800,284 | ) | | | 81,326,290 | | | | | | | | | | | | | | | | | | | Deferred income tax liability: | | | | | | | | | | | | | | | | | Wells, pipelines, properties, plant and equipment | | | (3,632,294 | ) | | | 188,676 | | | | — | | | | (3,443,618 | ) | Other | | | (502,242 | ) | | | (308,068 | ) | | | — | | | | (810,310 | ) | | | | | | | | | | | | | | | | | | Total deferred income tax liability | | | (4,134,536 | ) | | | (119,392 | ) | | | — | | | | (4,253,928 | ) | | | | | | | | | | | | | | | | | | Net long-term deferred income tax liability | | Ps. | 68,538,582 | | | Ps. | 9,334,064 | | | Ps. | (800,284 | ) | | Ps. | 77,072,362 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | 2019 | | | Recognized in profit and loss | | | Recognized in OCI | | | 2020 | | Deferred income tax asset: | | | | | | | | | | | | | | | | | | | Provisions | | Ps. | | | 8,880,184 | | | | 39,371 | | | | — | | | | 8,919,555 | | Employee benefits provision | | | | | 68,290,356 | | | | 4,451,358 | | | | (1,100,733 | ) | | | 71,640,981 | | Advance payments from clients | | | | | 305,000 | | | | (116,717 | ) | | | — | | | | 188,283 | | Accrued liabilities | | | | | 2,101,011 | | | | (419,649 | ) | | | — | | | | 1,681,362 | | Reserve due to depreciation of inventories | | | | | 189,751 | | | | (189,751 | ) | | | — | | | | — | | Non-recoverable accounts receivable | | | | | 709,328 | | | | (606,893 | ) | | | — | | | | 102,435 | | Derivative financial instruments | | | | | 136,260 | | | | (94,525 | ) | | | — | | | | 41,735 | | Wells, pipelines, properties and equipment | | | | | 8,071,570 | | | | (2,919,947 | ) | | | — | | | | 5,151,623 | | Tax loss carry-forwards(1) | | | | | 38,427,643 | | | | (25,999,985 | ) | | | — | | | | 12,427,658 | | | | | | | | | | | | | | | | | | | | | Total deferred income tax asset | | | | | 127,111,103 | | | | (25,856,738 | ) | | | (1,100,733 | ) | | | 100,153,632 | | Deferred income tax liability: | | | | | | | | | | | | | | | | | | | Wells, pipelines, properties, plant and equipment | | | | | (1,614,704 | ) | | | 512,872 | | | | — | | | | (1,101,832 | ) | Other | | | | | (2,062,031 | ) | | | (248,251 | ) | | | — | | | | (2,310,282 | ) | | | | | | | | | | | | | | | | | | | | Total deferred income tax liability | | | | | (3,676,735 | ) | | | 264,621 | | | | — | | | | (3,412,114 | ) | | | | | | | | | | | | | | | | | | | | Net long-term deferred income tax asset | | Ps. | | | 123,434,368 | | | | (25,592,117 | ) | | | (1,100,733 | ) | | | 96,741,518 | | | | | | | | | | | | | | | | | | | | |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) | | | | 2015 | | | Recognized in profit and loss | | | Recognized in OCI and equity (3) | | | 2016 | | | | | | | | | | | | | | 2018 | | | Recognized in profit and loss | | | Recognized in OCI | | | 2019 | | Deferred income tax asset: | | | | | | | | | | | | | | | | | Provisions | | Ps. | 25,414,822 | | | Ps. | (19,508,241 | ) | | Ps. | — | | | Ps. | 5,906,581 | | | Ps. | 8,836,693 | | | Ps. | 43,491 | | | Ps. | — | | | Ps. | 8,880,184 | | Employee benefits provision | | | 247,834,882 | | | (119,837,137 | ) | | (2,024,413 | ) | | 125,973,332 | | | | 40,314,749 | | | | 17,362,550 | | | | 10,613,057 | | | | 68,290,356 | | Advance payments from clients | | | 1,015,357 | | | 30,653 | | | | — | | | 1,046,010 | | | | 35,807 | | | | 269,193 | | | | — | | | | 305,000 | | Accrued liabilities | | | 1,514 | | | 2,268,047 | | | | — | | | 2,269,561 | | | | 611,652 | | | | 1,489,359 | | | | — | | | | 2,101,011 | | Reserve due to depreciation of inventories | | | | 982,228 | | | | (792,477 | ) | | | — | | | | 189,751 | | Non-recoverable accounts receivable | | | 104,346 | | | 673,833 | | | | — | | | 778,179 | | | | 763,924 | | | | (54,596 | ) | | | — | | | | 709,328 | | Derivative financial instruments | | | 22,506 | | | 201,012 | | | | — | | | 223,518 | | | | 29,674 | | | | 106,586 | | | | — | | | | 136,260 | | Wells, pipelines, properties and equipment | | | 446,970,333 | | | 11,303,564 | | | | — | | | 458,273,897 | | | | 11,862,776 | | | | (3,791,206 | ) | | | — | | | | 8,071,570 | | Tax loss carryforwards(1) | | | 14,894,231 | | | 28,433,506 | | | | — | | | 43,327,737 | | | Tax loss carry-forwards(1) | | | | 20,659,110 | | | | 17,768,533 | | | | — | | | | 38,427,643 | | | | | | | | | | | | | | | | | | | | | | | | | | | Total deferred income tax asset | | | 736,257,991 | | | (96,434,763 | ) | | (2,024,413 | ) | | 637,798,815 | | | | 84,096,613 | | | | 32,401,433 | | | | 10,613,057 | | | | 127,111,103 | | Valuation reserve(2) | | | (681,357,607 | ) | | 116,231,910 | | | | — | | | (565,125,697 | ) | | | | | | | | | | | | | | | | Net deferred income tax asset | | | 54,900,384 | | | 19,797,147 | | | (2,024,413 | ) | | 72,673,118 | | | | | | | | | | | | | | | | | Deferred income tax liability: | | | | | | | | | | | | | | | | | Wells, pipelines, properties, plant and equipment | | | (1,909,529 | ) | | (726,999 | ) | | (995,766 | ) | | (3,632,294 | ) | | | (2,630,597 | ) | | | 1,015,893 | | | | — | | | | (1,614,704 | ) | Other | | | (274,305 | ) | | (227,937 | ) | | | — | | | (502,242 | ) | | | (1,881,715 | ) | | | (180,316 | ) | | | — | | | | (2,062,031 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | Total deferred income tax liability | | | (2,183,834 | ) | | (954,936 | ) | | (995,766 | ) | | (4,134,536 | ) | | | (4,512,312 | ) | | | 835,577 | | | | — | | | | (3,676,735 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | Net long-term deferred income tax liability | | Ps. | 52,716,550 | | | Ps. | 18,842,211 | | | Ps. | (3,020,179 | ) | | Ps. | 68,538,582 | | | Net long-term deferred income tax asset | | | Ps. | 79,584,301 | | | Ps. | 33,237,010 | | | Ps. | 10,613,057 | | | Ps. | 123,434,368 | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Tax loss carryforwards expire in 2027.2030. |
(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. |
(3) | Includes effects from business combination in equity of Ps. (995,766). |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Expense attributable to the profit (loss) from continuing operations before income taxes was different from that which would result from applying the 30% rate to profit, as a result of the items listed below: | | | | | | | | | | | | | | | For the years ended December 31, | | | | 2017 | | | 2016 | | | 2015 | | Expected income tax expense | | Ps. | (20,055,588 | ) | | Ps. | (14,901,324 | ) | | Ps. | (3,089,241 | ) | Increase (decrease) resulting from: | | | | | | | | | | | | | Tax effect ofinflation-net | | | 14,302,118 | | | | 8,098,213 | | | | (1,618,327 | ) | Difference between accounting and tax depreciation | | | (3,713,920 | ) | | | (1,765,183 | ) | | | (107,231 | ) | Non-deductible expenses | | | 1,954,659 | | | | 1,558,120 | | | | (1,921,515 | ) | Others-net | | | (1,725,579 | ) | | | (5,630,195 | ) | | | (38,850,953 | ) | | | | | | | | | | | | | | Income tax expense | | Ps. | (5,787,152 | ) | | Ps. | (12,640,369 | ) | | Ps. | (45,587,267 | ) | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | For the years ended December 31, | | | | 2020 | | | 2019 | | | 2018 | | Expected income tax expense | | Ps. | 28,835,256 | | | Ps. | 3,707,023 | | | Ps. | (41,316,168 | ) | Increase (decrease) resulting from: | | | | | | | | | | | | | Tax effect of inflation-net | | | 5,694,637 | | | | 6,487,844 | | | | 11,742,346 | | Fiscal updating of pipelines, properties and equipment | | | (161,883 | ) | | | (5,290,734 | ) | | | (3,359,548 | ) |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) | | | | | | | | | | | | | Unrecognized Deferred tax asset(1) | | | — | | | | — | | | | 21,885,731 | | Cancellation of tax credits | | | — | | | | (24,189,922 | ) | | | — | | Retirement benefits | | | (8,206,693 | ) | | | (10,698,848 | ) | | | — | | Non-deductible expenses | | | 2,405,635 | | | | 4,826,745 | | | | 1,781,012 | | Others-net | | | 2,395,987 | | | | (3,831,120 | ) | | | 911,255 | | | | | | | | | | | | | | | Income tax expense (benefit), net | | Ps. | 30,962,939 | | | Ps. | (28,989,012 | ) | | Ps. | (8,355,372 | ) | | | | | | | | | | | | | |
(1) | Due to the fact that the circumstances to evaluate the recovery of the tax benefit from pending tax losses to be amortized in Pemex Logistics improved in 2019, a deferred asset was recognized. |
As of December 31, 20172020 and 2016,2019, the net accumulated effect of actuarial gains and losses on deferred tax was Ps. 17,688,03218,246,952 and Ps. 16,887,748,19,347,685, respectively. In addition, as of December 31, 20172020 and 2016,2019, the deferred tax effect of actuarial gains and losses from Petróleos Mexicanos and PMI CIM areis presented in comprehensive (loss) income in the amounts of Ps. (800,284)(1,100,733) and Ps. (2,024,413),Ps.10,613,057, respectively. As of December 31, 2015, the deferred tax effect of PMI CIM’s performance was Ps. (124,285). NOTE 21. EQUITY (DEFICIT), NET
a.A. | Certificates of Contribution “A” |
The capitalization agreement between Petróleos Mexicanos and the Mexican Government states that the Certificates of Contribution “A” constitute permanent capital. On January 19, 2015,August 5, 2016, the Mexican Government made an equity contribution ofissued Ps. 10,000,000 to Petróleos Mexicanos184,230,586 in accordance with the Ley Federal del Presupuesto y Responsabilidad Hacendaria (Federal Law of Budget and Fiscal Accountability). On December 24, 2015, the Mexican Government, through the SHCP, issuedexchange for a Ps. 50,000,000 non-negotiable promissory note in favor of Ps. 50,000,000 duePetróleos Mexicanos on December 31, 205024, 2015, for the assumption by the Mexican Government of the payment obligations related to pensions and retirement plans of Petróleos Mexicanos and its Subsidiary Entities (see Note 14).
On April 21, 2016, the Mexican Government made an equity contribution to Petróleos Mexicanos in the amount of Ps. 26,500,000 following the guidelines established in the Federal Budget and Fiscal Responsibility. This contribution was recognized as an increase in Certificates of Contribution “A.”
On August 3, 2016, the Mexican Government issued Ps. 184,230,586 in exchange for the Ps. 50,000,000non-negotiable promissory note issued to Petróleos Mexicanos on December 24, 2015, which was recognized as a Ps. 135,439,612 increase in equity. The Ps. 135,439,612 increase in equity was the result of the Ps. 184,230,586 value of the promissory notes as of June 29, 2016, minus the Ps. 50,000,000 promissory note received by
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
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 Petróleos Mexicanos received the promissory notes (see Note 14)15-A). On September 11, 2019, Petróleos Mexicanos received Ps. 122,131,000 in Certificates of Contribution “A” from the Mexican Government to help improve PEMEX’s financial position. During 2020, Petróleos Mexicanos received Ps. 46,256,000 in Certificates of Contribution “A” from the Mexican Government to help improve PEMEX’s financial position. PEMEX’s permanent equity isCertificates of Contribution “A” are as follows: | | | | | | | Amount | | Certificates of Contribution “A” as of December 31, 20152018 | | Ps. | 194,604,835356,544,447 | | Increase in Certificates of Contribution “A” during 20162019 | | | 161,939,612122,131,000 | | | | | | | Certificates of Contribution “A” as of December 31, 20162019 | | Ps. | 356,544,447478,675,447 | | Increase in Certificates of Contribution “A” during 20172020 | | | — | | | | | 46,256,000 | | Certificates of Contribution “A” as of December 31, 20172020 | | Ps. | 356,544,447 | | | | | 524,931,447 | |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) b.B. | Mexican Government contributions |
As of December 31, 2017During 2020 and 20162019 there were no Mexican Government contributions.contributions apart from Certificates of Contribution “A”.
Under Mexican law, each of the Subsidiary Companies is required to allocate a certain percentage of its net income to a legal reserve fund until the fund reaches an amount equal to a certain percentage of each Subsidiary Company’s capital stock. As of December 31, 2017During 2020 and 2016,2019, there were no changes to the legal reserve.
d.D. | Accumulated other comprehensive income (loss) |
As a result of the discount rate analysis related to employee benefits liability, for the periods ended December 31, 2020 and 2019 PEMEX recognized net actuarial losses in other comprehensive income (loss) net of deferred income tax for Ps. (19,178,587) and Ps (309,334,500), respectively, related to retirement and post-employment benefits as a result of a decrease in the discount rates. The variation related to retirement and post-employment benefits was the result of a decrease in the discount and return on plan assets rates from 7.53% as of December 31, 2019 to 7.08% as of December 31, 2020. E. | Accumulated deficit from prior years |
PEMEX has recorded negative earnings in the past several years. However, theLey de Concursos Mercantiles (“Commercial Bankruptcy Law of Mexico”) is not applicable to Petróleos Mexicanos and the Subsidiary Entities. Furthermore, the financing agreements to which PEMEX is a party do not provide for financial covenants that would be breached or events of default that would be triggered as a consequence of negative equity (see Note2-b). The Mexican Government has focused its recent efforts on consolidating PEMEX’s institutional strategy, including the approval of amendments to the Mexican Constitution published as the Energy Reform Decree on December 20, 2013, which permit it greater autonomy in decision-making and enhanced operational viability (see Note 1).equity. e.F. | Uncertainty related to going concern |
The consolidated financial statements have been prepared on a going concern basis. Facts and conditions PEMEX also has substantial debt, incurred mainly to finance the capital expenditures needed to carry out its capital investment projects and to fund its operating expenses. Due to its heavy fiscal burden resulting from the payment of hydrocarbon extraction duties and other taxes, the cash flows derived from PEMEX’s operations in recent years have not been sufficient to fund its operations and capital expenditure programs. As a result, PEMEX’s indebtedness has increased significantly, and its working capital has deteriorated. In recent years, PEMEX’s level of indebtedness relative to its oil reserves has increased substantially. Additionally, the significant crude oil price drop, which started in March 2020, PEMEX’s continued heavy tax burden, increased competition from the private sector and the negative economic impact as a result of the current global health crisis caused by the Covid-19 pandemic have negatively impacted PEMEX´s financial performance (see Note 28). PEMEX’s 2020 revenues decreased both from the decline in crude oil prices and from the decrease in the demand of petroleum products. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) In March and April 2020, certain ratings agencies downgraded PEMEX’s credit rating. Most recent credit downgrades have been mainly driven by the effects of Covid-19 and the associated reduced economic activity, as well the low crude oil prices and the downgrade of the Mexican Government’s sovereign debt rating. These downgrades could have an impact on PEMEX´s access to the financial markets, the cost and terms of PEMEX’s new debt and contract renegotiations that PEMEX may carry out during 2021 and 2022. (see Note 16). During 2020, 2019 and 2018, PEMEX recognized a net loss of Ps. 509,052,065, Ps. 282,112,024 and Ps. 180,419,837, respectively. In addition, as of December 31, 2020 and 2019, PEMEX had a negative equity of Ps. 2,404,727,030 and Ps. 1,931,409,302, respectively, mainly due to continuous net losses, and a negative working capital of Ps. 442,550,332 and Ps. 209,168,587, as of December 31, 2020 and 2019, respectively. PEMEX has budget autonomy, and, in public finance terms, is subject to the cash flows financial balance goals approved in the Decreto de Presupuesto de Egresos de la Federación (“Federal Expenditure Budget Decree”). This represents the difference between its gross revenues (inflows) and its total budgeted expenditures (outflows) including the financial cost of its debt, which is proposed by the SHCP and approved by the Cámara de Diputados (“Chamber of Deputies”). The Federal Budget for 2021 authorized PEMEX to have a budget deficit of Ps. 92,687,000. This shortfall does not consider payments of principal of PEMEX´s debt due in 2021. PEMEX has short-term debt principal maturities (including interest payable) of Ps. 391,097,267, as of December 31, 2020. The combined effect of the above-mentioned events indicates the existence of significant doubt about PEMEX’s ability to continue as a going concern. Actions- PEMEX and the Mexican Government are carrying out the following actions, among others, to preserve liquidity: PEMEX was granted a tax credit applicable to the Profit-sharing Duty of up to Ps. 73,280,000 pursuant to the presidential decree of the Mexican Government of February 19, 2021 (see note 28). As of March 31, 2020, PEMEX has applied Ps. 18,320,000 of this tax credit. It is expected that PEMEX will receive scheduled equity contributions from the Mexican Government during 2021, through the Ministry of Energy for Ps. 96,720,000, of which as of May 7, 2021 Ps. 64,124,000, have been received. The resources from these contributions will be used for short-term maturities of long-term debt will not affect PEMEX’s compliance with its financial balance goal established for 2021 (see Note 28). It is expected that PEMEX will be subject to a lower tax burden in 2021, since the share-profit duty decreased to 54% in 2021 from 58% in 2020. PEMEX has Ps. 190,604,990 (U.S. $7,700,000 and Ps. 37,000,000) in available credit lines in order to provide liquidity, if necessary. As of December 31, 2020, PEMEX had used Ps. 71,815,320 (U.S. $3,600,000 of its lines of credit denominated in U.S. dollars) and had a total availability of Ps. 74,902,530 (U.S. $1,900,000 and Ps. 37,000,000) remaining under its credit lines. Revenues from alternative financing mechanisms that do not constitute public debt. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) In addition, PEMEX may raise funds from the markets in accordance with prevailing conditions, to refinance its debt. Further, PEMEX has the capacity to refinance its short-term debt maturities through direct loans and revolving credit facilities and loans guaranteed by export credit agencies. PEMEX also established in conjunction with development and commercial banks Cadenas Productivas PEMEX Plus (Productive Chains Plus Program) to aid for the payment to suppliers and contractors. The Ley de Ingresos de la Federación para el Ejercicio Fiscal de 2021 (“Revenue Law for 2021”) also authorized PEMEX a net additional indebtedness up to Ps. 42,100,000 (Ps. 22,000,000 and U.S. 1,000,000), which is considered as public debt by the Mexican Government and may be used to partially cover its negative financial balance. In accordance with the Revenue Law for 2021, crude oil revenues between 42.12 and up to 44.12 U.S. dollars per barrel will be directed to improve PEMEX´s financial balance goal for 2021 and revenues above 44.12 U.S. dollars per barrel may be used for operating expenses and capital expenditures. PEMEX reviews and aligns its capital expenditures portfolio in accordance with updated economic assumptions on a periodic basis and giving priority to those projects which increase production in an efficient manner and at the lowest cost. Further, on March 22, 2021, the Board of Directors of Petróleos Mexicanos approved the business plan of Petróleos Mexicanos and its Subsidiary Companies for 2021-2025 (the “2021-2025 Business Plan”). For further information about the 2021-2025 Business Plan, see Note 28-G. Prices of crude oil, natural gas and petroleum products have begun to recover in the first months of 2021, and economic activity has begun to increase. Petróleos Mexicanos and its Subsidiary Entities are not subject to the Commercial Bankruptcy Law of Mexico and none of PEMEX’s existing financing agreements include any financial covenants that could lead to the demand for immediate payment of its debt due to having negative equity or non-compliance with financial ratios. PEMEX prepared its consolidated financial statements as of December 31, 2020 and 2019 on a going concern basis. There are certain conditions that have generated important uncertainty and significant doubts concerning the entity’s ability to continue operating, including recurring net losses, negative working capital and negative equity. These financial statements do not contain any adjustments that would be required if they were not prepared on a going concern basis. G. | Non-controlling interest |
Effective July 1, 2005, PEMEX entered into an option agreement with BNP Private Bank & Trust Cayman Limited; the option was not exercised 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
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
consolidated statements of changes in equity (deficit), net as“non-controlling interest,” and as net income and comprehensive income for the year, attributable tonon-controlling interest, in the consolidated statements of comprehensive income, due to the fact that PEMEX 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.”
