As filed with the Securities and Exchange Commission on December 2, 2002

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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Form 20-F/A

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AMENDMENT NO. 2 TO ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2000
Commission File Number: 0-99

PETROLEOS MEXICANOS(Exact name of registrant as specified in its charter)

|Mexican Petroleum(Translation of registrant's name into English) |  | United Mexican States(Jurisdiction of incorporation or organization)
|---------------------------------------------------------------- |  | --------------------------------------------------------------------

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Avenida Marina Nacional No. 329
Colonia Huasteca
Mexico, D.F. 11311
Mexico(Address of principal executive offices)

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Securities registered or to be registered pursuant to Section 12(b) of the Act.

None

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

Title of Each Class

8.85%
Global Guaranteed Notes due 2007
9.50% Global Guaranteed Bonds due 2027
8 3/8% Global Guaranteed Notes due 2005
91/4% Global Guaranteed Bonds due 2018
9 3/8% Notes due December 2, 2008, Puttable at Par on December 2, 2001
9.50% Puttable or Mandatorily Exchangeable Securities (POMESSM) due 2027

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual
report:

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the
past 90 days.

Yes ý    No o

Indicate by check mark which financial statement item the registrant has elected to follow:Item 17 o    Item 18 ý

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EXPLANATORY NOTE

This amended annual report dated December 2, 2002 has been prepared to revise adjustments related to exploration and drilling costs, and corresponding
disclosure, in the reconciliation of the consolidated financial statements of Petróleos Mexicanos, Subsidiary Entities and Subsidiary Companies (collectively, "PEMEX") as of, and for
the years ended, December 31, 2000, 1999 and 1998 to United States generally accepted accounting principles ("U.S. GAAP"). The revisions to the adjustments related to exploration and drilling
costs affect (i) PEMEX's income for the years ended December 31, 2000, 1999 and 1998 in accordance with U.S. GAAP, (ii) PEMEX's comprehensive income for the years ended
December 31, 2000, 1999 and 1998, (iii) PEMEX's equity at each of the years ended December 31, 2000, 1999 and 1998 in accordance with U.S. GAAP, and (iv) other
corresponding line items and disclosures in this Form 20-F/A relating to the reconciliation of PEMEX's financial statements to U.S. GAAP. Adjustments related to exploration and
drilling costs were originally made in an amendment to Petróleos Mexicanos' annual report on Form 20-F/A for the fiscal year ended December 31, 2000, filed
November 15, 2002. In addition, other minor corrections have been made to the unaudited supplementary price level adjusted financial information. The amendment filed as of the date hereof does
not affect (i) PEMEX's income in accordance with Mexican generally accepted accounting principles ("Mexican GAAP"), (ii) PEMEX's statements of operations, statements of changes in equity
or statements of changes in financial position for the years ended December 31, 2000, 1999 and 1998 under Mexican GAAP, or (iii) PEMEX's balance sheet or equity at December 31,
2000 or 1999 under Mexican GAAP.

Petróleos
Mexicanos believes that these changes are not material to its financial condition, operations or prospects.

Except
as described above, no change has been made to the amendment to Petróleos Mexicanos' annual report on Form 20-F/A for the fiscal year ended
December 31, 2000, filed November 15, 2002. The filing of this amended annual report should not be understood to mean that any statements contained herein are true or complete as of any
date subsequent to November 15, 2002.

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TABLE OF CONTENTS

|Item 1.  |  | Identity of Directors, Senior Management and Advisers*                        |  | 4  
|-------- |  | ----------------------------------------------------------------------------- |  | ---
|Item 2.  |  | Offer Statistics and Expected Timetable*                                      |  | 4  
|Item 3.  |  | Key Information                                                               |  | 5  
|Item 4.  |  | Information on the Company                                                    |  | 19 
|Item 5.  |  | Operating and Financial Review and Prospects                                  |  | 95 
|Item 6.  |  | Directors, Senior Management and Employees                                    |  | 127
|Item 7.  |  | Major Shareholders and Related Party Transactions                             |  | 146
|Item 8.  |  | Financial Information                                                         |  | 146
|Item 9.  |  | The Offer and Listing                                                         |  | 150
|Item 10. |  | Additional Information                                                        |  | 150
|Item 11. |  | Quantitative and Qualitative Disclosures About Market Risk                    |  | 158
|Item 12. |  | Description of Securities Other than Equity Securities*                       |  | 165
|Item 13. |  | Defaults, Dividend Arrearages and Delinquencies*                              |  | 165
|Item 14. |  | Material Modifications to the Rights of Security Holders and Use of Proceeds* |  | 165
|Item 15. |  | Controls and Procedures*                                                      |  | 165
|Item 16. |  | [Reserved]*                                                                   |  | 165
|Item 17. |  | Financial Statements*                                                         |  | 165
|Item 18. |  | Financial Statements                                                          |  | 165
|Item 19. |  | Exhibits                                                                      |  | 166

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Petróleos Mexicanos and its four subsidiary entities,Pemex-Exploración y Producción("Pemex-Exploration and Production"),Pemex-Refinación("Pemex-Refining"),Pemex-Gas y
Petroquímica Básica("Pemex-Gas and Basic Petrochemicals") and Pemex-Petroquímica("Pemex-Petrochemicals"), comprise Mexico's state oil and gas company. Each
of Petróleos Mexicanos and
the subsidiary entities is a decentralized public entity of the Mexican Government and is a legal entity empowered to own property and carry on business in its own name. In addition, a number of
subsidiary companies that are defined in Note 1 and listed in Note 2 c) to the restated financial statements included in Item 18, including Pemex Project Funding Master Trust, are
incorporated into the consolidated financial statements; these subsidiary companies are also identified in "Consolidated Structure of PEMEX" on page 3. Petróleos Mexicanos, the
subsidiary entities and the consolidated subsidiary companies are collectively referred to as "PEMEX" or "we." The consolidated financial statements of PEMEX included in Item 18 have been restated and
are referred to as the "Financial Statements." For more information regarding the restatement, see "Item 5Operating and Financial Review and ProspectsRestatement" and Notes 2
s) and 18I(t) to the Financial Statements.

References
herein to "U.S. $", "$", "U.S. dollars" or "dollars" are to United States dollars. References herein to "pesos" or "Ps." are to the lawful currency of United Mexican States
("Mexico"). The term "billion" as used herein means one thousand million. We maintain our consolidated financial statements and records in nominal or current pesos. Unless otherwise indicated, we have
converted all peso amounts to U.S. dollars in this Form 20-F, including all convenience conversions of the Financial Statements, at an exchange rate of Ps. 9.5722 = $1.00,
which is the exchange rate that the Ministry of Finance and Public Credit gave to us on December 31, 2000. You should not construe these conversions from pesos into dollars as actually
representing such U.S. dollar amounts or meaning that you could convert such amounts into U.S. dollars at the rates indicated. The peso has depreciated substantially in relation to the U.S. dollar
since the end of 1994, when the Mexican Government allowed the peso to float freely against the U.S. dollar and the Mexican Government established a broad economic reform program in response to these
and other events. Due to the volatility of the peso/dollar exchange rate, the exchange rate on any date subsequent to the date hereof could be materially different from the rate indicated above. See
"Item 3Key InformationExchange Rates" for information regarding the rates of exchange between pesos and U.S. dollars.

The
Private Securities Litigation Reform Act of 1995 provides for a safe harbor for forward-looking statements. This Form 20-F contains words, such as "believe,"
"expect" and "anticipate" and similar expressions that identify forward-looking statements, which reflect our views about future events and financial performance. Actual results could differ
materially from those projected in such forward-looking statements as a result of various factors that may be beyond our control, including, but not limited to, effects on us from competition, changes
in the limitations on our access to sources of financing on competitive terms, significant economic or political developments in Mexico, particularly developments affecting the energy sector, and
changes in our regulatory environment. Accordingly, you should not place undue reliance on these forward-looking statements. In any event, these statements
speak only as of their dates, and we undertake no obligation to update or revise any of them, whether as a result of new information, future events or otherwise.

2

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CONSOLIDATED STRUCTURE OF PEMEX

GRAPHIC

3

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PART I

Item 1.    Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2.    Offer Statistics and Expected Timetable

Not applicable.

4

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Item 3. Key Information

SELECTED FINANCIAL DATA (AS RESTATED)

The selected financial data set forth below have been restated and should be read in conjunction with, and are qualified in their entirety by reference to, the
Financial Statements included in Item 18. The restated selected financial data set forth below as of the five years ended December 31, 2000 have been derived from the consolidated financial
statements of PEMEX for the years ended December 31, 1997 and 1996, which were audited by PricewaterhouseCoopers, S.C., independent accountants, and the consolidated financial statements of
PEMEX for the years ended December 31, 2000, 1999 and 1998, which were audited by Mancera, S.C. (a member practice of Ernst & Young Global). See "Item 5Operating and
Financial Review and ProspectsChange in Independent Auditors."

We
have restated our consolidated financial statements as of and for the five years ended December 31, 2000. The principal adjustments made to the financial statements reflect the
following changes:



In
addition to these adjustments, we have restated the reconciliation of income and equity to U.S. GAAP to include the adjustments described above and to correct other errors relating to
exploration and drilling costs, Repsol investment securities and accrued vacation.



5

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For
further information regarding each of the foregoing adjustments, see "Item 5Operating and Financial Review and ProspectsRestatement," "Item
5Operating and Financial Review and ProspectsU.S. GAAP ReconciliationRestatement" and Notes 2 s) and 18I(t) to the Financial Statements.

The
Financial Statements are prepared in accordance with Mexican GAAP and, as to the recognition of inflation, in accordance with the guidelines established in Financial Reporting
Standard NIF-06 BIS "A", section A. See Notes 2b) and 14 to the Financial Statements for a discussion of the inflation accounting rules applicable to us. Mexican GAAP differs in
certain significant respects from U.S. GAAP. The material differences as they relate to our financial statements are described in Note 18 to the Financial Statements.

The
most important of the material items generating a difference between operating results under U.S. and Mexican GAAP are the accounting methodologies for the treatment of impairment of
fixed assets, petroleum exploration and drilling costs, measurement of pension obligations, derivatives and inflationary accounting for capitalized interest and accounting for foreign exchange losses.
Under Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of," we
are required to evaluate our long-lived assets for impairment for U.S. GAAP purposes whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable,
or is permanently impaired. Such impaired assets must be permanently written down to fair value or the present value of expected future cash flows of related assets. This requirement does not exist
under Mexican GAAP.

Under
Mexican GAAP, oil exploration and development costs are charged to a capital reserve rather than expensed or directly capitalized as required by U.S. GAAP. Such capital reserve is
funded by charging a certain percentage to cost of sales for each barrel of crude oil extracted. We establish this percentage on an annual basis.

Seniority
premiums and retirement plans generate a difference between U.S. and Mexican GAAP due to the different actuarial cost assumptions applied under Mexican GAAP Bulletin
D-3, "Labor

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Obligations," and SFAS No. 87, "Employers Accounting for Pensions." In addition, our adoption dates for Bulletin D-3 and SFAS No. 87 were different, resulting in differences
in period expenses due to the differing amortization of transition amounts.

The
treatment of capitalized interest in our Mexican GAAP financial statements differs from the treatment of capitalized interest in the reconciliation of the financial statements to
U.S. GAAP. For Mexican GAAP purposes, we treat all interest expense as being associated with construction or well development and accordingly capitalize all interest. For purposes of the U.S. GAAP
reconciliation, we capitalize interest by applying our average borrowing rate to our average amount of construction in progress.

We
apply NIF-06 BIS "A", section A, to our financial statements to reflect the effects of inflation. NIF-06 BIS "A", section A, provides for the
restatement of fixed assets, inventories and costs of sales by indexing and/or appraisals. Since NIF-06 BIS "A", section A, does not represent a comprehensive basis of inflation
accounting, beginning with our 1992 fiscal year, we have reversed the effects of NIF-06 BIS "A", section A, on our financial statements from the U.S. GAAP reconciliation of equity.
Under NIF-06 BIS "A", section A, a devaluation of the peso does not have a negative impact on our income because exchange losses are capitalized into fixed assets. Furthermore, a
devaluation of the peso relative to the dollar results in an increase in our income to the extent that our expenses remain relatively stable because they are incurred in pesos, while our revenues,
which are mostly denominated in dollars or linked to international, dollar-denominated prices, increase in peso terms. In contrast, under U.S. GAAP, a devaluation of the peso has a negative impact on
our income because the exchange losses are not capitalized but are charged immediately to income. This one-time charge to income will be gradually offset by dollar-linked revenues. In any
particular accounting period, the negative impact of a devaluation is, therefore, greater when the devaluation occurs at or near the end of the period, as occurred with the peso at the end of 1994.
For a further discussion of these and other adjustments, see Note 18 to the Financial Statements.

7

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Selected Financial Data of PEMEX (As Restated)

|                                   |                                          | Year Ended December 31,(1)(2)      | 
|---------------------------------- | ---------------------------------------- | ---------------------------------- | 
|
|
|Income Statement Data              |                                          |                                    | 
|                                   | Amounts in accordance with Mexican GAAP: |                                    | 
|                                   |                                          | Net sales(4)                       | 
|                                   |                                          | Total revenues(4)                  | 
|                                   |                                          | Total revenues net of the IEPS Tax | 
|                                   |                                          | Operating income                   | 
|                                   |                                          | Income (loss) for the period       | 
|Balance Sheet Data (end of period) |                                          |                                    | 
|                                   | Amounts in accordance with Mexican GAAP: |                                    | 
|                                   |                                          | Cash and cash equivalents          | 
|                                   |                                          | Total assets                       | 
|                                   |                                          | Long-term debt                     | 
|                                   |                                          | Total long-term liabilities        | 
|                                   |                                          | Equity                             | 
|                                   | Amounts in accordance with U.S. GAAP:    |                                    | 
|                                   |                                          | Net sales(5)                       | 
|                                   |                                          | Operating income(5)                | 
|                                   |                                          | Income (loss) for the period       | 
|                                   |                                          | Total assets                       | 
|                                   |                                          | Equity (deficit)                   | 
|Other Financial Data               |                                          |                                    | 
|                                   | Amounts in accordance with Mexican GAAP: |                                    | 
|                                   |                                          | Depreciation and amortization      | 
|                                   |                                          | Investments at cost(6)             | 
|                                   | Ratio of earnings to fixed charges:      |                                    | 
|                                   |                                          | Mexican GAAP(7)                    | 
|                                   |                                          | U.S. GAAP(7)                       | 

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Note: N.A. = not available

Source: PEMEX's restated financial statements.

8

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PEMEX does not prepare comprehensive price-level adjusted financial statements in accordance with Bulletin B-10 under Mexican GAAP.
For the years ended December 31, 1998 and 1997, Mexico was deemed to be a hyperinflationary economy. Pursuant to Rule 3-20(c) of Regulation S-X promulgated
by the U. S. Securities and Exchange Commission, PEMEX has included unaudited selected financial data prepared on the basis of price-level adjusted financial information for these years reflecting the
impact of U.S. GAAP adjustments and reclassifications. At December 31, 2000 and 1999, Mexico was not considered a hyperinflationary economy. However, we have continued to provide supplemental
price-level adjusted financial information for these subsequent years in lieu of a comprehensive price-level adjustment that would result from our adoption of Bulletin B-10. In the opinion
of PEMEX management, all adjustments that are necessary for a fair presentation of the price-level adjusted financial information have been included herein. This unaudited price-level adjusted
financial data is derived from the supplemental price-level adjusted financial information included elsewhere and should also be read in conjunction with the audited financial statements and notes
thereto as of December 31, 2000, 1999, 1998 and 1997 and for the years then ended.

Selected Financial Data of PEMEX (As Restated)  (continued)

|                                           |  | Years Ended December 31, | 
|------------------------------------------ |  | ------------------------ | 
|
|
|Unaudited Price-level Adjusted Information |  |                          | 
|Income Statement Data                      |  |                          | 
|Amounts in accordance with U.S. GAAP:      |  |                          | 
|Net sales(1)                               |  | Ps. 348,094              | 
|Total revenues(1)                          |  | 357,025                  | 
|Net Income (Loss)                          |  | 22,333                   | 
|Balance Sheet Data (end of period)         |  |                          | 
|Amounts in accordance with U.S. GAAP:      |  |                          | 
|Cash and cash equivalents                  |  | 25,299                   | 
|Total assets                               |  | 465,442                  | 
|Long-term debt                             |  | 81,779                   | 
|Total long-term liabilities                |  | 194,068                  | 
|Total Equity                               |  | 182,358                  | 

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Source: Petróleos Mexicanos

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EXCHANGE RATES

The following table sets forth, for the periods indicated, the high, low, average and period-end exchange rate for the purchase of U.S. dollars,
expressed in pesos per U.S. dollar.

|                        |  | Exchange Rate
|----------------------- |  | -------------
|
|Year Ended December 31, |  |              
|1996                    |  | 8.045        
|1997                    |  | 8.410        
|1998                    |  | 10.630       
|1999                    |  | 10.600       
|2000                    |  | 10.087       
|2001                    |  | 9.972        
|2002:                   |  |              
|January                 |  | 9.250        
|February                |  | 9.170        
|March                   |  | 9.114        
|April                   |  | 9.375        
|May                     |  | 9.713        
|June                    |  | 9.980        
|July                    |  | 9.970        
|August                  |  | 9.962        
|September               |  | 10.350       
|October                 |  | 10.222       

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Source: Noon buying rate for cable transfers in New York reported by the Federal Reserve Bank of New York.

The
noon buying rate for cable transfers in New York reported by the Federal Reserve Bank of New York on November 8, 2002 was Ps. 10.3200 = U.S. $1.00.

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RISK FACTORS

Risk Factors Related to the Operations of PEMEX

Crude oil prices are volatile, and low oil prices negatively affect PEMEX's income

International crude oil prices fluctuate due to many factors, including:



We
have no control over these factors. Historically, the weighted average price of the crude oil that we export has fluctuated from U.S. $26.82 per barrel in 1984 to U.S. $15.55 per
barrel in 1999. In 2000, the weighted average price of PEMEX crude oil was U.S. $24.78 per barrel, 59.4% higher than the weighted average price during 1999. On November 4, 2002, the weighted
average spot price of PEMEX crude oil was U.S. $21.93.

When
international crude oil and natural gas prices are low, we earn less export sales revenue, and, therefore, lower income because our costs remain roughly constant. Conversely, when
crude oil and natural gas prices are high, we earn more export sales revenue and our income increases. As a result, future fluctuations in international crude oil prices will directly affect our
results of operations and financial condition. We do not enter into transactions to hedge against fluctuations in crude oil prices.
See "Item 11Quantitative and Qualitative Disclosure About Market RiskRisk Management and Financial InstrumentsCommodity Price Risk."

Decreases in PEMEX's estimates from time to time of Mexico's hydrocarbon reserves could reduce PEMEX's potential future income

The reserve data set forth in this Form 20-F represent only estimates. Estimating quantities of proved hydrocarbon reserves and projecting
future rates of production and timing of development expenditures is an inexact process and is subject to many factors beyond our control. The accuracy of any reserve estimate depends on the quality
of available data and engineering and geological interpretation and judgment. As a result, estimates of different engineers may vary. Additionally, the results of drilling, testing and production
subsequent to the date of an estimate may justify revision of an estimate. Therefore, proved reserve estimates may be materially different from the quantities of crude oil and natural gas that we can
ultimately recover.

Pemex-Exploration
and Production revises its estimates of Mexico's hydrocarbon reserves annually. This process may result in material revisions to our estimates of Mexico's hydrocarbon
reserves.

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PEMEX is an integrated oil and gas company and is exposed to production, equipment and transportation risks

We are subject to production, equipment and transportation risks that are common among oil and gas companies. For example, we encounter:



In
particular, our business is subject to the risk of:



The
occurrence of any of these events could result in:



In
accordance with customary industry practice, we have purchased insurance policies covering some of these risks. However, these policies do not cover all potential liabilities that may
result from these risks. In addition, insurance is not available for some of these risks. See "Item 4Information on the CompanyBusiness OverviewPEMEX Corporate
MattersInsurance."

PEMEX's compliance with environmental regulations in Mexico could result in material adverse effects on its results of operations

A wide range of general and industry-specific Mexican federal and state environmental laws and regulations regulate our operations. Numerous Mexican Government
agencies and departments issue rules and regulations which are often difficult and costly to comply with and which carry substantial penalties for non-compliance. This regulatory burden on
us increases our cost of doing business and can:



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At
December 31, 2000, our estimated and accrued environmental liabilities totaled Ps. 2,838 million. See "Item 4Information on the
CompanyEnvironmental RegulationEnvironmental Liabilities."

PEMEX publishes less financial information than U.S. companies are required to file with the U.S. Securities and Exchange Commission

We prepare our financial statements according to Mexican GAAP, except as to the recognition of inflation, which is recognized in our financial statements
according to the Mexican Financial Reporting Standards applicable to Mexican public sector companies. Mexican GAAP differs in certain significant respects from U.S. GAAP including, but not limited to,
the accounting treatment for impairment of fixed assets, petroleum exploration and drilling costs, measurement of pension premiums and post-retirement benefit obligations, derivatives,
inflationary accounting, and capitalized foreign exchange loss. See "Item 3Key InformationSelected Financial Data of PEMEX" and Note 18 to the Financial Statements. In
addition, we only prepare U.S. GAAP information on a yearly basis. As a result, there may be less or different publicly available information about us than there is about U.S. issuers.

Risk Factors Related to the Relationship between PEMEX and the Mexican Government

The Mexican Government controls PEMEX, and the Mexican Congress approves the annual budget and financing program of Petróleos Mexicanos
and the subsidiary entities

Mexico is the sole owner of Petróleos Mexicanos and the subsidiary entities, and the Mexican Government closely regulates and supervises our
operations. Mexican Government ministers control key executive decisions at Petróleos Mexicanos. The Secretary of Energy of Mexico is the Chairman of the Board of Directors of
Petróleos Mexicanos. The General Comptroller's Office of the Mexican Government appoints the external auditors of Petróleos Mexicanos and the subsidiary entities.

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The Mexican Government incorporates Petróleos Mexicanos and the subsidiary entities' annual budget and financing program into its consolidated annual budget, which it
submits to the Mexican Congress for its approval. The Mexican Congress also designates certain of our largest capital expenditures as long-term productive infrastructure projects (which we
refer to as "PIDIREGAS"). See "Item 4Information on the CompanyHistory and DevelopmentCapital Expenditures and Investments."

The
Mexican Government has the power to intervene directly or indirectly in our commercial affairs. Such an intervention could have an adverse effect on us and thereby adversely affect
our or our subsidiaries' ability to make payments under any securities issued or guaranteed by us. For instance, if the Mexican Government were to cause us to reduce production or limit future capital
expenditures, this could reduce our ability to generate the necessary income to support payments on our debt, or to transfer the necessary funds between any of our subsidiaries to make payments on
their debts.

The Mexican Government may privatize all or part of Petróleos Mexicanos and the subsidiary entities

The Mexican Government would have the power, if federal law and the Political Constitution of the United Mexican States were amended, to privatize all or a
portion of Petróleos Mexicanos and the subsidiary entities or its assets. The Mexican Government could also transfer the activities of PEMEX to another Mexican Government-controlled
entity if these changes were made. These types of actions could adversely affect our operations by affecting our workforce and causing an interruption in production that could decrease output and
negatively affect our income from operations. In addition, the privatization could cause us to default on our obligations under certain of our indebtedness, including all of our publicly traded debt
securities, which could entitle the holders of this indebtedness to declare it immediately due and payable. In this case, investors in debt securities would be entitled to recover their entire
investment and their only loss would be that attributable to future interest income. See also "Considerations Related to Mexico" below.

The Mexican Government has entered into agreements with other nations to limit production

Historically, member countries of the Organization of the Petroleum Exporting Countries, commonly referred to as OPEC, have entered into agreements to reduce
their production of crude oil. These agreements have sometimes increased global crude oil prices by decreasing the global supply of crude oil. Although Mexico is not a member of OPEC, it has entered
into agreements with OPEC and non-OPEC countries to reduce global crude oil supply.

For
example, following OPEC's announcement in January 2001 that it would reduce crude oil production by 1.5 million barrels per day, Mexico announced it would decrease its
crude oil exports by 75 thousand barrels per day, beginning on February 1, 2001. Following a March 2001 announcement by OPEC of an additional 1.0 million barrel per day
reduction in crude oil production, Mexico announced on March 25, 2001 that it would further reduce its crude oil exports by 40 thousand barrels per day, beginning on April 1,
2001. On January 2, 2002, following an OPEC announcement that it would reduce crude oil production by 1.5 million barrels per day, Mexico announced it would reduce its crude oil exports
by 100 thousand barrels per day to 1.66 million barrels per day for six months, beginning on January 1, 2002. On June 27, 2002, following an OPEC announcement that it would
maintain crude oil production at their present levels until September 2002, Mexico announced that it would maintain its crude oil exports at their present levels for the same period. Most
recently, following an OPEC announcement that it would maintain current crude oil production levels through fourth quarter 2002, Mexico affirmed that it would maintain its crude oil exports at their
present levels for the same period.

We
do not control the Mexican Government's international affairs and the Mexican Government could agree with OPEC or other countries to reduce our crude oil production or exports in the
future. To the extent that such international agreements restrict our exports of crude oil, it is possible that

14

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Mexican domestic markets will not be able to consume additional amounts of crude oil that we are not allowed to export as a result of such agreements, thus reducing our revenues.

PEMEX does not own the hydrocarbon reserves in Mexico

A guaranteed source of petroleum and other hydrocarbons is essential to an oil company's production and generation of income. As a result, many oil and gas
companies own hydrocarbon reserves. The Political Constitution of the United Mexican States provides that the Mexican nation, not PEMEX, owns the petroleum and other hydrocarbon reserves located in
Mexico. Although Mexican law gives Petróleos Mexicanos and the subsidiary entities the exclusive right to exploit Mexico's hydrocarbon reserves, it does not preclude the Mexican
Government from changing current law and assigning these rights to another company. If the Mexican Government, by way of an amendment to theLey Reglamentaria del
Artículo 27 Constitucional en el Ramo del Petróleo(Regulatory Law to Article 27 of the Political Constitution of the United Mexican States
Concerning Petroleum Affairs, which we refer to as the "Regulatory Law"), assigned the rights to exploit its hydrocarbon reserves to another company, our ability to generate income would be adversely
affected.

