In December, the oil production of Pemex (Petróleos Mexicanos) fell by 13 percent compared to the previous year, reaching its lowest level in decades. These alarming numbers are clear evidence of the critical situation the state-owned company is in, despite former president Andrés Manuel López Obrador's claims of having "rescued" Pemex.
The new administration under Claudia Sheinbaum is at a crossroads in defining an energy strategy for Pemex. Although there is a temptation to maintain a soft approach, the landscape shows that a more drastic intervention is necessary to save the company.
Experts point out that incremental adjustments will not be enough and that Pemex requires major surgery to avoid becoming a threat to the Mexican economy. The company needs massive investments and time to develop projects, resources that are currently not available to it.
Sheinbaum faces high political costs if she decides to drastically change the approach established by the previous administration. Despite some changes in Pemex's management team, such as the appointment of Luz Elena González as Energy Secretary and Víctor Rodríguez as Executive Director, a quick solution to the structural problems of the company is not in sight.
Among the proposals of the new government is the possibility of partnerships with private companies to boost oil extraction and clean energy production. However, doubts remain about the appeal of these partnerships given Pemex's financial difficulties and the predominant state control in contracts.
The rising debt and operational problems underscore the urgency of taking drastic measures to save Pemex. Although the challenges are significant, possible solutions include divestments, refinery closures, workforce reductions, and the federal government assuming part of the company's debt.
The alternative of continuing to inject funds without fundamental changes does not seem viable in the long term. The utilization rate of Pemex's refineries is well below international standards, highlighting the need for deep reforms in the company's structure. The upcoming moves by Sheinbaum will be crucial in defining the future of Pemex and its role in the Mexican economy.
