Pemex (a

portmanteau A portmanteau word, or portmanteau (, ) is a blend of wordsMexican

state-owned State ownership, also called government ownership and public ownership, is the ownership of an industry, asset, or enterprise by the state or a public body representing a community, as opposed to an individual or private party. Public owne ...

petroleum company The petroleum industry, also known as the oil industry or the oil patch, includes the global processes of exploration, extraction, refining, transportation (often by oil tankers and pipelines), and marketing of petroleum products. The largest ...

managed and operated by the

Mexican government The Federal government of Mexico (alternately known as the Government of the Republic or ' or ') is the national government of the United Mexican States, the central government established by its constitution to share sovereignty over the republ ...

. It was formed in 1938 by

nationalization Nationalization (nationalisation in British English) is the process of transforming privately-owned assets into public assets by bringing them under the public ownership of a national government or state. Nationalization usually refers to p ...

and

expropriation Nationalization (nationalisation in British English) is the process of transforming privately-owned assets into public assets by bringing them under the public ownership of a national government or state. Nationalization usually refers to p ...

of all private oil companies in Mexico at the time of its formation. Pemex had total assets worth $101.8 billion in December 2019 and as of 2009 was

Latin America Latin America or * french: Amérique Latine, link=no * ht, Amerik Latin, link=no * pt, América Latina, link=no, name=a, sometimes referred to as LatAm is a large cultural region in the Americas where Romance languages — languages derived ...

's second largest enterprise by annual revenue, surpassed only by Petrobras (the Brazilian national oil company). The company is the seventh most polluting in the world according to ''

The Guardian ''The Guardian'' is a British daily newspaper. It was founded in 1821 as ''The Manchester Guardian'', and changed its name in 1959. Along with its sister papers '' The Observer'' and '' The Guardian Weekly'', ''The Guardian'' is part of the ...

''.

History

Asphalt Asphalt, also known as bitumen (, ), is a sticky, black, highly viscous liquid or semi-solid form of petroleum. It may be found in natural deposits or may be a refined product, and is classed as a pitch. Before the 20th century, the term ...

and pitch had been worked in Mexico since the time of the

Aztecs The Aztecs () were a Mesoamerican culture that flourished in central Mexico in the post-classic period from 1300 to 1521. The Aztec people included different ethnic groups of central Mexico, particularly those groups who spoke the Nahuatl ...

. Small quantities of oil were first refined into

kerosene Kerosene, paraffin, or lamp oil is a combustible hydrocarbon liquid which is derived from petroleum. It is widely used as a fuel in aviation as well as households. Its name derives from el, κηρός (''keros'') meaning " wax", and was re ...

around 1876 near Tampico. By the early 20th century, commercial quantities of oil were being extracted and refined by subsidiaries of the British Pearson and American Doheny companies and had attracted the attention of the Mexican government who then claimed all mineral rights for the state as part of its

Constitution A constitution is the aggregate of fundamental principles or established precedents that constitute the legal basis of a polity, organisation or other type of entity and commonly determine how that entity is to be governed. When these pr ...

. In 1938, President Lázaro Cárdenas (1934–40) sided with oil workers striking against foreign-owned oil companies for an increase in pay and social services. On March 18, 1938, citing Article 27 of the Constitution of 1917, President Cárdenas embarked on the state-expropriation of all resources and facilities, nationalizing the United States and Anglo– Dutch operating companies. He is famous in saying in his speech addressing the nation,

''I ask the entire nation to furnish the necessary moral and material support to face the consequences of a decision which we, of our own free will, would neither have sought nor desired.''