Petróleos Mexicanos and the subsidiary entities pay special taxes, duties and dividends to the Mexican Government

Petróleos Mexicanos and the subsidiary entities pay a number of special taxes and duties to the Mexican Government. These taxes and duties that
Petróleos Mexicanos and subsidiary entities paid to the
Mexican Government totaled Ps. 151,544 million in 1998, Ps. 208,137 million in 1999 and Ps. 292,960 million in 2000. For 2001, we expect the sum of these taxes and duties to total
approximately 60.8% of the revenue that we derive from sales to the PMI Group and third parties. In addition to these duties and taxes, the Mexican Government imposes an excess gains tax equal to
39.2% of the portion of Pemex-Exploration and Production's crude oil sales revenue in excess of a threshold price set by the Mexican Government, which in 2001 was U.S. $18.00 per barrel. See "Item
4Information on the CompanyTaxes and Duties" and "Item 5Operating and Financial Review and ProspectsGeneralIEPS Tax, Excess Gains Duty,
Hydrocarbon Duties and Other Taxes."

The
Mexican Government and PEMEX determine the rates of taxes and duties applicable to PEMEX from year to year depending on a variety of factors, including our:



Petróleos
Mexicanos is also obligated to pay minimum guaranteed dividends to the Mexican Government. The minimum guaranteed dividends totaled Ps. 3,843 million in
1998, Ps. 5,138 million in 1999 and Ps. 5,564 million in 2000. For further information on how the minimum guaranteed dividend is determined, see "Item 5Operating and
Financial Review and ProspectsLiquidity and Capital ResourcesEquity Structure and the Certificates of Contribution "A,"' "Item 8Financial
InformationDividends" and Note 12 to the Financial Statements.

PEMEX must make significant capital expenditures to maintain its current production levels and increase Mexico's hydrocarbon reserves. Mexican
Government budget cuts, reductions in PEMEX's income and inability to obtain financing may limit PEMEX's ability to make capital investments

We invest funds to increase the amount of extractable hydrocarbon reserves in Mexico. We also continually invest capital to enhance our hydrocarbon recovery ratio
and improve the reliability and

15

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productivity of our infrastructure. We estimate that we will need to make capital expenditures of approximately U.S. $45.3 billion in exploration and production over the next five years and an
additional
U.S. $16.1 billion to upgrade our refineries over the next ten years, in order to increase production to meet anticipated growth in domestic and international market demand.

Our
ability to make these capital expenditures is limited by the substantial taxes that we pay and cyclical decreases in our revenues primarily related to lower oil prices. In addition,
budget cuts imposed by the Mexican Government and the availability of financing may also limit our ability to make capital investments. Because the non-PIDIREGAS portion of our investment
budget is part of the Mexican Government's annual budget, when the Mexican Government reduces its annual budget, it may also reduce that portion of our investment budget. For example, in 1998, low
crude oil prices reduced our income and the amount of taxes and duties that we paid to the Mexican Government. As a result, the Mexican Government imposed federal budget cuts that resulted in an 11.1%
decrease in our capital expenditures budget (excluding PIDIREGAS) in 1998.

The
Mexican Government has recently approved a PIDIREGAS investment budget that we believe will be sufficient to meet a large proportion of our capital expenditure needs for the next
five years. However, under the PIDIREGAS program, we are required to obtain financing that can be supported by the project being funded. The availability of this financing is subject to factors beyond
our control. Accordingly, we cannot guarantee that we will always have the funds necessary to continue capital investments at their current levels.

PEMEX's debt obligations may be affected by the Mexican Government's agreements with external creditors

Petróleos Mexicanos and the subsidiary entities are decentralized public sector entities under the direct control of the Mexican Government;
consequently, the Mexican Government's agreements with international creditors may affect our external debt obligations. Since 1982, Mexico and its commercial bank creditors have concluded four debt
restructurings and new money exercises. In these restructurings, Petróleos Mexicanos' external indebtedness was treated on the same terms as the debt of the Mexican Government and other
public sector entities. In addition, Mexico has entered into agreements with official bilateral creditors to reschedule public sector external debt. Mexico has not requested restructuring of bonds or
debt owed to multilateral agencies.

PEMEX may claim some immunities under the Foreign Sovereign Immunities Act

Petróleos Mexicanos and the subsidiary entities are decentralized public entities of the Mexican Government. Because the Mexican Government is a
foreign sovereign, you may not be able to obtain a judgment in a U.S. court against us. In addition, Mexican law specifies that attachment prior to judgment and attachment in aid of execution may not
be ordered by Mexican courts against us or our assets and, as a result, your ability to enforce judgments against us in the courts of Mexico may be limited.

Unless
we waive our immunity, you could obtain a U.S. court judgment against us only if a U.S. court were to determine that we are not entitled to sovereign immunity under the Foreign
Sovereign Immunities Act of 1976 with respect to that action. We also do not know whether Mexican courts would enforce judgments of United States courts based on the civil liability provisions of the
federal securities laws of the United States.

Even
if you were able to obtain a U.S. judgment against us under the Foreign Sovereign Immunities Act, you might not be able to obtain a judgment in Mexico that is based on that U.S.
judgment. Moreover, you may not be able to enforce a judgment against our property in the United States except under the limited circumstances specified in the Foreign Sovereign Immunities Act.

16

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Satisfaction of any judgment in Mexico against PEMEX may be made in pesos

If you were to bring an action in Mexico seeking to enforce our obligations under any of our securities, satisfaction of those obligations may be made in pesos.
TheLey Monetaria de los Estados Unidos Mexicanos(Monetary Law of the United Mexican States) entitles us to discharge foreign currency denominated
obligations in Mexico with a payment in pesos at the exchange rate determined by Banco de México (Mexico's Central Bank) on the date payment is made. This rate is currently announced by
Banco de México each banking day and published the following day in theDiario Oficial de la Federación(the Official
Gazette of the Federation).

Considerations Related to Mexico

Petróleos Mexicanos and the subsidiary entities are foreign companies, and as a result holders of PEMEX securities may not be able to
effect service of process on, or enforce a judgment against, PEMEX

Petróleos Mexicanos and the subsidiary entities are organized under the laws of Mexico and all of its directors and officers, as well as some of
the experts named in this annual report, reside outside the United States. Substantially all of our assets and those of most of our directors, officers and experts are located outside the United
States. As a result, you may not be able to effect service of process on our directors or officers or those experts within the United States. You also may not be able to enforce in Mexico judgments
obtained in the United States against us, our directors or officers or the experts, if those judgments are not consistent with Mexican public policy and procedural rules.

Economic conditions and government policies in Mexico may have a material impact on PEMEX's operations

A deterioration in Mexico's economic conditions, social instability, political unrest or other adverse social developments in Mexico could adversely affect our
business and financial condition. Those events could also lead to increased volatility in the foreign exchange and financial markets, thereby affecting our ability to obtain and service foreign debt.
In addition, the Mexican Government may cut spending in the future. These cuts could adversely affect our business, financial condition and prospects.

From
1982 to 1987 Mexico experienced several periods of slow or negative economic growth, high inflation, peso devaluations and limited availability of foreign exchange. Beginning in
December 1994 and continuing through 1995, Mexico experienced an economic crisis characterized by exchange rate instability, devaluation of the peso, high inflation, high domestic interest
rates, negative economic growth, reduced consumer purchasing power and high unemployment. Despite signs of economic recovery following the implementation of broad economic reforms in 1995, a
combination of factors led to a slowdown in Mexico's economic growth in 1998. Notably, the decline in the price of crude oil resulted in a reduction of federal revenues, approximately
one-third of which derive from petroleum taxes and duties. In addition, the economic crises in Asia and Russia and the financial turmoil in Brazil, Venezuela and elsewhere produced greater
volatility in the international financial markets, which further slowed Mexico's recovery. The Mexican Government estimates that real Gross Domestic Product ("GDP") grew 4.9% in 1998, 3.7% in 1999 and
6.6% in 2000.

Despite
the slowdown in economic recovery and the significant devaluation of the peso in 1998, Mexico has managed to maintain a high level of gross international reserves, which totaled
U.S. $38,367 million at May 25, 2001. In the future, however, the Mexican economy could continue to suffer from declines in foreign direct and portfolio investment due to international
financial crises, inflationary pressures, high short-term interest rates and low oil prices.

17

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Changes in exchange rates or in Mexico's exchange control laws may hamper the ability of PEMEX to service its foreign currency debt

While the Mexican Government does not currently restrict the ability of Mexican companies or individuals to convert pesos into dollars or other currencies, in the
future, the Mexican Government could impose a restrictive exchange control policy, as it has done in the past. We cannot assure you that the Mexican Government will maintain its current policies with
regard to the peso or that the peso's value will not fluctuate significantly in the future. The peso has been subject to significant devaluations against the U.S. dollar in the past and may be subject
to significant fluctuations in the future. Mexican Government policies affecting the value of the peso could prevent us from paying our foreign currency obligations.

As
of December 31, 2000, the debt of Petróleos Mexicanos and the subsidiary entities (not including the indebtedness of the subsidiary companies) totaled Ps.
106.0 billion (or Ps. 104.5 billion excluding accrued interest), 91.9% of which was denominated in U.S. dollars. As of December 31, 2000, indebtedness of Pemex Project Funding
Master Trust totaled U.S. $9.2 billion (which includes U.S. $4.7 billion payable to Pemex-Exploration and Production), denominated in U.S. dollars, Euros and other currencies. U.S.
$4.5 billion of this debt was guaranteed by Petróleos Mexicanos. In addition, Pemex Finance, Ltd., a Cayman Islands company with limited liability established to issue
securities backed by PMI crude oil receivables to provide financing for investments in PIDIREGAS, had indebtedness totaling U.S. $5.5 billion at December 31, 2000. We do not guarantee
Pemex Finance, Ltd.'s indebtedness. In the future, PEMEX and Pemex Finance, Ltd. may incur additional indebtedness denominated in U.S. dollars or other currencies. Declines in the value
of the peso relative to the U.S. dollar or other currencies may increase our interest costs in pesos and result in foreign exchange losses.

From
October 1992 to December 21, 1994, Banco de México intervened in foreign exchange markets to maintain the peso-dollar exchange rate within a
government-controlled range that widened daily. On December 21, 1994, the Mexican Government suspended Banco de México's foreign exchange market operations and allowed the peso
to float freely against the U.S. dollar. The Mexican Government may introduce similar policies in the future that affect the exchange rate between the peso and other currencies.

For
a further discussion of historical peso/U.S. dollar exchange rates, see "Exchange Rates" above.

Political conditions in Mexico could materially and adversely affect Mexican economic policy and, in turn, PEMEX's operations

The national elections held on July 2, 2000 ended 71 years of rule by the Institutional Revolutionary Party ("PRI") with the election of President
Vicente Fox Quesada, a member of the National Action Party ("PAN") and resulted in the increased representation of opposition parties in the Mexican Congress and in mayoral and gubernatorial
positions. Neither the PRI nor the PAN currently has a majority in the Congress or Senate. This shift in political power has transformed Mexico from a one-party state to a pluralist
democracy. Although there have not yet been any material adverse repercussions resulting from this political change, multiparty rule is still relatively new in Mexico and could result in economic or
political conditions that could materially and adversely affect our operations. The lack of a majority party in the legislature and the lack of alignment between the legislature and the President
could result in deadlock and prevent the timely implementation of economic reforms, which in turn could have a material adverse effect on the Mexican economy and on our business.

18

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Item 4. Information on the Company

HISTORY AND DEVELOPMENT

We are the largest company in Mexico, and according toPetroleum Intelligence Weekly, we were the sixth largest
oil and gas company in the world in 2000, accounting for nearly 5% of the world's crude oil and condensates production in 2000. In 1938, the President of Mexico nationalized foreign-owned oil
companies which were then operating in Mexico and the Mexican Congress established Petróleos Mexicanos by a decree, effective on July 20, 1938. Since 1938, Mexican federal laws
and regulations have entrusted Petróleos Mexicanos with the central planning and management of Mexico's petroleum industry. On July 17, 1992, the Mexican Congress created the
subsidiary entities out of operations that had previously been directly managed by Petróleos Mexicanos. Petróleos Mexicanos and its four subsidiary entities,
Pemex-Exploration and Production, Pemex-Refining, Pemex-Gas and Basic Petrochemicals and Pemex-Petrochemicals, are decentralized public entities of the Mexican Government, and each is a
legal entity empowered to own property and carry on business in its own name.

PEMEX's
executive offices are located at Avenida Marina Nacional No. 329, Colonia Huasteca, Mexico, D.F. 11311, Mexico. PEMEX's telephone number is (52-55)
5722-2500.

Organizational Laws

The activities of Petróleos Mexicanos and the subsidiary entities are regulated primarily by:



The
Organic Law and related regulations grant Petróleos Mexicanos and certain of the subsidiary entities the exclusive right to:



The
Organic Law allocates the operating functions of Petróleos Mexicanos among the four subsidiary entities, each of which has the characteristics of a subsidiary of
Petróleos Mexicanos. The principal objectives of the subsidiary entities are as follows:



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In
1995, the Mexican Congress amended the Regulatory Law to allow private and social sector companies, which include labor-controlled organizations and industries, to participate, with
the Mexican Government's approval, in the storage, distribution and transportation of natural gas. The new regulation allows these types of companies to construct, own and operate pipelines,
installations and equipment. Since 1997, the Mexican Government has required PEMEX to divest its existing natural gas distribution assets but has allowed PEMEX to retain exclusive authority over the
exploration, exploitation, production and first-hand sale of natural gas, as well as the transportation and storage inextricably linked with this type of exploitation and production. See
"Gas and Basic PetrochemicalsPrivate Sector Participation in Natural Gas Distribution" below.

Capital Expenditures and Investments

PEMEX funds its annual budget (not including PIDIREGAS) through revenue generated by its operations and financing activities. Capital expenditures are undertaken
by Petróleos Mexicanos and the subsidiary entities. Capital expenditures and operating expenses must be authorized in our annual budget, which is approved by the Mexican Congress.
PIDIREGAS are off-balance sheet long-term productive infrastructure projects funded through financing activities of Pemex Project Funding Master Trust or directly by a
contractor and must also be authorized in a budget approved by the Mexican Congress. Thus, each year, we submit proposals to and negotiate with the Mexican Government regarding how our
after-tax funds should be allocated.

PIDIREGAS.An important component of our capital expenditures are PIDIREGAS. Because of federal budgetary constraints, the
Mexican Government has sought private sector participation in the building and financing of PIDIREGAS. The Mexican Government approves the designation of certain infrastructure projects as PIDIREGAS.
This designation means that such projects are treated as off-balance sheet items for annual budgetary purposes, until delivery of the completed project to us or until our payment
obligations begin under the contract.

TheLey General de Deuda Pública(General Law of Public Debt) and theLey de Presupuesto,
Contabilidad y Gasto Público Federal(Federal Law of Budget, Accounting and Public Expenditure) define the PIDIREGAS legal framework. Article 18 of the
General Law of Public Debt outlines the treatment of financial obligations under PIDIREGAS, defining as a direct liability the amounts payable under a financing during the current and immediately
following fiscal years, and the remaining amounts as a contingent liability until its full payment. Article 30 of the Federal Law of Budget, Accounting and Public Expenditure grants PIDIREGAS
preferential and priority treatment for inclusion in the Mexican Government's budget in future years, until the full payment of a project's costs.

PIDIREGAS
have three stages:



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Compliance
with the Mexican Government's Financial Reporting Standards and the Guidelines for the Accounting Treatment of Investments in Long-Term Productive Infrastructure
Projects (Technical Release NIF-09), which outlines the accounting and budgetary treatment applicable to PIDIREGAS, is mandatory during the construction period and after delivery of the
PIDIREGAS. The distinction between the PIDIREGAS and non-PIDIREGAS expenditures is an important one for budgetary purposes, as a project's designation as a PIDIREGAS guarantees that its
financing is immune from across-the-board budget cuts.

In
recent years, PIDIREGAS have represented a significant portion of our total annual capital expenditures. In 2001, 2000, 1999 and 1998, PIDIREGAS expenditures alone totaled Ps.
36.6 billion, Ps. 42.4 billion, Ps. 27.3 billion and Ps. 19.5 billion, respectively (or 53%, 57%, 52% and 39% of our total capital expenditures, respectively). For 2002,
PEMEX has budgeted approximately Ps. 104.4 billion for PIDIREGAS expenditures (or approximately 70% of our total budgeted capital expenditures), including payment of 100% of the Madero,
Salamanca and Tula projects. While PIDIREGAS expenditures are considered off-balance sheet items under Mexican Financial Reporting Standards applicable to Mexican public sector entities,
all of these expenditures are included in our Mexican GAAP financial statements.

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The
following table sets forth our capital expenditures for PIDIREGAS for the five years ended December 31, 2001 and the budget for such expenditures for 2002.

PIDIREGAS Capital Expenditures

|                                      |                                     | Year ended December 31,(1)
|------------------------------------- | ----------------------------------- | --------------------------
|
|
|Pemex-Exploration and Production      |                                     |                           
|Cantarell                             |                                     | Ps.                       
|Burgos                                |                                     |                           
|Delta del Grijalva                    |                                     |                           
|Strategic Gas Program(4)              |                                     |                           
|Ku-Maloob-Zaap                        |                                     |                           
|Antonio J. Bermúdez                   |                                     |                           
|Jujo-Tecominoacán                     |                                     |                           
|Bellota-Chinchorro                    |                                     |                           
|Cactus-Sitio Grande                   |                                     |                           
|Abkatún Integral                      |                                     |                           
|Ek-Balam                              |                                     |                           
|El Golpe-Puerto Ceiba                 |                                     |                           
|Taratunich                            |                                     |                           
|Och-Uech-Kax                          |                                     |                           
|Carmito-Artesa                        |                                     |                           
|Arenque                               |                                     |                           
|Cárdenas                              |                                     |                           
|Amatitlán-Profeta- Tzapotempa-Vinazco |                                     |                           
|Ayín-Alux                             |                                     |                           
|Pol                                   |                                     |                           
|Chuc                                  |                                     |                           
|Agua Fría-Coapechaca-Tajín            |                                     |                           
|Caan                                  |                                     |                           
|Integral Batab                        |                                     |                           
|Integral Kaanab                       |                                     |                           
|Integral Poza Rica                    |                                     |                           
|Integral Yaxche                       |                                     |                           
|                                      |                                     |                           
|                                      |                                     | Total                     
|Pemex-Refining(5)                     |                                     |                           
|                                      | Cadereyta                           |                           
|                                      | Madero                              |                           
|                                      | Salamanca                           |                           
|                                      | Tula                                |                           
|                                      |                                     |                           
|                                      |                                     | Total                     
|Pemex-Gas and Basic Petrochemicals    |                                     |                           
|                                      | Cryogenic Plant No. 2               |                           
|                                      | Modular Cryogenic Plants in Reynosa |                           
|                                      |                                     | Total                     
|                                      |                                     |                           
|Total PIDIREGAS Budget                |                                     | Ps.                       
|                                      |                                     |                           

---

Notes: Numbers may not total due to rounding.

Source: Petróleos Mexicanos

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For 2002, the Mexican Government has approved an additional 24 new PIDIREGAS, 23 of which will be carried out by Pemex-Exploration and Production,
and one of which will be carried out by Pemex-Gas and Basic Petrochemicals. The following table sets forth our approved capital expenditures budget for PIDIREGAS for 2002 through 2006.

PIDIREGAS Approved Budget Capital Expenditures

|                                   |                                         | Year ended December 31,(1)(2)
|---------------------------------- | --------------------------------------- | -----------------------------
|
|
|Pemex-Exploration and Production   |                                         |                              
|                                   | Cantarell                               |                              
|                                   | Burgos                                  |                              
|                                   | Delta del Grijalva                      |                              
|                                   | Strategic Gas Program                   |                              
|                                   | Ku-Maloob-Zaap                          |                              
|                                   | Antonio J. Bermúdez                     |                              
|                                   | Jujo-Tecominoacán                       |                              
|                                   | Bellota-Chinchorro                      |                              
|                                   | Cactus-Sitio Grande                     |                              
|                                   | Abkatún Integral                        |                              
|                                   | Ek-Balam                                |                              
|                                   | El Golpe-Puerto Ceiba                   |                              
|                                   | Taratunich                              |                              
|                                   | Och-Uech-Kax                            |                              
|                                   | Carmito-Artesa                          |                              
|                                   | Arenque                                 |                              
|                                   | Cárdenas                                |                              
|                                   | Amatitlán-Profeta-Tzapotempa-Vinazco(3) |                              
|                                   | Ayín-Alux                               |                              
|                                   | Pol                                     |                              
|                                   | Chuc                                    |                              
|                                   | Agua Fría-Coapechaca-Tajín(3)           |                              
|                                   | Caan                                    |                              
|                                   | Integral Batab                          |                              
|                                   | Integral Kaanab                         |                              
|                                   | Integral Poza Rica                      |                              
|                                   | Integral Yaxche                         |                              
|                                   |                                         |                              
|                                   |                                         | Total                        
|Pemex-Refining                     |                                         |                              
|                                   | Madero                                  |                              
|                                   | Salamanca                               |                              
|                                   | Tula                                    |                              
|                                   | Minatitlán                              |                              
|                                   | Salina Cruz                             |                              
|                                   |                                         |                              
|                                   |                                         | Total                        
|Pemex-Gas and Basic Petrochemicals |                                         |                              
|                                   | Modular Cryogenic Plants in Reynosa     |                              
|                                   |                                         |                              
|                                   |                                         | Total                        
|Total PIDIREGAS Budget             |                                         | Ps.                          
|                                   |                                         |                              

---

Note: Numbers may not total due to rounding.

Source: Petróleos Mexicanos

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Non-PIDIREGAS Capital Expenditures.In addition to the Ps. 36.6 billion spent on PIDIREGAS
in 2001, we spent Ps. 32.5 billion in 2001 for other capital expenditures, which represents a 3% increase from the Ps. 31.6 billion in non-PIDIREGAS capital expenditures in
2000. Of the Ps. 32.5 billion in non-PIDIREGAS capital expenditures during 2001, we directed Ps. 21.4 billion (or 66% of total non-PIDIREGAS capital expenditures)
to exploration and production programs. In addition to the Ps. 42.4 billion spent on PIDIREGAS in 2000, we spent Ps. 31.6 billion in 2000 for other capital expenditures, which represents
a 24% increase from the Ps. 25.5 billion in non-PIDIREGAS capital expenditures in 1999. Of the Ps. 31.6 billion in non-PIDIREGAS capital expenditures during 2000,
we directed Ps. 19.4 billion (or 62% of total non-PIDIREGAS capital expenditures) to exploration and production programs. Of the Ps. 25.5 billion and Ps. 31.0 billion
in non-PIDIREGAS capital expenditures in 1999 and 1998, respectively, we directed Ps. 14.6 billion (or 57% of total non-PIDIREGAS capital expenditures) and Ps.
19.1 billion (or 62% of total non-PIDIREGAS capital expenditures), respectively, to exploration and production programs.

Excluding
PIDIREGAS expenditures, we have budgeted a total of Ps. 44.8 billion for capital expenditures in 2002. Of this amount, we expect to direct Ps. 27.5 billion (or
61% of total non-PIDIREGAS capital expenditures) to exploration and production programs in 2002.

Our
capital expenditures (excluding PIDIREGAS) for the six years ended December 31, 2001 and budgeted for 2002 and 2003 were distributed and budgeted among the subsidiary entities
as follows:

Non-PIDIREGAS Capital Expenditures(1)

|                                            |  | Year ended December 31,
|------------------------------------------- |  | -----------------------
|
|
|Pemex-Exploration and Production            |  | Ps.                    
|Pemex-Refining                              |  |                        
|Pemex-Gas and Basic Petrochemicals          |  |                        
|Pemex-Petrochemicals                        |  |                        
|Petróleos Mexicanos corporate(2)            |  |                        
|                                            |  |                        
|Total                                       |  | Ps.                    
|                                            |  |                        
|Amortization of PIDIREGAS included in total |  |                        

---

Note: Numbers may not total due to rounding.

Source: Petróleos Mexicanos

Our principal objectives for upstream investment are to increase and improve the quality of Mexico's reserves, enhance Pemex-Exploration and
Production's recovery ratio and improve the reliability of its production and transportation infrastructure for crude oil and natural gas operations. In 2002, Pemex-Exploration and Production plans to
continue its Strategic Gas Program to increase the supply of natural gas for the domestic market in the medium to long term. The 23 new PIDIREGAS primarily focus on the production of Isthmus and
Olmeca crude oil, in order to improve the quality of the Mexican mixture of crude oil processed in our refineries and available for export.

Our
downstream investment program seeks to improve the quality of our product selection, to achieve a level of efficiency similar to that of our international competitors and to continue
to emphasize industrial safety and environmental compliance.

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In our downstream projects, we are revamping and upgrading some of Pemex-Refining's existing refineries, including the Cadereyta refinery, to produce unleaded gasoline, reduce sulphur
levels in fuel oil and diesel, increase production of middle distillates and increase Maya crude oil processing capacity. In order to increase refining capacity and improve product quality,
Pemex-Refining recently completed one fluid catalytic units, two reformer plants, four hydro-desulphurization units, one atmospheric distillation unit and one alkylation unit.

BUSINESS OVERVIEW

Overview by Business Segment



Pemex-Exploration and Production explores for and produces crude oil and natural gas, primarily in the northeastern and southeastern regions of Mexico and
offshore in the Gulf of Mexico. Measured in dollars, we increased our capital investment in exploration and production activities by 14% in 2000 by financing an array of programs to expand production
capacity and efficiency. As a result of our investments in previous years, last year our total hydrocarbon production reached a level of approximately 4.0 million barrels of oil equivalent per
day. Pemex-Exploration and Production's crude oil production increased by 3.6% from 1999 to 2000, averaging 3,012 thousand barrels per day in 2000. Pemex-Exploration and Production's natural
gas production (excluding natural gas liquids) decreased by 2.3% from 1999 to 2000, averaging 4,679 million cubic feet per day in 2000.



Pemex-Refining converts crude oil into gasoline, jet fuel, diesel, fuel oil, asphalts and lubricants. It also distributes and markets most of these products
throughout Mexico, where it experiences a significant demand for its refined products. In 2000, Pemex-Refining's atmospheric distillation refining capacity was approximately 1,560 thousand
barrels per day, and production of refined products totaled 1,334 thousand barrels per day. Average refining margins in the United States generally increased in 2000 as a result of strong U.S.
demand for refined products resulting in increases in prices of refined products that were relatively greater than the increases in prices of crude oil inputs. In Mexico, by contrast, Pemex-Refining's
average refining margin decreased by U.S. $0.66 per barrel, since the increases in prices of crude oil inputs was greater in proportion to the increase in prices of refined products. Due to market
conditions in Mexico, Pemex-Refining was unable to pass the crude oil price increases on to its refined products customers.



Pemex-Gas and Basic Petrochemicals processes natural gas and natural gas liquids, transports, distributes and sells natural gas and liquefied
petroleum gas throughout Mexico and produces and sells several basic petrochemical feedstocks. Pemex-Gas and Basic Petrochemicals' total sour natural gas processing capacity remained
constant from 1999 to 2000 at approximately 3,753 million cubic feet per day. Pemex-Gas and Basic Petrochemicals produced 445 thousand barrels per day of natural gas liquids
in 2000, a 0.44% decrease from 1999 natural gas liquid production of 447 thousand barrels per day.



