On March 21, 2018 Juan Carlos Zepeda, President Commissioner of CNH, highlighted the importance of allowing PEMEX to place a minority stake of the company on the Mexican stock exchange (BMV) through an Initial Public Offering (IPO) with the objective of raising capital and to give the company the financial strength it needs to follow through with its E&P objectives. “There is no other alternative for PEMEX to become successful,” he said.

There are several examples of National Oil Companies listing on public exchanges, among the most famous cases we have the cases of Petrobras and Statoil (soon to become Equinor). Statoil made its IPO on the Oslo and New York stock exchanges in 2001 and was valued at between US$15.82-18.12 billion at the time. In 2010 Petrobras placed a US$69.97 billion offer to finance its business plan ambition to develop offshore pre-salt fields in Brazil. Compared to the raised capital of Petrobras, Zepeda would expect PEMEX’s to be more successful, although he did not mention what would that mean.

For PEMEX to be allowed to place an IPO, Zepeda mentioned that constitutional changes would be needed for the company to be allowed to sell stakes while remaining under state control. Considering the fall in PEMEX’s production from 2.3 million b/d in 2004 to around 1.9 million b/d today, there is no doubt that a major overhaul is needed in the company, and Zepeda’s bet is on taking advantage of the assets the company already has. “PEMEX has good reserves, the best exploration areas, but it needs to move faster. PEMEX needs to be able to invest more.”

Prior to Zepeda’s statement, on February 2018, Jesús Reyes Heroles, former Minister of Energy and Director General of PEMEX and current Executive President of StructurA, called an IPO from PEMEX during a panel discussing the outlook of Mexico’s Energy Reform that took place at Rice University’s Baker Institute. According to him, the absence of a PEMEX IPO was a “flaw” in the Energy Reform.

For more articles on Mexico’s oil and gas industry, check out our blog here.  


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