Pemex

Petróleos Mexicanos

Type	State-owned
Founded	1938
Headquarters	Mexico City, Mexico
Key people	Jesús F. Reyes Heroles (CEO) Georgina Kessel (Chairwoman)
Industry	Oil and Gas Refining
Products	Petrochemical products
Revenue	▲US$ 173 billion (2008)
Net income	▲US$ 25 billion (2008)
Employees	138,215
Website	http://www.pemex.com.mx

A Pemex gas station in Puerto Vallarta

Petróleos Mexicanos (PEMEX) [Mexican Petroleums] is Mexico's state-owned petroleum company. It is the 10th largest oil company in the world in terms of revenue and ranks 42nd on the list of Fortune 500 companies.

Asphalt and pitch had been worked in Mexico since the time of the Aztecs. Small quantities of oil were first refined into kerosene around 1876 near Tampico. By 1917 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.

State oil expropiation

In 1938, president Lázaro Cárdenas sided with oil workers striking against foreign-owned oil companies for an increase in pay and social services. On March 18, 1938 citing the 27th article of the 1917 constitution, President Lázaro Cárdenas embarked on the state-expropriation of all resources and facilities, nationalizing the U.S. and Anglo-Dutch operating companies, creating PEMEX. In retaliation, many foreign governments closed their markets to Mexican oil. In spite of the 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.

Products

Pemex tower in Mexico City

PEMEX is the sole supplier of all commercial gasoline (petrol/diesel) stations in Mexico. All petrol stations, although labeled PEMEX, are concessions that are strictly full-service. PEMEX tried to take away the concessions from a large number of these for low-quality gasoline (often cut with up to 40% fuel oil) and for not serving the correct amount of gasoline (many serve only 9 litres for every 10 registered on the pump), however a judge ruled these were "not reasons to take away the concessions".

The grades of PEMEX gasoline are "Magna" (regular unleaded 87 octane—green pump handle) and "Premium" (92 octane—red pump handle). Previously, PEMEX offered a leaded gasoline called "Nova", but this has been discontinued for environmental reasons and due to stringent health regulations.

Some Pemex stations accept U.S. dollars and they accept major credit cards.

Accidents

On June 3, 1979, PEMEX's Ixtoc I exploratory oil well in the Gulf of Mexico, about 600 miles south of Texas, suffered a blowout and became the largest unintentional oil spill in history.

On November 19, 1984, a series of explosions at the PEMEX petroleum storage facility at San Juan Ixhuatepec in Mexico City ignited a major fire and killed about 500 people.

On April 22, 1992, explosions in Guadalajara, Jalisco killed more than 200 people.

On July 10, 2007, the Popular Revolutionary Army claimed responsibility for blasts on PEMEX pipelines on July 5 and 10.^[1]

On October 23, 2007, the Jackup rig Usumacinta collided with the oil platform Kab 101 in severe weather, leading to the eventual death of 22.

Reserves

• Chicontepec Field
• Cantarell Field
• Ku-Maloob-Zaap

Current situation

Protest in front of the Torre Ejecutiva Pemex against the privatization of Pemex, Mexico City February 2008

Despite its current $77 billion in revenue, PEMEX pays high taxes that contribute a large portion of the budget of the federal government. In recent years the company has only been able to make ends meet through massive borrowing, so that it now owes a staggering $42.5 billion, including $24 billion in off-balance-sheet debt because the Mexican government treats the company as a major source of revenue. The state-run company pays out over 60% of its revenue in royalties and taxes, and those funds pay for two fifths of the federal government's budget. In 2005, with record-breaking oil prices, the company has seen an unexpected excess of funds. This trend continued in 2006, but these funds have been used to pay salaries of bureaucrats and current costs, instead of being invested in projects of exploration and production; during the President Fox administration, these funds represent around 70 billion dollars,^[2] yet the administration says there is not enough money to pay the debts. The lack of investments prevent adequate refining capacity to be added. While exporting crude oil, Mexico imports expensive gasoline.^[3]

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" or PIDIREGAS^[4]; this proposal, along with alleviating PEMEX's heavy tax burden and a substantial budget increase, have met opposition in Congress.^[5][6]

President Calderon made clear at the beginning of his presidency that he would try his best to open up the sector to private investment so he started giving away oil contracts to his close friends like the late Juan Camilo Mouriño.^[7]

Pemex is Latin America's largest company measured by revenues, according to a ranking of the region's 500 largest companies by Latin Business Chronicle

In June 2009, Pemex has asked for an extra $1.5 billion state aid to finance oil fields investments, reported Bloomberg.

Oil reserves declining

In an interview on the oil news website www.oilcast.com 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 since 2004. [1] Furthermore, it has been reported the 2005-2006 daily oil production was down by approximately 500,000 barrels a day (a large proportion of the country's 4.5 million barrels) on the previous year.

PEMEX averaged 3.71 MMBPD in 2006. [2] PEMEX has never produced 4 MMBPD or higher for a yearly average. [3]

PEMEX has been replaced as Latin America's largest company by Brazilian oil company Petrobras, according to the latest Latin Business Chronicle ranking of Latin America's Top 500 companies.

See also

• Oil in Mexico

References

External links

Wikimedia Commons has media related to: PEMEX

• http://www.usaee.org/pdf/Nov06.pdf#19d "PEMEX: Challenges and Opportunities; Time for Reform?" (Nov. 2006) p. 19 by Justin Dargin
• (Spanish) Official site
• (Spanish) Security sheets for the use of substances (in PDF format) about the Pemex products: Magna, Diesel, Combustoleo
• Petróleos Mexicanos Company Profile on Yahoo!
• Mexico's crude oil production chart (1980-2004) - Data sourced from the US Department of Energy

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