Pemex was established by Cárdenas's decree of June 7, 1938. He framed expropriation as a necessary national response to the injustice of the operations of foreign companies operating on Mexican soil. Expropriation was not outright confiscation since the Mexican government promised to compensate companies. However, in retaliation, many foreign governments closed their markets to Mexican oil until the Allies demand for petroleum in

World War II World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the World War II by country, vast majority of the world's countries—including all of the great power ...

caused the boycott to be dropped. In spite of the early boycott, Pemex developed into one of the largest oil companies in the world and helped Mexico become the fifth-largest oil exporter in the world. In an interview on the oil news website in November 2005, a Pemex employee spoke anonymously of the company's inability to grow production, stating that the company and country is at Hubbert's Peak. The person interviewed believed export levels could not be recovered once peak had passed, as the size of current fields that have been discovered or are coming online represent a fraction of the size of the oilfields going into terminal decline. Annual production has dropped each year between 2004 and 2007. Furthermore, it has been reported the 2005–2006 daily oil production was down by approximately (a large proportion of the country's 4,500,000 barrels) on the previous year. Pemex averaged 3.71 MMBPD in 2006. Pemex has never produced 4 MMBPD or higher for a yearly average. Pemex was replaced as Latin America's largest company by Petrobras, according to a Latin Business Chronicle ranking of Latin America's Top 500 companies. To help capitalize the company, former President Vicente Fox brought forward the possibility of making shares of Pemex available to Mexican citizens and pension funds, to complement a current project-specific investment setup known as "Proyectos de Inversión Diferida En El Registro del Gasto" (Deferred Investment Projects in the Expenditure Registry). The proposal, which intended to alleviate Pemex's tax burden and create a substantial budget increase, met opposition in

Congress A congress is a formal meeting of the representatives of different countries, constituent states, organizations, trade unions, political parties, or other groups. The term originated in Late Middle English to denote an encounter (meeting of ...

. President Felipe Calderón made clear at the beginning of his presidency that he would try his best to open up the sector to private investment. Pemex is Latin America's second-largest company measured by revenues, according to a ranking of the region's 500 largest companies by Latin Business Chronicle, behind Brazilian oil company Petrobras. In June 2009, Pemex has asked for an extra $1.5 billion state aid to finance oil fields investments, reported Bloomberg. Tula Refinery (5)

President Calderón called for a change in Mexico's

oil industry The petroleum industry, also known as the oil industry or the oil patch, includes the global processes of exploration, extraction, refining, transportation (often by oil tankers and pipelines), and marketing of petroleum products. The larges ...

after output at Pemex fell at the fastest rate since 1942. His comments came after Petrobras and London-based BP said they made a "giant" oil find of as much as in the Gulf of Mexico, southeast of Houston. According to Mexican Energy Minister Georgina Kessel, Mexico may seek to emulate Brazilian Oil rules that strengthened Petroleo Brasileiro SA as it considers regulation changes to revive the oil industry. In January 2014, Pemex signed a cooperation agreement with the Russian oil company

Lukoil The PJSC Lukoil Oil Company ( stylized as LUKOIL or ЛУКОЙЛ in Cyrillic script) is a Russian multinational energy corporation headquartered in Moscow, specializing in the business of extraction, production, transport, and sale of petrol ...

focusing on oil production and field exploration as well as exchange of knowledge in the aforementioned areas, including actions for ecological preservation and environmental protection.Press bulletin from Pemex
In February 2016,

Emilio Lozoya Austin Emilio Ricardo Lozoya Austin (Chihuahua, Chihuahua, December 9, 1974) is a Mexican economist and politician. He was the CEO of Petróleos Mexicanos (PEMEX) from 2012 to 2016. Biography Education He holds a degree in Economics from the ITAM ...

stepped down as CEO of Pemex and was replaced by

José Antonio González Anaya José Antonio González Anaya (born 7 June 1967) is a Mexican economist who served as the minister of finance and public credit of Mexico until November 30, 2018. Previously he served as CEO of PEMEX (''Petroleos Mexicanos'', Mexico's National O ...

. On November 27, 2017,

was appointed to be the Secretary of Finance and Public Credit. Carlos Alberto Treviño Medina was appointed CEO, sequentially.

