Mexico's Economy
Pemex and Mexico's Oil
How Mexico nationalised oil in 1938, how Pemex funded the government, and why it became one of the world's most indebted oil companies.
Pemex (Petróleos Mexicanos) is Mexico’s state oil company.
Nationalisation
In 1938, President Lázaro Cárdenas nationalised foreign oil companies, a moment still celebrated as a symbol of sovereignty.
Fiscal role
For decades, Pemex provided a large share of government revenue, sometimes around a third.
Decline
- Cantarell, one of the world’s largest oil fields, peaked in the 2000s and declined sharply.
- Mexico’s oil production fell significantly from its peak.
Debt
Pemex became one of the world’s most indebted oil companies, with debts of around 100 billion dollars, requiring government support.
Reforms and reversals
- 2013: an energy reform opened oil and gas to private investment.
- 2018-24: President López Obrador favoured Pemex and state control, reversing parts of the opening.
Economic lesson
Heavy tax burdens, underinvestment and political control weakened Pemex, showing risks of relying on a state oil company.
Cantarell once produced over 2 million barrels a day. As it declined, Mexico's oil revenue fell, and Pemex borrowed more.
Pemex became deeply indebted as output fell.
- Mexico nationalised oil in 1938, creating Pemex.
- Pemex once provided about a third of government revenue.
- Output fell as Cantarell declined.
- Pemex became one of the world's most indebted oil firms.
No recording for this one yet - EconReader can read it aloud for you.