Sheinbaum Plans Green Shift for Debt-Ridden Pemex

Mexico's Presidential Plan Eyes Renewable Future for Pemex

by Ikeoluwa Juliana Ogungbangbe

Sheinbaum’s plan involves a significant departure from the current administration’s oil and gas-based policies. She intends to refinance Pemex’s massive debt load to generate funds for investments in sustainable energy projects such as renewable energy and lithium extraction. This approach is critical as Pemex is currently under financial pressure, with limited capacity to explore new energy sectors due to its cash flow challenges.

Under Sheinbaum’s strategy, Mexico’s oil production is set to increase to 1.8 million barrels per day from the current 1.5 million. This increase aims to stabilize the country’s oil production while focusing on more environmentally friendly technologies. In addition, Sheinbaum’s plan involves a considerable investment in Mexico’s renewable energy infrastructure. The proposed investment of approximately $13.6 billion will go towards new projects designed to increase wind and solar power generation, modernize hydroelectric stations, and extend the country’s electricity transmission networks by approximately 3,850 kilometers.

This shift towards greener technologies aligns with a growing global trend where environmental, social, and governance (ESG) metrics are becoming increasingly important in the evaluation of companies by investors and banks. To attract ESG investors, Sheinbaum’s plan for Pemex includes a sustainability blueprint that commits to significant reductions in greenhouse gas emissions.

The transformation of Pemex, the Mexican state-owned petroleum company, under Sheinbaum’s leadership, represents a significant shift in the country’s business strategy. It also signifies a broader shift towards environmental and economic policies that prioritize sustainability. With Mexico recently overtaking China as the largest trading partner of the United States, there is a potential for nearshoring to thrive. For this to happen, Mexico needs a reliable and sustainable energy sector, and this is where Pemex’s transformation comes in.

However, there are critics who argue that Sheinbaum’s focus on keeping Pemex at the forefront of the energy sector may have negative consequences. They fear that this approach could sideline private companies and stifle competition. This concern is similar to the policies of the current president of Mexico, known as AMLO. Since his election in 2018, AMLO has emphasized “energy sovereignty,” rolling back market-friendly reforms and investing heavily in domestic fuel-refining capacities.

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