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Mexico’s oil states led labor market losers in 2024

  • : Crude oil, Oil products
  • 25/01/16

Mexico's oil and gas-dependent states led state job losses in 2024, driven by a sharp contraction in spending by state-owned Pemex and the completion of the Olmeca refinery, according to energy market sources and state data, even as two-thirds of the country's states posted job growth.

Annually, the total employment in Mexico grew by 213,993 jobs in 2024, 67pc fewer than the 651,490 jobs added in 2023, according to the Mexican social security (IMSS) institute's tally of formal jobs, which have full benefits like better access to housing credits and public medical services. The deceleration in the number of jobs created last year adds to signals of a Mexican economy that was cooling as the year progressed, according to economists and energy market sources.

"In 2024, the second lowest generation of jobs in the last 15 years was recorded, only after 2020, the year in which the Covid-19 pandemic hit," according to a report from Mexican think tank Mexico Como Vamos.

Tabasco state, one of the most important for the energy sector in Mexico, led the reduction in employment among the 11 states that experienced job losses during 2024. Tabasco lost 28,675 jobs over the year, for a 12pc annual decline in employment in the state, according to IMSS data. Twenty-one states, including the capital, posted job growth.

Campeche, the state with the second biggest annual percentage of job losses, and Tamaulipas, the other state with a high dependence on the oil sector, also reported significant declines in 2024, with annual formal job losses of 5,952 and 3,120, representing 4pc and 1pc decreases from a year earlier, respectively.

These IMSS figures only account for formal jobs registered with the institute, which provide access to medical, pensions, and housing credits, and totaled 22.24mn as of December.

The official statistics agency Inegi counts employment nationwide at 59.5mn as of the third quarter last year. Inegi's count of employment includes the informal sector, made up of jobs without social security and other benefits. Inegi's estimates put the informal labor sector at over 54pc of all jobs.

According to IMSS, the country lost 405,259 jobs in December compared with November, the largest loss recorded for that month since 2000. Still, December is typically marked by heavy job losses because of seasonal adjustments. But last year the final month's tally was pulled even lower than normal by overall weak hiring over the year, Inegi said, even as total job growth was positive for the full year.

While the labor situation in Mexico worsened in 2024 because of the weakening of the national economy, including a sharp depreciation of the peso to the dollar, the decline has hit the states most closely tied to the oil and gas sector and Pemex spending, said Carlos Ramirez, founder of consultancy Integralia.

Tabasco hangover

"Tabasco benefited greatly from the investment poured into Pemex by the administration of AMLO (former president Juan Manuel Lopez Obrador), Ramirez said. "This is going to change now with the (Claudia) Sheinbaum administration, and the state will suffer a hangover as the new government reduces its support for the oil and gas industry."

Still, the national unemployment rate is low, at 2.6pc in November, according to Inegi. And the country added 361,000 jobs in the third quarter from a year earlier, according to Inegi's broader base of data.

But the economy was slowing in the second half of 2024. Growth in gross domestic product slowed to an annual 1.6pc in the third quarter from 2.1pc in the second quarter, according to Inegi.

Inegi's IGAE, an index that tracks the real economy, showed that the Mexican economy contracted 0.73pc in October, as economists lowered growth estimates for the Mexican economy for this year.

Pemex chief executive Victor Rodriguez in early October implemented a 20pc cut to the company's upstream budget, aiming to save Ps26.78bn ($1.32bn). This decision, combined with delays in payments for contracts and a halt in new service agreements, severely impacted local companies in Tabasco and Campeche, according to oil services company association Amespac. Some companies announced layoffs as Pemex's financial constraints rippled through the supply chain.

Part of Tabasco's workforce reduction could also be tied to the near-completion of the 340,000 b/d Olmeca refinery, said Jesus Carrillo, an analyst at think tank IMCO. While the major construction phases have concluded, the facility remains in a testing phase, contrary to Pemex's previous promises of full operations in 2024.

Despite the recent downturn, heavy Pemex spending during the administration of former president Lopez Obrador made Tabasco the leading state in job creation between December 2018 and December 2024, Ramirez said.