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) Until April 2020, the non-controlling interest in HJ BARRERAS was also presented. In May 2020, PMI HBV, a majority shareholder of HJ BARRERAS, transferred to Cruise Yacht Yard Co, Ltd, a company belonging to the acquirer of the vessel under construction by HJ BARRERAS, the corporate and economic rights derived from its 51.0 % of shareholding in HJ BARRERAS, through the conclusion of various contracts (i) of usufruct of shares, and (ii) shares purchase and share sale options, in exchange for a net amount of € 5,100 (Ps. 134,716). To ensure that PMI HBV did not pay the penalty arising from a guarantee granted by HJ BARRERAS shareholders, Cruise Yacht Yard Co, Ltd, assumed payment of the latter and its value was included in the total price of the assets (advance amounts) amounting to € 8,400. PMI HBV’s payment of the guarantee gave a right of recovery that becomes a participatory loan for HJ BARRERAS. As of the payment, the expiration period of the options for the purchase and sale of the shares between the two parties may take place on January 1, 2022, or earlier when the construction of that vessel is completed. Therefore, as of May 2020, PMI HBV. does not maintain control over HJ BARRERAS and Petróleos Mexicanos does not consolidate HJ BARRERAS’ financial information in its financial statements. As of April 30, 2020, HJ BARRERAS’ total assets amounted to Ps.1,558,000; total liabilities amounted to Ps. 2,945,300, respectively; and negative capital (of which 49.0% corresponded to non-controlling interest) amounted to Ps. 1,387,300. The negative capital amount as of April 30, 2020 included Ps. 224,500 of losses generated by HJ BARRERAS during the period from January 1 to April 30, 2020 (of which 49.0% corresponded to the non-controlling interest). This operation resulted in a profit in the consolidated income statement of Ps. 833,038. On July 31, 2020, Cruise Yacht Yard Co, Ltd exercised its purchase and sale option. As of December 31, 20172020 and 2016,2019, non-controlling interest represented gainslosses of Ps. 965,107369,692 and Ps. 976,705,141,793, respectively, in PEMEX’s equity (deficit). NOTE 22. OTHER REVENUES ANDEXPENSES-NET
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) NOTE 23. | COST AND EXPENSES BY NATURE |
Cost and expenses by nature for each of the years ended December 31, 2020, 2019 and 2018, was as follows: | | | | | | | | | | | | | | | 2020 | | | 2019 | | | 2018 | | Purchases | | Ps. | 386,040,047 | | | | Ps. 600,657,759 | | | | Ps. 756,867,203 | | Depreciation of wells, pipelines, properties, plant and equipment, depreciation of rights of use and amortization of intangible assets | | | 137,398,830 | | | | 145,159,657 | | | | 153,382,040 | | Net periodic cost of employee benefits | | | 128,808,540 | | | | 116,176,949 | | | | 114,621,614 | | Personnel services | | | 103,044,657 | | | | 101,252,318 | | | | 104,284,007 | | Conservation and maintenance | | | 69,939,632 | | | | 65,640,388 | | | | 48,562,536 | | Exploration and Extraction Hydrocarbons Duty and taxes | | | 43,593,642 | | | | 67,106,181 | | | | 88,145,519 | | Other operation costs and expenses | | | 25,031,177 | | | | 12,711,674 | | | | 16,672,534 | | Unsuccessful wells | | | 22,269,583 | | | | 79,595,185 | | | | 15,443,086 | | Raw materials and spare parts | | | 18,381,313 | | | | 22,729,422 | | | | 16,850,075 | | Auxiliary services with third-parties | | | 15,901,982 | | | | 19,492,638 | | | | 23,675,019 | | Other operation taxes and duties | | | 12,180,579 | | | | 12,764,473 | | | | 12,248,474 | | Exploration expenses | | | 6,732,689 | | | | 10,942,558 | | | | 13,048,078 | | Insurance | | | 6,068,497 | | | | 5,821,020 | | | | 5,647,101 | | Integrated Contracts | | | 5,275,946 | | | | 9,947,983 | | | | 8,015,606 | | Losses from fuels subtraction (1) | | | 4,279,542 | | | | 4,644,846 | | | | 39,439,107 | | Freight | | | 3,426,079 | | | | 3,197,421 | | | | 3,525,843 | | Inventory variations | | | 2,572,641 | | | | 1,063,678 | | | | (62,237,591 | ) | | | | | | | | | | | | | | Total cost of sales and general expenses | | Ps. | 990,945,376 | | | Ps. | 1,275,588,157 | | | Ps. | 1,358,190,251 | | | | | | | | | | | | | | |
(1) | In accordance with Resolution RES / 179/2017, issued by the CRE, losses from fuels subtraction are losses outside the scope of the contemplated operating costs as a result of various illicit actions, including the theft of and illicit market in fuels. |
Pemex Logistics is responsible for distributing hydrocarbons through the pipelines and for the received products, preserving their quality and delivering them from the point of reception to the user at the point of destination. Pemex Logistics determines the volume of missing hydrocarbons through monthly calculations. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) NOTE 24. | OTHER REVENUES AND OTHER EXPENSES |
Other revenues andexpenses-net for each of the years ended December 31, 2017, 20162020, 2019 and 2015,2018, was as follows: | | | | | | | | | | | | | | | 2017 | | | 2016 | | | 2015 | | Revenues: | | | | | | | | | | | | | Claims recovery | | Ps. | 16,386,250 | | | Ps. | 3,695,217 | | | Ps. | 1,975,281 | | Fiscal support (Profit-sharing duty) (see Note 20a.) | | | — | | | | 28,439,379 | | | | — | | Other income for services | | | 4,720,546 | | | | 4,266,854 | | | | 3,953,888 | | Price of sale share (see Note11-iii) | | | 3,139,103 | | | | 22,684,736 | | | | — | | Other | | | 4,277,207 | | | | 14,228,801 | | | | 6,992,954 | | Revenues from reinsurance premiums | | | 1,986,568 | | | | 3,694,026 | | | | 1,497,779 | | Franchise fees | | | 917,934 | | | | 1,059,333 | | | | 1,148,528 | | Bidding terms, sanctions, penalties and other | | | 825,956 | | | | 3,223,437 | | | | 1,262,458 | | Gain on sale of fixed assets | | | — | | | | 2,687,652 | | | | — | | Assets value transferred to CENAGAS | | | — | | | | 7,450,931 | | | | — | | Negative IEPS | | | — | | | | — | | | | 2,519,126 | | | | | | | | | | | | | | | Total other revenues | | | 32,253,564 | | | | 91,430,366 | | | | 19,350,014 | | | | | | | | | | | | | | | Expenses: | | | | | | | | | | | | | Loss in the Assets value transferred to CENAGAS | | | — | | | | (35,333,411 | ) | | | — | | Disposal of assets | | | (8,447,031 | ) | | | (2,140,943 | ) | | | (3,364,063 | ) | Transportation and distribution of natural gas | | | (6,652,878 | ) | | | (8,830,967 | ) | | | (369,317 | ) | Other | | | (7,927,150 | ) | | | (3,581,036 | ) | | | (726,589 | ) | Claims | | | (3,640,036 | ) | | | (4,757,116 | ) | | | (12,527,548 | ) | Loss in the sale of associates | | | (412,393 | ) | | | (7,473,698 | ) | | | — | | Impairment of goodwill | | | — | | | | (4,007,018 | ) | | | — | | Services provided | | | — | | | | (2,656,571 | ) | | | (3,237,984 | ) | | | | | | | | | | | | | | Total other expenses | | | (27,079,488 | ) | | | (68,780,760 | ) | | | (20,225,501 | ) | | | | | | | | | | | | | | Other revenues andexpenses-net | | Ps. | 5,174,076 | | | Ps. | 22,649,606 | | | Ps. | (875,487 | ) | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | 2020 | | | 2019 | | | 2018 | | Other | | Ps. | 3,551,636 | | | Ps. | 3,418,551 | | | Ps. | 7,525,714 | | Revenues from reinsurance premiums | | | 2,534,466 | | | | 4,869,266 | | | | 3,615,907 | | Other income for services | | | 2,420,939 | | | | 1,994,572 | | | | 3,786,253 | | Claims recovery | | | 1,515,295 | | | | 2,687,258 | | | | 3,979,698 | | Bidding terms, sanctions, penalties and other | | | 1,170,632 | | | | 1,503,437 | | | | 630,365 | | Franchise fees | | | 494,785 | | | | 389,730 | | | | 1,125,339 | | Gain on sale of fixed assets | | | 50,215 | | | | 77,633 | | | | 1,850,052 | | Participation rights(1) | | | 30,878 | | | | — | | | | 14,165,042 | | Sale of fixed assets by bidding(2) | | | — | | | | — | | | | 3,301,653 | | Price of sale share | | | — | | | | — | | | | 1,262,987 | | Cash distributions | | | — | | | | — | | | | 274,621 | | | | | | | | | | | | | | | Total other revenues | | Ps. | 11,768,846 | | | Ps. | 14,940,447 | | | Ps. | 41,517,631 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | 2020 | | | 2019 | | | 2018 | | Other | | Ps. | �� (436,723 | ) | | Ps. | (4,602,210 | ) | | Ps. | (5,348,666 | ) | Claims | | | (376,697 | ) | | | (173,414 | ) | | | (474,299 | ) | Disposal of assets | | | (351,010 | ) | | | (2,413,776 | ) | | | (12,600,191 | ) | Transportation and distribution of natural gas | | | (30,284 | ) | | | (22,291 | ) | | | (41,964 | ) | | | | | | | | | | | | | | Total other expenses | | Ps. | (1,194,714 | ) | | Ps. | (7,211,691 | ) | | Ps. | (18,465,120 | ) | | | | | | | | | | | | | |
(1) | Relates to rights participate of EECs, for which the operators of the EECs guarantee their participation in such contracts. |
(2) | Relates mainly to exploration and production fixed assets. |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) NOTE 25. | NOTE 23. RELATED PARTIES
|
The balances and transactions with related parties are mainly due to: (i) the sale and purchase of products, (ii) the billing of administrative services, and (iii) financial loans between related parties. Directors and employees of Petróleos Mexicanos and the Subsidiary Entities are subject to regulations related to conflict of interest such as the Petróleos Mexicanos Law,Ley Federal de Responsabilidades Administrativas de los Servidores Públicos (Federal Law of Administrative Responsibilities of Public Officials) and thePolíticas y Lineamientos Anticorrupción para Petróleos Mexicanos, sus Empresas Productivas Subsidiarias y, en su caso, Empresas Filiales (Anticorruption Policies and Guidelines for Petróleos Mexicanos, its Subsidiary Productive Companies and, where applicable, Subsidiary Companies). Under these provisions, PEMEX’s directors and employees are obligated to “recuse themselves from intervening in any way in the attention to, processing or resolution of matters in which they might have personal, family or business interest, including those where some benefit can result for themselves, their spouse, blood or affinity relatives up to the fourth degree, or 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. Main operations identified by PEMEX with this kind of directors and officers are as follows: PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
SecretaryMr. Manuel Bartlett Díaz, Chief Executive Officer of Energy, Mr. Pedro Joaquín Coldwell, ChairmanCFE, was appointed member of the Board of Directors of Petróleos Mexicanos sincein December 2012, as well as certain members of his family, have held ownership interests since prior to Mr. Pedro Joaquín Coldwell’s appointment to the Board of Directors and through October of 2017 in companies that have entered into2018. CFE has executed several purchase agreements with Pemex-Refining, which are now obligations of Pemex Industrial Transformation, forTransformation. During 2020, CFE acquired the sale and purchase of gasoline and otherfollowing products by certain retail service stations and a wholesale distributor, as well as the performance of other related activities, as provided below:from Pemex Industrial Transformation:
| | | | | | | CompanyProduct
| | Name
| | Ownership
share2020 | | Servicio Cozumel, S. A. de C. V. (which operates a retail service station)Heavy fuel oil
| | Mr. Pedro Joaquín Coldwell(1)Ps. | 6,258,996 | | Industrial diesel | | | 603,426,200 | % | Fuel oil | | | 456,960 | | Transport of Natural Gas | | | 364,512 | | Other | | | 303,278 | | Natural Gas | | | 263,993 | | Freights | | | 189,983 | | | | Mr. Pedro Oscar Joaquín Delbouis
| (son of Mr. Joaquín Coldwell)
| | Total | | Ps. | 2011,263,922 | % | | | Mr. Nassim Joaquín Delbouis
| (son of Mr. Joaquín Coldwell)
| | | 20 | % | Planta de Combustible Cozumel, S. A. de C. V. (which operates as a wholesale distributor)
| | Fideicomiso Testamentario(2) | | | 57 | % | | | Mr. Pedro Joaquín Coldwell(1) | | | 40 | % | Gasolinera y Servicios Juárez, S. A. de C. V. (which operates a retail service station)
| | Mr. Pedro Joaquín Coldwell(1) | | | 40 | % | | | Fideicomiso Testamentario(3) | | | 40 | % | | | Mr. Ignacio Nassim Ruiz Joaquín
(nephew of Mr. Joaquín Coldwell)
| | | 20 | % | Combustibles Caleta, S. A. de C. V. (which operates a retail service station)
| | Mr. Pedro Joaquín Coldwell(1) | | | 20 | % | | | Mr. Pedro Oscar Joaquín Delbouis | | | 20 | % | | | Mr. Nassim Joaquín Delbouis | | | 20 | % | | | Fideicomiso Testamentario(4) | | | 20 | % | | | Mr. Ignacio Nassim Ruiz Joaquín | | | 20 | % | Combustibles San Miguel, S. A. de C. V. (which operates a retail service station)
| | Mr. Pedro Joaquín Coldwell(1) | | | 25 | % | | | Mr. Pedro Oscar Joaquín Delbouis | | | 25 | % | | | Mr. Nassim Joaquín Delbouis | | | 25 | % | | | Mr. Ignacio Nassim Ruiz Joaquín | | | 25 | % |
(1) | In November, 2017, Mr. Pedro Joaquín Coldwell transmitted all of his shares in these companies to a management and investment trust held at Banco Mercantil del Norte, S.A., Institución de Banca Múltiple, Grupo Financiero Banorte. |
(2) | 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. |
(3) | 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. |
(4) | 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. |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBERAs of December 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
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 of2020, CFE owed Pemex Industrial Transformation’s retail service stationsTransformation a total amount of Ps. 1,509,057. Invoices are payable between 30 and wholesale distributors.60 days.
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) a.A. | Compensation of Directors and Officers |
For the years ended December 31, 2017, 20162020, 2019 and 2015, the aggregate compensation2018, short-term benefits of executive officers of Petróleos Mexicanos and the Subsidiary Entities paid or accrued in that year for services in all capacities was approximately Ps. 50,749,30,988, Ps. 49,16530,988 and Ps. 116,930,51,188, respectively. Retirement, post-employment and formerlong-term employee benefits are granted as described in Note 17. follows: | | | | | | | | | | | | | | | As of December 31, | | | | 2020 | | | 2019 | | | 2018 | | Retirement | | Ps. | 7,233 | | | | 15,549 | | | | 12,403 | | Post-employment | | | 354 | | | | 349 | | | | 782 | | Long-term | | | 3,702 | | | | 2,698 | | | | 3,312 | | | | | | | | | | | | | | | | | Ps. | 11,289 | | | | 18,596 | | | | 16,497 | | | | | | | | | | | | | | |
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 2017, 20162020, 2019 and 20152018, to the professional members of the previous Board of Directors of Petróleos Mexicanos and boards of directors of the existing Subsidiary Entities was approximately Ps. 7,525,6,008, Ps. 8,339,5,985 and Ps. 17,899,8,878, respectively. b.B. | Salary AdvancesCompensation and benefits
|
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 Empresas Productivas Subsidiarias (Employment Regulation of White Collar Employees of Petróleos Mexicanos and Subsidiary Entities), respectively. The salary advances, which arenon-interest bearing, are offered to each eligible employee in an amount up to a maximum of four months’ salary and are repaid through salary deductions in equal installments over a period of either one or two years, as elected by the employee. Most employees take advantage of this benefit. The amount of salary advances outstanding to executive officers at December 31, 20172020 was Ps. 3,466 and at893. As of December 31, 2016 was Ps. 2,415.2019, there were no outstanding amounts of salary advances to executive officers. The amount of salary advances outstanding to executive officers at March 31, 2018April 30, 2021 was Ps. 2,363. NOTE 24. COMMITMENTS689.
A. | PMI CIM has entered into several contracts for the sale of crude oil on the international market to foreign companies. The terms and conditions of these contracts are specific to each client, and their durations may be indefinite (evergreen contracts) or they may contain a minimum obligatory period (long-term contracts). |
b.B. | PEMEX has entered into a nitrogen supply contract for the pressure maintenance program at the Cantarell complex. During 2007, an additional contract was entered into with the purpose of supplying nitrogen to the |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| Ku-Maloob-Zap complex and extending the original contract until 2027. At December 31, 20162020 and 2015,2019, the value of the nitrogen to be supplied during the term of the contract was approximately Ps. 7,506,61932,260,379 and Ps. 8,646,726,35,718,401, respectively. In the event of the annulment of the contract and depending on the circumstances, PEMEX has the right or the obligation to acquire the vendor’s nitrogen plant under the terms of the contract. |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) Estimated future payments under this contract for upcoming fiscal years are as follows: | | | | | 2018 | | Ps. | 773,047 | | 2019 | | | 783,197 | | 2020 | | | 785,670 | | 2021 | | | 786,323 | | 2022 | | | 782,584 | | 2023 and thereafter | | | 3,595,798 | | | | | | | Total | | Ps. | 7,506,619 | | | | | | |
| | | | | 2021 | | Ps. | 4,774,522 | | 2022 | | | 4,863,254 | | 2023 | | | 5,008,700 | | 2024 | | | 5,042,333 | | 2025 | | | 5,039,959 | | 2026 and thereafter | | | 7,531,611 | | | | | | | Total | | Ps. | 32,260,379 | | | | | | |
c.C. | As of December 31, 2017,2020, PEMEX had entered into FPWCs by means of which the contractor manages and is responsible for financing performance of the work to be undertaken. |
As of December 31, 20172020 and 2016,2019, the estimated value of these contracts was as follows: | Maturity | | 2017 | | | 2016 | | | 2020 | | | 2019 | | Up to 1 year | | Ps. | 5,533,174 | | | Ps. | 7,366,247 | | | Ps. | 1,046,436 | | | Ps. | 1,251,543 | | 1 to 3 years | | | 1,891,557 | | | | 2,518,207 | | | | 1,339,040 | | | | 1,610,152 | | 4 to 5 years | | | 1,856,006 | | | | 2,470,878 | | | | 376,916 | | | | 426,886 | | More than 5 years | | | 3,123,173 | | | | 4,157,843 | | | | | | | | | | | | | | | | Total | | Ps. | 12,403,910 | | | Ps. | 16,513,175 | | | Ps. | 2,762,392 | | | Ps. | 3,288,581 | | | | | | | | | | | | | | |
d.D. | As of December 31, 20172020 and 2016, Pemex Exploration and Production, has in operation certain integrated exploration and production contracts (“Integrated E&P Contracts”) for the development of mature fields in the Altamira, Ébano, Nejo, Pánuco and San Andrés blocks in the Northern region of Mexico and Magallanes, Santuario and Carrizo blocks in the Southern region of Mexico, respectively. Each contract has a term of up to 25 years. Payments to the contractors pursuant to the Integrated E&P Contracts will be made on aper-barrel basis, plus recovery of certain costs, provided that the payments to the contractor may not exceed PEMEX’s cash flow from the particular block subject to each contract. During 2017, PEMEX made payments pursuant to the Integrated E&P Contracts in the Northern region of Ps. 6,594,486 and in the Southern region of Ps. 727,331. During 2016, PEMEX made payments pursuant to the Integrated E&P Contracts in the Northern region of Ps. 7,026,822 and in the Southern region of Ps. 524,475. As of December 31, 2017 there is no outstanding liability due to the fact that the available cash flow has an annual maturity and has not yet matured. Additionally, these contracts are in the process of being migrated to a new EEC. |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
e. | As of December 31, 2017 and 2016,2019, the estimated value of the contracts that PEMEX has entered into with several contractors for the development of various infrastructure and services works was as follows: |
| Maturity | | 2017 | | | 2016 | | | 2020 | | | 2019 | | Up to 1 year | | Ps. | 229,738,368 | | | Ps. | 347,606,848 | | | Ps. | 39,162,033 | | | Ps. | 104,584,602 | | 1 to 3 years | | | 196,335,411 | | | | 281,563,607 | | | | 274,421,535 | | | | 325,674,623 | | 4 to 5 years | | | 123,159,215 | | | | 69,541,826 | | | | 23,055,268 | | | | 43,984,437 | | More than 5 years | | | 149,672,236 | | | | 119,281,849 | | | | 37,518,571 | | | | 147,488,082 | | | | | | | | | | | | | | | Total | | Ps. | 698,905,230 | | | Ps. | 817,994,130 | | | Ps. | 374,157,407 | | | Ps. | 621,731,744 | | | | | | | | | | | | | | |
NOTE 25.
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) In the ordinary course of business, PEMEX is named in a number of lawsuits of various types. PEMEX evaluates the merit of each claim and assesses the likely outcome. PEMEX has not recorded provisions related to ongoing legal proceedings due to the fact that an unfavorable resolution is not expected in such proceedings, with the exception of the proceeding described in further detail in this Note. PEMEX is involved in various civil, tax, criminal, administrative, labor and commercial lawsuits and arbitration proceedings. The results of these proceedings are uncertain as of the date of these consolidated financial statements. As of December 31, 20172020, and 2016,December 31, 2019, PEMEX had accrued a reserve of Ps. 7,812,6898,321,816 and Ps. 15,119,692,8,075,031, respectively, for these contingent liabilities. As of December 31, 2017,2020, the current status of the principal lawsuits in which PEMEX is involved is as follows: On April 4, 2011, Pemex-Exploration and Production was summoned before the Séptima Sala Regional Metropolitana (“Seventh Regional Metropolitan Court”) of the Tribunal Federal de Justicia Fiscal y Administrativa (“Tax and Administrative Federal Court”) in connection with an administrative claim (No. 4957/1117071) filed by EMS Energy Services de México, S. de R.L. de C.V. and Energy Maintenance Services Group I. LLC requesting 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 the Sexta Sala Regional Metropolitana (“Sixth Regional Metropolitan Court”) of the Tax and Administrative Federal Court in Mexico City seeking damages totaling U.S. $193,713 related to the above-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. On May 3, 2017, the proceeding was closed for a judgment to be issued. As of the date of these financial statements, a resolution from the Second Section of the Superior Court of the Tax and Administrative Federal Court is still pending.
In June 2016, Pemex Exploration and Production was summoned before the Juzgado Octavo de Distrito en Materia Civil (“Eighth Civil District Court”) in Mexico City, in connection with a claim filed by Drake Mesa, S. de R.L. (file No.200/2016-II), seeking approximately U.S.$120,856 related to expenses and damages, in connection with a public work agreement executed between them. On November 9, 2017, a judgment was issued finding the Eighth Civil District Court lacked jurisdiction over this case. Both parties filed appeals against this resolution. | • | | On April 4, 2011, Pemex Exploration and Production was summoned before the Séptima Sala Regional Metropolitana (“Seventh Regional Metropolitan Court”) of the Tribunal Federal de Justicia Fiscal y Administrativa (“Tax and Administrative Federal Court”) in connection with an administrative claim (No. 4957/11-17-07-1) filed by EMS Energy Services de México, S. de R.L. de C.V. and Energy Maintenance Services Group I. LLC requesting that 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 the Sexta Sala Regional Metropolitana (“Sixth Regional Metropolitan Court”) of the Tax and Administrative Federal Court in Mexico City seeking damages totaling U.S. $193,713 related to the above-mentioned contract. Pemex Exploration and Production filed a response requesting the two administrative claims be joined in a single proceeding, which was granted. On April 30, 2019, a judgment was issued by the Second Section of the Superior Court in favor of Pemex Exploration and Production. On June 25, 2019, the plaintiffs filed an amparo (D.A. 397/2019) before the Tercer Tribunal Colegiado en Materia Administrativa del Primer Circuito (“Third Administrative Joint Court of the First Circuit”), which was granted. On March 12, 2020, Pemex Exploration and Production filed a motion to review against the resolution granting this amparo before the Third Administrative Joint Court of the First Circuit. On October 1, 2020, the Third Administrative Joint Court declared the resolution null and void, among others. Pemex Exploration and Production filed an amparo which was admitted. As of the date of these financial statements, a final resolution is still pending. On June 11, 2015, the Segunda Sala Regional del Noreste (“Second Regional Northeast Court”) notified Pemex-Refining of an administrative claim (file no.2383/15-06-02-4) filed by Severo
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
| Granados Mendoza, Luciano Machorro Olvera and Hilario Martínez Cerda, as President, Secretary and Treasurer of the Ejido Tepehuaje, seeking Ps. 2,094,232 in damages due to a hydrocarbon spill on their land. Pemex-Refining filed a response to this claim and the plaintiffs were given time to amend their claim. The defendant filed a motion against this resolution and responded to the amended claim on February 17, 2017. The trial is in the evidentiary stage. The appointment of an independent expert related to environmental issues is still pending. A final judgment is still pending.
|
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 Chief Executive Officer of Petróleos Mexicanos and the Chief Executive Officer of Pemex-Exploration and Production before the Segunda Sala RegionalHidalgo-México (“Hidalgo-Mexico Second Regional Court”) of the Tax Administrative Federal Court in Tlalnepantla, Estado de México. The plaintiff is seeking compensation for 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 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). On October 29, 2014, the proceeding was returned to the Second Regional Court to correct a procedural error. A new term to file pleas was approved. On September 7, 2017, a motion was filed questioning a signature’s authenticity. In December 2017, a documentary expert’s opinion was filed by the plaintiff and a new expert was designated by Pemex Exploration and Production. The acceptance of this designation is still pending. As of the date of these financial statements, a final resolution is still pending.
