If Pemex is able to execute a successful turnaround, the upside is material.
Norman ValentineView Norman Valentine's full profile
What’s inside this report?
State-owned Mexican NOC Pemex is one of the largest oil producers in the world. But the company has one of the weakest growth outlooks in the sector.
Over the last five years, the government and Pemex have taken steps in the right direction to improve the company’s performance. But real transformation requires broader action.
We take a closer look at Pemex’s prospects and consider whether a successful turnaround is possible for the struggling oil company.
What key questions does this report answer?
Get answers to all your questions about Pemex, including:
- Pemex can no longer afford to fund state coffers. How could it improve its finances?
- Mature assets underpin its upstream business. Can partnerships with IOCs help accelerate upstream development?
- Significant resource remains in Mexican waters. What role should exploration play?
- The Dos Bocas refinery project is moving forward. Will this move backfire?
Pemex's outlook faces greater uncertainty following the election of President Obrador in December 2018. Energy Reform progress has slowed down and dented investor confidence. A government push to build a massive new refinery in Dos Bocas could lead to capital misallocation. Tough operational and financial challenges remain. Mexico's NOC is one of the largest oil producers in the world, but years of political complacency have left the company with one of the weakest growth outlooks in the sector. The fiscal regime under which the company operates does not work in a low oil price environment, forcing Pemex to increasingly turn to debt markets. Comprehensive reform, however politically unpalatable, is required to turn things around. If Pemex's financial outlook improves, they can then step up investment in upstream and capture significant upside from Mexico’s large remaining resource potential.