S&P Revises CFE: The Week in Energy

S&P Global Ratings revised the outlooks on both PEMEX and CFE from stable to negative, the first such move in nearly four years, one day after applying the same revision to Mexico's sovereign. Both retain their BBB investment-grade ratings, but downgrades could follow within 12 to 24 months.

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S&P Shifts PEMEX and CFE Outlooks to Negative

S&P was direct about the causal logic: the federal government transferred approximately US$69.8 billion to PEMEX alone between 2019 and 2025, and the persistent large-scale support required by both companies is itself aggravating the sovereign's fiscal rigidities. PEMEX's standalone credit profile remains at CCC+, with a debt-to-EBITDA ratio of 5.8x and negative free operating cash flow in 1Q26. For CFE, S&P acknowledged its strategic importance but flagged the same structural dependency on federal transfers. If two of the three major rating agencies ultimately downgrade Mexico to junk, institutional fund managers could face mandatory sell-offs, triggering capital outflows and higher borrowing costs across both sectors.

Mexico Launches MX$140 Billion Gas Pipeline Modernization Plan

Minister of Energy Luz Elena González announced a MX$140.9 billion investment program to expand, modernize, and rehabilitate Mexico's national gas pipeline network through 2030, the largest single gas infrastructure commitment in Mexico's recent history. The total splits between CFE (MX$53.8 billion for nine new pipelines feeding 13 new combined-cycle plants entering operation in 2026–2027) and CENAGAS (MX$87 billion for three new ducts and 41 modernization projects across its 21,149km network). González acknowledged a structural problem: much of the network was transferred from PEMEX to CENAGAS in deteriorating condition. The Cuxtal II pipeline connecting Yucatán to Tabasco, CENACE's flagged pressure point, is scheduled for May 2027. The Naco-Hermosillo-Guaymas pipeline in Sonora, to be developed in partnership with private companies, would address the supply conflict between power generation and LNG export ambitions that IEEFA identified, though its 2029 completion means near-term constraints remain.

Grupo Carso Advances Geothermal Plant in Celaya

Grupo Carso's ENAL subsidiary is developing Mexico's first private geothermal plant in Celaya, Guanajuato, with 26MW of installed capacity and approximately US$80 million in investment, under a 30-year SENER concession granted under Mexico's new Geothermal Law. The project uses binary-cycle technology, which extracts electricity from moderate-temperature geothermal water in a closed loop with no direct emissions, and is geologically connected to the Los Azufres system in Michoacan. Its placement at the heart of the Bajio industrial corridor, Mexico's most energy-intensive nearshoring zone, is commercially deliberate, with the stated scope including industrial thermal applications beyond simple power generation. The project, combined with Carso's prior Baja California geothermal tender win and its upstream oil and gas positions at Zama, Ichalkil-Pokoch, and Macavil, signals a deliberate strategy to build a vertically integrated energy platform across Mexico's full demand spectrum.

US Extends Cuba Sanctions to Foreign Energy Companies

Trump signed an Executive Order on May 1 authorizing blocking sanctions against any foreign person operating in Cuba's energy, mining, financial services, or defense sectors, under IEEPA, extending secondary sanctions to foreign financial institutions that conduct significant transactions with designated parties. Legal analysts describe the measure as a structural transformation of the Cuba sanctions regime comparable in scope to Iran and Russia frameworks. The January 2026 order had threatened tariffs on countries supplying Cuba; this one authorizes direct sanctions on foreign entities, including state-owned company subsidiaries. PEMEX's Cuban trade vehicle, recently rebranded from Gasolinas Bienestar to Servicios Logísticos Integrales Mumiya, would fall squarely within the sectoral designation criteria. For the Sheinbaum administration, the USMCA review deadline, PEMEX receivables dispute, and this new sanctions framework now converge to make any resumption of Cuban oil exports a decision with compounding diplomatic, legal, and commercial consequences.

IEEFA: New Fortress Energy's Bankruptcy Reveals Systemic Failures

IEEFA identifies four overlooked failures within New Fortress Energy's March 17 debt restructuring, which would slash the company's debt from US$5.7 billion to US$527 million in exchange for creditor control, with direct consequences for Mexico's LNG sector. First, an SEC filing simultaneously admitted financial misstatements since 2023 and identified multiple material weaknesses in internal controls. Second, insiders including CEO Wes Edens and Co-Founder Randal Nardone, who together controlled 53.6% of shares, extracted over US$1 billion in dividends during years of sustained losses. Third, NFE's Fast LNG facility off Altamira, Mexico's only functioning LNG export plant, has nearly 20% feedgas losses, far above industry norms, with costly engineering fixes that had not resolved the problem by January 2026. Fourth, a second Mexican LNG plant at Altamira was effectively abandoned after CNE denied the pipeline permit and construction was halted for lack of funds. Combined with Sempra's Vista Pacífico cancellation and Amigo LNG's feedgas conflict, NFE's collapse compounds a pattern of serious failures across Mexico's LNG export ambitions.