PEMEX Cuts Subsidiaries Amid Restructuring Effort

PEMEX has reduced the number of subsidiary companies it manages by 46.3%, with aims to take this to a total of 61% by the end of the six-year term. CEO Octavio Romero said that the state-owned company will go from having 95 subsidiary companies at the beginning of the administration to just 37 by the end of the term, as part of an ambitious restructuring program implemented by the company.

As part of the restructuring process, PEMEX merged several of its subsidiary companies. At the end of 2018, the company had seven Productive Subsidiary Enterprises (EPS), which, in turn, housed 95 subsidiaries. After eliminating subsidiary companies and merging, the NOC now maintains only four EPS: Exploration and Production, Industrial Transformation, Logistics and Corporate.

A prominent merger was that of PEMEX Transformación Industrial, the second largest within the company, which absorbed three dissolved subsidiaries: Logistics, Fertilizers, Drilling and Services and Ethylene.

Romero Oropeza explained that these mergers allowed for the transfer of human resources, materials, finances, assets, rights and obligations, ultimately improving operations and generating financial savings. PEMEX's average annual administrative expenditure has now fallen to MX$3.24 billion (US$180 million), representing a 67% decrease compared to the previous administration's annual average. However, during 1Q23, the company reported a net income of MX$56.7 billion, representing a 54% decrease compared to the same period in 2022. This decline in financial performance can be attributed to several factors, including a reduction in total sales and an increase in the cost of sales. PEMEX’s total sales reached MX$418.439 billion in 1Q23, recording a 19.1% decrease compared to the same period in the previous year.

Romero emphasized that PEMEX's restructuring is just one of the measures implemented by the oil company to enhance its financial and operational performance. Various measures have been introduced depending on the area for improvement, with an operational excellence strategy responsible for the progress made in production.  

The decision to retain certain subsidiary companies is based on their strategic roles, as they hold shares in other companies, generate profits or own critical infrastructure that is not easily replaceable. The goal of the restructuring process is not to indiscriminately eliminate companies but rather to optimize resources and enhance business efficiency.

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