PEMEX: A Geothermal Leader in Mexico's Energy Transition?

PEMEX’s Strategic Plan 2025–2035 lays out a vision of stability and growth centered on hydrocarbons. The plan rightly emphasizes expanding reserves through exploration, consolidating production in mature fields, and leveraging infrastructure to sustain national energy security. Yet at this pivotal moment, Pemex has the opportunity to go further. By embedding geothermal data collection into its annual exploration campaigns, the company can send a powerful message: PEMEX is not only Mexico’s oil champion, but it is becoming Mexico’s energy transition lever.

The idea is simple but transformative. For a marginal cost increase of roughly 10–15% in its exploration budgets, PEMEX can generate insights into geothermal potential every time it drills. Instead of limiting exploration to hydrocarbons, each well can become a dual-use data asset, capable of informing both oil and gas strategies today and renewable development tomorrow. It is a no-regret move that strengthens PEMEX’s portfolio, diversifies risk, and enhances its credibility with investors, regulators, and society.

A Small Add-On, a Big Payoff

Exploration remains PEMEX’s backbone. In 2024 alone, the company drilled 33 exploratory wells, with a commercial success rate of 30 percent—well above the global average (PEMEX, Annual Report 2024). Yet that still means 70% of wells fail to yield commercially viable hydrocarbons. Traditionally, such “dry wells” represent sunk costs. With geothermal data collection, however, they can still deliver value.

The incremental expense of this integration is minimal. Adding temperature gradient logging, downhole pressure sensors, water chemistry sampling, and adapted seismic reprocessing typically adds US $200,000–500,000 per well (World Bank, Geothermal Handbook). For a five-well campaign, the geothermal add-on would cost around US$1–3 million. Compare that to a standalone geothermal exploration program, where slim-hole drilling and temperature gradient wells often cost US$5–15 million before a single field is confirmed (IRENA, Geothermal Power: Technology Brief). By leveraging existing mobilization, logistics, and equipment, EEMEX can save up to 80% of geothermal prospecting costs.

From Dry Wells to National Assets

In oil and gas, a dry well is a disappointment. In geothermal, however, it can be a discovery. Mexico already leads Latin America in geothermal, with more than 1,000MW of installed capacity, including Cerro Prieto in Baja California — the world’s largest single geothermal complex at 820MW (IEAGeothermal). Yet, much of the country’s geothermal potential remains untapped, primarily because the data is scattered, outdated, or incomplete.

If PEMEX systematically captures geothermal data during exploration, the result would be an unprecedented national geothermal atlas enriched by the company’s drilling footprint. This would not only expand Mexico’s clean energy options but also create opportunities for regional development: direct-use geothermal heat for agro-industry, aquaculture, and manufacturing, or binary cycle power plants supplying local grids and industrial parks (World Bank, Direct Utilization of Geothermal Resources).

By redefining dry wells as geothermal assets, PEMEX diversifies its risk profile. Even if hydrocarbons are absent, geothermal heat may still be present, providing resilience in an era when oil and gas markets are volatile and global capital is shifting toward renewables.

Building Bridges: PEMEX + CFE

The synergies between PEMEX and the Federal Electricity Commission (CFE) are evident. CFE is Mexico’s largest geothermal operator and has decades of experience in geothermal generation. PEMEX, by contrast, has unmatched drilling capacity and subsurface expertise. Together, they could form a national alliance that accelerates geothermal development, combining CFE’s operational know-how with PEMEX’s exploration footprint.

Imagine a scenario where PEMEX provides geothermal resource data from its exploratory campaigns, and CFE evaluates these prospects for integration into the national grid. This partnership would exemplify the government’s broader vision of state-led energy coordination while boosting Mexico’s reputation as one of the top ten geothermal leaders.

ESG Appeal and Investor Signaling

The energy sector is increasingly judged not just on production metrics, but on sustainability and transition strategies. International investors and development banks want to see companies diversifying and aligning with global climate commitments.

For PEMEX, systematically integrating geothermal into exploration offers a clear ESG narrative: 

• Barrels today, clean energy tomorrow. The company delivers hydrocarbons while laying the groundwork for renewables.
• De-risking and diversification. Exploration budgets produce multiple value streams, hedging against market volatility.
• Institutional credibility. PEMEX shows it is evolving beyond fossil fuels, appealing to green funds and ESG-focused capital.

In practical terms, this positioning matters. As capital markets tighten for fossil-heavy companies, PEMEX can distinguish itself as an innovator rather than a laggard. By turning exploration into a dual-purpose activity, it demonstrates vision and pragmatism, two qualities investors reward.

Competitive Economics of Geothermal

Geothermal is not only clean; it is competitive. According to Lazard (Lazard, LCOE-Levelized Cost of Energy, 2025), geothermal baseload generation costs about US$66-109/MWh — competitive even with coal (US$71-173/MWh) and geothermal provides continuous, dispatchable power — a critical complement for grid stability.

For PEMEX, enabling geothermal means enabling cost-effective, reliable energy for the nation. That aligns with its mandate of sovereignty and security, while also enhancing its role in the broader energy mix.

A Sharper Closing Call

PEMEX’s Strategic Plan emphasizes sovereignty, energy security, and sustainability. Adding geothermal to its exploration portfolio delivers all three. The incremental cost is marginal; the upside is transformative. It is a classic no-regret option: Even if oil prospects decline, geothermal data remains a strategic asset for Mexico.

By embedding geothermal into exploration, PEMEX can:

• Reframe “dry wells” as new opportunities.
• Build a powerful alliance with CFE.
• Enhance its sustainability credentials with investors.
• Strengthen Mexico’s leadership in geothermal energy.

The time to act is now. Every exploration well drilled without geothermal data is a missed opportunity. If PEMEX wants to truly evolve into an energy company — not just an oil company — it must seize this chance. The message to investors, policymakers, and citizens would be unmistakable: PEMEX is no longer only in the business of hydrocarbons. PEMEX is in the business of energy.