S&P Questions Pemex Production Target, Cites Unresolved Operational Issues
Mexican state owned company Pemex’s plan to become financially self-sustainable by boosting crude output to 1.8 million b/d faces significant challenges, with S&P Global Ratings analysts warning that it will likely require continued government support for years to come amid declining oil production and underperforming refineries.
President Claudia Sheinbaum has pledged to raise Pemex’s crude production to 1.8 million b/d next year as a key step toward making the company financially self-sufficient. However, S&P Global Ratings does not view that target as achievable.
“In our opinion, the company’s underlying operational issues have not been resolved,” said Fabiola Ortiz, Director of Corporate Ratings for Latin America at S&P Global Ratings during a webinar organized last week by the energy unit at the Mexican Council on Foreign Relations, COMEXI.
Ortiz said the strategy launched under former President Andrés Manuel López Obrador to boost smaller wells and mature fields only generated limited and temporary production increases.
She added that Pemex would need a major project or discovery comparable to Cantarell, once one of the world’s most productive oil fields, to offset current production declines.
“As of today, we do not have a project of that magnitude capable of mitigating this decline,” Ortiz said, adding that even if such a discovery were made, Pemex would be unable to develop it on its own under its current financial and operational conditions.
She also said private investment has remained insufficient, as Mexico has failed to attract major investors due to legal uncertainty and because Pemex’s available mixed-projects have not been attractive enough for private capital.
On the refining side, analysts said Pemex’s refineries remain underutilized because of inadequate maintenance. Most are operating between 35% and 40% of process capacity, while upgrades at the Tula and Salina Cruz refineries, including delayed coker projects, have not started operations as expected.
Meanwhile, the 340,000-b/d Dos Bocas refinery, which began producing fuel in mid-2024, only surpassed 200,000 b/d of output in December and has faced operational setbacks, including leaks, fires and fatal accidents.
“It has experienced incidents that are not expected in a newly opened project,” Ortiz said.
S&P Global Ratings in mid-May revised its outlook Pemex from stable to negative, citing weak economic growth and rising budget constraints, in line with a similar revision to Mexico’s sovereign outlook.
The agency outlined eight different mechanisms through which the Mexican government has supported Pemex. These include financing for the construction of the Dos Bocas refinery, tax burden reductions and, most importantly, direct budget transfers.
“Pemex will likely continue requiring government support to cover debt maturities beyond 2027, which remain significant and will continue consuming government resources,” the analyst said.
The Mexican government allocated $6.7 billion to Pemex in 2025 and nearly doubled that amount to $13 billion for 2026. Additional support measures have included Banobras bond issuances, P-Cap issuances and bond buybacks.
Reporting by José Luis Adriano, jadriano@opisnet.com; Editing by Karla Omaña, komana@opisnet.com and Michael Kelly, mkelly@opisnet.com