
The political and energy context in Mexico
With Claudia Sheinbaum’s recent electoral victory, attention is focused on policies regarding Pemex, Mexico’s state-owned oil company. According to Graham Stock, Senior EM Sovereign Strategist at RBC BlueBay, the current management represents a missed opportunity for structural reform.
Proposed structural reform for Pemex
RBC BlueBay proposed a groundbreaking reform: splitting Pemex into two separate entities – one focused on refining and the other on exploration and production (E&P). This division would:
- Enhance transparency between profitable and loss-making operations.
- Justify subsidies for refineries by highlighting their benefits for energy security and employment.
- Enable the upstream sector to operate commercially and access bond markets.
Despite continuous engagement with the government and Pemex leadership, no major structural reforms were included in the administration’s latest announcements.
Initiatives under the Sheinbaum administration
The government reiterated existing priorities like energy self-sufficiency and refining but neglected strategic innovation. However, some positive measures include:
- Cost reductions: Pemex aims to cut annual costs by 50 billion pesos.
- Tax reform: From 2025, Pemex will benefit from reduced taxes, improving financial predictability.
While significant, these measures fall short of ensuring Pemex’s sustainability without radical changes.
Production targets and private collaborations
The administration targets a daily output of 1.8 million barrels, supported by the Trion and Zama fields. It remains open to private sector collaboration in:
- Petrochemicals and fertilizers
- Renewable energy, including green hydrogen and solar power
Details will emerge in secondary legislation, but it’s reassuring that energy nationalism has not escalated.
Fiscal implications and economic outlook
The 2025 budget allocates around $6.7 billion to Pemex, alongside a 2% reduction in public financing needs relative to GDP. However, Graham Stock suggests the 2-3% GDP growth forecast is overly optimistic given global and domestic uncertainties.
Final thoughts by Graham Stock
For Graham Stock, the government’s implicit support for Pemex will remain strong, whether through ad hoc measures or eventual structural reform. This confidence has led RBC BlueBay to favor strategies leveraging the narrowing spread between Pemex and sovereign debt.