Company sources say Pemex has been paying fines rather than meeting environmental standards

Mexico’s national oil company (NOC) Pemex has been paying fines for violating environmental regulations rather than rectifying its underlying deficiencies, two senior company sources told Reuters last week.

They noted that the NOC had taken this approach because it had been more concerned with avoiding delays in production than with fixing these problems. Since the beginning of the year, they reported, the state-owned oil company has been fined four times for its failure to comply with development plans for two of its own largest natural gas fields – Ixachi, a site in Veracruz State, and Quesqui, a site in Tabasco.

Reuters had reported in August, when the first penalty was imposed, that the CNH had fined Pemex MXP42mn ($2mn) for environmental violations at Ixachi. Last week, a source with direct knowledge of the matter said that the company could be obliged to pay as much as MXP120mn ($6.2mn) for the two latest fines, one of which is the single highest monetary penalty ever levied by the CNH.

Pemex’s decision to accept fines over environmental fixes led to the flaring of significant volumes of gas. As such, it is a major blow to the nation’s oil and gas regulator, the National Hydrocarbon Commission (CNH), which has been working to prevent the NOC from wasting natural resources and contributing in a negative way to climate change.

According to one source from within the company, Pemex has been happy to accept the consequence of paying such fines, as its management views the monetary values involved as “small” in relation to the company’s revenues. Additionally, the source said, company managers would prefer instead to focus on ramping up output in order to meet the production goals set by Mexico's President Andres Manuel Lopez Obrador.

Pemex’s next move will be to appeal against all four fines, though it is not clear when it intends to do so, Reuters reported. While the company is seeking to meet the Mexican president’s output target, it is also contradicting the climate change rhetoric of Mexico’s leaders, who are due to attend the COP27 summit later in the week to discuss how oil and gas companies can contribute to the transition to a low-carbon economy.