Pemex Faces Mounting Challenges Amid Declining Oil Production and Refining Struggles

Petróleos Mexicanos (Pemex), Mexico’s state-owned oil giant, faces mounting challenges as crude oil exports and refining operations underperform.

In January 2025, crude exports dropped 44% year-over-year to 532,404 barrels per day (b/d), the lowest since records began in 1990. Sales to the U.S., Pemex’s largest market, fell by 36%, partly due to complaints about crude quality, including high salt and water content.

Refining operations also missed targets. Pemex processed just 886,787 b/d in its seven refineries in January, a 7% decline compared to last year. This figure remains far from the 1.143 million b/d goal set for early 2025.

The newly launched Olmeca refinery in Dos Bocas, which is intended to process 340,000 b/d, continues to underperform. This is due to delays and supply chain issues. In January, it processed no crude but produced small amounts of gasoline (13,400 b/d), diesel (5,000 b/d), and petroleum coke (1,100 b/d).

Despite investments of R$12 billion ($2 billion) annually during President Andrés Manuel López Obrador’s administration—up from R$8.5 billion ($1.4 billion) in the previous term—refining capacity utilization remains at just 46%.

Financial troubles compound these operational setbacks. Pemex carries nearly $100 billion in foreign debt and owes $20 billion to contractors, delaying payments and disrupting drilling activities.

Budget cuts of 7.5% for this year add further strain despite a new fiscal regime under President Claudia Sheinbaum aimed at easing financial pressures.

These issues raise concerns about Mexico’s energy security. They also highlight Pemex’s ability to meet national fuel demand while reducing reliance on imports.

For policymakers and investors, Pemex’s struggles highlight critical risks tied to operational inefficiencies and financial instability in Mexico’s energy sector.

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