Jul. 15, 2021

Rafael Espino de la Peña


Rafael Espino de la Peña

Independent member of the board, Pemex

Pemex's board seeks to revamp and rescue the company, which would give Mexico greater energy sovereignty.


Rafael Espino de la Peña has been the CEO of Amerimed Hospitals since 2012. He is also a founding partner of the law firm Fernández, Espino y Asociados and specialized in fiscal, corporate, and trade law. He holds a bachelor's in law from ITESM University in Chihuahua and a master's in comparative law from George Washington University.

Can you share some of the achievements from Pemex last year?

The main achievement of the company was to halt the fall in oil production that had been persistent for 16 years. Production was stabilized around 1.56 million bpd, taking into account the reduction required by OPEC. The company recorded two achievements: increasing oil production and a reorganization of the company's assets and collaboration with service providers to unify the purposes of the country's president. The goal of the president is to produce 2.2 million bpd. Of that amount, 1 million barrels will be for exports, and 1.2 million will be refined in Mexican refineries.

How are you seeking to diversify the services you offer?

The board of Pemex has 10 members and is headed by the Secretary of Energy. There are five members who are government representatives, and the other five are independent. The role of the independent members is to direct the committees that support the board. There are four committees: strategy and investments; auditing; rent; and acquisitions, human resources, and remunerations. Pemex is extremely important to the Mexican government; it provides around MXN600 billion in total to the government, which is about 10% of government revenues. Pemex is the most important taxpayer in the country. The challenge, on the one hand, is that the tax burden of Pemex has to be reduced in order to make it into a competitive company. On the other, it is important to ensure it continues to contribute to the country's budget. The goal of the president is to rescue Pemex, because during the previous regime the goal was to dismantle it and transfer the exploration and production activities into private hands.

How is the board seeking to support the financial restructuring of the company?

Pemex is the most indebted oil company in the world. It is not easy because it has many taxes. Pemex pays taxes for extracting oil, and not after selling oil and obtaining earnings. In order to make it competitive at a global level, it should have an adequate tax regime. The debt of Pemex, some USD100 billion, is 10 times the budget of Mexico City. Thus, it is important to have a sustainable debt that is aligned to the worldwide reality. Pemex is a viable company, in operative terms. It has an important level of free cash flow. The EBITDA of Pemex is always positive; the problem is the high interest that it pays for its US-denominated debt and its tax burden.

Is it viable to have a government-owned oil company, and should Pemex be a private company instead?

Pemex is a well-managed company; it has a positive cash flow right now. Before, there were other interests and a great deal of corruption. However, this government is committed to rescuing Pemex, and I support that because it would give Mexico back its energy sovereignty. The country will then depend less on foreign markets. The reality is that there is a big effort to rescue the company. We want to bring a more nationalistic view to the company.

What are the challenges for 2021?

We want to revamp the system of refineries in the country, particularly in the industrial activities of transformation. In addition, we want to increase oil production of 1.56 million to 1.8 million bpd. We want to continue exploring and producing oil to create economies of scale to reduce the extraction costs. We want to reduce oil production costs because it allows the company to allocate resources for other areas.