But with the refinery now completed and Pemex projecting further budget cuts for 2025, analysts expect labor market challenges in oil-reliant states to persist.

By Édgar Sígler


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25/02/03

LatAm output rise poses quandaries for exporters

LatAm output rise poses quandaries for exporters

Sao Paulo, 3 February (Argus) — Crude supply from Latin America is set to rise this year, raising questions about where the extra flows will go, given the multiple uncertainties that the markets are facing around tariffs, sanctions and maritime security. The big drivers of this additional supply will be Brazil, Guyana and Argentina, which are together expected to deliver an extra 400,000 b/d of mainly light and medium sweet crudes to world markets this year, according to the latest IEA projections. Brazil is expected to produce 220,000 b/d more crude this year as several new floating production storage and offloading vessels come on line. These include two at the Buzios complex that will add 405,000 b/d of capacity, and another at the Mero field adding 180,000 b/d — both fields produce middle distillate-rich medium sweet grades popular with buyers in Europe. Guyana, the most eye-catching oil development story of the past decade, produced just over 615,000 b/d last year, and output will increase again this year as the 250,000 b/d Yellowtail project ramps up. In Argentina, the oil sector is expected to benefit from the expansion of storage and loading facilities at the key port of Puerto Rosales, which will allow the docking of heavier Suezmax tankers and create scope for increased exports of light sweet Medanito from the Vaca Muerta shale formation. The big question for these producers is how and where they can market these exports, given the myriad uncertainties being caused by geopolitics. Tighter US sanctions on Russian exports are lifting premiums for non-sanctioned crude, boosting interest in recent weeks for Brazilian and Guyanese grades. But the White House's threatened trade tariffs on Canada and Mexico could also leave US refiners seeking replacements, while diverting Canadian and Mexican shipments elsewhere. Lower risks to shipping in the Red Sea could boost Mideast Gulf flows to Europe, increasing competition there, but this could open up sales opportunities in Asia-Pacific, as could tighter US sanctions restricting Iranian oil sales to China. The upshot of all this is that some of these Latin American grades are likely to find increased interest from existing and some new customers. Brazil, Guyana and Argentinian sweet crudes do not offer a like-for-like substitute for mainly heavy sour Mexican and Canadian grades — Colombia or Ecuador could provide a closer match. But they could hold some appeal as a short-haul option for US refiners needing to rethink their crude buying — Guyana and Argentina, for example, already export some oil to the US west coast. Going for Unity Gold There could also be interest from new markets in Asia and west Africa — India's BPCL bought its first cargo of Medanito in December, while Nigeria's huge new Dangote refinery could be another outlet. The refinery is likely to face competition for domestic Nigerian grades from the country's newly renovated Port Harcourt and Warri refineries, and this month closed a tender that included Brazilian and Guyanese options for the first time. Brazil and Guyana have already established robust exports to Europe — the region took two-thirds of Guyana's shipments last year — while Brazil is a big supplier to India and especially China. Guyana could also come into play as another "non-sanctioned" option for Chinese and Indian buyers scaling back Russian crude purchases because of US sanctions. China has not imported any Guyanese crude for several years, shiptracking data indicate, but India is starting to show interest, as indicated by state-owned IOC's tender earlier this month, which listed Guyana's Payara Gold, Unity Gold and Liza among the eligible grades. By Joao Scheller Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Trump's vow to unleash ‘liquid gold’ faces reality


