Economics: Pemex and CFE results combine minor gains, continuing risks, and no energy transition

MEXICO - Report 15 Nov 2021 by Mauricio Gonzalez and Francisco González

The country’s national oil and electric power companies released their third quarter results just as delegates were starting to assemble in Glasgow for COP26. Positive takeaways from Pemex included an extension of the gradual uptrend in crude production alongside a smattering of new well discoveries, a price-powered rise in export revenues, gains in petroleum product output despite a lack of progress in efforts to modernize the countries refineries, and another quarterly pick-up in domestic sales even amid the demand-depressing effects of the pandemic’s third wave. But those pros were offset by higher costs and mounting debt. The report also reaffirmed the tendency toward an ebbing of international crude exports while the company’s focus on modernizing refineries has yielded scant results, and a growing trend to flare a considerable share of its natural gas output.

The CFE report showed a notable increase in electric power sales alongside a significant drop in employee benefit costs, but the revenue growth was more than offset by greater power generation and funding costs. Both companies registered net losses.

Both firms’ trajectories, along with the government’s initial unveiling of its proposals to change the rules governing the electric power sector, might shake investor distrust as to the 4T regime’s capability to lead the country in a positive direction. They also underscore the extent to which Mexico currently appears determined to squander an opportunity to become a player in the global energy transition.

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