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Introduction

Mexico’s 2013-2014 energy reform not only opened all chains of the energy sector to private, national, and international stakeholders, but also set the stage for Petróleos Mexicanos (Pemex) to possibly become a state productive enterprise. We are barely beginning to discern the fruits and limits of the energy reform, and it will be precisely during Andrés Manuel López Obrador’s administration that these reforms will either be enhanced or curbed. Most analysts who have justified the reforms have highlighted the amount of private investment captured through the nine auctions held so far. Critics of the reform note the drop in crude oil production and the accelerated growth of natural gas imports and oil products. Another way to consider the course and success of the reforms is through the new profile that Pemex may take on if it indeed becomes an efficient enterprise able to generate profit in the different value chains it still owns, thus helping to mitigate the country’s current vulnerable energy situation.

Meanwhile, the new administration would seem to be once again focusing its hydrocarbon policy goals on reactivating state-run business investments to reach crude oil and gasoline production goals for 2024, when the administration will end. This type of strategy would mean going back to the López Portillo years (1976–1982), or even the Vicente Fox years (2000–2006), when the then state-run monopoly was forced to maximize its crude oil and oil-refined production without taking into account financial, geological, technological, or other types of restrictions. Today, the administration is correct in prioritizing the development of Pemex as a leading hydrocarbons company, but it must understand that to do so, the enterprise must become part of the new competitive context brought about by the reforms so that it can reduce risks and bolster its strengths. This article looks at these risks and strengths and highlights the potential danger if Pemex’s management and board of directors remains subordinate to one administration’s political priorities. This article also considers the significant difference between basing an energy policy on hydrocarbon and oil-product self-sufficiency versus basing it on progressively decarbonizing the nation’s energy matrix with the goal of improving its resiliency and sustainability. The first plan (hydrocarbon self-sufficiency) is more a project to legitimize the government’s political priorities and implies questionable results and possible high costs. However, the second plan (progressive decarbonization) might mean a true state policy that would allow the country to make an energy transition over this century, with economic, political, and social opportunities that could be unleashed. Pemex would have to play an essential role on either path, but it certainly cannot go back to the leading role it had during the state-run monopoly stage. The enterprise must first and foremost specialize in the chains where it is the most competitive and fight for financial and corporate autonomy, meaning it must stop being an income collector for the state, something that the energy reform did not modify.

This article is divided into five sections. The first one analyzes the limits and risks of basing the nation’s new energy policy on self-sufficiency, without taking into account farther reaching, long-term goals such as securing decarbonization and the country’s energy transition. The second section reviews the severe restrictions imposed on the company over the last few years and the challenges it faces in obtaining fresh capital to be used for the myriad goals mandated by the president instead of by its board of directors, such as increasing oil and gas production, modernizing refineries, building a new refinery, and fighting against imports of gas and oil products. The final three sections focus on explaining the challenges the company faces in meeting such diverse goals, highlighting that the current challenges and vulnerabilities in each of the chains (crude oil and gas extraction and building refineries) are different in nature. Comprehending the different nature of each challenge will help Pemex to prioritize its goals.

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