Schlumberger to File Lawsuit Against Pemex in NY

Schlumberger drilling company is preparing a lawsuit against Pemex for late payments, which is expected to be filed in January, sources told LPO. If this action takes place it increases the risk that Pemex will lose its investment grade by the rating firms.

It was the last week of December when executives of the company held a meeting in its offices in Mexico, located on Paseo de la Reforma, to make this decision, sources reported.

LPO reported months ago the problems of the oil company to comply with the payment to their suppliers, with the exception of Marinsa, which has benefited from other contracts within the administration of Andres Manuel Lopez Obrador, the only one to receive their respective payments.

Other companies with which Pemex has defaulted include Dowell Schlumberger de México. As of March, the debt amounted to $96.7 million dollars for contracts in exploration and production.

The withholding of these payments is explained in some way by the austerity measures and the lack of resources, however, a source who knows the case considers that it is also due to a strategy of Pemex's management -whose CEO is Octavio Romero, appointed by President Lopez Obrador- to "artificially" improve the company's numbers, since it is not invoicing and thus, less expenses are registered. "They are in danger of crossing the line and committing fraud," they warn in the oil giant's tower in Mexico City's Anzures neighborhood.

A report by the newspaper El Universal states that the Mexican oil company's debt to nearly a thousand suppliers, which amounts to $100 billion pesos, is not being reported in their financial statements.

Pemex is listed on the debt market of the N.Y. Stock Exchange, which by law must notify investors about the payment obligations acquired, this explains the lawsuit that was being determined these days in Mexico City.

If the lawsuit is filed, there is concern that this action will be considered by the rating agencies in a new adjustment of Pemex's credit rating, which would result in a loss of investment grade. This decision could be taken in the first quarter of 2020.

This scenario risks contagion to Mexico's credit rating, which would imply that some rating agencies could also make an adjustment to it. There is disagreement in the market on whether this action is the route for the sovereign credit rating to also lose its investment grade, because for that to happen, at least three more cuts would have to come.