Energy Reform Raises Concerns for Future Investments in PEMEX

The secondary legislation for President Claudia Sheinbaum's Energy Reform has raised concerns about its ability to attract investment and improve PEMEX’s production and finances, according to Moody’s and industry experts. Moody’s warns that the main risk to the NOC lies in the clarity of the secondary laws and their potential to provide certainty for private investors.

Roxana Muñoz, PEMEX Analyst, Moody’s, explains that the core issue is whether the new legislation will allow for sufficient private investment to help PEMEX increase its oil production. "One of the biggest concerns is whether there will really be enough investment in these secondary laws to allow PEMEX to increase production," she says.

In addition, Muñoz says that by 2026, PEMEX will need a capital injection of US$17 billion from the federal government to support its operations. This continued support, she adds, would be a significant burden on Mexico’s public finances, as the company is already heavily indebted.

Alejandra Macías, Director, Center for Economic and Budgetary Research (CIEP), says that oil revenue will continue to decrease, putting additional pressure on PEMEX to ensure higher productivity while meeting the government's self-sufficiency objectives.

Since 2019, PEMEX has received over MX$2.8 billion (US$137.53 million) in government support, including MX$1.2 billion in direct capital contributions and MX$1 billion in tax benefits. Alejandro Chanona, Consultant, NGRGY, says that this support has acted as a temporary fix, and that a more structured approach with clear goals and schedules is needed for future assistance.

PEMEX, which holds the title of the most indebted oil company in the world with liabilities amounting to US$97.3 billion, has seen its production decline during the current administration. The company’s daily oil extraction dropped by 6% annually to 1.7MMb of crude oil and condensates, a figure far from the 1.8MMb/d target set by the government.

In February, Victor Rodriguez, CEO, PEMEX, announced a six-year investment plan of MXN$1.8 trillion for oil and gas production. Sheinbaum also mentioned that private involvement could account for 10% of the total oil production if necessary.

When questioned about private investment in PEMEX’s operations, Sheinbaum stated that the Ministry of Energy would evaluate whether private companies should exploit certain areas if PEMEX is unable to do so. “If necessary, the Ministry of Energy will evaluate whether a private company can exploit it,” Sheinbaum stated.

Muñoz says that relying solely on a "harvesting" strategy, where PEMEX focuses only on maintaining its existing assets to conserve funds, would not be a sustainable solution to the company’s debt issues. The company’s financial situation requires a more comprehensive approach, and the secondary laws need to clarify whether they will improve PEMEX’s credit profile, he adds.