Operation

Exploration

Proponents of Calderón's energy policy stated that Pemex lacks the equipment, technology and financial means to explore for new reserves in deep water or shale gas; hence, a reform to Mexican law is needed. In addition to a failing infrastructure, dwindling reserves have created urgency in completing some type of reform. Only 20% of Mexico has been extensively explored for further reserves and it has been argued that Pemex will need the help of some form of foreign investment to successfully explore new reserves, including in the Gulf of Mexico. In February 2015, the board approved a $4.16 billion spending cut, pulling the company's budget down 11.5 percent from the 2015 budget approved by Mexico's congress. The company also said it will delay deepwater exploration plans and cut jobs in response to weak oil prices. In December 2019, the company stated the discovery of a deposit in southeastern Mexico that could produce 500 million barrels of crude, the largest discovery in more than 30 years.

Financial status

Taxes on Pemex revenue provide about a third of all the tax revenues collected by the Mexican government. Pemex has a debt of $42.5 billion, including $24 billion in

off-balance-sheet Off balance sheet (OBS), or incognito leverage, usually means an asset or debt or financing activity not on the company's balance sheet. Total return swaps are an example of an off-balance-sheet item. Some companies may have significant amounts ...

debt. The state-owned company pays out over 60% of its revenue in royalties and taxes. Mexico exports crude oil, but imports more expensive gasoline. National Hydrocarbons Commission, created in 2008 by the

Mexican Congress The Congress of the Union ( es, Congreso de la Unión, ), formally known as the General Congress of the United Mexican States (''Congreso General de los Estados Unidos Mexicanos''), is the legislature of the federal government of Mexico cons ...

to increase regulatory oversight, has increased scrutiny over Pemex in 2012. As of July 2019, Pemex is the most indebted oil company in the world.

Incidents and controversies

Incidents

In 1979, Pemex's Ixtoc 1 exploratory oil well in the

Bay of Campeche The Bay of Campeche ( es, Bahía de Campeche), or Campeche Sound, is a bight in the southern area of the Gulf of Mexico, forming the north side of the Isthmus of Tehuantepec. It is surrounded on three sides by the Mexican states of Campeche, ...

suffered a blowout resulting in one of the largest oil spills in history. Pemex spent $100 million to clean up the spill and avoided most compensation claims by asserting sovereign immunity as a state-run company. On November 19th, 1984, a series of

BLEVE A boiling liquid expanding vapor explosion (BLEVE, ) is an explosion caused by the rupture of a vessel containing a pressurized liquid that has reached temperature above its boiling point. Because the boiling point of a liquid rises wi ...

's at a Pemex LPG storage facility occur in the heavily populated outskirts of

San Juan Ixhuatepec San Juan Ixhuatepec is a town located in the municipality of Tlalnepantla de Baz, in the centre of the State of Mexico. The population is 353,300. The name of Ixhuatepec means "place in the leaves hill" in the Nahuatl Nahuatl (; ), Aztec, or M ...

, near

Mexico City Mexico City ( es, link=no, Ciudad de México, ; abbr.: CDMX; Nahuatl: ''Altepetl Mexico'') is the capital and largest city of Mexico, and the most populous city in North America. One of the world's alpha cities, it is located in the Valley o ...

, resulting in the deaths of around 500-600 residents and up to 7000 injured by the explosions, ensuing fire and shrapnel from exploding tanks. It is considered among the deadliest industrial accidents in world history. Pemex was blamed for a series of 1992 gas explosions in Guadalajara. On September 19, 2012, an explosion at the Pemex gas plant in Reynosa,

Tamaulipas Tamaulipas (), officially the Free and Sovereign State of Tamaulipas ( es, Estado Libre y Soberano de Tamaulipas), is a state in the northeast region of Mexico; one of the 31 states which, along with Mexico City, comprise the 32 Federal Entiti ...

