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NATIONAL OIL COMPANY

Pemex within the Framework

of AMLO’s Government Trajectory

Pemex, the world’s most indebted
NOC, sits on shaky foundations but
it could be ultimately backstopped
by the Mexican government – unless
economic and geopolitical factors
excessively weaken or derail AMLO’s
government

Paolo Gangi, Managing Director,
i2p Consulting S.R.L.

exico crude oil reserves amount
to 6.63 billion barrels (2018), Pemex and the Oil and Gas
which gives Mexico the 4 lar- Nationalization Historical
th
gest Latin American oil reserves
and the world’s 19 largest (2018, Phases
th
Msource CIA). After President Láza- After the 1910 revolution which toppled Porfi rio
ro Cárdenas’ 1938 nationalization and the 1960s’ Díaz, Mexico entered into decades of civil war
reform, Petróleos Mexicanos (Pemex), the Mexican between many armies and factions. Thereafter, un-
National Oil Company (NOC), operated in a sub- der the government in Mexico City of Vetustiano
stantial regime of monopoly which was partially rol- Carranza and the Constitutionalists, the Mexican
led over only by President Peña Nieto, who ended Constitution was enacted in 1917 (still in force),
his mandate in 2018 however and was replaced by which in its Article 27, paragraph 4, declared that
the leftist candidate Andrés Manuel López Obra- “the following elements are the property of the Na-
dor (AMLO), whose election in 2018 signaled the tion: all natural resources of the continental shelf
victory of a leftist party for the fi rst time in almost and the seabed of the islands […] petroleum and all
one hundred years. At the same time, Pemex is solid, liquid or gaseous hydrocarbons”.
currently the most debt-laden NOC due to long- Due to political instability and violent fi ghting
term mismanagement and has been downgraded between the various factions which dominated
by Fitch and Standard and Poor. In this article, we Mexico, the principles of the Mexican Constitution
will examine the Pemex situation within the AMLO had never been applied for almost twenty years, so
political trajectory, and his energy policy, and we that the major oil companies of the 1930s (among
will endeavor in make some forecasts about Pe- them Rockefeller’s Standard Oil, Chevron and
mex’s future. Royal Dutch Shell) were still substantially managing
Mexican hydrocarbon resources and Article 27
At the time of writing, Pemex is was unapplied. However, due to a confl ict between
the world’s most indebted NOC, the international oil companies and the local union
which was resolved by a local arbitrators body
“owing about US$ 108 billion in favor of the union and the subsequent refusal
of the international oil companies to comply with

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