The Mexican government will provide a capital injection of Peso 73.5 billion ($4.2 billion) for Pemex that analysts described as the first salvo in a battle to defend the survival of the state oil company.
The finance ministry Wednesday described the money as a rescue as a time low oil prices have forced Pemex to cut capital spending, and cut its production forecasts.
"If it is a rescue, it's certainly not sufficient. Pemex has negative equity of about $70 billion," said Luis Miguel Labardini, a partner of the Marcos y Asociados consultancy.
The ministry said it would pay $1.5 billion immediately, to be deducted from the $5.5 billion in cuts made in February of the Pemex budget for this year. The rest of the $4.2 billion would be paid over the whole of 2016 for the payment of severances and pensions.
But the ministry added: "This support is on condition that Pemex reduces its cash flow, and maintain its commitments with suppliers and contractors."
Miguel Messmacher, the deputy finance minister, said: "This packet is so that Pemex can have the resources it needs to meet its obligations without having to go to the debt markets."
Pemex did make a recent substantial payment of long-overdue debt to suppliers, but only small firms were paid. The Mexican private sector Business Coordination Council has said that the larger suppliers are owed some $6.9 billion.
In addition, Pemex owes some $80 billion in debt for pensions. Only recently has the company formed a pension fund for its employees.
Before that there was no provision. Payments to pensioners were met out of current income, as though they were wages.
The absence of a pension scheme formed part of a "let the good times roll" mentality in Pemex management that only now appears to have been halted.
"Pemex chiefs were talking about setting up a pension fund at least 10 years ago, but they never did anything to make it happen then," said David Shields, editor and publisher of the Energia a Debtae magazine.
But the pensions and the debts to suppliers are only part of the problem, said Arturo Carranza, senior analyst of the Mexico City-based Solana consultancy.
"The long-term indicators point to deep-seated problems that threaten the viability of Pemex," he said. "They include the slide in crude production, the fall in the replacement of proven reserves, declining refinery output, and much more. All these problems have to be tackled, and very urgently."
Pemex management has said that, under the terms of the nation?s energy reform, it will sell assets and launch farm-outs that can produce ready cash. But these moves have to be implemented urgently, added Carranza.
Will the new Pemex director-general, Jose Antonio Gonzalez Anaya, be able to meet the challenge?
"He's the right man at the right time," Labardini said. "He's got an excellent track record. As head of the Mexican Social Security Institute, he turned round what had been a basket case in the state sector. "Even so, there's no guarantee that even he can turn round Pemex."
Mexico's injection comes as the country is in the process of opening up its oil industry to private investors, ending the Pemex monopoly. President Enrique Pena Nieto, architect of the reform, has consistently advocated a strong and healthy Pemex, no longer a monopoly but a state company, such as Norway's Statoil that can compete successfully within the international oil industry.
Pena Nieto has said that a strong Pemex will be a ?linchpin? for the reform, particularly in its early years when the private sector is not expected to have much more than a marginal impact on oil output, which still forms at least a fifth of the federal government's income.