25/02/03
25/02/03

Trump's vow to unleash ‘liquid gold’ faces reality

New York, 3 February (Argus) — President Donald Trump's quest to see higher US crude output as part of his "energy dominance" agenda is set to get off to a rocky start as shale firms get ready to unveil budgets that are likely to be flat or lower compared with 2024. Trump may be keen to encourage companies to ramp up production from already record levels, but separating the reality from the rhetoric suggests this may be a tall order. Promises to slash red tape, speed up permitting and open up more federal land to drilling — all of which were included in a barrage of executive orders issued in Trump's first week back in office — certainly feature high on the industry's wish list. But the general mood has shifted since Trump was last in the White House, and growth is no longer the main objective of operators. "Deregulation provides an option, not an obligation, to produce," is how consulting group ClearView Energy Partners managing director Kevin Book puts it. Given US crude output has increased to 13.5mn b/d from 11mn b/d at the start of former president Joe Biden's administration, it is hard to make the case that the previous government held back the sector to any serious degree. And a layer of ambiguity surrounds a target of boosting output by 3mn b/d of oil equivalent between now and the end of Trump's second term, as cited in Treasury secretary Scott Bessent's "3-3-3" economic strategy. There is also an inherent contradiction in Trump's call to bring down oil prices at the same time, hardly an incentive for companies to go flat-out in terms of drilling even if they wanted to. Energy firms recently surveyed by the Federal Reserve Bank of Kansas City said an oil price of $84/bl would be needed before a substantial increase in drilling could occur. The US benchmark currently trades at around $73/bl. For the most part, shareholders want the focus in company boardrooms to be about returns above all else, translating into a relentless focus on cutting costs and raising dividends and share buy-backs. "Supply growth is not being restrained, for the most part, by government," says Clay Seigle, senior fellow at think-tank CSIS. "It's being restrained by Wall Street. It's being restrained by the capital markets that have different objectives for their investments." Now is not the time to be growing into an oversupplied market, warned Occidental chief executive Vicki Hollub at the World Economic Forum (WEF) in Davos, Switzerland, last week. "We are still in an oversupplied market," she added. "We have got to let some of the spare capacity get worked off. At that point, we can look at growing our production again meaningfully." Biden permitting Moreover, the length of time it takes to secure permits has not been a major obstacle in the past few years, according to Rystad Energy. The fourth quarter saw the third-highest number of permits issued on land with federal mineral rights, with output reaching a record high, the consultancy says. All in all, there is likely to be little appetite to get production growth going again in the near term, especially as the top Permian basin gets even more crowded in light of a recent wave of consolidation, and attention turns to prolonging the life span of existing inventory as the best acreage gets used up. The quality of newly acquired inventory is declining, averaging a $50/bl breakeven price in 2024, up from $45/bl in 2022-23, according to consultancy Enverus. "We're in a return of capital phase that doesn't leave a lot of room for the sort of heady days of the ‘shale gale'" almost a decade ago, Book says. And so shale executives may be best advised to keep their heads down to avoid provoking Trump for as long as Wall Street calls the shots. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Iraq OKs budget change aimed at resuming KRG oil flows


25/02/03
25/02/03

Iraq OKs budget change aimed at resuming KRG oil flows

Dubai, 3 February (Argus) — Iraq's parliament has approved a key budget amendment that should pave the way for a restart of crude exports from the Kurdistan region in the north of the country via the Turkish Mediterranean port of Ceyhan. The change to the draft budget law — proposed by Baghdad in November last year after protracted negotiations with the Kurdistan Regional Government (KRG) — will see oil companies operating in the semi-autonomous Kurdish region get $16/bl for their production and transportation costs, double the previous rate. Iraqi prime minister Mohammed Shia al-Sudani called on the relevant authorities in the federal and regional governments to "immediately commence implementation of the amendment". Disagreements between Baghdad and the KRG over commercial terms were the main reason why Kurdish crude exports have yet to resume from Ceyhan after the pipeline linking the port with oil fields in northern Iraq was closed by Turkey in March 2023. The closure followed an international arbitration ruling that said Turkey had breached a bilateral agreement with Iraq by allowing KRG crude to be exported without Baghdad's consent. Miles Caggins, the spokesman for the Association of the Petroleum Industry of Kurdistan (Apikur), said the body "welcomes" the amendment and "remains focused on reaching agreements to restore oil exports through the Iraq-Turkey pipeline." Apikur represents eight foreign oil companies operating in the Kurdistan region — DNO, Genel Energy, Gulf Keystone, HKN Energy, Shamaran Petroleum, Western Zagros, Mol and Hunt Oil. Kurdish lawmaker Rebwar Orhaman said the amendment was "very significant to resolve the oil dispute between Baghdad and Erbil and will help expedite the resumption of Kurdistan oil exports to boost the country's revenues." As part of the amendment, an international consulting firm will be tasked with auditing Kurdish production and transportation costs over a 60-day period. Iraq's federal oil ministry and its KRG counterpart will co-ordinate on appointing the auditor but if they fail to reach an agreement, the Iraqi government will make the selection unilaterally. The 2025 budget is expected to be the final law passed by Iraq's current government and parliament before elections in October this year. The resumption of oil flows via Ceyhan should give the Iraqi oil ministry more visibility on how much crude is being produced in the Kurdistan region, putting Baghdad in a better position to comply with its Opec+ production targets and to start compensating for past overproduction. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Mexico to detail tariff counter-measures Monday


