Pemex
Overview
 
Petróleos Mexicanos or Pemex (ˈpemeks or 'фɛimeʃ, Mexican Petroleums) is a Mexican state-owned petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...

 company. As of 2010, with a total asset worth of $415.75 billion, it is the second non-publicly listed largest company in the world by total market value, and Latin America's second largest enterprise by annual revenue as of 2009. However, the majority of its shares are non-publicly listed and under control of the Mexican government.
Encyclopedia
Petróleos Mexicanos or Pemex (ˈpemeks or 'фɛimeʃ, Mexican Petroleums) is a Mexican state-owned petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...

 company. As of 2010, with a total asset worth of $415.75 billion, it is the second non-publicly listed largest company in the world by total market value, and Latin America's second largest enterprise by annual revenue as of 2009. However, the majority of its shares are non-publicly listed and under control of the Mexican government. The value of its publicly listed shares totalled $102 billion in 2010, representing approximately one quarter of the company's total worth.

History

Asphalt
Asphalt
Asphalt or , also known as bitumen, is a sticky, black and highly viscous liquid or semi-solid that is present in most crude petroleums and in some natural deposits, it is a substance classed as a pitch...

 and pitch
Pitch (resin)
Pitch is the name for any of a number of viscoelastic, solid polymers. Pitch can be made from petroleum products or plants. Petroleum-derived pitch is also called bitumen. Pitch produced from plants is also known as resin. Products made from plant resin are also known as rosin.Pitch was...

 had been worked in Mexico since the time of the Aztecs. Small quantities of oil were first refined into kerosene
Kerosene
Kerosene, sometimes spelled kerosine in scientific and industrial usage, also known as paraffin or paraffin oil in the United Kingdom, Hong Kong, Ireland and South Africa, is a combustible hydrocarbon liquid. The name is derived from Greek keros...

 around 1876 near Tampico
Tampico
Tampico is a city and port in the state of Tamaulipas, in the country of Mexico. It is located in the southeastern part of the state, directly north across the border from Veracruz. Tampico is the third largest city in Tamaulipas, and counts with a population of 309,003. The Metropolitan area of...

. By 1917 commercial quantities of oil were being extracted and refined
Oil refinery
An oil refinery or petroleum refinery is an industrial process plant where crude oil is processed and refined into more useful petroleum products, such as gasoline, diesel fuel, asphalt base, heating oil, kerosene, and liquefied petroleum gas...

 by subsidiaries of the British Pearson
Pearson PLC
Pearson plc is a global media and education company headquartered in London, United Kingdom. It is both the largest education company and the largest book publisher in the world, with consumer imprints including Penguin, Dorling Kindersley and Ladybird...

 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.

In 1938, President Lázaro Cárdenas
Lázaro Cárdenas
Lázaro Cárdenas del Río was President of Mexico from 1934 to 1940.-Early life:Lázaro Cárdenas was born on May 21, 1895 in a lower-middle class family in the village of Jiquilpan, Michoacán. He supported his family from age 16 after the death of his father...

 sided with oil workers striking against foreign-owned oil companies for an increase in pay and social services. On March 18, 1938, citing the 27th article of the 1917 constitution, President Cárdenas embarked on the state-expropriation of all resources and facilities, nationalizing the United States and Anglo
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

Dutch
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...

 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 fifth-largest oil exporter in the world.

In 1979, Pemex's Ixtoc I exploratory oil well in the Bay of Campeche
Bay of Campeche
The Bay of Campeche is the southern bight of the Gulf of Mexico. It is surrounded on three sides by the Mexican states of Campeche, Tabasco and Veracruz. It was named by Francisco Hernández de Córdoba and Antonio de Alaminos during their expedition in 1517...

 suffered a blowout resulting in one of the largest oil spills in history.
Despite its current $80.6 billion in revenue, Pemex pays high taxes that contribute a large portion of the budget of the federal government. 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
Off-balance-sheet
Off-balance sheet usually means an asset or debt or financing activity not on the company's balance sheet.Some companies may have significant amounts of off-balance sheet assets and liabilities. For example, financial institutions often offer asset management or brokerage services to their clients...

 debt because the Mexican government treats the company as a major source of revenue. The state-owned company pays out over 60% of its revenue in royalties and taxes, and those funds pay for 40% of the federal government's budget. In 2005, with record-breaking oil prices, the company saw an unexpected excess of funds. This trend continued in 2006, but these funds have been used to pay salaries of bureaucrats and current costs, instead of being invested in projects of exploration and production; during the President Fox
Vicente Fox
Vicente Fox Quesada is a Mexican former politician who served as President of Mexico from 1 December 2000 to 30 November 2006 and currently serves as co-President of the Centrist Democrat International, an international organization of Christian democratic political parties.Fox was elected...

 administration, these funds represented around 70 billion dollars, yet the administration said there was not enough money to pay the debts. The lack of investments prevent adequate refining capacity to be added. While exporting crude oil, Mexico imports expensive gasoline.

