EUROMONEY | By Ben Edwards | MAY 2016

April turned out to be the cruellest of months for Mexico’s beleaguered state-owned energy firm Petroleos Mexicanos. Already reeling from a collapse in oil prices and a decade-long decline in crude production, a deadly blast at a petrochemicals plant in southern Mexico that Pemex co-owns with Mexichem claimed the lives of more than two dozen people and injured scores more. That came just over a week after the Mexican government handed Pemex $4.2 billion to help pay overdue bills to suppliers.

The disaster was the latest in a series of fatal incidents involving Pemex; the government’s financial intervention is unlikely to be a one-off either.  “[The intervention] was not enough,” says Fabiola Ortiz, analyst at Standard & Poor’s in Mexico City. “It will continue to need support from the government. We need to see what happens with the oil price and the company’s production, but the problems are still there.”

Pemex’s financial woes have continued to mount despite the government’s move to open up Mexico’s energy sector for the first time in three quarters of a century – reforms that were supposed to attract foreign investment and help transform the company. Instead the firm has become more entrenched, says John Padilla, managing director at IPD Latin America, an energy consultancy.

“The implosion at Pemex has been much more severe than most people had realised,” he says. “Typically with market openings, the expectation is that the state-owned oil company is basically strengthened, but that hasn’t happened.”

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