Although the rumors have been around for a few days now, just a few minutes ago, it was made official: Emilio Lozoya Austin renounced his position as Director General of PEMEX. José Antonio González Anaya, now the former Director General of the Mexican Institute of Social Security (IMSS) will be replacing Lozoya as head of Mexico’s National Oil Company, which is currently in the middle of a perfect storm.

Lozoya was sworn in in December 2012, the same year Enrique Peña Nieto became President. He has been in charge of restructuring PEMEX, and has successfully done so, taking the organization from four divisions and an independent department, to two divisions and five service companies as illustrated in the graph below.

pemex org before after

PEMEX Restructuration. Source: El Financiero

The restructuring has been successful, but has not been in place long enough for its impact to be appreciated. Although this step is complete, it does not mean that PEMEX’s new Director General can sit back, relax, and wait for results. He has been left with a mountain of challenges. The tax-burdened NOC has been experiencing budget cut after budget cut, and is currently implementing a strategy to improve its capital structure to relieve its current debt of US$87 billion, among other liabilities. The strategy of the Productive Enterprise of the State involves joint ventures, monetization, a fiscal regime, and pension liability, as depicted below.

pemex cap struct

PEMEX’s Strategy to Improve Capital Structure. Source: PEMEX

While the joint ventures are underway thanks to the Energy Reform, many of our interviewees have criticized the lack of a collaboration-driven culture at PEMEX, which will be one of the major challenges faced by Anaya. When it comes to monetization, the NOC has already taken reasonable steps regarding its ability to renounce to certain assets, by returning 95 fields awarded in Round Zero to the state last year, and by considering a range of fields for contract migrations. The fiscal regime and pension liability, however, given the government’s dependence on PEMEX revenues and the simple lack of funds, might be Anaya’s biggest challenge.



José Antonio González Anaya, the new face of PEMEX. Source: sdpnoticias

As harsh as it may sound, the productive enterprise of the State is also slowly but surely killing off the industry. It is currently incapable of paying its suppliers, underlining the urgency of improving PEMEX’s capital structure. That is a lot of weight to put on the shoulders of one man, but let us hope that Anaya is up for the challenge. He graduated from Harvard with a PhD in Economy and has worked for both the Ministry of Energy (SENER) and Mexican Institute of Social Security (IMSS). Moreover, he is a specialist in pensions and retirement and is acclaimed for having reduced the financial deficit of IMSS during the first half of Peña Nieto’s presidential term. Maybe a change in management is exactly what PEMEX needs, and Anaya may just be the man for the job.

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