killed 30 and injured 46 people. Pemex Director Juan Jose Suarez said that there was "no evidence that it was a deliberate incident, or some kind of attack". On January 31, 2013, an explosion occurred at the administrative offices of Pemex in

. At least 37 people were killed and at least 126 were injured. The cause has not been confirmed. Local media reported that machinery exploded in the basement of an administrative center next door to the 52-story Pemex tower. On April 1, 2015, a fire occurred on platform Abkatun A in the southern Gulf of Mexico which killed 4 workers. On April 20, 2016, a large explosion and fire at the company's Chlorinate 3 plant in Coatzacoalcos killed at least 28 people. On September 24, 2016, a fire broke out on the oil tanker "Burgos", off the coast of Boca del Río, Veracruz, forcing all the crew (31 members) to be evacuated safely. The tanker was carrying 80,000 barrels of diesel and 70,000 barrels of gasoline. On January 18, 2019, an explosion occurred on a pipeline passing through the village of Tlauhuelilpan, Hidalgo killing at least 137 people. Several hundred people were gathering around an illegal pipe drain in order to get fuel. Images of the event shows people collecting fuel with buckets and small containers from a waterfall of gasoline. Military and police forces were present during the event for several hours before the explosion but were unable to stop the people from stealing fuel. The pipeline was not closed on time even after the fuel drain was reported. On July 2, 2021, a natural gas pipeline owned by Pemex burst in the

Gulf of Mexico The Gulf of Mexico ( es, Golfo de México) is an ocean basin and a marginal sea of the Atlantic Ocean, largely surrounded by the North American continent. It is bounded on the northeast, north and northwest by the Gulf Coast of the United ...

. The natural gas was then ignited, causing a "fireball" to appear on the water's surface. The blaze was extinguished with

nitrogen Nitrogen is the chemical element with the symbol N and atomic number 7. Nitrogen is a nonmetal and the lightest member of group 15 of the periodic table, often called the pnictogens. It is a common element in the universe, estimated at se ...

after approximately five hours. On August 24, 2021, an oil rig fire killed five workers.

Controversies

In 2009, the U.S. Justice Department reported that some U.S. refineries had bought millions of dollars' worth of oil stolen from Mexican government pipelines. Criminals, especially drug gangs, tap remote pipelines and sometimes build their own pipelines to siphon off hundreds of millions of dollars' worth of oil each year. One oil executive has been charged and has pleaded guilty to conspiracy charges. The U.S. Homeland Security Department will return $2.4 million to Mexico's tax administration—the first money seized during a binational investigation into smuggled oil that authorities expect to lead to more arrests and seizures. In 2010 the former president of

Houston Houston (; ) is the most populous city in Texas, the most populous city in the Southern United States, the fourth-most populous city in the United States, and the sixth-most populous city in North America, with a population of 2,304,580 ...

-based Trammo Petroleum was sentenced to three years of probation and fined $10,000 after pleading guilty to conspiracy to receive stolen goods. There have been various allegations of corruption in Pemex for over a decade. These range from political contributions to the Institutional Revolutionary Party (PRI) (over $200 million), "no show" jobs – individuals who receive a salary while performing no duties – various forms of fraud, embezzlement and even under-the-table fuel sales. It has been estimated these various forms of corruption contribute to the loss of over $1 billion a year. Pemex has a long history of alleged violation of human and labour rights regarding engineers, unrightfully considered to be "trusted workers" who have tried to unionize since 1995 and succeeded, after several repression episodes, in doing so in 2008 and 2009, although at a high human cost. This included the death of a person who was refused medical service at one of Pemex's hospitals because his son had just been sacked for belonging to this union, the Unión Nacional de Técnicos y Profesionistas (shorthand UNTyPP). It also included forcing union members to resign from the Union from their hospital beds, as happened to three cancer patients in 2009. Up to date and in spite of pressure by the Mexican Congress, the International Labour Organization, the Global Compact, the Industrial Global Union and thousands of citizens all over the world, workers fired in 2002, 2004, 2008, 2009, 2010 and 2011 have not been all reinstated nor has there been any other reparation. Pemex has denied these accusations. On November 10, 2019, the institution suffered a cyber attack and its computers were infected with DoppelPaymer ransomware.

