Lula’s win viewed from Mexico’s energy sector
Lula da Silva’s unexpected victory in Brazil’s presidential run-off on 25 October has put Pemex-Petrobras cooperation back on the table. At her morning press conference on Monday, President Claudia Sheinbaum said she would discuss reviving joint projects with Lula, including those between the two state oil companies.
On 26 August, as we reported in a previous edition, Sheinbaum had said a further deep-water agreement would have to wait until after Brazil’s election, but even with Lula re-elected, expectations should be modest.
The memorandum of understanding Pemex and Petrobras signed on 23 June is non-binding, carries no investment commitment and creates no joint venture. Any Gulf of Mexico project, including the pre-salt play off Campeche, would still need separate negotiation and approval on both sides, and ties between the two companies have historically been limited. Petrobras is unlikely to commit significant capital under Mexico’s mixed contracts model, and a more conservative Brazilian Congress may leave Lula with less room for manoeuvre.
Mexico’s more immediate interest lies in petrochemicals. Braskem, semi-controlled by Petrobras (47 per cent of voting capital) and IG4 Capital, owns 75 per cent of Braskem Idesa, which operates the Etileno XXI polyethylene complex in Nanchital, Veracruz. The remaining 25 per cent is held by Idesa, controlled by Carlos Slim’s Inbursa, which also holds Braskem Idesa bonds and debt. As we reported on 19 August, falling ethane supply from Pemex, weak polyethylene margins, a liquidity squeeze driven by a heavy debt load pushed the company into Chapter 11.
A Texas judge confirmed Braskem Idesa’s pre-packaged Chapter 11 plan on 24 September. The plan cuts senior debt by more than US $920 million, to roughly US $1.6 billion. Braskem committed US $476 million under the plan, of which about US $405 million had been transferred. The same day, however, a São Paulo court froze the remaining US $70 million or so after a challenge by the parent’s own creditors. An appeals judge refused to lift the block on 9 October, and a ruling on the merits is pending. The restructuring is approved in the US but frozen in Brazil, with no date for resolution.
Unlocking it is likely to depend on Braskem’s own restructuring of some US $11 billion in debt. Bloomberg reported on 24 October that creditors and shareholders were closing in on a deal combining a follow-on share offering, with fresh capital from the main shareholders and third parties, and a swap of creditor debt for equity. Under the company’s proposal, Petrobras and IG4 would keep control. The main gap is the size and firmness of the controlling shareholders’ commitment: creditors want US $1.85 billion of the offering backstopped upfront, against the US $1.2 billion the company has proposed.
Pressure is mounting. Last week a group of bondholders filed an involuntary Chapter 11 petition in New York against a Braskem finance unit that issued bonds due 2041. Creditors have since set a 30 October deadline for a deal, Exame reported on Monday, within a court-backed standstill that runs to 22 November.
The election result split investors. Petrobras and Braskem shares closed 8 per cent and 23.6 per cent lower respectively in São Paulo on Monday, on fears of greater state intervention, a sell-off Petrobras head Magda Chambriard told Reuters was speculative and did not reflect the company’s fundamentals. Bondholders, whose number includes Inbursa, may take a different view: Lula’s continuity could make it more likely that the state, through Petrobras, backs a Braskem deal.
Pemex’s quiet payroll squeeze
On 22 October Pemex denied reports of mass lay-offs and cuts to its pay scales, saying its restructuring had reduced headcount by just 0.21 per cent in 2026. Workers’ accounts tell a different story, though the two may not be contradictory: Pemex’s ‘salary re-levelling’ leaves the pay scales untouched while moving individual workers down them.
The company presents re-levelling as voluntary, but workers who refuse to sign face the threat of dismissal. Guillermo Briceño, secretary-general of Section 8 of the National Union of Petroleum Technicians and Professionals (UNTyPP), told Reforma that the Administration and Services Division has been circulating unheaded letters worded as though workers were requesting their own downgrading. Some are being moved down two levels, cutting monthly pay by around 4,000 pesos; others by as many as nine, worth around 50,000 pesos. Workers are also being asked to waive any legal action against the company.
