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The president-elect of Mexico Claudia Sheinbaum on Monday chose academic Víctor Rodríguez to run Petróleos Mexicanos, the country’s heavily indebted state oil company that is increasingly dragging on public finances.
Rodríguez, an energy economics specialist close to the future president, will take on one of the most challenging roles in the new administration, running the company with a debt pile of about $100bn.
Production at Petróleos Mexicanos, known as Pemex, has been falling for two decades and recently hit a record low of about 1.47mn barrels of crude oil per day. It recorded a loss of about $13bn in the second quarter. Rating agency Fitch warned that increased fiscal support for the group could be a risk for the sovereign credit rating.
Sheinbaum, who takes office in October, has a doctorate in energy engineering and wrote about climate change as an academic. Her political mentor and the country’s current president, Andrés Manuel López Obrador, promoted fossil fuels and all but killed private investment in renewable energy generation.
With her cabinet picks and in statements since her landslide win in June, Sheinbaum has signalled continuity with López Obrador. Investors are unclear how she will square that promise with shifting to renewables and attracting more investment.
“There is a vision that’s been put forward . . . that everything is bad in Pemex,” Sheinbaum said on Monday. “Here we’ve started rescuing it and we’re going to continue that.” She has promoted another close collaborator, Luz Elena González, to run the energy ministry.
Energy experts diverged in their views of what Rodríguez’s appointment will mean amid broader concerns that a package of constitutional changes backed by Sheinbaum will scare off investment. The plans include scrapping independent energy regulators and having their duties absorbed by the government.
Some observers cited Rodríguez’s lack of operational experience and nationalist views as negative signs, given the dramatic turnaround needed at the 125,000-employee firm.
Others underlined that the move to tap subject-matter experts as leaders for Pemex and state electricity company CFE were a step forward, and that the country’s energy needs were so urgent that Sheinbaum would be forced to be pragmatic.
“Under the circumstances, having someone that is close to the president is a major positive,” said John Padilla, partner at Latin America-based energy consultancy IPD. “He’s studied the heck out of the energy sector, at least you can have a conversation . . . it’s a dramatic improvement.”
On Monday Rodríguez praised the government’s strategy to increase its refining capacity and efforts to “rescue” the company from high debt levels left by prior administrations. He also signalled he would work closely with the finance ministry — a historically tense relationship — while collaborating with the private sector.
“We are going to co-ordinate investments with the private sector, we will do projects with them,” he said.
Pablo Medina, head of new ventures at energy consulting firm Wellingence, said an important sign would be whether Pemex’s new leader restarted joint investments with private oil firms, possibly via farmouts.
“If a change doesn’t materialise, Pemex will probably face its toughest sexenio (presidential term) ever with a dire financial situation,” he said.
https://www.ft.com/content/63f63733-7783-41a5-90ea-ebc2d01586cd
