Mexico’s Energy Reform and the Future of Pemex

Mexico’s Energy Reform and the Future of Pemex

The ebullient celebration in Brazil over Petrobras' historic $70 billion share-issue last month was bitterly received in Mexico City, where the state-owned oil company Pemex is mired in debt, inefficiency and ongoing political wrangling.

With little having changed since Mexican President Felipe Calderón sought to reform the country's energy sector two years ago, the contrast between Petrobras' successes and Pemex's failures has reignited discussion of Pemex's future and renewed the public's interest in the beleaguered Mexican oil giant.

Once Latin America's largest company, Pemex has persistently lost profits and market share to other state-led oil companies, including PetroChina, Russia's Lukoil, and Petrobras. Pemex's inability to expand production and compete internationally stems from decades of mismanagement, corruption and a politically sensitive constitutional provision barring the company from receiving private investment, as most of its state-led competitors already do.

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