Pemex is also reportedly planning to fold fixed fortnightly payments for overtime and the pension calculation base, together with the performance bonus, into a single variable quarterly payment tied to performance assessments. According to a column in Energía a Debate, this would take overtime out of the pension calculation, leaving confianza (non-union) engineers and technicians to retire on income well below their actual pay.
An internal presentation circulating in chat groups sets out ‘Formado en Casa’ (Home-Grown), a two-year programme whose first cohort started in August 2026. Its aim is to build a pool of specialist talent at what the presentation calls ‘optimised labour costs’. Trainees progress from unpaid social service through a paid internship and a graduate year, both at under 10,000 pesos a month, to a level N8 post paying 27,800 pesos a month net.
According to a source consulted for this edition, the N8 level is the real change. Until now, the lowest confianza level has been 29, set to avoid overlapping with the levels reserved for unionised workers. Lowering that floor to level 8 would create a new tier of confianza staff in posts that neither the Oil Workers’ Union (STPRM) nor UNTyPP could claim.
Taken together, these moves point to a strategy of cutting the wage bill by extending confianza staffing into new, lower levels rather than reopening collective agreements. Whether that materially improves Pemex’s finances is doubtful given its limited scope, and it could backfire if it leads to years of litigation the company could lose.
One such dispute is already before the Supreme Court (SCJN). In August the court agreed to hear an appeal by UNTyPP, which is seeking union recognition, and the same conditions as STPRM members, for thousands of workers Pemex classifies as confianza staff. In June a collegiate labour court had dismissed the union’s collective claim, ruling that each worker’s status must be decided individually and that Pemex had not discriminated against staff hired as confianza. The union argues that under the Federal Labour Law the classification should reflect the nature of the work performed, whereas Pemex’s own rules define confianza staff simply as those to whom the collective agreement does not apply. Individual claims for reclassification have already succeeded, Expansión reported. Justice Loretta Ortiz will draft a proposed ruling for the full court, and there is no timetable for a decision.
CFE weighs approvals of more renewable projects
CFE’s board was scheduled to vote on 20 October on preliminary approval for more than 60 renewable projects, mostly wind and solar farms, under the second call for mixed development schemes (Mixtos II), Bloomberg reported on 16 October, citing a person with knowledge of the matter. Together the projects would add about 8.2 GW to the grid at an estimated cost of US $12.5 billion, depending on transmission costs yet to be defined.
Not all of them will be built. From 126 proposals, the government has shortlisted 66 projects from 34 business groups, totalling 8,241 MW: 57 solar plants with 6,310 MW and nine wind farms with 1,931 MW. That is more than double the 3,995 MW of capacity the authorities say is required. A second Bloomberg source said fewer projects could receive final approval, and a CFE spokesperson said it was premature to say how many would go ahead. Mexican groups account for 18 of the 34, followed by Spanish and US companies. Those with the most shortlisted capacity include GEMEX, Freeman, Fisterra, AES México and Invenergy.
Final decisions are still weeks away. At an investor roadshow with SENER, CFE scheduled analysis, negotiation and rulings on the regional projects for November. Four of its own projects will begin their competitive process in early December, with rulings in January 2027. These are likely the projects CFE’s board approved at its latest session, which its 22 October statement placed in Baja California Sur and Hidalgo. They include two solar thermal projects in Baja California Sur, El Crucero (100 MW, combining solar towers with photovoltaic fields) and Comondú (50 MW). The others are the Oasis hybrid at Guerrero Negro, which combines solar power, batteries, hydrogen production and fuel cells, and a cogeneration plant at Tula de Allende, Hidalgo, rated at 681 MW in summer conditions.
