According to Bloomberg, a refinancing operation has decreased the debt of Mexico’s state-owned oil company Pemex by up to $3.2 billion. The process involved replacing debt that was about to expire with a new bond having a 10-year maturity. The government also took advantage of low refinancing costs to restructure some medium-term debt.

The government has given the energy giant tax advantages in addition to debt refinancing and direct cash injections to assist it to get back on its feet. The state has cut the amount of taxes the corporation owes it three times since the Lopez Obrador administration took office, from 64% to 40%.

This isn’t the first time the government has utilised debt swap and refinancing measures to help the national oil business, which is the world’s most indebted, with a debt pile of $113 billion. Pemex will restructure its existing debt with a $1.5 billion bond in 2020. The government then provided Pemex with a $3.5 billion cash injection in December of last year. According to the finance ministry, the company’s “financial pressure” will be relieved by $10.5 billion between 2024 and 2030 as a result of the current debt refinancing manoeuvre.

The Mexican government has been working on a major overhaul of the country’s energy market, to effectively undo all of the previous administration’s reforms and re-establishing state-owned businesses as the leading players in the sector. López Obrador is also a key supporter of fossil fuels and believes Pemex should play a significant role in the market.

Pemex, on the other hand, has been battling to reverse a long-term fall in oil production, particularly since the Lopez Obrador administration effectively shut foreign oil corporations out of Mexico’s oil resources.