Pemex Plans Drilling, Logistics Companies as Energy Reform Looms

Petroleos Mexicanos plans to group drilling and logistics subsidiaries into single entities to streamline operations as the state-run company prepares for energy reforms that would end a 75-year-old oil monopoly.

Pemex, as the company is known, is readying a series of structural changes in anticipation of revisions to national energy legislation, Chief Executive Officer Emilio Lozoya said. The creation of drilling and logistics companies will help maximize profitability and extend the company’s international reach, he said.

“If Pemex put all its drilling subsidiaries into one entity, it would be the second-largest drilling company in the world,” Lozoya said at the Mexico Business Summit in Guadalajara. “It would be able to provide services to not only Pemex, but to other companies in the world.”

President Enrique Pena Nieto presented a bill to Congress on Aug. 12 that would permit foreign companies to pump crude from Latin America’s third-largest reserves for the first time since 1938.

Lozoya said competition is “the best thing that could happen for Pemex” as it will impel the company to correct inefficiencies that contribute to problems such as refining losses. The losses are subsidized by the government and forecast to be 100 billion pesos ($7.7 billion) this year, Lozoya said.

The logistics company will synchronize pipelines and ports to improve the transportation of hydrocarbons. The company oversees more than 80,000 kilometers (49,710 miles) of pipelines in Mexico, Lozoya said.

“When all this logistic infrastructure of ports and pipelines are together in a single entity, it could be one of the biggest logistics companies in Latin America,” he said.

To contact the reporters on this story: Adam Williams in Mexico City at awilliams111@bloomberg.net; Carlos Manuel Rodriguez in Mexico City at carlosmr@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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