U.S. oilfield service provider Halliburton on Tuesday said Mexico’s oil production decline rates are creating pressure for a reactivation of business amid long delays from state-run Pemex to pay its suppliers.
Output of crude and condensate by Pemex, the largest producer in the country, fell 8.4% in May to 1.64 million barrels per day, according to official figures.
Oilfield service companies have significantly decreased activities because of the lack of payments from Pemex, the world’s most indebted energy company.
Halliburton said issues related to payments from Pemex have not been resolved yet.
Last week, larger rival service firm SLB said the government and Pemex must address critical issues before there can be a rebound.
“We believe we’re there. We’re just waiting now to see what are the next steps that could help unlock the value of obviously the assets in Mexico and the dynamic of Pemex to rebound from this,” SLB’s chief executive Olivier Le Peuch said during the company’s earnings call.
SLB is ready to work closely with Pemex to solve the issues, he added.
Last month, the Mexican association that groups foreign oil services companies warned that many of these firms may have to stop operations as early as July.
Pemex has an outstanding debt with an extensive list of suppliers and contractors of about $20 billion, in addition to its financial debt of $101 billion, despite the government’s billions of dollars in recent years to cover amortizations.
In a letter in June, the Mexican Association of Oil Service Companies urged Pemex to process and release billing for services provided last year; guarantee regular billing and timely payment for services this year; and design a payment plan to settle all historical debts owed to companies in the sector.
Mexico’s oilfield services sector has shrunk significantly due to Pemex’s lack of payments, the association said, adding it would not be able to guarantee operational continuity due to cash flow problems.
Halliburton, which posted second-quarter earnings on Tuesday, said it expects its full-year international revenue to decline by mid-single digits, year on year, primarily driven by activity reductions in Saudi Arabia and Mexico.
(Reporting by Arathy Somasekhar and Tanay Dhumal in Houston; Editing by Chizu Nomiyama and David Gregorio)