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(Bloomberg) — Mexico’s President-elect Claudia Sheinbaum appointed the energy economist Victor Rodriguez Padilla to lead state-owned oil driller and refiner Petroleos Mexicanos as her administration looks to revive the company’s flagging production and trim its nearly $100 billion debt burden.
Sheinbaum tapped Rodriguez, a professor at the National Autonomous University of Mexico, for the job to boost Pemex’s profitability and rescue the company from ballooning debt and recurring accidents as she seeks to jump start Mexico’s green energy transition.
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“He has 42 years of experience in the energy sector and of course he’s been a defender of the energy companies of the nation,” Sheinbaum said when she announced the appointment during a news conference Monday. “We have written a number of academic and opinion articles together.”
Rodriguez will face the gargantuan task of turning around production that has slumped to about half its peak 20 years ago. The company’s debt burden stands at about $99.4 billion, making it the world’s most indebted oil producer. It’s been saddled with deadly fires, oil spills and methane leaks in recent years as its infrastructure crumbles. And, it relies heavily on government handouts to stay afloat.
Rodriguez, who holds a doctorate in energy economics from Pierre Mendès-France University, has spent the majority of his career at UNAM, where he received degrees in physics and engineering. He also co-authored a paper with Sheinbaum in 2009 on Mexico’s energy policies and sustainable development.
Returning the drilling and refining behemoth to profitability will be a monumental task. Last quarter, the company posted its worst loss since the global pandemic emerged more than four years ago, mostly due to a slide in the value of the peso in recent months.
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To stay afloat, the company has relied on government handouts to buoy its finances. Over the course of his term, President Andres Manuel Lopez Obrador has showered the company with capital injections and tax relief totaling as much as $80 billion, though the infusions have done little to reverse oil output.
Pemex is also facing billions in late payments to service providers. Repeat accidents in recent years have led many investors concerned with environmental, social and governance metrics to flee.
Sheinbaum says she envisions Pemex playing a role in Mexico’s transition to cleaner sources of energy and has promised to expand it into green technologies, including hydrogen, lithium extraction and electric-vehicle infrastructure. The company published its first sustainability plan in March after some of its creditors threatened to divest from the company if it didn’t clean up its ESG record.
Another major question is how Pemex will work with the private sector to turn around production, such as the company’s recent deal to farm out some of its offshore production to private drillers. Sheinbaum has vowed to keep state-owned enterprises at the center of Mexico’s energy sector, echoing a position taken by AMLO.
Sheinbaum has also said she expects to refinance the company’s bonds before large maturities come due in 2025. The company has more than $7 billion in bonds maturing next year, according to the latest company data.
—With assistance from Maya Averbuch.
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