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Pemex

Petróleos Mexicanos TypePublic ownershipFounded 1938Headquarters Mexico City, MexicoKey people Jesús Reyes Heroles (CEO)
Georgina Kessel(Chairwoman) IndustryOil and Gas RefiningProductsPetrochemicalproducts Revenue$198 billion USD(2006) Employees138,215 Websitehttp://www.pemex.com.mx
A Pemex gas station in Puerto Vallarta Pemex tower in Mexico City

Petróleos Mexicanos (PEMEX) is Mexico's state-owned petroleum company. It is the 10th largest oil company in the world in terms of Revenue and 34th place out of the Fortune 500 companies.

Asphalt and pitch had been worked in Mexico since the time of the Aztecs. Small quantities of oil were first refined into kerosene around 1876 near Tampico. By 1917 commercial quantities of oil were being extracted and refined by subsidiaries of the British Pearson and American Doheny companies, and had attracted the attention of the Mexican government who then claimed all mineral rights for the state as part of its Constitution.

Contents

Expropiación Petrolera

Main article: Expropiación petrolera

In 1938, President Lázaro Cárdenas sided with oil workers striking against foreign-owned oil companies for an increase in pay and social services. On March 18, citing the 27th article of the 1917 constitution, President Lázaro Cárdenas embarked on the state-expropriation of all resources and facilities, nationalizing the U.S. and Anglo-Dutch operating companies, creating PEMEX. In retaliation, many foreign governments closed their markets to Mexican oil. In spite of the boycott, PEMEX developed into one of the largest oil companies in the world and helped Mexico become the fifth largest oil exporter in the world.

Products

PEMEX is the sole supplier of all commercial gasoline (petrol/diesel) stations in Mexico. All petrol stations, although labeled PEMEX, are concessions that are strictly full-service. PEMEX tried to take away the concessions from a large number of these for low-quality gasoline (often cut with up to 40% fuel oil) and for not serving the correct amount of gasoline (many serve only 9 litres for every 10 registered on the pump), however a judge ruled these were "not reasons to take away the concessions".

The grades of PEMEX gasoline are 'Magna' (Regular Unleaded 87 octane - green pump handle) and 'Premium' (92 octane - red pump handle). Previously, PEMEX offered a leaded gasoline called 'Nova,' but this has been discontinued for environmental reasons (Nova gasoline, like many other leaded gasolines, have been discontinued due to stringent health regulations).

Some Pemex stations accept US Dollars and they are beginning to accept major credit cards.

Controversy

Customers have complained about the fraud committed by some gas stations, which consisted in selling "liters" of less than 900ml (leading to some to refer to these "liters" as "chiquilitros"; i.e. "small liters"). Pemex claims it is not responsible for such frauds and has claimed to be taking measures to counter this problem.

Other customers of the gas stations have been victims of "baptized" gasoline; meaning that approximately 3/4 liters of gasoline are mixed with 1/4 liters of water, in order to create a full liter capable of passing the weight inspections.

Accidents

On June 3, 1979, PEMEX's Ixtoc I exploratory oil well in the Gulf of Mexico, about 600 miles south of Texas, suffered a blowout and became the largest unintentional oil spill in history.

On November 19, 1984 a series of explosions at the PEMEX petroleum storage facility at San Juan Ixhuatepec in Mexico City ignited a major fire and killed about 500 people.

On April 22, 1992, explosions in Guadalajara, Jalisco killed more than 200 people.

On July 10, 2007, the Popular Revolutionary Army claimed responsibility for blasts on Pemex pipelines on July 5 and 10.[1]

Reserves

Current situation

Protest in front of the Torre Ejecutiva Pemex against the privatization of Pemex, Mexico City February 2008

PEMEX, despite its current $77 billion in revenue, pays high taxes that contribute with a large portion of the budget of the federal government. Indeed, in recent years the company has only been able to make ends meet through massive borrowing, so that it now owes a staggering $42.5 billion, including $24 billion in off-balance-sheet debt because the Mexican government treats the company as a major source of revenue. The state-run company pays out over 60% of its revenue in royalties and taxes, and those funds pay for a third of the federal government's budget. If oil prices drop or there are no major new discoveries of crude, that could spell big trouble for PEMEX despite its immense revenue stream and expansion prospects. However, in 2005, with record-breaking oil prices (due to the Iraq war, economic expansion of the United States and the People's Republic of China) the company has seen an unexpected excess of funds. This tendency continued in 2006, but these funds have been used to pay salaries of bureaucrats and current costs, instead of being invested in projects of exploration and production; during President Fox administration, these funds represent around 70 billion dollars[2], yet the administration says there is not enough money to pay the debts.

To help capitalize the company former President Vicente Fox brought forward the possibility of making shares of PEMEX available to Mexican citizens and pension funds, to complement a current project-specific investment setup known as "Proyectos de Inversión Diferida En El Registro del Gasto" or PIDIREGAS[3]; this proposal, along with alleviating PEMEX's heavy tax burden and a substantial budget increase, have met opposition in Congress.[4][5]

President Calderon made clear at the beginning of his presidency that he would respect the constitutional mandate to keep Pemex in government hands, but that he would try his best to open up the sector to private investment.[6]

Oil Reserves Declining

In an interview on the oil news website www.oilcast.com in November 2005, a PEMEX employee spoke anonymously of the company's inability to grow production, stating that the company and country is at Hubbert's Peak. The person interviewed believed export levels could not be recovered once peak had passed, as the size of current fields that have been discovered or are coming online represent a fraction of the size of the oilfields going into terminal decline.

Annual production has dropped each year since 2004. [1] Furthermore, it has been reported the 2005-2006 daily oil production was down by approximately 500,000 barrels a day (a large proportion of the country's 4.5 million barrels) on the previous year.

PEMEX averaged 3.71 MMBPD in 2006. [2] PEMEX has never produced 4 MMBPD or higher for a yearly average. [3]

See also

References

  1. ^ "Rebels claim Pemex pipeline attacks", Upstream Online, 2007-07-10. Retrieved on 2007-07-11
  2. ^ Ingresos petroleros, el mejor aliado de Fox - El Universal - Finanzas
  3. ^ PEMEX.com | Frequently Asked Questions
  4. ^ Pemex May Be Turning From Gusher To Black Hole
  5. ^ World Business Briefing | Americas: Mexico: Pemex to Increase Spending
  6. ^ Vargas Llosa, Alvaro. "The True Price of Gas", The New Republic, 2008-05-06. Retrieved on 2008-05-08

External links

Wikimedia Commons has media related to: PEMEX Categories: Oil and gas companies of Mexico | Companies based in Mexico City | Automotive fuel brands | Government-owned companies | Government-owned companies in Mexico

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