Mexico - July 2026

Mexico’s state-owned oil company Pemex has signed a wide-ranging agreement with its counterpart in Brazil, Petrobras, to boost exploration and production in Mexico’s largely undeveloped deepwater reserves in the Gulf of Mexico, potentially opening the door for more specific agreements in the future that could halt the decline in Pemex’s reserves and give Petrobras a new international frontier.

At an event in Rio de Janeiro on 23 June, Latin America’s two biggest energy companies signed a non-binding memorandum of understanding (MoU) to enable technical ⁠and strategic ​cooperation, although no concrete cooperation opportunities or real investment commitments have yet been made. Instead, the companies will evaluate initiatives aimed at revitalising mature oil fields, seismic reprocessing, and exploration and development opportunities in deepwater and ultra-deepwater areas in the Gulf of Mexico that remain largely unexplored. In particular, the companies will explore whether a “pre-salt” layer of oil exists there, similar to the one discovered in Brazil in 2006 some 5km (3 miles) beneath sea level which has underpinned an oil bonanza there ever since.

The partnership is also aimed at promoting the exchange of technical knowledge, technologies, and best practices, enabling Pemex to take advantage of Petrobras’ world-class expertise in highly complex offshore operations, an area where Pemex has considerably less experience. Petrobras’ technology could also be used to analyse the remaining potential of Pemex’s mature fields in Mexico, with a view to increasing the country’s oil reserves.

Pemex also hopes that the agreement could bring important developments in a range of other areas, including refining, petrochemicals, fertilisers, gas processing and liquids recovery, energy efficiency, emissions reduction, carbon capture, and the industrial production of lower-carbon-intensity fuels, in addition to sharing best practices related to safety, operational reliability, and environmental protection.

But both companies were careful to emphasise the non-committal nature of the MoU, which is set to last for two years, and can be extended. Importantly, they highlighted that the agreement does not constitute a binding investment commitment nor create a partnership, consortium, or joint venture between the parties. Furthermore, any opportunities identified may be subject to future negotiations and will require specific agreements to be signed, taking into account feasibility analyses, approvals from competent authorities, and the governance rules applicable to each party.

At the crux of the deal is an exchange between Mexican resources and Brazilian know-how – and very likely Petrobras’ cash too, observe analysts, given that Pemex, the world’s most indebted oil company, can scarcely afford the costly exploration, which could potentially run into hundreds of millions of dollars, required to replace its shrinking reserves. Indeed, the contrasting performance of the two companies in recent years is striking. Pemex’s oil production has more than halved from a record 3.4m barrels per day (bpd) in 2004 to around 1.6m bpd as its mature shallow water fields are depleted. In contrast, Petrobras’ oil production rose 11% in 2025 alone, to 2.4m bpd, mainly due to higher output from its deepwater pre-salt fields off the coast of Brazil.

In the lead up to the MoU, Mexico’s President Claudia Sheinbaum and her Brazilian counterpart Luiz Inácio Lula da Silva held a video meeting in June in which the two politically aligned leaders discussed energy cooperation as they seek ways of deepening trade ties. Pemex has long been in search of private partners for joint ventures to help reinvigorate declining oil production and take pressure off its US$80bn debt burden. It is facing a host of other challenges that explain why it is seeking a powerful partner – without resorting to a partnership with private Western oil majors – with profits suffering also because of its struggling refining business and intractable operational inefficiencies.

Following the agreement, Sheinbaum underlined the clear advantages for Mexico in cooperating with Petrobras: “The idea is to have support and technology transfer, and even the possibility that Pemex and Petrobras could jointly develop an area of ​​the Gulf”. She noted that what could otherwise take Mexico a decade to achieve by itself “has been reduced to about three years – and, in some cases, timeframes of a year and a half have been cut to months – thanks to the technological advancements they have achieved, particularly in exploration…Petrobras has developed highly significant oil exploration techniques for both deepwater and shallow-water environments.”

In a similar vein, Pemex CEO Juan Carlos Carpio Fragoso stated that the MoU “opens up opportunities for cooperation that benefit the companies, the countries, and their peoples; it establishes a strategic and technical collaboration framework to jointly evaluate, develop, and execute potential, comprehensive projects involving hydrocarbon exploration and extraction activities – aimed at new discoveries and opportunities to optimise and increase production in deepwater, heavy and extra-heavy oil areas, mature fields, and pre-salt prospects in the Gulf of Mexico – as well as activities related to industrial processes”.

But Mexican authorities were also careful to emphasise that both parties would benefit from the agreement. “[Brazil is] interested in how we have improved fertiliser production – at Pemex, for instance. So, it is not just a one-way street; it goes both ways,” said Sheinbaum, noting that research was underway in the Yucatán peninsula aimed at strengthening scientific and technological development in sectors beyond oil and gas.

Having suffered setbacks with previous regional partners in recent decades – notably Bolivia, where its gas fields were expropriated, and Venezuela, where the business environment became unworkable – Petrobras is also attempting to secure more discoveries to expand its international business. More broadly, it also wants to prolong the oil bonanza triggered by the discovery of its vast pre-salt offshore basin which accounts for about 80% of Brazil’s production and has made it Latin America’s leading oil exporter.

Petrobras president, Magda Chambriard – who suggested that cooperation could go beyond the Gulf, naming Brazil itself, as well as Africa – underlined the mutual benefit for both oil companies. “This is a strategic cooperation instrument with significant potential for Petrobras, capable of positioning the company as a partner to Pemex amidst the strengthening of oil exploration and production in Mexico. We are interested in exploration in the Gulf of Mexico, increasing production in mature fields, and industrial processes involving refining, petrochemicals, and fertilisers. Undoubtedly, the alliance between the two state-owned companies will be beneficial for both countries,” she said.

Perhaps the most promising prospect for Petrobras is the possibility of finding pre-salt reserves in the Gulf of Mexico, with offshore areas including the Bay of Campeche known to contain salt, although no discoveries comparable to Brazil’s giant pre-salt fields have yet been made. While around 2m bpd are produced in deepwater fields in US territorial waters, there is no commercial output from similar projects on the Mexican side. “Did all of the Gulf of Mexico’s oil really end up only on the US side?” Chambriard asked. “We need to look at the Mexican side of the Gulf through a new lens and with new technologies.”