Pemex reaches out to private sector as production drops and losses mount

The new CEO of Mexico's state oil company Pemex will work with the private sector to boost production, he said Tuesday as the embattled energy giant reported falling output, declining revenues and widening losses.

"The energy sector, and the oil sector in particular, will remain open to private investment, particularly in exploration and production," Víctor Rodríguez Padilla told a Q3 results conference call.

"We are establishing a whole series of partnerships and mixed projects in exploration and production. Private participation is very important because of the know-how, experience and technology that it can provide."

Rodríguez Padilla was appointed by newly inaugurated President Claudia Sheinbaum at the start of October.

Sheinbaum has tasked him with restoring the company's financial health, while maintaining oil output at current levels, diversifying into renewable energy and preserving Mexican energy sovereignty.

Public company

Constitutional reforms approved this month will change the status of Pemex from a "productive company of the State" to a "public company" and give it a privileged position in the energy market.  

That has raised concerns about the future role of the private sector in Mexico's oil and gas industry.

Pemex has a social function to fulfil but will continue to look for profitable returns on its investment and will work with private partners in its upstream and downstream activities, Rodríguez Padilla said Tuesday.

"In the short term, we will make known a set of clear rules that provide certainty and lead to a fair distribution of risks and benefits, both for Pemex and for third parties," he said.

"We are not going to reject private investment, quite the contrary." 

Pemex will soon publish a business plan which will be aligned with the eagerly awaited energy plan of the Sheinbaum administration, he added.

Fiscal incentives

Pemex is working with the finance ministry on a new fiscal regime for exploration and production, including a specific tax framework for natural gas fields.

This would allow the company to develop fields that are currently not viable, Rodriguez Padilla said.

Néstor Martínez Romero, the company's head of exploration and production, said Pemex will explore for oil and gas in partnership with other companies to increase its production and reserves.

"What we have to do in the short term is maximize the portfolio of projects... optimize the development of strategic fields [and] use partnerships for assets with low residual value," he said.

Losses widen, revenue falls

Pemex reported a net loss of 161bn pesos (US$8bn) in the quarter, double the loss in 3Q23. 

Sales fell 7.7% to 426bn pesos as the company's output of crude oil and condensates dipped 6% to 1.76Mb/d from 1.87Mb/d. Natural gas production fell 6.8%.

Output from mature fields such as Maloob and Zaap is continuing to decline, Pemex said. Recent discoveries have failed to make up for falling production at its older fields.

Revenue from crude exports dropped 18% as Pemex sent more oil to its own refineries, including the newly opened Dos Bocas complex. 

Crude processing volumes increased 24%. Dos Bocas, which has capacity of 340,000b/d, processed 56,000b/d in Q3, its first quarter of operations.

Debt stable

Pemex's net financial debt stood at US$97bn at the end of September, down from US$99bn in June.

The company, which has more debt than any other oil company and relies on government support to pay its maturities, faces US$8.9bn of payments in 2025.

Rodriguez Padilla said Pemex is working with the finance and energy ministries to manage its liabilities. The aim is to reduce the size and cost of the debt, change the profile of maturities, and allow the company to increase its investments.