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(Bloomberg) — Mexico’s leading presidential candidate Claudia Sheinbaum said she expects Petroleos Mexicanos, 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 CEO and the president are going to leave us with a long-term plan.”

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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 $106 billion, including $6.8 billion 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. 

Read More: To see the latest update from Mexico’s polls, see the Bloomberg Poll Tracker 

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,” she said, “and at the same time, the entry of Pemex into other energy sources or other types of electricity generation.”

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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 aging infrastructure is instead being used to cover interest payments. The company’s debt load is so large that has hindered its market access, and refinancing the bonds could prove costly as global rates remain high.

The company has roughly $8.8 billion 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.”

Pemex Strategy

Lately, Pemex has relied on tax breaks and cash injections from the government to remain afloat. AMLO has lavished support on the company, granting it as much as 1.37 trillion pesos, or around $80 billion, over the course of his administration.

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An environmental engineer and former Mexico City mayor, Sheinbaum outlined her energy strategy last month, including a roughly 1.8-million-barrel daily cap on Pemex’s oil production in coming years — a slight increase from about 1.5 million now — while the government focuses on sparking growth in green energy.

Read More: Mexico’s Next Leader Will Inherit Oil Giant’s $106 Billion Debt

New Projects

The company’s future plans, including participating in the extraction of lithium, are financially viable, Sheinbaum said in the interview. The funding for energy initiatives would come in part from the private sector and in part from extra revenue from projects executed during Lopez Obrador’s administration, such as the purchase of plants from Spanish firm Iberdrola.

Her administration would also look for ways to improve Pemex’s environmental record, confronting problems such as methane emissions.

“We have to advance in what would be a vision of decarbonization of the economy, to what point oil production will continue and until when,” she said. “Natural gas is going to continue to be a very important fuel in the future.”

—With assistance from Carlos Manuel Rodriguez, Paola Vega Torre and Rafael Gayol.

(Updates with details of Pemex debt load, more comments from Sheinbaum starting in eighth paragraph)

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