The fire on a platform in the Ku-Maloob-Zaap complex in the Gulf of Mexico will cost the state-owned oil company Petróleos Mexicanos (Pemex) hundreds of millions of dollars and puts the focus on the quality of its contractors.

A fire on a Pemex E-Ku-A2 gas and crude oil platform on Sunday left five people dead, six injured and at least two missing, according to the most recent report. In sales alone, Pemex will lose 240 million dollars for the eight days that the 125 wells that were affected by the fire on the platform will remain closed. To this must be added what it will cost the company to condition the reopening of each closed well, which could be between 40 and 50 million dollars.

The risk rating agency Fitch updated its outlook for the company as a result of the incident, since the complex contributes 40% of the total production. Fitch expects the incident to accelerate the drop in the company's cash flow to average negative P12 billion a year for the next three years. Since January 2019, Pemex has increased its crude production in new fields, Fitch added, but it does not make up for the loss from the accident.

Although the company has successfully increased production in new fields over the past two years, a faster decline in production from the mature Ku-Maloob-Zaap field would be more difficult to offset.

The fire occurred when Cotemar, a company contracted by Pemex, was maintaining the platform, which puts the focus on the quality of both the contractors and the contracts themselves, explains Pech. It is necessary to review each one of the contracts, if all the companies that are working for Pemex comply with the insurance and the standards that are needed in this industry, because it is not child's play. The union to which most of the employees of the state-owned oil company are affiliated, the Sindicato de Trabajadores Petroleros de la República Mexicana (STPRM), blamed Pemex, saying that the fire was caused by "bad management".

The investigation and the expertise of the Agencia de Seguridad, Energía y Ambiente (ASEA), as well as Pemex and Cotemar's insurance companies, will be key to estimate the costs of repairing or replacing the infrastructure. According to Pemex, the budget allocated for maintenance is 5 billion pesos, which is equivalent to 1% of its total budget. Pemex's infrastructure is already more than 30 years old. The question is how much are they investing each year in preventive maintenance and how much in corrective maintenance?

In 2017, the National Hydrocarbons Commission (CNH) recommended that Pemex and the Ministry of Energy seek a private partner in a so-called farmout agreement for exploration and production of Ku-Maloob-Zaap. This, said the regulator, could alleviate Pemex's high tax burden and allow it to reinvest more of its profits. The oil company did not follow the recommendation and the farmouts that were agreed during the previous administration were frozen by the government of President Andrés Manuel López Obrador.