PEMEX: Energy Sovereignty or a Sovereign Risk?

PEMEX entered the first quarter of 2026 in a critical situation. The company reported losses of MXN 46 billion, financial debt approaching USD 79 billion, and liquid hydrocarbon production of just 1.65 million barrels per day, well below official targets. These challenges were compounded by accidents, fires, and spills at key facilities, reflecting not only financial fragility but also operational deterioration and shortcomings in industrial safety.

These results undermine the logic that dominated between 2018 and 2024: the idea that restoring PEMEX’s full control over production, allocations, and budgeting, while reducing its tax burden and transferring public resources to the company, would be sufficient to rescue it within six years.

The accumulated government support was enormous, including tax relief and foregone petroleum revenues. Nevertheless, production continued to decline, and the company became increasingly dependent on the state, with reduced operational capacity and no reversal of the structural decline of its producing fields.

The model promoted during the previous administration sought to recentralize the energy sector around PEMEX. Oil licensing rounds were suspended, open competition was curtailed, and the state oil company was positioned as the cornerstone of energy sovereignty. Although the Shared Profit Duty was reduced and government transfers increased to support debt payments, refining activities, and infrastructure projects, the productivity of that support remained low.

PEMEX failed to increase production or improve profitability and ultimately emerged with larger liabilities, growing debts to suppliers, and greater dependence on fiscal support.

The administration of Claudia Sheinbaum inherited a financially exhausted company and began pursuing a different approach. The 2024 constitutional reform transformed PEMEX into a State Public Enterprise and eliminated part of the regulatory architecture established in 2013.

The new strategy seeks to prioritize liquidity, refinancing, and financial restructuring through a new fiscal regime, mixed contracts, and extraordinary government support. However, the results have also proven insufficient. Production remains below target levels, and the company continues to post losses even in an international environment characterized by relatively high oil prices.

At this stage, the problem has ceased to be exclusively corporate and has begun to affect the sovereign itself. Growing transfers to PEMEX have reduced the state’s net oil income and increased pressure on Mexico’s public finances. Moody’s, Fitch, and S&P have explicitly linked the country’s fiscal deterioration to the government’s continuing support for the state oil company.

While major international oil companies took advantage of the recent period of higher oil prices to generate record profits, PEMEX continued to lose money due to its debt burden, low productivity, and operational challenges.

The central conclusion is that rescuing PEMEX only makes sense if the objective is to restore public value for Mexico rather than simply preserve the company as a political symbol. Achieving this would require establishing clear metrics for profitability, production, and safety; conditioning any fiscal support on measurable performance; separating profitable business segments from those that destroy value; restoring competition and credible technical regulation; and prioritizing maintenance and industrial safety.

The model that provided PEMEX with financial resources, tax relief, regulatory control, and unrestricted political support has already been tested. The result was not energy sovereignty, but rather growing pressure on the country’s sovereign credit profile.

This article was originally published by La Prensa OEM.
Date: June 5, 2026
Link: https://oem.com.mx/la-prensa/analisis/opinion-por-paul-alejandro-sanchez-30370677 [Online]

Clean Energies, from a Means to an End

Regarding the debacle generated by the regulatory changes of the Energy Regulatory Commission related to the measurement of energies in the national electric system, I believe it is important to remember that increasing clean energies in the energy matrix of our country is not an end in itself and the correct indicator is not the percentage of clean energies that the matrix has.

Clean energies are a means for the reduction of greenhouse gas emissions, for the decarbonization of the energy matrix and of the emissions intensity of the national electric system. The famous percentage of 35% is an indicator that was calculated with the purpose of determining how much clean energy proportional to the total was necessary to reduce a given volume of emissions.

“Clean energies are a means for the reduction of greenhouse gas emissions.”

But let us go to the beginning. After the signing, ratification and entry into force of the Paris Agreement, the countries took on as a task to establish the nationally determined contributions. Within this framework, Mexico established a series of commitments for the 2020-2030 period within which the following stands out: “By 2024, 35% clean energy will be generated and by 2030, 43%, including renewable energy, cogeneration with natural gas and thermoelectric plants with CO2 capture.”

At that time, with data from 2013, Mexico’s greenhouse gas emissions for electric generation were 127 million tons of CO2 equivalent, so it was determined that by having clean energy generation of 35% by 2024, then the emissions that were linearly calculated could reach 177 million tons and decrease to around 130 million tons of CO2 equivalent.

