For decades, Pemex has been steered by the Mexican government to implement sovereignty policies that are not economically viable, and it is now stuck in a rut. Its refineries are dilapidated and operating below capacity, and this trend is set to worsen, due to a lack of financial resources to carry out the huge investments needed to modernize them.
Last year, the group's refining segment lost $15bn, exactly equivalent to the profit made by the exploration and production segment. By draining its resources in this way, Pemex has been unable to undertake new exploration efforts, with the result that in ten years its proven reserves have fallen by 40%, from 10 to 6 billion barrels and equivalents.
Last year, President Sheinbaum's appointment of Victor Rodriguez—a big shot from academia with no management experience—raised a few eyebrows. Rodriguez, who has publicly spoken out in favor of the sovereignist policies that have been leading their proponents into a rut for years, has been tasked with developing shale drilling at Pemex.
Despite its ambitions, Mexico remains far too dependent on imports from the United States. Domestic oil production has fallen to 1.5 million barrels per day, its lowest level since the early 1980s and a far cry from the peak of 3.3 million barrels reached in 2004. Without gas from its northern neighbor, the country would be plunged into darkness.
Constantly bailed out by successive governments, Pemex is currently facing near-insolvency, both with its creditors and its suppliers. The entire economy is suffering as a result. Because of these difficulties, opening up the company to foreign investors remains unthinkable.
The major South American energy companies have all suffered from the effects of ill-advised public policies, generally guided by populist agendas. At the center of the biggest corruption scandal in history, Brazil's Petrobras has set out to redeem itself thanks to the exceptional windfall from its offshore oil fields. But it still has a lot to prove.
See also Petrobras' stratospheric dividend yield reflects investors' extreme mistrust of the company.
The situation is similar in Colombia, where the underperformance of the refining segment has prevented Ecopetrol from developing its production and proven reserves, both of which have been stagnant for ten years. Despite the relative success of the recovery plan launched in 2017-2018, Ecopetrol, still 90% state-owned, is unable to finance its dividends and investments.
Of course, nothing compares to the scale of the disaster in Venezuela. Production at the major company Petróleos de Venezuela, despite sitting on the world's largest reserves of heavy crude oil, has collapsed by two-thirds in twenty years.
