Monterrey, Mexico: For greater than 30 years, Dagoberto Ramos labored at Pemex, Mexico’s state-owned oil firm, at one in every of its petrochemical complexes within the power hub of Coatzacoalcos, Veracruz.
Ten years in the past, the specialist in ethylene manufacturing opted for early retirement, fearing that deteriorating upkeep routines had been placing him prone to harm and legal responsibility. He was notably involved about being blamed for an accident ensuing from uncared for infrastructure.
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“Beforehand, the manufacturing plant obtained a month of upkeep, however this was progressively minimize down to twenty days, and generally even 15, the place solely essentially the most pressing duties had been prioritised,” he mentioned.
“The danger of a possible disaster was very actual, each for the employees and for the encompassing communities.”
On April 20, 2016, lower than a 12 months after Ramos left, an explosion rocked the Pajaritos complicated, the place he had labored earlier than transferring to the Morelos complicated simply 5 kilometres away. The incident killed 32 individuals and injured greater than 130 staff.
Pemex, over time, has been chargeable for soil contamination, rising methane emissions, and pipeline spills, with power leaks impacting native communities and marine fauna. This lack of infrastructure upkeep has worsened because the state-owned big contends with important monetary and operational constraints and an enormous debt burden.
For the previous twenty years, Pemex has struggled to extend manufacturing as mature oil fields decline, whereas it carries a debt of $100bn and has failed to draw personal funding. Considerations are rising for the sustainability of the oil firm and the way forward for Mexico’s power sector amid regional adjustments, monetary instability and a robust reliance on imports from the US.
Regardless of being a crude oil producer, Mexico stays depending on refined merchandise and pure fuel imports from the US. Mariana Castaneda, director of Grupo Estrategia Politica, a public affairs consulting agency, informed Al Jazeera that home gasoline manufacturing at the moment falls 21 p.c wanting demand. This hole, she mentioned, is predicted to widen, at the same time as most refineries function at or close to their most capability.
Rafael Vaquera Salazar, a professor at Monterrey Technological College (TEC), informed Al Jazeera that regardless of the nation’s huge reserves and lengthy historical past of extraction, the outlook for restoration stays bleak.
Now there’s a new problem.
Following the US invasion of Venezuela that resulted within the abduction of then-President Nicolas Maduro and his spouse on January 3, the regional power panorama has turn out to be unstable, complicating long-term planning.
Whereas shifts in Venezuela’s oil trade might affect Mexico’s personal manufacturing, Vaquera mentioned that the timeframe and particular situations stay unsure.
Each Venezuelan and Mexican crude are heavy, and US Gulf Coast refineries are particularly outfitted to course of any such oil. “A aggressive state of affairs might come up the place whoever presents the largest reductions will safe the refining capability,” he identified.
About 60 p.c of Pemex’s crude oil exports go to the US. Whereas imports from Venezuela had been restricted by sanctions, volumes are anticipated to rise with renewed exercise.
Though oil executives informed US President Donald Trump that important reforms are wanted earlier than they decide to Venezuela, a market that Exxon CEO Darren Woods known as “uninvestible”, that won’t actually be the case.
Within the oil trade, it doesn’t actually matter who you do enterprise with. What issues is the assure that investments will likely be safe and steady, Vaquera informed Al Jazeera. “If I’ve certainty and stability, I could make investments,” he mentioned. “Even when it means coping with the satan.”
Support to Cuba and an ailing state oil firm
Mexico has been sending oil shipments to Cuba since 2023 via Pemex subsidiary Gasolina Bienestar. These shipments, which had been as soon as sporadic, grew to become constant beneath the administration of Andres Manuel Lopez Obrador, who framed them as humanitarian support.
Final 12 months, between January and September 30, Mexico shipped 17,200 barrels of crude oil per day and a couple of,000 barrels of refined merchandise, in response to a report submitted to the US Securities and Trade Fee.
Mexico’s President Claudia Sheinbaum has additionally defended the oil shipments as humanitarian support, but they proceed to gasoline tensions with the Trump administration.
On January 26, reviews emerged that Pemex had halted oil shipments to Cuba amid rising tensions. The next day, Sheinbaum declined to verify or deny the reviews, stating that the transfer was a “sovereign resolution” by the state oil firm.
Camila Acosta, an unbiased journalist in Havana, informed Al Jazeera on January 15 that 60 p.c of the island faces blackouts. These are pushed by gasoline shortages and crumbling infrastructure, together with declining oil shipments, the longstanding US embargo and the Trump administration’s tactic of seizing Venezuelan oil tankers.
“Persons are fed up with the blackouts, having to prepare dinner with firewood, not with the ability to refrigerate meals – or having it spoil – and the shortage of water as a result of, with out electrical energy, it will probably’t be pumped,” she mentioned.
