When the machines and men came to bury toxic sludge on a property near her house in the Mexican state of Tabasco, Lorenza Castro Castro at first thought it was a kind of fertile soil. Companies contracted by Mexico’s state-owned oil giant, Petróleos Mexicanos, or Pemex, had come with truckloads of black earth and set about ripping up the trees, pouring the sludge onto the ground and then covering it up.

It was only once they had finished making mounds of earth and watering them that Castro Castro realized something was off. “We realized the soil was toxic because we could smell it,” she told a Mexican investigative team. “It was a fetid smell, a smell like iron. It was like with this smell, our throats started to hurt so much we couldn’t even sense the taste of food anymore.”

That year, in 2019, the rainy season floods washed the contaminated soil from what they termed the “toxic cemetery” into her home and those of her neighbors. They claim that the sludge — a toxic waste product of oil refining — makes them and their children sick. Many have moved away. Castro Castro’s community is just one of many affected by this practice. Jose Manuel Arias Rodriguez, a member of the Saint Thomas Ecological Association, an organization that has been working on environmental protection activities in Tabasco for almost three decades, says it is common for Pemex to contract out their waste disposal to other companies that look for properties near the highway where they can dump the sludge, often in under-resourced communities. “That way, Pemex can wash their hands of the responsibility,” he said.

An investigation by the nonprofit Mexicans Against Corruption and Impunity uncovered the myriad ways that Pemex has failed to remediate damages to communities affected by oil contamination and has diverted funds meant for social development programs to other uses. The investigation adds to a growing list of environmental and social allegations against the state-owned oil giant, which is more than $100 billion in debt and has been lagging behind on setting targets to reduce greenhouse gas emissions. In March, Pemex’s board of directors approved an environmental, social & governance (ESG) plan for the first time. But both grassroots organizations and energy experts are skeptical about how much the plan will actually change on the ground, especially considering Pemex’s priority is to expand oil production.

A toxic legacy

Like many extractive industries, Pemex has a program for community and environmental support (PACMA), which is supposed to invest in the communities surrounding and affected by oil extraction and grant them a “social license to operate.” Investigations show that a significant portion of PACMA funds, amounting to at least 3.2 billion pesos ($187 million), have been directed toward donations and projects ranging from fishing equipment and ambulances to cosmetics and lingerie. Some of the donations haven’t gone to communities affected by oil extraction, rather toward purchasing fertilizers for those affected by the Maya Train construction (which, alongside tourists, will also transport goods such as oil and steel).

These kinds of allegations against the oil company are not new. For several decades, communities have protested against environmental harm from Pemex’s fossil fuel extraction. In Veracruz, fishers have attempted to sue the company for environmental pollution that has turned much of the Gulf Coast into a “sacrifice zone.” Dangerous air quality levels in Monterrey have attracted the attention of regional environmental agencies, and oil spills and natural gas explosions in the Gulf of Mexico have set the ocean ablaze. The company has reportedly opted to risk and pay fines rather than fix environmental problems, and recent reports show that emissions from some of its refineries are up to 2.5 times higher than what have been reported.

But nowhere has Pemex’s environmental legacy been as widespread as in Tabasco, where the company is active in the majority of the state’s municipalities and where many of its large operations are.

“Pemex has had brutal impunity in regards to the impacts it has had on communities, especially in Tabasco,” Juan Manuel Orozco, project officer at Climate Connections, an organization that works on communication strategies for climate action, told Mongabay over the phone. “There are also many interests here because Pemex is an important source of financing of the public treasury, providing many of the resources of the state and of the municipalities like ambulances, roads and schools. There is this narrative that it is the engine of public modernity, the public company par excellence. Nothing could be further from the truth.”

Pemex’s symbolic importance to the Mexican government belies its dire environmental legacy and current financial woes. It is ranked third among the oil companies with the greatest environmental risk on the planet and is one of the top 20 companies to have contributed most to global carbon emissions. PEMEX is also considered one of the world’s most indebted companies with a current debt burden of almost $108 billion.

Current President Andrés Manuel López Obrador, whose term ends this year, ran on a platform of reviving Pemex and achieving energy independence for the country, announcing that Mexico would stop importing foreign oil in 2024. To do this, he has attempted to increase crude oil production, including sinking billions into the construction of the new Dos Bocas oil refinery in Paraíso, Tabasco. But this focus on growth has come at the cost of the environment, labor safety and communities.

“Mexico will have to actually allocate more billions of dollars for the refinery to operate. They also say they are upgrading all their refineries. Those are the priorities,” Adrian Duhalt, a research scholar at the Center on Global Energy Policy at Columbia University, told Mongabay. “I think that the environmental commitments of Pemex and Mexico have been put on the back burner because of this context of tight finances.”

Pemex itself has raised concerns about its inability to reduce its environmental footprint, as have members of the Mexican government. A 2022 ruling required the company to incorporate an area dedicated to sustainable development within its organizational structure, with many senators citing the urgency to reduce emissions from oil and gas to confront the climate crisis and put Mexico closer toward achieving its climate goals. Mexico’s climate targets and policies have decreased in ambition and have been labeled “critically insufficient” by Climate Action Tracker (CAT), an independent group that analyzes international action. President Lopez Obrador presented 10 “climate” actions at the Major Economies Forum on Energy and Climate held by President Biden in June 2022, which included the acquisition of a U.S. refinery and the construction of the Dos Bocas project.

In March, Pemex released a sustainability plan that aims to slash its carbon dioxide emissions by 54% and its methane emissions by 30% over the next six years and reach net-zero emissions by 2050. The plan, developed with the assistance of several banks and credit rating agencies, is an effort to prop up the company’s poor environmental, social and governance (ESG) record and open up the potential for more or better financing. But implementing the plan will fall on the next government, which will be elected in June.

“When you look at the timing of this report or this strategy they just released, it’s like kicking the can down the road,” Duhalt said. “Basically, it’s a strategy for the next government to consider, and it remains to be seen if they are going to implement what the report of this report is saying.”

What to do with the future of the oil company, long a symbol of Mexican self-sufficiency, is expected to be a key talking point in the upcoming elections. Historically, the state-owned oil company has lagged behind in setting climate goals and in developing ESG metrics. But even with newly developed plans, communities are skeptical that anything will change for them on the ground.

“It’s a contradiction that the oil industry is talking about reducing emissions at the same time that they are planning to increase their production,” Orozco said. If money and capital are going toward growing oil output, it is questionable how much — if any — will go toward social and environmental remediation. “There are still possibilities to plan for life. What we need is to pollute less, to repair the damage and make sure that there is an exit plan from this fossil model that is fair for the communities and for the workers of Pemex.”

Banner image: Image courtesy of Lucía Vergara.

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