To help capitalize the company, former President Vicente Fox
Vicente Fox
Vicente Fox Quesada is a Mexican former politician who served as President of Mexico from 1 December 2000 to 30 November 2006 and currently serves as co-President of the Centrist Democrat International, an international organization of Christian democratic political parties.Fox was elected...

 brought forward the possibility of making shares of Pemex available to Mexican citizens and pension funds, to complement a current project-specific investment setup known as "Proyectos de Inversión Diferida En El Registro del Gasto" (Deferred Investment Projects in the Expenditure Registry); this proposal, along with alleviating Pemex's heavy tax burden and a substantial budget increase, have met opposition in Congress
Congress of Mexico
The Congress of the Union is the legislative branch of the Mexican government...

. President Calderón
Felipe Calderón
Felipe de Jesús Calderón Hinojosa is the current President of Mexico. He assumed office on December 1, 2006, and was elected for a single six-year term through 2012...

 made clear at the beginning of his presidency that he would try his best to open up the sector to private investment. Pemex is Latin America's second largest company measured by revenues, according to a ranking of the region's 500 largest companies by Latin Business Chronicle
Latin Business Chronicle
Latin Business Chronicle is a weekly online journal on Latin American business and technology.-Company information:LBC, a unit of , has around 17,000 readers per month.- Indexes :...

, only behind, Brazilian oil company Petrobras
Petrobras
Petróleo Brasileiro or Petrobras is a semi-public Brazilian multinational energy corporation headquartered in Rio de Janeiro, Brazil. It is the largest company in Latin America by market capitalization and revenue, and the largest company headquartered in the Southern Hemisphere by market...

. In June 2009, Pemex has asked for an extra $1.5 billion state aid to finance oil fields investments, reported Bloomberg.

On August 11, 2009, the U.S. Justice Department reported that U.S. refineries have been buying vast quantities of stolen oil from Mexican government pipelines. Criminals, especially drug gangs, tap remote pipelines and sometimes build their own pipelines to siphon off hundreds of millions of dollars worth of oil each year. One oil executive has been charged and has pleaded guilty to conspiracy charges. The U.S. Homeland Security Department will return $2.4 million to Mexico's tax administration - the first batch of money seized during a binational investigation into smuggled oil that authorities expect to lead to more arrests and seizures. The President of Houston-based Trammo Petroleum is set to be sentenced in December after pleading guilty in May.

President Felipe Calderón is calling for change in Mexico's oil industry after output at Pemex fell at the fastest rate since 1942. His comments came after Petrobras and London-based BP
BP
BP p.l.c. is a global oil and gas company headquartered in London, United Kingdom. It is the third-largest energy company and fourth-largest company in the world measured by revenues and one of the six oil and gas "supermajors"...

 said they made a "giant" oil find of as much as 3 Goilbbl in the Gulf of Mexico southeast of Houston. According Mexican Energy Minister Georgina Kessel, Mexico may seek to emulate Brazilian Oil rules that strengthened Petroleo Brasileiro SA as it considers regulation changes to revive the oil industry.

In an interview on the oil news website in November 2005, a Pemex employee spoke anonymously of the company's inability to grow production, stating that the company and country is at Hubbert's Peak
Hubbert peak theory
The Hubbert peak theory posits that for any given geographical area, from an individual oil-producing region to the planet as a whole, the rate of petroleum production tends to follow a bell-shaped curve...

. The person interviewed believed export levels could not be recovered once peak had passed, as the size of current fields that have been discovered or are coming online represent a fraction of the size of the oilfields going into terminal decline. Annual production has dropped each year since 2004. Furthermore, it has been reported the 2005-2006 daily oil production was down by approximately 500000 oilbbl/d (a large proportion of the country's 45,00,000 barrels) on the previous year. Pemex averaged 3.71 MMBPD in 2006. Pemex has never produced 4 MMBPD or higher for a yearly average. Pemex has been replaced as Latin America's largest company by Petrobras, according to the latest Latin Business Chronicle
Latin Business Chronicle
Latin Business Chronicle is a weekly online journal on Latin American business and technology.-Company information:LBC, a unit of , has around 17,000 readers per month.- Indexes :...

 ranking of Latin America's Top 500 companies.

External links

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