Odebrecht corruption investigation of EPN and the ex-director of Pemex Emilio Lozoya Austin

Odebrecht Odebrecht S.A. (), officially known as Novonor, is a Brazilian conglomerate, headquartered in Salvador, Bahia, Brazil, consisting of diversified businesses in the fields of engineering, construction, chemicals and petrochemicals. The company ...

is a Brazilian conglomerate that like Pemex also operates in the field of petroleum. Back in 2010–2012,

was part of the PRI's team supporting

Enrique Peña Nieto Enrique Peña Nieto (; born 20 July 1966), commonly referred to by his initials EPN, is a Mexican politician who served as the 64th president of Mexico from 1 December 2012 to 30 November 2018. A member of the Institutional Revolutionary Party ...

(EPN) in his presidential campaign. After EPN won the elections, Lozoya was promoted to director of Pemex, a role in which he served for most of EPN's presidency. In 2017, Brazilian newspaper

O Globo ''O Globo'' (, ''The Globe'') is a Brazilian newspaper based in Rio de Janeiro. ''O Globo'' is the most prominent print publication in the Grupo Globo media conglomerate. Founded by journalist Irineu Marinho, owner of ''A Noite'', it was ori ...

claimed that Odebrecht helped finance EPN's presidential campaign, by giving $10 million to Emilio Lozoya as a bribe during times close to the 2012 elections. Soon after EPN won the elections in 2012, Lozoya became a director of Pemex and Odebrecht "won" huge contracts from Pemex and the Mexican government. The news of the controversy surfaced in 2017, revealing Lozoya bought a $38 million house with a single payment even before he was named a director of Pemex. Such a house did not fit with his salary at the time. In October 2017, it was confirmed by the presidency that EPN himself also met with Odebrecht four times during his presidential campaign. This directly tied EPN into the scandal, albeit EPN claimed not to have received any bribes. A document from Brazil reported Lozoya received $5 million in November 2014. Santiago Nieto, in charge of the (FEPADE), an office in charge of investigating electoral crimes, was controversially fired soon after the Odebrecht scandal began. He was said to be receiving too much pressure from EPN and Lozoya to stop the investigation. The firing was criticized by ex-president Felipe Calderon's wife and independent 2018 presidential candidate Margarita Zavala. President Peña Nieto said Santiago's restitution fate depended on the Mexican Senate. The organization Borde Politico had published weeks before that 116 out of the 128 Mexican senators were incompetent.

References

External links

Official Pemex website

* ttp://biz.yahoo.com/ic/41/41359.html Petróleos Mexicanos Company Profileon

Yahoo! Yahoo! (, styled yahoo''!'' in its logo) is an American web services provider. It is headquartered in Sunnyvale, California and operated by the namesake company Yahoo Inc., which is 90% owned by investment funds managed by Apollo Global Mana ...

Mexico Energy Reform and related infrastructure projectsAll about of Asiste PemexMexico's crude oil production chart (1980–2004)
– Data sourced from the US Department of Energy
"Pemex: Challenges and Opportunities; Time for Reform?" (Nov. 2006) p. 19 by Justin Dargin
{{authority control Oil and gas companies of Mexico

Mexico Mexico (Spanish language, Spanish: México), officially the United Mexican States, is a List of sovereign states, country in the southern portion of North America. It is borders of Mexico, bordered to the north by the United States; to the so ...

Automotive fuel retailers Monopolies Government-owned companies of Mexico Holding companies of Mexico Companies based in Mexico City Energy companies established in 1938 Non-renewable resource companies established in 1938 Mexican companies established in 1938 Petroleum industry in Mexico Mexican brands