Sheinbaum Addresses PEMEX Transformation, Foreign Subsidiaries

President Claudia Sheinbaum reiterated that her administration is embarking on a "profound transformation" of PEMEX, with a comprehensive long-term vision for the NOC extending to at least 2040. This comes as recent reports highlight the liquidation of key foreign subsidiaries, signaling a determined effort to consolidate the company's structure and finances.

During her morning press conference, President Sheinbaum responded to a journalist's query regarding a report from Contralínea, which detailed the dissolution of PEMEX Finance Limited, a subsidiary previously based in the tax haven of the Cayman Islands. This entity, established during the Ernesto Zedillo administration (1998), was used to issue debt in international markets and, due to its offshore location, to avoid tax payments. PEMEX Finance Limited was finally liquidated on Sept. 2, 2024, after 26 years of operation.

Sheinbaum indicated that the ministries of Energy and Finance, along with the director of PEMEX, will present the full scope of this transformation process and its future implications in approximately three weeks, either at a special event or during a future morning conference.

The president detailed a historical overview of PEMEX's evolving structure, which she described as a gradual dismantling that culminated in the 2013 energy reform. She explained that PEMEX, since 1992 under Carlos Salinas de Gortari, began a process of division into subsidiaries like PEMEX Exploration and Production and PEMEX Refining. This was followed by the privatization of many of its services and, subsequently, the creation of numerous foreign subsidiaries.

Sheinbaum asserted that the 2013 reform was "the masterstroke" that “facilitated corruption and accelerated PEMEX's desmantling,” leading to the creation of 40 subsidiaries. She credited the recent constitutional amendment to Art. 28 and subsequent legal reforms for effectively reversing "at least 60 to 70%" of the 2013 reform. This legal shift now grants PEMEX "primacy," allowing it the first right to exploit a given deposit, with private entities stepping in only if PEMEX cannot.

A significant focus of the transformation is addressing PEMEX's financial health. President Sheinbaum noted that the company's largest debt problems escalated during the Enrique Peña Nieto administration due to total market liberation, which decapitalized PEMEX as it lost revenue from fuel sales. She acknowledged that debt accumulation had roots in previous administrations (Salinas, Zedillo, Fox, Calderón) but reached its peak under Peña Nieto. She emphasized that past debt increases often served current expenses rather than new investments.

Sheinbaum highlighted that former President López Obrador initiated the debt reduction, and her administration is building on that with a comprehensive, long-term vision. This includes not only addressing immediate financial obligations but also planning for PEMEX's future in oil and gas exploration, petrochemicals, and other ventures through 2040.

Responding directly to questions about the "parallel business scheme" of PEMEX's private subsidiaries, particularly those like PEMEX Finance Limited based in tax havens, Sheinbaum confirmed that her government is actively consolidating and vertically integrating PEMEX. She expects to provide full details on how many subsidiaries remain and the repatriation of funds currently held outside Mexico in the upcoming presentation.

The core of the new strategy is the vertical integration of PEMEX, meaning “that from exploration to the sale of gasoline, PEMEX is a single company," Sheinbaum explained, emphasizing the goal of clear accounting within a unified structure. She added that no other oil company in the world had PEMEX's fragmented organizational structure, with most being vertically integrated for greater transparency and efficiency from initial production to final sale.