Analysts Show Concern About PEMEX’s Production Plans

As the government pushes PEMEX to raise crude output, a new warning from financial and industry analysts points to the company’s heavy debt burden as a major obstacle for forming new partnerships and achieving production targets. The warning follows a report by Reuters that frames PEMEX’s financial liabilities as a red flag for potential investors and private-sector partners.

According to the analysis, PEMEX’s debt to suppliers and contractors has reached historically high levels. By September 2025, the oil company reportedly owed close to US$28 billion dollars to a broad list of companies that include global service providers and local firms. This legacy indebtedness remains one of the principal factors fueling reluctance among private firms to commit to the mixed-contract projects PEMEX now seeks to launch.

The government has called for private-sector participation. In late October, PEMEX’s leadership invited national and international oil and gas firms to submit proposals for mixed contracts aimed at elevating crude production, with the target set at about 1.8MMb/d. However, to date, those calls have received little response, and industry insiders cited the weight of PEMEX’s debt as a major deterrent. “There is always doubt as to whether PEMEX will honour its commitments because paying suppliers remains a problem,” sources told Reuters.

The scale of the problem is considerable. In 2025 alone, PEMEX reportedly made payments amounting to US$16.3 billion to suppliers, reflecting efforts to reduce arrears. Despite these efforts, many service companies continue to flag delays in payment as a structural risk. The status of numerous invoices remains uncertain, and several key contractors, from multinational firms to SMEs, have paused operations or demand robust guarantees before accepting new assignments.

The hesitation is especially consequential because PEMEX’s plan relies on awarding roughly 21 mixed-contract agreements in the near term, with hopes they will add up to 450Mb/d in new output. If private companies decline to partner, the burden of increasing production will remain solely on PEMEX, an uncertain proposition given the company’s financial constraints.

Beyond cash-flow issues, the structure of the proposed mixed contracts also dilutes incentives. Under current terms, PEMEX is required to maintain at least 40% stake in joint operations, while private partners can recover no more than 30% of costs before participating in profits. Several sources warned these conditions reduce the appeal of projects, especially for firms wary of upfront investment and uncertain returns.

Moreover, experts argue that persistent delays in payments to service providers affect not just investor confidence but also the NOC’s operational capacity. The independent group representing many such providers warned earlier this year that ongoing non-payments could trigger industry-wide disruptions, threatening drilling schedules, maintenance plans, and ultimately crude and gas output.

Politically and economically, the stakes are high. PEMEX remains a central pillar of the federal government’s energy strategy. The company’s production supports national fuel security, revenue, and the long-term outlook of the sector under the current administration. A failure to revive output could force Mexico to maintain or increase fuel imports, undermining rhetoric about energy sovereignty and national self-sufficiency.

The government has attempted to mitigate the crisis. In September 2025, the Ministry of Finance successfully placed a bond issuance worth US$13.8 billion to buy back part of PEMEX’s foreign-denominated debt and improve its liquidity profile. Credit rating agencies reacted positively. But while these financial maneuvers ease immediate liquidity and refinancing pressures, they do not address the deeper problem: the lack of committed investments and deferred supplier payments that undermine the company’s long-term credibility and operational stability.

Industry analysts warn that unless PEMEX can both clear outstanding debts and present more attractive partnership terms, the expansion plan will remain aspirational. “Without certainty around payments, companies will be reluctant to risk investment in Mexico,” one executive commented.

At the same time, some observers argue that strong state support, including debt restructuring and legal frameworks for mixed contracts, might still eventually bring companies onboard, albeit at a slower pace than anticipated. Others suggest the state may have to accept a greater privatization of production or offer more flexible contract conditions, such as higher profit shares or better payment guarantees, to revive interest.