PEMEX Doesn't Need More Money: It Needs a New Purpose

A company that loses US$9 for every barrel it refines, wastes 77 out of every 100 barrels in the Gulf of Mexico because of aging infrastructure, and whose crown jewel — the Olmeca refinery in Dos Bocas — has seen its cost rise from US$8 billion to more than US$21 billion [1], is not simply a company in crisis. It is a business model that has run its course. Yet, the public debate remains trapped in the same old question: How do we rescue PEMEX so it can keep doing the same thing? Personally, I prefer a different question: Why do we insist that PEMEX remain, above all else, an oil company?

The Mirage of Cosmetic Surgery

Attempts to revive PEMEX within its existing business model have already been made — and they have failed. Its return to the capital markets in February of this year, after a seven-year absence, was a survival maneuver, not a genuine transformation. The 7.3% reduction in its financial debt — a meaningful improvement, bringing it to its lowest level since 2014 — fades against the backdrop of a structural liability that still hovers around US$100 billion. Meanwhile, the company's labor productivity is the lowest in Latin America, surpassed only by the collapsed Venezuelan state oil company, PDVSA: fewer than 14 barrels per employee per day, compared with 27 at Ecopetrol, 48 at Petrobras, and 92 at Saudi Aramco [2].

No amount of refinancing can solve an industrial design problem. PEMEX isn't a poorly managed company in a good business; it's well managed — or poorly managed, as the case may be — in a business that no longer has a viable global future. Crude oil, besides being a bottomless pit, is catching fire both literally and metaphorically: the recent fire at Dos Bocas and the massive spill that has been polluting the coasts of Tabasco, Veracruz, and Tamaulipas since March are a reminder that the environmental liability is now as large as the financial one.

If extraction productivity is unrecoverable in the short term, if refining megaprojects have become monuments to cost overruns, and if the government itself is already exploring mixed models with the private sector and alliances with Petrobras, then the true fundamental reform is not seeking greater oil efficiency, but asking whether PEMEX should continue to define itself as an oil company.

The Mexican state-owned enterprise wouldn't be inventing anything new by heading in that direction. This path has been explored for years in other parts of the world, with mixed but instructive results.

Domestically, the viability of these mixed models is already an operational reality, albeit one still heavily anchored to the old fossil fuel paradigm. The most striking example is that of Carlos Slim, who, through Grupo Carso, leads private investment in hydrocarbon extraction in Mexico. Through strategic partnerships with PEMEX valued at billions of dollars, the conglomerate has firmly positioned itself as the country's top private oil operator.

The scale of this foray is evident: Grupo Carso recently signed a US$1.99 billion contract with PEMEX to drill up to 32 wells in the Ixachi [3] field in Veracruz — considered one of the nation’s most strategic onshore fields — aiming to substantially boost oil and gas production. On this site, the conglomerate’s subsidiaries already operate around 32 active wells, extracting roughly 2,000 barrels of crude per day. 

Adding to this operational expansion is the full acquisition of Fieldwood [4] Mexico (a Lukoil subsidiary) for US$270 million plus the settlement of liabilities, as well as the announcement of an aggressive US$5 billion capital injection this year in 2026, earmarked for key strategic energy projects [5].

The Model That Actually Works: Equinor

The Norwegian state-owned oil company Equinor has demonstrated that an oil company can pivot toward sustainability without it remaining mere corporate rhetoric. In the first quarter of 2021, the company reported over US$2.6 billion in profits, and almost half of that amount already came from renewable energy. For 2025, Equinor forecasts a capital expenditure of approximately US$13 billion, split between its traditional oil and gas business and a growing portfolio of offshore wind and other renewable projects [6].

What matters is not just the amount, but the mechanism: the Norwegian state, which owns approximately 67% of the company, reinvests oil revenues directly into the energy transition of its own oil company [7]. It is a virtuous cycle built on institutional patience and fiscal discipline — two things PEMEX lacks, not due to technical inability, but by political choice.

Of course, Equinor’s path has not been linear: in 2025, the company recorded impairments in offshore wind projects due to regulatory changes, a sign that no energy transition is exempt from real friction [8]. But that is precisely the difference with Pemex. While Norway has sought to overcome the operational and financial obstacles of the energy transition, Mexico is still battling the dilemma of renewable intermittency instead of figuring out how to actually make them work.

Why PEMEX Can’t Just Copy and Paste the Model

Comparing PEMEX to Equinor without nuance would be unfair. Norway has minimal public debt, a population ten times smaller, and sovereign reserves accumulated over decades of oil surpluses. PEMEX, in contrast, is heavily indebted, its institutional credibility eroded by scandals like Odebrecht — where cost overruns reached 61% and improper payments totaled MX$1.25 billion (US$73 billion), without the Superior Audit Office of the Federation (ASF) managing to get most of its audit findings cleared [9] — as well as by the uncertainty flagged by credit rating agencies.

