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('''PEMEX''') is
Mexico 's state-owned, nationalized
Petroleum company.
Asphalt and pitch had been worked in Mexico since the time of the
Aztecs .
Small quantities of oil were first refined into
Kerosene 1876 near
Tampico . By
1917 commercial quantities of oil were being extracted and
Refined by subsidiaries of the British
Pearson and American Doheny companies, and had attracted the attention of the Mexican government who then claimed all mineral rights for the state as part of its
Constitution . New exploration effectively stopped.
See Also: Expropiación Petrolera
In 1938,
President Lázaro Cárdenas sided with oil workers striking against foreign-owned oil companies for an increase in pay and social services.
On
March 18 President Lázaro Cárdenas embarked on the state-expropriation of all resources and facilities, nationalising the
U.S. and
Anglo -
Dutch operating companies, creating PEMEX. In retaliation, many foreign governments closed their markets to Mexican oil. In spite of the boycott, PEMEX developed into one of the largest oil companies in the world and helped Mexico become the sixth largest oil exporter in the world.
PEMEX is now the sole supplier of all commercial gasoline (petrol/diesel) stations in
Mexico . All petrol stations, although labeled PEMEX, are concessions that are strictly full-service. PEMEX tried to take away the concessions from a large number of these for low-quality gasoline (often times cut with up to 40%
Fuel Oil ) and for not serving the correct amount of gasoline (many serve only 9 litres for every 10 registered on the pump), however a judge ruled these were "not reasons to take away the concessions". In November 2005 it was decided that people could only pay gas with credit card to deduce taxes.
The grades of PEMEX gasoline are Magna (Regular Unleaded 87) and Premium (93).
PEMEX accepts Mexican Pesos and U.S. Dollars and fills vehicles in liters. Credit cards are not accepted. Therefore, American tourists who drive in Mexico do not have to exchange U.S. Dollars for Mexican Pesos to gas up in Mexico.
On
June 3 ,
1979 , PEMEX's
Ixtoc I exploratory oil well in the Gulf of Mexico, about 600 miles south of Texas, suffered a blowout and became the largest unintentional
Oil Spill in history.
On
November 19 ,
1984 a series of explosions at the PEMEX petroleum storage facility at San Juan Ixhuatepec in
Mexico City ignited a major fire and killed about 500 people.
In November, PEMEX announced the discovery of possible reserves that may total 200 million bbl. of oil in the deep waters of the
Gulf Of Mexico . Yet independent oil analysts point out that extensive seismic studies and test wells will be needed to confirm the area's true potential, and PEMEX has neither the financial resources nor the technical expertise to carry out those follow-ups on its own.
An article in the quarterly magazine of the
International Monetary Fund in
2001 used PEMEX as an illustration of a broader point about the
Securitization of future flow
Receivables . The authors noted that between
January 21 ,
1999 and
March 29 ,
2000 , the mean spread on the 7 year bonds issued by PEMEX, the state-owned oil company, was 309
Basis Points , with a
Standard Deviation of 63. But the mean spread on the bonds of the United Mexican States maturing in 2026 was 372, with a standard deviation of 79. Unsurprisingly, then, investors prefer secured debt to unsecured sovereign from emerging market countries.
PEMEX, despite its current $77 billion in revenue, the company pays high taxes that contribute with a large portion of the budget of the federal government. Indeed, in recent years the company has only been able to make ends meet through massive borrowing, so that it now owes a staggering $42.5 billion, including $24 billion in off-balance-sheet debt because the Mexican government treats the company as a cash cow. The state-run company pays out over 60% of its revenue in royalties and taxes, and those funds pay for a third of the federal government's budget. If oil prices drop or there are no major new discoveries of crude, that could spell big trouble for PEMEX despite its immense revenue stream and expansion prospects. However, in 2005, with record-breaking oil prices (due to the
Iraq War , economic expansion of the United States and
China ) the company has seen an unexpected excess of funds. To help capitalize the company
President Fox has proposed to permit the company receive foreign investment. This is a controversial issue in Mexican politics. PEMEX has financed many projects through
PIDIREGAS using private investment.