The regulatory changes published by the Energy Regulatory Commission at the end of the month of May, which modified the methodologies for the measurement of clean energies to consider as clean energy that electricity produced by the gas steam of combined cycle plants that use natural gas, as long as it does not use additional fuel, derived in the update of the National Electric System Development Program (PRODESEN) 2023-2037.

In that sense, and according to said document, generation in 2022 presented a total of 31.2% clean energies, an amount that was obtained based on the methodological modifications of Agreement No. A/018/2023 of the CRE, published in the DOF on May 26, 2023. That is, because of the change in calculation from 2021 to 2022, the newly catalogued non-renewable clean energy increased by 7,502.1 GWh.

This recategorization, however, does a poor favor to the reduction of international commitments, since according to SEMARNAT data, from 2021 to 2022 the emissions factor of the National Electric System went from 0.423 tons per MWh to 0.435 tons per MWh. That is, more clean energy by reclassification with more emissions in the system.

If we consider the same information from PRODESEN 2023-2037, we can multiply the total generation of the system by the emissions intensity to obtain the absolute, that is, in 2021 when 328,598 GWh were generated, 138,997 kilo-tons of CO2 equivalent (ktCO2eq) would have been produced and in 2022 with 340,713 GWh, 148,210 ktCO2eq were emitted into the atmosphere. There is the paradox, since our emissions increased by almost 10,000 tons, at the same time that the participation rate of clean energy generation increased.

The moral of this story is that it is of no use to us to see the participation of clean energies as an end, since in themselves they should be a means for the reduction of greenhouse gas emissions. That is, even if tomorrow all gas were declared clean and 80% of the country’s energy, by decree, were clean, the reality would be that, ultimately, there are no emissions decreases, therefore, the country’s progress in fulfilling its climate objectives would continue to be highly insufficient.

This article was originally published by Energía a Debate.
Date: June 12, 2023
Link: https://energiaadebate.com/energias-limpias-de-un-medio-a-un-fin/ [Online]

OPEC+ Cuts Again

This Sunday the news was spread that OPEC+ is planning a new voluntary cut led by Saudi Arabia that by itself would reduce 500,000 barrels per day. The members of OPEC and their allies could reduce between 1.1 and 1.6 million barrels per day of crude in the world market, which depends on Russia contributing another 500,000 barrels per day to the reduction. In any case, the cut would enter into force starting in May and would extend throughout all that remains of 2023.

Of course this is not a coincidence. In the midst of the financial chaos caused by the inflationary escalation, the continuous rise of the reference rate and the blow to banking institutions, it is not the best moment for energy prices to come back on the offensive. But it is clear that the surprise cut is directed at the United States for a couple of reasons particularly.

“It is clear that the surprise cut is directed at the United States.”

On the one hand, in October of last year the United States promised Saudi Arabia that it would not let oil prices collapse and that, once prices touched $75 dollars per barrel in the Brent reference, the government of the United States would begin to fill its strategic reserve to keep the price stable.

However, when the price of Brent fell below the mark in mid-March, the Biden government showed little interest in beginning the purchase of oil to refill the strategic reserve and even declared that perhaps, toward the end of 2023, they could begin with the purchase to observe the behavior of global markets derived from the recent financial shocks.

On the other hand, just last week the United States Energy Information Agency published that in 2022 the United States broke a record of crude exports, reaching 3.6 million barrels per day, which represented an increase of 22% compared with 2021.

Faced with greater production of American oil in the world and with prices falling in comparison with the previous year, it seemed like a good moment to begin filling the strategic reserve of the United States. This would allow reducing the circulating crude and stopping the fall of international prices.

These two events could have had political implications, or that is what is rumored in the circles that follow the issue. That Biden did not quickly fulfill his word to maintain the international price of oil contributes to the deterioration of relations between the two nations.

For now, the price of oil in the main references has risen around five dollars per barrel after the announcement. It is too soon to know whether this price will be maintained in the future or how the United States will respond or, even, whether the countries, including Russia, comply with the voluntary reduction, but what is a fact is that this occurs at a complicated moment due to global inflationary pressure.

This article was originally published by Energía a Debate.
Date: April 3, 2023
Link: https://energiaadebate.com/la-opep-recorta-de-nuevo/ [Online]