LatinFinance - January/February 2014 - 56

parting
shot
Mexico's energy reform opens the way for Pemex to
modernize its capital structure and improve its financial
position, writes its chief executive Emilio Lozoya

A new beginning
History will remember 2013 as one of the most important years
for the mexican energy sector. the oil and gas industry has been
a cornerstone of mexican history and tradition, and has played a
fundamental role in the development of our economy.
today, Pemex is the biggest and most important corporation in
mexico. We truly represent fuel to the mexican economy. We are
among the top five crude oil producers worldwide and we are one of
the top three exporters of crude oil to the United States.
Yet, Pemex and the mexican oil and gas sector - reflecting a
global industry trend - are at a crossroads. the need for additional
access to technology, know-how and financial resources, as well as
the increasing energy requirements of mexico's evolving economy,
has called for a thorough analysis of our sector and of our business
model and the implementation of a new approach, as well as the
adoption of a new mindset. President enrique Peña nieto has a
clear understanding of these circumstances. Since his presidential
campaign he has been determined to lay aside paradigms and
prejudices, to embark on what will be one of the most influential
events of modern mexican history.
allowing Pemex to work more like a corporation and less like a
government agency will set the path to unleash our potential. more
than before, we will be able to take full advantage of our human
capital, of the technology that we have developed in the fields
where we have advanced expertise, and to share it in exchange
for the expertise and know-how in new productive frontiers, like
deep waters and shale formations. important challenges lay ahead
of us, and in a more competitive environment Pemex will have to
transform itself.
We will introduce a new more dynamic and efficient corporate
structure, regrouping our four subsidiary entities into two, split
between upstream and downstream, which will make decisionmaking more streamlined and timely. We will modernize corporate
programs and business models which, in some cases, have not been
revised since the establishment of the company back in 1938. and,
also, we will engage in an arm's length relationship with the federal
government, which will grant additional capacities to Pemex with,
of course, a higher commitment to transparency, accountability and
stronger corporate governance policies and practices.
We will continue to look for the best ways to deploy our resources
and optimize our capital base, including examining new financing

56 l atinfina nce.com - January/February 2014

strategies for our non-core
businesses. Upstream
activities, in the regions where
we have most expertise and
which offer a significant
competitive advantage to
Pemex, will continue to be the
main focus for our investment.
However, the reform provides
Pemex the means to overhaul
and improve the economics all
along the entire value chain.
With this transition, Pemex
will remain the leading
company in mexico, with
greater access to technology,
and will embark on a gradual
course to a much more
solid financial position. the
mexican oil and gas sector will
eventually grow in importance
and undoubtedly become an
even more important driver
of the mexican economy
than it has been up to now. its
growth and evolution will represent progress for mexico, because
of additional investment, infrastructure, job creation and a gradual
increase in production of petroleum derivatives and feedstock to
generate more energy at competitive prices.
the energy reform gives mexico the opportunity to reach a
strategic position in the north american energy market and take full
advantage of mexico's vast resources to the benefit of its citizens. at
the same time, Pemex now has the opportunity to participate in an
open market, to compete and to collaborate with other operators. i
trust we have a solid foundation to build upon and openly measure
our performance against the best companies in the sector. We have
the means and we will have the tools to become a better company
and stronger source of wealth and prosperity for our country. LF

"With this
transition,
PeMex Will
eMbark on a
gradual course
to a Much More
solid financial
Position"

Emilio Lozoya is chief executive of Pemex

http://www.LATINFINANCE.COM

LatinFinance - January/February 2014

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