PEMEX Struggles With ESG Goals
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PEMEX Struggles With ESG Goals

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Perla Velasco By Perla Velasco | Journalist and Industry Analyst - Thu, 03/09/2023 - 09:09

PEMEX faces a difficult start to the year. In addition to the NOC’s debt struggles, the company suffered a series of accidents in its US and Mexican installations. Likewise, it is facing backlash from environmentalists for its practices. Moreover, PEMEX must strengthen its environmental efforts to keep support from investors.

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To Keep Investors, PEMEX Must Upgrade Environmental Efforts

PEMEX is preparing to strengthen its environmental efforts to retain its bank financing and investors. While benchmarking and reporting ESG metrics is not mandatory, it is becoming increasingly relevant for investors that business models align with sustainability. The NOC is updating its safety and environmental procedures to ensure it can attract financing from banks and investors demanding more robust ESG standards from fossil fuel companies.

PEMEX Accused of Increasing Gas Flares Despite EPA Alliance

State-owned oil and gas company PEMEX has been accused of increasing how much gas it flares despite pledges to decrease its environmental damage. In January, the company burned 1.3Bcf of gas, an upsurge noticed by Mikhail Zhizhin, Researcher, the Earth Observation Group at the Payne Institute for Public Policy. Reuters reported that Mexico’s methane emissions are twice as high as the US, the world’s top oil producer.

PEMEX Cuts Losses by 11%

Falling crude prices and internal struggles impacted PEMEX’s results during the last quarter of 2022. From October to December of last year, the state-owned company reported a net loss of MX$172.5 billion (US$9.3 billion). Despite the millionaire losses, the blow was mitigated by 11% when compared to the same period of 2021. 

Oil Production Still Winding Down

PEMEX reported an oil production of 1.564MMb/d, a 7.12% decrease compared to the same period in 2022 and a 0.5% increase compared to 2022. Last year the state company lowered its 2 million projection to 1.8MMb/d, but the company did not reach it either.

PEMEX’s Refining Strategy is Costly

PEMEX reported losses from refining of MX$177.857 billion (US$6.56 billion) in 2022, an MX$5.137 billion (US$285.77 million) increase compared to 2021. Despite losing money from refining, the company still depends on exports to meet the national fuel demand. Nonetheless,  PEMEX reported profits for the first time in nine years.

Quesqui: Key PEMEX Field Despite Controversy, Declining Reserves

PEMEX’s most important field during this administration is Quesqui. Octavio Romero Oropeza reported that Quesqui’s 15th well came online this week and the NOC plans to deploy 15 further wells. However, Reuters reported that PEMEX had flared US$275 million worth of resources at Ixachi in three years and another US$67 million at Quesqui in two years. What is more, oil production continues to decrease regardless of federal support. 

Two Dead and Several Injured Following Multiple PEMEX Fires

Two workers were declared dead due to multiple fires reported at PEMEX’s refineries on Thursday, Feb. 23, 2023. This incident puts the state-owned company’s safety regulations under severe scrutiny. The incident put PEMEX´s environment, social and governance record under the spotlight, as the company has been accused of witnessing an upsurge in the workers’ incidents without a proper response.

PEMEX, Talos to Finish Zama Field Work Program

Talos Energy reported the progress it made with PEMEX regarding the Zama Field. The IOC warned of possible negative outcomes due to its restrained participation in the project and its costs. “We may have limited ability to influence the operations of some non-operated properties and their associated costs,” read the statement.

Dos Bocas Refinery Subject to Backlash from Environmentalists

The Olmeca refinery has been accused of uprooting rare mangrove trees in the area, according to a report by Quartz. Despite a warning from ASEA, the construction led to the removal of the trees, leaving the area susceptible to flooding.

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