(World Oil) – National oil companies tend to be more bloated and less efficient than their private-sector counterparts. Yet Petroleos Mexicanos, with a workforce of about 128,000, stands out even among its state-owned peers.
The amount of crude Pemex pumps per employee has slipped to just under 14 bpd, less than any other Latin American state producer except Petroleos de Venezuela. Brazil’s state oil company pumps nearly 48 bpd per employee. Colombia’s cranks out about 27. On the other side of the globe, Saudi Aramco — with a similarly sized workforce to Pemex — pumps more than 92.
It points to a massive challenge for new Chief Executive Officer Victor Rodriguez, tapped by President Claudia Sheinbaum to rescue the world’s most indebted major oil producer. And the implications extend beyond just the company and its bondholders. Pemex’s finances are deeply intertwined with Mexico itself, which means Sheinbaum’s efforts to fight crime, grow the economy and advance the rest of her agenda will hinge, in part, on fixing Pemex.
“Pemex needs someone to come in with a big broom to clean things up, but there’s no power to do so,” said Luis Maizel, a longtime Pemex bondholder and senior managing director at LM Capital Group in San Diego. “You need somebody who’s a good negotiator and a good politician, and in that regard Victor Rodriguez is really an unknown.”
Aside from a bloated workforce, the company’s woes include $100 billion in debt, drilling platforms that leave huge oil deposits in the ground, abysmal records on safety and the environment and refineries that bleed cash. Pemex declined to comment for this story.
Former President Andres Manuel Lopez Obrador dumped up to $80 billion into the company via capital injections and tax breaks over his six-year term. But little, if anything, improved, underscoring just how much of a drag Pemex’s inefficiency has become on the nation’s bottom line.
Pemex’s problems make it all the more difficult for Sheinbaum, who is inheriting the widest public deficit in 40 years, to keep her promises to slash the shortfall and continue financial support for the state oil company.
Chief among the new CEO’s challenges will be slimming down its workforce, which hasn’t shrunk amid the company’s two-decade slide in production.
Powerful unions have mostly kept Pemex from initiating mass layoffs. Over 80% of employees are unionized, according to company documents, and growing pension payments are adding to its financial burden.
There’s also been a raft of safety problems and production losses. A massive explosion at an offshore well last year left two dead and hundreds of thousands of barrels lost after a facility went offline for months.
That was only one accident in a string of deadly mishaps, including a recent one at a Texas refinery. The company had nine worker fatalities in 2022, according to the most recent data available to Bloomberg. There were 12 the year before, including five people killed in an offshore platform accident. Exxon Mobil Corp. and Chevron Corp., which both produce more crude, recorded two deaths each last year, the data show.
