Pemex, Mexico’s state-owned oil company and one of the largest oil producers on the planet, has a new CEO in José Antonio González Anaya. The old one, Emilio Lozoya Austin, stepped down after Pemex announced a big budget cut from the Mexican government.
Lozoya, who had been in the role since December 2012, was a turnaround artist with private-sector experience. But Pemex put an end to his winning streak. As Quartz noted a few months into his tenure, the company had a few issues it needed to work through:
[T]he reality is that Pemex has become dangerously inefficient. Oil production has fallen every year since 2009, and hit an eight-year low last year. The country now produces roughly 2.6 million barrels a day, down from a high of 3.5 million in 2004. At the current rate, and without private and foreign investment, Mexico could become a net energy importer by 2020 for the first time in nearly a century.
Lozoya’s successor inherits all this and more. Global oil prices are at less than a third of where they were when Lozoya came in, and as Mexico indeed opened up its oil industry to foreign investment following decades of state monopoly, Pemex’s production kept falling, to 2.4 million barrels in 2014, and 2.3 million in 2015. Meanwhile, US shale producers and Saudi Arabia-via-OPEC are still battling for market share, letting pumps run on overtime and flooding the world in oil it clearly doesn’t need right now.
The pressure is showing in Mexico’s oil trade: Exports haven’t been falling this fast since the recession, and it’s not clear that anything’s going to stop that from happening.
All of this is a high hurdle for González Anaya, who developed a reputation as a cost-cutter (link in Spanish) at the Mexican Social Security Institute. He’s going to need all that discipline and then some to help right Pemex.