By Amy Stillman, Eric Martin and Lucia Kassai
Briones, who worked for two decades at PMI, the trading arm of Mexico’s state-owned oil company, left amid an external review of new formulas created to price oil sales to refiners in the U.S. and elsewhere, one of the people said. Pemex Chief Executive Officer Octavio Romero raised questions about the marketing of Mexico’s crude by PMI’s management team, two people said.
Briones did not respond to calls and emails seeking comment. Pemex didn’t immediately respond to requests for comment.
The review has caused delays in presenting the pricing to customers. The new formulas for pricing the nation’s crude seek to eliminate fuel oil as a result of new regulations issue by the International Maritime Organization, known as IMO 2020, that require ships to burn cleaner fuels from January of next year. It is expected to push down prices by reducing the demand for fuel oil.
The formulas underpin not only all physical crude sales made by Pemex, but also Mexico’s annual sovereign hedge, the largest of its kind. The delay in finalizing the formula could complicate banks’ efforts to mitigate their risk from the hedge, as they need to use a combination of liquid oil futures and options.
Mexico’s President Andres Manuel Lopez Obrador has staunchly opposed his predecessor’s policies and suspended competitive oil auctions and joint-venture agreements with Pemex in its oil fields. His more nationalistic energy policy seeks to make Mexico self-sufficient in fuel production and reduce the influence of global oil markets.
The country, which has been struggling to turn around an extended decline in oil production, exported 1.08 million barrels a day of crude in August, government data show. Oil revenue accounted for about 16% of federal government income in the second quarter, according to Finance Ministry data. That’s down from more than 30% at the start of the presidency of AMLO’s predecessor, Enrique Pena Nieto, before a tax overhaul and an acceleration in the output drop.