Acosta mentioned that Mexico now stands because the Cuban regime’s “lifeline” as Trump pledged in early January to cease Venezuelan oil shipments to Cuba. Nonetheless, there may be rising concern over how a lot worse the disaster might turn out to be if Mexican shipments had been to stop solely.
“Pemex is in critical monetary bother, and given the general public strain, I don’t know the way for much longer they’ll maintain these shipments to the island,” Acosta added.
Following a collection of reforms since 2013, a 2025 reform beneath Sheinbaum modified Pemex’s standing from a “Productive State Enterprise” to a “Public State Enterprise”. This authorized change prioritises public profit over financial profitability.
Castaneda says that the present administration recognises the necessity for personal capital to ensure Pemex’s monetary viability, offered it doesn’t compromise nationwide sovereignty.
“The objective is to make sure that sovereignty and Mexican oil stay within the palms of Mexicans. However Pemex itself has acknowledged that with out help and participation from the personal sector, it’s virtually unattainable to face the challenges Pemex has, together with its debt,” she added.
Pemex owes roughly $30bn to its suppliers regardless of official guarantees to speed up funds. Castaneda mentioned that whereas the federal government has been making funds, the quantities stay inadequate in contrast with the entire debt, although it does provide some reassurance to the market. The Ministry of Finance and Public Credit score didn’t reply to a number of requests for remark from Al Jazeera.
Ramos, the previous employee, mentioned that this debt has severely affected native companies, corresponding to these offering upkeep, provides, and technical and transportation companies, which depend on these funds to remain afloat and pay their workers. He famous that in Coatzacoalcos, many residents are transferring to cities like Monterrey for work.
Pedro Aguirre, CEO at Verifigas, a agency that gives technical verification in Mexico’s power sector, informed Al Jazeera that the federal government’s push for personal capital is falling wanting expectations.
The mix of Mexico’s 2025 judicial reforms – which enhance authorized uncertainty – alongside Pemex’s operational challenges and the dangers surrounding fee, have triggered many firms to have second ideas.
Final 12 months, Aguirre mentioned, the Mexican authorities offered Pemex with practically 400 billion pesos ($23bn), greater than double the permitted quantity, to stabilise its funds and bolster its reliability.
“The uncomfortable query that is still is, how lengthy will this deficit be sustained?” Aguirre mentioned. “And who, in a number of years, will make the choice to say sufficient is sufficient.”
For 2026, Pemex’s funds grew 7.7 p.c. Its technique depends on hitting 1.8 million barrels per day, up from final 12 months’s common of 1.6 million, and growing home gasoline processing on the Dos Bocas and Deer Park refineries to cut back imports. The Ministry of Vitality just isn’t granting interviews presently.
However the rising monetary help has additionally raised questions on which different key sectors are being impacted.
Castaneda mentioned that regardless of authorities efforts to make sure that general funding continues, sectors corresponding to well being, training and infrastructure have been diminished or uncared for.
“It is sort of a blanket, isn’t it? For those who pull on one facet, the opposite facet is revealed,” Castaneda mentioned. “In different phrases, if there may be extra on one facet, there will likely be much less on the opposite.”
Pemex’s precarious monetary place has been additional strained by gasoline theft, generally often known as huachicol. Whereas prison organisations historically siphoned gasoline from pipelines, the follow has developed right into a extra complicated scheme, involving a community of organised crime, Mexican and US firms, and corrupt officers. Fiscal gasoline theft entails misclassifying gasoline imports to evade the required taxes.
“For a few years, these networks had been importing diesel, specifically, however labelling it as lubricants or waste. This creates a fiscal shortfall. Funds that the state didn’t obtain and will have obtained,” Vaquera added.
Based on Aguirre, from Verifigas, the nation misplaced about $10bn in 2025 on account of this illicit commerce, leading to an enormous deficit of public funds. He describes it as an “more and more refined fraud” that exposes governance failures and has direct impacts on group security, native market competitors, and Pemex’s economic system.
Whereas the US and Mexican governments have sanctioned and arrested individuals for his or her involvement within the huachicol fiscal, many in Mexico are nonetheless calling for high-ranking politicians throughout the Morena ruling celebration to be held accountable.
In September, Vice Admiral Manuel Roberto Farias Laguna, a relative of a former navy secretary, was arrested alongside different businessmen and public officers for alleged involvement in organised crime and gasoline smuggling. He’s the highest-ranking official detained thus far in reference to these investigations.
For Vaquera, the difficulty is much less concerning the cash and extra about how these funds are used. He warns that it may be used to put in handpicked candidates in elections, affect authorities, or facilitate cash laundering.
“It’s about who saved it [the money] and the political energy they acquired by having all that cash or financial energy,” he mentioned.
