PEMEX Cuts Debt, Struggles with Fuel Self-Sufficiency Goals

PEMEX closed 2025 with a financial debt of US$84.5 billion, down from US$97.6 billion at the end of 2024, reported Víctor Rodríguez Padilla, CEO, PEMEX. This marks the fifth consecutive year that PEMEX has successfully reduced its obligations, reflecting disciplined fiscal management. However, declining crude output, falling export revenues, and operational pressures on aging refineries challenge the state-owned company in meeting Mexico’s goal of fuel self-sufficiency.

Rodríguez stressed that the Mexican government remains committed to a long-term strategy of halting crude oil exports, increasing domestic processing, and expanding fuel production to meet local demand. While this approach aims to reduce dependence on foreign fuel, experts note it carries financial and operational trade-offs, placing additional strain on PEMEX’s budget and on national fiscal revenues.

Exports and Domestic Production

PEMEX’s export revenues and production trends reveal the high cost of Mexico’s push for fuel self-sufficiency. In December 2025, oil export revenues dropped to US$634 million, a sharp 61.5% decline from US$1.657 billion in December 2024. Falling global prices exacerbated the revenue decline, since the average price per barrel fell from US$66.25 in December 2024 to US$55.59 in 2025, a 16% decrease or US$10.66 less per barrel. Export volumes also contracted dramatically, from 807,000 barrels per day (bpd) in December 2024 to 368,000 bpd a year later.

At the same time, domestic refining and fuel production increased to support the government’s self-sufficiency goal. In December 2025, domestic fuel output reached 1.19 million bpd, up 34% from 885,933 bpd in December 2024. Despite this growth, total national liquids production, including crude and condensates, fell to an average of 1.635 million bpd for the year, down 7% from 1.759 million bpd in 2024. This is the lowest level reported in 46 years.

Crude production alone averaged 1.367 million bpd, down 7.9% from 2024, and nearly 40% below 2015 levels. Condensates, higher-value liquids associated with certain fields, also declined for the first time in seven years, averaging 267,867 bpd, a 2.3% decrease from 2024.

These trends reflect structural challenges, including mature reservoirs and insufficient new field development. Despite sustained investment aimed at slowing reservoir decline, total liquids production has dropped 10.8% since 2018, the first full year of the current presidential administration, and by 28% over the past decade, including contributions from private upstream operators under contractual arrangements.

Unmet Promises in Fuel Independence

Mexico’s drive for fuel self-sufficiency dates back to former President López Obrador, who launched the initiative in 2019. The policy seeks to replace foreign fuel imports with domestic production from Mexico’s refining system, including the newly built Dos Bocas refinery in Tabasco and the Deer Park facility in Texas, which PEMEX fully acquired in January 2022. The overarching goal is to supply domestic demand entirely with locally refined fuels, reducing exposure to global market fluctuations.

Economists have repeatedly warned about the financial risks of prioritizing domestic consumption over export revenue. Oscar Ocampo, director, Economic Development, Mexican Institute for Competitiveness (IMCO), described the strategy as economically unsound, noting that reduced export revenues and reliance on an aging refining system undermine long-term stability. “The diversion of resources to domestic refining limits funding for new exploration projects, debt repayments, and broader production expansion,” he explained. These factors raise concerns about PEMEX’s ability to achieve financial independence by 2027.

Strategic Adjustments and Priority Projects

Acknowledging that the era of giant oil fields sustaining Mexico’s production is ending, PEMEX has emphasized portfolio diversification. The company is investing in smaller, technically complex assets and onshore developments to stabilize output.

PEMEX’s Strategic Plan 2025–2035 identifies 21 priority projects, including the Cuervito block in the Burgos Basin and the Tamaulipas-Constituciones block in the Tampico-Misantla Basin. However, the pace of project development has been slower than needed to counterbalance decades of declining output. Mixed contracts designed to attract private capital have faced uneven uptake, hindered by regulatory uncertainty, financial risk perceptions, and limited assurances on payment flows.

Analysts note that while PEMEX’s investment efforts are significant, they remain insufficient to reverse long-term declines. Operational pressures from mature reservoirs, limited drilling activity, and budget constraints continue to challenge the company’s ability to expand production sustainably. Short-term gains projected for 2026 may reflect cyclical improvements rather than durable new sources of output.

Ocampo stressed that even with higher domestic refining, the government strategy remains operationally inefficient. “Current refineries are not optimized for the crude they process. That oil could be refined more efficiently abroad,” he said, highlighting structural limitations in Mexico’s refining infrastructure.

Broader Implications for Mexico

IMF analysts explained that PEMEX’s production performance has implications far beyond the company itself. Declining crude and liquids output affects Mexico’s trade balance, energy security, and fiscal revenues, especially during periods of global oil market volatility. Domestic refining strategies, import decisions, and allocation of crude toward national fuel production are all influenced by shrinking exportable volumes, creating operational and financial pressures.

The production decline also intersects with broader energy policy debates. Policymakers are weighing the roles of conventional onshore development, private sector participation, and even unconventional resources such as shale gas, despite fracking restrictions, in shaping long-term supply. Balancing energy security, economic stability, and climate objectives will be central to future policy decisions, with PEMEX’s performance serving as a key determinant of what is feasible.

PEMEX’s Strategic Plan sets a target of 1.8 million bpd in total liquids production by 2035, with a 2026 goal of 1.794 million bpd. Achieving these targets will require reversing persistent declines, accelerating new production, and addressing structural and operational constraints that have limited growth for decades. While debt reduction and increased refining output signal progress, the broader energy independence strategy still faces significant financial, logistical, and operational hurdles.

“The outlook for the Mexican oil sector in 2026 is characterized by a combination of structural opportunities and persistent challenges until 2030 (...) Mexico can either adapt its regulatory and contractual mechanisms to attract disciplined, long-term private capital — accepting market realities and prioritizing execution — or maintain a rigid framework that risks locking the sector into stagnation. The window for achieving the objectives of the 2025–2035 strategic plan is narrowing, and pragmatism, rather than ideology, will ultimately determine whether Mexico stabilizes its oil production or continues with a structural decline,” said Fernando Cruz Galvan, Director, Energy and Board Member, Kannbal Consulting.