Pemex-Petrochemicals manufactures 39 different petrochemical products, including: (1) methane and its derivatives such as ammonia and methanol;
(2) ethane and its derivatives, such as polyethylenes, as well as other olefins; (3) aromatics and their derivatives; (4) propylene and its derivatives; and (5) oxygen,
nitrogen and other products. Pemex-Petrochemicals' total annual production (excluding ethane and butane gases) decreased by 14.5% in 2000, from 7,991 thousand tons in 1999 to
6,836 thousand tons in 2000.

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In 2000, we sold 1,604 thousand barrels per day of crude oil through our subsidiary, P.M.I. Comercio Internacional, S.A. de C.V. ("PMI"). PEMEX is a
major supplier of crude oil to the United States. PMI, P.M.I. Trading Ltd. ("PMI Trading") and their affiliates (together, the "PMI Group") provide PEMEX and a number of independent
customers with international trading, distribution and related services. PMI and PMI Trading sell, buy and transport crude oil, refined products and petrochemicals in world markets. The PMI Group also
provides related risk management, insurance, transportation and storage services to PEMEX. The PMI Group has offices in Mexico City, Houston and London. The PMI Group's trading volume of sales and
imports totaled U.S. $22,075 million in 2000, including U.S. $14,546 million in crude oil sales.

Infrastructure of PEMEX

GRAPHIC

Exploration and Production

Reserves

Under the Political Constitution of the United Mexican States and the Regulatory Law, all oil and other hydrocarbon reserves within Mexico are owned by the
Mexican nation and not by PEMEX. Under the Organic Law, Petróleos Mexicanos and the subsidiary entities, except for Pemex-Petrochemicals, have the exclusive right to produce, not own,
these reserves, and sell the production. The exploration and development activities of Petróleos Mexicanos and the subsidiary entities are limited to reserves located in Mexico.

26

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Proved
oil and natural gas reserves are those estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs under existing economic and operating conditionsi.e., prices and costs at
the date of estimation. Mexico's proved reserves are estimated by Pemex-Exploration and Production's technical staff.

Pemex-Exploration
and Production estimates Mexico's reserves using standard geological and engineering methods generally accepted by the petroleum industry. The choice of method or
combinations of methods employed in the analysis of each reservoir is determined by:



The
reserves data set forth herein represent only estimates. Reserves valuation is a subjective process of estimating underground accumulations of crude oil and natural gas that cannot
be measured in an exact manner. The accuracy of any reserve estimate depends on the quality of available data, engineering and geological interpretation and judgment. As a result, estimates of
different engineers may vary. In addition, the results of drilling, testing and production subsequent to the date of an estimate may justify revision of an estimate.

Mexico's
total proved developed and undeveloped reserves of crude oil and condensates decreased by 0.5% in 1999, from 21.6 billion barrels of oil equivalent at December 31,
1998 to 21.5 billion barrels of oil equivalent at December 31, 1999, and decreased by 6.2% in 2000 to 20.2 billion barrels of oil equivalent at December 31, 2000. Mexico's
dry gas reserves increased by 8.3%, from 17.1 trillion cubic feet at December 31, 1998 to 18.5 trillion cubic feet at December 31, 1999, and decreased by 6.0% in 2000 to 17.4 trillion
cubic feet at December 31, 2000.

The
following two tables of crude oil and dry gas reserves set forth our estimates of Mexico's proved reserves determined in accordance with Rule 4-10(a) of
Regulation S-X of the Securities Act of 1933.

Crude Oil and Condensate Reserves  (including natural gas liquids)(1)

|                                          |                | 1998                          |        | 1999   |        | 2000   |       
|----------------------------------------- | -------------- | ----------------------------- | ------ | ------ | ------ | ------ | ------
|
|Proved developed and undeveloped reserves |                |                               |        |        |        |        |       
|                                          | At January 1   |                               | 22,410 |        | 21,638 |        | 21,519
|                                          |                | Revisions                     |        | 425    |        | 775    |       
|                                          |                | Extensions and discoveries(2) |        | 84     |        | 311    |       
|                                          |                | Production                    |        | (1,281 | )      | (1,205 | )     
|                                          |                |                               |        |        |        |        |       
|                                          | At December 31 |                               | 21,638 |        | 21,519 |        | 20,186
|                                          |                |                               |        |        |        |        |       
|Proved developed reserves at December 31  |                | 12,056                        |        | 11,414 |        | 12,312 |       

---

Note:
Numbers may not total due to rounding.

Source: Pemex-Exploration and Production.

27

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Dry Gas Reserves

|                                          |                | 1998                          |        | 1999   |        | 2000   |       
|----------------------------------------- | -------------- | ----------------------------- | ------ | ------ | ------ | ------ | ------
|
|Proved developed and undeveloped reserves |                |                               |        |        |        |        |       
|                                          | At January 1   |                               | 18,328 |        | 17,054 |        | 18,471
|                                          |                | Revisions                     |        | (414   | )      | 2,427  |       
|                                          |                | Extensions and discoveries(1) |        | 224    |        | 176    |       
|                                          |                | Production(2)                 |        | (1,084 | )      | (1,186 | )     
|                                          |                |                               |        |        |        |        |       
|                                          | At December 31 |                               | 17,054 |        | 18,471 |        | 17,365
|                                          |                |                               |        |        |        |        |       
|Proved developed reserves at December 31  |                | 9,699                         |        | 11,127 |        | 9,713  |       

---

Note:
Numbers may not total due to rounding.

Source: Pemex-Exploration and Production.

28

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The following table sets forth the number of proved developed and undeveloped reserves, the number of producing wells, and the number of proved undeveloped
locations for the fields that contain over 85% of Mexico's proved reserves, as of December 31, 2000.

|Field                    |                            | Proved
Reserves |         | Developed
Reserves |         | Undeveloped
Reserves |         | Producing
Wells |     | Undeveloped
Locations
|------------------------ | -------------------------- | --------------- | ------- | ------------------ | ------- | -------------------- | ------- | --------------- | --- | ---------------------
|
|                         | Akal                       |                 | 9,887.2 |                    | 6,667.5 |                      | 3,219.7 |                 | 168 |                      
|                         | Samaria                    |                 | 1,320.8 |                    | 947.6   |                      | 373.2   |                 | 44  |                      
|                         | Jujo-Tecominoacán          |                 | 1,304.9 |                    | 898.6   |                      | 406.3   |                 | 47  |                      
|                         | Maloob                     |                 | 696.9   |                    | 63.9    |                      | 633.1   |                 | 9   |                      
|                         | Iride                      |                 | 672.5   |                    | 419.6   |                      | 252.8   |                 | 17  |                      
|                         | Chicontepec                |                 | 669.0   |                    | 50.5    |                      | 618.5   |                 | 459 |                      
|                         | Zaap                       |                 | 545.6   |                    | 64.6    |                      | 481.0   |                 | 5   |                      
|                         | Cunduacán                  |                 | 499.6   |                    | 210.9   |                      | 288.7   |                 | 15  |                      
|                         | Ku                         |                 | 441.8   |                    | 204.5   |                      | 237.4   |                 | 28  |                      
|                         | Sihil                      |                 | 421.8   |                    | 0.0     |                      | 421.8   |                 | 0   |                      
|                         | Caan                       |                 | 367.7   |                    | 284.6   |                      | 83.1    |                 | 29  |                      
|                         | Chuc                       |                 | 328.6   |                    | 296.2   |                      | 32.4    |                 | 18  |                      
|                         | Oxiacaque                  |                 | 270.4   |                    | 160.5   |                      | 109.9   |                 | 9   |                      
|                         | Cárdenas                   |                 | 261.0   |                    | 235.3   |                      | 25.7    |                 | 19  |                      
|                         | Sinán                      |                 | 241.0   |                    | 0.0     |                      | 241.0   |                 | 0   |                      
|                         | Muspac                     |                 | 229.7   |                    | 229.7   |                      | 0.0     |                 | 20  |                      
|                         | Poza Rica                  |                 | 214.7   |                    | 209.0   |                      | 5.8     |                 | 173 |                      
|                         | Paredón                    |                 | 212.2   |                    | 212.2   |                      | 0.0     |                 | 9   |                      
|                         | Ayín                       |                 | 189.1   |                    | 0.0     |                      | 189.1   |                 | 0   |                      
|                         | Cactus                     |                 | 151.8   |                    | 120.0   |                      | 31.8    |                 | 19  |                      
|                         | Abkatún                    |                 | 147.5   |                    | 145.9   |                      | 1.6     |                 | 23  |                      
|                         | Culebra                    |                 | 138.9   |                    | 68.0    |                      | 70.9    |                 | 217 |                      
|                         | Balam                      |                 | 123.9   |                    | 113.3   |                      | 10.6    |                 | 7   |                      
|                         | Sen                        |                 | 113.6   |                    | 97.4    |                      | 16.2    |                 | 11  |                      
|                         | Nohoch                     |                 | 100.9   |                    | 98.4    |                      | 2.5     |                 | 5   |                      
|                         | Pol                        |                 | 96.3    |                    | 96.3    |                      | 0.0     |                 | 16  |                      
|                         | Kutz                       |                 | 93.4    |                    | 0.0     |                      | 93.4    |                 | 0   |                      
|                         | Caparroso-Pijije-Escuintle |                 | 80.4    |                    | 80.4    |                      | 0.0     |                 | 12  |                      
|                         | Luna-Palapa                |                 | 71.5    |                    | 50.5    |                      | 21.0    |                 | 13  |                      
|                         | Cuitláhuac                 |                 | 59.1    |                    | 39.3    |                      | 19.8    |                 | 111 |                      
|                         | Chac                       |                 | 48.2    |                    | 48.2    |                      | 0.0     |                 | 3   |                      
|                         | Arcos                      |                 | 46.6    |                    | 26.8    |                      | 19.7    |                 | 86  |                      
|                         | Arcabuz                    |                 | 45.1    |                    | 22.6    |                      | 22.5    |                 | 83  |                      
|                         | Lum                        |                 | 42.1    |                    | 0.0     |                      | 42.1    |                 | 0   |                      
|                         | Ek                         |                 | 40.9    |                    | 40.9    |                      | 0.0     |                 | 1   |                      
|                         | Ixtoc                      |                 | 39.0    |                    | 39.0    |                      | 0.0     |                 | 2   |                      
|                         | Bacab                      |                 | 27.1    |                    | 27.1    |                      | 0.0     |                 | 3   |                      
|                         | Platanal                   |                 | 26.7    |                    | 18.7    |                      | 8.1     |                 | 2   |                      
|                         | Escarbado                  |                 | 24.3    |                    | 24.3    |                      | 0.0     |                 | 1   |                      
|                         | Tizón                      |                 | 9.2     |                    | 9.2     |                      | 0.0     |                 | 2   |                      
|                         | Carrizo                    |                 | 5.0     |                    | 5.0     |                      | 0.0     |                 | 7   |                      
|Total                    |                            | 20,306.0        |         | 12,326.3           |         | 7,979.7              |         | 1,693           |     | 1,857                
|Mexico's proved reserves |                            | 23,525.4        |         | 14,180.3           |         | 9,345.1              |         |                 |     |                      
|Percentage               |                            | 86%             |         | 87%                |         | 85%                  |         |                 |     |                      

---

Source: Pemex-Exploration and Production

29

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We seek to identify new oil reservoirs through our exploration program in order to maintain an adequate level of reserves. From 1990 through 2000, we completed
1,580 exploration and development wells. During 2000, the average success rate for exploration wells was 57%, and the average success rate for development wells was 95%. From 1996 to 2000, we
discovered nine new crude oil fields and 14 new natural gas fields, bringing the total number of our crude oil and natural gas fields in production to 299 at the end of 2000.

While
most of our offshore production in the Gulf of Mexico occurs in waters less than 100 meters deep, the 2000 exploration program included exploration of regions located in deeper
waters. Our most productive crude oil and natural gas fields in the Gulf of Mexico are Cantarell, Ku and Zaap in the Northeast Marine region and Caan, Abkatun and Chuc in the Southwest Marine region.
The Cantarell field, for example, produced 1,420 thousand barrels per day of crude oil in 2000 or 47.1% of our total 2000 crude oil production and 551 million cubic feet per day of
natural gas in 2000 or 11.8% of our total 2000 production of natural gas.

The
following table summarizes our drilling activity for the five years ended December 31, 2000.

|                                             |                   | Year Ended December 31,
|-------------------------------------------- | ----------------- | -----------------------
|
|Wells drilled                                |                   | 118                    
|Wells completed                              |                   | 114                    
|                                             | Exploratory wells |                        
|                                             |                   | Success rate %         
|                                             | Development wells |                        
|                                             |                   | Success rate %         
|Producing wells at end of period             |                   | 4,718                  
|                                             | Marine Region     |                        
|                                             | Southern Region   |                        
|                                             | Northern Region   |                        
|Fields in production                         |                   | 347                    
|                                             | Marine Region     |                        
|                                             | Southern Region   |                        
|                                             | Northern Region   |                        
|Drilling Rigs                                |                   | 39                     
|Kilometers drilled                           |                   | 459                    
|Average depth by well (meters)               |                   | 3,730                  
|Discovered Fields                            |                   | 1                      
|                                             | Crude Oil         |                        
|                                             | Natural gas       |                        
|Oil and gas output by well (barrels per day) |                   | 818                    

---

Source: Pemex-Exploration and Production

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The following table sets forth our lifting costs (the average amount in U.S. dollars that it costs us to extract a barrel of oil equivalent) for each of the last
three years.

Average Lifting Costs
Year Ended December 31,1998

1999

2000(U.S. dollars per barrel)$2.38

$2.21

$2.97


---

Source: Pemex-Exploration and Production



During the year 2000, we discovered new sources of crude oil and natural gas reserves in the Southeast Marine region, the Northeast Marine region, the Burgos
fields of Northern Mexico and the Southern Region. The new discoveries yielded a total of 101.9 million barrels of crude oil equivalent reserves.

In
the Northeast Marine region, drilling of the Cantarell 3068 well led to the addition of 88.0 million barrels of crude oil equivalent proved reserves. The addition of these
reserves resulted from a reclassification of 75.5 million barrels of crude oil equivalent reserves from probable to proved reserves and the discovery of 12.5 million barrels of crude oil
equivalent reserves in a new reservoir. The total proved natural gas reserves added by the Cantarell 3068 well were 28.6 billion cubic feet of natural gas. In addition, the drilling of wells in
Burgos led to the addition of 31.0 billion cubic feet of proved natural gas reserves.



In 2001, we invested Ps. 57,302 million in exploration and production, as compared to Ps. 46,626 million in 2000, representing a 22.9% increase in
investment in exploration and production. An important component of our investment budget consists of projects financed under the Mexican Government's program for PIDIREGAS. In 2001, Pemex-Exploration
and Production's PIDIREGAS investments totaled approximately Ps. 35,945 million, consisting of Ps. 25,867 million in investments in the Cantarell fields, Ps. 7,018 million for
development of the Burgos natural gas fields, Ps. 1,466 million in the Delta del Grijalva project and Ps. 1,594 million in the Strategic Gas Program. In 2000, Pemex-Exploration and
Production's PIDIREGAS investments totaled approximately Ps. 27,236 million, consisting of Ps. 20,210 million in investments in the Cantarell fields, Ps. 5,596 million for
development of the Burgos natural gas fields and Ps. 1,431 million in the Delta del Grijalva project. These PIDIREGAS are described below.

Cantarell.Pemex-Exploration and Production invested Ps. 12,979 million in 1998, Ps. 18,337 million in 1999,
Ps. 20,210 million in 2000 and Ps. 25,867 million in 2001 in the development of the Cantarell reservoirs in the Marine region. For 2002, we have budgeted Ps. 30,709 million for
Cantarell investments. By the end of 2002, we expect our investments in the Cantarell project to total approximately U.S. $11.6 billion.

On
October 10, 1997, we awarded to a consortium formed by BOC Holdings, Linde, Marubeni, West Coast Energy and ICA Fluor Daniel a build-own-operate
contract for a nitrogen cryogenic plant at the Cantarell oil and natural gas field. Under this contract, the consortium is responsible for the financing, design, construction and operation of the
plant. The plant will cost an estimated Ps. 10,131 million. Pursuant to the terms of the agreement, the consortium has legal ownership of the plant, and Pemex-Exploration and Production has
committed to buy from the consortium 1.2 billion cubic feet per day of nitrogen for a period of 15 years. The plant began operations in 2000, and is not yet working at full
capacity. During 2000 and 2001, Pemex-Exploration and Production paid approximately U.S. $81 million and U.S. $186 million, respectively, under this contract for a total

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volume of approximately 146.3 billion cubic feet and 390.8 billion cubic feet of nitrogen, respectively. We expect this project to increase our crude oil recovery rates by injecting
nitrogen into the Cantarell reservoirs, which should help maintain pressure during crude oil extraction. By maintaining favorable crude oil recovery rates at Cantarell, we expect that the injection
program will yield long-term benefits, including an increase in exploitable hydrocarbon reserves at Cantarell.

Pemex-Exploration
and Production is a party to a nitrogen supply agreement relating to the Cantarell project. This agreement expires in 2015. As of June 2001, the amount of the
nitrogen to be supplied during the remaining life of the agreement amounted to approximately 1,200 million cubic feet per day. In the event that the agreement is rescinded due to a cause
imputed to us, we will be obligated under the agreement to purchase the nitrogen production plant, the estimated value of which is approximately Ps. 8,310 million.

Burgos.In 1997, Pemex-Exploration and Production initiated a 15-year, U.S. $5.7 billion project to
develop the Burgos natural gas fields in Northern Mexico, which accounted for 11% of our total natural gas production in 1997. We expect that the Burgos project will better enable us to meet
increasing domestic demand for natural gas and thereby reduce our imports of natural gas in the future. Three major turn-key contracts worth U.S. $108 million, U.S.
$96.4 million and U.S. $71 million have been awarded to Dowell-Schlumberger México, Industrial Perforadora de Campeche and Halliburton International Inc.,
respectively, for this project. Exploratory activities and field reentrance and maintenance activities in the Burgos region increased estimated reserves by 66.8 million barrels of oil
equivalent in 1998 and decreased estimated reserves by 24.4 million barrels of oil equivalent in 1999. We invested Ps. 4,826 million in 1998, Ps. 7,307 million in 1999, Ps.
5,596 million in 2000 and Ps. 7,018 million in 2001 in the Burgos project. For 2002, we anticipate that our investments in this project will amount to Ps. 12,500 million and that
our total accumulated investments will reach approximately U.S. $4.1 billion.

Delta del Grijalva.In 1998, Pemex-Exploration and Production initiated a 15-year, U.S. $600 million
investment project named Delta del Grijalva, which represents the continuation of development and optimization of a group of fields in the state of Tabasco in southeastern Mexico. These fields produce
Olmeca light crude oil, which is the highest value crude oil that PMI sells in international markets on behalf of PEMEX. We invested Ps. 795 million in 1998, Ps. 982 million in 1999, Ps.
1,431 million in 2000 and Ps. 1,466 million in 2001 in the Delta del Grijalva project. In 2002, we expect to invest Ps. 1,469 million in this project, bringing our total
investment in Delta del Grijalva to U.S. $642 million.

Strategic Gas Program.In 2001, Pemex-Exploration and Production initiated a nine-year, U.S.
$8,105 million investment project named the Strategic Gas Program. The purpose of the program is to increase the supply of natural gas and develop a reserve that would satisfy the domestic
demand for natural gas, thereby reducing future reliance on imports. Field development and optimization of production will represent 39% of investments, with the goal of increasing the production of
natural gas to 883 million cubic feet per day by 2007. Exploration activities will represent 49% of investments with
the goal of increasing proved reserves of oil equivalent in the nineteen different natural gas projects by 2,412 million barrels per year, from current levels. Finally, development of newly
discovered fields will represent 12% of the investment amount. In 2001, total investment for the program was U.S. $283 million and average production was 19 million cubic feet per day of
natural gas.

Non-PIDIREGAS Investments.In addition to PIDIREGAS investments, Pemex-Exploration and Production invested Ps.
21,357 million in 2001 in other capital investments, as compared to Ps. 19,390 million in 2000. Of the Ps. 21,357 million in other capital investments in 2001, 81% was invested in
general operating improvements and 19% was invested in strategic projects consisting of Ps. 1,385 million in oil and gas exploration and Ps. 2,764 million in general field development
and facilities. Of the Ps. 19,390 million in other capital investments in 2000, 85% was invested in general operating

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improvements and 15% was invested in strategic projects consisting of Ps. 1,047 million in oil and gas exploration and Ps. 1,789 million in general field development and facilities.

2002 Exploration and Production Investment Budget.For 2002, Pemex-Exploration and Production anticipates investing Ps.
27,512 million, excluding PIDIREGAS expenditures. Approximately 9% of this amount is to be allocated to investments in projects relating to field development, pipelines and exploration
activities, including the continuation of certain projects that began during the period from 1997 to 2001. The remaining 91% will be allocated to operating projects as well as to projects relating to
maintenance facilities, industrial safety and environmental matters. In addition to these non-PIDIREGAS investments, the 2002 budget includes 23 new PIDIREGAS strategic exploration and
production projects for a total PIDIREGAS budget for 2002 of approximately Ps. 82,234 million. This amount includes Ps. 30,709 million for Cantarell, Ps. 12,500 million for
Burgos, Ps. 16,569 million for the Strategic Gas Program, Ps. 1,469 million for Delta del Grijalva and Ps. 20,987 million for the 23 new PIDIREGAS.



In December 2001, we announced our Multiple Services Contracts program to provide financing for the development and exploitation of certain hydrocarbon
reserves. The goal of the program is to increase the supply of natural gas in Mexico through a transparent process that permits contracts under the program to be executed quickly. Under this program,
we will, in consultation with private sector companies, develop a generic model services contract and solicit bids from a variety of contractors for the performance of various
high-technology services including seismic reservoir characterization, implementation of new well logging technology and other high-technology methods of enhancing well
performance and analysis. We published the generic model services contract in June 2002 and expect to begin to solicit bids in the first half of 2003.



In 2000, we produced an average of 3,012 thousand barrels per day of crude oil, which was 106 thousand barrels per day (3.6%) greater than our
average daily production in 1999. This increase was due to increased export volumes resulting from Mexico's decision to increase oil exports, following OPEC's agreements in March and June of 2000 to
increase oil exports. See "Trade Regulations and Export Agreements" below.

Crude
oil can be classified by sulphur content. "Sour" crudes contain 3.4% or greater sulphur content by weight and "sweet" crudes contain less than 1.0% sulphur content by weight. Most
of our production is classified as sour crudes. The fact that we produce mostly sour crude oils affects our sales. See "Crude Oil Sales" below.

Pemex-Exploration
and Production produces four types of crude oil:



Most
of Pemex-Exploration and Production's production consists of Isthmus and Maya crude oil. In 2000, 58.9% of Pemex-Exploration and Production's total production of crude oil consisted
of heavy crudes and 41.1% consisted of light and very light crudes. The Marine region yields mostly heavy crude oil (57.5% of overall production), although significant volumes of light crude oil are
also produced (21.7% of overall production). The Southern region yields mainly light and very light crudes (together,

33

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18.2% of overall production), whereas the Northern region yields mostly heavy crude oil (together, 2.6% of overall production).

The
following table sets forth our annual crude oil production rates for the five years ended December 31, 2000.

|                      |                 | Year Ended December 31, |         |         |        
|--------------------- | --------------- | ----------------------- | ------- | ------- | -------
|
|
|
|Marine region         |                 |                         |         |         |        
|                      | Heavy crude oil |                         | 1,314.6 |         | 1,511.0
|                      | Light crude oil |                         | 817.5   |         | 788.1  
|                      |                 |                         |         |         |        
|                      |                 | Total                   |         | 2,132.1 |        
|Southern region       |                 |                         |         |         |        
|                      | Heavy crude oil |                         | 1.0     |         | 0.6    
|                      | Light crude oil |                         | 628.9   |         | 626.3  
|                      |                 |                         |         |         |        
|Total                 |                 | 629.9                   |         | 626.9   |        
|Northern region       |                 |                         |         |         |        
|                      | Heavy crude oil |                         | 55.0    |         | 55.5   
|                      | Light crude oil |                         | 41.3    |         | 40.8   
|                      |                 |                         |         |         |        
|                      |                 | Total                   |         | 96.3    |        
|Total heavy crude oil |                 | 1,370.6                 |         | 1,567.1 |        
|Total light crude oil |                 | 1,487.7                 |         | 1,455.2 |        
|                      |                 |                         |         |         |        
|                      | Total crude oil |                         | 2,858.3 |         | 3,022.2
|                      |                 |                         |         |         |        

---

Note:
Numbers may not total due to rounding. Source: Pemex-Exploration and Production.

In 2000, the Marine region's offshore facilities, which are located in the Campeche Sound in the Gulf of Mexico, produced approximately 79% of Mexico's crude oil.
Approximately 18% of crude oil production came from onshore facilities in the Southern region. Inland facilities in the Northern region accounted for the remaining 3% of total crude oil production.
Due to the high productivity of certain wells, 15 fields accounted for 84.1% of Mexico's crude oil production in 2000.

The
Marine region is an area of approximately 21,000 square kilometers in the Campeche Sound in the Gulf of Mexico. Our production area covers 9,000 square kilometers of the Marine
region. We began geophysical operations in this region in 1972, commenced drilling in 1974 and began production in June 1979. In 2000, the average production level for this region was
2,385 thousand barrels per day. The Marine region's oil fields are less than 100 meters below sea level and have an average well depth of 3,500 meters.

The
Southern region covers an area of approximately 23,000 square kilometers, with our production area in this region comprising 9,000 square kilometers in the states of Chiapas and
Tabasco. In 2000, production in the Southern region totaled 550 thousand barrels per day. This production area included 104 oil fields with an average well depth of 5,500 meters.

The
Northern region covers an area of approximately 2 million square kilometers, with our production area in this region located in the states of Veracruz, Tamaulipas, Nuevo
León, Coahuila, San Luis Potosí and the continental platform in the Gulf of Mexico. In 2000, production in the

34

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Northern region totaled 77 thousand barrels of crude oil per day and 1,151 million cubic feet of natural gas per day. This production area included 177 oil fields with an average well
depth of 2,100 meters.



We conduct exploration, production, and development activities in fields throughout Mexico. Mexico's main fields are described below.

