Mexico City: Mexico’s leading presidential candidate Claudia Sheinbaum said she expects Petroleos Mexicanos (Pemex), the world’s most indebted oil producer, to refinance its bonds ahead of upcoming maturities in 2025.

“By necessity it has to be in 2025, because there is a maturity of part of the debt coming up in the next year, and we have to work on that,” she said in an interview on the sidelines of Mexico’s annual banking convention in Acapulco. “Most likely the current Pemex chief executive and the president are going to leave us with a long-term plan.”

Analysts and investors agree that Pemex stands as one of the greatest challenges Mexico’s next president will inherit. The company’s debt burden stands around US$106bil, including US$6.8bil due in 2025.

Sheinbaum, a former Mexico City mayor from the ruling Morena party, has positioned herself as a natural successor to President Andres Manuel Lopez Obrador.

The popularity of AMLO, as the president is known, has helped her lead the race with 58% of voting intention, according to the Bloomberg Poll Tracker. Mexicans will pick their new president on June 2.

She added that her team would have to build on the plan left by the current administration and management, and establish a timeline for Pemex to develop other business options.

“We have to work on two fronts: on the one hand, the refinancing of the debt, and allow that refinancing to be associated with the production of oil, the refining of oil, and at the same time, the entry of Pemex into other energy sources or other types of electricity generation,” she said.

Pemex’s oil and gas output has withered to less than half of what it was two decades ago.

Slashing debt is key to increasing production, since money that could be spent fixing ageing infrastructure is instead being used to cover interest payments.

The company’s debt load is so large that it has hindered its market access, and refinancing the bonds could prove costly as global rates remain high.

The company has roughly US$8.8bil in debt due in the remainder of 2024, according to its latest earnings presentation.

Lopez Obrador’s government has promised to cover the majority of it.

Sheinbaum said that she would look to appoint a chief executive for Pemex who has both financial expertise and experience in the oil sector. She said that she had someone in mind for the position, but that she would only reveal the name at “the right moment”.

 - Bloomberg