Wednesday, 21 September 2011

Pemex


Petróleos Mexicanos or Pemex (Spanish pronunciation: [ˈpemeks or 'фɛimeʃ]Mexican Petroleums) is a Mexican state-owned petroleum 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,[3] and Latin America's second largest enterprise by annual revenue as of 2009.[2] 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.[4][5][6]

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Asphalt and pitch had been worked in Mexico since the time of the Aztecs. Small quantities of oil were first refined into kerosene around 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.
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, 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 AngloDutch 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 suffered a blowout resulting in one of the largest oil spills in history.[7]
Pemex's offices in Mexico City.
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 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 administration, these funds represented around 70 billion dollars,[8] 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.[9]
To help capitalize the company, former President Vicente Fox 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);[10] this proposal, along with alleviating Pemex's heavy tax burden and a substantial budget increase, have met opposition in Congress.[11][12] President Calderón 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, only behind, Brazilian oil company Petrobras. 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.[13][14]
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 said they made a "giant" oil find of as much as 3 billion barrels (480×106 m3) 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.[15]
In an interview on the oil news website [16] 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. 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.[17] Furthermore, it has been reported the 2005-2006 daily oil production was down by approximately 500,000 barrels per day (79,000 m3/d) (a large proportion of the country's 45,00,000 barrels) on the previous year. Pemex averaged 3.71 MMBPD in 2006.[17] Pemex has never produced 4 MMBPD or higher for a yearly average.[18] Pemex has been replaced as Latin America's largest company by Petrobras, according to the latest Latin Business Chronicle ranking of Latin America's Top 500 companies

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