Petróleos Mexicanos (“Pemex”), Mexico’s state-owned oil company, continues to struggle with what may be the deepest crisis in its history. Despite decades of dominance as the nation’s most important economic enterprise, Pemex now finds itself on the brink of collapse, weighed down by mounting debt, operational inefficiencies and an erosion of trust among suppliers and partners. 

As of 2024, Pemex’s financial debt had reached nearly USD 100 billion, while unpaid obligations to suppliers stood at around USD 23 billion. These dismal figures have not only raised alarms among financial analysts but have also exposed the structural weaknesses at the heart of the company. One of the clearest indicators of this inefficiency is barrels per day per employee (bpd/employee). Pemex currently produces just 14 bpd/employee, a performance dramatically lower than Petrobras (48), Colombia’s Ecopetrol (27) and Saudi Aramco (92). 

To address this mounting crisis, Pemex recently announced a recovery plan. Yet instead of inspiring confidence, the proposal has been widely criticised by market analysts and industry stakeholders. The Mexican Association of Oil Services Companies (“AMESPAC”) argued that the plan fails to provide clear solutions to the company’s spiralling debt and does little to reassure contractors or investors. 

Meanwhile, uncertainty at the top has added to the heat. Rumours abound regarding the possible departure of CEO Víctor Rodríguez Padilla, appointed by President Claudia Sheinbaum just last August. These whispers gained volume after the return of Ángel Cid in May as Head of Exploration and Production, a position he had previously held before being replaced last year. Cid’s return is seen as an attempt to stabilise Pemex, but sceptics note its decline deepened under his watch, leaving doubts over whether this is rescue or repetition. 

However, some insiders believe continuity will prevail. “There’s no basis to expect a leadership change any time soon,” stated a Pemex officer. “The priorities are clear: producing more while streamlining resources, undertaking a deep restructuring to eliminate idle assets and promoting modernisation to ensure increased production.” 

Pemex’s struggles cannot be disentangled from the political project of former President Andrés Manuel López Obrador (“AMLO”) and his successor Sheinbaum. AMLO’s model, built on shielding Pemex from private investment, has created additional constraints. The former Pemex official bluntly noted, “The reality is that a model closed to private investment, as proposed by López Obrador, is unsustainable.” Our source observed, “I believe Andy López Beltrán (López Obrador’s son) and Claudia’s team are aware of this, and so, in one way or another, they are allowing some degree of private investment.” 

“The reality is that a model closed to private investment, as proposed by López Obrador, is unsustainable.”

Former Pemex strategic energy consultant

This view was reinforced by an officer in Pemex’s compliance and responsibilities unit who added, “Efforts have been made to develop frameworks that facilitate private investment without jeopardising Pemex’s leading role. A great deal of work has gone into this and it has proven attractive, even to international companies.” The officer suggested, “A strong wave of investment is expected, particularly around the Zuma Project.” 

Still, political rivalries complicate matters. According to the former official, “The tug-of-war between Andy López Beltrán and President Sheinbaum is more about control and benefits than about the government’s overall strategy. I think Andy [López Beltrán] will be left wanting when it comes to influencing Pemex.” 

Pemex’s inability to pay its debts has sparked open conflict with contractors. Suppliers accuse the company of deliberately blocking invoice submissions to avoid acknowledging its growing liabilities. A former strategic energy consultant observed, “Pemex’s short-term strategic plans don’t include settling past debts - only allocating resources for new contracts. As a result, many suppliers are beginning to feel that Pemex might, at some point, simply refuse to pay altogether.” 

“Pemex’s short-term strategic plans don’t include settling past debts.”

Former Pemex strategic energy consultant

The situation is already having consequences. “In the short term, Pemex will continue refusing to accept invoices for smaller contracts and will keep stalling.” The former strategic energy consultant continued, “Obviously, this will reduce the number of contractors and suppliers willing to work with the company.” Even more worrying, some regions have experienced severe distribution problems. “Just look at what’s happening with service stations in several states - they’ve gone more than ten days without receiving petrol deliveries because Pemex hasn’t paid the tanker drivers,” exclaimed the consultant. 

“The company’s response to these claims has been that efforts are being made to process and accelerate payments, but resources are limited, so prioritisation is necessary and suppliers are being asked to be patient.” Pemex’s compliance and responsibilities unit office expanded, “no evidence of wrongdoing or bad faith has been identified in the conduct of public officials” and that contracts are being audited more rigorously. 

The company’s massive debt, inefficiency and declining reputation are dragging Mexico’s energy sector into the dirt. Whether through deeper reforms, expanded private investment, or continued political intervention, the choices made in the coming months will determine whether Pemex survives as a viable enterprise or takes a quick Pem-exit.