Mexico sets out 15-year roadmap to hold oil output at 1.8mn bpd as Pemex remains under pressure

Mexico's federal government aims to sustain national liquid hydrocarbons production at 1.8mn barrels per day until the end of 2039. This forms part of a strategy to strengthen domestic supply and cut reliance on fuel imports, according to the Hydrocarbons Sector Development Plan published by the Mexican Energy Secretariat (Sener) in the Official Gazette.

The plan envisages participation from state oil company Pemex, private firms and mixed-development projects, drawing on existing contracts, new exploration and extraction ventures, and secondary and enhanced recovery techniques. For natural gas, Sener expects production to hold near 5.0bn cubic feet (141.6mn cubic metres) per day until the end of 2029, climbing to 5.36 bcf (151.9 mcm) per day in 2035 and peaking at 6.66 bcf (188.6 mcm) per day in 2038, as the government seeks to curb import dependence. Private companies handled 89% of natural gas imports in 2024.

However, Mexican President Claudia Sheinbaum said in her two-year progress report last week that an expert committee had ruled out unconventional gas exploitation in the Tampico-Misantla Basin on environmental grounds, while studies continued in the Burgos Basin.

On refining, the Mexican government wants National Refining System plants to run at an average 80% of capacity, including the Deer Park refinery in the US. It is targeting processing capacity of up to 1.695mn barrels per day (bpd) while boosting gasoline, diesel and jet fuel output and reducing fuel oil production. The plan also envisages reviving the petrochemical sector through rehabilitation of the Morelos and La Cangrejera complexes. This would entail lifting ethylene derivatives output from 176,000 tonnes per year (tpy) in 2025 to 1.029mn tpy from 2030, and aromatics production from 78,000 tpy to 329,000 tpy from 2027, alongside higher urea output to reduce fertiliser imports.

Under the 15-year roadmap, national production would be prioritised for the domestic market, with crude and energy product exports gradually reduced. The strategy targets incorporating around 7.29bn barrels of oil equivalent (boe) into proven, probable and possible (3P) reserves between 2026 and 2039, including 3.21bn barrels in the first five years, with exploration initially focused on the Sureste Basins and Veracruz Province.

The roadmap comes as Mexico's continued financial backing for Pemex is testing the limits of the country's fiscal space, with markets watching the 2027 Economic Package for signs of how far the government can go without further damaging its credit rating, according to El País.

Sheinbaum reaffirmed her administration's support for the indebted state oil company in her second progress report, even as fiscal manoeuvring room narrows and the original goal of financial self-sufficiency by 2027 looks increasingly distant. Pemex’s output remains around 1.7mn bpd, with its refining system processing about 1.5mn bpd, largely for domestic gasoline consumption.

Over her first two years in office, Sheinbaum has authorised roughly $25.8bn in operations to amortise Pemex debt and created a MXN250bn ($14.8bn) fund for strategic projects, yet financial debt has fallen by only about $20bn. As of June 2026, Pemex reported financial debt of $77.5bn, down 9.1% from the end of 2025, alongside net profit of $1.0bn between April and June, aided by higher international oil prices.

The sustained support has come at a cost. In May, Moody's and S&P downgraded Mexico's sovereign and Pemex ratings, citing deepening fiscal weaknesses. Moody's now rates Mexican debt just one notch above speculative grade. "What the global investor fears... is if we reach the crossroads where we have to decide whether to withdraw support for Pemex to save the country's credit rating," said Luis Gonzali, chief investment officer at Franklin Templeton, adding that investors no longer see that scenario as distant.

More recently, Fitch Ratings' head of corporate ratings for Latin America, Saverio Minervini, told Bloomberg Línea that macroeconomic risks facing Mexico (rated BBB-) could spill over into Pemex’s credit rating (BB+).

While there is no direct short-term threat to Pemex's rating, indirect risks stemming from the wider Mexican economy remain, Minervini said. He cited renegotiation of the US-Mexico-Canada Agreement (USMCA) trade agreement, political uncertainty, weak growth, the fiscal deficit, inflation and hydrocarbon prices as key pressure points that could dent market sentiment and raise Pemex's cost of capital.

Mexico's economy grew just 0.8% in 2025 amid weak investment tied to uncertainty over trade relations with the US, which has imposed 50% tariffs on steel, aluminium and derivatives, and 25% on cars, with negotiations still unresolved. The fiscal deficit fell to 4.9% of GDP, short of the government's original 3.9% target, though the Mexican Secretariat of Finance and Public Credit expects it to narrow to 4.1% by the end of this year and 3.5% by the end of 2027. Inflation stands at 3.12% and is expected to stay stable into the end of 2026, according to Citi's expectations survey.

Mexico's budget deficit reached MXN578.9bn ($34.3bn) in the first half of the year, up 19.5% year-on-year, as revenue growth stagnated at just 0.1%.

Pemex's individual financial profile remains "persistently weak", Fitch said, reflecting negative operating funds, compressed EBITDA, falling crude prices and production, tight liquidity and ongoing losses in refining and distribution. Minervini noted the company's individual credit profile stands at CCC, several notches below its BB+ issuer rating, which benefits from an assumed government backstop. Mexico deployed a $50bn rescue for Pemex last year and expects the company to cover its financial obligations independently from 2027.

Minervini also flagged Pemex's production costs, among the highest in Latin America, warning that a fall in crude prices below $60 per barrel would leave the company unable to generate sufficient cash flow for reinvestment.