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A Brief Fascinating History of Pemex and the Mexican Petroleum Industry

The history of Petroleos Mexicanos, the Mexican state-owned oil and petroleum monopoly, needs to be understood with its beginnings during the complicated, protracted and very long Mexican Revolution. Most history books will try to set the dates of the revolutionary war between roughly 1910 and 1920, but the long period from 1920 until 1940 is also considered a phase of the revolution in which many of the many of the unsettled disputes and disagreements of the earlier war flared, and re-flared into both hot and cold conflicts. That’s a 30-year period to consider, and aspects of it still confound scholars and historians who argue over its significance even to this day.

Oil and gas resources were nationalized and, for all intents and purposes, made the property of the Mexican state with the Constitution of 1917. As this was still very much the hot part of the revolution, it took many years afterward to consolidate and implement the laws established in that constitution. As increasing numbers of oil and gas companies from foreign countries were exploiting these resources – indeed, foreign companies were the only ones exploiting them – conflicts led to ever more involvement by the still shaky Mexican government.

As these conflicts continually took the form of labor strikes, and interruptions to services that the now young Republic was relying on by 1938 they became simply intolerable. President Lázaro Cárdenas came down hard on behalf of workers striking, now against nearly all foreign-based oil companies. Article 27 of the Constitution of 1917, was famously implemented by President Cárdenas who nationalized all of the companies that had been owned by companies from the US and other countries.

Today’s Pemex actually developed from a state company called Petromex, establish by the federal government in 1933. It was intended as a regulatory body to control the domestic market, produce downstream derivative products and to recruit and train personnel. By 1936, workers at nearly all oil companies were united into one big Petroleum Workers Union (STPRM: Sindicato de Trabajadores Petroleros de la República Mexicana). Contracts negotiated were binding with nearly every company in the country. By March 18, 1938, when Cardenas expropriated the property of the remaining foreign owned and non-governmental oil companies, there was very little left for them anyway. By 1940, Pemex, despite being boycotted from most of the world’s oil markets was completely vertically integrated and on its way to becoming the premier company in Mexico. Compensation to foreign oil companies who’d lost property in the nationalization process was completed within two subsequent years.

By the late 1940s, Pemex was expanding and despite a turbulent market and always changing industrial conditions the company proved resilient over the next several decades. Reforms in 2012 and subsequently in 2014 have opened many aspects of the oil industry and landscape to outside, private and even foreign-owned oil and gas companies. These compete for increasingly lucrative shares in the state’s oil and gas resources and for rights to explore, extract, refine and sell those petroleum products.

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