25/02/03
25/02/03

Mexico to detail tariff counter-measures Monday

Mexico City, 2 February (Argus) — Mexico's president Claudia Sheinbaum vowed an in-kind response to US president Donald Trump's 25pc tariffs on Mexican imports , but details will not be released until her Monday morning press conference. Mexico had sought dialogue with the US government in recent weeks, Sheinbaum said, but now that the White House decided to impose the tariffs effective 4 February her government is forced to respond. "I instructed the minister of economy to implement Plan B, which we have been working on, including tariff and non-tariff measures in defense of Mexico's interests," Sheinbaum said over the weekend. Mexico's economy minister Marcelo Ebrard confirmed that "Plan B" is ready to go. "We will win," he said, after calling the tariffs "a shot in the foot" for the US on the social media platform X. Sheinbaum characterized the text of Trump's executive order as "slander" in accusing Mexico's government of being an instrument of the country's drug cartels. She pointed toward the flow of high-powered weapons from the US to Mexico and suggested that the US could implement more internal measures to combat the fentanyl crisis. By Cas Biekmann Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Pemex can partially bypass US tariffs with Asia sales


25/02/03
25/02/03

Pemex can partially bypass US tariffs with Asia sales

Mexico City, 2 February (Argus) — Mexico's state-owned oil company Pemex can sidestep the US' 25pc tariff on Mexican imports by redirecting crude to other international buyers, particularly in Asia, market sources say. Pemex primarily sells crude under evergreen or long-term contracts, allowing it to set prices and volumes buyers must accept, one former executive at Pemex's trading arm PMI told Argus . These agreements vary in duration, with some being indefinite and others requiring a minimum purchase period. The 25pc tariff imposed by US president Donald Trump's administration could simply be added to Pemex's benchmark price and leave US buyers to decide whether to accept it. If they decline, Pemex could offer its crude at a discount to other buyers. "Pemex would rather sell at a discount elsewhere than absorb most or all of the tariff to keep exporting to the US," the former PMI executive said. Pemex has more flexibility than Canadian heavy crude producers, whose output is primarily transported through pipeline to US refiners in the midcontinent. Pemex can more easily divert shipments to Europe or Asia rather than Texas, where most of its crude is consumed. Pemex exported about 806,200 b/d of crude in 2024, a 22pc drop from 2023, according to company data. The US took around 505,000 b/d, or 60pc, of Mexico's crude exports in 2024, vessel tracking data show. Pemex is a key supplier of heavy crude and high-sulphur fuel oil (HSFO) to US Gulf coast refiners, which are also optimized to convert HSFO — a low-value byproduct — into higher-value fuels like gasoline and diesel. The state-owned company exported around 130,000 b/d of HSFO to the US in 2024, down from 163,000 b/d in 2023, according to Vortexa. Pemex typically sells fuel oil at a discount relative to its high-sulphur Mayan crude to Texas refiners. Domestically, Pemex supplies HSFO to state-owned utility CFE, which uses it for power generation. Pemex owns the 312,500 b/d Deer Park refinery in Texas, which processes Maya crude, but does not disclose how much crude it supplies to the facility. Pemex exported around 67,000 b/d of crude to the Deer Park refinery in 2024, according to Vortexa data. In the medium term, Pemex could lower shipping costs to Asia by upgrading infrastructure at its Salina Cruz port on Mexico's Pacific coast, the former PMI executive said. "It wouldn't require a large investment, just improved pipeline capacity to move crude from the Gulf to the Pacific," he said. By Édgar Sígler Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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