Government and Business Case Study

Pemex, the Mexican Oil Company: Deregulation Challenges

OR

Abstract:
Pemex, Mexico's state-owned oil company was the leading oil producer in the world. But production in Pemex has been declining since the 1980s. The reasons for decreasing oil production in Pemex are cited as lack of investment for new exploration, mismanagement, lack of new technology, etc. This declining production led the company into a financial crisis. This crisis also affected the Mexican government because Pemex was a major source of revenue. The government proposed an Energy Reform Bill to resolve the crisis at Pemex, which would allow foreign companies to enter Mexico's oil sector. But the government failed to pass this bill in Congress due to the high volume of criticism. Supporters of the bill believed that only privatisation could save Pemex, while opponents protested that oil, the national treasure of Mexico, had to be protected from both foreign players and profit seeking businessmen.

Pedagogical Objectives:

• To overall picture of the Mexican economy.
• To growth and history of Pemex.
• To reasons for crisis at Pemex and its impact on the Mexican economy.
• To proposals of the Reform Bill to solve the crisis and the reasons for opposition of the bill.

Keywords :  Pemex, Deregulation, Mexico, Energy Reform Bill, Oil sector, Privatisation, Cantarell, Technology, Infrastructure, Exploration, Regulation, Oil crisis, Billion barrels of oil equivalent (BOE), Crude oil and petroleum, Denationalisation