PEMEX:Perspectives and main

Challenges

Nov 6, 2008

2

Results and evolution

Main challenges

Content

3

Pemex at a glance

International

National

Operating statistics

2007(2)

Sales (USD bln)Sales as % of Mexico’s GDP

104.5

12%

Exports (USD bln)Exports as % of current account revenues

49.0

15%

Tax contributions (USD bln)Tax contribution as % of federal government revenue

62.3

40%

Production

Oil (Mln b/d)

Gas (bcfd)

Crude oil refined (Mln b/d)

Petrochemicals (Mln Tones)

Domestic sales:

Transportation fuels (Mln b/d)

Natural gas (bcfd)

Oil exports (Mln b/d)

Employees (thousands)

2007

3.1

6.1

1.3

5.2

1.2

3.1

1.7

147.3

11th oil and gas company worldwide(1)

3rd in oil production

11th in oil reserves

14th in gas production

13th in refining capacity

33th in gas reserves

1. According to rankings by Petroleum Intelligence Weekly, December 20072. Current dollars.

4

4.44.44.44.44.34.14.14.0

0.90 0.87 0.85 0.86 0.88 0.93 1.03 1.16

3.0 3.1 3.23.4 3.4 3.3 3.3

3.1

0

1

2

3

4

5

2000 2001 2002 2003 2004 2005 2006 2007

Total Gas Oil

Pemex: Crude oil and natural gas production

Sustained total production since 2004

Crude oil production has decreased since peaking in 2004

Increased natural gas production since 2003

Total Hydrocarbon Production, (Mln boed)

5

20.1 18.9 17.6 16.5 15.5 14.7

17 16 15.8 15.8 15.3 15.1

13 13.1 13.4 14.2 14.3 14.6

454546474850

2002 2003 2004 2005 2006 2007

(1) As of December 31 of each year

Crude oil and natural gas reserves

Total reserves (1), (Bln BOE)

Proven

Probable

Possible

13reserves/production

(years) 12 11 10 10 9

Higher reserve replacement ratios are required to sustain current reserve levels

6

Construction of deep conversion units has improved margins at Madero and Cadereyta by increasing distillate yields and processing heavier crude mixes

Gas processing units were built to handle the increasing production from Burgos

Petrochemical operations are focused on the most profitable chains: ethane and aromatics

Oil products, gas and petrochemical production

Product Yields – SNR(%)

Crude run - SNR(Mln bd)

33

30

37

1.1

2000

39

35

26

1.2

2007

Gasoline

IntermediateDistillates

Fuel oil

100% =100% =

64

36

1.2

2000

58

42

1.3

2007

Light

Heavy

2000 2007

Petrochemical sales(Bton/y)

Gas production(Mln cfd)

5,097

3,653

3.2 3.9

8.3

1996 2000 2007

7

Results and evolution

Main challenges

Content

8

Sustain crude production above 2.8 Mln b/d by 2012. Seek new

opportunities to increase the production level above 3.0 Mln b/d in

the long term

Maintain gas production above 6 bcfd

100% reserve-replacement ratio by 2012

Maintain long term reserve/production ratio above 9 years

Residual conversion in all existing refineries & the new capacity

(reduction of gasoline imports)

Close safety and reliability gaps

Reduce environmental liabilities

Enact crucial operational upgrades

Close efficiency gaps through operational improvement programs

Main goals

9

Manage depletion rate of mature fields

Develop low-permeability fields

Implement enhanced recovery methods

Develop Burgos and Veracruz basins to increase non-associated gas production

Implement best practices in project management

Maintain a proved reserve life above 9 years and reach replacement rate of 100% by 2012

Explore deepwater and sub-saline prospects

Exploitation

Exploration

Balanced exploitation strategy to sustain production

Other Exploitation Projects

Other exploration

ChicontepecCantarell

Crude oil production (Thousand barrels per day)

KMZ

ChicontepecCantarell

Other exploration

Natural gas production(Million cubic feet per day)

Other Exploitation Projects

Deepwater

Deepwater

Burgos

Average: 2,884

Average: 6,649

10

Production and reserve replacement ratio evolution(Million barrels of crude oil equivalent)