On December 12, 2017, Pemex Exploration and Production was summoned in connection with an arbitration claim (no. 23217/JPA) filed by SUBSEA 7 de México, S. de R. L. de C.V. (“SUBSEA 7”) seeking U.S.$153,000 $153,000 related to additional expenses in connection with a pipelines construction contract. Acontracts (No. 420832856 and 420833820). On January 5, 2018, Pemex Exploration and Production filed a response byto the arbitration request and its counterclaim. On September 14, 2018, the defendant is still pending asreceived the claim briefs including documentation and related evidence and the amount sought under this claim was increased to U.S. $310,484. On January 4, 2019, Pemex Exploration and Production filed a response to the claim. On February 14, 2019, SUBSEA 7 filed its reply. In June 2019, a hearing was held and on October 4, 2019 the parties filed their pleadings. The final award was issued on July 28, 2020, and notice was provided on July 30, 2020. Pemex Exploration and Production was ordered to pay U.S. $34,576 and Ps. 70,668. As of the date of these financial statements.statements, the execution of this resolution is still pending. | • | | On August 1, 2017, Pemex Exploration and Production was summoned in connection with an administrative claim (no.11590/17-17-06-2) filed by Proyectos y Cimentaciones Industriales, S.A. de C.V. before the Sixth Regional Metropolitan Court seeking Ps. 800,000 and U.S.$ 12.82 and to have the settlement certificate dated March 22, 2017 related to services agreement declared null and void. On September 25, 2017, Pemex Exploration and Production was summoned in connection with an administrative claim (no. 11590/17-17-06-2) filed by Proyectos y Cimentaciones Industriales, S.A. de C.V. before the Sixth Regional Metropolitan Court seeking Ps. 800,000 and U.S. $12.82 and to have the settlement certificate dated March 22, 2017 related to a services agreement declared null and void. On May 16, 2019, the Segunda Sección de la Sala Superior (“Second Section of the Superior Court”) issued a judgment in favor of Pemex Exploration and Production. On July 1, 2019, the Décimo Primer Tribunal Colegiado en Materia Administrativa (“Eleventh Administrative Joint Court”) admitted an amparo (no. 399/2019) filed by the plaintiff. On August 8, 2019, the defendant filed its pleadings. As of the date of these financial statements, a final resolution is still pending. |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) | • | | On February 6, 2019, the Sala Regional del Golfo Norte (“North Gulf Regional Court”) of the Tax and Administrative Federal Court summoned Pemex Drilling and Services (now Pemex Exploration and Production) in connection with a claim (752/17-18-01-7) filed by Micro Smart System de Mexico, S. de R.L. de C.V., challenging a settlement statement dated March 14, 2017, related to a works contract number 424049831 dated December 9, 2009, seeking the payment of: U.S. $240,448 for work performed and U.S. $284 for work estimates. On May 8, 2019, a response to this claim was admitted and evidence was filed by Pemex Exploration and Production. On July 1, 2019, the Second Section of the Superior Court was instructed to review the claim. On September 24, 2019, the plaintiff filed its pleadings. On February 13, 2020, the Second Section of the Superior Court declared that the plaintiff partially proved its claim and no payments shall be made by the defendant. On September 8, 2020, the judgment was published in the Gaceta Judicial (“Jurisdictional Gazette”). On September 29, 2020, Pemex Exploration and Production filed a motion to clarify this judgment, which was granted on November 24, 2020 and notified on December 10, 2020. On October 2, 2020 the plaintiff filed an amparo against this judgment. As of the date of these financial statements, a final resolution is still pending. |
| • | | On October 18, 2019, the Sala Regional Peninsular (“Regional Peninsular Court”) of the Tribunal Federal de Justicia Administrativa (“Federal Justice Administrative Court”) in Mérida, Yucatán summoned Pemex Exploration and Production in connection with a claim (91/19-16-01-9) filed by PICO México Servicios Petroleros, S. de R.L. de C.V. requesting that Pemex Exploration and Production’s termination of the public works contract (no. 428814828) be declared null and void and seeking U.S. $137.3 for expenses and related damages, among other claims. On December 12, 2019, Pemex Exploration and Production filed a response to this claim. On March 28, 2020, a notification dated February 10, 2020 was received in which the extended claim was admitted. On February 10, 2020 the expert appointed by the plaintiff was accepted. On February 18, 2020 an extension requested by the accounting expert appointed by Pemex Exploration and Production was accepted and his opinion was filed and ratified on August 11, 2020. As of the date of these financial statements, a resolution admitting the response to the claim and the opinion filed is still pending. |
Tech Man Group, S.A. de C.V. filed an administrative claim (7804/18-17-09-8) against Pemex Industrial Transformation seeking Ps. 2,009,598 for, among other things, payment of expenses and penalties in connection with a public works contract (CO-OF-019-4008699-11) before the Federal Justice Administrative Court. On June 25, 2019, a response was filed by Pemex Industrial Transformation as well as a motion against the admission of the claim, which was accepted. On October 2, 2019, the opinion of the accounting and construction experts submitted by the defendant was filed. On February 17, 2020, Pemex Industrial Transformation requested the Federal Justice Administrative Court to appoint a new accounting expert since the previous appointed expert rejected his designation. On March 2, 2020, the independent construction expert filed his opinion. As of the date of these financial statements, a final resolution is still pending. Constructora Norberto Odebrecht, S.A. filed an administrative claim against Pemex Industrial Transformation (file No. 4742/19-17-01-7) seeking U.S. $113,582 and Ps. 14,607 in connection with a termination resolution (no. 1,757) dated January 14, 2019 issued by Pemex Industrial Transformation, which awarded U.S. $51,454 in favor of the defendant. The claim was admitted. On November 11, 2020, Pemex Industrial Transformation filed a response to this claim. As of the date of these financial statements, a final resolution is still pending. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) The results of these proceedings are uncertain until their final resolutions are issued by the appropriate authorities. PEMEX has recorded liabilities for loss contingencies when it is probable that a liability has been incurred and the amount thereof can be reasonably estimated. When a reasonable estimation could not be made, qualitative disclosure was provided in the notes to these consolidated financial statements. PEMEX does not disclose amounts accrued for each individual claim because such disclosure could adversely affect PEMEX’s legal strategy, as well as the outcome of the related litigation. Pursuant to an ordinary session held by the Board of Directors on August 23, 2013, Petróleos Mexicanos established policies for the granting of mutual guarantees, loans or any type of credit in favor of the Subsidiary Entities and Subsidiary Companies; in accordance with these policies, the Corporate Finance Department issues an opinion with its risk analysis, financial valuation, budget sufficiency, accounting treatment and conclusions. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Additionally, Pemex Logistics has granted the following corporate guarantees in connection with the exploration and extraction contracts entered into by Pemex Exploration and Production, as required by the NHC:CNH: Exploration and extraction of hydrocarbons under the deep-water license modality, Trión field (TenderCNH-A1-TRION / 2016), of USU.S. $4,000,000. Exploration and extraction of the contract area 3 Cinturón plegado perdido (Tender CNHR01- L04 / 2015), of USU.S. $3,333,000. Extraction of hydrocarbons under shared production contract of theEk-Balam fields, of U.S. $5,000,000. Extraction of hydrocarbons in contractual area Santuario and El Golpe 3 field, of U.S. $320,000. Exploration and extraction of hydrocarbons under shared production contract, contractual area 2 Tampico-Misantla, of U.S. $1,750,000.$1,250,000. Exploration and extraction of hydrocarbons under shared production contract, contractual area 8 Cuencas del Sureste, of U.S. $1,250,000. Exploration and extraction of hydrocarbons shared production contract, assignmentAE-0398-Mission of U.S. $255,000. Extraction of hydrocarbons under license agreement, Ogarrio field of U.S. $250,000. Extraction of hydrocarbons under license agreement, Cárdenas and Mora fields, of U.S. $250,000. Exploration and extraction of hydrocarbons under the deep-water license modality, contractual area 2 Perdido, of U.S. $2,500,000. Exploration and extraction of hydrocarbons under the deep-water license modality, contractual area 5 Perdido, of U.S. $5,000,000. Exploration and extraction of hydrocarbons under the deep-water license modality, contractual area 18 Cordilleras Mexicanas, of U.S. $5,000,000. Exploration and extraction of hydrocarbons under shared production contract contractual area 22 Cuenca Salina, of U.S. $1,375,000. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) Contractual area 16 Tampico-Misantla, Veracruz, of U.S. $1,000,000. Contractual area 17 Tampico-Misantla, Veracruz, of U.S. $1,000,000. Contractual area 18 Tampico-Misantla, Veracruz, of U.S. $2,000,000. Contractual area 29 Cuencas del Sureste, of U.S. $2,500,000. Contractual area 32 Cuencas del Sureste, of U.S. $1,250,000. Contractual area 33 Cuencas del Sureste, of U.S. $1,250,000. Contractual area 35 Cuencas del Sureste, of U.S. $1,250,000. Contractual area Ébano, of U.S. $225,000. Contractual area AE-0388-M-Miquetla (for conventional and non-conventional on-shore licenses) of U.S. $245,000. Certain other Subsidiary Entities have also granted guarantees and other contingencies. Total guarantees granted to Pemex Exploration and Production amounted to U.S. $40,503,000, equivalent to Ps. 807,982,196, as of December 31, 2020. As of December 31, 2020, Pemex Logistics granted to Pemex Industrial Transformation the obligations from a lease contract for U.S. $150,000, equivalent to Ps. 2,992,305 at the closing exchange rate on December 31, 2020, of Ps. 19.9487 = U.S. $1.00, to J. Aron & Company LLC, a subsidiary of Goldman Sachs Group Inc. PEMEX considers the probability it needs to make a disbursement of cash, for the guarantees granted and in effect as of December 31, 20172020 remote. NOTE 26. BUSINESS COMBINATION
On January 28, 2016, PMX Fertilizantes Pacífico, S.A. de C.V., a PEMEX subsidiary company, acquired 99.99% of the outstanding shares of Fertinal, for a total purchase price of Ps. 4,322,826. This amount was paid through credit lines under a simple credit agreement. Additionally, within the same credit line, PMX Fertilizantes obtained U.S. $425,800 for the liquidation of Fertinal’s debt. These loans will mature in 16 years.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The net fair value of Fertinal’s assets and liabilities as of the date of acquisition is:
NOTE 28. | | | | SUBSEQUENT EVENTS |
| A. | Fair value | Indebtedness for 2021 |
The Revenue Law for 2021, which will be applicable to PEMEX as of January 1, 2021, permits the incurrence of up to Ps. 42,100,000 (Ps. 22,000,000 and U.S. $1,000,000) of net indebtedness through a combination of domestic and international capital markets offerings and borrowings from domestic and international financial institutions. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) 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 | | | B. | Recent financing activities | | | Total assets
| | | 12,341,078 | | | | Accounts payable
| | Ps. | 2,331,540 | | Debt
| | | 9,365,152 | | Deferred taxes
| | | 328,578 | | | | | | | Total liabilities
| | | 12,025,270 | | | | | | | Total assets, net
| | Ps. | 315,808 | | | | | | | Transaction value
| | Ps. | 4,322,826 | | | | | | | Goodwill
| | Ps. | 4,007,018 | | | | | | |
PMX FP carried 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 of2020, the impairment of goodwill resultedoutstanding amount 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.
PEMEX intends to incorporate Fertinal into thegas-ammonia solid fertilizers value chain in order to strengthen its ability to offer a wide range of fertilizers and to cover approximately 50% of the domestic market, and is also assessing the possibility of selling the integrated business in the future.
NOTE 27. SUBSEQUENT EVENTS
During the period from January 1 to April 27, 2018, PEMEX participated in the following financing activities:
On February, 12, 2018, Petróleos Mexicanos issuedPMI Trading revolving credit lines was U.S. $4,000,000 of debt securities under its U.S. $92,000,000 Medium-Term Notes Program, Series C, in two tranches: (1) U.S. $2,500,000,000 5.35% Notes due 2028 and (2) U.S. $1,500,000,000 6.35% Bonds due 2048. All debt securities under this program are guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services.
On February 12, 2018, Petróleos Mexicanos consummated an exchange offer pursuant to which it exchanged (1) U.S. $952,454, aggregate principal amount of its outstanding 5.500% Bonds due 2044 for U.S. $881,899, aggregate principal amount of its new 6.350% Bonds due 2048 and (2) U.S. $1,021,065, aggregate principal amount of its outstanding 5.6250% Bonds due 2046 for U.S. $946,764, aggregate principal amount of its 6.350% Bonds due 2048.
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
On March 5, 2018, Petróleos Mexicanos consummated a tender offer pursuant to which it purchased U.S. $138,598, aggregate principal amount of its outstanding 3.125% Notes due 2019, U.S. $558,644 aggregate principal amount of its outstanding 5.500% Notes due 2019, U.S. $91,843 aggregate principal amount of its outstanding 8.000% Notes due 2019, U.S. $183,017 aggregate principal amount of its outstanding 6.000% Notes due 2020 and U.S. $817,303 aggregate principal amount of its outstanding 3.500% Notes due 2020.
$2,387,065. Between January 1, 2021 to April 27, 2018,May 11, 2021, PMI HBVTrading obtained U.S. $7,126,000$19,259,325 and repaid U.S. $6,126,000$19,367,412 in financing from its revolving credit lines. As of April 27, 2018,May 1, 2021, the outstanding amount under these revolving credit lines was U.S. $1,227,500.$2,278,978. As of May 11, 2021, Petróleos Mexicanos had U.S. $5,500,000 and Ps. 37,000,000 in available revolving credit lines in order to provide liquidity, with U.S. $70,000 and Ps. 24,500,000 remaining available. During the period from January 1 to May 11, 2021, we participated in the following activities: On January 22, 2021, Petróleos Mexicanos issued Ps. 2,500,000 of promissory notes due 2021 at a rate linked to the six-months TIIE + 2.40%, maturing in July 2021. On January 22, 2021, Petróleos Mexicanos issued Ps. 4,000,000 of promissory notes due 2021 at a rate linked to the six-months TIIE + 2.48%, maturing in July 2021. On January 22, 2021, Petróleos Mexicanos entered into a credit line for the amount of U.S. $152,237 due January 2031, linked to one-year LIBOR + 1.38%, and adjusted every six-months. On March 23, 2021, we issued Ps. 2,000,000 promissory notes due in June 2021, at a rate linked to the TIIE plus 238 basis points. The original maturity of the promissory notes was May 2021. On April 27, 2018,13, 2021, we issued Ps. 1,500,000 promissory notes due in July 2021, at a rate linked to the TIIE plus 215 basis points. On April 22, 2021, we issued Ps. 4,000,000 promissory notes due in October 2021, at a rate linked to the TIIE plus 248 basis points. The original maturity of the promissory notes was July 2021. | C. | Decrease in the price of refined products |
As a result of the economic slowdown and the consumption of refiners (gasolines, turbosins, diesel and others), a 13.7% decrease in sales is estimated during the period from January 1 to May 11, 2021, compared to the same period of 2020. | D. | Exchange rates and crude oil prices |
As of May 11, 2021, the Mexicanpeso-U.S. dollar exchange rate was Ps. 19.053019.9223 per U.S. dollar, which represents a 3.7%0.13% appreciation of the value of the peso in U.S. dollar terms as compared to the exchange rate as of December 31, 2017,2020, which was Ps. 19.786719.9487 per U.S. dollar. This decrease in U.S. dollar exchange rate has led to an estimate of Ps. 2,602,088 in PEMEX’s foreign exchange gains as of May 11, 2021. As of April 27, 2018,May 11, 2021, the weighted average price of the crude oil exported by PEMEX was U.S. $60.89$62.43 per barrel. This represents a price increase of approximately 8.3%32% as compared to the average price as of December 31, 2017,2020, which was U.S. $56.19$47.16 per barrel. | E. | Merger of Pemex Fertilizers |
On December 2, 2020, the Board of Directors of Petróleos Mexicanos approved the merger of Pemex Industrial Transformation and Pemex Fertilizers. Effective as of January 1, 2021 Pemex Industrial Transformation will remain as merging company and Pemex Fertilizers became extinct as a merged company. On January 27, 2021, the Declaration of Extinction of Pemex Fertilizers, as a result of its merger with Pemex Industrial Transformation, was published in the Official Gazette of the Federation, effective January 1, 2021. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) The Declaration of Extinction of Pemex Fertilizers will not affect any payment obligations previously executed by Pemex Fertilizers, in Mexico and abroad, in which Pemex Industrial Transformation is subrogated due to the above-mentioned merger. | F. | Contributions from the Mexican Government |
On February 19, 2021, the Mexican Government published in the Official Gazzete of the Federation a presidential decree, granting the application of a tax credit applicable to the Profit-sharing Duty in the amount of Ps. 73,280,000. During 2021, the Mexican Government made the following contributions to Petróleos Mexicanos through the Ministry of Energy in order to support PEMEX’s finances: | | | | | | | Amount | | January 22, 2021 (i) | | Ps. | 12,000,000 | | February 11, 2021 (i) | | | 10,000,000 | | February 24, 2021 (ii) | | | 32,062,000 | | March 5, 2021 (i) | | | 7,000,000 | | March 26, 2021 (i) | | | 2,000,000 | | April 5, 2021 (i) | | | 5,000,000 | | April 26, 2021 (i) | | | 2,050,000 | | May 3, 2021 (i) | | | 7,000,000 | | May 4, 2021 (ii) | | | 32,062,000 | | | | | | | Total | | Ps. | 109,174,000 | |
(i) | Capital contributions to the construction of the Dos Bocas Refinery. |
(ii) | Capital contributions to debt’s payments. |
| G. | Business Plan 2021-2025 |
On March 22, 2021, the Board of Directors of Petróleos Mexicanos approved the business plan of Petróleos Mexicanos and its Subsidiary Companies for 2021-2025 (the “2021-2025 Business Plan”), which effectively replaced its 2019-2023 business plan (the “2019-2023 Business Plan”). The 2021-2025 Business Plan considers adjustments for the changes and challenges arising from the health and economic crisis caused by the Covid-19 pandemic, taking into consideration PEMEX’s expectations with regards to economic recovery and the domestic fuel market. The 2021-2025 Business Plan continues to focus on initiatives emphasized in the 2019-2023 Business Plan, including recovering crude oil and natural gas production, focusing exploration and production activities on land basins and shallow waters and, with respect to oil and petrochemical production, constructing the new refinery in Dos Bocas, Tabasco. In March 2018, Pemex Explorationaddition, the 2021-2025 Business Plan continues to focus on the rehabilitation of the National Refining System and Production was summonedthe strengthening of PEMEX’s ethylene production, its derivatives production and its fertilizer business. The 2021-2025 Business Plan reaffirms the strategic vision of the previous 2019-2023 Business Plan regarding the recovery of PEMEX’s financial capacity and the productivity of its value chain but makes adjustments to its strategies in light of the challenges of the current global environment. While the 2019-2023 Business Plan adjusts PEMEX’s strategies and goals and extends the time period contemplated, it reinforces PEMEX’s focus on financial discipline and cost reduction measures, including as related to its investments and maintenance of its portfolio. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) The 2021-2025 Business Plan has three main objectives: Efficiency and competitiveness PEMEX’s main objectives in the 2021-2025 Business Plan is to strengthen its finances and ensure the availability of financial resources for investment projects. PEMEX aims to identify the financial resources available for investments and to work to efficiently allocate resources to projects according to their profitability and the priorities of the Mexican Government. | H. | MEXICAN GOVERNMENT BONDS |
Income interest generated by the Government Bonds amounted Ps. 2,311,338 from January 1 to April 30, 2021, of which Petróleos Mexicanos received the payment of Ps. 2,492,147. On January 29, 2021, Petróleos Mexicanos and its Subsidiary Entities filed an amparo (124/2021) before the International Centre for Dispute ResolutionTwelfth District Court in Ciudad Victoria, Tamaulipas against the Congress of the American Arbitration Association in connection with an arbitration claim (No.01-18-0001-1499) filed by Loadmaster Universal Rigs, Inc., Loadmaster Drilling Technologies, LLC, Ulterra Drilling Technologies Mexico, S.A. de C.V.state of Tamaulipas and Kennedy Fabricating, LLC seeking U.S. $139,870 in connection with the construction and acquisition of modular drilling equipment. Pemex Exploration and Production is currently analyzing the legal actions available to itnine other authorities in response to this claim.a request for rights to payments related to atmospheric emissions in the amount of Ps. 2,863,050. On February 4, 2021, the amparo was admitted and a provisional suspension was granted. On March 2, 2021, a constitutional hearing was scheduled. On February 18, 2021, a definitive suspension was granted. On February 22, 2021, the partial gas emission test offered by Petróleos Mexicanos and its Subsidiary Entities was reserved. On February 24, 2021, the governor and the secretary general of government of the state of Tamaulipas filed a justified report. On March 2, 2021, the constitutional hearing was postponed to March 30, 2021. On March 17, 2021, the president of the state congress filed a justified report. On March 29, 2021, evidence was offered by Petróleos Mexicanos and its Subsidiary Entities. On March 31, 2021, the constitutional hearing was postponed to April 29, 2021. As of the date of these financial statements, the final resolution is pending. NOTE 28.
