Conditional Support for Pemex: Achieving Financial Sustainability During the Energy Transition
Key messages
- Mexico must reform its financial support for the national oil company, Pemex. Since 2013, the state has given 2.8 billion pesos (about USD 140 million) to Pemex. This support has made Pemex dependent on the state and has led to inefficiencies.
- In 2025, there is a window of opportunity open to reform state support for Pemex. Mexico’s new government has taken office and will write a new Federal Expenditure Budget, following constitutional reform that has changed Pemex into a Public State Company.
- There is mounting pressure for reform in the next round of debt refinancing for Pemex. The company’s USD 100 billion debt is alarming creditors, leading them to require higher interest rates from Pemex.
- Before granting another round of state support, the government should establish clear conditions for such funding. International experience—for example, from Eskom, the state electricity company in South Africa—shows that conditionality contributes to financial sustainability for state-owned businesses. Eskom’s experience offers lessons on how to design and administer support for Pemex.
- A powerful condition for support could be that Pemex assesses and mitigates the risks for its business stemming from the global energy transition. This could involve scenario planning; aligning its business plan with the country’s climate plan; implementing a just transition plan for oil-producing regions, and managing the closure of petroleum infrastructure.
Mexico’s national oil company, Pemex, is in financial crisis. It has debt approaching USD 100 billion, equivalent to 6 percent of Mexico’s Gross Domestic Product, and oil production is declining. While state financial support is necessary to keep Pemex afloat, it has contributed to a company culture of unsustainable and costly dependency. The global energy transition adds to the crisis, threatening to permanently reduce global demand for oil, along with oil prices.
Pemex needs about USD 22 billion to meet its debt-related commitments up to 2026. In 2025, it faces USD 9 billion of debt that matures. By 2026, this rises to nearly USD 13 billion. With the arrival of Mexico’s new federal government, there have been discussions about how to support Pemex more effectively. Various ideas have been floated, seeking to modernize the company and restructure its debt. However, there has been little discussion of how to address the issues related to unconditional state support for Pemex.
The constitutional reform on strategic areas and companies, approved in October 2024, reclassified Pemex and the Federal Electricity Commission (CFE) from State Productive Company (Empresa Productiva del Estado)—the status assigned to them in the 2013 energy reform—to State Public Company (Empresa Pública del Estado). This change seeks to “return to Petróleos Mexicanos and the Federal Electricity Commission their public character in order to fulfil their social responsibility.”
The constitutional amendment provides an opportunity to define more clearly in secondary legislation the remit associated with the new title, including the commercial and public-interest objectives of these companies. It also offers scope to define the support mechanisms applicable to them.
Through this analysis, we seek to promote informed discussion on how to improve the effectiveness of financial support for Pemex, involving policymakers, government representatives, the company’s management team, academia, civil society organizations working on tax and climate justice, and other stakeholders.
In this document we explain why the state needs to set conditions for support, to promote improvements in Pemex’s commercial, environmental and social performance. These conditions are not necessarily designed to reduce financial support or limit Pemex’s investment capacity—one of the factors behind its current plight. Rather, they aim to incentivize the company to better use public resources. We also describe the main problems in the current support model, before suggesting a set of preconditions and conditions for future support. Consideration of these conditions is highly relevant, given the likelihood of Pemex needing more bailouts8 in the future, possibly on an even larger scale than past support—especially if the state decides to assume part or all of the company’s debt.
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