Cantarell Complex.Cantarell is located on the continental shelf of the Gulf of Mexico and is the eighth largest petroleum
complex of fields in the world in terms of proved reserves. It consists of the Akal, Chac, Kutz and Nohoch fields, which extend over an area of 162 square kilometers. As of December 31, 2000,
there were a total of 333 wells drilled, 176 of which were producing. During 2000, the complex produced an average of 1.43 million barrels of crude oil and 550.7 million cubic feet of
natural gas per day. As of December 31, 2000, cumulative production was 7.9 billion barrels of crude oil and 3.3 trillion cubic feet of natural gas. Proved hydrocarbon reserves totaled
9,016.1 billion barrels of crude oil and 4.4 trillion cubic feet of natural gas. Total proved reserves were 10.1 billion barrels of crude oil equivalent, of which 6.8 billion were
developed.

Burgos Project.The Burgos fields of Northern Mexico produced an average of 1 billion cubic feet of natural gas per
day in 2000. This complex of fields is the largest producer of non-associated gas in Mexico. The most important producers are the Arcabuz-Culebra, Arcos and Cuitláhuac
fields.



Delta del Grijalva Project.In terms of production, this project is the third most important in the Southern region. It
includes the fields of Caparroso-Escuintle-Pijije, Escarbado, Luna-Palapa, Sen and Tizón. During 2000, the fields produced an average of 68.8 thousand barrels of
crude oil and 259.3 million cubic feet of natural gas per day. The most important producers are Caparroso-Pijije-Escuintle, Luna-Palapa and Sen.



35

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Antonio J. Bermúdez Complex.This complex of fields is the largest crude oil producer in the Southern region
and the fourth largest in Mexico. It consists of the Samaria, Cunduacan, Oxiacaque, Iride, Platanal and Carrizo fields, and covers an area of 192 square kilometers. As of December 31, 2000,
there were a total of 379 wells drilled, 94 of which were producing. During 2000, the complex produced an average of 167.2 thousand barrels of crude oil and 268.5 million cubic feet of
natural gas per day. As of December 31, 2000, cumulative production was 2.4 billion barrels of crude oil and 3.1 trillion cubic feet of natural gas, and proved hydrocarbon reserves
totaled 1.9 billion barrels of crude oil and 3.6 trillion cubic feet of natural gas. Total proved reserves were 2.8 billion barrels of crude oil equivalent, of which 1.7 billion
were developed.

Jujo-Tecominoacán Field.This field is the second largest crude oil producer in the Southern
region and the eighth largest producer in Mexico, and covers an area of 74 square kilometers. As of December 31, 2000, there were a total of 100 wells drilled, 47 of which were producing.
During 2000, the field produced an average of 92.7 thousand barrels of crude oil and 121.4 million cubic feet of natural gas per day. As of December 31, 2000 cumulative production
was 880 million barrels of crude oil and 1.1 trillion cubic feet of natural gas, and proved hydrocarbon reserves totaled 841.3 million barrels of crude oil and 1.8 trillion cubic feet of
natural gas. Total proved reserves were 1.3 billion barrels of crude oil equivalent, of which 898.6 million were developed.

Muspac Field.Muspac is the most important gas producer in the Southern region and the fifth most important in the country,
covering an area of 17 square kilometers. As of December 31, 2000, there were a total of 24 wells drilled, 20 of which were producing. During 2000, the field produced an average of
7.4 thousand barrels of crude oil and 215.8 million cubic feet of natural gas per day. As of December 31, 2000, cumulative production was 85 million barrels of crude oil
and 1,206.2 billion cubic feet of natural gas, and proved hydrocarbon reserves totaled 25.2 million barrels of crude oil and 817 billion cubic feet of natural gas, all of which
were developed.

Abkatún-Pol-Chuc Complex.This area is made up of three fields in the Southwestern
offshore region which extend over an area of 198 square kilometers. As of December 31, 2000, there were a total of 188 wells drilled, 35 of which were injectors. Currently, there are 57
producing wells. During 2000, the complex produced an average of 321.7 thousand barrels of crude oil and 335.8 million cubic feet of natural gas per day. As of December 31, 2000,
cumulative production was 3.5 billion barrels of crude oil and 3,084.6 billion cubic feet of natural gas, and proved hydrocarbon reserves totaled 465.0 million barrels of crude
oil and 455.8 billion cubic feet of natural gas. Total proved reserves were 572.4 million barrels of crude oil equivalent, of which 538.4 million were developed.

36

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Caan Field.This field is located in the Southwestern offshore region, and covers an area of 46 square kilometers. As of
December 31, 2000, there were a total of 41 wells drilled, 29 of which were producing. During 2000, the field produced an average of 181.5 thousand barrels of crude oil and
278 million cubic feet of natural gas per day. As of December 31, 2000, cumulative production was 525.5 million barrels of crude oil and 899.4 billion cubic feet of natural
gas, and proved hydrocarbon reserves totaled 237 million barrels of crude oil and 559.2 billion cubic feet of natural gas. Total proved reserves were 367.7 million barrels of
crude oil equivalent, of which 284.6 million were developed.

Ku-Maloob-Zaap Complex.This complex of fields is located off the coast of Campeche in Mexican
territorial waters in the Gulf of Mexico. This is Mexico's fourth most important complex of fields in terms of total remaining hydrocarbon reserves. It is composed of the Ku, Maloob and Zaap fields,
and extends over an area of 121 square kilometers. As of December 31, 2000, there were a total of 61 wells drilled, 42 of which were producing. During 2000, this complex produced an average of
284.6 thousand barrels of crude oil and 168.2 million cubic feet of natural gas per day. As of December 31, 2000, cumulative production was 1.5 million barrels of crude oil
and 795.2 billion cubic feet of natural gas, and proved hydrocarbon reserves totaled 1.4 billion barrels of crude oil and 0.95 trillion cubic feet of natural gas. Total proved reserves
were 1.7 billion barrels of crude oil equivalent, of which 332.9 million were developed.

Ek and Balam Fields.This complex of fields is located off the coast of Campeche in Mexican territorial waters in the Gulf of
Mexico. It is made up of two fields extending over an area of 43 square kilometers. As of December 31, 2000, there were a total of 35 wells drilled, 8 of which were producing. During 2000, the
fields produced an average of 20.76 thousand barrels of crude oil and 4.97 million cubic feet of natural gas per day. As of December 31, 2000, cumulative production was
95.4 million barrels of crude oil and 23.5 billion cubic feet of natural gas, and proved hydrocarbon reserves totaled 155.0 million
barrels of crude oil and 37.9 billion cubic feet of natural gas. Total proved reserves were 164.9 million barrels of crude oil equivalent, of which 154.3 million were developed.

Paleocanal de Chicontepec.This complex of fields is part of the northern region of our operations and is divided into
twenty-nine areas, which extend over an area of 3,731 square kilometers. As of December 31, 2000, there were a total of 1,138 wells drilled, 459 of which were producing. During
2000, Chicontepec produced an average of 8.4 thousand barrels of crude oil and 19.2 million cubic feet of natural gas per day. As of December 31, 2000, cumulative production was
108.2 million barrels of crude oil and 187.9 billion cubic feet of natural gas, and proved hydrocarbon reserves totaled 483 million barrels of crude oil and 1,048 billion
cubic feet of natural gas. Total proved reserves were 669 million barrels of crude oil equivalent, of which 50.5 million were developed.



The crude oil and natural gas pipeline network owned by Pemex-Exploration and Production connects crude oil and natural gas producing centers with refineries and
petrochemical plants. At the end of 2000, this pipeline network consisted of approximately 28,285 kilometers of pipe, of which 2,537 kilometers were located in the Marine region, 12,085 kilometers
were located in the Southern region and 13,663 kilometers were located in the Northern region. For a description of products transported by the pipeline network, see "Transportation and
Distribution" below.



During 2000, domestic consumption of crude oil amounted to approximately 1,367 thousand barrels per day, which represented 45% of our total crude oil
production. Through PMI's activities, we sold the remainder of our crude oil production abroad. See "International Trading" below. Maya crude oil accounted for 68% of exported crude oil
volume sold by PMI in 2000, but only 31% of domestic consumption.

37

---



The following table sets forth crude oil distribution.

Crude Oil Distribution

|                                       |                | At December 31, |         |         |        
|-------------------------------------- | -------------- | --------------- | ------- | ------- | -------
|
|
|
|Production                             |                | 2,858.3         |         | 3,022.2 |        
|Distribution                           |                |                 |         |         |        
|                                       | Refineries     |                 | 1,068.9 |         | 1,072.6
|                                       | Petrochemicals |                 | 207.4   |         | 194.3  
|                                       | Exports(1)     |                 | 1,552.3 |         | 1,730.5
|                                       |                |                 |         |         |        
|                                       |                | Total           |         | 2,828.7 |        
|                                       |                |                 |         |         |        
|Stock changes, statistical differences |                | 29.7            |         | 24.9    |        

---

Note:  Numbers
may not total due to rounding.

Source: Pemex-Exploration and Production.

Because
of its higher sulphur content, Maya crude oil requires extra processing and has lower refining yields than do more valuable sweet crudes, and thus requires extra investment by
the purchaser to refine. Because of this, we receive a lower price for Maya crude oil than we do for sweeter crude oils that cost less to refine. In addition, because of this price difference, we must
continue to support the export value of sour crude oil such as our Maya crude oil in relation to other grades of crude oil by creating incentives for refiners to invest in high-conversion
refineries capable of upgrading the relatively
large proportion of residue produced from processing sour crude oil in less efficient refining complex configurations. We may do this by entering into long-term Maya crude oil supply
agreements pursuant to which purchasers agree to undertake projects to expand the capacity of their respective refineries to upgrade residue from Maya crude oil.

Refining



Pemex-Refining's production processes include the following:



38

---



These
production processes together constitute Pemex-Refining's production capacity as set forth in the table below.

Refining Capacity by Production Process

|                   |                                     | At December 31,
|------------------ | ----------------------------------- | ---------------
|
|
|Production Process |                                     |                
|                   | Atmospheric distillation            |                
|                   | Vacuum distillation                 |                
|                   | Catalytic and thermal cracking      |                
|                   | Visbreaking                         |                
|                   | Reforming                           |                
|                   | Hydrotreatment                      |                
|                   | Alkylation and isomerization        |                
|                   | Natural gas liquid fractionation(1) |                

---

Source: Base de Datos Institucional(Pemex BDI)

At
the end of 2000, Pemex-Refining owned and operated six refineries, Cadereyta, Madero, Minatitlán, Salamanca, Salina Cruz and Tula, and one topping unit located in the
petrochemical complex of La Cangrejera. Our refineries are comprised of atmospheric and vacuum distillation units, where the bulk of crude oil input is processed. Secondary processing facilities
include desulphurization units and facilities for catalytic cracking, reforming and hydrotreating. During 2000, our refineries processed 1,227 thousand barrels per day of crude oil
(126 thousand barrels at Cadereyta, 149 thousand barrels at Madero, 172 thousand barrels at Minatitlán, 186 thousand barrels at Salamanca,

39

---

298 thousand barrels at Salina Cruz and 296 thousand barrels at Tula), which consisted of 776 thousand barrels per day of Olmeca and Isthmus crude oil and 451 thousand
barrels per day of Maya crude oil. For the location of each of these facilities, see "Overview by Business SegmentInfrastructure of PEMEX."

Since
1993, through our subsidiary company, P.M.I. Norteamérica, S.A. de C.V., we have participated in a limited partnership with Shell Oil Company in a refinery
located in Deer Park, Texas. Under the Deer Park Limited Partnership agreement, P.M.I. Norteamérica, S.A. de C.V. and Shell Oil Company each provides 50% of the refinery's crude
oil input and owns 50% of the refinery's output. The partnership completed a substantial upgrading program in mid-1995 to enable it to process Maya crude oil. PEMEX and Shell Oil Company
completed an expansion project at the Deer Park Refinery in April 2001 thereby increasing the capacity of the refinery by 60 thousand barrels per day to 340 thousand barrels per
day. The expansion project includes an expansion of the refinery's existing coking unit, a new sulphur plant and upgrades to the crude distillation, distillates hydrotreating and hydrocracking units.



Pemex-Refining produces a wide range of products derived from crude oil and natural gas, including liquefied petroleum gas, gasoline, jet fuel, diesel, fuel oil,
asphalts, lubricants and other refined oil and natural gas products. Pemex-Refining produced 1,246 thousand barrels per day of refined products (including dry gas by-products of the
refining process) in 2000, a decrease of 3.0% from 1999 levels.

40

---

The
following table sets forth, by category, Pemex-Refining's production of refined products from 1996 through 2000.

Pemex-Refining Production

|                 |                         | Year Ended December 31,   |         |         |        
|---------------- | ----------------------- | ------------------------- | ------- | ------- | -------
|
|
|
|Refinery runs    |                         |                           |         |         |        
|                 | Crude oil               |                           | 1,266.9 |         | 1,242.3
|                 | Liquids                 |                           | 15.9    |         | 0.2    
|                 |                         |                           |         |         |        
|                 |                         | Total                     |         | 1,282.8 |        
|                 |                         |                           |         |         |        
|Refined Products |                         |                           |         |         |        
|                 | Liquefied petroleum gas |                           | 62.3    |         | 38.3   
|                 | Gasoline                |                           |         |         |        
|                 |                         | Nova (leaded)/Base(1)     |         | 199.4   |        
|                 |                         | Pemex Magna               |         | 214.7   |        
|                 |                         | Pemex Premium             |         | 0.4     |        
|                 |                         | Others                    |         | 2.0     |        
|                 |                         |                           |         |         |        
|                 |                         |                           | Total   |         | 416.5  
|                 | Kerosenes               |                           |         |         |        
|                 |                         | Jet fuel                  |         | 61.7    |        
|                 |                         | Other kerosenes           |         | 7.0     |        
|                 |                         |                           |         |         |        
|                 |                         |                           | Total   |         | 68.7   
|                 | Diesel                  |                           |         |         |        
|                 |                         | Pemex Diesel              |         | 207.5   |        
|                 |                         | Low sulphur diesel        |         | 56.1    |        
|                 |                         | Others                    |         | 6.0     |        
|                 |                         |                           |         |         |        
|                 |                         |                           | Total   |         | 269.6  
|                 | Fuel oil                |                           | 418.0   |         | 426.2  
|                 | Other refined products  |                           |         |         |        
|                 |                         | Industrial gas oil        |         | 4.9     |        
|                 |                         | Asphalts                  |         | 23.3    |        
|                 |                         | Lubricants                |         | 6.7     |        
|                 |                         | Paraffins                 |         | 1.9     |        
|                 |                         | Still gas                 |         | 46.4    |        
|                 |                         | Other refined products(2) |         | 5.4     |        
|                 |                         |                           |         |         |        
|                 |                         |                           | Total   |         | 88.6   
|                 |                         |                           |         |         |        
|                 | Total refined products  |                           | 1,323.7 |         | 1,275.7
|                 |                         |                           |         |         |        

---

Note:  Numbers
may not total due to rounding.

Source: Pemex BDI.

Fuel
oil, automotive gasoline and diesels represented the bulk of Pemex-Refining's production. In 2000, fuel oil represented 34%, automotive gasoline represented 32% and diesels
represented 21% of total refined product production. Jet fuel represented 4% and liquefied petroleum gas represented 2% of total production of refined products in 2000. The remainder of
Pemex-Refining's production consisted of a variety of other refined products.

41

---

As
a result of our strategy of investing in technology to improve the quality of our fuels, over the past few years Pemex-Refining has increased its production of unleaded gasoline
(including Pemex Premium) in relation to leaded gasoline. The share of unleaded gasoline as a percentage of our total automotive gasoline production has increased from 73% in 1997 to 100% since 1998.
We also introduced new environmentally sound products such as Pemex Diesel, with 0.05% sulphur content. The share of Pemex Diesel as a percentage of total diesel produced by Pemex-Refining has
increased from 77% in 1996 to 96% in 2000. We have also promoted liquefied petroleum gas as an environmentally sound substitute fuel for gasoline in motor vehicles.



We market a full range of refined products, including gasoline, jet fuel, diesel, fuel oil and petrochemicals. We are one of a few major producers of crude oil
worldwide that experiences significant domestic demand for our refined products.

42

---

Over
the five years ended December 31, 2000, the value of Pemex-Refining's domestic sales of refined products was as follows:

Value of Domestic Sales(1)

|                       |                    | Year Ended December 31, |          |          |         
|---------------------- | ------------------ | ----------------------- | -------- | -------- | --------
|
|
|
|Oil Products           |                    |                         |          |          |         
|Gasoline               |                    |                         |          |          |         
|                       | Nova (leaded)(2)   |                         | Ps.      | 14,434.0 |         
|                       | Pemex Magna        |                         |          | 24,651.9 |         
|                       | Pemex Premium      |                         |          | 168.4    |         
|                       | Aviation fuels     |                         |          | 80.4     |         
|                       | Others             |                         |          | 142.3    |         
|                       |                    |                         |          |          |         
|                       |                    | Total                   |          |          | 39,477.0
|Kerosenes              |                    |                         |          |          |         
|                       | Jet fuel           |                         |          | 3,087.3  |         
|                       | Other kerosenes    |                         |          | 188.4    |         
|                       |                    |                         |          |          |         
|                       |                    | Total                   |          |          | 3,275.8 
|Diesel                 |                    |                         |          |          |         
|                       | Pemex Diesel       |                         |          | 15,839.9 |         
|                       | Low sulphur(3)     |                         |          | 1,509.7  |         
|                       | Others             |                         |          | 2,803.1  |         
|                       |                    |                         |          |          |         
|                       |                    | Total                   |          |          | 20,152.7
|Fuel oil               |                    |                         |          |          |         
|                       |                    | Total                   |          |          | 13,927.4
|Other refined products |                    |                         |          |          |         
|                       | Industrial gas oil |                         |          | 321.8    |         
|                       | Asphalts           |                         |          | 645.3    |         
|                       | Lubricants         |                         |          | 789.2    |         
|                       | Paraffins          |                         |          | 155.5    |         
|                       | Others             |                         |          | 1.9      |         
|                       |                    |                         |          |          |         
|                       |                    | Total                   |          |          | 1,913.7 
|                       |                    |                         |          |          |         
|Total oil products     |                    | Ps.                     | 78,746.6 |          | Ps.     
|                       |                    |                         |          |          |         
|Petrochemicals(4)      |                    | Ps.                     | 324.6    |          | Ps.     

---

Notes:  Numbers may not total due to rounding.
N.A. = not available.

Source: Pemex BDI.

The
largest consumers of fuels in Mexico are the Federal Electricity Commission and the subsidiary entities. The Federal Electricity Commission consumed approximately 80% of our fuel oil
production during 2000 pursuant to a fuel oil supply contract entered into in November 1995 under which we agreed to supply a minimum of 270,000 barrels of fuel oil per day to the Federal
Electricity Commission. The price per cubic meter of the fuel oil supplied to the Federal Electricity Commission is based on the three-month average spot price per cubic meter of Fuel Oil No. 6
(3% sulphur) at Houston, Texas, as quoted in Platt's U.S. Marketscan and adjusted for quality and transportation cost

43

---

differentials. In addition, the price of the fuel oil is discounted by a commercial margin on each cubic meter of fuel oil. In 2000, this volume discount amounted to approximately 1.9% of total fuel
oil sales to the Federal Electricity Commission. The contract can be terminated by either party upon six months' notice. The total amount paid to us by the Federal Electricity Commission under this
contract in 2000 was Ps. 27,230 million and represented 6.6% of our total consolidated sales revenues.

The
volume of our domestic gasoline sales in 2000 increased by 3.9% from 1999 levels, from 512.6 thousand barrels per day in 1999 to 532.7 thousand barrels per day in 2000.
By the end of 1997, we stopped selling Nova low-octane leaded gasoline in Mexico. This measure occurred earlier than originally planned and required us to import high-octane
unleaded gasoline in 1998 and 1999. The volume of our domestic diesel sales increased by 3.6%, from 274.7 thousand barrels per day in 1999 to 284.7 thousand barrels per day in 2000.

44

---

The
volume of Pemex-Refining's domestic sales of refined products for the five-year period ended December 31, 2000 was distributed as follows:

Volume of Domestic Sales

|                  |                    | Year Ended December 31, |       |         |      
|----------------- | ------------------ | ----------------------- | ----- | ------- | -----
|
|
|
|Oil Products      |                    |                         |       |         |      
|                  | Gasoline           |                         |       |         |      
|                  |                    | Nova (leaded)(1)        |       | 188.8   |      
|                  |                    | Pemex Magna             |       | 290.3   |      
|                  |                    | Pemex Premium           |       | 1.6     |      
|                  |                    | Aviation fuels          |       | 0.6     |      
|                  |                    | Others                  |       | 1.2     |      
|                  |                    |                         |       |         |      
|                  |                    |                         | Total |         | 482.4
|                  | Kerosenes          |                         |       |         |      
|                  |                    | Jet fuel                |       | 44.9    |      
|                  |                    | Other kerosenes         |       | 2.4     |      
|                  |                    |                         |       |         |      
|                  |                    |                         | Total |         | 47.3 
|                  | Diesel             |                         |       |         |      
|                  |                    | Pemex Diesel            |       | 187.8   |      
|                  |                    | Low sulphur(2)          |       | 19.9    |      
|                  |                    | Others                  |       | 36.2    |      
|                  |                    |                         |       |         |      
|                  |                    |                         | Total |         | 243.9
|                  | Fuel oil           |                         |       |         |      
|                  |                    |                         | Total |         | 411.2
|                  | Other oil products |                         |       |         |      
|                  |                    | Industrial gas oil      |       | 5.3     |      
|                  |                    | Asphalts                |       | 15.4    |      
|                  |                    | Lubricants              |       | 6.6     |      
|                  |                    | Paraffins               |       | 1.7     |      
|                  |                    | Others                  |       | 1.6     |      
|                  |                    |                         |       |         |      
|                  |                    |                         | Total |         | 30.6 
|                  |                    |                         |       |         |      
|                  |                    | Total oil products      |       | 1,215.4 |      
|                  |                    |                         |       |         |      
|Petrochemicals(3) |                    | 161.1                   |       | 90.6    |      

---

Note:  Numbers
may not total due to rounding

N.A. =
not available.

Source: Pemex BDI

At
the retail level, we now offer standard and premium grades of unleaded gasoline throughout the country. Our efforts to build and enhance our brands have also progressed during 2000.
More than 98% of Mexico's independent gasoline service stations now participate in our franchise program, which provides financial assistance to upgrade equipment and facilities and technical
assistance in the

45

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development of marketing and customer service programs. At the end of 2000, there were 4,767 retail service stations in Mexico, of which 4,702 were privately owned and operated as franchises.



Over the last six years, Pemex-Refining has focused its investment program on enhancing the quality of gasoline and diesel to meet new environmental standards in
Mexico, improving its ability to process heavy crudes in order to optimize the crude oil blend in the refineries and increasing the production of unleaded gasoline and diesel to supply growing demand
at low cost, as opposed to increasing its overall
crude oil processing capacity. In the medium-term, Pemex-Refining will continue to import unleaded gasoline to satisfy domestic demand. During 2000, Pemex-Refining imported approximately
73 thousand barrels per day of unleaded gasoline, which represented 13.7% of total domestic demand for unleaded gasoline in that year. During 2001, Pemex-Refining imported approximately
121 thousand barrels per day of unleaded gasoline, which represented 22% of total domestic demand for unleaded gasoline in that year.

In
2001, Pemex-Refining invested Ps. 7,222 million, as compared to Ps. 22,072 million in 2000, representing a 67% decrease in investment in combined PIDIREGAS and
non-PIDIREGAS capital expenditures due to the partial recognition of the Cadereyta project as a capital expenditure in 2000, although the project had not yet been completed. Of the Ps.
7,222 million, we invested Ps. 684 million in the Cadereyta PIDIREGAS. Amounts that were originally budgeted for investment in the Madero, Salamanca and Tula PIDIREGAS in 2001 were
allocated to the 2002 budget, as these projects are expected to be completed in 2002.

Cadereyta.In 1997, Pemex-Refining awarded a U.S. $1.6 billion contract to upgrade and revamp the Cadereyta refinery
toConsorcio Proyecto Cadereyta(CONPROCA), a consortium formed by SK Engineering & Construction Co., Ltd., Siemens AG and Triturados
Basálticos y Derivados, S.A. de C.V. The project will increase clean fuel production substantially, specifically gasoline and diesel, which will enable Pemex-Refining to fulfill future
demand requirements in northern Mexico and comply with future environmental regulations. As of December 2000 and December 2001, the project was certified as 98.18% and 99.31% complete,
respectively. Pemex-Refining made the first amortization payment of U.S. $121.2 million on December 15, 2000. During 2001, Pemex-Refining made the second and third amortization payments
of U.S. $121.2 million each on June 15, 2001 and December 15, 2001.

Madero.In February 1999, Pemex-Refining awarded a U.S. $1.2 billion contract for the Madero refinery upgrading
project to another consortium, PEMOPRO, S.A. de C.V., led by SK Engineering & Construction Co., Ltd., Siemens AG and Triturados Basálticos y Derivados, S.A. de C.V. The
total cost of the project is estimated at U.S. $1.6 billion and will involve the construction of 10 new plants and the upgrading of five others at the Madero complex in the state of Tamaulipas
in northeastern Mexico. The project is expected to increase the Madero refinery's processing capacity for heavy crude oil (Maya) by 125,000 barrels per day, increase gasoline production by 34,000
barrels per day, increase middle distillates (diesel and jet fuel) production by 15,000 barrels per day and reduce production of high sulphur fuel oil by 13,000 barrels per day. As of
December 2000 and December 2001, 55% and 95.11% of the total work for the Madero project had been completed, respectively. The project was completed on October 24, 2002.

Tula and Salamanca Projects.On November 11, 1999, Pemex-Refining awarded the Tula and Salamanca projects to Samsung
Co. through an international bidding process. These projects are dedicated exclusively to increasing gasoline production, whereas the Cadereyta and Madero projects are dedicated to increasing heavy
crude oil processing capacities through residual conversion. Upon the successful arrangement of a U.S. $333.5 million credit facility on March 10, 2000, Samsung Co. began construction on
both projects. The construction period for both the Tula and Salamanca projects lasted 27 months. Total costs are expected to be U.S. $139.0 million for the Tula Project and U.S.

46

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$194.5 million for the Salamanca project. As of December 2000, the Tula and Salamanca projects were 34.28% and 25.89% complete, respectively. As of December 2001, the Tula and
Salamanca projects were 97.87% and 95.23% complete, respectively. The Tula project was completed on August 27, 2002, and the Salamanca project is expected to be delivered in the second half of
2002.

Minatitlán and Salina Cruz Projects.These refining projects are intended to increase production of high
quality gasoline and middle distillates and to improve the crude oil blend. The bidding packages for these projects are ready and are pending final approval. The construction period is expected to
last approximately 36 months following the financial closing.

