Pemex's blueprint for achieving fiscal soundness by 2027 unveiled
Mexico Unveils 10-Year Plan to Boost Pemex and Achieve Energy Sovereignty
The Mexican government has announced a comprehensive 10-year strategic plan (2025-2035) for Petróleos Mexicanos (Pemex) with a primary goal of reducing the company's debt from approximately $99 billion in 2025 to around $77.3 billion by 2030, representing a 26% reduction below 2019 levels. This plan aims to achieve financial self-sufficiency by 2027, eliminating the need for federal financial support.
To accomplish these financial objectives and boost production, the plan includes several key elements:
- Formation of a government-backed investment vehicle: Expected to raise around $13 billion in 2025 alone, this investment fund will finance Pemex projects.
- Engaging the private sector: The plan involves issuing mixed contracts to develop onshore unconventional natural gas and oil resources, including fracking, marking a departure from previous policies.
- Production targets: The plan aims to increase oil output to about 1.8 million barrels per day and natural gas production to 5 billion cubic feet per day by 2030, reducing Mexico’s dependency on U.S. natural gas imports.
- Tax reform: A crucial component to reducing debt involves a tax reform aimed at lowering Pemex’s commercial and financial obligations, complemented by extensive financial restructuring and capital raising efforts.
The Mexican government’s strategy focuses on improving Pemex’s financial health through debt reduction and capital infusion, while sustainably expanding domestic oil and natural gas production to achieve energy sovereignty by 2030.
The plan also includes:
- Increasing domestic production of natural gas.
- Building four cogeneration plants in Hidalgo, Oaxaca, Veracruz, and Tabasco.
- Building three new gas pipelines that connect to economic development hubs.
- Exploiting lithium resources.
- Supporting renewable energy initiatives to reduce greenhouse gas emissions.
- Relaunching Mexico’s petrochemicals industry and increasing the production of fertilizers to support food sovereignty.
Last week, Pemex reported debt of around $99 billion. The government’s plan will support Pemex to make significant debt repayments this year and next. The Finance Ministry continues to provide monetary support for Pemex's productive investment.
The United States currently supplies large quantities of natural gas to Mexico. However, Mexico's gas production falls short as US imports surge to record levels. The government's plan aims to address this issue by increasing domestic production and achieving energy sovereignty.
The plan has three main "ejes" (pillars or central tenets): the determination of the Derecho Petrolero para el Bienestar at a rate of 30% for oil and 12% for non-associated natural gas. The "well-being" tax on non-associated natural gas is just 12%, allowing Pemex to capitalize.
The state oil company also recently built the Olmeca Refinery on the Tabasco coast. The plan will support Pemex to make significant debt repayments this year and next, while optimizing the company's tax burden and incentivizing a very efficient productive investment strategy in the long term.
The government's plan will support Pemex to make significant debt repayments this year and next, setting the state oil company up for a successful future and resolving its structural challenges. The 10-year strategic plan for Pemex aims for financial self-sufficiency starting in 2027.
- The Mexican government's plan to support Pemex includes building four cogeneration plants in Hidalgo, Oaxaca, Veracruz, and Tabasco, which will not only increase domestic natural gas production but also contribute to the country's energy sovereignty.
- The plan to boost Pemex's production also involves engaging the private sector, with the issuing of mixed contracts for the development of onshore unconventional natural gas and oil resources, such as fracking, marking a shift away from previous policies.
- In the financial sector, a crucial component to reducing Pemex’s debt involves a tax reform aimed at lowering commercial and financial obligations, complemented by extensive financial restructuring and capital raising efforts.
- To achieve energy sovereignty by 2030, the government's strategy focuses on optimizing tax burdens and incentivizing a productive investment strategy in the long term, as evident in the recent construction of the Olmeca Refinery by Pemex.
