The future president of Mexico, Sheinbaum, chooses a university professor to lead Pemex

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Mexico’s President-elect Claudia Sheinbaum on Monday tapped university professor Víctor Rodríguez to lead Petróleos Mexicanos, the country’s heavily indebted state oil company, which is increasingly draining public finances.

Rodríguez, an energy economist close to the incoming president, will take on one of the most challenging roles in the new administration, leading the company with a debt pile of about $100 billion.

Production at Petróleos Mexicanos, known as Pemex, has been falling for two decades and recently hit a record low of about 1.47 million barrels of crude a day. It posted a loss of about $13 billion in the second quarter. Ratings agency Fitch warned that increased fiscal support for the group could pose a risk to the sovereign credit rating.

Sheinbaum, who takes over in October, has a doctorate in energy engineering and has written about climate change as an academic. Her political mentor and the country’s current president, Andrés Manuel López Obrador, promoted fossil fuels and killed private investment in renewable energy generation.

With her cabinet picks and in statements since her landslide victory in June, Sheinbaum has signaled continuity with López Obrador. Investors are not clear how it will deliver on that promise with the shift to renewables and attracting more investment.

“There is a vision that has been presented. . . that everything is bad in Pemex,” Sheinbaum said Monday. “This is where we started to save it and we will continue to do so.” She promoted another close associate, Luz Elena González, to head the energy ministry.

Energy experts are divided on what Rodríguez’s appointment will mean amid broader concerns that a package of constitutional changes championed by Sheinbaum will scare away investment. The plans include scrapping independent energy regulators and having their powers absorbed by the government.

Some observers cited Rodríguez’s lack of operational experience and nationalistic views as negative signs given the dramatic turnaround needed at the 125,000-employee firm.

Others pointed out that the move to turn to experts in the field as leaders of Pemex and state electricity company CFE was a step forward, and that the country’s energy needs are so urgent that Sheinbaum will be forced to be pragmatic.

“Under these circumstances, having someone close to the president is a major positive,” said John Padilla, partner at energy consultancy IPD in Latin America. “He studied the hell out of the energy sector, at least you can have a conversation. . . it’s a dramatic improvement.”

Rodríguez on Monday praised the government’s strategy to increase its refining capacity and efforts to “rescue” the company from high debt levels left by previous administrations. He also signaled that he would work closely with the finance ministry — a historically strained relationship — while engaging with the private sector.

“We will coordinate investments with the private sector, we will do projects with them,” he said.

Pablo Medina, head of new ventures at energy consultancy Wellingence, said an important sign would be if Pemex’s new leader resumed joint investments with private oil firms, possibly through farmouts.

“If a change does not materialize, Pemex will probably face the hardest sexenio (presidential mandate) with a dire financial situation,” he said.