NOTE 29. | NEW STANDARDS RECENTLY ISSUED |
A number of new standards are effective for annual periods beginning after January 1, 2021 and earlier application is permitted; however, PEMEX has not early adopted the new or amended standards in preparing these consolidated financial statements. The following amended standards and interpretations are not expected to have a significant impact on the PEMEX’s consolidated financial statements. A. Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) The amendments address issues that might affect financial reporting as a result of reforms to IBOR interest rate benchmarks, including the effects of changes to contractual cash flows or hedging relationships arising from the replacement of IBOR interest rate benchmarks with alternative benchmark rates. The amendments provide practical relief from certain requirements in IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 relating to: changes in the basis for determining contractual cash flows of financial assets, financial liabilities and lease liabilities; and Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) i. Change in basis for determining cash flows The amendments will require an entity to account for a change in the basis for determining the contractual cash flows of a financial asset or financial liability that is required by interest rate benchmark reform by updating the effective interest rate of the financial asset or financial liability ii. Hedge accounting The amendments provide exceptions to the hedge accounting requirements in the following areas. Allow amendment of the designation of a hedging relationship to reflect changes that are required by the reform. When a hedged item in a cash flow hedge is amended to reflect the changes that are required by the reform, the amount accumulated in the cash flow hedge reserve will be deemed to be based on the alternative benchmark rate on which the hedged future cash flows are determined. When a group of items is designated as a hedged item and an item in the group is amended to reflect the changes that are required by the reform, the hedged items are allocated to sub- groups based on the benchmark rates being hedged. If an entity reasonably expects that an alternative benchmark rate will be separately identifiable within a period of 24 months, it is not prohibited from designating the rate as a non-contractually specified risk component if it is not separately identifiable at the designation date. iii. Disclosure The amendments will require PEMEX to disclose additional information about its exposure to risks arising from interest rate benchmark reform and related risk management activities. iv. Transition As of December 31, 2020, PEMEX is evaluating the possible impacts on the application of these new standards. B. Other standards. The following amended standards and interpretations are not expected to have a significant impact on the PEMEX’s consolidated financial statements. Onerous contracts – Cost of Fulfilling a Contract (Amendments to IAS 37) Covid-19-Related Rent Concessions (Amendment to IFRS 16). Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16). Reference to Conceptual Framework (Amendments to IFRS 3). Classification of Liabilities as Current or Non-current (Amendments to IAS 1). Insurance Contracts (Amendments to IFRS 17). Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) NOTE 30. | SUBSIDIARY GUARANTOR INFORMATION |
The following consolidating information presents: (i) condensed consolidated statements of financial position at December 31, 20172020 and 20162019 and condensed consolidated statements of comprehensive income and cash flows for the years ended December 31, 2017, 20162020, 2019 and 20152018 of Petróleos Mexicanos, the Subsidiary Guarantors and theNon-Guarantor Subsidiaries (as defined below). These condensed consolidated statements were prepared in conformity with IFRS, with one exception: for the purposes of the presentation of the subsidiary guarantor information, the Subsidiary Entities and Subsidiary Companies have been accounted for as investments under the equity method by Petróleos Mexicanos. Earnings of subsidiaries are therefore reflected in Petróleos Mexicanos’ investment account and earnings. The principal elimination entries eliminate Petróleos Mexicanos’ investment in subsidiaries and inter-company balances and transactions. Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services (merged with Pemex Exploration and Production as of June 30, 2019), Pemex Logistics and Pemex Cogeneration and Services (collectively, the “Subsidiary Guarantors”) and Pemex Ethylene (merged with Pemex Industrial Transformation as of June 30, 2019) and Pemex Fertilizers are 100%-owned subsidiaries of the Mexican Government. The guarantiesguarantees by the Subsidiary Guarantors of Petróleos Mexicanos’ payment obligations under this indebtedness are full, unconditional, joint and several. Pemex Ethylene, Pemex Fertilizers, Pemex Finance Ltd. and the Subsidiary Companies collectively comprise thenon-guarantor subsidiaries (the“Non-Guarantor Subsidiaries”). The Pemex Project Funding Master Trust (the “Master Trust”), which was a trust formed for the purpose of financing PEMEX’s projects, was dissolved effective December 20, 2011 and is no longer consolidated in the financial statements of PEMEX as of December 31, 2011 and thereafter. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
The following table sets forth, as of December 31, 2017,2020, the principal amount outstanding of the registered debt securities originally issued by the Master Trust. As noted above, Petróleos Mexicanos has assumed, as primary obligor, all of the obligations of the Master Trust under these debt securities. The obligations of Petróleos Mexicanos are guaranteed by the Subsidiary Guarantors: Table 1: Registered Debt Securities originally issued by the Master Trust and Assumed by Petróleos Mexicanos | | | | | | | | | Security | | Primary obligor | | Guarantors | | Principal amount
outstanding
(U.S. (U.S. $) | | 5.75%6.625% Guaranteed NotesBonds due 2018 2035 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 834,688 | 2,749,000 | | | | | 6.625% Guaranteed Bonds due 2035 2038 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 1,750,000 | 491,175 | | | | | 6.625% Guaranteed8.625% Bonds due 2038 2022 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 491,175 | 89,609 | | | | | 8.625% Guaranteed Bonds due 2022 2023 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 160,245 | 63,705 | | | | | 8.625%9.50% Guaranteed Bonds due 2023 2027 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 106,507 | | | | | | 9 1⁄4% Guaranteed Bonds due 2018
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 107,109 | | | | | | 9.50% Guaranteed Bonds due 2027
| | Petróleos
Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 219,217 | |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) The following table sets forth, as of December 31, 2017,2020, the principal amount outstanding of the registered debt securities issued by Petróleos Mexicanos, and guaranteed by Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services.Logistics. Table 2: Registered Debt Securities originally issued by Petróleos Mexicanos | | | | | | | | | Security | | Issuer | | Guarantors | | Principal amount outstanding
(U.S. (U.S. $) | | 8.00%Floating Rate Notes due 2019 2022 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 1,312,015 | 500,448 | | | | | 9 1⁄4% Global Guaranteed Bonds due 2018
| | Petróleos
Mexicanos
| | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services
| | | 9,296
| | | | | | 9.50% Global Guaranteed Bonds due 2027 | | Petróleos
Mexicanos
| | Pemex Exploration and Production, Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services
| | | 102,149
| | | | | | 3.500% Notes due 2018
| | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 355,356 | 102,149 | | | | | Floating Rate5.50% Notes due 2018 2021 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 498,570 | 806,540 | | | | | 6.000%3.500% Notes due 2020 2023 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 995,364 | 1,143,938 | | | | | 5.50%4.875% Notes due 2021 2024 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | 1,031,954 | | 2,962,047 | | | 6.625% Notes due 2035 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | 2,749,000 |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) | | | | | | | | | Security | | Issuer | | Guarantors | | Principal amount outstanding
(U.S. (U.S. $) | | 3.500% Notes6.500% Bonds due 2023 2041 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 2,099,730 | 1,560,521 | | | | | 4.875% Notes due 2024 2022 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 1,499,136 | 639,371 | | | | | 6.625%5.375% Notes due 2035 2022 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 999,000 | 447,340 | | | | | 6.500%5.50% Bonds due 2041 2044 | | Petróleos
Mexicanos | | Pemex Exploration and Production,
Pemex Industrial Transformation, Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services
| | | 3,000,000 | | | | | | 4.875% Bonds 2022
| | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 2,097,055 | 793,638 | | | | | 3.125% Notes6.375% Bonds due 2019 en 2045 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 325,778 | 1,560,461 | | | | | 3.500% Notes5.625% Bonds due 2020 2046 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 1,465,367 | 947,279 | | | | | 5.50% Bonds4.500% Notes due 2044 2026 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 2,657,962 | 1,386,032 |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) | | | | | | | | | Security | | Issuer | | Guarantors | | Principal amount outstanding
(U.S. (U.S. $) | | 6.375% Bonds
| | | | 4.250% Notes due en 20452025 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 2,999,980 | 790,153 | | | | | 5.625% Bonds6.375% Notes due 2046 2021 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 2,996,226 | 192,826 | | | | | 4.500%6.875% Notes due 2026
| | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 1,489,718 | 2,970,334 | | | | | 4.250%4.625% Notes due 2025 2023 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 998,435 | 895,444 | | | | | 5.500% Notes6.750% Bonds due 2019 2047 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 740,851 | 5,997,558 | | | | | 6.375%5.350% Notes due 2021 2028 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 1,247,668 | 2,482,468 | | | | | 6.875% Notes6.350% Bonds due 2026 2048 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | | 2,970,334 | 2,882,540 | | | | | 4.625%6.500% Notes due 2023 2027 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | 5,478,577 | | 2,055,498 | | | 5.950% Notes due 2031 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | 3,777,381 |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) | | | | | | | | | Security | | Issuer | | Guarantors | | Principal amount outstanding
(U.S. (U.S. $) | | | | | | 6.750%6.490% Notes due 2047 2027 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation Pemex Drilling and Services, Pemex Logistics and Pemex Cogeneration and Services | | 2,341,377 | | 3,671,628 | | | 6.840% Notes due 2030 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | 4,387,135 | | | | | 6.950% Bonds due 2060 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | 3,796,812 | | | | | 7.690% Bonds due 2050 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | 8,047,831 | | | | | 6.500% Notes due 2029 | | Petróleos Mexicanos | | Pemex Exploration and Production, Pemex Industrial Transformation and Pemex Logistics | | 1,986,963 |
Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) Petróleos Mexicanos is the only PEMEX entity that had debt securities registered with the SEC outstanding as of December 31, 20172020 and as of the date of these consolidated financial statements, and all guaranteed debt is issued by Petróleos Mexicanos. The guaranties of the Subsidiary Guarantors are full and unconditional and joint and several. PEMEX’s management has not presented separate financial statements for the Subsidiary Guarantors, because it has determined that such information is not material to investors. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESSTATEMENT OF FINANCIAL POSITION
AND SUBSIDIARY COMPANIESAs of December 31, 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Assets | | | | | | | | | | | | | | | | | | | | | Current assets | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | | Ps. 9,394,220 | | | | Ps. 4,970,074 | | | | Ps. 25,625,487 | | | | Ps. — | | | | Ps. 39,989,781 | | Trade and other accounts receivable, derivative financial instruments and other current assets | | | 46,962,377 | | | | 139,800,991 | | | | 50,500,929 | | | | — | | | | 237,264,297 | | Accounts receivable—inter-company | | | 800,429,251 | | | | 1,061,537,492 | | | | 131,931,674 | | | | (1,993,898,417 | ) | | | — | | Inventories | | | 889,543 | | | | 41,946,007 | | | | 9,770,111 | | | | — | | | | 52,605,661 | | | | | | | | | | | | | | | | | | | | | | | Total current assets | | | 857,675,391 | | | | 1,248,254,564 | | | | 217,828,201 | | | | (1,993,898,417 | ) | | | 329,859,739 | | Long-term receivables—intercompany | | | 1,824,398,719 | | | | — | | | | 988,069 | | | | (1,825,386,788 | ) | | | — | | Investments in joint ventures and associates | | | (1,358,455,811 | ) | | | 45,295,025 | | | | 75,662,389 | | | | 1,249,513,526 | | | | 12,015,129 | | Wells, pipelines, properties, plant and equipment-net | | | 8,548,022 | | | | 1,209,708,979 | | | | 57,872,520 | | | | — | | | | 1,276,129,521 | | Long-term notes receivables | | | 1,999 | | | | 884,828 | | | | — | | | | — | | | | 886,827 | | Right of use | | | 759,133 | | | | 56,949,499 | | | | 1,486,625 | | | | — | | | | 59,195,257 | | Deferred taxes | | | 59,277,027 | | | | 45,431,025 | | | | 3,821,147 | | | | — | | | | 108,529,199 | | Intangible assets | | | 25,650 | | | | 21,639,537 | | | | 1,110,597 | | | | — | | | | 22,775,784 | | Mexican Government Bonds | | | 111,512,962 | | | | — | | | | — | | | | — | | | | 111,512,962 | | Other assets | | | — | | | | 780,426 | | | | 6,803,084 | | | | — | | | | 7,583,510 | | | | | | | | | | | | | | | | | | | | | | | Total assets | | | 1,503,743,092 | | | | 2,628,943,883 | | | | 365,572,632 | | | | (2,569,771,679 | ) | | | 1,928,487,928 | | | | | | | | | | | | | | | | | | | | | | | Liabilities | | | | | | | | | | | | | | | | | | | | | Current liabilities | | | | | | | | | | | | | | | | | | | | | Current portion of long-term debt | | | 334,770,935 | | | | 6,642,039 | | | | 49,684,293 | | | | — | | | | 391,097,267 | | Accounts payable—inter-company | | | 1,360,720,755 | | | | 552,292,445 | | | | 78,413,852 | | | | (1,991,427,052 | ) | | | — | | Other current liabilities | | | 18,629,284 | | | | 325,647,266 | | | | 37,036,254 | | | | — | | | | 381,312,804 | | | | | | | | | | | | | | | | | | | | | | | Total current liabilities | | | 1,714,120,974 | | | | 884,581,750 | | | | 165,134,399 | | | | (1,991,427,052 | ) | | | 772,410,071 | | Long-term debt | | | 1,825,964,253 | | | | 27,513,661 | | | | 14,152,136 | | | | — | | | | 1,867,630,050 | | Long-term payables—inter-company | | | — | | | | 1,825,630,931 | | | | 2,227,221 | | | | (1,827,858,152 | ) | | | — | | Employee benefits, provisions for sundry creditors, other liabilities and deferred taxes | | | 368,754,587 | | | | 1,315,022,188 | | | | 9,398,062 | | | | — | | | | 1,693,174,837 | | | | | | | | | | | | | | | | | | | | | | | Total liabilities | | | 3,908,839,814 | | | | 4,052,748,530 | | | | 190,911,818 | | | | (3,819,285,204 | ) | | | 4,333,214,958 | | | | | | | | | | | | | | | | | | | | | | | Equity (deficit), net | | | (2,405,096,722 | ) | | | (1,423,804,647 | ) | | | 174,660,814 | | | | 1,249,513,525 | | | | (2,404,727,030 | ) | | | | | | | | | | | | | | | | | | | | | | Total liabilities and equity | | | Ps.1,503,743,092 | | | | Ps.2,628,943,883 | | | | Ps.365,572,632 | | | | Ps.(2,569,771,679 | ) | | | Ps.1,928,487,928 | | | | | | | | | | | | | | | | | | | | | | |
Petróleos Mexicanos FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Productive State-Owned Subsidiaries and Subsidiary Companies
Notes to the consolidated financial statements (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, 20172019 | | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Assets | | | | | | | | | | | | | | | | | | | | | Current assets | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | Ps. | 46,959,103 | | | Ps. | 18,815,345 | | | Ps. | 32,077,306 | | | Ps. | — | | | Ps. | 97,851,754 | | Accounts receivable and other, net, and derivative financial instruments | | | 83,119,394 | | | | 38,105,354 | | | | 79,533,940 | | | | — | | | | 200,758,688 | | Accounts receivable—inter-company | | | 311,148,593 | | | | 1,380,100,592 | | | | 86,354,837 | | | | (1,777,604,022 | ) | | | — | | Inventories | | | 509,375 | | | | 32,357,125 | | | | 30,992,430 | | | | — | | | | 63,858,930 | | Available-for-sale financial assets | | | — | | | | — | | | | 1,056,918 | | | | — | | | | 1,056,918 | | | | | | | | | | | | | | | | | | | | | | | Total current assets | | | 441,736,465 | | | | 1,469,378,416 | | | | 230,015,431 | | | | (1,777,604,022 | ) | | | 363,526,290 | | Long-term receivables—intercompany | | | 1,823,276,758 | | | | 285 | | | | 3,597,880 | | | | (1,826,874,923 | ) | | | — | | Investments in joint ventures and associates | | | (465,832,399 | ) | | | 82,668 | | | | 16,611,681 | | | | 465,845,414 | | | | 16,707,364 | | Wells, pipelines, properties, plant andequipment-net | | | 12,444,376 | | | | 1,370,974,060 | | | | 53,090,890 | | | | — | | | | 1,436,509,326 | | Long-term notes receivables | | | 147,286,367 | | | | 1,206,542 | | | | — | | | | — | | | | 148,492,909 | | Deferred taxes | | | 59,691,528 | | | | 84,443,897 | | | | 2,057,060 | | | | — | | | | 146,192,485 | | Intangible assets | | | — | | | | 9,088,563 | | | | — | | | | — | | | | 9,088,563 | | Other assets | | | 2,209,579 | | | | 4,846,078 | | | | 4,429,520 | | | | — | | | | 11,485,177 | | | | | | | | | | | | | | | | | | | | | | | Total assets | | Ps. | 2,020,812,674 | | | Ps. | 2,940,020,509 | | | Ps. | 309,802,462 | | | Ps. | (3,138,633,531 | ) | | Ps. | 2,132,002,114 | | | | | | | | | | | | | | | | | | | | | | | Liabilities | | | | | | | | | | | | | | | | | | | | | Current liabilities | | | | | | | | | | | | | | | | | | | | | Current portion of long-term debt | | Ps. | 137,947,110 | | | Ps. | 5,386,564 | | | Ps. | 13,875,793 | | | Ps. | — | | | Ps. | 157,209,467 | | Accounts payable—inter-company | | | 1,240,490,891 | | | | 434,556,688 | | | | 93,140,905 | | | | (1,768,188,484 | ) | | | — | | Other current liabilities | | | 23,435,614 | | | | 157,589,107 | | | | 50,892,997 | | | | — | | | | 231,917,718 | | | | | | | | | | | | | | | | | | | | | | | Total current liabilities | | | 1,401,873,615 | | | | 597,532,359 | | | | 157,909,695 | | | | (1,768,188,484 | ) | | | 389,127,185 | | Long-term debt | | | 1,824,829,579 | | | | 40,262,391 | | | | 15,573,634 | | | | — | | | | 1,880,665,604 | | Long-term payables—inter-company | | | — | | | | 1,830,150,615 | | | | 6,139,845 | | | | (1,836,290,460 | ) | | | — | | Employee benefits, provisions for sundry creditors, other liabilities and deferred taxes | | | 297,028,436 | | | | 1,057,191,286 | | | | 10,341,988 | | | | — | | | | 1,364,561,710 | | | | | | | | | | | | | | | | | | | | | | | Total liabilities | | | 3,523,731,630 | | | | 3,525,136,651 | | | | 189,965,162 | | | | (3,604,478,944 | ) | | | 3,634,354,499 | | Equity (deficit), net | | | (1,502,918,956 | ) | | | (585,116,142 | ) | | | 119,837,300 | | | | 465,845,413 | | | | (1,502,352,385 | ) | | | | | | | | | | | | | | | | | | | | | | Total liabilities and equity | | Ps. | 2,020,812,674 | | | Ps. | 2,940,020,509 | | | Ps. | 309,802,462 | | | Ps. | (3,138,633,531 | ) | | Ps. | 2,132,002,114 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Assets | | | | | | | | | | | | | | | | | | | | | Current assets | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | Ps. | 28,234,857 | | | Ps. | 4,826,057 | | | Ps. | 27,560,717 | | | Ps. | — | | | Ps. | 60,621,631 | | Trade and other accounts receivable, derivative financial instruments and other current assets | | | 21,286,590 | | | | 121,770,414 | | | | 56,684,210 | | | | — | | | | 199,741,214 | | Accounts receivable—inter-company | | | 592,503,940 | | | | 1,134,820,799 | | | | 129,911,984 | | | | (1,857,236,723 | ) | | | — | | Inventories | | | 459,131 | | | | 51,833,240 | | | | 30,379,825 | | | | — | | | | 82,672,196 | | | | | | | | | | | | | | | | | | | | | | | Total current assets | | | 642,484,518 | | | | 1,313,250,510 | | | | 244,536,736 | | | | (1,857,236,723 | ) | | | 343,035,041 | | Long-term receivables—intercompany | | | 1,692,840,909 | | | | — | | | | 1,615,441 | | | | (1,694,456,350 | ) | | | — | | Investments in joint ventures and associates | | | (980,054,315 | ) | | | 10,757,092 | | | | 73,151,606 | | | | 911,020,196 | | | | 14,874,579 | | Wells, pipelines, properties, plant and equipment-net | | | 9,706,301 | | | | 1,234,911,644 | | | | 32,930,617 | | | | — | | | | 1,277,548,562 | | Long-term notes receivables | | | 121,626,851 | | | | 938,455 | | | | — | | | | — | | | | 122,565,306 | | Right of use | | | 1,385,617 | | | | 67,564,544 | | | | 1,868,153 | | | | — | | | | 70,818,314 | | Deferred taxes | | | 81,127,820 | | | | 50,735,224 | | | | 4,303,703 | | | | — | | | | 136,166,747 | | Intangible assets | | | 130,535 | | | | 13,018,022 | | | | 1,435,967 | | | | — | | | | 14,584,524 | | Other assets | | | — | | | | 564,971 | | | | 4,089,036 | | | | — | | | | 4,654,007 | | | | | | | | | | | | | | | | | | | | | | | Total assets | | | 1,569,248,236 | | | | 2,691,740,462 | | | | 363,931,259 | | | | (2,640,672,877 | ) | | | 1,984,247,080 | | Liabilities | | | | | | | | | | | | | | | | | | | | | Current liabilities | | | | | | | | | | | | | | | | | | | | | Current portion of long-term debt | | | 209,291,307 | | | | 2,942,757 | | | | 32,690,121 | | | | — | | | | 244,924,185 | | Accounts payable—inter-company | | | 1,275,967,793 | | | | 471,706,488 | | | | 106,934,283 | | | | (1,854,608,564 | ) | | | — | | Other current liabilities | | | 23,694,401 | | | | 230,345,159 | | | | 53,239,883 | | | | — | | | | 307,279,443 | | | | | | | | | | | | | | | | | | | | | | | Total current liabilities | | | 1,508,953,501 | | | | 704,994,404 | | | | 192,864,287 | | | | (1,854,608,564 | ) | | | 552,203,628 | | Long-term debt | | | 1,694,319,842 | | | | 28,300,551 | | | | 15,629,510 | | | | — | | | | 1,738,249,903 | | Long-term payables—inter-company | | | — | | | | 1,694,801,416 | | | | 2,283,093 | | | | (1,697,084,509 | ) | | | — | | Employee benefits, provisions for sundry creditors, other liabilities and deferred taxes | | | 363,041,463 | | | | 1,247,581,410 | | | | 14,579,978 | | | | — | | | | 1,625,202,851 | | | | | | | | | | | | | | | | | | | | | | | Total liabilities | | | 3,566,314,806 | | | | 3,675,677,781 | | | | 225,356,868 | | | | (3,551,693,073 | ) | | | 3,915,656,382 | | | | | | | | | | | | | | | | | | | | | | | Equity (deficit), net | | | (1,997,066,570 | ) | | | (983,937,319 | ) | | | 138,574,391 | | | | 911,020,196 | | | | (1,931,409,302 | ) | | | | | | | | | | | | | | | | | | | | | | Total liabilities and equity | | Ps. | 1,569,248,236 | | | Ps. | 2,691,740,462 | | | Ps. | 363,931,259 | | | Ps. | (2,640,672,877) | | | Ps. | 1,984,247,080 | | | | | | | | | | | | | | | | | | | | | | |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(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, 2016
| | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Assets | | | | | | | | | | | | | | | | | | | | | Current assets | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | Ps. | 92,503,607 | | | Ps. | 9,732,503 | | | Ps. | 61,296,403 | | | Ps. | — | | | Ps. | 163,532,513 | | Accounts receivable and other, net, and derivative financial instruments | | | 6,604,595 | | | | 75,760,079 | | | | 55,713,323 | | | | — | | | | 138,077,997 | | Accounts receivable—inter-company | | | 440,645,367 | | | | 1,684,782,235 | | | | 70,268,246 | | | | (2,195,695,848 | ) | | | — | | Inventories | | | 446,954 | | | | 29,270,943 | | | | 16,174,163 | | | | — | | | | 45,892,060 | | Available-for-sale financial assets | | | — | | | | — | | | | 2,852,679 | | | | — | | | | 2,852,679 | | Held-for-salenon-financial assets | | | — | | | | 7,460,674 | | | | — | | | | — | | | | 7,460,674 | | | | | | | | | | | | | | | | | | | | | | | Total current assets | | | 540,200,523 | | | | 1,807,006,434 | | | | 206,304,814 | | | | (2,195,695,848 | ) | | | 357,815,923 | | 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 | ) | | | — | | Investments in joint ventures and associates | | | (250,108,630 | ) | | | 396,681 | | | | 20,327,813 | | | | 250,121,645 | | | | 20,737,509 | | Wells, pipelines, properties, plant andequipment-net | | | 12,596,722 | | | | 1,595,655,580 | | | | 59,489,946 | | | | — | | | | 1,667,742,248 | | Long-term notes receivables | | | 140,579,974 | | | | 8,027,628 | | | | — | | | | — | | | | 148,607,602 | | Deferred taxes | | | 59,162,878 | | | | 40,341,615 | | | | 820,196 | | | | — | | | | 100,324,689 | | Restricted cash | | | — | | | | 9,624,804 | | | | 853,822 | | | | — | | | | 10,478,626 | | Intangible assets | | | — | | | | 8,639,242 | | | | — | | | | — | | | | 8,639,242 | | Other assets | | | 1,824,104 | | | | 2,707,788 | | | | 4,980,753 | | | | — | | | | 9,512,645 | | | | | | | | | | | | | | | | | | | | | | | Total assets | | Ps. | 2,244,774,970 | | | Ps. | 3,472,400,061 | | | Ps. | 305,189,828 | | | Ps. | (3,692,478,835 | ) | | Ps. | 2,329,886,024 | | | | | | | | | | | | | | | | | | | | | | | Liabilities | | | | | | | | | | | | | | | | | | | | | Current liabilities | | | | | | | | | | | | | | | | | | | | | Current portion of long-term debt | | | 157,937,631 | | | | 7,381,095 | | | | 10,847,462 | | | | — | | | | 176,166,188 | | Accounts payable—inter-company | | | 1,265,244,986 | | | | 854,106,939 | | | | 68,510,835 | | | | (2,187,862,760 | ) | | | — | | Other current liabilities | | | 34,913,773 | | | | 169,182,239 | | | | 45,927,686 | | | | — | | | | 250,023,698 | | | | | | | | | | | | | | | | | | | | | | | Total current liabilities | | | 1,458,096,390 | | | | 1,030,670,273 | | | | 125,285,983 | | | | (2,187,862,760 | ) | | | 426,189,886 | | Long-term debt | | | 1,737,332,174 | | | | 46,090,919 | | | | 23,581,449 | | | | — | | | | 1,807,004,542 | | Long-term payables—inter-company | | | — | | | | 1,746,433,870 | | | | 8,303,850 | | | | (1,754,737,720 | ) | | | — | | Employee benefits, provisions for sundry creditors, other liabilities and deferred taxes | | | 282,902,667 | | | | 1,035,019,339 | | | | 11,777,737 | | | | — | | | | 1,329,699,743 | | | | | | | | | | | | | | | | | | | | | | | Total liabilities | | | 3,478,331,231 | | | | 3,858,214,401 | | | | 168,949,019 | | | | (3,942,600,480 | ) | | | 3,562,894,171 | | Equity (deficit), net | | | (1,233,556,261 | ) | | | (385,814,340 | ) | | | 136,240,809 | | | | 250,121,645 | | | | (1,233,008,147 | ) | | | | | | | | | | | | | | | | | | | | | | Total liabilities and equity | | Ps. | 2,244,774,970 | | | Ps. | 3,472,400,061 | | | Ps. | 305,189,828 | | | Ps. | (3,692,478,835 | ) | | Ps. | 2,329,886,024 | | | | | | | | | | | | | | | | | | | | | | |
PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION STATEMENT OF COMPREHENSIVE INCOME For the year ended December 31, 20172020 | | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Net sales | | Ps. | — | | | Ps. | 1,713,914,703 | | | Ps. | 1,096,752,930 | | | Ps. | (1,424,768,483 | ) | | Ps. | 1,385,899,150 | | Services income | | | 50,399,983 | | | | 140,934,022 | | | | 2,646,144 | | | | (182,849,580 | ) | | | 11,130,569 | | | | | | | | | | | | | | | | | | | | | | | Total sales revenues | | | 50,399,983 | | | | 1,854,848,725 | | | | 1,099,399,074 | | | | (1,607,618,063 | ) | | | 1,397,029,719 | | Impairment of wells, pipelines, properties, plant and equipment | | | — | | | | 145,302,407 | | | | 6,142,153 | | | | — | | | | 151,444,560 | | Cost of sales | | | 2,007,814 | | | | 1,447,640,131 | | | | 1,083,297,610 | | | | (1,528,740,675 | ) | | | 1,004,204,880 | | | | | | | | | | | | | | | | | | | | | | | Gross income | | | 48,392,169 | | | | 261,906,187 | | | | 9,959,311 | | | | (78,877,388 | ) | | | 241,380,279 | | Other revenues (expenses), net | | | (341,521 | ) | | | (12,443,660 | ) | | | (4,664,096 | ) | | | 22,623,353 | | | | 5,174,076 | | | | | | | | | | | | | | | | | | | | | | | General expenses: | | | | | | | | | | | | | | | | | | | | | Transportation, distribution and sale expenses | | | — | | | | 26,136,674 | | | | 1,297,558 | | | | (5,544,562 | ) | | | 21,889,670 | | Administrative expenses | | | 59,141,391 | | | | 105,920,390 | | | | 5,883,200 | | | | (51,005,527 | ) | | | 119,939,454 | | | | | | | | | | | | | | | | | | | | | | | Total general expenses | | | 59,141,391 | | | | 132,057,064 | | | | 7,180,758 | | | | (56,550,089 | ) | | | 141,829,124 | | | | | | | | | | | | | | | | | | | | | | | Operating income | | | (11,090,743 | ) | | | 117,405,463 | | | | (1,885,543 | ) | | | 296,054 | | | | 104,725,231 | | Financing income | | | 143,676,367 | | | | 134,401,598 | | | | 3,185,195 | | | | (265,097,307 | ) | | | 16,165,853 | | Financing cost | | | (236,929,035 | ) | | | (141,900,236 | ) | | | (3,616,530 | ) | | | 264,801,253 | | | | (117,644,548 | ) | Derivative financial instruments income (cost), net | | | 27,670,991 | | | | (1,608,039 | ) | | | (724,628 | ) | | | — | | | | 25,338,324 | | Foreign exchange income , net | | | 6,837,171 | | | | 15,807,988 | | | | 538,963 | | | | — | | | | 23,184,122 | | Profit (loss) sharing in joint ventures and associates | | | (211,567,169 | ) | | | 409,955 | | | | (49,515 | ) | | | 211,567,169 | | | | 360,440 | | | | | | | | | | | | | | | | | | | | | | | Income (loss) before taxes, duties and other | | | (281,402,418 | ) | | | 124,516,729 | | | | (2,552,058 | ) | | | 211,567,169 | | | | 52,129,422 | | Total taxes, duties and other | | | (557,520 | ) | | | 331,001,261 | | | | 2,536,300 | | | | — | | | | 332,980,041 | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | | (280,844,898 | ) | | | (206,484,532 | ) | | | (5,088,358 | ) | | | 211,567,169 | | | | (280,850,619 | ) | Total other comprehensive result | | | 4,728,640 | | | | 6,841,586 | | | | (63,845 | ) | | | — | | | | 11,506,381 | | | | | | | | | | | | | | | | | | | | | | | Total comprehensive result for the year | | Ps. | (276,116,258 | ) | | Ps. | (199,642,946 | ) | | Ps. | (5,152,203 | ) | | Ps. | 211,567,169 | | | Ps. | (269,344,238 | ) | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Net sales | | | — | | | | 1,115,845,485 | | | | 459,202,040 | | | | (626,101,165 | ) | | | 948,946,360 | | Services income | | | 78,461,654 | | | | 88,034,087 | | | | 12,253,482 | | | | (174,033,739 | ) | | | 4,715,484 | | | | | | | | | | | | | | | | | | | | | | | Total sales revenues | | | 78,461,654 | | | | 1,203,879,572 | | | | 471,455,522 | | | | (800,134,904 | ) | | | 953,661,844 | | (Impairment) of wells, pipelines, properties, plant and equipment | | | — | | | | (36,303,470 | ) | | | (50,230 | ) | | | — | | | | (36,353,700 | ) | Cost of sales | | | 982,896 | | | | 1,090,745,812 | | | | 460,296,695 | | | | (719,410,713 | ) | | | 832,614,690 | | | | | | | | | | | | | | | | | | | | | | | Gross income | | | 77,478,758 | | | | 76,830,290 | | | | 11,108,597 | | | | (80,724,191 | ) | | | 84,693,454 | | Other revenues (expenses), net | | | 170,887 | | | | 5,733,633 | | | | 4,635,082 | | | | 34,530 | | | | 10,574,132 | | | | | | | | | | | | | | | | | | | | | | | Total general expenses | | | 75,817,961 | | | | 154,020,378 | | | | 9,198,761 | | | | (80,706,414 | ) | | | 158,330,686 | | | | | | | | | | | | | | | | | | | | | | | Operating income | | | 1,831,684 | | | | (71,456,455 | ) | | | 6,544,918 | | | | 16,753 | | | | (63,063,100 | ) | Financing cost, net | | | (54,710,062 | ) | | | (70,134,087 | ) | | | (3,066,150 | ) | | | (16,754 | ) | | | (127,927,053 | ) | Foreign exchange income, net | | | (1,778,917 | ) | | | (125,864,355 | ) | | | (1,306,032 | ) | | | — | | | | (128,949,304 | ) | Profit (loss) sharing in joint ventures and associates | | | (433,417,288 | ) | | | 1,288,687 | | | | (12,588,491 | ) | | | 441,176,559 | | | | (3,540,533 | ) | | | | | | | | | | | | | | | | | | | | | | (Loss) income before taxes, duties and other | | | (488,074,583 | ) | | | (266,166,210 | ) | | | (10,415,755 | ) | | | 441,176,558 | | | | (323,479,990 | ) | Total taxes, duties and other | | | 20,804,230 | | | | 159,451,307 | | | | 5,316,538 | | | | — | | | | 185,572,075 | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | | (508,878,813 | ) | | | (425,617,517 | ) | | | (15,732,293 | ) | | | 441,176,558 | | | | (509,052,065 | ) | Total other comprehensive result | | | (6,062,096 | ) | | | (12,844,301 | ) | | | 7,600,985 | | | | — | | | | (11,305,412 | ) | | | | | | | | | | | | | | | | | | | | | | Total comprehensive result for the year | | | (514,940,909 | ) | | | (438,461,818 | ) | | | (8,131,308 | ) | | | 441,176,558 | | | | (520,357,477 | ) | | | | | | | | | | | | | | | | | | | | | |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(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, 20162019 | | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Net sales | | Ps. | — | | | Ps. | 1,361,538,624 | | | Ps. | 828,143,332 | | | Ps. | (1,124,563,366 | ) | | Ps. | 1,065,118,590 | | Services income | | | 46,330,245 | | | | 98,959,131 | | | | 1,970,055 | | | | (138,284,789 | ) | | | 8,974,642 | | | | | | | | | | | | | | | | | | | | | | | Total sales revenues | | | 46,330,245 | | | | 1,460,497,755 | | | | 830,113,387 | | | | (1,262,848,155 | ) | | | 1,074,093,232 | | (Reversal) impairment of wells, pipelines, properties, plant and equipment | | | — | | | | (330,037,834 | ) | | | (1,276,509 | ) | | | — | | | | (331,314,343 | ) | Cost of sales | | | 1,236,921 | | | | 1,244,388,072 | | | | 809,156,778 | | | | (1,188,959,550 | ) | | | 865,822,221 | | | | | | | | | | | | | | | | | | | | | | | Gross income | | | 45,093,324 | | | | 546,147,517 | | | | 22,233,118 | | | | (73,888,605 | ) | | | 539,585,354 | | Other revenues (expenses), net | | | (312,611 | ) | | | 20,713,184 | | | | 2,915,837 | | | | (666,804 | ) | | | 22,649,606 | | | | | | | | | | | | | | | | | | | | | | | General expenses: | | | | | | | | | | | | | | | | | | | | | Transportation, distribution and sale expenses | | | — | | | | 50,948,771 | | | | 945,489 | | | | (26,663,020 | ) | | | 25,231,240 | | Administrative expenses | | | 57,437,455 | | | | 96,884,031 | | | | 7,050,271 | | | | (48,718,224 | ) | | | 112,653,533 | | | | | | | | | | | | | | | | | | | | | | | Total general expenses | | | 57,437,455 | | | | 147,832,802 | | | | 7,995,760 | | | | (75,381,244 | ) | | | 137,884,773 | | | | | | | | | | | | | | | | | | | | | | | Operating income | | | (12,656,742 | ) | | | 419,027,899 | | | | 17,153,195 | | | | 825,835 | | | | 424,350,187 | | Financing income | | | 123,266,281 | | | | 67,542,768 | | | | 3,526,378 | | | | (180,586,172 | ) | | | 13,749,255 | | Financing cost | | | (160,824,632 | ) | | | (114,271,762 | ) | | | (3,602,868 | ) | | | 179,854,798 | | | | (98,844,464 | ) | Derivative financial instruments (cost) income, net | | | (12,052,200 | ) | | | 3,172 | | | | (1,951,959 | ) | | | — | | | | (14,000,987 | ) | Foreign exchange loss, net | | | (20,531,005 | ) | | | (232,714,446 | ) | | | (767,292 | ) | | | — | | | | (254,012,743 | ) | Profit (loss) sharing in joint ventures and associates | | | (117,347,803 | ) | | | 628,357 | | | | 1,507,488 | | | | 117,347,803 | | | | 2,135,845 | | | | | | | | | | | | | | | | | | | | | | | Income (loss) before taxes, duties and other | | | (200,146,101 | ) | | | 140,215,988 | | | | 15,864,942 | | | | 117,442,264 | | | | 73,377,093 | | Total taxes, duties and other | | | (8,834,626 | ) | | | 266,155,181 | | | | 7,200,880 | | | | — | | | | 264,521,435 | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | | (191,311,475 | ) | | | (125,939,193 | ) | | | 8,664,062 | | | | 117,442,264 | | | | (191,144,342 | ) | Total other comprehensive result | | | 10,126,560 | | | | 96,032,433 | | | | 21,713,488 | | | | — | | | | 127,872,481 | | | | | | | | | | | | | | | | | | | | | | | Total comprehensive result for the year | | Ps. | (181,184,915 | ) | | Ps. | (29,906,760 | ) | | Ps. | 30,377,550 | | | Ps. | 117,442,264 | | | Ps. | (63,271,861 | ) | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Net sales | | Ps. | — | | | Ps. | 1,623,118,346 | | | Ps. | 712,266,064 | | | Ps. | (942,521,905 | ) | | Ps. | 1,392,862,505 | | Services income | | | 59,915,165 | | | | 131,935,732 | | | | 9,683,190 | | | | (192,425,407 | ) | | | 9,108,680 | | | | | | | | | | | | | | | | | | | | | | | Total sales revenues | | | 59,915,165 | | | | 1,755,054,078 | | | | 721,949,254 | | | | (1,134,947,312 | ) | | | 1,401,971,185 | | (Impairment) of wells, pipelines, properties, plant and equipment | | | — | | | | (27,672,704 | ) | | | (3,610,450 | ) | | | — | | | | (31,283,154 | ) | Cost of sales | | | 989,308 | | | | 1,488,250,706 | | | | 705,101,991 | | | | (1,071,408,581 | ) | | | 1,122,933,424 | | | | | | | | | | | | | | | | | | | | | | | Gross income | | | 58,925,857 | | | | 239,130,668 | | | | 13,236,813 | | | | (63,538,731 | ) | | | 247,754,607 | | Other revenues (expenses), net | | | 139,412 | | | | 3,048,907 | | | | 4,616,272 | | | | (75,835 | ) | | | 7,728,756 | | | | | | | | | | | | | | | | | | | | | | | Total general expenses | | | 62,645,185 | | | | 141,628,000 | | | | 11,974,223 | | | | (63,592,675 | ) | | | 152,654,733 | | | | | | | | | | | | | | | | | | | | | | | Operating income | | | (3,579,916 | ) | | | 100,551,575 | | | | 5,878,862 | | | | (21,891 | ) | | | 102,828,630 | | Financing cost, net | | | (66,593,657 | ) | | | (57,364,522 | ) | | | (2,953,372 | ) | | | 21,891 | | | | (126,889,660 | ) | Foreign exchange income, net | | | 3,912,176 | | | | 82,143,830 | | | | 874,382 | | | | — | | | | 86,930,388 | | Profit (loss) sharing in joint ventures and associates | | | (292,585,923 | ) | | | 116,536 | | | | (4,297,609 | ) | | | 295,609,103 | | | | (1,157,893 | ) | | | | | | | | | | | | | | | | | | | | | | (loss) income before taxes, duties and other | | | (358,847,320 | ) | | | 125,447,419 | | | | (497,737 | ) | | | 295,609,103 | | | | 61,711,465 | | Total taxes, duties and other | | | (11,557,958 | ) | | | 352,239,318 | | | | 3,142,129 | | | | — | | | | 343,823,489 | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | | (347,289,362 | ) | | | (226,791,899 | ) | | | (3,639,866 | ) | | | 295,609,103 | | | | (282,112,024 | ) | Total other comprehensive result | | | (55,495,859 | ) | | | (253,482,329 | ) | | | (375,252 | ) | | | (2,669,406 | ) | | | (312,022,846 | ) | | | | | | | | | | | | | | | | | | | | | | Total comprehensive result for the year | | Ps. | (402,785,221 | ) | | Ps. | (480,274,228 | ) | | Ps. | (4,015,118 | ) | | Ps. | 292,939,697 | | | Ps. | (594,134,870 | ) | | | | | | | | | | | | | | | | | | | | | |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(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, 20152018 | | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Net sales | | Ps. | 15,556 | | | Ps. | 1,523,767,800 | | | Ps. | 803,623,324 | | | Ps. | (1,173,956,323 | ) | | Ps. | 1,153,450,357 | | Services income | | | 16,897,139 | | | | 16,815,589 | | | | 2,585,617 | | | | (27,988,310 | ) | | | 8,310,035 | | | | | | | | | | | | | | | | | | | | | | | Total sales revenues | | | 16,912,695 | | | | 1,540,583,389 | | | | 806,208,941 | | | | (1,201,944,633 | ) | | | 1,161,760,392 | | Impairment of wells, pipelines, properties, plant and equipment | | | — | | | | 476,276,159 | | | | 1,668,531 | | | | — | | | | 477,944,690 | | Benefit from change in pension plan | | | | | | | (83,657,496 | ) | | | (8,519,593 | ) | | | — | | | | (92,177,089 | ) | Cost of sales | | | 2,695,423 | | | | 1,280,404,059 | | | | 791,147,745 | | | | (1,182,282,621 | ) | | | 891,964,606 | | | | | | | | | | | | | | | | | | | | | | | Gross