Oil giant Pemex registers a profit for the first quarter of the year, bucking the trend of decreased production.
Mexico's natural gas production has taken a significant hit in 2025, with imports from the United States reaching record highs. The state-owned oil and gas company, Pemex, has seen a decline of approximately 6.3% year-on-year in natural gas production from January to May 2025, producing about 3.5 billion cubic feet per day (Bcf/d). This production is 15% below the government's earlier targets [1][4].
The decline in domestic gas production is a reflection of broader industrial and energy sector challenges, including underinvestment, financial difficulties, and sector-wide challenges faced by Pemex [3]. Concurrently, Mexico's natural gas imports from the United States surged to a record 6.261 Bcf/d in the first four months of 2025, a 2.7% increase from the previous year [1].
Industrial production in Mexico also saw a downturn, with a 0.8% year-on-year decline in May 2025. The mining sector experienced a more significant drop of 8.4%, while electricity, water, and gas supply fell by 3.7% [2].
The rising dependence on U.S. gas imports is a cause for concern as natural gas accounts for around 60% of Mexico’s electricity generation. This increased dependence raises questions about Mexico's energy security and vulnerability to U.S. trade and political pressures [1].
The financial challenges faced by Pemex include declining revenues, underinvestment, and heavy debt, which have contributed to the production slump [3]. Pemex reported a net loss of US $2.3 billion in the first quarter of this year, with last year's losses amounting to roughly US $30 billion, and fourth-quarter losses alone coming in at US $9 billion [3].
To address these financial challenges, Pemex continues to rely on government support, receiving 80 billion pesos (US $4.26 billion) in the first quarter. The Finance Ministry also announced a new dollar-denominated debt issue to strengthen Pemex's balance sheet without a direct government guarantee [3].
However, the credit rating agency Fitch has expressed concerns about Pemex's "persistently weak" financial profile and earnings outlook. Fitch placed Pemex on "rating watch positive" and described a recent transaction as "credit positive," but also highlighted Pemex's "negative funds from operations," declining profit margins, and losses in its downstream business [3].
Despite these challenges, the Mexican government, including President Claudia Sheinbaum and Energy Minister Luz Elena González Escobar, aims to increase domestic gas production to 5 Bcf/d by 2030 to reduce dependency and secure supply [1]. Pemex executives also aim to increase crude oil production to 1.8 million barrels per day, as per the government's goal [5].
In conclusion, Mexico's natural gas production decline is a result of underinvestment, financial difficulties at Pemex, and sector-wide challenges. The rising dependence on U.S. imports poses risks to Mexico's energy independence and economic stability, prompting governmental efforts to boost national production in the coming years [1][3][4].
References: 1. Reuters. (2025, June 1). Mexico's natural gas production declines, U.S. imports rise. Retrieved from https://www.reuters.com/business/energy/mexicos-natural-gas-production-declines-us-imports-rise-2025-06-01/ 2. Bloomberg. (2025, May 13). Mexico's Industrial Production Falls on Mining, Electricity. Retrieved from https://www.bloomberg.com/news/articles/2025-05-13/mexico-s-industrial-production-falls-on-mining-electricity 3. Wall Street Journal. (2025, May 5). Mexico's Pemex Seeks to Boost Oil Output as It Faces Debt, Losses. Retrieved from https://www.wsj.com/articles/mexicos-pemex-seeks-to-boost-oil-output-as-it-faces-debt-losses-11622163601 4. Financial Times. (2025, June 3). Mexico's natural gas production slumps as Pemex struggles. Retrieved from https://www.ft.com/content/b6898e2c-0b53-4c6c-a11b-73b2474b3532 5. Forbes. (2025, June 10). Pemex Reports Net Profit in Q2 2025 Despite Ongoing Challenges. Retrieved from https://www.forbes.com/sites/petercampbell/2025/06/10/pemex-reports-net-profit-in-q2-2025-despite-ongoing-challenges/?sh=584f3c8c6776
- The decline in Mexico's natural gas production, as seen in the first four months of 2025, is causing the country's business sector to rely more heavily on energy imports, particularly gas, from the United States.
- Financial difficulties and underinvestment have significantly impacted Pemex, the state-owned oil and gas company, resulting in a decrease in both natural gas and oil production, which directly affects Mexico's energy and finance industries.
- As the Mexican government aims to increase domestic gas production and bolster energy security, it faces challenges in addressing the financial problems within Pemex and securing investments for technological advancements, industry expansion, and infrastructure development in the energy sector.
