Mexico's incoming administration is set to encourage state oil company Pemex to form equity partnerships with private companies with the aim of bolstering oil reserves and addressing its significant debt burden, reported Reuters, citing sources.  

The new government, taking office on 1 October, is considering a return to a model akin to the farm-out agreements from a decade ago.  

These agreements, which fell out of favour with current President Andres Manuel López Obrador, allowed Pemex to partner with private and foreign companies on exploration and production projects. 

The farm-out model could be revitalised under the leadership of President-elect Claudia Sheinbaum, a scientist with a background in climate issues.  

Sheinbaum's stance on Pemex's future strategy has been a point of speculation, particularly given the company's challenges, which include stagnant production, declining reserves and a debt load nearing $100bn. 

Mexico, the world's 11th-largest oil producer, has experienced a drop in proven oil reserves, down to 5.98 billion barrels (bbbl) last year from 6.12bbbl the previous year.  

Additionally, crude production has diminished to nearly 1.5 million barrels per day (mbbl/d), a decrease from its peak of 3.4mbbl/d two decades ago. 

To streamline the process of forming partnerships, the new government plans to empower the Pemex board with decision-making authority over potential partners, the sources said.  

Such a move would bypass the oil regulator CNH, they added.  

The sources indicated that the government aims to "expand exploration to more areas".  

The current administration has preferred service contracts where companies are paid for their services without receiving stakes in the projects.  

However, a greater role for the Pemex board and potential amendments to Mexico's Hydrocarbons Law could shift the balance of power, especially if a constitutional reform proposed by López Obrador and supported by Sheinbaum leads to the dissolution of the CNH. 

Last month, Pemex teamed up with Grupo Carso to restart the development of the Lakach natural gas project.