https://mexicobusiness.news/energy/news/oil-expropriation-and-evolution-sector
By Rafael Espino | President – Thu, 03/20/2025 – 07:00
The 1938 oil expropriation and the nationalization of hydrocarbons, decreed by President Lázaro Cárdenas, reshaped the regulatory framework of Mexico’s energy sector. The institutionalization of Petróleos Mexicanos (PEMEX) as the industry’s leading entity ensured stability and development through a regulatory structure that has evolved in response to national needs and global energy market dynamics.
From a systemic perspective, the expropriation redefined the relationship between the state and private entities, laying the foundation for an energy policy based on the vertical integration of production processes. Its impact extends beyond the oil industry, influencing the country’s economic structure and conditioning its interaction with foreign capital.
From State Monopoly to a Diversified Market
As the industry evolved, new challenges emerged related to technological advancements, financial optimization, and efficient resource management. The fluctuation of international crude oil prices, advances in exploration and production techniques, and the need for financing large-scale projects drove the sector’s adaptation to new operational and strategic realities.
The turning point came with the 2013 Energy Reform, a sweeping regulatory shift that redefined the contracting and regulatory structure of Mexico’s hydrocarbon sector.
The reform introduced an open-market approach in the upstream and midstream value chains, allowing private companies to participate in activities previously reserved for the state. To this end, contractual models such as licenses, production-sharing agreements, profit-sharing contracts, and service contracts were established, each with varying levels of state involvement and profit distribution.
From a legal perspective, the reform restructured the operational ownership of resources while maintaining the constitutional principle of state ownership over hydrocarbons. It enabled their exploitation through partnership schemes with private entities.
From a technical standpoint, this model allowed access to foreign capital and technology for the exploration and development of conventional and unconventional fields. However, the sector’s reorganization also led to the fragmentation of state control over strategic projects, creating a new institutional framework that required greater regulatory coordination and contract oversight.
Nonetheless, with the 2024 energy reform, PEMEX’s management model was once again transformed to consolidate it as a state-owned enterprise, reaffirming its role as the cornerstone of the energy sector with new rules for strategic planning and operational execution.
Through secondary legislation approved in March 2025, mechanisms were established to strengthen PEMEX’s technical and operational capacity, ensuring its role in hydrocarbon exploration and production aligns with national energy policy.
The Evolution of the Oil Services Sector
In its early decades, the oil services sector operated primarily as an extension of PEMEX’s internal capabilities, facilitating the vertical integration of production processes.
However, as energy demand grew, the incorporation of more complex technologies, along with the need to optimize costs and operational timelines, led to a significant evolution in the oil services sector. Its role shifted from being a supporting function to becoming an essential component in maximizing reservoir recovery factors and reducing operational uncertainty.
Today, these companies play a critical role in extraction and infrastructure maintenance, ensuring operational continuity and substantially contributing to PEMEX’s production goals.
Oil service companies serve as the technical link that enables efficient hydrocarbon extraction through advanced technologies in seismic exploration, well drilling, enhanced recovery, and reservoir optimization.
The engineering applied by these firms allows PEMEX to improve its operational efficiency by reducing drilling times, enhancing wellbore integrity, and maximizing reservoir recovery factors.
The use of high-resolution seismic exploration techniques enables a more precise definition of reservoir geology, which, in turn, minimizes decision-making uncertainty and optimizes resource allocation for drilling new wells.
Furthermore, the implementation of directional drilling and advanced completion technologies has increased the success rate in developing complex fields, reducing the need for corrective interventions and optimizing production flow.
Oil service companies also contribute to enhanced hydrocarbon recovery, employing specialized fluid injection and thermal recovery techniques that allow PEMEX to maximize the extraction of mature fields and extend their productive life.
This technological optimization, combined with a greater integration of predictive models and real-time data analysis, enables the company to adjust production strategies according to dynamic operational variables, ensuring better fulfillment of annual crude oil and natural gas extraction targets.
Thus, oil service companies have evolved from a subsidiary role to a central position in the sector’s value chain, providing critical capabilities in geotechnical risk mitigation and operational cost optimization. Advances in drilling engineering and the development of real-time monitoring methodologies have enhanced resource exploitation efficiency and extended the lifespan of oil fields.
The Oil Services Sector in Contemporary Mexico
On the anniversary of the oil expropriation, it is essential to recognize that the relationship between the state-owned enterprise and its contractors determines the ability to execute strategic projects. This highlights the importance of ensuring financial predictability and stability to maintain the operational continuity of the entire value chain.
Thus, the effort to regularize industry debts strengthens trust among sector participants and fosters a more predictable operational environment. These actions reflect an institutional commitment to cooperation and the recognition of each segment’s role in achieving national production goals.
The oil sector must consolidate a management model that integrates innovation, efficiency, and strategic collaboration among PEMEX, regulators, and service companies. Technological advancements, infrastructure optimization, and the development of more dynamic operational models will strengthen the country’s energy security and maintain industry competitiveness in an ever-evolving global landscape.
The success of Mexico’s oil industry depends on its ability to achieve production targets with operational efficiency and project execution stability. PEMEX is strategically positioned to strengthen its relationship with specialized suppliers and leverage their technical capabilities to optimize processes. The oil services sector offers expertise, experience, and technology to maximize hydrocarbon recovery and enhance every phase of the production cycle, increasing operational profitability.