The first call set the template. It drew bids for more than 38 GW, five times CFE’s 7.5 GW target, and, according to the roadshow, awarded 8,025 MW across 38 projects, with estimated investment of US$10.6 billion. Each project must include storage equivalent to 30 per cent of its capacity for three hours; the second call is the first to admit standalone storage projects. Under the model CFE presented, the state utility holds 54 per cent of each mixed investment company and the private partner 46 per cent. Projects are financed 20 to 30 per cent with equity and 70 to 80 per cent with debt, and CFE buys 70 per cent of the output under a power purchase agreement. As we reported in our last edition, the government plans to channel 453 billion pesos of generation investment through mixed schemes between 2025 and 2030, while raising renewables from 24 per cent to 38 per cent of generation and the state’s share of output from 57 per cent to 61 per cent.
Huachicol fiscal: follow the invoices
On 21 October, at the president’s morning press conference, Energy Secretary Luz Elena González presented the government’s results against ‘huachicol fiscal’, the smuggling and tax evasion that runs through the fuel value chain from import to the pump. By cross-checking invoices and tax records for 2025, a year now closed for tax purposes, the authorities identified an imbalance of 8.8 billion litres of fuel, equivalent to 61.8 billion pesos in unpaid excise tax (IEPS).
Marketers account for most of it: 6.35 billion litres, equivalent to 44.5 billion pesos, or 72 per cent of the total, from a segment with just 660 permit holders against 14,587 for retail stations. Retail stations follow with 1.2 billion litres (8.4 billion pesos, about 14 per cent), then importers with 645 million litres (4.5 billion pesos). Firms holding marketing alongside other permits, and distributors, account for the rest.
González said companies that had misused their permits would have to answer to the authorities and pay the taxes they owe, and that a similar exercise is under way for 2026. Sixteen federal agencies now share information through a Hydrocarbons Data Analysis Centre, which tracks fuel volumes across the chain on a real-time dashboard.
The government points to results this year. (As Mexico gasoline and diesel prices have fallen below those in the US, thanks to costly fiscal subsidies in Mexico, much of the decrease in illegal smuggling has a simple explanation: the tax arbitrage has largely gone.) Declared IEPS on fuels rose by 48.4 billion pesos, or about 16 per cent, to 351.5 billion pesos between January and September, which officials attributed to corrected and higher declared imports, increased Pemex sales and other controls. Pemex’s petrol and diesel sales were 160.6 billion pesos higher than a year earlier. Declared import volumes rose 10.5 per cent, and customs checks stopped 1.95 billion litres of fuel from entering the country illegally, equivalent to 13.7 billion pesos in IEPS.
On enforcement, the energy regulator (CNE) has cancelled 264 marketing and retail permits, with 307 more permit holders facing sanction proceedings. The tax authority (SAT) has closed 2,224 businesses selling fuel without a permit, fined 2,032 petrol stations that failed to submit volume records and removed 180 companies from the importers’ register for smuggling.
The official figure may understate the losses. Francisco Barnés de Castro, a former deputy hydrocarbons secretary, had estimated 2025 IEPS losses at 48 billion pesos, below the government’s figure, and VAT evasion at a further 52 billion pesos, as buyers of smuggled fuel turn to invoice mills (‘factureras’) to avoid the tax. Adding his VAT estimate to the official figure would push total losses above 113 billion pesos, he told Expansión, and he believes VAT evasion was higher than he first calculated. He expects smuggling losses to fall this year, as the IEPS waiver on fuel removes much of the incentive to smuggle, but warns that pipeline theft is likely to rise as a result. The waiver comes at a cost: analyst Ramsés Pech estimates that fuel tax support cost 108.4 billion pesos between late February and late September.
Chatter Box
Pemex’s debt cut gets a second airing
On 21 October Pemex director-general Juan Carlos Carpio Fragoso announced that the company’s financial debt had fallen 21 per cent from 2024, to US $77.5 billion, its lowest level since 2014. The figure is not new: it is the end-June level already published in Pemex’s second-quarter report, which EL CEO reported on 3 August as a 9.1 per cent fall from end-2025. What changed is the baseline. Measured against 2024 rather than last December, the same number looks more than twice as good.
