National oil companies are often less efficient than private-sector firms, and Petroleos Mexicanos (Pemex) exemplifies this issue with a workforce of about 128,000. The company currently pumps just under 14 barrels per day (bpd) per employee, lagging behind other Latin American state producers like Brazil and Colombia, and even further behind Saudi Aramco, which produces over 92 bpd per employee.
New CEO Victor Rodriguez, appointed by President Claudia Sheinbaum, faces a monumental challenge as he attempts to rectify Pemex’s financial woes—$100 billion in debt and significant production inefficiencies. The stakes extend beyond Pemex itself; the company’s fiscal health is closely linked with the Mexican economy. Thus, Sheinbaum’s agenda to combat crime and stimulate growth partially relies on Pemex’s recovery.
“Pemex needs someone to clean things up, but there’s no political power to do so,” said Luis Maizel, a long-time bondholder. Rodriguez will also need to navigate powerful unions that have prevented mass layoffs, with over 80% of employees unionized.
Safety issues further complicate the company’s standing. Recent accidents, including a deadly explosion at an offshore well, have led to production losses and negative public perception. In 2022, Pemex recorded nine worker fatalities, compared to two for Exxon Mobil and Chevron. Pemex’s financial troubles are pressing, with the company recently reporting its worst loss since the pandemic began. As of the second quarter, Pemex owed $99.4 billion to creditors, often paying 30% to 40% above market rates due to payment delays.
Aging equipment means Pemex leaves a large portion of its oil reserves untapped—nearly 77 barrels for every 100 produced in the Gulf of Mexico, significantly higher than its competitors. The company has also struggled to maintain production levels, which are currently about 1.8 million bpd, roughly half of its peak two decades ago. With its finances in disarray, the road to recovery appears long and daunting for Rodriguez and Pemex.
Story via WorldOil.com