Non-PIDIREGAS Investments.Pemex-Refining invested Ps. 6,537.7 million in 2001, not including expenditures
relating to the Cadereyta, Madero, Tula and Salamanca PIDIREGAS. Strategic projects, in addition to those described above, comprised Ps. 2,282.7 million of the total investment, operating
projects represented Ps. 2,836.5 million of the total investment and the remaining Ps. 1,418.5 million was dedicated mainly to acquisitions of equipment, research and development and
complementary investments.

Pemex-Refining
invested Ps. 6,918.3 million in 2000, not including expenditures relating to the Cadereyta, Madero, Tula and Salamanca PIDIREGAS. Strategic projects, in addition to
those described above, comprised Ps. 2,445.3 million of the total investment, operating projects represented Ps. 3,475.6 million of the total investment and the remaining Ps.
997.4 million was dedicated mainly to acquisitions of equipment, research and development and complementary investments.

2002 Refining Budget.For 2002, Pemex-Refining has budgeted Ps. 21,445 million for investment in PIDIREGAS and Ps.
8,942.2 million for investment in non-PIDIREGAS expenditures. The non-PIDIREGAS budget includes Ps. 1,707.6 million in amortization payments for PIDIREGAS, or 19%
of the total budget. Pemex-Refining will invest 23% of the total amount to expand and upgrade refineries, 13% in environmental and industrial safety projects, 2% in pipeline systems and distribution
terminals, 22% in maintenance and rehabilitation projects and 21% in other projects and acquisitions.

Gas and Basic Petrochemicals



Pemex-Exploration and Production's average natural gas production decreased by 2.3% from 4,791 million cubic feet per day in 1999 to 4,679 million
cubic feet per day in 2000, while the average natural gas production of Pemex-Gas and Basic Petrochemicals increased by 3.0%, from 2,709 million cubic feet per day in 1999 to
2,791 million cubic feet per day in 2000. Natural gas production associated with crude oil production accounted for 72% of production of natural gas in 2000, with the remainder of natural gas
production consisting of extraction from fields holding natural gas reserves. Although natural gas production is more geographically diverse than crude oil production, 20 fields accounted for 66% of
all production in 2000. Of the total production, 33% originated in the Marine region, 40% in the Southern region and the remainder in the Northern region.

All
natural gas production is directed to Pemex-Gas and Basic Petrochemical's gas processing facilities. At the end of 2000, Pemex-Gas and Basic Petrochemicals
owned ten facilities.

The
following facilities are located in the Southern region:



47

---



The
following facility is located in the Northern region:



48

---



The
following tables set forth Pemex-Gas and Basic Petrochemicals' total natural gas processing and production, as well as processing capacity, for the five years ended
December 31, 2000.

Natural Gas Processing and Production(1)

|           |                                       | Year Ended December 31, |       |       |      
|---------- | ------------------------------------- | ----------------------- | ----- | ----- | -----
|
|
|
|Processing |                                       |                         |       |       |      
|           | Wet gas                               |                         | 3,227 |       | 3,338
|           |                                       | Sour gas                |       | 3,034 |      
|           |                                       | Sweet gas(2)            |       | 192   |      
|           | Gas to natural gas liquids extraction |                         | 3,350 |       | 3,389
|           |                                       | Wet gas                 |       | 3,078 |      
|           |                                       | Reprocessing streams(3) |       | 272   |      
|Production |                                       |                         |       |       |      
|           | Dry gas(4)                            |                         | 2,615 |       | 2,799
|           | Natural gas liquids(5)(6)             |                         | 433   |       | 400  
|           | Liquefied petroleum gas(5)            |                         | 187   |       | 177  
|           | Ethane(5)                             |                         | 146   |       | 125  
|           | Naphtha(5)                            |                         | 79    |       | 84   
|           | Sulphur(7)                            |                         | 761   |       | 750  

---

Source: Pemex-Gas and Basic Petrochemicals.

49

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Processing Capacity

Year Ended December 31,1996

1997

1998

1999

2000(in millions of cubic feet per day,
except where otherwise indicated)Sweetening plantsSour condensates(1)

168

192

192

192

192Sour natural gas

3,553

3,553

3,753

3,753

3,753Natural gas liquids recovery plantsCryogenics(2)

2,634

3,234

3,959

4,559

4,559Absorption(3)

750

750

750

475

475Total

3,384

3,984

4,709

5,034

5,034Natural gas liquids fractionating(1)(4)

450

450

554

554

554


---

Source: Pemex-Gas and Basic Petrochemicals.

Domestic consumption of dry gas, which is natural gas with a methane content of more than 90%, totaled 3,836 million cubic feet per day in 2000, a 9.0%
increase from the 1999 domestic consumption of 3,519 million cubic feet per day. The subsidiary entities consumed approximately 46% of the total domestic dry gas consumed in 2000. The
industrial sector consumed 26%, the electrical sector consumed 23% and residential consumers consumed the remaining 5%.

We
import dry gas to satisfy shortfalls in our production and to meet demand in areas of northern Mexico which, due to the distance from the fields, can be supplied more efficiently by
importing natural gas from the United States. We imported 231 million cubic feet per day of dry gas in 2000, a 58% increase from 146.0 million cubic feet per day imported in 1999.

Pemex-Gas
and Basic Petrochemicals also produces condensates, which include liquid hydrocarbons obtained from sweet natural gas and recovered in surface separating facilities
and liquid hydrocarbons
condensed in natural gas pipelines. Our production of natural gas liquids, including stabilized condensates and reprocessing and other fractionating streams, decreased by 0.4%, from
447 thousand barrels per day in 1999 to 445 thousand barrels per day in 2000, as our capacity recovered due to repairs and improvements.

Pemex-Gas
and Basic Petrochemicals processes sweet and sour condensates and uses sweet condensates at its Reynosa facilities to produce solvents and naphtha. It also uses
sour condensates, which have a higher sulphur content, to produce stabilized sweet condensates, such as ethane, propane, butane and certain pentanes. Production of sour condensates amounted to
90 thousand barrels per day in 2000 and 87 thousand barrels per day in 1999. Of these amounts, 79 thousand barrels per day (91%) resulted in stabilized condensates during 1999,
and 84 thousand barrels per day (93%) resulted in stabilized condensates during 2000.

In
April 1999, Pemex-Gas and Basic Petrochemicals began operating its Cryogenic Plant No. 2 with a capacity of 600 million cubic feet per day at the
Ciudad Pemex natural gas processing center.

In
July 1996, three accidental explosions occurred at the Cactus natural gas processing complex in Reforma, Chiapas, which destroyed one natural gas liquid recovery plant, damaged
a second natural gas liquid recovery plant and damaged the system of pipelines connecting these plants with other facilities.

50

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Since the explosions, our liquids recovery capacity has been steadily recovering. We completed the repair and upgrade of the damaged plants in April 1999.

Over
the five years ended December 31, 2000, the value of Pemex-Gas and Basic Petrochemicals' domestic sales were distributed as follows:

Value of Domestic Sales of Pemex-Gas and Basic Petrochemicals(1)

|                        |                   | Year Ended December 31, |       |             |      
|----------------------- | ----------------- | ----------------------- | ----- | ----------- | -----
|
|
|
|Natural gas             |                   | Ps.9,999.3              |       | Ps.12,553.6 |      
|Liquefied petroleum gas |                   | 9,187.2                 |       | 14,004.1    |      
|Petrochemicals          |                   |                         |       |             |      
|                        | Hexane            |                         | 119.4 |             | 135.7
|                        | Dissolving agents |                         |      |             |     
|                        | Sulphur           |                         | 162.9 |             | 171.1
|                        | Carbon black      |                         | 98.7  |             | 108.8
|                        | Pentanes          |                         | 23.3  |             | 26.8 
|                        | Heptane           |                         | 14.8  |             | 22.9 
|                        | Butane            |                         | 6.7   |             | 9.9  
|                        | Propane           |                         | 6.8   |             | 10.0 
|                        | Isobutane         |                         | 4.8   |             | 6.2  
|                        | Others            |                         | 6.1   |             | 9.8  
|                        |                   |                         |       |             |      
|                        |                   | Total Petrochemicals    |       | 443.5       |      
|Total                   |                   | Ps.19,630.0             |       | Ps.27,058.9 |      
|                        |                   |                         |       |             |      

---

Note:
Numbers may not total due to rounding

Source: Pemex-Gas and Basic Petrochemicals.



Pemex-Gas and Basic Petrochemicals conducts certain management, real estate and distribution activities through its subsidiaries. The following table
lists Pemex-Gas and Basic Petrochemicals' subsidiaries, their principal operating activities and Pemex-Gas and Basic Petrochemicals' ownership interest:

Subsidiaries of Pemex-Gas and Basic Petrochemicals(1)

|Subsidiary                         |  | Principal Activity                         |  | Ownership
Interest |  
|---------------------------------- |  | ------------------------------------------ |  | ------------------ | -
|Gasoductos de Chihuahua S. de R.L. |  | Transport of gas                           |  | 50.00              | %
|Mexgas International, Ltd.         |  | Holding company                            |  | 100.00             |  
|Pasco Terminals, Inc.              |  | Storage and distribution of liquid sulphur |  | 100.00             |  
|Pasco International, Ltd.          |  | Holding company                            |  | 100.00             |  
|Pan American Sulphur, Ltd.         |  | Storage and distribution of liquid sulphur |  | 100.00             |  
|Terrenos para Industrias, S.A.     |  | Real estate holding company                |  | 100.00             |  
|CH4 Energía S.A. de C.V.           |  | Trading of Gas                             |  | 50.00              |  

---

Source: Pemex-Gas and Basic Petrochemicals.

51

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The Regulatory Law, as amended effective May 12, 1995, provides that private and "social sector" companies may, with governmental authorization, store,
distribute and transport natural gas, and may construct, own and operate natural gas pipelines, facilities and equipment. The regulations implementing this amendment entered into effect on
November 9, 1995. The primary purpose of the change in the law is to increase the use of natural gas, which is a clean-burning fuel, among industrial users that currently burn fuel oil. Natural
gas is a particularly practical substitute for fuel oil due to the low cost of converting existing equipment from fuel oil to natural gas and the existence of significant natural gas reserves in
Mexico. In addition, we believe that the increased use of natural gas will promote economies of scale, which should tend to lower natural gas prices and enable the Mexican natural gas industry to
comply with the stricter environmental standards that went into effect in 1998.

Notwithstanding
these regulatory changes, we retain the exclusive right to explore, exploit, produce and sell to the initial purchaser natural gas, as well as to transport and store
natural gas when those activities are inextricably linked with such exploitation and production. In addition, we retain exclusive right over the production of petroleum and natural gas derivatives
classified as basic petrochemicals. Due to the amendment of the Regulatory Law, we are experiencing competition from the private sector in natural gas distribution. However, private sector
distribution has increased use of natural gas (for which we remain the sole producer), which may offset the negative effect of the new competition.

TheComisión Reguladora de Energía(Energy Regulatory Commission), which is a technical agency of the
Ministry of Energy with operational and budgetary autonomy within the Ministry of Energy:



Under
the regulatory framework, we maintain an important role in the supply of natural gas given our position as the sole domestic producer of this product. We must apply the Energy
Regulatory Commission's methodologies for establishing our initial domestic sales prices for natural gas that we produce (price regulation does not affect imported natural gas) and calculating our
transportation rates. We then must submit those prices and rates to the Energy Regulatory Commission for its approval. Since 1997, the Regulatory Law has required us to provide the private sector with
open access to our transportation system for distribution, ending our prior exclusive rights over the lines of distribution. We continue to market natural gas and may develop natural gas storage
systems.

In
1996, the Energy Regulatory Commission approved the Gradual Access Program for 1996-1997 which allowed for subsequent private sector access to the domestic natural gas
market as well as to natural gas imports of more than 5 million cubic feet per day in northern Mexico. As part of this program, PEMEX opened the Naco-Hermosillo pipeline for private
sector use in September 1996 and granted the first permit for private sector distribution pipelines in Mexicali in August 1996. The Gradual Access Program of 1996-1997 also
required that we open access to certain distribution assets to the private sector. As a result, Pemex-Gas and Basic Petrochemicals' distribution assets located in Chihuahua,
Cuauhtémoc-Anáhuac, Ciudad Juárez, Hermosillo, Toluca, Río Pánuco, Norte de Tamaulipas, Distrito Federal, Valle
Cuautitlán-Texcoco, Saltillo, Nuevo Laredo, Querétaro and Monterrey have been privatized. As of 1999, all of our natural gas distribution pipelines were opened to private
sector use and there were no further distribution assets left for us to divest pursuant to the program.

52

---



We are an importer of natural gas and have prepared our budget for 2001 based on a natural gas import price assumption of U.S. $3.90 per million British Thermal
Units ("BTUs"). To cover our exposure to fluctuations in international natural gas prices, which may affect our budget assumptions, we have entered into and will continue to enter into contracts that
hedge against such price fluctuations.

As
part of the Mexican Government's policy of promoting economic growth, the Ministry of Finance and Public Credit, the Ministry of Economy, the Ministry of Energy and PEMEX announced a
natural
gas pricing program on January 17, 2001 for certain industrial consumers of natural gas in Mexico. Under that program, Mexican industrial consumers that hold outstanding natural gas price
hedging instruments may enter into a three-year agreement with us to purchase natural gas from us at a fixed reference price of U.S. $4.00 per million BTUs. The purchase price represents
approximately a 58% discount on spot prices offered in the market as of January 17, 2001. We entered into a number of such contracts in 2001. As part of our risk management strategy, we have
also entered into a number of derivative instruments, primarily swaps and futures, for hedging purposes.

For
more information on these fixed price sales, see "Item 11Quantitative and Qualitative Disclosures About Market RiskCommodity Instruments."



Pemex-Gas and Basic Petrochemicals invested Ps. 2,676 million in 2001, as compared to Ps. 3,719 million in 2000, in projects primarily
related to natural gas and condensates processing, transportation and storage. In 2002, the Mexican Government approved Ps. 734 million of capital expenditures for investment in a new PIDIREGAS
for Pemex-Gas and Basic Petrochemicals at the modular cryogenic plants in Reynosa. In addition to this, Ps. 4,758 million has been budgeted for Pemex-Gas and Basic
Petrochemicals' other non-PIDIREGAS-related expenditures.

Petrochemicals



At the end of 2000, we operated 116 industrial plants and auxiliary units located in six petrochemical complexes and four petrochemical units.
Pemex-Gas and Basic Petrochemicals operated 63 of these plants and auxiliary units, and Pemex-Petrochemicals operated the remaining 53 plants. Pemex-Petrochemicals had total installed
capacity sufficient to produce 11.6 million tons per year of petrochemical products in 2000, 0.8% less than its 1999 capacity of 11.7 million tons per year. Pemex-Petrochemicals' total
production capacity for the last five years was distributed among its facilities as follows:

|                       |                       | Percentage of Pemex-Petrochemical's
Total Capacity |      
|---------------------- | --------------------- | -------------------------------------------------- | -----
|
|Petrochemical Facility |                       |                                                    |      
|                       | Cosoleacaque          |                                                    | 34.53
|                       | La Cangrejera         |                                                    | 26.87
|                       | Morelos               |                                                    | 14.76
|                       | Pajaritos             |                                                    | 10.55
|                       | Escolín               |                                                    | 2.39 
|                       | San Martín Texmelucan |                                                    | 3.07 
|                       | Others                |                                                    | 7.83 
|                       |                       |                                                    |      
|                       |                       | Total                                              |      
|                       |                       |                                                    |      

---

Source: Pemex-Petrochemicals.

53

---



We manufacture 39 different petrochemical products, including:



Pemex-Gas
and Basic Petrochemicals produces certain basic petrochemicals, such as sulphur and hexanes, while Pemex-Petrochemicals produces non-basic
petrochemicals and Pemex-Refining produces a limited amount of non-basic petrochemicals as part of the crude oil refining process. Pemex-Petrochemicals' and Pemex-Gas and Basic
Petrochemicals' combined annual total petrochemical production (excluding ethane and butane gases) decreased by 9.2% in 2000, from 12,823 thousand tons in 1999 to 11,647 thousand tons in
2000. This decrease was caused primarily by a reduction in the production of methane and its derivatives and aromatics and their derivatives. Pemex-Petrochemicals alone produced 6,836 thousand
tons of petrochemicals in 2000, a 14.4% decrease from the 7,991 thousand tons it produced in 1999. The remainder was produced by Pemex-Gas and Basic Petrochemicals.

Over
the past five years, Pemex-Petrochemicals' petrochemical production has decreased. This is primarily due to steadily decreasing petrochemical prices in international markets,
contraction in demand in Mexico for petrochemicals and increasing competition in petrochemical production. These factors, together with increasing prices in raw materials, resulted in high production
costs that caused Pemex-Petrochemicals to downsize some of its operations. The following table summarizes the annual production associated with the principal petrochemical activities of
Pemex-Petrochemicals for the five years ended December 31, 2000.

54

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Pemex-Petrochemicals Production

|               |                           | Year Ended December 31, |        |        |       
|-------------- | ------------------------- | ----------------------- | ------ | ------ | ------
|
|
|
|Liquids        |                           |                         |        |        |       
|               | Pentanes                  |                         | 1,163  |        | 589   
|               | Hexanes                   |                         | 62     |        | 64    
|               | Heptanes                  |                         | 21     |        | 19    
|               |                           |                         |        |        |       
|               |                           | Total                   |        | 1,246  |       
|Other inputs   |                           |                         |        |        |       
|               | Oxygen                    |                         | 476    |        | 496   
|               | Nitrogen                  |                         | 115    |        | 110   
|               | Hydrogen                  |                         | 15     |        | 15    
|               |                           |                         |        |        |       
|               |                           | Total                   |        | 606    |       
|Petrochemicals |                           |                         |        |        |       
|               | Methane derivatives       |                         | 5,961  |        | 5,067 
|               | Ethane derivatives        |                         | 3,088  |        | 3,089 
|               | Aromatics and derivatives |                         | 1,649  |        | 1,461 
|               | Propylene and derivatives |                         | 446    |        | 377   
|               | Others                    |                         | 107    |        | 56    
|               |                           |                         |        |        |       
|               |                           | Total                   |        | 11,251 |       
|Other products |                           |                         |        |        |       
|               | Hydrochloric acid         |                         | 128    |        | 131   
|               | Muriatic acid             |                         | 61     |        | 39    
|               |                           |                         |        |        |       
|               |                           | Total                   |        | 189    |       
|               |                           |                         |        |        |       
|               | Total                     |                         | 13,292 |        | 11,513
|               |                           |                         |        |        |       

---

Note:
Numbers may not total due to rounding. Source: Pemex-Petrochemicals.



Including the expenditures related to the Morelos petrochemical facility (which is indirectly controlled by Pemex-Petrochemicals and has its own budget),
Pemex-Petrochemicals invested Ps. 1,541 million in 2001, as compared to Ps. 1,143 million in 2000, in projects primarily related to natural gas and condensates processing, transportation
and storage. For 2002, Pemex-Petrochemicals expects to invest Ps.2,704 million on these projects.

55

---





Over the five years ended December 31, 2000, the value of Pemex-Petrochemicals' domestic sales were distributed as set forth in the table below. The sales
of petrochemical products by Pemex-Gas and Basic Petrochemicals and Pemex-Refining are included under "Gas and Basic Petrochemicals" and "Refining" above.

Value of Domestic Sales(1)

|                          |       | Year Ended December 31, |       |        |    
|------------------------- | ----- | ----------------------- | ----- | ------ | ---
|
|
|
|Petrochemical Product     |       |                         |       |        |    
|Methane derivatives       |       | Ps.                     | 3,354 |        | Ps.
|Ethane derivatives        |       |                         | 5,265 |        |    
|Aromatics and derivatives |       |                         | 2,210 |        |    
|Propylene and derivatives |       |                         | 1,410 |        |    
|Others                    |       |                         | 29    |        |    
|                          |       |                         |       |        |    
|                          | Total |                         | Ps.   | 12,267 |    
|                          |       |                         |       |        |    

---

|Note:   | Numbers may not total due to rounding.
|------- | --------------------------------------
|(1)     | Excludes value added tax.             
|Source: | Pemex-Petrochemicals.                 



Since the end of 1993, foreign and domestic private investors have been allowed to own 100% of any petrochemical plant producing non-basic
petrochemicals. However, under Mexican law, only PEMEX may produce and engage in the first-hand sale of basic petrochemicals. Before the amendment to the Regulatory Law on
November 14, 1996, the Ministry of Energy was responsible for determining which petrochemical products were classified as "basic" and nearly all petrochemicals were classified as such. In that
regulatory environment, we expanded our petrochemical division rapidly. The amendment to the Regulatory Law limited basic petrochemicals to nine products (down from 34 products in 1986 and 19 products
in 1989) that are used in the petrochemical production process. The amendment further allowed companies that produce basic petrochemicals as by-products of non-basic
petrochemical production to sell these basic petrochemicals internally within plants in the same unit or complex or to sell those basic petrochemicals to PEMEX.

In
October 1992, PEMEX and the Mexican Government announced a plan to privatize the non-basic petrochemical plants owned and operated by Pemex-Petrochemicals. In 1997,
the Board of Directors of Petróleos Mexicanos approved a secondary petrochemical private sector participation plan authorizing the creation of seven new subsidiaries of
Pemex-Petrochemicals, which were created in 1997. The seven subsidiaries listed below hold the assets and liabilities associated with the production of non-basic petrochemicals, as well as
the real estate corresponding to each complex or plant:



56

---



Currently,
Pemex-Petrochemicals is the sole shareholder of these seven subsidiaries, which own and operate our secondary petrochemical facilities at Cosoleacaque, Escolín
(including the assets of Reynosa), Tula, Camargo, Cangrejera, Morelos and Pajaritos. On June 28, 2002, the Board of Directors of Pemex-Petrochemicals approved the merger of the seven
subsidiaries into Pemex-Petrochemicals. The merger is subject to the approval of the Board of Directors of Petróleos Mexicanos and the board of directors and shareholders of each
subsidiary.

International Trading



The PMI Group includes PMI and the other PEMEX subsidiaries and affiliates that conduct international commercial activities for our products, except for natural
gas, which is marketed directly by Pemex-Gas and Basic Petrochemicals. The PMI Group's main objective is to assist in maximizing our profitability and optimizing our operations through the
use of international trade, facilitating the link between the international markets and us and pursuing new business opportunities in marketing our products. The PMI Group manages the international
sales of our crude oil and petroleum products and acquires in the international markets those petroleum products that we import to satisfy domestic demand. Sales and purchases of petroleum products
(refined products, petrochemical products and liquefied petroleum gas) in the international markets are carried out through PMI Trading. PMI Trading also performs third-party trading, chartering and
risk-management activities.



PMI purchases crude oil from Pemex-Exploration and Production and then sells it to PMI's customers. PMI sold an average of 1,604 thousand barrels per day
of crude oil in 2000, which constituted 53.2% of our total crude oil production.

57

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The
following tables set forth the composition and average prices of our crude oil exports for the periods indicated:

|                                 |                                       | Year Ended December 31,
|-------------------------------- | ------------------------------------- | -----------------------
|
|
|Crude oil exports (by volume)(1) |                                       |                        
|                                 | Olmeca (API gravity of 38°-39°)       |                        
|                                 | Isthmus (API gravity of 32°-33°)      |                        
|                                 | Maya (API gravity of 21°-22°)         |                        
|                                 | Altamira (API gravity 15.0°-16.5°)(2) |                        
|                                 |                                       |                        
|                                 |                                       | Total                  
|                                 |                                       |                        

---

|Notes:   | Numbers may not total due to rounding.                                                                                                                                                                                                                                                                                                                
|-------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         | tbpd = thousand barrels per day.                                                                                                                                                                                                                                                                                                                      
|         | API Gravity refers to the specific gravity, or density, of liquid petroleum products measured in degrees on the American Petroleum Institute scale. On the API scale, oil with the least specific gravity has the highest API
gravity. In addition, if all other things are equal, the higher the API gravity, the greater the value of the crude oil.
|(1)      | Includes sales of crude oil of 96 and 108 thousand barrels per day to affiliated companies in 1996 and 1997, respectively.                                                                                                                                                                                                                            
|(2)      | PEMEX began selling Altamira crude oil in late 1998 and recorded Altamira crude oil sales separately beginning in 1999.                                                                                                                                                                                                                               
|Sources: | 1996 and 1997 figures: PEMEX's 1996 and 1997 Statistical Yearbooks. 1998, 1999 and 2000 figures: PMI operating statistics, which are based on information in bills of lading.                                                                                                                                                                         

|                 |             | Year Ended December 31,        
|---------------- | ----------- | -------------------------------
|
|
|Crude Oil Prices |             |                                
|                 | Olmeca      |                                
|                 | Isthmus     |                                
|                 | Maya        |                                
|                 | Altamira(1) |                                
|                 |             | Weighted average realized price

---

|(1)      | PEMEX began selling Altamira crude oil in 1998.                                                          
|-------- | ---------------------------------------------------------------------------------------------------------
|Sources: | 1996 and 1997 figures: PEMEX's 1998 Statistical Yearbook.                                                
|         | 1998, 1999 and 2000 figures: PMI operating statistics, which are based on information in bills of lading.

Geographic Distribution of Export Sales

In 2000, 97% of PMI's sales of our crude oil exports were to countries in the western hemisphere. As of December 31, 2000, PMI had 40 customers in 15
countries. Among these countries, the United States, the Netherlands Antilles, Spain and Japan have consistently been our largest customers.

58

---

The
following table sets forth crude oil export sales by country:

Crude Oil Exports by Country

|                     |       | Percentage of Exports |      
|-------------------- | ----- | --------------------- | -----
|
|United States        |       | 78.3                  | %    
|Spain                |       | 6.2                   |      
|Japan                |       | 5.6                   |      
|Netherlands Antilles |       | 4.3                   |      
|Canada               |       | 1.3                   |      
|Others               |       | 4.2                   |      
|                     |       |                       |      
|                     | Total |                       | 100.0
|                     |       |                       |      

---

|Note:    | Numbers may not total due to rounding.                                                                                                                             
|-------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Sources: | 1996 and 1997 figures: PEMEX's 1998 Statistical Yearbook. 1998, 1999 and 2000 figures: PMI operating statistics, which are based on information in bills of lading.

59

---

The
following table sets forth the geographic distribution of PMI's sales of crude oil exports from January 1, 1996 through December 31, 2000. The table also presents the
distribution of exports among PMI's crude oil types for those years.