Carpio also set out 1.85 trillion pesos of investment for 2025–2030, 79 per cent of it in exploration and production. Pemex put liquids output at 1.76 million barrels a day between January and August, against a target of 1.8 million. That figure includes condensates and production by private operators and partners; Pemex’s own crude output, excluding condensates, averaged 1.367 million barrels a day in the first half, according to IMCO. Supplier debt has also come down, to 374 billion pesos at end-June, 14.5 per cent below end-2025.
Energy analyst Nay Marrufo told El Financiero that the debt reduction did not come from a cash surplus: Pemex’s free cash flow remains negative, and the improvement has rested on federal support. The record bears this out. In July 2025 the finance ministry raised US $12 billion through pre-capitalised securities to shore up the company. According to IMCO’s analysis of the second-quarter report, capital contributions to Pemex reached 100.4 billion pesos at end-June, 6.2 per cent more than a year earlier.
Unmanned, but not uneventful
At 11:15 on 19 October a fire broke out on Abkatún-H, an unmanned satellite platform about 73 kilometres off Ciudad del Carmen, Campeche, which gathers well output and sends it by pipeline to the Abkatún-Pol-Chuc processing complex. Pemex deployed firefighting vessels and reported no injuries. At 22:30, some 11 hours later, it said the incident had been addressed. The company has opened a root-cause investigation but has said nothing about lost output.
The Abkatún area has a troubled record. Abkatún-H sits near the Abkatún Permanente platform, where a fire in April 2015 killed seven people. In April this year the authorities confirmed that an oil spill detected in the Gulf in February had come from the Abkatún platform zone. Earlier this month Pemex reported repairing a crack in a subsea pipeline at the Chuc-1 platform, part of the same complex, about 65 kilometres off Paraíso, Tabasco, after a sheen was spotted on the water. Across its operations, Pemex recorded 1,163 leak-related incidents in 2025, 11 per cent more than in 2024, according to its latest sustainability report. That figure excludes illegal pipeline taps. Onshore, the Olmeca refinery at Dos Bocas has had several fires this year, including one in March that killed five people.
Third-quarter 2026 results from four major US-listed oilfield services companies suggest improving Pemex collections
Weatherford gave the clearest view. Latin American revenue rose 14% sequentially to US$225 million, driven by Mexico and the Caribbean. CEO Girish Saligram described consecutive quarters of regular payments as a marked improvement from 18 months earlier. CFO Anuj Dhruv said Pemex’s share of receivables was its lowest in more than six years, crediting government measures for collections arriving “like clockwork”. However, remaining payments were still the biggest variable in quarterly free cash flow, and timing could be uneven. Mexican drilling-related activity improved sequentially but remained below a year earlier.
Halliburton reported increased Mexican activity across several service lines, offsetting weaker stimulation work in Argentina and keeping Latin American revenue flat sequentially at US$1.1 billion. COO Shannon Slocum expected Mexico to remain broadly flat in the first half of 2027, with opportunities in the second half. Its quarterly filing nevertheless acknowledged payment delays from its principal Mexican customer, although it expected no material write-offs. That customer represented 8% of total receivables at September 30, compared with 7% at December 2025.
SLB reported double-digit sequential growth in Mexican Reservoir Performance revenue, but lower Well Construction activity. CFO Stéphane Biguet said the fourth-quarter cash-flow improvement would depend on collection timing in certain countries, without naming Mexico.
Olinia seeking private partners
On 14 October the science and technology ministry (Secihti) opened a call, run by the development bank Nafin, for investors in Sociedad Olinia, the company that will build and sell the state-backed electric vehicles, with a target initial capitalisation of 950 million pesos.
The state will keep at least 33 per cent. Secihti will contribute 205–390 million pesos in cash plus credit for the engineering and intellectual property already developed, while private partners will put in 560–745 million pesos. The minimum ticket is 200 million pesos per investor or consortium, which leaves room for three private partners at most, and foreign investors are capped at 33 per cent combined. Registration closes on 3 November and the process concludes on 29 January 2027. The line-up now comprises three models on a shared architecture, all charged from a standard socket: the Olinia 1 passenger car, the Olinia Carga utility vehicle (650 kg payload, more than 120 km range) and the Olinia Van.
