The complicated oil legacy of Claudia Sheinbaum's administration

The upcoming administration led by Claudia Sheinbaum faces a complicated legacy in the oil sector, particularly regarding Petróleos Mexicanos (Pemex). The state-owned company is going through significant difficulties, evidenced by a declining crude oil production and the absence of new discoveries to boost oil extraction. This situation poses important challenges for the new administration, which will have to decide how to manage Mexico's largest oil company in a challenging economic and technical environment. During Andrés Manuel López Obrador's administration, Pemex has experienced a concerning decrease in its oil production, reaching historically low figures of 1.47 million barrels per day, thus marking the lowest production in 45 years. This trend has been influenced by the current administration's strategy, focused on mature fields like Ku Maloob Zaap and the urgency to increase hydrocarbon production, which has accelerated the decline of some key assets. The future outlook for oil production in Mexico will largely depend on the decisions made by Sheinbaum's administration regarding Pemex. Experts like Pablo Medina from the consulting firm Welligence warn about the need to adopt a pragmatic approach instead of a political one, considering the delicate economic situation inherited by the new president and the importance of strategically boosting investments in the oil sector. Despite Claudia Sheinbaum's team setting a production target of 1.8 million barrels per day, below the previous government's initial expectations, analysts like John Padilla from IPD Latin America see it challenging to achieve this goal. The reduction in production from key fields like Ku Maloob Zaap, which has decreased by 38% during the current administration, presents significant challenges for the future of the oil industry in Mexico. Pemex's dependence on mature fields and the extraction of condensates as an alternative to compensate for the drop in crude oil production highlight the need to explore new strategies and sources of hydrocarbon extraction. The lack of significant discoveries and the decrease in condensate production in recent years point to the urgency of diversifying production sources and revitalizing the Mexican oil industry. The legacy of a fiscal deficit and warnings from consulting firms like Welligence about the need for caution in the face of excessive optimism present a complicated scenario for the next administration in terms of financial support for Pemex. The urgency to resume a long-term vision, expand the country's geological frontier, and strengthen collaboration with institutions like the Mexican Petroleum Institute become priorities to drive the recovery and growth of the oil sector in Mexico. The challenge of finding a balance between exploring new reserves and exploiting existing fields emerges as one of the most significant challenges for Sheinbaum's administration. The need to increase oil production sustainably and efficiently requires strategies that combine the exploration of new deposits with the optimization of existing resources, in a context of decline in national oil production. The drop in oil production from the beginning of López Obrador's government to the present, evidenced by a decrease of around 250,000 barrels per day, reflects the magnitude of the challenges facing the oil industry in Mexico. The impact of this situation on the national economy and Pemex's finances underscores the urgency of implementing effective and sustainable measures to reverse this trend and boost the development of the energy sector in the country. In this context, Claudia Sheinbaum's administration faces the task of revitalizing a declining oil industry, marked by production decreases, lack of new discoveries, and dependence on mature fields. The need to adopt a pragmatic approach, promote strategic investments, and foster collaboration with specialized institutions become fundamental pillars to drive the recovery and sustainable growth of the energy sector in Mexico.