Enforcement SEC´s guidelines3P reserves Only discoveries

1P Reserves. Includes additions, development and revisions

-500

0

500

1,000

1,500

2,000

2,500

90 91 92 93 94 95 96 97 98 99 0 1 2 3 4 5 6 7 8 9 10 11 12

Additions

Production

Additions 2008: 1,053 Mln boe

66%66%57%57%

14%14%

45%45%37%37%

4%4%

53%53%

50%50%

12%12%

23%23%

Additions from existing projects

100%

11

55% of prospective

resources are found in the

deep waters of the Gulf of

Mexico

34% are located in

Southeast Mexico, where

PEMEX currently has a

large amount of its

operations

45.4

53.8

Sabinas 0.6%0.3

Burgos 5.8%3.1

Tampico-Misantla 3.1%1.7

Veracruz 1.5%0.8

Sureste 33.6%18.1

Golfo de México Profundo 54.8%29.5

Plataforma de Yucatán 0.6%0.3

1. As of December 31, 20062. As of December 31, 2006. Stochastic addition, results may vary from an algebraic addition

Mexico’s untapped resource potential

3P Reserves, (Bln BOE)(1):

Total prospective resources

(Bln BOE)(2):

BasinsProspective Resources(2)

(Bln BOE)

As a % of Total Prospective Resources

12

In recent years Mexico’s demand for automotive fuels has grown above the GDP while production capacity has stagnated. It is expected that this trend on demand will continue in the future.

On the other hand, fuel oil demand has decreased due to substitution with natural gas for power generation.

Refining growth challenges

Cadereyta

Salamanca

Salina Cruz

Minatitlán

Madero Location under study

Tula

Fuel quality & residualconversionFuel quality

New capacity

Main projects 2007-2015

481

762937 999

1996 2007 2013 2015

Gasoline demand (T b/d)

Current production + projects under construction

523 T b/dCurrent production

458 T b/d

14% 40% 44% 48%

Part. of imports

With projects under construction

14% 40% 30% 20%With new projects

13

Deep conversion projects at Minatitlán, Salamanca, Tula &

Salina Cruz

Deep conversion projects at Minatitlán, Salamanca, Tula &

Salina Cruz

New refining capacity

New refining capacity

Increase refining margin through deep conversion projects (coking) over national production of heavy crude oil

Additional refining capacity to face growing demand, based on national availability of heavy crude oil

Increase imports capacity and strengthen storage and

distribution

Increase imports capacity and strengthen storage and

distribution

Increase storage and distribution capacity to satisfy domestic demand

Ultra low sulfur fuels(NOM-086)

Ultra low sulfur fuels(NOM-086)

Modernization of existing units and construction of new plants to meet ultra-low sulfur fuels standard

Refining Investment Priorities

14

Natural Gas and Petrochemicals Strategies

Increase process infrastructure according to primary production (sweetening, NGL recovery, liquid fractionation, and sulfur recovery).

Capture the benefit associated with rich gas production (non associated) in the Northern Region

Increase transport capacity as required by production and demand

Encourage private sector participation in transport and storage

Diversify supply sources and analyze participation in LNG projects

Focus on most profitable chains and retrieve from non profitable ones:

Encourage participation of private sector to develop new projects and capture business opportunities in selected chains

Increase efficiency and debottlenecking of profitable chains

Divest nonprofitable and marginal chains

Petrochemicals

Natural Gas

15

Pemex Strategic lines

Pemex strategy focuses on value maximization and sustainability, involving positive financial results in every business unit, through four strategic lines:

Operational efficiency

Operational efficiency

Social responsibility

Social responsibility

ManagementManagement

GrowthGrowth

Close efficiency gaps in all operationsImprove reliability and productivityExcel in investment project planning and executionDevelop human resources

Strengthen environmental protection, industrial safety and physical securityDevelop healthy relationships with Stakeholders :

Communities where Pemex has operationsClients and suppliersGovernmentImplement new regulatory framework

Improve Corporate GovernanceStrengthen business oriented culture to improve performance

Discover and develop new reservesSustain oil and gas production levelsBuild Downstream and Logistics infrastructure to meet market opportunities, demand growth and environmental standards

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17

Energy Reform: benefits

Deregulation / new operational flexibility

New budgetary flexibility

More latitude in contracting debt

Gradual use of company’s profits

Increase legal certainty

New contractual models for high complexity projects

New modalities for contracting construction and services

The energy reform represents an answer to diverse aspects

of Pemex’s problems providing several benefits:

18

Envisages a smooth transition that will not be a shock to public finances and will not threaten short-term production

and product supply

Energy Reform: benefits

Strengthening of the Board

Independent members

Creation of committees - More effective oversight

Citizen bonds - market accountability

More accountability and transparency

Improved corporate governance

Chicontepec, deep waters, abandoned fields

New fiscal adjustments for strategic projects