Mexico’s northern state Nuevo Leon warned that it would seek penalties for indebted state-owned oil company Pemex after detecting a significant increase in visible emissions from its Cadereyta refinery on March 19, as reported by Reuters on the same day. Pemex stated that it has “safely halted” operations in one of the plants at the Cadereyta refinery and that there was no risk to the population, as the emissions are under control. However, the environment ministry of Nuevo Leon stated that it had repeatedly detected “intensified” emissions from the refinery, particularly at night. Furthermore, the ministry alleged that the refinery is responsible for 90% of sulfur dioxide emissions in the metropolitan area of Monterrey. 

Pemex is burdened with increased pressure to manage emissions and tackle its debt mounted to USD107.7bn. Over the past few years, the firm experienced two massive methane leaks, a deadly offshore platform accident, and a gas explosion that set the Gulf Ocean on fire. The mishaps have raised doubts about whether the company is serious about improving its environmental, social, and governance (ESG) metrics. Additionally, for a lack of capital, the company has failed to upgrade its aged infrastructure to better manage emissions. An internal document from Mexico’s oil regulator has revealed that Pemex illegally burned off hydrocarbon resources worth over USD342m over three years until August 2022, at two of its most significant new fields. Pemex is working with external advisers and banks such as HSBC Holdings [HSBA:LN] and BNP Paribas [BNP:FP], to devise a plan to improve its ESG record, according to people familiar with the matter. 

Sources:

https://www.reuters.com/world/americas/mexican-state-seeks-punish-pemex-emissions-refinery-2023-03-20/

https://www.bloomberg.com/news/articles/2023-03-03/pemex-to-overhaul-esg-safety-policies-to-lure-bank-financing

https://www.cnbc.com/2023/01/18/mexicos-pemex-illegally-flared-over-342-million-worth-of-hydrocarbons.html