Mexico prepares to reactivate Pemex with new private alliances

Mexico's next government, headed by Claudia Sheinbaum, is considering a strategic opening of Pemex to equity partnerships with private oil companies, an approach that contrasts with the policy of her predecessor, Andres Manuel Lopez Obrador.

This move, driven by the need to increase oil reserves amid high debt, marks a major turnaround in the management of the state-owned company and could have profound implications for the country's economy and energy sector.

The proposed partnerships, known as farm-outs, are reminiscent of the energy reform of a decade ago that allowed Pemex to form joint ventures with private oil producers, both domestic and foreign. This model, common in the international industry, allowed Pemex to share the risks and rewards of oil exploration and production, something essential in a context where the company faces serious financial and operational challenges. However, López Obrador stopped this reform, canceling auctions for associations and limiting private participation in the operation of oil blocks.

The difference in vision between Sheinbaum and López Obrador on the future of Pemex underscores a possible tension in the transition of power.

While Sheinbaum, a scientist with a strong focus on renewable energy, has not clearly outlined her strategy for Pemex, the need to address stagnant production and dwindling reserves is clear. The company, once Mexico's economic engine, has seen a drop in its proven reserves to 5.98 billion barrels and a decline in daily production to about 1.5 million barrels, down significantly from 3.4 million barrels two decades ago.

In this context, the new government plans to grant Pemex's board of directors greater decision-making powers over potential partnerships, largely removing the oil regulator CNH from the process. This move seeks to streamline Pemex's ability to form strategic alliances that could be crucial to its survival. However, it also raises concerns about the centralization of power and the potential lack of transparency in the management of these deals.

The Trion field, an ultra-deepwater project in the Gulf of Mexico, represents an example of what could be the future of Pemex under this new strategy. In this case, Pemex has formed a partnership with Woodside Energy, an Australian company that owns 60% of the project, while Pemex holds the remaining 40%. This type of alliance not only allows Pemex to share financial risks, but also facilitates access to technologies and know-how that could significantly improve the company's efficiency in highly complex projects. However, Pemex's nearly US$$100 billion debt and limited margin for new investments limit the company's financial flexibility, making the successful execution of these partnerships even more crucial.

The idea of expanding exploration to more areas reflects a significant opportunity to reactivate Mexico's oil industry. However, the continuity and success of these initiatives depend largely on how the delicate balance between current and future government energy policies is managed. While the constitutional reform that could eliminate the regulator CNH and give more power to Pemex's board of directors may speed up decision-making, it could also reduce oversight and increase the risks of corruption and mismanagement.

In short, opening Pemex to private partnerships under Claudia Sheinbaum's administration could revitalize the company and attract new investment to the country. However, this approach also brings with it significant risks, especially if it is not handled with due transparency and a strategic approach that mitigates the company's current weaknesses. For the Mexican market, these partnerships represent an opportunity to strengthen its position in the global energy industry, but success will depend on how the strengths and opportunities are balanced with the threats and weaknesses inherent in the sector.

Collaboration: Editorial Auge.