income | | | 14,217,272 | | | | (132,439,333 | ) | | | 21,912,258 | | | | (19,662,012 | ) | | | (115,971,815 | ) | Other (expenses) revenues, net | | | (19,805 | ) | | | (6,073,003 | ) | | | 3,326,421 | | | | 1,890,900 | | | | (875,487 | ) | | | | | | | | | | | | | | | | | | | | | | General expenses: | | | | | | | | | | | | | | | | | | | | | Transportation, distribution and sale expenses | | | — | | | | 32,870,908 | | | | 2,921,430 | | | | (6,863,699 | ) | | | 28,928,639 | | Administrative expenses | | | 59,923,878 | | | | 52,832,029 | | | | 10,638,127 | | | | (10,921,939 | ) | | | 112,472,095 | | Benefit from change in pension plan | | | (46,031,780 | ) | | | (50,394,477 | ) | | | (7,434,698 | ) | | | — | | | | (103,860,955 | ) | Total general expenses | | | 13,892,098 | | | | 35,308,460 | | | | 6,124,859 | | | | (17,785,638 | ) | | | 37,539,779 | | | | | | | | | | | | | | | | | | | | | | | Operating income | | | 305,369 | | | | (173,820,796 | ) | | | 19,113,820 | | | | 14,526 | | | | (154,387,081 | ) | Financing income | | | 108,543,665 | | | | 28,639,034 | | | | 3,478,434 | | | | (125,670,274 | ) | | | 14,990,859 | | Financing cost | | | (85,544,060 | ) | | | (104,453,148 | ) | | | (3,306,776 | ) | | | 125,530,391 | | | | (67,773,593 | ) | Derivative financial instruments (cost) income, net | | | (22,803,663 | ) | | | 6,463 | | | | 1,347,323 | | | | — | | | | (21,449,877 | ) | Foreign exchange loss, net | | | (14,829,436 | ) | | | (139,623,910 | ) | | | (312,228 | ) | | | — | | | | (154,765,574 | ) | (Loss) profit sharing in joint ventures and associates | | | (749,963,960 | ) | | | 198,786 | | | | 2,119,329 | | | | 749,963,960 | | | | 2,318,115 | | | | | | | | | | | | | | | | | | | | | | | (Loss) income before taxes, duties and other | | | (764,292,085 | ) | | | (389,053,571 | ) | | | 22,439,902 | | | | 749,838,603 | | | | (381,067,151 | ) | Total taxes, duties and other | | | (51,982,560 | ) | | | 376,649,369 | | | | 6,833,438 | | | | — | | | | 331,500,247 | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | | (712,309,525 | ) | | | (765,702,940 | ) | | | 15,606,464 | | | | 749,838,603 | | | | (712,567,398 | ) | Total other comprehensive result | | | 10,980,787 | | | | 56,585,790 | | | | 21,045,777 | | | | — | | | | 88,612,354 | | | | | | | | | | | | | | | | | | | | | | | Total comprehensive result for the year | | Ps. | (701,328,738 | ) | | Ps. | (709,117,150 | ) | | Ps. | 36,652,241 | | | Ps. | 749,838,603 | | | Ps. | (623,955,044) | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Net sales | | Ps. | — | | | Ps. | 1,941,467,663 | | | Ps. | 912,726,857 | | | Ps. | (1,181,748,372 | ) | | Ps. | 1,672,446,148 | | Services income | | | 75,979,835 | | | | 113,113,024 | | | | 5,960,807 | | | | (186,380,664 | ) | | | 8,673,002 | | | | | | | | | | | | | | | | | | | | | | | Total sales revenues | | | 75,979,835 | | | | 2,054,580,687 | | | | 918,687,664 | | | | (1,368,129,036 | ) | | | 1,681,119,150 | | Reversal (impairment) of wells, pipelines, properties, plant and equipment | | | — | | | | 25,384,888 | | | | (3,965,891 | ) | | | — | | | | 21,418,997 | | Cost of sales | | | 1,905,865 | | | | 1,536,120,030 | | | | 910,525,715 | | | | (1,249,040,049 | ) | | | 1,199,511,561 | | | | | | | | | | | | | | | | | | | | | | | Gross income | | | 74,073,970 | | | | 543,845,545 | | | | 4,196,058 | | | | (119,088,987 | ) | | | 503,026,586 | | Other revenues (expenses), net | | | 73,183 | | | | (26,020,067 | ) | | | 8,710,216 | | | | 40,289,179 | | | | 23,052,511 | | | | | | | | | | | | | | | | | | | | | | | Total general expenses | | | 69,479,218 | | | | 158,965,537 | | | | 10,248,039 | | | | (80,014,104 | ) | | | 158,678,690 | | | | | | | | | | | | | | | | | | | | | | | Operating income | | | 4,667,935 | | | | 358,859,941 | | | | 2,658,235 | | | | 1,214,296 | | | | 367,400,407 | | Financing cost, net | | | (64,226,376 | ) | | | (46,203,154 | ) | | | (475,599 | ) | | | (523,384 | ) | | | (111,428,513 | ) | Foreign exchange income, net | | | (3,832,933 | ) | | | 26,526,563 | | | | 965,850 | | | | — | | | | 23,659,480 | | Profit (loss) sharing in joint ventures and associates | | | (125,246,527 | ) | | | 53,058 | | | | 2,164,868 | | | | 124,555,613 | | | | 1,527,012 | | | | | | | | | | | | | | | | | | | | | | | Income (loss) before taxes, duties and other | | | (188,637,901 | ) | | | 339,236,408 | | | | 5,313,354 | | | | 125,246,525 | | | | 281,158,386 | | Total taxes, duties and other | | | (8,272,851 | ) | | | 466,788,123 | | | | 3,062,951 | | | | — | | | | 461,578,223 | | | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | | (180,365,050 | ) | | | (127,551,715 | ) | | | 2,250,403 | | | | 125,246,525 | | | | (180,419,837 | ) | Total other comprehensive result | | | 47,357,316 | | | | 176,174,564 | | | | (140,133 | ) | | | — | | | | 223,391,747 | | | | | | | | | | | | | | | | | | | | | | | Total comprehensive result for the year | | Ps. | (133,007,734 | ) | | Ps. | 48,622,849 | | | Ps. | 2,110,270 | | | Ps. | 125,246,525 | | | Ps. | 42,971,910 | | | | | | | | | | | | | | | | | | | | | | |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(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, 20172020 | | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Operating activities: | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | Ps. | (280,844,898 | ) | | Ps. | (206,484,532 | ) | | Ps. | (5,082,639 | ) | | Ps. | 211,561,450 | | | Ps. | (280,850,619 | ) | Adjustments to reconcile net loss to cash provided by operating activities: | | | | | | | | | | | | | | | | | | | | | Depreciation and amortization | | | 1,155,881 | | | | 152,607,943 | | | | 2,940,689 | | | | — | | | | 156,704,513 | | Impairment of wells, pipelines, properties, plant and equipment | | | — | | | | 145,302,407 | | | | 6,142,153 | | | | — | | | | 151,444,560 | | Unsuccessful wells | | | — | | | | 6,164,624 | | | | — | | | | — | | | | 6,164,624 | | Exploration costs | | | — | | | | (1,447,761 | ) | | | — | | | | — | | | | (1,447,761 | ) | Disposal of wells, pipelines, properties, plant and equipment | | | 433,391 | | | | 14,687,229 | | | | 1,943,051 | | | | — | | | | 17,063,671 | | Gain on sale of share in joint ventures and associates | | | — | | | | (3,139,103 | ) | | | — | | | | — | | | | (3,139,103 | ) | Disposal of held—for—sale current non—financial assets | | | — | | | | 2,808,360 | | | | — | | | | — | | | | 2,808,360 | | Dividends | | | — | | | | — | | | | (180,675 | ) | | | — | | | | (180,675 | ) | Effects of net present value of reserve for well abandonment | | | — | | | | 7,774,000 | | | | — | | | | — | | | | 7,774,000 | | Profit (loss) sharing in investments | | | 211,567,169 | | | | (409,955 | ) | | | 49,515 | | | | (211,567,169 | ) | | | (360,440 | ) | Decrease onavailable—for-sale financial assets | | | — | | | | — | | | | 1,360,205 | | | | — | | | | 1,360,205 | | Net loss on available-for-sale financial assets | | | — | | | | — | | | | 3,523,748 | | | | — | | | | 3,523,748 | | Unrealized foreign exchange loss (gain) | | | (13,526,153 | ) | | | (1,585,910 | ) | | | (1,573,376 | ) | | | — | | | | (16,685,439 | ) | Interest expense | | | 100,545,114 | | | | 15,736,420 | | | | 1,363,014 | | | | — | | | | 117,644,548 | | Funds (used in) from operating activities: | | | | | | | | | | | | | | | | | | | | | Accounts receivable, accounts payable and derivative financial instruments | | | (88,496,967 | ) | | | (14,214,566 | ) | | | (20,789,692 | ) | | | — | | | | (123,501,225 | ) | Inventories | | | (62,421 | ) | | | (3,086,181 | ) | | | (14,818,268 | ) | | | — | | | | (17,966,870 | ) | Other assets | | | (7,091,867 | ) | | | (483,389 | ) | | | 551,233 | | | | — | | | | (7,024,023 | ) | Employee benefits | | | 18,829,768 | | | | 31,489,785 | | | | (254,157 | ) | | | — | | | | 50,065,396 | | Inter-company charges and deductions | | | 7,284,124 | | | | (114,968,213 | ) | | | 514,270 | | | | 107,169,819 | | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows (used in) from operating activities | | | (50,206,859 | ) | | | 30,751,158 | | | | (24,310,929 | ) | | | 107,164,100 | | | | 63,397,470 | | Investing activities: | | | | | | | | | | | | | | | | | | | | | Acquisition of wells, pipelines, properties, plant and equipment | | | (1,436,926 | ) | | | (87,274,561 | ) | | | (3,147,978 | ) | | | — | | | | (91,859,465 | ) | Resources from saleavailable-for-sale financial assets | | | — | | | | — | | | | 8,026,836 | | | | — | | | | 8,026,836 | | Resources from sale of shares in associates | | | — | | | | 3,863,072 | | | | (721,362 | ) | | | — | | | | 3,141,710 | | (Increase) decrease due to Inter-company investing | | | 25,611,359 | | | | — | | | | — | | | | (25,611,359 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows used in investing activities | | | 24,174,433 | | | | (83,411,489 | ) | | | 4,157,496 | | | | (25,611,359 | ) | | | (80,690,919 | ) | Financing activities: | | | | | | | | | | | | | | | | | | | | | Loans obtained from financial institutions | | | 401,947,349 | | | | — | | | | 302,768,119 | | | | — | | | | 704,715,468 | | Debt payments, principal only | | | (327,703,729 | ) | | | (7,981,937 | ) | | | (306,374,153 | ) | | | — | | | | (642,059,819 | ) | Interest paid | | | (93,755,698 | ) | | | (13,991,633 | ) | | | (1,163,086 | ) | | | — | | | | (108,910,417 | ) | Inter-company increase (decrease) financing | | | — | | | | 83,716,743 | | | | (2,164,002 | ) | | | (81,552,741 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows provided by financing activities: | | | (19,512,078 | ) | | | 61,743,173 | | | | (6,933,122 | ) | | | (81,552,741 | ) | | | (46,254,768 | ) | | | | | | | | | | | | | | | | | | | | | | Net (decrease) increase in cash and cash equivalents | | | (45,544,504 | ) | | | 9,082,842 | | | | (27,086,555 | ) | | | — | | | | (63,548,217 | ) | Effects of change in cash value | | | — | | | | — | | | | (2,132,542 | ) | | | — | | | | (2,132,542 | ) | Cash and cash equivalents at the beginning of the year | | | 92,503,607 | | | | 9,732,503 | | | | 61,296,403 | | | | — | | | | 163,532,513 | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents at the end of the year | | Ps. | 46,959,103 | | | Ps. | 18,815,345 | | | Ps. | 32,077,306 | | | Ps. | — | | | Ps. | 97,851,754 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Operating activities: | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | | (508,878,813 | ) | | | (425,617,517 | ) | | | (15,507,766 | ) | | | 440,952,031 | | | | (509,052,065 | ) | Income tax and duties | | | 20,804,230 | | | | 159,451,307 | | | | 5,316,538 | | | | — | | | | 185,572,075 | | Depreciation and amortization | | | 1,066,176 | | | | 126,778,686 | | | | 1,786,958 | | | | — | | | | 129,631,820 | | Amortization of intangible assets | | | 453,081 | | | | (30,155 | ) | | | 56,062 | | | | — | | | | 478,988 | | Impairment of wells, pipelines, properties, plant and equipment | | | — | | | | 36,303,471 | | | | 50,229 | | | | — | | | | 36,353,700 | | Capitalized unsuccesful wells | | | — | | | | 10,947,702 | | | | — | | | | — | | | | 10,947,702 | | Unsuccesful wells from intangible assets | | | — | | | | 8,404,284 | | | | — | | | | — | | | | 8,404,284 | | Disposal of wells, pipelines, properties, plant and equipment | | | 94,065 | | | | 3,004,053 | | | | 2,199,444 | | | | — | | | | 5,297,562 | | Disposal of intangible asset | | | | | | | | | | | 396,118 | | | | | | | | 396,118 | | Amortization of rights of use | | | 644,838 | | | | 5,453,688 | | | | 1,130,705 | | | | — | | | | 7,229,231 | | Cancellation of rights of use | | | — | | | | (1,101,987 | ) | | | — | | | | — | | | | (1,101,987 | ) | Gain on sale of subsidiary entity | | | — | | | | — | | | | (707,533 | ) | | | — | | | | (707,533 | ) | Effects of net present value of reserve for well abandonment | | | — | | | | 4,555,692 | | | | — | | | | — | | | | 4,555,692 | | Profit (loss) sharing in investments | | | 441,125,283 | | | | (41,685 | ) | | | 3,582,218 | | | | (441,125,283 | ) | | | 3,540,533 | | Unrealized foreign exchange loss (gain) | | | 117,158,102 | | | | 12,040,638 | | | | 3,267,503 | | | | — | | | | 132,466,243 | | Interest expense | | | 134,335,289 | | | | 25,908,927 | | | | 1,521,026 | | | | — | | | | 161,765,242 | | Interest income | | | (11,617,299 | ) | | | (5,124,749 | ) | | | — | | | | — | | | | (16,742,048 | ) | Funds (used in) from operating activities: | | | | | | | | | | | | | | | | | | | | | Taxes | | | 1,349,021 | | | | (155,315,035 | ) | | | (3,725,449 | ) | | | — | | | | (157,691,463 | ) | Accounts receivable, accounts payable, derivative financial instruments and accrued liabilities | | | (16,644,218 | ) | | | (692,255 | ) | | | 22,115,695 | | | | — | | | | 4,779,222 | | Employee benefits | | | (355,666 | ) | | | 64,873,037 | | | | (5,347,025 | ) | | | — | | | | 59,170,346 | | Inter-company charges and deductions | | | (147,308,477 | ) | | | 37,878,271 | | | | 35,319,045 | | | | 74,111,161 | | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows (used in) from operating activities | | | 32,225,612 | | | | (92,323,627 | ) | | | 51,453,768 | | | | 73,937,909 | | | | 65,293,662 | | Investing activities: | | | | | | | | | | | | | | | | | | | | | Acquisition of wells, pipelines, properties, plant and equipment and intangible assets | | | (349,555 | ) | | | (97,841,648 | ) | | | (40,426,953 | ) | | | — | | | | (138,618,156 | ) | Other assets and other receivables | | | 930,596 | | | | (812,028 | ) | | | (2,640,055 | ) | | | — | | | | (2,521,487 | ) | (Increase) decrease due to Inter-company investing | | | (194,281,597 | ) | | | — | | | | 627,372 | | | | 193,654,225 | | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows used in investing activities | | | (193,700,556 | ) | | | (98,653,676 | ) | | | (42,439,636 | ) | | | 193,654,225 | | | | (141,139,643 | ) | Financing activities: | | | | | | | | | | | | | | | | | | | | | Increase in equity due to Certificates of Contribution “A” | | | 46,256,000 | | | | — | | | | — | | | | — | | | | 46,256,000 | | Long-terms and interest received from the Mexican Government | | | 5,800,940 | | | | — | | | | — | | | | — | | | | 5,800,940 | | Lease payments of principal and interest | | | (396,917 | ) | | | (8,266,969 | ) | | | (1,346,915 | ) | | | — | | | | (10,010,801 | ) | Loans obtained from financial institutions | | | 730,222,863 | | | | 1,046 | | | | 557,905,959 | | | | — | | | | 1,288,129,868 | | Debt payments, principal only | | | (601,448,338 | ) | | | (4,828,154 | ) | | | (545,685,655 | ) | | | — | | | | (1,151,962,147 | ) | Interest paid | | | (122,553,204 | ) | | | (7,200,077 | ) | | | (1,235,869 | ) | | | — | | | | (130,989,150 | ) | Inter-company increase (decrease) financing | | | 84,752,963 | | | | 211,415,474 | | | | (28,576,303 | ) | | | (267,592,134 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows provided by financing activities: | | | 142,634,307 | | | | 191,121,320 | | | | (18,938,783 | ) | | | (267,592,134 | ) | | | 47,224,710 | | Net (decrease) increase in cash and cash equivalents | | | (18,840,637 | ) | | | 144,017 | | | | (9,924,651 | ) | | | — | | | | (28,621,271 | ) | Effects of change in cash value | | | — | | | | — | | | | 7,989,421 | | | | — | | | | 7,989,421 | | Cash and cash equivalents at the beginning of the year | | | 28,234,857 | | | | 4,826,057 | | | | 27,560,717 | | | | — | | | | 60,621,631 | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents at the end of the year | | | 9,394,220 | | | | 4,970,074 | | | | 25,625,487 | | | | — | | | | 39,989,781 | | | | | | | | | | | | | | | | | | | | | | |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(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, 20162019 | | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Operating activities: | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | Ps. | (191,311,476 | ) | | Ps. | (139,410,398 | ) | | Ps. | 22,160,755 | | | Ps. | 117,416,777 | | | Ps. | (191,144,342 | ) | Adjustments to reconcile net loss to cash provided by operating activities: | | | | | | | | | | | | | | | | | | | | | Depreciation and amortization | | | 1,066,033 | | | | 146,545,307 | | | | 2,828,151 | | | | — | | | | 150,439,491 | | (Reversal) impairment of wells, pipelines, properties, plant and equipment | | | — | | | | (330,037,834 | ) | | | (1,276,509 | ) | | | — | | | | (331,314,343 | ) | Unsuccessful wells | | | — | | | | 29,106,084 | | | | — | | | | — | | | | 29,106,084 | | Exploration costs | | | — | | | | (2,022,826 | ) | | | — | | | | — | | | | (2,022,826 | ) | 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 joint ventures and associates | | | — | | | | (15,211,039 | ) | | | — | | | | — | | | | (15,211,039 | ) | Profit (loss) sharing in joint ventures and associates | | | 117,249,643 | | | | (628,356 | ) | | | (1,507,489 | ) | | | (117,249,643 | ) | | | (2,135,845 | ) | Impairment of goodwill | | | — | | | | — | | | | 4,007,018 | | | | — | | | | 4,007,018 | | Dividends | | | — | | | | — | | | | (293,397 | ) | | | — | | | | (293,397 | ) | Effects of net present value of reserve for well abandonment | | | — | | | | 11,968,966 | | | | — | | | | — | | | | 11,968,966 | | Unrealized foreign exchange loss (gain) | | | 231,191,646 | | | | 6,754,046 | | | | 5,237,072 | | | | — | | | | 243,182,764 | | Interest expense | | | 91,044,541 | | | | 5,687,502 | | | | 2,112,421 | | | | — | | | | 98,844,464 | | Funds (used in) from operating activities: | | | | | | | | | | | | | | | | | | | | | Accounts receivable, accounts payable and derivative financial instruments | | | 23,636,331 | | | | (158,449,370 | ) | | | 45,028,534 | | | | — | | | | (89,784,505 | ) | Inventories | | | 83,317 | | | | 3,508,494 | | | | (4,950,690 | ) | | | — | | | | (1,358,879 | ) | Other assets | | | (2,405,412 | ) | | | (22,600,504 | ) | | | (122,614 | ) | | | — | | | | (25,128,530 | ) | Employee benefits | | | 2,591,000 | | | | 136,354,337 | | | | (91,652,268 | ) | | | — | | | | 47,293,069 | | Inter-company charges and deductions | | | (393,835,932 | ) | | | (83,049,125 | ) | | | 48,435,633 | | | | 428,449,424 | | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows (used in) from operating activities | | | (120,369,710 | ) | | | (380,943,611 | ) | | | 30,798,680 | | | | 428,616,558 | | | | (41,898,083 | ) | Investing activities: | | | | | | | | | | | | | | | | | | | | | Acquisition of wells, pipelines, properties, plant and equipment | | | (2,172,586 | ) | | | (147,786,686 | ) | | | (1,449,208 | ) | | | — | | | | (151,408,480 | ) | Resources from sale on share in associates | | | — | | | | 23,050,344 | | | | (365,608 | ) | | | — | | | | 22,684,736 | | Proceeds from the sale of fixed assets | | | — | | | | 560,665 | | | | — | | | | — | | | | 560,665 | | Business acquisition | | | — | | | | — | | | | (4,329,769 | ) | | | — | | | | (4,329,769 | ) | (Increase) decrease due to Inter-company investing | | | (39,612,699 | ) | | | — | | | | — | | | | 39,612,699 | | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows used in investing activities | | | (41,785,285 | ) | | | (124,175,677 | ) | | | (6,144,585 | ) | | | 39,612,699 | | | | (132,492,848 | ) | Financing activities: | | | | | | | | | | | | | | | | | | | | | Increase in equity due to Certificates of Contributions “A” | | | 73,500,000 | | | | — | | | | — | | | | — | | | | 73,500,000 | | Loans obtained from financial institutions | | | 571,944,209 | | | | 34,483,348 | | | | 235,564,210 | | | | — | | | | 841,991,767 | | Debt payments, principal only | | | (372,809,166 | ) | | | (6,414,441 | ) | | | (235,763,722 | ) | | | — | | | | (614,987,329 | ) | Interest paid | | | (82,008,347 | ) | | | (4,706,946 | ) | | | (2,038,848 | ) | | | — | | | | (88,754,141 | ) | Inter-company increase (decrease) financing | | | — | | | | 464,488,030 | | | | 3,741227 | | | | (468,229,257 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows provided by financing activities: | | | 190,626,696 | | | | 487,849,991 | | | | 1,502,867 | | | | (468,229,257 | ) | | | 211,750,297 | | | | | | | | | | | | | | | | | | | | | | | Net (decrease) increase in cash and cash equivalents | | | 28,471,701 | | | | (17,269,297 | ) | | | 26,156,962 | | | | — | | | | 37,359,366 | | Effects of change in cash value | | | 5,570,892 | | | | 20,371,126 | | | | (9,137,751 | ) | | | — | | | | 16,804,267 | | Cash and cash equivalents at the beginning of the year | | | 58,461,014 | | | | 6,630,674 | | | | 44,277,192 | | | | — | | | | 109,368,880 | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents at the end of the year | | Ps. | 92,503,607 | | | Ps. | 9,732,503 | | | Ps. | 61,296,403 | | | Ps. | — | | | Ps. | 163,532,513 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Operating activities: | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | Ps. | (347,289,363 | ) | | Ps. | (225,457,279 | ) | | Ps. | (4,974,486 | ) | | Ps. | 295,609,104 | | | Ps. | (282,112,024 | ) | Income tax and duties | | | (11,557,958 | ) | | | 352,291,238 | | | | 3,090,209 | | | | — | | | | 343,823,489 | | Depreciation and amortization | | | 1,183,741 | | | | 134,134,135 | | | | 1,869,134 | | | | — | | | | 137,187,010 | | Amortization of intangible assets | | | 373,961 | | | | 86,342 | | | | 83,069 | | | | — | | | | 543,372 | | Impairment of wells, pipelines, properties, plant and equipment | | | — | | | | 27,672,705 | | | | 3,610,449 | | | | — | | | | 31,283,154 | | Capitalized unsuccesful wells | | | — | | | | 71,604,308 | | | | — | | | | — | | | | 71,604,308 | | Unsuccesful wells from intangible assets | | | — | | | | 7,990,877 | | | | — | | | | — | | | | 7,990,877 | | Disposal of wells, pipelines, properties, plant and equipment | | | 14,115 | | | | 1,492,916 | | | | 1,034,527 | | | | — | | | | 2,541,558 | | Amortization of rights of use | | | 639,877 | | | | 5,439,642 | | | | 1,349,756 | | | | — | | | | 7,429,275 | | Effects of net present value of reserve for well abandonment | | | — | | | | (258,816 | ) | | | — | | | | — | | | | (258,816 | ) | Profit (loss) sharing in investments | | | 296,230,824 | | | | (538,281 | ) | | | (1,473,955 | ) | | | (293,060,695 | ) | | | 1,157,893 | | Unrealized foreign exchange loss (gain) | | | (74,439,514 | ) | | | (2,867,091 | ) | | | (938,369 | ) | | | — | | | | (78,244,974 | ) | Interest expense | | | 118,543,971 | | | | 12,446,222 | | | | 1,871,147 | | | | — | | | | 132,861,340 | | Interest income | | | (22,964,784 | ) | | | (5,410,645 | ) | | | (860,174 | ) | | | — | | | | (29,235,603 | ) | Funds (used in) from operating activities: | | | | | | | | | | | | | | | | | | | | | Accounts receivable, accounts payable, derivative financial instruments and accrued liabilities | | | 11,279,402 | | | | 32,413,620 | | | | 675,345 | | | | — | | | | 44,368,367 | | Taxes | | | (10,682,007 | ) | | | (356,254,147 | ) | | | (5,737,259 | ) | | | — | | | | (372,673,413 | ) | Employee benefits | | | 52,052,212 | | | | 9,322,327 | | | | 5,580,162 | | | | — | | | | 66,954,701 | | Inter-company charges and deductions | | | (439,039,267 | ) | | | 176,676,691 | | | | 5,349,241 | | | | 257,013,335 | | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows (used in) from operating activities | | | (425,654,790 | ) | | | 240,784,764 | | | | 10,528,796 | | | | 259,561,744 | | | | 85,220,514 | | Investing activities: | | | | | | | | | | | | | | | | | | | | | Acquisition of wells, pipelines, properties, plant and equipment and intangible assets | | | (232,592 | ) | | | (132,206,201 | ) | | | 5,564,862 | | | | — | | | | (126,873,931 | ) | Other assets and other receivables | | | 14,743,694 | | | | 933,269 | | | | (101,835 | ) | | | — | | | | 15,575,128 | | (Increase) decrease due to Inter-company investing | | | 401,422,502 | | | | — | | | | — | | | | (401,422,502 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows used in investing activities | | | 415,933,604 | | | | (131,272,932 | ) | | | 5,463,027 | | | | (401,422,502 | ) | | | (111,298,803 | ) | Financing activities: | | | | | | | | | | | | | | | | | | | | | Increase in equity due to Certificates of Contribution “A” | | | 122,131,000 | | | | 41,956,917 | | | | (41,956,917 | ) | | | — | | | | 122,131,000 | | Long-terms and interest received from the Mexican Government | | | 38,704,883 | | | | — | | | | — | | | | — | | | | 38,704,883 | | Lease payments | | | (588,463 | ) | | | (8,745,025 | ) | | | (1,375,933 | ) | | | — | | | | (10,709,421 | ) | Loans obtained from financial institutions | | | 824,049,426 | | | | 46,297 | | | | 343,739,223 | | | | — | | | | 1,167,834,946 | | Debt payments, principal only | | | (851,077,341 | ) | | | (4,826,936 | ) | | | (329,138,006 | ) | | | — | | | | (1,185,042,283 | ) | Interest paid | | | (120,450,950 | ) | | | (6,104,160 | ) | | | (1,390,093 | ) | | | — | | | | (127,945,203 | ) | Inter-company increase (decrease) financing | | | — | | | | (143,484,166 | ) | | | 1,623,408 | | | | 141,860,758 | | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows provided by financing activities: | | | 12,768,555 | | | | (121,157,073 | ) | | | (28,498,318 | ) | | | 141,860,758 | | | | 4,973,922 | | Net (decrease) increase in cash and cash equivalents | | | 3,047,369 | | | | (11,645,241 | ) | | | (12,506,495 | ) | | | — | | | | (21,104,367 | ) | Effects of change in cash value | | | — | | | | — | | | | (186,411 | ) | | | — | | | | (186,411 | ) | Cash and cash equivalents at the beginning of the year | | | 25,187,488 | | | | 16,471,298 | | | | 40,253,623 | | | | — | | | | 81,912,409 | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents at the end of the year | | Ps. | 28,234,857 | | | Ps. | 4,826,057 | | | Ps. | 27,560,717 | | | Ps. | — | | | Ps. | 60,621,631 | | | | | | | | | | | | | | | | | | | | | | |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(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, 20152018 | | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Operating activities: | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | Ps. | (712,177,124 | ) | | Ps. | (765,702,826 | ) | | Ps. | 15,738,868 | | | Ps. | 749,573,684 | | | Ps. | (712,567,398 | ) | Adjustments to reconcile net loss to cash provided by operating activities: | | | | | | | | | | | | | | | | | | | | | Depreciation and amortization | | | 789,657 | | | | 164,221,429 | | | | 2,940,164 | | | | — | | | | 167,951,250 | | Impairment of wells, pipelines, properties, plant and equipment | | | — | | | | 476,276,159 | | | | 1,668,531 | | | | — | | | | 477,944,690 | | Unsuccessful wells | | | — | | | | 23,213,519 | | | | — | | | | — | | | | 23,213,519 | | Exploration costs | | | — | | | | (5,698,511 | ) | | | — | | | | — | | | | (5,698,511 | ) | Disposal of wells, pipelines, properties, plant and equipment | | | 180,992 | | | | 21,945,266 | | | | 2,512,279 | | | | — | | | | 24,638,537 | | Profit (loss) sharing in joint ventures and associates | | | 749,963,958 | | | | (198,786 | ) | | | (2,119,329 | ) | | | (749,963,958 | ) | | | (2,318,115 | ) | Gain on sale of share in joint ventures and associates | | | — | | | | (337,675 | ) | | | (342,955 | ) | | | — | | | | (680,630 | ) | Dividends | | | — | | | | — | | | | (359,941 | ) | | | — | | | | (359,941 | ) | Effects of net present value of reserve for well abandonment | | | — | | | | (608,160 | ) | | | — | | | | — | | | | (608,160 | ) | Unrealized foreign exchange loss (gain) | | | 145,971,158 | | | | 2,996,219 | | | | 3,708,879 | | | | — | | | | 152,676,256 | | Interest expense | | | 63,460,443 | | | | 3,414,430 | | | | 898,720 | | | | — | | | | 67,773,593 | | Funds provided by (used in) operating activities: | | | | | | | | | | | | | | | | | | | | | Accounts receivable, accounts payable and derivative financial instruments | | | (58,554,144 | ) | | | 119,761,648 | | | | (27,777,939 | ) | | | — | | | | 33,429,565 | | Inventories | | | 108,568 | | | | 4,547,843 | | | | 1,511,317 | | | | — | | | | 6,167,728 | | Other assets | | | (149,819 | ) | | | (16,578,827 | ) | | | 126,281 | | | | — | | | | (16,602,365 | ) | Employee benefits | | | (10,037,444 | ) | | | (94,183,192 | ) | | | (11,801,596 | ) | | | — | | | | (116,022,232 | ) | Inter-company charges and deductions | | | (310,384,820 | ) | | | 30,044,041 | | | | 31,975,215 | | | | 248,365,564 | | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows provided by operating activities | | | (130,828,575 | ) | | | (36,887,423 | ) | | | 18,678,494 | | | | 247,975,290 | | | | 98,937,786 | | Investing activities: | | | | | | | | | | | | | | | | | | | | | Acquisition of wells, pipelines, properties, plant and equipment | | | (1,496,277 | ) | | | (239,315,507 | ) | | | (12,702,217 | ) | | | — | | | | (253,514,001 | ) | Investments in associates | | | — | | | | — | | | | (36,214 | ) | | | — | | | | (36,214 | ) | Resources from the sales on share in associates | | | — | | | | (130,323 | ) | | | 4,547,461 | | | | — | | | | 4,417,138 | | (Increase) decrease due to Inter-company investing | | | (39,108,879 | ) | | | — | | | | — | | | | 39,108,879 | | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows used in investing activities | | | (40,605,156 | ) | | | (239,445,830 | ) | | | (8,190,970 | ) | | | 39,108,879 | | | | (249,133,077 | ) | Financing activities: | | | | | | | | | | | | | | | | | | | | | Increase in equity due to Certificates of Contributions “A” | | | 10,000,000 | | | | (1,915,922 | ) | | | 1,844,394 | | | | 71,528 | | | | 10,000,000 | | Loans obtained from financial institutions | | | 345,383,990 | | | | — | | | | 33,587,088 | | | | — | | | | 378,971,078 | | Debt payments, principal only | | | (147,927,857 | ) | | | (8,081,177 | ) | | | (37,609,464 | ) | | | — | | | | (193,618,498 | ) | Interest paid | | | (58,123,368 | ) | | | (3,443,923 | ) | | | (1,169,859 | ) | | | — | | | | (62,737,150 | ) | Inter-company increase (decrease) financing | | | (3,626,448 | ) | | | 289,859,173 | | | | 922,972 | | | | (287,155,697 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows provided by financing activities: | | | 145,706,317 | | | | 276,418,151 | | | | (2,424,869 | ) | | | (287,084,169 | ) | | | 132,615,430 | | | | | | | | | | | | | | | | | | | | | | | Net (decrease) increase in cash and cash equivalents | | | (25,727,414 | ) | | | 84,898 | | | | 8,062,655 | | | | — | | | | (17,579,861 | ) | Effects of change in cash value | | | 11,185,788 | | | | 1,138,356 | | | | (3,363,931 | ) | | | — | | | | 8,960,213 | | Cash and cash equivalents at the beginning of the year | | | 73,002,640 | | | | 5,407,420 | | | | 39,578,468 | | | | — | | | | 117,988,528 | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents at the end of the year | | Ps. | 58,461,014 | | | Ps. | 6,630,674 | | | Ps. | 44,277,192 | | | Ps. | — | | | Ps. | 109,368,880 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Petróleos Mexicanos | | | Subsidiary guarantors | | | Non-guarantor subsidiaries | | | Eliminations | | | PEMEX consolidated | | Operating activities: | | | | | | | | | | | | | | | | | | | | | Net (loss) income for the year | | Ps. | (180,365,050 | ) | | Ps. | (127,551,718 | ) | | Ps. | 2,305,189 | | | Ps. | 125,191,742 | | | Ps. | (180,419,837 | ) | Adjustments to reconcile net loss to cash provided by operating activities: | | | | | | | | | | | | | | | | | | | | | Depreciation and amortization | | | 1,274,179 | | | | 149,747,232 | | | | 2,360,629 | | | | — | | | | 153,382,040 | | Amortization of intangible assets | | | 2,446,445 | | | | 86,332 | | | | 110,549 | | | | — | | | | 2,643,326 | | Impairment of wells, pipelines, properties, plant and equipment | | | — | | | | (25,384,888 | ) | | | 3,965,891 | | | | — | | | | (21,418,997 | ) | Capitalized unsuccesful wells | | | — | | | | 15,443,086 | | | | — | | | | — | | | | 15,443,086 | | Unsuccesful wells from intangible assets | | | — | | | | (2,171,218 | ) | | | — | | | | — | | | | (2,171,218 | ) | Disposal of wells, pipelines, properties, plant and equipment | | | 872,527 | | | | 12,226,128 | | | | 3,786,609 | | | | — | | | | 16,885,264 | | Gain on sale of share in joint ventures and associates | | | — | | | | (10,257 | ) | | | (690,914 | ) | | | — | | | | (701,171 | ) | Effects of net present value of reserve for well abandonment | | | — | | | | (6,953,200 | ) | | | — | | | | — | | | | (6,953,200 | ) | Profit (loss) sharing in investments | | | 125,246,527 | | | | (538,281 | ) | | | (1,473,955 | ) | | | (124,761,303 | ) | | | (1,527,012 | ) | Unrealized foreign exchange loss (gain) | | | (19,726,271 | ) | | | 446,523 | | | | (482,460 | ) | | | — | | | | (19,762,208 | ) | Interest expense | | | 109,697,028 | | | | 12,720,032 | | | | 1,452,624 | | | | — | | | | 123,869,684 | | Interest income | | | (9,520,962 | ) | | | — | | | | — | | | | — | | | | (9,520,962 | ) | Funds (used in) from operating activities: | | | | | | | | | | | | | | | | | | | | | Accounts receivable, accounts payable, derivative financial instruments and accrued liabilities | | | 51,460,407 | | | | (73,421,161 | ) | | | 26,118,293 | | | | — | | | | 4,157,539 | | Taxes | | | (8,881,300 | ) | | | 38,071,896 | | | | (157,861 | ) | | | — | | | | 29,032,735 | | Other assets and other liabilities | | | 559,449 | | | | (12,071,857 | ) | | | (3,244,955 | ) | | | — | | | | (14,757,363 | ) | Employee benefits | | | 10,519,603 | | | | 44,858,697 | | | | (1,773,416 | ) | | | — | | | | 53,604,884 | | Inter-company charges and deductions | | | (14,527,177 | ) | | | 81,240,429 | | | | (21,516,287 | ) | | | (45,196,965 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows (used in) from operating activities | | | 69,055,405 | | | | 106,737,775 | | | | 10,759,936 | | | | (44,766,526 | ) | | | 141,786,590 | | Investing activities: | | | | | | | | | | | | | | | | | | | | | Acquisition of wells, pipelines, properties, plant and equipment and intangible assets | | | (1,162,685 | ) | | | (103,408,759 | ) | | | (4,389,245 | ) | | | — | | | | (108,960,689 | ) | Proceeds from sale of assets | | | — | | | | 14,568 | | | | 4,063,776 | | | | — | | | | 4,078,344 | | Other assets | | | 3,586,010 | | | | 212,421 | | | | — | | | | — | | | | 3,798,431 | | (Increase) decrease due to Inter-company investing | | | (47,454,385 | ) | | | — | | | | — | | | | 47,454,385 | | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows used in investing activities | | | (45,031,060 | ) | | | (103,181,770 | ) | | | (325,469 | ) | | | 47,454,385 | | | | (101,083,914 | ) | Financing activities: | | | | | | | | | | | | | | | | | | | | | Loans obtained from financial institutions | | | 510,871,366 | | | | — | | | | 388,897,646 | | | | — | | | | 899,769,012 | | Debt payments, principal only | | | (450,353,531 | ) | | | (6,662,318 | ) | | | (384,017,543 | ) | | | — | | | | (841,033,392 | ) | Interest paid | | | (106,313,795 | ) | | | (7,857,926 | ) | | | (1,117,668 | ) | | | — | | | | (115,289,389 | ) | Inter-company increase (decrease) financing | | | — | | | | 8,620,192 | | | | (5,932,333 | ) | | | (2,687,859 | ) | | | — | | | | | | | | | | | | | | | | | | | | | | | Cash flows provided by financing activities: | | | (45,795,960 | ) | | | (5,900,052 | ) | | | (2,169,898 | ) | | | (2,687,859 | ) | | | (56,553,769 | ) | Net (decrease) increase in cash and cash equivalents | | | (21,771,615 | ) | | | (2,344,047 | ) | | | 8,264,569 | | | | — | | | | (15,851,093 | ) | Effects of change in cash value | | | — | | | | — | | | | (88,252 | ) | | | — | | | | (88,252 | ) | Cash and cash equivalents at the beginning of the year | | | 46,959,103 | | | | 18,815,345 | | | | 32,077,306 | | | | — | | | | 97,851,754 | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents at the end of the year | | Ps. | 25,187,488 | | | Ps. | 16,471,298 | | | Ps. | 40,253,623 | | | Ps. | — | | | Ps. | 81,912,409 | | | | | | | | | | | | | | | | | | | | | | |
Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) NOTE 31. | NOTE 29. SUPPLEMENTARY INFORMATION ON OIL AND GAS EXPLORATION AND PRODUCTION ACTIVITIES (UNAUDITED)
|
Under the Mexican Constitution, all crude oil and other hydrocarbon reserves located in the subsoil of Mexico are owned by the Mexican nation and not by PEMEX. In August 2014, through the Round Zero process, the Mexican Government granted PEMEX the right to extract, but not own, certain petroleum and other hydrocarbon reserves in Mexico through assignment deeds. This note provides supplementary information on the oil and gas exploration, development and production activities of Pemex Exploration and Production in compliance with the U.S. Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 93210-5 “Extractive Activities—Oil and Gas” (“ASC Topic 932”) and Accounting Standards Update2010-03 (see Note 3(i))3-G). As of the date of these consolidated financial statements, all exploration and production activities of Pemex Exploration and Production are conducted in Mexico. The supplemental data presented herein reflect information for all of Pemex Exploration and Production’s oil and gas producing activities. a.A. | Capitalized costs for oil and gas producing activities (unaudited): |
| | | As of December 31, | | | | | 2020 | | | 2019 | | | 2018 | | | | 2017 | | 2016 | | 2015 | | | Proved reserves | | Ps. | 2,363,336,481 | | | Ps. | 2,476,535,503 | | | Ps. | 2,102,971,025 | | | Proved Properties | | | Ps. | | | 2,483,134,177 | | | | 2,306,255,209 | | | | 2,505,307,260 | | Construction in progress | | | 35,381,089 | | | 60,720,261 | | | 88,706,330 | | | | | | 64,911,619 | | | | 50,951,279 | | | | 51,033,968 | | Accumulated depreciation and amortization | | | (1,444,962,317 | ) | | (1,355,402,150 | ) | | (1,224,690,867 | ) | | | | | (1,775,163,736 | ) | | | (1,675,843,298 | ) | | | (1,572,649,381 | ) | | | | | | | | | | | | | | | | | | | | | | Net capitalized costs | | Ps. | 953,755,253 | | | Ps. | 1,181,853,614 | | | Ps. | 966,986,487 | | | Ps. | | | 772,882,060 | | | | 681,363,190 | | | | 983,691,847 | | | | | | | | | | | | | | | | | | | | | | |
b.B. | Costs incurred for oil and gas property exploration and development activities (unaudited): |
| | | As of December 31, | | | | | | | | | | 2017 | | | 2016 | | | | | 2020 | | | 2019 | | Exploration | | Ps. | 32,480,801 | | | Ps. | 41,661,666 | | | Ps. | | | 33,986,110 | | | | 31,222,023 | | Development | | | 53,460,364 | | | | 113,895,246 | | | | | | 97,041,516 | | | | 82,135,240 | | | | | | | | | | | | | | | | | Total costs incurred | | Ps. | 85,941,165 | | | Ps. | 155,556,912 | | | Ps. | | | 131,027,626 | | | | 113,357,263 | | | | | | | | | | | | | | | | |
There are noPEMEX does not have property acquisition costs because PEMEXthe oil reserves it exploits oil reservesare owned by the Mexican nation.
Exploration costs include costs forof geological and geophysical studies of fields amounting toin the amount of Ps. 8,828,8099,599,274 and Ps. 6,804,341,10,663,334, for 20172020 and 2016, respectively, that,2019, respectively. These costs are accounted for as geological and geophysical exploration expenses, in accordance with the successful efforts method of accounting, are accounted for as geological and geophysical exploration expenses.accounting. 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 PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) c.C. | Results of operations for oil and gas producing activities (unaudited): |
| | | | | | | | | | | | | | | 2017 | | | 2016 | | | 2015 | | Revenues from sale of oil and gas | | Ps. | 762,637,362 | | | Ps. | 616,380,608 | | | Ps. | 690,591,455 | | | | | | | | | | | | | | | Hydrocarbon duties | | | 375,156,405 | | | | 304,299,019 | | | | 376,682,705 | | Production costs (excluding taxes) | | | 248,957,950 | | | | 171,194,337 | | | | 177,774,082 | | Other costs and expenses | | | (3,954,222 | ) | | | 61,359,271 | | | | 20,360,540 | | Exploration expenses | | | 14,993,433 | | | | 39,693,273 | | | | 31,244,564 | | Depreciation, depletion, amortization and accretion | | | 240,672,906 | | | | (150,891,739 | ) | | | 527,014,056 | | | | | | | | | | | | | | | | | | 875,826,472 | | | | 425,654,161 | | | | 1,133,075,947 | | | | | | | | | | | | | | | Results of operations for oil and gas producing activities | | Ps. | (113,189,111 | ) | | Ps. | 190,726,447 | | | Ps. | (442,484,491 | ) | | | | | | | | | | | | | |
Note: Numbers may not total due to rounding.
