Introduction

Petróleos Mexicanos, better known as Pemex, is the oldest of the major NOCs. Mexico nationalized its oil industry in the 1930s, long before countries in the Persian Gulf were inspired to expropriate foreign companies’ oil assets. Today, Pemex is a large supplier and a key non-OPEC player on the global oil market. In 2009, as for many years before, Mexico was a chief supplier of oil to the United States. The Mexican government, in turn, depends heavily on the vast oil revenues that the company accrues. Pemex refers to itself, correctly, as “the most important company of the country” (Pemex 2010).

But Pemex is a troubled company. Its economic efficiency does not compare favorably to other NOCs and fares even worse when compared with globally oriented international oil companies (IOCs). Its troubles are the result of a decades-long strategy that focused on maximizing short-term revenues and effectively stripped the company’s managers of key decision making. That strategy was initially pursued under pressure from the government, which needed the money to cover holes in the national budget at a time of low oil prices. And it worked by the metrics implied in that mission: Pemex indeed provided loads of money to the Mexican national coffers. The company has had enormous revenues for over a decade and is a Fortune “Global 500” company that has, since 2005, been in and near the top fifty positions in pre-tax revenues of all companies worldwide (Fortune Magazine 2008).