Business / Companies

Pemex discussing up to $4b fund with Chinese companies

By Bloomberg (China Daily) Updated: 2014-05-30 07:00

Pemex discussing up to $4b fund with Chinese companies

An undated picture shows a night view of part of the Petroleos Mexicanos (Pemex) Refinery at the Tula de Allende, Hidalgo state in Mexico. [Photo/IC] 

Petroleos Mexicanos, the state-owned oil producer, is in talks with Chinese companies to create a fund valued at up to $4 billion to invest and finance projects.

The proposed arrangement is in the "final stage of negotiations," Pemex, as the Mexico City-based oil producer is known, said in an e-mailed statement on Wednesday, correcting an earlier filing that said a deal had already been signed.

Pemex discussing up to $4b fund with Chinese companies
Pemex discussing up to $4b fund with Chinese companies
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The Sino-Mex Energy Fund would be the largest Chinese investment fund in Latin America, according to the earlier statement sent to the Mexican Stock Exchange. The prospective agreement between Pemex's international unit PMI Comercio Internacional and Chinese companies including Xinxing Ductile Iron Pipes Co Ltd and SPF Capital Hong Kong Ltd, would finance large-scale projects and create jobs.

Pemex wants to increase sales to Asia and Europe to offset falling oil exports to the US, Mexico's largest crude buyer. US oil imports from Mexico have fallen 47 percent in the past decade, dropping to a 20-year low, according to the US Energy Information Administration.

Pemex announced plans this year to export light crude to Japan, India and Switzerland. It will continue to pursue new partners in Asia and the Pacific region, Gustavo Hernandez, Pemex's director of exploration and production, said last week.

Mexico signed an energy bill last year to end Pemex's production monopoly and allow for private investment in the oil industry. Pemex's production has fallen to 2.5 million barrels a day from 3.3 million in 2004.

The government is also considering creating a fund allowing it to partner third-party investors to develop fields, similar to Norway's Petoro AS. That may require as much as 30 percent participation in the contracts it seeks.

The continued decline in Mexican oil output "has been one of the causes" of weak economic growth in the first quarter, Carlos Capistran, Bank of America Corp's chief economist in Mexico, said in e-mailed report on Wednesday.

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