Does Pemex have a reason to celebrate?
Pemex is a symbol of sovereignty for Mexico - Photo: Daniel Becerril/EL UNIVERSAL

Does Pemex have a reason to celebrate?

18/03/2019
09:08
Mexico City
Editorial
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On this day in 1938, then President Lázaro Cárdenas nationalized the oil industry

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March 18 has been a relevant date for the country for 81 years. It is one of the most outstanding events in the history of Mexico. It is so important it is taught at school and has even become a public holiday.

On this day in 1938, then President Lázaro Cárdenas nationalized the oil industry, which was managed by foreign companies. It was a key moment for the rise of Pemex three months later, a company that has been considered as a symbol of national sovereignty, and since the 70s, when the Cantarell oil field was discovered, it was characterized as a company with the capacity to develop the country into the first world.

Tax burdens, the lack of investment, and the abandonment of the government since 2000 have driven Pemex in a deplorable position.

The balance made by EL UNIVERSAL is revealing. It is the company with the largest debt in the world: MXN $2 billion in debt, a number that is almost the same as its assets. In 2004, Pemex reached its highest production levels, 3.3 million barrels per day; this year, the production is only 1.7 million barrels per day. In the last decade, Pemex has had to face new challenges: fuel theft in pipelines, facilities, and marine platforms, which has represented an MXN $60,000 million loss per year. Its oil refining capacity is only 30%, it has been importing fuel for 29 years, diesel for 23 years, and jet fuel for 21 years.

As an almost natural result, international rating agencies have a pessimistic view and have place Pemex in a negative perspective.

For Andrés Manuel López Obrador's government, rescuing the oil company from its financial crisis is a priority and its low productivity in order to return it to its main role in economy.

Mexico still has oil reserves. Recently, more oil reserves have been found, which can be exploited and contribute to increasing its production but it will have to be more efficient and without increasing, or diminishing, the current spending, the budget allocated to everyday purchases and salaries, among other expenses.

The strategy adopted by the federal government will be essential to try and revive Pemex. The failure of this strategy wouldn't only be a blow for the company, it would have a negative effect on the economy. Something that should be avoided, for the good of the country.

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