Composition and Geographic Distribution of Crude Oil Export Sales

|                                      |                           | At December 31,
|------------------------------------- | ------------------------- | ---------------
|
|
|PMI Crude Oil Export Sales to:        |                           |                
|                                      | United States and Canada  |                
|                                      | Europe                    |                
|                                      | Central and South America |                
|                                      | Far East                  |                
|                                      | Africa                    |                
|                                      |                           |                
|                                      |                           | Total          
|                                      |                           |                
|Olmeca (API gravity of 38°-39°)       |                           |                
|                                      | United States and Canada  |                
|                                      | Others                    |                
|                                      |                           |                
|                                      |                           | Total          
|                                      |                           |                
|Isthmus (API gravity of 32°-33°)      |                           |                
|                                      | United States and Canada  |                
|                                      | Others                    |                
|                                      |                           |                
|                                      |                           | Total          
|                                      |                           |                
|Maya (API gravity of 21°-22°)         |                           |                
|                                      | United States and Canada  |                
|                                      | Others                    |                
|                                      |                           |                
|                                      |                           | Total          
|                                      |                           |                
|Altamira (API gravity of 15.0°-16.5°) |                           |                
|                                      | United States and Canada  |                
|                                      | Others                    |                
|                                      |                           |                
|                                      |                           | Total          
|                                      |                           |                

---

|Notes:   | Numbers may not total due to rounding.                                                                                                                                                            
|-------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         | tbpd = thousands barrels per day                                                                                                                                                                  
|         | API Gravity refers to the specific gravity, or density, of liquid petroleum products measured in degrees on the American Petroleum Institute scale.                                               
|         | On the API scale, oil with the least specific gravity has the highest API gravity. In addition, if all other things are equal, the higher the API gravity, the greater the value of the crude oil.
|Sources: | 1996 and 1997 figures: PEMEX's 1998 Statistical Yearbook.                                                                                                                                         
|         | 1998, 1999 and 2000 figures: PMI operating statistics, which are based on information in bills of lading.                                                                                         

PMI makes a significant percentage of crude oil sales under evergreen contracts, which can be terminated by either party pursuant to a three month
phase-out clause. PMI sells most of its remaining
exports to the same customers that purchase under evergreen contracts, but PMI makes these sales pursuant to separate supply contracts, which apply the pricing formulas included in the evergreen
contracts. PMI generally sells crude oil on aFree On Boardbasis. In practically all cases, PMI sells

60

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refined products onFree on BoardandCost and Freightbases and buys refined products on Delivery Ex-shiporDelivery at FrontierandCost and
Freightbases.

PMI
has entered into several long-term Maya crude oil supply agreements pursuant to which the purchasers have agreed to undertake projects to expand the capacity of their
respective refineries to upgrade residue from Maya crude oil. Under these agreements, PMI will provide the purchasers with certain support mechanisms that will protect, under certain adverse market
conditions, the investments that the purchasers have to undertake in accordance with the agreements. These agreements include:



These
long-term Maya crude oil supply agreements further our strategy to support the export value of Maya crude oil in relation to the value of other grades of crude oil by
creating incentives for refiners to invest in new high-conversion refineries, which will be capable of upgrading the relatively large proportion of residue produced from processing Maya
crude oil in less-efficient refining complex configurations.

The
Ministry of Energy has entered into certain agreements to reduce and increase exports of crude oil as discussed below in "Trade Regulations and Export Agreements."

61

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The following table sets forth the average volume of exports and imports of crude oil, natural gas and petroleum products for the five years ended December 31, 2000.

Volume of Exports and Imports

|        |                           | Year Ended December 31, |                 |       |        
|------- | ------------------------- | ----------------------- | --------------- | ----- | -------
|
|
|
|Exports |                           |                         |                 |       |        
|        | Crude Oil                 |                         |                 |       |        
|        |                           | Olmeca                  |                 | 491.5 |        
|        |                           | Isthmus                 |                 | 189.1 |        
|        |                           | Maya(1)                 |                 | 863.2 |        
|        |                           |                         |                 |       |        
|        |                           |                         | Total crude oil |       | 1,543.8
|        | Natural gas(2)            |                         | 5.3             |       | 6.3    
|        | Refined products          |                         | 90.8            |       | 93.0   
|        | Petrochemical products(3) |                         | 1,123.4         |       | 1,062.3
|Imports |                           |                         |                 |       |        
|        | Natural gas(2)            |                         | 12.3            |       | 16.9   
|        | Refined products          |                         | 177.3           |       | 298.6  
|        | Petrochemical products(3) |                         | 90.4            |       | 164.7  

---

Note:
Numbers are subject to adjustment because the volume of crude oil exports actually sold during December 2000 may be adjusted to reflect the percentage of water in each shipment.

Sources: 1996, 1997 figures: PEMEX's 1999 Statistical Yearbook.
1998, 1999 and 2000 figures: PMI operating statistics, which are based on information in bills of lading.

Natural
gas imports increased by 55.0% in 2000, from 148.9 million cubic feet per day in 1999 to 231 million cubic feet per day in 2000. In 2000, total exports and imports
of petrochemical products by volume increased by 71.3%, from 915.4 thousand metric tons in 1999 to 1,568.2 thousand metric tons in 2000. This increase was mainly due to higher demand in
international markets for exports of our petrochemical products.

62

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The
following table sets forth the value of exports and imports of crude oil, natural gas and petroleum products for the five years ended December 31, 2000.

Value of Exports and Imports

|            |                        | Year Ended December 31,(1) |         |         |         
|----------- | ---------------------- | -------------------------- | ------- | ------- | --------
|
|
|
|Exports     |                        |                            |         |         |         
|            |                        | Olmeca                     |         | $       | 3,869.0 
|            |                        | Isthmus                    |         |         | 1,386.0 
|            |                        | Maya(2)                    |         |         | 5,450.0 
|            |                        |                            |         |         |         
|            |                        | Total crude oil            |         | $       | 10,705.0
|            | Natural gas            |                            |         | 31.8    |         
|            | Refined products       |                            |         | 671.6   |         
|            | Petrochemical products |                            |         | 201.0   |         
|            |                        |                            |         |         |         
|            |                        | Total products             |         | $       | 904.4   
|            |                        | Total exports              |         | $       | 11,609.4
|            |                        |                            |         |         |         
|Imports     |                        |                            |         |         |         
|            | Natural gas            |                            |         | 67.1    |         
|            | Refined products       |                            |         | 1,550.0 |         
|            | Petrochemical products |                            |         | 24.9    |         
|            |                        |                            |         |         |         
|            |                        | Total imports              |         | $       | 1,642.0 
|            |                        |                            |         |         |         
|Net exports |                        | $                          | 9,967.4 |         | $       
|            |                        |                            |         |         |         

---

Note:
Numbers may not total due to rounding.

Sources: 1996 and 1997 figures: PEMEX's 1999 Statistical Yearbook.
                1998, 1999 and 2000 figures: PMI operating statistics, which are based on information in bills of lading.

Since
1989, increasing domestic demand has led to a deficit in the petroleum products trade balance. Imports of refined petroleum products increased in value by 120.9% during 2000, while
exports of refined products increased in value by 40.2%. Including trading activities on behalf of third parties, PMI marketed more than 411 thousand barrels per day of petroleum products,
representing an 8.4% increase as compared to 1999, including gasolines, diesel, fuel oil, jet fuel and gasoline additives. Import volumes of refined products are likely to continue to fluctuate
significantly in the short-term as a result of expected increases in future production capacity. Due to the uncertainty regarding the successful startup and initial operation of the new
refining plants, we cannot predict import trends in the short term from current data.

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The
following table describes the composition of our imports and exports of selected refined products in 1998, 1999 and 2000.

Imports and Exports of Selected Refined Products

|                        |       | Year Ended December 31, |      
|----------------------- | ----- | ----------------------- | -----
|
|
|Imports                 |       |                         |      
|Gasoline(1)             |       | 133.2                   |      
|Fuel oil                |       | 91.8                    |      
|Liquefied petroleum gas |       | 77.2                    |      
|Diesel                  |       | 19.2                    |      
|Others                  |       | 13.9                    |      
|                        |       |                         |      
|                        | Total |                         | 335.2
|                        |       |                         |      
|Exports                 |       |                         |      
|Gasoline(1)             |       | 78.7                    |      
|Diesel                  |       | 7.8                     |      
|Liquefied petroleum gas |       | 4.2                     |      
|Jet fuel                |       | 2.2                     |      
|Fuel oil                |       | 1.3                     |      
|Others                  |       | 25.7                    |      
|                        |       |                         |      
|                        | Total |                         | 120.0
|                        |       |                         |      

---

Note:
tbpd = thousands of barrels per day.

Source: PMI operating statistics based on INCOTERMS (International Commercial Terms).

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For
the three years ended December 31, 2000, our imports and exports of selected petrochemicals were as follows:

Imports and Exports of Selected Petrochemicals

|              |       | Year Ended December 31, |        
|------------- | ----- | ----------------------- | -------
|
|
|Imports       |       |                         |        
|Xylenes       |       |                        |        
|Propylene     |       | 20.6                    |        
|Ammonia       |       |                        |        
|Others        |       | 110.2                   |        
|              |       |                         |        
|              | Total |                         | 130.8  
|              |       |                         |        
|Exports       |       |                         |        
|Sulphur       |       | 581.8                   |        
|Ammonia       |       | 198.3                   |        
|Ethylene      |       | 88.5                    |        
|Polyethylenes |       | 34.1                    |        
|Others        |       | 122.6                   |        
|              |       |                         |        
|              | Total |                         | 1,025.4
|              |       |                         |        

---

Note:
tmt = thousands of metric tons.

Source: PMI operating statistics based on INCOTERMS (International Commercial Terms).



PMI Trading engages in hedging operations to cover the variations in the purchase and sale prices for petroleum products. Its internal policies establish a limit
on the maximum capital at risk. Capital at risk is calculated daily in order to compare the actual figures with the aforementioned limit. Internal
controls include a risk comptroller responsible for ensuring compliance, an internal auditing department and a risk management committee. We do not hedge against crude oil price fluctuations. See
"Item 11Quantitative and Qualitative Disclosure About Market RiskRisk Management and Financial InstrumentsCommodity Instruments."

Transportation and Distribution

Our pipelines connect crude oil and natural gas producing centers with refineries and petrochemical plants, and the refineries and petrochemical plants with
Mexico's major cities. At the end of 2000, our pipeline network measured approximately 54,478 kilometers in length. Of the total network, approximately 8,768 kilometers of pipelines transport crude
oil, approximately 12,140 kilometers transport petroleum products and petrochemicals, 15,935 kilometers transport natural gas, 1,822 kilometers transport liquefied petroleum gas, 1,084 kilometers
transport basic petrochemicals and the remaining kilometers are crude oil and natural gas gathering pipelines. Ownership of the pipelines is distributed among our subsidiary entities according to the
products they transport.

During
2000, we transported approximately 71.03 billion tons per kilometer of crude oil to be processed in the refining system and petroleum products to satisfy domestic demand,
as compared to

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the 69.6 billion tons per kilometer carried in 1999. Of the total amount of tons per kilometer we transported in 2000, we carried 92% through pipelines and 8% by vessels.

At
the end of 2000, we owned 19 refined product tankers and leased another nine. We also owned 77 major wholesale storage centers.

PEMEX Corporate Matters

In addition to the operating activities that we undertake through the activities of our subsidiary entities and subsidiary companies, we have certain centralized
corporate operations that coordinate general labor, safety, insurance and legal matters.



Petróleos Mexicanos' Corporate Division of Industrial Safety and Environmental Protection is responsible for planning, conducting and coordinating
programs to:



We
intend to develop further the industrial safety and environmental programs for each subsidiary entity. The environmental and safety division of each subsidiary entity coordinates
closely with the Corporate Division of Industrial Safety and Environmental Protection.



We maintain general and civil liability insurance coverage for our onshore real and personal property, such as refineries, process plants, pipelines and storage
facilities, and our offshore properties such as drilling platforms, rigs, gas gathering systems, floating docks and production facilities. Our insurance covers risks of sudden and accidental physical
destruction or loss or damage to our properties. Our offshore general and liability insurance also covers extraordinary costs related to the operation of offshore wells, such as control and repair
costs, evacuation costs and costs associated with spills. We maintain additional coverage for offshore environmental liabilities. We also maintain cargo and hull insurance for our shipping fleet,
automobiles and heavy equipment as well as protection and indemnity insurance.

We
contract the majority of our insurance policies through Mexican insurance carriers. These policies have limits of U.S. $1.0 billion for onshore property, U.S.
$1.25 billion for offshore property (with an additional U.S. $250 million for accidental losses at our Atasta Processing and Transportation Center and our terminal at Dos Bocas,
Tabasco), U.S. $300 million for extraordinary costs related to the operation of offshore wells, U.S. $500 million for offshore environmental liability and U.S. $400 million
for civil liabilities. Since June 30, 1999, our insurance policies covering onshore and offshore properties also cover unforeseen interruptions in operations. This coverage, which is limited to
U.S. $750 million for onshore operations and U.S. $1.25 billion for offshore operations, counts against the overall limits of the onshore and offshore property policies.

Property, Plants and Equipment



Substantially all of PEMEX's property, consisting of refineries, storage, production, manufacturing and transportation facilities and certain retail outlets, is
located in Mexico, including Mexican waters in

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the Gulf of Mexico. The location, character, utilization, productive capacity and related environmental issues of our exploration, drilling, refining, petrochemical production, transportation and
storage facilities are described above. See "Exploration and Production," "Refining," "Gas and Basic Petrochemicals," "Petrochemicals," and
"Transportation and Distribution."



Under Mexican law, all oil and other hydrocarbon reserves within Mexico are owned by the Mexican nation and not by PEMEX. Petróleos Mexicanos and
the subsidiary entities have the exclusive right to exploit those reserves under the Regulatory Law and related laws and regulations. Our estimates of Mexico's hydrocarbon reserves are described in
"Exploration and ProductionReserves."

GENERAL REGULATORY FRAMEWORK

The Mexican Government and its agencies closely regulate and supervise our operations. The Ministry of Energy monitors our activities and the Secretary of Energy
acts as the chairman of the Board of Directors of Petróleos Mexicanos. The Ministry of Finance and Public Credit approves the annual budget and financing program of
Petróleos Mexicanos and the subsidiary entities. The Mexican Government incorporates the annual budget and financing program of Petróleos Mexicanos and the subsidiary
entities into its budget, which the Mexican Congress must approve each year. The Mexican Government is not, however, directly liable for the financial obligations that we incur. The Ministry of
the Environment and Natural Resources, in conjunction with other federal and state authorities, regulates our activities that affect the environment. The General Comptroller's Office of the Mexican
Government appoints the external auditors of Petróleos Mexicanos and the subsidiary entities.

ENVIRONMENTAL REGULATION

Legal Framework

We are subject to the provisions of theLey General del Equilibrio Ecológico y la Protección al
Ambiente(General Law on Ecology and Environmental Protection, which we refer to as the Environmental Law), the regulations issued thereunder and several technical
environmental norms issued by the Ministry of the Environment and Natural Resources which is the federal ministry in charge of supervising and regulating environmental matters relating to PEMEX. The
Ministry of Health, the Ministry of Communications and Transportation, the Ministry of the Navy and the Ministry of Energy assist the Ministry of the Environment and Natural Resources in its
functions. In addition, we are subject to the environmental laws and regulations issued by the governments of each of the states of Mexico where our facilities are located.

The Environmental Law and Regulation by the Ministry of the Environment and Natural Resources

The Environmental Law and related regulations require that we obtain certain authorizations from the Ministry of the Environment and Natural Resources before we
can carry out any activity that may have an adverse effect on the environment. In particular, these environmental regulations apply to chemical, petrochemical, crude oil refining and extraction
activities, as well as the construction of crude oil and natural gas pipelines. Before authorizing a new project, the Ministry of the Environment and Natural Resources requires the submission of an
environmental impact analysis and any other information that it may request. The Ministry of the Environment and Natural Resources is entitled to grant or deny its authorization of any activity.

The
environmental regulations that apply generally to Mexican industry apply to us. These regulations specify, among other matters, permissible levels of emissions, water discharges and
hazardous substances discharges as well as atmospheric pollution level limits. The technical regulations

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for oil and petrochemical industries set forth maximum permissible levels of pollution in residual water discharges and natural gas emissions. These regulations also establish procedures for
measuring pollution levels. Mexico generally updates and revises its environmental regulatory framework annually,
and we participate with the Mexican Government in developing environmental regulations that are related to our activities.

In
April 1997, the Ministry of the Environment and Natural Resources issued regulations governing the procedures for obtaining an environmental license, under which new industrial
facilities can comply with all applicable environmental requirements by way of a single administrative procedure. Each environmental license integrates all different permits, licenses and
authorizations related to environmental matters for a particular facility. We must obtain an Environmental License for any new facility, while our existing facilities are not subject to this
obligation.

Federal
and state authorities in Mexico may inspect any facility to determine compliance with the Environmental Law, local environmental laws, regulations and technical environmental
regulations. Violations or non-compliance with the legal provisions may result in the application of substantial fines, temporary or permanent shutdown of a facility, required capital
expenditures to minimize the effect of our operations on the environment, cleanup of contaminated land and water, cancellation of a concession or revocation of authorization to carry out certain
activities and, in certain cases, criminal prosecution of employees and individuals.

PEMEX's Internal Monitoring

We believe that we are currently in substantial compliance with current federal and state environmental laws as those laws have been historically interpreted and
enforced. We maintain an organizational structure that permits us to implement and monitor our environmental program. The subsidiary entities have specialized departments, depending on the size and
geographic distribution of their respective sites, that implement their own environmental programs and internal environmental audits of their sites and their immediate surroundings based on the
standards of the Ministry of the Environment and Natural Resources. When these internal audits reveal deficiencies, the subsidiary entities take the necessary remedial actions. Remediation
requirements derived from these internal audits are recorded in the financial statements when they are known and estimable.

Our
Corporate Division of Industrial Safety and Environmental Protection has developed an integrated safety and environmental protection management system and is currently implementing
strategies within PEMEX to create a company culture focused on improving industrial safety and environmental protection. This system is an administrative tool composed of diverse, interdependent and
interrelated elements, focused on diagnosis, evaluation, implementation and continuing preventive improvements related to safety and environmental protection. The diagnosis and evaluation stages have
been completed; the system is now in the implementation stage.

We
maintain an internal structure to identify and solve environmental problems and retain external consultants to perform operational audits at our industrial plants, including cost
estimates for remedying any shortfall in compliance with Mexican environmental laws. Such remedies can include
improving the operating efficiency of plants, cleaning up contaminated land and water, and capital expenditures to minimize the effect of our operations on the environment.

In
addition to our internal monitoring structure for identifying affected areas, areas of noncompliance and improvement opportunities, our environmental program is subject to the review
of the Office of the Federal Attorney for Environmental Protection, which we refer to as PROFEPA. PROFEPA administers the Mexican environmental regulatory rubric and establishes acceptable standards
of environmental remediation. Although PROFEPA has the authority to review and inspect remediation works performed by PEMEX and compliance with permitted contamination levels established by laws and
regulations, it does not determine PEMEX's environmental liabilities. PEMEX

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maintains proper records of all of the studies, estimations, performed works and any other information that PROFEPA may request from time to time.

In
1993, PEMEX entered into a voluntary environmental audit program with PROFEPA. As of December 31, 2000, with respect to Petróleos Mexicanos and the subsidiary
entities, 373 environmental audits had been completed under the program with PROFEPA, covering approximately 50% of our facilities. As each environmental audit is completed, we send the audit report
(which includes the estimated costs for remedying environmental anomalies) to PROFEPA for its review and approval. After approval by PROFEPA, we review the audits and determine which findings can be
resolved by changing current plant or drilling operations and implementing the current capital expenditures plan. If the audit report is approved by PROFEPA, PEMEX and PROFEPA negotiate a corrective
action plan, stipulating the time period, amounts to be expended and the steps to be taken to bring each site into compliance. As of December 31, 2000, corrective action plans for 230 audits
had been completed and 229 sites had received "clean industry" certifications from PROFEPA. With respect to the remaining 143 audits, the corrective action plans have been agreed upon and are being
implemented.

There
are currently no material legal or administrative proceedings pending against us with respect to any environmental matters, and we do not believe that continued compliance with
environmental laws will have a material adverse effect on our financial condition or results of operations.

Environmental Liabilities

At December 31, 2000, our estimated and accrued environmental liabilities totaled Ps. 2,837,758,000. Of this total, Ps. 1,787,169,000 was attributable to
Pemex-Exploration and Production, Ps. 918,646,000 was attributable to Pemex-Refining, Ps. 109,581,000 was attributable to Pemex-Gas and Basic Petrochemicals, and Ps. 22,362,000 was
attributable to Pemex-Petrochemicals; there were no environmental liabilities at the subsidiary company level. The following charts detail our environmental liabilities by operating region at
December 31, 2000.

Pemex-Exploration and Production

|                        |  | Estimated Affected Area |  | Containment Reservoir Drainage
|----------------------- |  | ----------------------- |  | ------------------------------
|
|
|Northern Region         |  | 306.5                   |  | Ps.                           
|Southern Region         |  | 106.8                   |  | Ps.                           
|Southeast Marine Region |  | 4.0                     |  | Ps.                           
|                        |  |                         |  |                               
|Total                   |  | 417.0                   |  | Ps.                           
|                        |  |                         |  |                               
|Sum Total               |  |                         |  | Ps.                           
|                        |  |                         |  |                               

---

Source: PEMEX

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Pemex-Refining

|                                         |  | Estimated
affected area |  | Estimated Liability
|---------------------------------------- |  | ----------------------- |  | -------------------
|
|Ducts                                    |  | 9.0                     |  | Ps.                
|5 Refineries(1)                          |  | 985.0                   |  | Ps.                
|36 Storage and Distribution Terminals(2) |  | 236.0                   |  | Ps.                
|                                         |  |                         |  |                    
|Total                                    |  | 1,230.0                 |  | Ps.                
|                                         |  |                         |  |                    

---

Source: PEMEX

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Pemex-Gas and Basic Petrochemicals

|                            |  | Estimated affected
area |  | Estimated Liability
|--------------------------- |  | ----------------------- |  | -------------------
|
|6 Complex Gas Processors(1) |  | 48.94                   |  | Ps.                
|Ducts                       |  | 3.00                    |  | Ps.                
|                            |  |                         |  |                    
|Total                       |  | 51.94                   |  | Ps.                
|                            |  |                         |  |                    

---

Source: PEMEX

Pemex-Petrochemicals

|                                      |  | Estimated affected area |  | Estimated Liability
|------------------------------------- |  | ----------------------- |  | -------------------
|
|Petroquímica Cangrejera, S.A. de C.V. |  | 0.30                    |  | Ps.                
|Petroquímica Pajaritos, S.A. de C.V.  |  | 10.13                   |  | Ps.                
|                                      |  |                         |  |                    
|Total(1)                              |  | 10.43                   |  | Ps.                
|                                      |  |                         |  |                    

---

Source: PEMEX

Our estimates of environmental liabilities include cost estimates for general and site-specific evaluation studies and the corresponding remediation.
The remediation sites consist of sites identified in the audit process described above as well as those previously identified sites in more mature petroleum operating areas that were not cleaned in
the past. Our environmental liabilities also include the elimination of ponds created by abandoned petroleum wells. Additionally, our environmental liabilities include an accrual for information
requested and received periodically from field managers as to probable environmental liabilities identified in their respective areas of responsibility. PEMEX accrues its environmental liabilities
when sufficient basic knowledge is available to form a preliminary estimation as to remediation cost. Although the full potential scope of remediation cost may not be known with
certainty, such accruals are made when the liability is probable and the amount is reasonably estimable, in accordance with SFAS No. 5. These estimated liabilities include assumptions as to
initial evaluation of damage, including land acreage to be remediated, depth of contamination and type of contamination. While the initial evaluation is extensive, there is a possibility that the
actual scope of remediation could vary depending upon information gained during the remediation process. For further discussion of PEMEX's environmental liabilities, see Note 18II(i) to
the Financial Statements.

Unasserted
or additional claims are not reflected in our identified liabilities. We are not aware of any such claims that would be of such a magnitude as to materially affect our
estimates of environmental liabilities.

At
the end of 2000, we were not aware of uncertainties with respect to joint and several liability that could affect our assessment of environmental contingencies or otherwise result in
a major environmental liability. We are responsible for all production, processing, storage and distribution of petroleum and its derivatives in Mexico; as a result, we believe we are positioned to
know immediately

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of any claims and are therefore directly and immediately accountable for such claims that may be brought against us.

The
timing of remediation or cleanup of the sites accounted for in these environmental liabilities is a function of the annual budget assigned to us by the Mexican Congress.

Environmental Expenditures

In 2000, we invested approximately Ps. 2,711 million in environmental projects as compared to Ps. 1,873 million in 1999. For 2001, we have budgeted
Ps. 3,349 million for environmental expenditures. The most important of these projects are directed to the modernization of installations, the implementation of systems and control mechanisms
to monitor atmospheric pollution, the acquisition of equipment to address the contingencies of hydrocarbon spills, the expansion of water effluent systems, the restoration and reforestation of
affected areas, studies for environmental investigation and the conducting of environmental audits. In addition, we continue to make extensive research and development efforts to increase our capacity
to produce gasoline, diesel and fuel oil with lower sulphur content and alternative fuels, such as industrial oil and natural gas. Currently, we are developing procedures to track the costs and
expenses of our industrial safety measures and environmental compliance.

We
do not believe that the cost of complying with environmental laws or environmental requirements related to the North American Free Trade Agreement among the governments of Mexico, the
United States and Canada, which we refer to as NAFTA, or Mexico's membership in the Organization for Economic Cooperation and Development, has caused or will cause a significant increase in our
environmental expenditures.

TRADE REGULATIONS AND EXPORT AGREEMENTS

Although it is not a member of OPEC, since 1998 Mexico has entered into agreements with OPEC and non-OPEC members to reduce its oil exports in order
to stabilize international oil prices. Under these agreements, Mexico agreed to reduce our oil exports by 325 thousand barrels per day for most of 1999. These agreements were successful in
raising oil prices in 1999.

On
March 29, 2000, the Ministry of Energy announced that Mexico would increase its crude oil exports by 150 thousand barrels per day, beginning in April 2000. On
June 21, 2000, the Ministry of Energy announced an additional increase in crude oil exports of 75 thousand barrels per day, beginning in July 2000. Following OPEC's announcement
in January 2001 that it would reduce crude oil production by 1.5 million barrels per day, Mexico announced it would decrease its crude oil exports by 75 thousand barrels per day,
beginning on February 1, 2001. Following a March 2001 announcement by OPEC of an additional 1.0 million barrel per day reduction in crude oil production, on March 25, 2001,
Mexico announced a further reduction in crude oil exports of 40 thousand barrels per day, beginning on April 1, 2001. On January 2, 2002, the Ministry of Energy announced that
Mexico would reduce exports of crude oil by 100 thousand barrels per day to 1.66 million barrels per day for six months, beginning on January 1, 2002, following OPEC's
announcement of an additional 1.5 million barrel per day reduction in crude oil production. On June 27, 2002, Mexico announced that it would maintain its crude oil exports at their
present levels through the third quarter of 2002, following OPEC's announcement that it would keep crude oil production at present levels for the same period. Most recently, following an OPEC
announcement that it would maintain current crude oil production levels through fourth quarter 2002, Mexico affirmed that it would maintain its crude oil exports at their present levels for the same
period.

