Pemex's New Strategy: Sharing Venture Profits With Private-Sector Partners

In a significant shift in strategy, Mexican state-owned oil company Pemex has announced its intention to share venture profits with private-sector partners. This move, spearheaded by President Claudia Sheinbaum and Pemex CEO Víctor Rodríguez, aims to boost hydrocarbon reserves, maintain production levels, and attract external investments. Let's delve into the details of this new approach and its potential implications.



Pemex's new strategy focuses on intensifying deepwater exploration, a departure from the previous administration's emphasis on shallow water projects. This shift is designed to optimize the extraction of challenging resources, such as heavy crude oil and natural gas. The company will also prioritize the development of marginal oil fields to maximize their potential.

To ensure an equitable distribution of risks and benefits, Pemex will introduce clear rules in the coming weeks that will encourage private sector participation. These rules will be designed to balance the interests of both Pemex and its private sector partners. For instance, President Sheinbaum has proposed a profit-sharing scheme where Pemex will split profits with private-sector partners in joint ventures. This division will be based on proceeds left over after the recovery of initial investments and the government's 30% oil levy. This arrangement guarantees that the private sector will recover its investment and collects its share of the profit, while Pemex also profits.



Pemex's new fiscal regime, being developed in collaboration with the Ministry of Finance (SHCP), aims to support public finances while acknowledging the company's advanced geological maturity and specific operational needs. This regime is expected to create a framework that allows for the company's growth while ensuring that government revenues remain protected. The new fiscal regime is expected to address the challenges faced by Pemex due to its advanced geological maturity and specific operational needs, including the need for increased investment in exploration and production activities to maintain and increase hydrocarbon reserves.

Regarding potential private sector investments, the new fiscal regime is expected to provide clear rules and mechanisms for private participation in Pemex's operations. This includes allowing private companies to share risks and exchange technology with Pemex in exploration and production projects, as well as in downstream activities such as cogeneration and clean energy projects. The new fiscal regime is also expected to address the issue of strategic storage projects aimed at enhancing energy security, which will involve private investment.

In conclusion, Pemex's new strategy of sharing venture profits with private-sector partners signals a significant shift in the company's approach to exploration, production, and collaboration. By introducing clear rules and a new fiscal regime, Pemex aims to attract external investments, optimize its hydrocarbon reserves, and maintain production levels. This strategy has the potential to enhance Pemex's financial health and contribute to Mexico's energy security. As an investor, keeping an eye on the developments surrounding Pemex's new strategy could present attractive opportunities in the coming years.