Mexico president rebuked top officials this summer over sliding Pemex output, sources say

In her 2027 budget proposal announced last week, Sheinbaum slashed funding for Pemex debt payments, reflecting the government's stated expectation that the company will soon no longer need financial support. Two days after the tense meeting with the president, Gonzalez met with Pemex executives to seek ways to shore up fuel production, two of the four sources said. The Pemex executives agreed to conduct weekly reviews of refinery performance and to push plant managers to improve results. The new measures have failed to reverse deterioration of the refining system, said six sources consulted by Reuters, including the four with knowledge of the July meeting with Sheinbaum. They identified a range of structural problems, including political interference in operational decisions, erosion of safety protocols, insufficiently trained personnel, shortages of equipment and spare parts, and inconsistent maintenance practices. “Pemex workers are saying, ‘How do you expect us to operate if you don’t give us money for maintenance?" said Ramses Pech, an energy industry analyst and consultant. "The company’s main problem is maintenance.” MEXICO CITY, Sept. 17 (Reuters) - President Claudia Sheinbaum, who had spent months touting Mexico's march toward "energy sovereignty" through greater domestic fuel production, lashed out at top officials this summer over sliding output at state oil company Pemex, sources told Reuters. At a late July meeting at the National Palace, Sheinbaum angrily confronted her top energy and finance officials. At the time, second-quarter data showed Pemex gasoline and diesel output was falling. The country was relying more on costly imports, despite her claims that Mexico had achieved self-sufficiency in diesel and was close to achieving it in gasoline. Mexico's government has poured billions of dollars into Pemex in recent years through debt support, tax breaks and financing aimed at helping it pay suppliers. The government was betting that the company would increase oil and fuel production, yet production has stagnated while operational problems persisted. Sheinbaum felt misled, according to four sources with knowledge of the meeting. They said she also grilled her top officials about 12 accidents this year at Pemex refineries that left six dead and 10 injured. The sources spoke on condition of anonymity because of the sensitive nature of the meeting. The president was especially critical of Energy Secretary Luz Elena Gonzalez and Pemex Director Juan Carlos Carpio, who took over the company in May, two of the sources said. They said she chided them over the poor image the accidents have generated, and told Gonzalez to "get things in order." A spokesperson for Sheinbaum said the president meets frequently with the energy sector but did not have more information. Neither Pemex, the Energy Ministry nor the Finance Ministry responded to requests for comment. The second quarter marked a major setback for Pemex, significantly increasing Mexico's reliance on foreign fuel supplies. Pemex diesel production fell 11% and gasoline output dropped 13% from the previous quarter, while diesel imports jumped 134% and gasoline imports rose 45%. Elevated fuel prices during the US-Israeli war on Iran boosted the cost of imports sourced largely from US refiners. In value terms, gasoline imports rose 122% to $4.55 billion, while diesel imports climbed 273% to $1.51 billion from the first quarter. Meanwhile, accidents have plagued Mexico’s refineries and slowed production. In the southern state of Tabasco, the new Olmeca refinery — the $21 billion flagship project of former President Andrés Manuel López Obrador — has experienced recurring electrical failures and fires. In March, a fire caused by an overflow of oily wastewater killed five people. Pemex has also reported "cases of injured workers" at the Madero refinery in Tamaulipas and "safety incidents" at the Minatitlan refinery in Veracruz, without providing details. Not a single refinery is operating at its designed capacity, according to an analysis of public data and information provided to Reuters by a Pemex official. "Every month we're losing money — some months more, some months less, but we keep losing," said the official, who spoke on condition of anonymity. The weakest performer is the Minatitlán refinery. In July, it converted just 39% of the petroleum it processed into higher-value products such as gasoline and diesel. While that was up from 24% in June, it was well below its designed conversion rate of 75%. Olmeca reached a conversion rate of 74% in July, closer to its designed capacity of 88%, but has recorded rates as low as 41.5% this year.

Mexico president rebuked top officials this summer over sliding Pemex output, sources say

Budget cuts and maintenance concerns remain

Sheinbaum confronted officials over Pemex output

Refinery accidents and weak output fueled frustration

Refineries continue to face operational and maintenance problems

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