But the point isn't to replicate Norway’s financial muscle; it’s to replicate its capital allocation logic. Other Latin American state-owned producers have already started moving in that direction, albeit with modest progress so far: Ecopetrol is participating in wind and solar projects and has acquired a power transmission company [10], while Petrobras announced the incorporation of renewables into its portfolio in its 2024–2028 strategic plan [11]. Neither of these two has reached Equinor’s level; in fact, the renewable assets of most state-owned oil companies remain marginal compared to their fossil fuel production, [12] but both demonstrate that the shift is possible even for companies with less fiscal space than Norway.

Mexico also has a geographic advantage that PEMEX is not leveraging: the country boasts some of the best solar and wind resources on the continent, concentrated precisely in regions — the north, the Isthmus of Tehuantepec, the Yucatan Peninsula — where PEMEX already has an operational presence, partial transmission infrastructure, and a specialized technical workforce. This, despite the sector having been at a standstill for an entire six-year presidential term.

Becoming an Energy Company

The proposal is not to dismantle PEMEX overnight, nor to forgo the oil revenues that still sustain a significant portion of public finances. It is to begin redirecting — gradually but irreversibly — the capital currently being sunk into cost overruns and operational inefficiencies toward a different energy portfolio: solar and wind farms on existing federal lands, the retraining of the technical workforce for renewable infrastructure maintenance, and partnerships with players that — like Petrobras, already cited as a potential partner — have recent experience in this transition.

The argument for energy sovereignty, invoked for decades to justify the current model, could be flipped in favor of the transition: no country is less sovereign for generating its own clean energy; rather, it is when its flagship company is structurally unprofitable, relies on recurring fiscal bailouts, and is weighed down by a legacy of environmental degradation and unchecked pollution.

(The author acknowledges the research assistance of María Fernanda Reynoso Vallarta in the preparation of this article.)

Sources: 

[1] Squires, S. (2024, October 28). Pemex, la petrolera más ineficiente: Extrae menos barriles que Aramco pese a tener misma fuerza laboral. El Financiero. https://www.elfinanciero.com.mx/economia/2024/10/28/pemex-la-petrolera-mas-ineficiente-extrae-menos-barriles-que-aramco-pese-a-tener-misma-fuerza-laboral/

[2] Ibid.

[3] Redacción Animal Político. (2025, September 29). Grupo Carso, de Carlos Slim, firma contrato por mil 991 mdd con Pemex para perforar pozos. Animal Político. https://grupoanimal.mx/politica/grupo-carso-slim-contrato-pemex-pozos

[4] Reuters. (2026, January 19). Slim compra el 100% de la participación de Lukoil en los campos Ichalkil y Pokoch. El Economista. https://www.eleconomista.com.mx/empresas/slim-compra-100-participacion-lukoil-campos-ichalkil-pokoch-20260119-795931.html

[5] Calderón, C. (2026, May 27). Carlos Slim saca la cartera: Anuncia inversión de 5 mil mdd en México para 2026. El Financiero. https://www.elfinanciero.com.mx/empresas/2026/05/27/carlos-slim-saca-la-cartera-anuncia-inversion-de-5-mil-mdd-en-mexico-para-2026/

[6] Equinor. (2026, March 19). Equinor's annual report for 2025. https://www.equinor.com/news/20260319-equinor-annual-report-for-2025

[7] Malkin, E. (2019, May 10). ¿Una refinería de 8000 millones de dólares? El presidente mexicano dice: ‘Sí se puede’. The New York Times. https://www.nytimes.com/es/2019/05/10/espanol/refineria-dos-bocas-amlo.html

[8] Gambetta, G., McNally, F., & Webb, D. (2025, May 15). Almost a quarter of non-state shareholders oppose Equinor transition plan. Responsible Investor. https://www.responsible-investor.com/almost-a-quarter-of-non-state-shareholders-oppose-equinor-transition-plan/

[9] El Economista. (2017, November 2). Revelan sobrecostos de hasta 61% en contrato de Pemex. https://www.eleconomista.com.mx/politica/Revelan-sobrecostos-de-hasta-61-en-contrato-de-Pemex-20171102-0028.html

[10] Chavez, D., & Peñaranda, L. (2025, March 1). Empresas petroleras administradas por el Estado y la transición energética: El caso de Ecopetrol en Colombia. The Transnational Institute. https://www.tni.org/es/articulo/empresas-petroleras-administradas-por-el-estado-y-la-transicion-energetica

[11] Atlas Renewable Energy. (2025, July 14). Energías renovables: La apuesta de transición energética para las operaciones en minería y petróleo. https://es.atlasrenewableenergy.com/energias-renovables-la-apuesta-de-transicion-energetica-para-las-operaciones-en-mineria-y-petroleo/

[12] Actis, A. (2025, October 9). La falsa transición verde de Repsol: solo el 1,28% de toda la energía que produce es renovable. El Salto. https://www.elsaltodiario.com/repsol/falsa-transicion-verde-energia-produce-renovable