Oil remains closely tied to Mexico’s national identity, public finances and energy policy. The country is still a significant crude producer, with extensive operations in the Gulf of Mexico and a large network of refineries, pipelines, terminals and storage facilities. However, the sector no longer produces at the levels reached during its strongest years.
Mexico’s current oil strategy is built around a difficult balance. The government wants Petróleos Mexicanos, better known as Pemex, to maintain production from mature fields, develop replacement reserves and process more crude inside the country. At the same time, Pemex must manage high debt, aging infrastructure and the natural decline of several important assets.
This makes Mexico different from oil-producing countries focused mainly on export growth. The central question is whether it can preserve upstream production while redirecting a larger share of its crude toward domestic refining and fuel supply.
Mature Gulf of Mexico Fields Still Carry the Industry
Most Mexican oil production is concentrated in the Gulf of Mexico, particularly in shallow-water areas off Campeche and Tabasco. Offshore fields have supported the country’s petroleum economy for decades, but many of the largest assets are now mature.
Pemex reported average liquid hydrocarbon production of approximately 1.65 million barrels per day during the final quarter of 2025. Production remained near that level in the first quarter of 2026, when liquids output reached about 1.652 million barrels per day. These figures include crude oil, condensates and limited production associated with business partners.
Fields such as Maloob, Zaap, Ayatsil, Quesqui and Ixachi remain important to current output. Maloob and Zaap form part of the mature offshore production base, while Quesqui and Ixachi have helped diversify production through onshore development. Pemex has also focused on well repairs, stimulation work and new completions to slow the decline of older reservoirs.
The operational challenge is that maintenance activity can preserve output for a period, but it cannot remove the geological effects of depletion. During 2024 and 2025, lower performance at Maloob, Zaap, Quesqui and other fields contributed to declining production. Complex wells, equipment failures and delays in installing offshore infrastructure added further pressure.
Exploration continues in the southern Gulf, where new discoveries may provide smaller replacement volumes. Nevertheless, Mexico has not identified another development capable of rapidly restoring the production lost from its largest mature fields. The industry is therefore moving toward a portfolio of smaller projects, incremental additions and extended recovery from existing assets.
Pemex’s 2025–2030 work plan aims to maintain average liquid fossil-fuel production near 1.8 million barrels per day. It proposes more than 2,000 wells, extensive repair work and investment concentrated in a group of strategic projects. Reaching that level will depend on execution, financing and the speed at which new production can offset declines elsewhere.
Pemex Remains at the Centre of Mexican Oil Policy
Mexico’s oil sector is dominated by Pemex, which operates across exploration, production, refining, logistics and fuel marketing. Private companies participate in fields awarded under earlier reforms and through service or development arrangements, but their share of national oil production remains relatively small.
The government has reinforced Pemex’s public role and placed energy sovereignty at the centre of petroleum policy. This approach gives the state company responsibility not only for commercial performance but also for employment, domestic fuel supply, government revenue and national infrastructure.
These objectives do not always align easily. Pemex needs large and regular capital investment to drill wells, repair refineries and maintain pipelines. At the same time, it carries a financial burden that would be difficult for a conventional commercial oil company to manage.
Pemex reported financial debt of approximately US$85.2 billion at the end of 2025, despite a substantial reduction from the previous year. Government capital contributions, debt-management measures and prepayments helped lower the total. Debt fell further during the first quarter of 2026, but the company continued to depend on public support and favourable access to financing.
The government is also using contracts with private service providers and operators to bring additional technical capacity into selected fields. Agreements covering mature onshore assets can help increase recovery without returning to the broad licensing model associated with the earlier energy reform. This creates a hybrid structure in which Pemex remains the controlling institution while external companies take part in specific projects.
The success of this structure will be measured by more than daily production. Mexico also needs sufficient reserve replacement, reliable offshore equipment, lower methane emissions, improved safety performance and faster payment across the petroleum supply chain.
Refining Has Become the Main Direction of Oil Strategy
Mexico’s oil policy has shifted increasingly from maximizing crude exports toward processing more oil domestically. The objective is to reduce dependence on imported gasoline, diesel and other petroleum products.
For years, this goal was limited by the condition of the national refining system. Mexico’s older refineries often operated below capacity because of maintenance problems, unplanned shutdowns and limited ability to process certain crude grades efficiently. As a result, the country exported crude oil while importing large volumes of finished fuels, particularly from the United States.
The National Refining System has an atmospheric distillation capacity of approximately 1.75 million barrels per day. However, average crude processing reached only about 1.014 million barrels per day in 2025, equal to slightly more than half of installed primary capacity.
Performance improved during the year. Processing rose to approximately 1.136 million barrels per day in the fourth quarter of 2025 and 1.141 million barrels per day in the first quarter of 2026. Higher runs at the Tula refinery and the gradual start-up of the new Olmeca refinery at Dos Bocas were central to this growth.
The Olmeca refinery was designed to process 340,000 barrels of crude per day and produce gasoline and low-sulphur diesel for the domestic market. It entered continuous operations during 2025 and gradually increased throughput, averaging about 134,000 barrels per day across the year and more than 200,000 barrels per day during the final quarter.
Dos Bocas gives Mexico additional refining capacity, but it does not solve every downstream problem. The country must also improve utilization at Cadereyta, Madero, Minatitlán, Salamanca, Salina Cruz and Tula. Higher crude runs must translate into useful transport fuels rather than larger volumes of lower-value fuel oil.
The refinery programme therefore depends on maintenance, conversion units and operating efficiency as much as new capacity.
The United States Remains Mexico’s Essential Oil Trading Partner
The oil relationship between Mexico and the United States has traditionally moved in both directions. Mexico sends crude north, while the United States supplies Mexico with gasoline, diesel, propane and other refined products.
In 2024, US petroleum-product exports to Mexico averaged approximately 1.2 million barrels per day. Mexico remained the largest foreign market for US petroleum products, reflecting strong fuel demand and the limitations of the domestic refining system.
At the same time, Mexican crude exports have been falling. Pemex reported that crude export volumes declined by 28% in 2025 as production weakened and more oil was directed toward domestic refineries. Lower international prices also reduced export revenue.
This represents a structural change. Oil exports remain commercially important, especially for heavy Mexican crude that is suitable for complex Gulf Coast refineries. However, export volumes may continue to decline if domestic processing rises while upstream output remains near current levels.
Mexico could therefore reduce one form of external dependence while creating a new pressure elsewhere. Sending more crude to domestic refineries may lower gasoline and diesel imports, but only if the refineries operate reliably and produce the fuels demanded by the market.
Mexico’s Oil Outlook Depends on Execution
Mexico is unlikely to return quickly to its historical production highs. Its more realistic objective is to stabilize output, extend mature fields and develop enough new production to avoid a sharp decline.
The refining strategy could improve national fuel security, particularly if Dos Bocas and the existing refinery network maintain higher utilization. Yet processing more crude at home also reduces the volume available for export and places additional operational demands on Pemex.
The future of Mexican oil will be determined by the company’s ability to finance drilling, manage debt, complete infrastructure and improve refinery performance at the same time. Mexico still has a large oil industry, but its next phase will depend less on discovering a single giant field and more on whether many operational improvements can be delivered together.