| | | | | | | | | | | | | | | | | | | 2020 | | | 2019 | | | 2018 | | Revenues from sale of oil and gas | | Ps. | | | 558,051,547 | | | | 762,102,939 | | | | 910,433,244 | | | | | | | | | | | | | | | | | Hydrocarbon duties | | | | | 154,609,136 | | | | 343,242,436 | | | | 443,491,451 | | Production costs (excluding taxes) | | | | | 257,571,641 | | | | 275,090,795 | | | | 273,695,691 | | Other costs and expenses | | | | | (7,024,695 | ) | | | (6,910,321 | ) | | | (10,109,114 | ) | Exploration expenses | | | | | 31,868,857 | | | | 90,258,519 | | | | 30,953,413 | | Depreciation, depletion, amortization and accretion | | | | | 845,380 | | | | 222,651,461 | | | | 28,845,604 | | | | | | | | | | | | | | | | | | | | | | 437,870,319 | | | | 924,332,890 | | | | 766,877,047 | | | | | | | | | | | | | | | | | Results of operations for oil and gas producing activities | | Ps. | | | 120,181,228 | | | | (162,229,951 | ) | | | 143,556,198 | | | | | | | | | | | | | | | | |
d.D. | Sales prices (unaudited) |
The following table summarizes average sales prices in U.S. dollars for each of the years ended December 31 (excluding production taxes): | | | 2017 | | | 2016 | | | 2015 | | | Description | | | 2020 | | | 2019 | | | 2018 | | Weighted average sales price per barrel of oil equivalent (boe)(1) | | US$ | 38.63 | | | US$ | 29.18 | | | US$ | 37.17 | | | U.S. $ | 27.86 | | | U.S. $ | 43.52 | | | U.S. $ | 50.89 | | Crude oil, per barrel | | | 48.71 | | | | 36.55 | | | | 48.22 | | | | 35.47 | | | | 57.13 | | | | 62.99 | | Natural gas, per thousand cubic feet | | | 4.32 | | | | 3.01 | | | | 3.78 | | | | 2.54 | | | | 3.55 | | | | 5.57 | |
(1) | To convert dry gas to barrels of oil equivalent, a factor of 5.201 thousand cubic feet of dry gas per barrel of oil equivalent is used. |
e.E. | Crude oil and natural gas reserves (unaudited) |
Under the Mexican Constitution, all oil and other hydrocarbon reserves located in the subsoil of Mexico are owned by the Mexican nation and not by PEMEX. Under the Petróleos Mexicanos Law, Pemex Exploration and Production has the right to extract, but not own, these reserves, and to sell the resulting production. The exploration and development activities of Petróleos Mexicanos and the Subsidiary Entities are limited to reserves located in Mexico. 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, 20172020 were prepared by the exploration and production segment and were reviewed by the Independent Engineering Firms (as defined below), which audit its estimates of its hydrocarbon reserves. In addition, pursuantAccording to the ReglamentoLineamientos que Regulan los Procedimientos de Cuantificación y Certificación de Reservas de la Ley de Hidrocarburos (Regulations toNación (Guidelines for Regulating the Hydrocarbons Law)Nation’s Reserves Quantification and Certification Procedures), on March 23, 2018CNH should review and approve of hydrocarbons reserves reports of Mexico’s operators in the NHCmonth of April. The CNH reviewed and approved the proved reserves reports estimates as of December 31, 2017. 2020 and approved them on April 20, 2021. However, as of the date of these consolidated financial statements, the CNH has not published the resolution.PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESPetróleos Mexicanos
AND SUBSIDIARY COMPANIESProductive State-Owned Subsidiaries and Subsidiary Companies
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) Pemex Exploration and Production estimates proved 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, 2007June 25, 2019, 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: Quality and completeness of basic data Production and pressure histories Reserves data set forth herein represents only estimates. Reserves valuation is a subjective process of estimating underground accumulations of crude oil and natural gas that cannot be measured in an exact manner. The accuracy of any reserves estimate depends on the quality of available data, engineering and geological interpretation and professional judgment. As a result, estimates of different engineers may vary. In addition, the results of drilling, testing and producing subsequent to the date of an estimate may lead to the revision of an estimate. During 2017,2020, PEMEX did not record any material increase in PEMEX’s hydrocarbons reserves as a result of the use of new technologies. In order to ensure the reliability of PEMEX’s reserves estimation efforts, it has undertaken the internal certification of its estimates of reserves since 1996. PEMEX has established certain internal controls in connection with the preparation of its proved reserves estimates. Initially, teams of geoscientists from Pemex Exploration and Production’s exploration and exploitation business units (with each of these units covering several projects) prepare the reserves estimates, using distinct estimation processes for valuations relating to new discoveries and developed fields, respectively. Subsequently, the regional reserves offices collect these reserves estimates from the units and request that the Gerencia de Recursos y Certificación de Reservas de Hidrocarburos, (Office of Resources and Reserves Certification), the central hydrocarbon reserves management body of Pemex Exploration and Production, review and certify such valuations and the booking of the related reserves. This internal certification process is undertaken in accordance with internal guidelines for estimating and classifying hydrocarbon reserves, which are based on the SEC’s rules and definitions. The Office of Resources and Reserves Certification, which additionally oversees and conducts an internal audit of the above process, consists entirely of professionals with geological, geophysical, petrophysical and reservoir engineering backgrounds. The engineers who participate in PEMEX’s reserves estimation process are experienced in:in the following areas: reservoir numerical simulation; well drilling and completion; pressure, volume and temperature (PVT) analysis; analytical tools used in forecasting the performance of the various elements comprising the production system; and design strategies in petroleum field development. Furthermore, all of PEMEX’s personnel have been certified by the Secretaría de Educación Pública (Ministry of Public Education), most have earned master’s degrees in areas of study such as petroleum engineering, geology and geophysical engineering and they possess an average of over fifteen years of professional experience. Petróleos Mexicanos PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIESProductive State-Owned Subsidiaries and Subsidiary Companies
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015Notes to the consolidated financial statements
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)Figures stated in thousands, except as noted) In addition to this internal review process, Pemex Exploration and Production’s final reserves estimates are audited by independent engineering firms. ThreeFour independent engineering firms audited Pemex Exploration and Production’s estimates of proved reserves as of December 31, 2017:2020 or January 1, 2021: DeGolyer and MacNaughton (“DeGolyer”), Netherland, Sewell International, S. de R. L.R.L. de C. V.C.V. (“Netherland Sewell”); DeGolyer and MacNaughton, GLJ LTD. (“DeGolyer”); and Ryder Scott Company, L.P. (“Ryder Scott,”GLJ”) and together with Netherland Sewell and DeGolyer and MacNaughton,Sproule International Limited (“Sproule”), the “Independent Engineering Firms”. The reserves estimatesestimate reviewed by the Independent Engineering Firms totaled 97.0%97.8% of PEMEX’s estimated proved reserves. The remaining 3.0%2.2% of PEMEX’s estimated proved reserves consisted of reserves located mainly in certain areas in which have been shared with third parties provide drilling services to Pemex Exploration and Production.parties. Under such agreements, the corresponding third party is responsible of assessing the volume of reserves. Netherland Sewell audited the reserves in the Poza Rica-Altamira, Aceite Terciario del GolfoCantarell, Ku-Maloob-Zaap, Cinco Presidentes and Litoral de Tabasco assets.Macuspana-Muspac business units, DeGolyer in Burgos and Veracruz Assets and Ryder Scott audited the reserves in the Bellota-Jujo, Cinco Presidentes, Macuspana-Muspac, Samaria-Luna,Poza Rica-Altamira, Abkatún-Pol-Chuc Cantarell andKu-Maloob-Zaap Assets. Litoral de Tabasco business units and GLJ audited the reserves in the Burgos, Veracruz, Bellota-Jujo and Samaria-Luna business units and Sproule audited the reserves in the fields recently added to Pemex´s inventory reserves. The audits conducted by the Independent Engineering Firms consisted primarily of: (1) analysis of historical static and dynamic reservoir data provided by Pemex-Exploration and Production; (2) construction or updating of the Independent Engineering Firms’ own static and dynamic reservoir characterization models of some of the fields; (3) economic analysis of the fields; and (4) review of Pemex Exploration and Production’s production forecasts and reserves estimates. Since reserves estimates are, by definition, only estimates, they cannot be reviewed for the purpose of verifying exactness. Instead, the Independent Engineering Firms conducted a detailed review of Pemex Exploration and Production’s reserves estimates so that they could express an opinion as to whether, in the aggregate, the reserves estimates that Pemex Exploration and Production furnished were reasonable and had been estimated and presented in conformity with generally accepted petroleum engineering and evaluation methods and procedures. All questions, including any suggested modifications to proved reserves estimates, that arose during the Independent Engineering Firms’ review process were resolved by Pemex Exploration and Production to the satisfaction of the Independent Engineering Firms. The Independent Engineering Firms have concluded that PEMEX’s estimated total proved oil and natural gas reserve volumes set forth in this report are, in the aggregate, reasonable and have been prepared in accordance with Rule4-10(a) are consistent with international reserves reporting practice and are in accordance with the revised oil and gas reserves disclosure provisions of ASC Topic 932. PEMEX’s total proved developed and undeveloped reserves of crude oil, condensates and liquefiable hydrocarbons recoverable from field processing plants decreasedincreased by 11.0%1.3% in 2017,2020, from 7,2195,960.6 million barrels at December 31, 20162019 to 6,4276,041.0 million barrels at December 31, 2017.2020. PEMEX’s proved developed reserves of crude oil, condensates and liquefiable hydrocarbons recoverable from processing plants decreasedincreased by 14.7%0.5 % in 2017,2020, from 4,8663,585.0 million barrels at December 31, 20162019 to 4,1663,603.4 million barrels at December 31, 2017. These decreases were principally due to oil production in 2017, a decrease in field development activities and field behavior and the transfer to third parties, who were awarded with contracts in the bidding rounds,2020. The amount of certain PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
fields that had been temporarily assigned to PEMEX and associations and alliances such as Santuario and El Golpe fields, of which PEMEX is assigned a 64% of theirour proved reserves . The amount of crude oil, condensate and liquefiable hydrocarbon reserves added in 20172020 was insufficientenough to offset the level of production in 2017,2020, which amounted to 805.5694.8 million barrels of crude oil, condensates and liquefiable hydrocarbons.
PEMEX’s total proved developed and undeveloped dry gas reserves decreasedincreased by 5.6%10.0% in 2017,2020, from 6,9846,351.7 billion cubic feet at December 31, 20162019 to 6,5936,984.2 billion cubic feet at December 31, 2017.2020. PEMEX’s proved developed dry gas reserves decreasedincreased by 10.8%8.7% in 2017,2020, from 4,5133,608.5 billion cubic feet at December 31, 20162019 to 4,0263,922.3 billion cubic feet at December 31, 2017.2020. These decreasesincreases were principally due to oil production in 2017, a decrease in field development activities and field behavior and the transfer to third parties, who were awarded with contractshigher proved developed dry gas reserves in the bidding rounds, of certain fields that had been temporarily assigned to PEMEX and associations and alliances such as Santuario and El Golpe fields of which PEMEX is assigned a 64% of their proved reserves.Poza Rica, Burgos and Abkatún-Pol-Chuc business units. The amount of dry gas reserves added in 20172020 was insufficientenough to offset the level of production in 2017,2020, which amounted to 999818.7 billion cubic feet of dry gas. PEMEX’s proved undeveloped dry gas reserves increased by 3.9%11.6% in 2017,2020, from 2,4712,743.1 billion cubic feet at December 31, 20162019 to 2,5673,061.9 billion cubic feet at December 31, 2017.2020. This increase was principally due to an increase in proved undeveloped dry gas reserves in the fields of Poza Rica, Burgos and Abkatún-Pol-Chuc business units. During 2017, our2020, PEMEX’s exploratory activity in the shallow waters of the Gulf of Mexico and onshore regions resulted in three new discoveries of light crude oil fields (Camatl, Paki and Xolotl). In addition, PEMEX discovered three new reservoirs in the offshore Suuk fieldexisting fields Cibix, Terra and Pokche. Further, extension activities in June 2017our Pokche, Ixachi and gasQuesqui fields led to the incorporation of additional reserves. Together, these extensions and condensate discoveries in the onshore Valeriana and lxachi fields in August and November of 2017, respectively. These discoveries led to the incorporation of approximately 246130.6 million barrels of oil equivalentequivalent. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in three fields.thousands, except as noted) The following three tables of crude oil and dry gas reserves set forth PEMEX’s estimates of its proved reserves determined in accordance with Rule4-10(a). Summary of oil and gas(1) proved reserves as of December 31, 20172020 based on average fiscal year prices | | | | | | | | | | | Crude oil and Condensates(2) | | | Dry Gas(3) | | | | (in millions of barrels) | | | (in billions of cubic feet) | | Proved developed andun-developed reserves: | | | | | | | | | Proved developed reserves | | | 4,166 | | | | 4,026 | | Proved undeveloped reserves | | | 2,261 | | | | 2,567 | | | | | | | | | | | Total proved reserves | | | 6,427 | | | | 6,593 | | | | | | | | | | |
| | | | | | | | | | | Crude oil and Condensates (2) | | | Dry Gas (3) | | | | (in millions of barrels) | | | (in billions of cubic feet) | | Proved developed and un-developed reserves: | | | | | | | | | Proved developed reserves | | | 3,603.4 | | | | 3,922.3 | | Proved undeveloped reserves | | | 2,437.6 | | | | 3,061.9 | | | | | | | | | | | Total proved reserves | | | 6,041.0 | | | | 6,984.2 | | | | | | | | | | |
Note: Numbers may not total due to rounding. (1) | (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) | (2) | Crude oil and condensate reserves include the fraction of liquefiable hydrocarbons recoverable in natural gas processing plants located at fields. |
(3) | (3) | Reserve volumes reported in this table are volumes of dry gas, although natural gas production reported in other tables refers to sour wet gas. There is a shrinkage in volume when natural gas liquids and impurities are extracted to obtain dry gas. Therefore, reported natural gas volumes are greater than dry gas volumes. |
Source: Pemex Exploration and Production. PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Crude oil and condensate reserves (including natural gas liquids)(1) | | | | | | | | | | | | | | | 2017 | | | 2016 | | | 2015 | | | | (in millions of barrels) | | Proved developed and undeveloped reserves: | | | | | | | | | | | | | At December 31 | | | 7,219 | | | | 7,977 | | | | 10,292 | | Revisions(2) | | | (95 | ) | | | 189 | | | | (1,491 | ) | Extensions and discoveries | | | 147 | | | | (55 | ) | | | 111 | | Production | | | (805 | ) | | | (891 | ) | | | (935 | ) | Farm outs & transfer of fields due to NHC bidding process | | | (38 | ) | | | — | | | | — | | | | | | | | | | | | | | | At December 31 | | | 6,427 | | | | 7,219 | | | | 7,977 | | | | | | | | | | | | | | | Proved developed reserves at December 31 | | | 4,166 | | | | 4,886 | | | | 5,725 | | Proved undeveloped reserves at December 31 | | | 2,261 | | | | 2,333 | | | | 2,252 | |
| | | | | | | | | | | | | | | 2020 | | | 2019 | | | 2018 | | | | (in millions of barrels) | | Proved developed and undeveloped reserves: | | | | | | | | | | | | | At December 31 | | | 5,961 | | | | 5,786 | | | | 6,427 | | Revisions (2) | | | 651 | | | | 784 | | | | 22 | | Extensions and discoveries | | | 97 | | | | 78 | | | | 140 | | Production | | | (695 | ) | | | (687 | ) | | | (744 | ) | Farm-outs and transfers to E&P contracts (CEE) and transfers of fields due to CNH bidding process | | | 27 | | | | — | | | | (59 | ) | | | | | | | | | | | | | | At December 31 | | | 6,041 | | | | 5,961 | | | | 5,786 | | | | | | | | | | | | | | | Proved developed reserves at December 31 | | | 3,603 | | | | 3,585 | | | | 3,588 | | Proved undeveloped reserves at December 31 | | | 2,438 | | | | 2,376 | | | | 2,198 | |
Note: Numbers may not total due to rounding. (1) | Crude oil and condensate reserves include the fraction of liquefiable hydrocarbons recoverable in natural gas processing plants located at fields. |
(2) | Revisions include positive and negative changes due to new data from well drilling, revisions made when actual reservoir performance differs from expected performance and changes in hydrocarbon prices. |
Source: Pemex Exploration and Production. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) Dry gas reserves | | | | | | | | | | | | | | | 2017 | | | 2016 | | | 2015 | | | | (in billions of cubic feet) | | Proved developed and undeveloped reserves: | | | | | | | | | | | | | At December 31 | | | 6,984 | | | | 8,610 | | | | 10,859 | | Revisions(1) | | | 169 | | | | (183 | ) | | | (955 | ) | Extensions and discoveries | | | 468 | | | | (308 | ) | | | 47 | | Production(2) | | | (999 | ) | | | (1,134 | ) | | | (1,341 | ) | Farm outs & transfer of fields due to NHC bidding process | | | (29 | ) | | | — | | | | — | | | | | | | | | | | | | | | At December 31 | | | 6,593 | | | | 6,984 | | | | 8,610 | | Proved developed reserves at December 31 | | | 4,026 | | | | 4,513 | | | | 6,012 | | Proved undeveloped reserves at December 31 | | | 2,567 | | | | 2,471 | | | | 2,598 | |
| | | | | | | | | | | | | | | 2020 | | | 2019 | | | 2018 | | | | (in billions of cubic feet) | | Proved developed and undeveloped reserves: | | | | | | | | | | | | | At December 31 | | | 6,352 | | | | 6,370 | | | | 6,593 | | Revisions (1) | | | 1,240 | | | | 656 | | | | 3 | | Extensions and discoveries | | | 176 | | | | 196 | | | | 809 | | Production (2) | | | (819 | ) | | | (870 | ) | | | (887 | ) | Farm outs and transfer to E&P contracts (CEE) and transfers of fields due to CNH bidding process | | | 35 | | | | — | | | | (148 | ) | | | | | | | | | | | | | | At December 31 | | | 6,984 | | | | 6,352 | | | | 6,370 | | | | | | | | | | | | | | | Proved developed reserves at December 31 | | | 3,922 | | | | 3,609 | | | | 3,380 | | Proved undeveloped reserves at December 31 | | | 3,062 | | | | 2,743 | | | | 2,990 | |
Note: Numbers may not total due to rounding. (1) | (1) | Revisions include positive and negative changes due to new data from well drilling, revisions made when actual reservoir performance differs from expected performance and changes in hydrocarbon prices. |
(2) | (2) | Production refers here to dry gas, although natural gas production reported in other tables refers to sour wet gas. There is a shrinkage in volume when natural gas liquids and impurities are extracted to obtain dry gas. Therefore, reported natural gas volumes are greater than dry gas volumes. |
Source: Pemex Exploration and Production. Pemex Exploration and Production’s reserve-replacement ratio, or RRR,“RRR”, for a given period is calculated by dividing the sum of proved reserves additions due to discoveries, developments, delineations and revisions by that period’s total production. During 2017,2020, we obtained an increase of 174.21,019.9 million barrels of oil equivalent of PETRÓLEOS MEXICANOS, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
proved reserves as aggregated from discoveries, revisions, delimitations and development and production, which represents a RRR of 17.5 %.119.7%. PEMEX’s 20172020 RRR is an improvement as comparedsimilar to 2016, when theits 2019 RRR, which was 4.0%120.1%. PEMEX expects continued improvements in itsto continue to obtain an RRR in subsequentgreater than 100%, consistent with the last two years. PEMEX’s reserves production ratio (“RRP”), 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, 2017,2020, this ratio stayed constant with 2016 levels and was equal to 7.7is 8.7 years for proved reserves.reserves which is similar to the RRP of 2019. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) f.F. | Standardized measure of discounted future net cash flows related to proved oil and gas reserves (unaudited) |
The standardized measure tables presented below relate to proved oil and gas reserves excluding proved reserves scheduled to be produced after the year 2042.2046. This measure is presented in accordance with ASC Topic 932. Estimated future cash inflows from production are computed by applying average prices of oil and gas on the first day of each month of 2017.2020. Future development and production costs are those estimated future expenditures needed to develop and produce theyear-end estimated proved reserves after a net cash flows discount factor of 10%, assuming constantyear-end economic conditions. Future tax expenses are computed by applying the appropriateyear-end statutory tax rates with consideration of the tax rates of the new fiscal regime for Pemex Exploration and Production already legislated for 20172020 to the futurepre-tax net cash flows related to PEMEX’s proved oil and gas reserves. The estimated future payment of taxes was calculated based on the latest fiscal regime applicable by decree to Pemex-ExplorationPemex Exploration and Production, effective January 1, 2015 and by the tax benefits published in the Official Gazette of the Federation on April 18, 2016.December 9, 2019. 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, PRODUCTIVE STATE-OWNED SUBSIDIARIES
AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(FIGURES STATED IN THOUSANDS, EXCEPT AS NOTED)
Standardized measure of discounted future net cash flows as of December 31 | | | | | | | | | | | | | | | 2017 | | | 2016 | | | 2015 | | | | (in millions of U.S. dollars) | | Future cash inflows | | US$ | 269,489 | | | US$ | 228,196 | | | US$ | 325,052 | | Future production costs (excluding profit taxes) | | | (114,369 | ) | | | (87,942 | ) | | | (99,948 | ) | Future development costs | | | (26,229 | ) | | | (25,515 | ) | | | (32,560 | ) | | | | | | | | | | | | | | Future cash flows before tax | | | 128,891 | | | | 114,738 | | | | 192,544 | | Future production and excess gains taxes | | | (129,377 | ) | | | (108,960 | ) | | | (167,056 | ) | | | | | | | | | | | | | | Future net cash flows | | | (487 | ) | | | 5,779 | | | | 25,488 | | Effect of discounting net cash flows by 10% | | | (4,600 | ) | | | (937 | ) | | | (9,946 | ) | | | | | | | | | | | | | | Standardized measure of discounted future net cash flows | | US$ | 4,113 | | | US$ | 4,841 | | | US$ | 15,541 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | 2020 | | | 2019 | | | 2018 | | | | (in millions of U.S. dollars) | | Future cash inflows | | | 201,777 | | | | 330,286 | | | | 321,065 | | Future production costs (excluding profit taxes) | | | (109,064 | ) | | | (114,782 | ) | | | (103,498 | ) | Future development costs | | | (23,631 | ) | | | (37,540 | ) | | | (22,224 | ) | | | | | | | | | | | | | | Future cash flows before tax | | | 69,082 | | | | 177,964 | | | | 195,343 | | Future production and excess gains taxes | | | (73,122 | ) | | | (134,174 | ) | | | (156,691 | ) | | | | | | | | | | | | | | Future net cash flows | | | (4,040 | ) | | | 43,790 | | | | 38,652 | | Effect of discounting net cash flows by 10% | | | 3,359 | | | | (18,807 | ) | | | (12,434 | ) | | | | | | | | | | | | | | Standardized measure of discounted future net cash flows | | | (681 | ) | | | 24,983 | | | | 26,218 | | | | | | | | | | | | | | |
Note: Table amounts may not total due to rounding. Petróleos Mexicanos Productive State-Owned Subsidiaries and Subsidiary Companies Notes to the consolidated financial statements (Figures stated in thousands, except as noted) To comply with ASC Topic 932, the following table presents the aggregate standardized measure changes for each of the last three years and significant sources of variance: Changes in standardized measure of discounted future net cash flows | | | 2017 | | 2016 | | 2015 | | | 2020 | | | 2019 | | | 2018 | | | | (in millions of U.S. dollars) | | | (in millions of U.S. dollars) | | Sales of oil and gas produced, net of production costs | | US$ | (25,076 | ) | | US$ | (19,411 | ) | | US$ | (28,371 | ) | | | (16,968 | ) | | | (29,530 | ) | | | (31,279 | ) | Net changes in prices and production costs | | | 26,355 | | | (53,278 | ) | | (327,865 | ) | | | (39,509 | ) | | | 73,278 | | | | 62,902 | | Extensions and discoveries | | | 3,639 | | | 1,105 | | | 3,086 | | | | 1,426 | | | | 1,658 | | | | 4,323 | | Development cost incurred during the year | | | 2,699 | | | 4,124 | | | 10,172 | | | | 4,654 | | | | 4,281 | | | | 2,984 | | Changes in estimated development costs | | | 2,744 | | | 1,763 | | | (2,171 | ) | | | (10,019 | ) | | | 3,341 | | | | (2,146 | ) | Reserves revisions and timing changes | | | (1,353 | ) | | 6,366 | | | (22,801 | ) | | | 5,808 | | | | (19,615 | ) | | | 1,511 | | Accretion of discount ofpre-tax net cash flows | | | 5,891 | | | 11,094 | | | 43,394 | | | | 5,929 | | | | (9,305 | ) | | | 6,628 | | Net changes in production and excess gains taxes | | | (15,628 | ) | | 37,537 | | | 295,437 | | | | 23,015 | | | | (25,343 | ) | | | (22,818 | ) | | | | | | | | | | | | | | | | | | | | Aggregate change in standardized measure of discounted future net cash flows | | US$ | (728 | ) | | US$ | (10,700 | ) | | US$ | (29,119 | ) | | | (25,664 | ) | | | (1,235 | ) | | | 22,105 | | | | | | | | | | | | | | | | | | | | | Standardized measure: | | | | | | | | As of January 1 | | US$ | 4,841 | | | US$ | 15,541 | | | US$ | 44,661 | | | As of December 31 | | | 4,113 | | | 4,841 | | | 15,541 | | | | | | | | | | | | | | Change | | US$ | (728 | ) | | US$ | (10,700 | ) | | US$ | (29,119 | ) | | | | | | | | | | | | |
| | | | | | | | | | | | | | | 2020 | | | 2019 | | | 2018 | | | | (in millions of U.S. dollars) | | Standardized measure: | | | | | | | | | | | | | As of January 1 | | | 24,983 | | | | 26,218 | | | | 4,113 | | As of December 31 | | | (681 | ) | | | 24,983 | | | | 26,218 | | | | | | | | | | | | | | | Change | | | (25,664 | ) | | | (1,235 | ) | | | 22,105 | | | | | | | | | | | | | | |
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-151F-169
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