In March Bloomberg reported that project head Roberto Capuano was seeking about US $200 million of private capital to move into manufacturing, with sales from early 2027 at around 150,000 pesos a vehicle. At current exchange rates, the full 950 million pesos is roughly a quarter of that, and the private share less than a fifth.
That is enough to test whether private investors will share a balance sheet with the state on a consumer product, but not enough to build a carmaker. The more telling number will be how many of the three seats are filled.
Buen Fin, brought to you by CFE
CFE’s electricity bills, which reach more than 50 million customers, will now carry promotion for El Buen Fin, Mexico’s annual discount weekend, under an agreement signed on 27 October by CFE director-general Emilia Calleja Alor and Economy Secretary Marcelo Ebrard. The bills will also promote the ‘Hecho en México’ brand and support for small businesses. Ebrard said the campaign would focus on getting more small firms to register for this year’s event, which runs from 13 to 17 November.
Ebrard likened the digitalisation of small businesses to Mexico’s electrification in the last century, crediting CFE with bringing power to 99.75 per cent of the country. Firms that stay offline, he argued, are at a fundamental disadvantage. He said the government had helped more than a million microbusinesses go digital in the past year and aims to reach a similar number as quickly as possible.
The more substantive detail came from CFE. Under the Plan México push for local content, it says it has raised domestic-content requirements in its tenders. In 2026 these averaged 30 per cent for combined-cycle plants and reached up to 52.5 per cent in transmission and 89.6 per cent in distribution, all higher than in previous years.
The race to build AI data centres in Latin America is running into an old problem: the grid
At a recent industry webinar reported by Energy21, executives from Eaton, the data-centre standards body ICREA and KIO Data Centers agreed that transmission lines, substations and grid connections are not keeping pace with demand for digital infrastructure. As Eaton’s Diego Hofman put it, the challenge “is not only having energy, but making sure it reaches the right place.”
The engineering helps explain why. Traditional server racks draw 5–15 kW, but AI-ready racks need 50–140 kW. That forces a redesign of power distribution, backup and cooling. AI workloads also swing sharply in consumption, which makes power quality worse. Building transmission takes years, so the grid capacity already available is now what decides where projects go.
Ana Paola Barbosa, AWS’s public policy director for Mexico, told DPL News that the three big cloud providers will invest US$8–10 billion in Mexico over the next 15 years. AWS alone is committing US$5 billion to its Querétaro cloud region, which went live in 2025 and is one of only two AWS regions in Latin America, alongside Brazil. AWS says the region will add US$10 billion to GDP and support an average of 7,000 jobs a year. Barbosa says that makes Mexico “a digital node for all the Americas.”
Querétaro hosts about 72% of national data-centre operations. Guillermo García Alcocer, a former head of the energy regulator CRE, says some finished facilities there have waited up to two years to connect to the grid. Operators are now paying for their own substations, and CFE has pledged about MXN 9 billion for Querétaro’s grid through 2030. The panel’s advice applies directly to Mexico: secure long-term power contracts, budget two to five years for permits and community consultation, and build in phases. For example, a site can be designed for 100 MW but start with only part of that.
The oil bill grows
Mexico ran an oil trade deficit of US $25.7 billion in January–September, INEGI reported on 27 October, already larger than in the same period of 2024 or 2025. Oil exports, mostly crude, brought in US $16.4 billion, slightly down on a year earlier. Imports, which include fuels, natural gas for power generation and LPG, rose 19 per cent to US $42.0 billion. Exports covered less than two-fifths of the import bill, and the oil deficit widened by US $3.4 billion in September alone.
A US $34.9 billion non-oil surplus kept overall trade in the black, at US $9.3 billion for the nine months, despite a US $606 million deficit in September.
The figures sit awkwardly beside Pemex’s claim that 85 per cent of the fuel it sells now comes from its own refineries. Part of the explanation is that the share includes output from Deer Park in Texas, which enters Mexico as an import. The rest lies in natural gas and LPG, which the refining push does not touch, and in higher fuel prices this year.