Pemex’s Leadership Pivot: Can a Familiar Face Revive a Struggling Giant?

The Mexican oil giant Petróleos Mexicanos (Pemex) has entered a critical phase of its storied history. After years of stagnation, scandal, and declining production, the company is once again turning to a familiar face: Octavio Romero Oropeza, the former CEO who led Pemex during the Andrés Manuel López Obrador administration, is set to return to head Pemex Exploration and Production (PEP) in early 2025. His reappointment follows the abrupt exit of Roberto Velázquez Leal, who stepped down in late 2024 amid mounting criticism over Pemex’s $100 billion debt crisis, plummeting crude output, and ongoing corruption probes. The move raises urgent questions: Can Romero’s return stabilize PEP, or will it repeat the missteps that defined his earlier tenure?

The Exit of Velázquez and the Return of Romero: A Story of Familiar Struggles

Velázquez’s departure capped a turbulent period for Pemex. Appointed in 2021 as a successor to Romero, he inherited an organization in freefall. Crude production had dropped to 1.65 million barrels per day (b/d) by late 2024—a 10% decline year-over-year—while debt soared to $100 billion, including $24.2 billion owed to service providers. His tenure saw the Dos Bocas refinery (Olmeca), a flagship project of López Obrador’s era, limp along at just 19% of its 340,000 b/d capacity, exacerbating losses in Pemex’s refining division.

Romero’s return, however, is no panacea. His first stint as CEO (2018–2021) was marked by unmet production targets, $13 billion in refining losses by 2024, and the Zama field mismanagement scandal, where Pemex’s insistence on sole control delayed development by years. Critics argue that his return risks doubling down on the nationalistic policies that prioritized state control over pragmatic reform, stifling private investment and technical expertise.

The 2025 Reforms: A Double-Edged Sword for PEP

Mexico’s 2025 energy reforms aim to solidify Pemex’s dominance in exploration and production, requiring the state-owned firm to be prioritized in all new contracts. While this grants PEP preferential access to reserves, it also perpetuates the same structural issues that have plagued the company: lack of capital, outdated infrastructure, and dependency on maturing fields.

The reforms also mandate that Pemex retain at least 40% ownership in mixed development projects with private firms—a rule that may deter investors wary of Pemex’s $100 billion debt and historically poor governance. Meanwhile, the new “Petroleum Law for Wellbeing” imposes a 30% tax on oil, further squeezing margins in an industry already struggling with low global prices.

Market Sentiment: Caution Amid Political Continuity

Investors remain skeptical. Pemex’s stock has plummeted 65% since 2020, reflecting concerns over its $100 billion debt, 100,000 b/d annual production decline, and $20 billion in unpaid supplier debts. Even the appointment of Romero—a figure closely tied to López Obrador’s policies—has done little to inspire confidence. Analysts note that without private partnerships, debt restructuring, or new discoveries, Pemex risks becoming a fiscal anchor for Mexico’s economy.

The Romero Gamble: Can Experience Trump History?

Romero’s reappointment is framed as a “return to institutional memory”, leveraging his familiarity with Pemex’s bureaucracy. His mandate includes postponing non-essential projects, focusing on high-output wells, and streamlining governance under new board structures. Yet his track record is a liability. During his first tenure, Pemex’s refining division lost $13 billion in a single quarter (Q1 2024), while production at legacy fields like Maloob and Zaap collapsed.

The key to success now lies in abandoning ideological rigidity. Romero must embrace private-sector collaboration—a shift hinted at through limited partnerships like the Bacab and Lum field deal with CME Oil and Gas—while addressing Pemex’s $100 billion debt mountain. Without this, Pemex risks becoming a cautionary tale of national pride over pragmatism.

Conclusion: A High-Risk Gamble with Little Margin for Error

Pemex’s future hinges on whether Romero can reverse decades of decline without repeating the mistakes of his first tenure. The numbers are stark: production must stabilize at 1.8 million b/d to meet 2025 targets, yet only 50% of output comes from seven aging fields in decline. With debt exceeding $100 billion and refining losses $13 billion annually, there is little room for error.

Investors should monitor Pemex’s debt-to-equity ratio, its new project approvals, and the performance of private partnerships. If Romero can attract capital and revive exploration, Pemex may stabilize. But with 100,000 b/d of annual declines projected post-2025 and $20 billion in debt maturities due by 2026, the odds remain stacked against him. For now, the bet on a familiar face is a gamble with the Mexican economy itself.