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News Article

Should PEMEX’s Rulebook Change?

Thu, 05/05/2022 - 18:14

In a 1Q22 briefing sent to investors and submitted to the Mexican stock exchange (BMV), PEMEX admitted that its anti-corruption rules and guidelines “might prove insufficient”, according to a report from El Universal. The NOC goes on to explain that “it cannot guarantee the prevention of intentional acts of imprudence or negligence on the part of its administration’s managers or employees.” It also made clear that this warning extended to its contractors, its service providers and “any person that does business with PEMEX.” 

This warning arrived amid good news: the NOC might be beginning to see the light at the end of the tunnel in terms of its financial situation. It posted significant profits for the first time since 4Q20. The briefing also specified that PEMEX’s purchase of Deer Park proved to be a sound investment, with positive processing results demonstrating that the facility is a lively marketplace for refined products. 

However, all this success was considerably shadowed by this confession of a faulty rulebook. PEMEX, according to its own personnel, “is subject to the risk of managers, employees, suppliers and service providers participating in fraudulent and corrupt practices that evade our own internal controls and preventive procedures, enabling schemes and the handling of influences to manipulate the actions and assets of the NOC for personal gain or that of third parties, in a manner contrary to the nation’s best interests.” These risks that these “insufficient” anti-corruption practices create are made more significant by “the fact that PEMEX has many complex contracts and materials provided by third parties that are both national and international.”

This begs the question as to whether the internal and external controls and institutions that oversee PEMEX activity should change their structure. The only way to assess this accurately is to trace the past years of changes in the rulebooks that govern the industry. Therefore, Mexico Oil & Gas Summit 2022 will have the first panel of its first day be a discussion of this matter. Titled “Keeping Up with Changes In the Rulebook,” the discussion aims to define the most important enacted and proposed changes to the regulatory framework of the Mexican oil and gas industry. This can point the sector toward the likely future of these changes, as well as how potential opportunities within those changes might be overlooked.