NAFTA
did not affect our exclusive rights to explore and produce crude oil and natural gas, to refine crude oil and to produce basic petrochemicals. By 2004, however, NAFTA will phase in
lower tariffs on certain petroleum products, including petrochemicals, and certain materials and equipment that we import into Mexico as well as lower tariffs on crude oil and petroleum products that
we export

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to the United States and Canada. Lower tariffs on exports of non-basic petrochemicals from the United States and Canada to Mexico could, over time, increase competition in the
non-basic petrochemicals industry in Mexico. To the extent that domestic and international prices for our products remain constant, lower tariffs on the products, materials and equipment
that we import from and export to the United States and Canada will decrease our expenses and increase our income.

TAXES AND DUTIES

General

We must pay a number of special hydrocarbon taxes and duties to the Mexican Government, in addition to the other taxes and duties paid by some of the subsidiary
companies, as described below under "Other Taxes." The rate at which the hydrocarbon taxes and duties are assessed varies from year to year and is set after taking into consideration our
operating budget, our capital expenditure program and our financing needs.

If
the indirect IEPS Tax that we collect is taken into account, we contributed approximately 37% of the Mexican Government's revenues in 2000 and 31.0% in 1999.

The
most important taxes and duties payable by us and their applicable rates in 2001 are the following:

|Hydrocarbon Extraction Duty               |  | Only Pemex-Exploration and Production pays this duty. A rate of 52.3% is applied to the net cash flow that results from deducting all cash expenditures (including operating expenses and capital expenditures) from the cash revenues generated by
Pemex-Exploration and Production's sales of goods and services.                                                                                                                                                   
|----------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Extraordinary Hydrocarbon Extraction Duty |  | Only Pemex-Exploration and Production pays this duty, which is calculated on the same basis as the Hydrocarbon Extraction Duty, using a tax rate of 25.5%.                                                                                                                                                                                                                                                                                                            
|Additional Hydrocarbon Extraction Duty    |  | Only Pemex-Exploration and Production pays this duty, which is calculated on the same basis as the Hydrocarbon Extraction Duty, using a tax rate of 1.1%.                                                                                                                                                                                                                                                                                                             
|Hydrocarbon Income Tax                    |  | Petróleos Mexicanos pays this direct tax on behalf of itself and the subsidiary entities. This tax is equivalent to the regular income tax applied to all Mexican corporations, a tax to which Petróleos Mexicanos and subsidiary entities
are not subject. A tax rate of 35% is applied to net income (determined in accordance with the Income Tax Law) of each of Petróleos Mexicanos and the subsidiary entities, which may be determined on a consolidated basis.
|                                          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

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|IEPS Tax |  | The Special Tax on Production and Services, which we refer to as the IEPS Tax, is an indirect tax on domestic sales of gasoline, diesel and natural gas for automotive use that Pemex-Refining and Pemex-Gas and Basic Petrochemicals collect on behalf of
the Mexican Government. The IEPS Tax on the sale of gasoline and diesel is equivalent to the difference between the international reference price of each product (adjusted by freight costs and quality factors) and the retail price of the product to
its customers (not including value added tax, the retailers' margin and freight costs). Thus, the Mexican Government ensures that PEMEX retains an amount reflecting the international prices (adjusted as described above) of these products, while the
Mexican Government collects the difference between the international prices and the prices at which these products are sold in Mexico. The IEPS Tax imposed on natural gas sales for automotive use is based on a variable percentage, taking into
consideration the international reference price of this product and the reference of the retail price of unleaded gasoline.
|-------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
sum of the Hydrocarbon Extraction Duty, the Extraordinary Hydrocarbon Extraction Duty, the Additional Hydrocarbon Extraction Duty, the Hydrocarbon Income Tax and the IEPS Tax
(collectively, the "Taxes and Duties") must equal the Hydrocarbon Duty. For 2001, the Hydrocarbon Duty is calculated by applying a rate of 60.8% to Petróleos Mexicanos and the
subsidiary entities' sales revenues from the PMI Group and third parties, including the IEPS Tax generated by Pemex-Refining, but excluding the value added tax. We make advance payments to the Mexican
Government in respect of our Tax and Duty liability up to the amount of the Hydrocarbon Duty.Our advance payments are, in turn, credited against our
liability under the Hydrocarbon Extraction Duty, the Extraordinary Hydrocarbon Extraction Duty, the Additional Hydrocarbon Extraction Duty, the Hydrocarbon Income Tax and the IEPS Tax.

In
the event that the sum of the Taxes and Duties is not equal to the Hydrocarbon Duty, the rates of the Hydrocarbon Extraction Duty, the Extraordinary Hydrocarbon Extraction Duty and
the Additional Hydrocarbon Extraction Duty will be adjusted to ensure that the sum of the Taxes and Duties equals the Hydrocarbon Duty.

Excess Gains Revenue Duty

This is an administrative duty payable to the Mexican Government in addition to the Hydrocarbon Duty. Each year, we must pay an Excess Gains Revenue Duty in an
amount equal to 39.2% of those revenues in excess of a threshold price set for that year. In 2000 we paid an Excess Gains Revenue Duty because our crude oil export prices exceeded the U.S. $15.00 per
barrel threshold established for that year. For 2001, the Excess Gains Revenue Duty was 39.2% of those revenues from crude oil export sales in excess of a threshold crude oil price of U.S. $18.00 per
barrel. Thus, for every dollar exceeding the threshold price, we must pay to the Mexican Government 60.8 cents in Hydrocarbon Duty and 39.2 cents in Excess Gains Revenue Duty so that all revenues
above the threshold amount for that year are payable to the Mexican Government. However, for the amount up to the threshold price, we pay only

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the Hydrocarbon Duty. See also "Item 5Operating and Financial Review and ProspectsGeneralIEPS Tax, Excess Gains Duty, Hydrocarbon Duties and Other Taxes." We
paid this duty in 2001 and cannot
assure you that the Mexican Government will not lower this threshold price in the future and thereby increase the amounts that we would be required to pay to the Mexican Government.

Other Taxes

Since 1994, our interest payments on our external debt have been subject to Mexican withholding taxes. In 1994, the Mexican Government credited our withholding
tax payments against our tax liability, but since the end of 1994, the Mexican Government has not allowed such a credit. Nevertheless, withholding taxes do not represent a substantial portion of our
total tax liability.

Beginning
in 1995, we have been subject to municipal and state taxes, such as real property and payroll taxes. However, because most of our facilities are located on federal property,
which is not subject to municipal taxation, real property taxes are not a significant part of our overall taxes. Similarly, payroll taxes do not represent a substantial portion of our total tax
liability.

Petróleos
Mexicanos and the subsidiary entities are exempt from Mexican corporate income tax; however, certain of our subsidiary companies are Mexican corporations and are
subject to the tax regime applicable to other Mexican corporations. Mexican companies are generally required to pay the higher of their income tax liability (determined at a rate of 35% for 1999
through 2002, 34% for 2003, 33% for 2004 and 32% thereafter) or their asset tax liability (determined at a rate of 1.8% of the average tax value of virtually all of their assets, less the average tax
value of certain liabilities (basically liabilities with Mexican residents excluding those with financial institutions or their intermediaries)). To the extent a company is required to pay the asset
tax in any year, the portion of that tax that exceeds the company's income tax liability may be credited against the company's income tax liability in subsequent years. In addition, we have a number
of non-Mexican subsidiary companies that may be subject to taxation in the jurisdiction of their incorporation or operations. The aggregate taxes paid by the subsidiary companies was Ps.
807 million in 2000, Ps. 689 million in 1999 and Ps. 343 million in 1998.

Future Fiscal Reform

Over the past few years, the Mexican Government and PEMEX have been discussing various proposals for reforming the Mexican federal tax regime applicable to us.
The proposals have generally sought to change applicable tax law so that our fiscal burdens are similar to those of state-owned oil companies in other countries. In particular, we have presented
alternative internal revenue strategies to improve the Mexican Government's recovery of income from hydrocarbon extraction, while allowing PEMEX to finance more efficiently the development of
hydrocarbon reserves and investments in property, plant and equipment.

At
the current time, however, the Mexican Government has not taken a position on this issue. Because only the Mexican Congress has the power to enact a change in federal tax law, and
given the highly
politicized nature of the federal legislative process, we cannot predict the extent or nature of future changes, if any, to the federal tax law applicable to us.

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UNITED MEXICAN STATES

The information in this section with regard to Mexico has been included due to Petróleos Mexicanos and the subsidiary entities' relationship with
the Mexican Government and has been reviewed by the Ministry of Finance and Public Credit.

Form of Government

The President of Mexico is the chief of the executive branch of the Mexican Government. The current President is Vicente Fox Quesada, whose term expires on
November 30, 2006. The Constitution limits the President to one six-year term and does not allow for reelection for any additional terms.

On
July 2, 2000, all of the seats in the Senate and in the Chamber of Deputies were up for election. The election, together with later changes in the party affiliations of certain
deputies, resulted in the following distribution of Congressional seats:

Party Representation in Congress

|                                  |  | Senate |  | Chamber of Deputies |  
|--------------------------------- |  | ------ |  | ------------------- | -
|
|Institutional Revolutionary Party |  | 60     |  | 46.9                | %
|National Action Party             |  | 46     |  | 35.9                |  
|Democratic Revolution Party       |  | 16     |  | 12.5                |  
|Ecological Green Party of Mexico  |  | 5      |  | 3.9                 |  
|Labor Party                       |  | 0      |  | 0.0                 |  
|Nationalist Social Party          |  | 0      |  | 0.0                 |  
|Social Alliance Party             |  | 0      |  | 0.0                 |  
|Convergence for Democracy         |  | 1      |  | 0.8                 |  
|                                  |  |        |  |                     |  
|Total                             |  | 128    |  | 100.0               | %
|                                  |  |        |  |                     |  

---

Note:    Totals
may differ due to rounding.

Source:    Federal Electoral Institute

The Economy



As a result of developments in the global economy, and their impact on Mexican external trade, the Mexican Government announced on May 11, 2001 that it
expects that Mexico's GDP growth for 2001 would be between 2.5% and 3.0% in real terms. Concurrently, the Mexican Government presented its program to strengthen the Mexican economy, by stimulating
growth on two fronts.

First,
the program aims to promote productive competitiveness through:



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Second,
the program aims to strengthen public-sector finances and increase public-sector productivity through:



On June 3, 1997, the Mexican Government announced thePrograma Nacional de Financiamiento del Desarrollo
1997-2000(National Development Financing Program 1997-2000, or "PRONAFIDE"). The PRONAFIDE's goals are to:



In
order to achieve a sustainable real GDP growth of 5%, the Mexican Government believes an investment rate of 25% of GDP is required. Thus, the PRONAFIDE seeks to stimulate investment
by:





During 2000, GDP grew by 6.6% in real terms, exceeding the target originally set in the General Economic Policy Guidelines for 2000 by 2.1 percentage
points. GDP grew by 7.5% in real terms in the first quarter of 2000, 7.4% in the second quarter, 7.1% in the third quarter and 4.7% in the fourth quarter.

In
2000, all of the productive sectors of the economy experienced significant growth. The transportation, storage and communications sector grew by 9.6%, the commerce, hotels and
restaurants sectors grew by 12.4%, the financial services, insurance and real estate sector grew by 5.2%, and the community, social and personal services sector grew by 2.9%, each in real terms. The
manufacturing sector expanded by 6.9% in real terms. In addition, electricity, gas and water; construction; and mining, petroleum and gas grew by 1.0%, 5.1% and 3.8% in real terms, respectively. Also
during 2000, the agriculture and livestock, fishing and forestry sector grew by 0.6% in real terms.

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According
to preliminary figures, GDP increased by 2.0% in real terms in the first quarter of 2001, as compared with the same period of 2000. The commerce, hotels and restaurants sector
grew by 6.3%
and the transportation, storage and communications sector grew by 6.5%. Increases were also experienced by financial services, insurance and real estate, which registered real growth of 3.7%, and
community, social and personal services, which registered real growth of 1.0%. The mining, petroleum and gas sector and the electricity, gas and water sector grew by 0.2% and 1.9%, each in real terms.
The agriculture, livestock, fishing and forestry sector decreased by 6.2%, the construction sector decreased by 3.6%, and the manufacturing sector decreased 1.3%, each in real terms.

The
following table sets forth the change in Mexico's real GDP by sector for the periods indicated.

Real GDP Growth by Sector

|                                              |  | 1996 |   | 1997 |   | 1998 |   | 1999 |   | 2000 |   | First quarter
of 2001(1) |  
|--------------------------------------------- |  | ---- | - | ---- | - | ---- | - | ---- | - | ---- | - | ------------------------ | -
|GDP (constant 1993 prices)                    |  | 5.1  | % | 6.8  | % | 4.9  | % | 3.7  | % | 6.6  | % | 2.0                      | %
|Agriculture, livestock, fishing and forestry  |  | 3.6  |   | 0.2  |   | 0.8  |   | 3.6  |   | 0.6  |   | (6.2                     | )
|Mining, petroleum and gas                     |  | 8.1  |   | 4.5  |   | 2.7  |   | (2.1 | ) | 3.8  |   | 0.2                      |  
|Manufacturing                                 |  | 10.8 |   | 9.9  |   | 7.3  |   | 4.2  |   | 6.9  |   | (1.3                     | )
|Construction                                  |  | 9.8  |   | 9.3  |   | 4.2  |   | 5.0  |   | 5.1  |   | (3.6                     | )
|Electricity, gas and water                    |  | 4.6  |   | 5.2  |   | 1.9  |   | 7.9  |   | 1.0  |   | 1.9                      |  
|Transportation, storage and communications    |  | 8.0  |   | 9.9  |   | 6.7  |   | 7.8  |   | 9.6  |   | 6.5                      |  
|Commerce, hotels and restaurants              |  | 4.8  |   | 10.7 |   | 5.6  |   | 3.1  |   | 12.4 |   | 6.3                      |  
|Financial services, insurance and real estate |  | 0.6  |   | 3.7  |   | 4.6  |   | 3.6  |   | 5.2  |   | 3.7                      |  
|Community, social and personal services       |  | 1.0  |   | 3.3  |   | 2.9  |   | 2.1  |   | 2.9  |   | 1.0                      |  

---

(1)    Preliminary.

Source: National Institute of Statistics, Geography and Informatics.



During most of 2000, consumer inflation (as measured by the change in the national consumer price index) maintained an uninterrupted downward trend in accordance
with the goals established by Banco de México, Mexico's central bank. However, during the last few months of the year, the economy experienced inflationary pressures, which led Banco de
México to adopt a stricter monetary stance. Inflation during 2000 was 8.96%, 1.04 percentage points lower than the official inflation target for the year.

Inflation
during the first four months of 2001 was 1.63%, 1.76 percentage points lower than during the same period of 2000.

Producer
prices (as measured by the change in the national producer price index) increased by 6.4% during 2000, 6.0 percentage points lower than the rate observed during 1999 and
the lowest annual rate of increase during the past five years.

On
January 1, 2001, the minimum wage increased by 7.0%. In addition, the Mexican Government announced that electricity, gasoline and diesel prices would increase by 6.5% during
2001.



The 28-day Treasury bill (Certificados de la Tesorería de la Federación,orCetes) rate reached 18.08%, its highest level in 2000, during the last week of November 2000. This was primarily due to the volatility in the
international financial markets caused by the signs of a deceleration in economic growth in the United States and the restrictive monetary policy adopted by Banco de México. However,

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interest rates registered a slight decline toward the end of the year. The 28-dayCetesrate averaged 15.2% during 2000,
6.2 percentage points lower than the average rate during 1999, and the 91-dayCetesrate averaged 16.2% for 2000,
6.2 percentage points lower than the average rate during 1999.

During
the first five months of 2001, interest rates on the 28-dayCetesaveraged 15.6% and interest rates on the
91-dayCetesaveraged 16.2%, as compared with average rates of 14.6% and 15.7%, respectively, during the same period of 2000. On
May 31, 2001, the 28-dayCetesrate was 10.76% and the 91-dayCetesrate
was 11.39%.

Financial System



The principal objective of Mexico's monetary policy has been to reduce inflation. Banco de México has tightened domestic credit in response to
depreciation in the exchange rate, capital outflows or higher than projected inflation. New reserve requirements (which are intended to limit the amount of overdrafts by banks of their accounts at
Banco de México) were introduced by Banco de México to facilitate the regulation of liquidity and reduce Banco de México's daily net extension of credit.
In addition, Banco de México has established quarterly targets for the expansion of net domestic credit since 1996.

Banco
de México's monetary policy during 2000 continued to target a sustainable reduction in inflation. In this context, Banco de México maintained the
"short" mechanism as its principal monetary policy instrument, increasing the short on six occasions during 2000, from Ps. 160 million to Ps. 180 million on January 18, from Ps.
180 million to Ps. 200 million on May 16, from Ps. 200 million to Ps. 230 million on June 26, from Ps. 230 million to Ps. 280 million on
July 31, from Ps. 280 million to Ps. 310 million on October 18, and from Ps. 310 million to Ps. 350 million on November 10. The May, June, July,
October and November increases were in response to increased internal and external factors that threatened the achievement of the inflation target for 2000 and Mexico's goal of bringing inflation in
line with that of its main trading partners by 2003. The factors identified by Banco de México included (i) increased aggregate demand, (ii) increased inflationary
pressures in the United States and in other principal developed economies and (iii) recent increases in the prices of certain fruits and vegetables. Banco de México's restrictive
monetary policy played an important role in reducing short-term and medium-term inflationary expectations.

At
the end of December 2000, the monetary base totaled Ps. 208,943 million, a 1.6% increase in real terms as compared to the level at December 31, 1999. The net
domestic credit of Banco de México registered a negative balance of Ps. 133,443 million at December 29, 2000, a decrease of Ps. 57,152 million from the level at the
end 1999. This decrease was attributable primarily to the accumulation of net international assets by Banco de México during this period, since the monetary base remained within the
limits established in the monetary program.

During
2000, the M1a money supply increased by 5.6% in real terms, as compared with 12.5% real growth in 1999. This trend was due primarily to a deceleration in the rate of growth of the
economy and the increase in interest rates observed during the second half of the year. In addition, checking account deposits denominated in pesos increased by 24.5% in real terms during 2000.

The
growth in financial savings, defined as the difference between the monetary aggregates M4a, and bills and coins held by the public, declined from 5.0% in real terms in 1999 to 3.6%
in 2000. Savings generated by Mexican residents increased by 4.6% in real terms, whereas savings generated by non-residents decreased by 26.0% in real terms.

Since
April 2000, Banco de México has been publishing quarterly reports on inflation.

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The primary objective of Banco de México's 2001 monetary program is to reduce inflation to 6.5% in 2001 and to 3.0% in 2003. To this end, the 2001
monetary program relies on four basic elements:



The
monetary program also assumes the absence of certain external factors, such as reductions in the prices of commodities exported by Mexico or the inflows of foreign capital, which
could result in a considerable modification of the real exchange rate.

Banco
de México will publish quarterly reports on inflation throughout 2001. Monetary policy will be restricted if and when necessary to bring inflation in line with the
Mexican Government's medium-term goal.

In
2001, Banco de México expects to continue to use the "short" mechanism as an instrument to indicate modifications in its monetary stance, and to induce the necessary
movements of interest rates to achieve inflation objectives. Banco de México has identified the following factors that may lead it to use the "short" mechanism in 2001:



In
January 2001, the "short" was increased from Ps. 350 million to Ps. 400 million. The January increase was in response to internal and external factors that could
threaten the achievement of the inflation target for 2001. Banco de México identified as an internal factor increases in aggregate demand which exceeded increases in production. Banco
de México identified as an external factor a deceleration of economic growth in the United States, beginning in the second half of 2000.

During
the first four months of 2001, the rate of inflation in Mexico has been consistent with the trajectory necessary to meet the central bank's annual inflation target of less than
6.5% by December 2001, as discussed under "The EconomyPrices and Wages."

Moreover,
it appears that financial market participants have recently perceived a decrease in factors that could threaten the achievement of the inflationary target, leading to an
approximately 6 percentage point decline in short-term interest rates from January to May 2001.

In
light of the recent decline in interest rates and inflationary expectations, the Board of Governors of Banco de México decided to decrease the "short" mechanism from
Ps. 400 million to Ps. 350 million as of May 18, 2001. However, if internal or external events or a change in inflationary expectations threatens the achievement of the inflation
target, Banco de México could again increase the "short" mechanism.

At
April 30, 2001, the monetary base totaled Ps. 174.6 billion, a 17.7% decrease in real terms as compared to the level at December 29, 2000. By December 31,
2001, Banco de México estimates that the monetary base will total Ps. 237.4 billion, a 13.6% increase over the level at December 29, 2000.

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In connection with the implementation of the North American Free Trade Agreement, amendments to several laws relating to financial services, including the Banking
Law and theLey del Mercado de Valores(Securities Market Law), became effective on January 1, 1994. These measures permit
non-Mexican financial groups and financial intermediaries, through Mexican subsidiaries, to engage in various activities in the Mexican financial system, including banking and securities
activities. On April 20, 1994, the Ministry of Finance and Public Credit issued regulations which implemented these amendments, as well as provisions of the North American Free Trade Agreement
dealing with financial services and any future trade agreements incorporating similar provisions. These regulations set forth rules under which Canadian and U.S. financial institutions (and other
foreign financial institutions acting through Canadian or U.S. affiliates) are permitted to establish or acquire Mexican financial institutions and financial holding companies. Pursuant to these
rules, the aggregate net capital of Mexican commercial banks controlled by foreign financial institutions established pursuant to the North American Free Trade Agreement and other trade treaties,
excluding Mexican banks acquired pursuant to a program approved by the Ministry of Finance and Public Credit, could not exceed 25% of the total net capitalization of all Mexican banks until
January 1, 2000.

In
December 1998, Congress approved legislation introducing a package of financial and banking reforms which supplemented reforms in place since 1995. The 1998 reforms did not
affect the general foreign ownership restrictions under the Banking Law and the North American Free Trade Agreement regulations discussed above. Under the 1998 reforms, all remaining restrictions on
foreign ownership of the largest Mexican banks were removed. Foreign ownership was previously restricted in any Mexican bank whose net capital exceeded 6% of the aggregate net capital of all Mexican
banks. In addition, the aggregate foreign shareholdings of Mexican-controlled banks was limited to 49% and no foreign shareholder was authorized to own, directly or indirectly, more than 5% of the
equity of any Mexican bank (or 20%, with the approval of the Ministry of Finance and Public Credit). Those limits did not, however, apply to any foreign financial institution that acquired control
(i.e., more than 51% of the common stock) of a smaller-sized Mexican bank (i.e., one whose net capital
did not exceed 6% of the Mexican banking system's aggregate net capital).



The 1994-1995 peso devaluation and ensuing financial crisis created concerns about the stability of the Mexican banking system. The devaluation,
higher domestic interest rates and contraction in real GDP combined to weaken the quality of the assets of Mexican banks, caused the capitalization of several banks to fall below the minimum required
levels and created funding difficulties for many banks.

The
weakening of the banking system prompted the Mexican Government to enact policies aimed at increasing the capitalization of Mexican banks. New reserve requirements were introduced by
Banco de México to facilitate the regulation of liquidity. Pursuant to these requirements, which took effect on March 11, 1995, a bank that overdraws its account with Banco de
México must subsequently deposit funds, and maintain amounts on deposit, at least equal to the amount of the overdraft. Substantial fines may be imposed if a bank fails to make and
maintain such deposits. The new reserve requirements were intended to reduce Banco de México's daily net extension of credit. In addition, effective January 1, 1997, Banking
Circular 1343 issued by the National Banking and Securities Commission, or "CNBV," adopted significant changes in the accounting practices applicable to Mexican commercial banks and development banks,
with the intent of making those practices more consistent with international accounting standards, including U.S. generally accepted accounting principles.

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In
response to the 1994-95 financial crisis, the Mexican Government took a number of other steps to support the banking system, including:



In
1998, the Mexican Government's program to rescue troubled banks, which was first implemented in 1995, was restructured. Under the revised scheme, FOBAPROA was replaced by the Bank
Savings Insurance Institute, or "IPAB," which assumed FOBAPROA's assets and liabilities, except for certain liabilities that were explicitly excluded under the financial reforms. IPAB also manages a
deposit insurance program. During 1999, IPAB commenced a transition program under which deposit insurance limits are being introduced gradually. By 2005, deposit insurance will be limited to 400,000 Unidades de
Inversión("UDIs", units of account whose value in pesos is indexed to inflation on a daily basis, as measured by the change
in the national consumer price index), per person or entity, per institution. At June 15, 2001, one UDI was worth Ps. 2.982793.

The
Congress allocates funds to IPAB on an annual basis to manage and service IPAB's net liabilities, but they generally have not become public sector debt as had been originally
proposed. In emergency situations, IPAB is permitted to contract additional financing in an amount not exceeding 6% of the total liabilities of banking institutions without congressional
authorization. At December 29, 2000, IPAB's debt totaled Ps. 747.3 billion.

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In
addition to Mexico's auctions of debt securities in the domestic market, IPAB announced on January 6, 2000 that it planned to sell peso-denominated debt securities
in Mexico. IPAB will use the proceeds of these sales to service its maturing obligations, to improve the maturity profile of its indebtedness and to reduce its financing costs. IPAB's securities are
sold through auctions conducted by Banco de México.

On
March 1, 2000, IPAB conducted its first offering of peso-denominated debt securities, placing Ps. 1.0 billion of three-year Savings Protection
Bonds. These Savings Protection Bonds pay interest monthly at a rate (reset monthly) equal to the higher of the 28-dayCetesrate or the
rate applicable to one-month bank notes (Pagarés con Rendimiento Liquidable al Vencimiento).

In
addition to its other activities, IPAB is now in the process of disposing of the loan portfolios and other assets acquired by FOBAPROA during the 1994-96 period.
Significant transactions include the following:



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The
Ministry of Finance of Public Credit issued new rules governing the capitalization requirements of Mexican commercial banks effective January 1, 2000. These rules require
Mexican commercial banks to:



The
new rules also allow Mexican commercial banks, as part of a capitalization program, to issue cumulative and noncumulative subordinated debt securities through a special purpose
vehicle, providing them with a new financing alternative in international markets. These new instruments will have a minimum maturity of 10 years, will be unsecured and deeply subordinated and
will provide for the deferral (cumulative) or cancellation (noncumulative) of interest payments in certain circumstances and payment of the face value at the maturity date. Subject to limitations,
noncumulative instruments may be included as Tier 1 capital.

