(Bloomberg) -- Petroleos Mexicanos is revamping its environment and safety procedures to ensure it can attract financing from banks and investors demanding tougher standards from fossil fuel companies, according to people familiar. 

Banco Bilbao Vizcaya Argentaria SA, HSBC Holdings Plc and BNP Paribas are among banks and external advisers who are helping the world’s most indebted oil company develop a long-term plan to improve its environmental, social and governance track record, the people said, asking not to be named because they are not authorized to speak publicly on the issue. A rollout is planned for the second half of the year, they added. 

Without the plan, Pemex could lose credit lines from banks including HSBC, BNP and Credit Agricole, one of the people said, as European banks have been more quick to adopt strict standards compared to their US counterparts. One of the top goals of the plan is to reduce gas flaring, according to two of the people with direct knowledge of the talks. 

A Pemex representative didn’t respond to a request for comment, and neither did BNP Paribas. HSBC and Credit Agricole declined to comment. A representative of BBVA Mexico said the bank could not confirm that it was involved, adding that it is “common practice for banks to accompany their clients to give them advice aimed at strengthening their overall situation to obtain credit lines.” 

Pemex’s reputation has been marred by a cavalcade of mishaps over the past several years, including two massive methane leaks, a deadly offshore platform accident and a gas explosion that set the Gulf ocean ablaze. Three fires last month at its facilities resulted in five deaths and many more injuries. The company’s accident frequency rate soared by 40% last year.

Meanwhile, a growing number of banks and investors are demanding companies around the world mitigate practices they quantify as harmful to the planet. Pemex could see dwindling interest in its bonds unless it makes serious commitments to improve ESG metrics, the people said.

“Though the company is engaging on ESG and providing disclosure on its earnings presentation, these trends and recent events are certainly concerning and weaken the credibility of any plan the company may disclose,” JPMorgan Chase & Co. analyst Alejandra Andrade said in a Wednesday research note.

Pemex acknowledged in its latest five-year business plan that it faces “limitations” in receiving ESG financing and should improve its environmental and safety metrics. 

Read more: Pemex Lines Up Goldman, JPMorgan for $1 Billion in Financing

Pemex is under growing pressure to find new sources of funding, with $107.7 billion in outstanding debt as of the end of 2022. About $8 billion coming due this year, according to a Jan. 31 note from Moody’s Investors Service. The government has provided nearly $45 billion to Pemex in capital injections, tax breaks and other assistance since 2019, and indicated it could step in if necessary.

The debt-laden state driller has been asking banks since late last year for innovative solutions to help manage its debt, with the most recent including a deal with JPMorgan and Goldman Sachs Group Inc. to provide at least $1 billion in collaterized loans. 

Bloomberg News previously reported Pemex has been in talks with Goldman and HSBC for financing linked to reducing greenhouse gas emissions.

--With assistance from Maria Elena Vizcaino and Alexandre Rajbhandari.

(Recasts paragraphs one through five with more details on plan and banks involved.)

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