On
April 27, 2000, the Mexican Congress passed into law the Commercial Reorganization and Bankruptcy Act, a new framework for business reorganizations and for bankruptcy
proceedings, which is intended to result in greater legal certainty and swifter case resolution for debtors and creditors involved in the insolvency process. The new law replaces one that had been in
place since 1943. Among its provisions, the new law limits the period of time in which insolvent debtors may reach a reorganization agreement with their creditors before a liquidation of the debtor is
imposed. The new law also establishes a Federal Institute of Reorganization and Bankruptcy Specialists, which is intended to coordinate the provision of certain technical support in reorganization
cases and to ensure that the professionals assigned to provide such support meet certain ethical and professional requirements.

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On April 30, 2000, the Mexican Congress passed into law the Miscellany of Secured Lending, which amends the Commerce Code, the General Law of Negotiable Instruments and Credit
Transactions and the Credit Institutions Law. The new law is intended to promote the availability of credit to small- and medium-size businesses by allowing a wider range of assets to be
used as collateral for new borrowing. It recognizes two new types of security interests, a pledge while the borrower retains possession of the collateral and a collateral trust where a trustee holds
the collateral for the benefit of the lender. Under the new law, if a debtor defaults on its obligation to a creditor who holds either type of security interest, the obligation may be satisfied by the
transfer of the collateral to the creditor. In such a case, if the value of collateral exceeds the value of the obligation, the creditor will be obligated to compensate the debtor for the difference.
The new law also provides for an expedited procedure for creditors to execute judgments against security interests.

During
the second half of 2000, the Mexican Government continued to establish rules and criteria for the regulation of banking institutions in accordance with accepted international
practices. In September 2000, the Mexican Government launched a new methodology for classifying the quality of loan portfolios of commercial banking institutions. At the same time, the rules
governing the capitalization requirements of commercial banks were modified. In October 2000, new rules for classifying credit portfolios and new capitalization requirements for development
banks were announced.

In
April 2001, the Congress approved a series of initiatives intended to help develop and strengthen the financial system. The initiatives approved by Congress, which will become
effective only after their publication on the Official Gazette of the Federation, are discussed below.

Amendments to Credit Institutions Law and Financial Groups Law.These amendments are intended to enhance the transparency of
and competition among financial institutions, as well as to strengthen their regulation and supervision and to develop financial products and services. The objectives of the initiative are to:



Mutual and Investment Funds Law.The proposed reform aims to develop financial intermediaries other than banks, thus allowing
retail investors to participate in a more transparent and liquid securities market. The goals of the reform are to:



Amendments to Securities Market Law.The proposed amendments aim to promote the securities market by making it more
transparent, liquid and efficient and to include stricter corporate governance rules, which are intended to strengthen the rights of minority shareholders of public companies and brokerage houses,
among other things. The amendments require issuers of securities to appoint an audit committee of the board, which will have full access to the issuer's information, appoint

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independent board members and limit the amount of non-voting and voting-restricted stock they issue. In addition, the reforms introduce provisions that are intended to regulate the duties
of board members and the legal responsibility of board members when acting in violation of such duties. The amendments also broaden the scope of insider trading provisions and introduce more severe
penalties for insider trading violations.

Organic Law of the National Savings and Financial Services Bank.This initiative seeks to improve and strengthen the
institutional framework for popular savings and incorporate more people into the formal financial system by creating a National Savings and Financial Services Bank. The goals of the initiative are to:



At
December 29, 2000, calculated in accordance with the accounting criteria applicable to credit institutions since the beginning of 1997, the total amount of past-due
loans of commercial banks (excluding banks under Mexican Government intervention and those in special situations) was Ps. 54,697.5 million, as compared with Ps. 80,750.8 million at
December 31, 1999. The past-due loans of the banking system decreased by 37.8% in real terms in 2000 from the level at December 31, 1999. This decline was primarily due to
the positive impact of the closing of the debt-relief program for debtors implemented starting on January 1, 1999 and also to write-offs and recoveries made by some
banks. The total loan portfolio of the banking system grew by 2.1% in real terms during the fourth quarter of the year. As a consequence, the past-due loans ratio of commercial banks was
5.8% at December 29, 2000, as compared with 10.4% at December 31, 1999 and 11.3% at December 31, 1998.

Loan
loss reserves created by commercial banks (excluding banks under Mexican Government intervention and those in special situations) totaled Ps. 63,070.7 million at
December 31, 2000, as compared with Ps. 87,027.9 million at December 31, 1999. At this level, commercial banks have reserves covering 115.3% of their past-due loans,
exceeding the minimum reserve level of 45% required by the applicable accounting criteria.



The Mexican Stock Exchange is Mexico's only stock exchange and is located in Mexico City. The Mexican Stock Exchange is organized as a corporation with shares
owned by 31 brokerage firms, each of which is authorized to trade on the exchange floor. Both debt and equity securities are traded on the Mexican Stock Exchange, including stocks and bonds of private
sector corporations, equity certificates or shares issued by banks, commercial paper, bankers' acceptances, certificates of deposit, Mexican Government debt and special hedging instruments linked to
the dollar. Currently, institutional investors are the most active participants in the Mexican Stock Exchange, although retail investors also play a role in the market. The Mexican equity market is
one of Latin America's largest in terms of market capitalization, but it remains relatively small and illiquid compared to major world markets.

The
market capitalization of the Mexican Stock Exchange was U.S. $125.7 billion at the end of 2000, representing a decrease of 18.1% from its year-end 1999 level. The
value of transactions on the Mexican Stock Exchange reached U.S. $52.4 billion in 2000, 24.0% more than the 1999 level. Fixed income securities
(i.e., commercial paper, notes, bonds and ordinary participation certificates) accounted for 1.0% and equity securities
(i.e., shares and certificates of patrimonial contribution) accounted for the remaining 99.0% of transactions.

During
the first three months of 2000, the Stock Market Index registered an upward trend, due to the public's confidence in the economy as result of the preceding year's economic
performance. The Stock Market Index reached its highest level on March 9, 2000, registering 8,319.67 points. However,

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during the rest of the year, the Mexican Stock Exchange Index registered a downward trend due to increasing volatility in the international financial markets. This behavior was attributable to the
poor performance of the stock markets in the United States, particularly the NASDAQ. At December 29, 2000, the Stock Market Index stood at 5,652.19 points, representing a 20.7% decrease in
nominal peso terms and 27.2% decrease in real peso terms from the level at December 31, 1999.

At
April 30, 2001, the Stock Market Index stood at 5,987.25 points, representing a 5.9% increase in nominal peso terms and a 4.2% increase in real peso terms from the level at
December 29, 2000.

External Sector of the Economy



In 2000, Mexican exports grew by 22.0%, reaching U.S. $166.5 billion. Imports grew by 22.9% as compared with 1999, reaching U.S. $174.5 billion.
Imports were mainly driven by the dynamism of domestic demand and the greater availability of external resources. As a result, the accumulated trade deficit for 2000 was U.S. $8.0 billion,
43.3% greater than in 1999.

Petroleum
exports increased by 65.0% in 2000, non-petroleum exports increased by 18.7% and exports of manufactured good increased by 19.0%, in each case as compared with
1999. Imports of intermediate goods increased by 22.3%, imports of capital goods increased by 17.5% and imports of consumer goods increased by 37.1%, each as compared with 1999.

During
the first four months of 2001, Mexico recorded a trade deficit of U.S. $3,034 million, as compared with a trade deficit of U.S. $1,474 million for the same period of
2000. Merchandise exports increased by 4.9% during the first four months of 2001, to U.S. $52,942 million, as compared with U.S. $50,462 million in the same period of 2000. During the
first four months of 2001, petroleum exports decreased by 9.1% and non-petroleum exports increased by 6.5%, in each case as compared with the same period of 2000. Exports of manufactured
goods, which represented 85.4% of total merchandise exports, increased by 7.1% during the first four months of 2001. Total imports were U.S. $55,975 million during the first four months of
2001, a 7.8% increase as compared with the same period of 2000. Imports of intermediate goods increased by 5.2%, imports of capital goods increased by 8.0% and
imports of consumer goods increased by 29.2% during the first four months of 2001, each as compared with the same period of 2000.

In
March 2000, Mexico and the European Union signed a free trade agreement, which took effect on July 1, 2000. The agreement covers industrial tariffs, agricultural goods,
services, public procurement, rules of competition and investment, intellectual property, rules of origin and dispute resolution.



According to preliminary figures, during 2000, the current account registered a deficit of U.S. $18,111 million, or 3.1% of GDP, U.S. $4,112 million
higher than the current account deficit registered in 1999. Approximately 82.3% of the current account deficit was financed by foreign direct investment. The increase in the current account deficit in
2000 was primarily attributable to a larger trade deficit. The capital account registered a surplus of U.S. $17,786 million in 2000, as compared with a surplus of U.S. $13,416 million in
1999. The increase was principally due to an inflow of long-term external resources, such as foreign direct investment flows. In addition, there was inflow of resources resulting from the
reduction of assets held abroad by Mexican residents. At the same time, there was a modest inflow of foreign portfolio investment and significant reductions in indebtedness of the public sector and
Banco de México.

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During
2000, total foreign investment in Mexico reached U.S. $14,475 million, as a result of an inflow of U.S. $14,911 million in direct foreign investment and an outflow
of U.S. $436 million of net foreign portfolio investment.

According
to preliminary figures, during the first quarter of 2001, Mexico's current account registered a deficit of 3.1% of GDP or U.S. $4,771 million, U.S. $25 million
more than the current account deficit in the first quarter of 2000. The capital account surplus for the first quarter of 2001 totaled U.S. $7,689 million, as compared with a surplus of U.S.
$8,039 million during the first quarter of 2000. During the first quarter of 2001, direct foreign investment totaled U.S. $2,740 million and portfolio investment (including securities
placed abroad) totaled of U.S. $3,345 million.

In
August 1996, the Foreign Exchange Commission, comprised of members of the Ministry of Finance and Banco de México, announced a plan to increase Mexico's reserves
by conducting monthly auctions of options to sell U.S. dollars to Banco de México. The auctions took place among commercial banks, which could assign their rights arising therefrom.

The
auctions met the objective for which they were created. They allowed Banco de México to accumulate international assets without creating distortions in the currency
markets. Through this mechanism, Banco de México has accumulated U.S. $12,117 million in reserves since the auctions were introduced in 1996. At May 11, 2001, the net
international assets of Banco de México totaled U.S. $40,732 million, a level sufficiently high to justify the suspension of the accumulation by this mechanism.

On
May 18, 2001, the Foreign Exchange Commission decided to suspend until further notice the sale of options after the auction to be held June 29, 2001.

At
December 29, 2000, Mexico's international reserves totaled U.S. $33,555 million, an increase of U.S. $2,822 million from the level at December 30, 1999.
The net international assets of Banco de México were U.S. $35,629 million at December 29, 2000, an increase of U.S. $8,249 million from December 30, 1999. At
June 8, 2001, Mexico's international reserves totaled U.S. $39,018 million, an increase of U.S. $5,463 million from the level at December 29, 2000. The net international
assets of Banco de México totaled U.S. $40,280 million at June 8, 2001, an increase of U.S. $4,651 million from December 29, 2000.



During 2000, direct foreign investment in Mexico notified to the National Foreign Investment Commission totaled approximately U.S. $10.3 billion. Total
accumulated direct foreign investment in Mexico during the 1996-2000 period amounted to approximately U.S. $49.1 billion. Of the total direct foreign investment accumulated during
the 1996-2000 period, excluding that in securities, 65.9% has been channeled to industry, 32.5% to services, 1.1% to mining and 0.5% to agriculture and fishing.

During
2000, net foreign investment in Mexico, as recorded in the balance of payments, totaled U.S. $14.5 billion, and was comprised of direct foreign investment of U.S.
$14.9 billion and portfolio investment of U.S. $(0.4) billion.



Since December 22, 1994 the Mexican Government has maintained a floating exchange rate policy, with Banco de México intervening in the
foreign exchange market from time to time to minimize volatility and ensure an orderly market. The Mexican Government has also promoted market-based mechanisms for stabilizing the exchange rate, such
as over-the-counter forward and options contracts between banks and their clients in Mexico, and authorization of peso futures trading on the Chicago Mercantile Exchange. In
addition, since the beginning of October 1996, Banco de México has permitted

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foreign financial institutions to open peso-denominated accounts and to borrow and lend pesos (subject to general restrictions on conducting banking activities in Mexico).

In
February 1997, the Foreign Exchange Commission established a program enabling Banco de México to sell up to U.S. $200 million of dollars to Mexican
commercial banks pursuant to an auction mechanism on any day in which the peso/dollar exchange rate applicable to the payment of obligations denominated in foreign currencies exceeds the corresponding
rate on the preceding business day by more than 2%. This mechanism was adopted with the aim of moderating the volatility of the peso/dollar exchange rate, while maintaining the Mexican Government's
freely floating exchange rate regime.

On
August 26, 1998, the Foreign Exchange Commission decided to allow Banco de México to increase the number of currency auctions held per day from two to three, in
order to increase the likelihood that Banco de México would sell the entire maximum amount of U.S. $200 million on any day it chose to use the auction program. From
October 27, 1997 through May 31, 2001, Banco de México sold U.S. $1,900 million under this program, auctioning dollars on October 27 and 30 and
November 6, 1997, January 12, May 27, August 21 and 26, September 10 and 21 and October 8, 1998 and on January 12 and 13 and May 25, 1999. On
June 8, 2000, Mexico sold U.S. $50 million, the first such sale of dollars under this program since May 25, 1999.

On
September 10, 1998, in response to continuing steep declines in the value of the peso, Banco de México sold a total of U.S. $478 million. U.S.
$200 million of this amount was sold under the auction program, and the remainder was sold as an extraordinary direct sale of dollars at market rates, the first extraordinary intervention by
Banco de México in the foreign currency market since December 1995.

The
Foreign Exchange Commission resolved on May 18, 2001 to suspend use of the mechanism for the contingent sale of dollars. The suspension will take effect as of July 2,
2001.

Following
a period of relative stability, during June and the first two weeks of July of 2000, pressures on the peso-dollar exchange rate resumed, due primarily to
uncertainty generated by financial problems in Argentina. In December of 2000, the exchange rate experienced new pressures due primarily to unfavorable external factors, notably the growing evidence
of the U.S. economic deceleration and the downward correction in the price of oil.

During
2000, the monthly average peso/U.S. dollar exchange rate was Ps. 9.456 = U.S. $1.00. During the first five months of 2001, the monthly average peso/U.S. dollar exchange
rate was Ps. 9.518 = U.S. $1.00. The peso/U.S. dollar exchange rate announced by Banco de México on June 8, 2001 (to take effect on the second business day thereafter) was
Ps. 9.0680 = U.S. $1.00.

Public Finance



The rationalization of public expenditure and the augmentation of revenue have been important components of the Mexican Government's economic stabilization
strategy. The Mexican Government's fiscal policy has had two fundamental objectives: to establish the macroeconomic foundation for sustained growth and to focus the Mexican Government's resources on
those sectors in which the Mexican Government can have the greatest impact in supporting social development and the competitiveness of the Mexican economy.

At
present, the Mexican Government's principal short-term fiscal policy objectives, in addition to countering inflation, are to:



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The
Mexican Government's principal fiscal policy objectives over the medium-term are to:



On December 28, 2000, the Congress approved the Federal Annual Revenue Law for 2001 and on December 29, 2000, the Congress approved the Federal
Expenditure Budget for 2001 (together with the Federal Annual Revenue Law for 2001, the "2001 Budget"). The principal objectives of the 2001 Budget are to maintain sound public finances and a tight
fiscal stance in order to promote a more stable economic environment, higher domestic savings and investment rates and higher employment rates.

Under
the 2001 Budget, the Mexican Government estimates that it will devote Ps. 236,988 billion (25.6% of total budgetary programmable expenditures) to education and Ps.
261,293 billion (28.3% of total budgetary programmable expenditures) to health and social security.

The
Mexican Government also expects that it will devote Ps. 51,491 billion (5.6% of total budgetary programmable expenditures) to regional and urban development and Ps.
12,696 billion (1.2% of total budgetary programmable expenditures) to social spending and nutrition. In addition, the 2001 Budget contemplates that Ps. 184,231 billion will be used for
the debt service of the Mexican Government and that Ps. 22,854 billion will be used for the debt service of the public sector agencies included in the 2001 Budget.

The
assumptions and targets underlying the 2001 Budget, as embodied in theCriterios Generales de Política
Económica(General Economic Policy Guidelines) for 2001, the results for 1999 and preliminary results for 2000 and the first quarter of 2001 are set forth below.

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1999 Results; and Preliminary 2000 and First Quarter 2001 Results;  2001 Budget Assumptions and Targets

|                                                       |  | 1999
Results |   | 2000
Results |   | First quarter
of 2001(1) |  | 2001
Budget |    
|------------------------------------------------------ |  | ------------ | - | ------------ | - | ------------------------ |  | ----------- | ---
|Real GDP growth (%)                                    |  | 3.8          |   | 6.6          |   | 2.0                      |  | 2.5-3.0     | (2)
|Increase in the national consumer price index (%)      |  | 12.3         |   | 9.0          |   | 1.1                      |  | 6.5         |    
|Average export price of Mexican oil mix (U.S.$/barrel) |  | 15.5         |   | 24.6         |   | 19.6                     |  | 18.0        |    
|Current account deficit as % of GDP                    |  | 3.0          |   | 3.1          |   | 3.0                      |  | 3.8         |    
|Average exchange rate (Ps. /$1.00)                     |  | 9.561        |   | 9.456        |   | 9.697                    |  | 10.1        |    
|Average rate on 28-day Cetes (%)                       |  | 21.4         |   | 15.2         |   | 17.0                     |  | 12.4        |    
|Public sector balance as % of GDP                      |  | (1.1         | ) | (1.1         | ) | 0.9                      |  | (0.7        | )  
|Primary balance as % of GDP                            |  | 2.5          |   | 2.6          |   | 4.9                      |  | 2.7         |    

---

Source: Ministry of Finance and Public Credit, except for oil price data, which is provided by PEMEX.

The
increase in international oil prices and the strength of economic activity in Mexico favorably influenced the public finance results in 2000. During 2000, the public sector recorded
an overall deficit of Ps. 60.6 billion or 1.1% of GDP, slightly higher than the deficit recorded in 1999.

The
overall primary balance registered a surplus of Ps. 143.4 billion, or 2.6% of GDP, in 2000, 11.3% greater in real terms than the primary balance registered in 1999.

The
public sector registered an overall surplus of Ps. 13.3 billion in the first quarter of 2001, a reduction in real terms of 6.3% compared to the first quarter of last year, and
the primary balance registered a surplus of Ps. 69.5 billion, 4.5% lower in real terms when compared to the same period of 2000.

During
the first quarter of 2001, public sector revenues were negatively affected by:



These
factors caused budgetary revenues in the first quarter of the year to be Ps. 3.4 billion lower than projected in the estimate published in the Official Gazette of the
Federation on January 31, 2001, as stated in the 2001 Budget. In accordance with the automatic adjustment mechanism contained in Article 32 of the 2001 Budget, and in response to the
lower than projected revenues, the Mexican Government will cut expenditures in the same amount, to ensure that the fiscal targets for 2001 will be met.

Public Debt



Internal debt is presented herein on a "net" basis, and includes the internal debt of the Mexican Government and budget-controlled agencies, excluding Banco de
México's general account balance (which was negative at March 31, 2001, indicating monies owed to the Mexican Government) and the assets of theFondo del
Sistema de Ahorro Para el Retiro(the Retirement Savings System Fund). In addition, net internal debt includesCetesand other
securities sold to the public in primary auctions, but not such debt allocated to Banco de México for its use in regulating liquidity ("Regulación
Monetaria").

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For a discussion of net internal debt, see footnote 2 to the table "Net Internal Public Debt" below. Internal debt does not include the debt of IPAB. See "Financial
SystemBanking Supervision and Support."

In
2000, the Mexican Government continued to pursue an internal debt strategy aimed at lengthening the average maturity of its debt in order to reduce its refinancing risk. To this end,
the Mexican Government continued to offer new instruments of longer maturities. In the last quarter of 1999, the Mexican Government offered for the first time 10-year
UDI-denominated securities and guaranteed 30-year UDI-indexed Bonds. In January 2000, the Mexican Government began offering three-year fixed rate
peso-denominated bonds.

In
addition to the three-year fixed rate peso-denominated debt securities that were first issued in January 2000, the Mexican Government issued
five-year fixed rate peso-denominated securities in May 2000. With the issuance of these securities, the Mexican Government intends to establish a long-dated
benchmark yield curve and to begin to develop a long-term private domestic debt market. The Mexican Government anticipates that the issuance of these instruments will also encourage:



The
following table summarizes the net internal public debt of the Mexican Government and the budget-controlled agencies at each of the dates indicated.

Net Internal Public Debt

|                           |                            | December 31,                                |      | March 31,
|-------------------------- | -------------------------- | ------------------------------------------- | ---- | ---------
|
|
|Total net internal debt(2) |                            | $23.1                                       |      | $32.2    
|                           | Mexican Government         |                                             | 22.8 |          
|                           |                            | Peso-denominated                            |      | 22.8     
|                           |                            | Foreign currency-denominated (Tesobonos)(2) |      | 0.0      
|                           | Budget-controlled agencies |                                             | 0.3  |          
|                           |                            | Peso-denominated                            |      | 0.1      
|                           |                            | Foreign currency-denominated                |      | 0.2      

---

Note:  Totals
may differ due to rounding.

N.A. =
Not available.

Source: Ministry of Finance and Public Credit.

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At December 29, 2000, the net internal debt of the Mexican Government totaled U.S. $63.3 billion, an increase of U.S. $15.6 billion (or 32.7%) from the U.S. $47.7 billion
outstanding at December 31, 1999. The increase in net internal debt was attributable to the fact that, as in previous years, the Mexican Government financed its deficit primarily through
borrowings in the domestic market. At the end of December 2000, the average maturity of internal debt was 538 days, as compared with 561 days on December 31, 1999.

At
March 31, 2001, the stock of public net internal debt represented 10.3% of GDP (0.3 percentage points lower than in December 2000), and amounted to U.S.
$61.7 billion, a decrease of U.S. $1.6 billion from the U.S. $63.3 billion outstanding at December 29, 2000. At the end of March 2001, the average maturity of
internal debt was 570 days, as compared with 540 days on December 29, 2000.

At
the end of the first quarter of 2001, the Mexican Government announced an increase in the minimum amounts of 364 daysCetes, bondesand fixed rate
bonds to be issued during the second quarter of 2001, with the purpose of further increasing the average maturity of the Mexican
Government's internal debt.



At December 29, 2000, Mexico's gross external public debt totaled U.S. $84.1 billion, a decrease of U.S. $8.2 billion from the U.S.
$92.3 billion outstanding at December 31, 1999. The sharp reduction in the stock of gross external public debt was largely due to the Mexican Government's repurchase and redemption of
more than U.S. $7.0 billion of Brady Bonds, in a series of transactions during 2000 and prior years, as part of the Mexican Government's debt management initiatives. Overall, total public debt
(gross external debt plus net internal debt) at December 29, 2000, represented approximately 24.2% of nominal GDP.

The
following table sets forth a summary of the external public debt of Mexico, which includes the external debt of the Mexican Government, budget-controlled agencies and
administratively controlled agencies, and a breakdown of such debt by currency. External public debt as used in this section does not include, among other things, repurchase obligations of Banco de
México with the International Monetary Fund or the debt of IPAB. See "Financial SystemBanking Supervision and Support." See footnote 1 to the table "Summary of External
Public Debt" below.

Summary of External Public Debt(1)  By Type

|               |      | Long-Term
Direct Debt
of the
Mexican
Government |         | Long-Term
Debt of
Budget
Controlled
Agencies |        | Other Long-
Term Public
Debt(2) |         | Total Long-
Term Debt |         | Total Short-
Term Debt |        | Total Long-
and Short-
Term Debt
|-------------- | ---- | ----------------------------------------------- | ------- | -------------------------------------------- | ------ | ------------------------------- | ------- | --------------------- | ------- | ---------------------- | ------ | --------------------------------
|
|December 31,   |      |                                                 |         |                                              |        |                                 |         |                       |         |                        |        |                                 
|               | 1996 |                                                 | $55,569 |                                              | $9,172 |                                 | $28,553 |                       | $93,294 |                        | $4,991 |                                 
|               | 1997 |                                                 | 48,827  |                                              | 9,514  |                                 | 25,920  |                       | 84,261  |                        | 4,060  |                                 
|               | 1998 |                                                 | 52,043  |                                              | 10,557 |                                 | 25,297  |                       | 87,897  |                        | 4,398  |                                 
|               | 1999 |                                                 | 52,738  |                                              | 11,101 |                                 | 24,158  |                       | 87,997  |                        | 4,293  |                                 
|               | 2000 |                                                 | 46,065  |                                              | 10,853 |                                 | 23,386  |                       | 80,304  |                        | 3,754  |                                 
|March 31, 2001 |      | 48,988                                          |         | 11,602                                       |        | 22,985                          |         | 83,575                |         | 4,886                  |        | 88,461                          

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By Currencies(3)

|                |  | December 31, |        |  |       | 
|--------------- |  | ------------ | ------ |  | ----- | 
|
|
|U.S. Dollars    |  | $            | 81,757 |  | 83.2  | 
|Japanese Yen    |  |              | 7,802  |  | 7.9   | 
|Deutsche Marks  |  |              | 3,239  |  | 3.3   | 
|Pounds Sterling |  |              | 480    |  | 0.5   | 
|French Francs   |  |              | 2,317  |  | 2.4   | 
|Swiss Francs    |  |              | 302    |  | 0.3   | 
|Others          |  |              | 2,389  |  | 2.4   | 
|                |  |              |        |  |       | 
|Total           |  | $            | 98,285 |  | 100.0 | 
|                |  |              |        |  |       | 

---

Note:  Totals may differ due to rounding.

Source: Ministry of Finance and Public Credit.

Outstanding
gross public sector external debt increased by approximately U.S. $3.8 billion in the first quarter of 2001, from U.S. $84.6 billion at December 29,
2000, to U.S. $88.5 billion at March 31, 2001. Of this amount, U.S. $83.6 billion represented long-term debt and U.S. $4.9 billion represented
short-term debt, as compared with U.S. $80.3 billion of long-term debt and U.S. $3.8 billion of short-term debt as of December 29, 2000.

Since
December 31, 2000, the Mexican Government and public sector entities have issued the following debt securities in the international capital markets:



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Item 5. Operating and Financial Review and Prospects

General

PEMEX
earns income from:



PEMEX's
operating expenses include:



PEMEX's
income is affected by a number of factors, including:



Sales Volumes and Prices

The profitability of our operations in any particular accounting period is directly related to the sales volume of, and average realized prices for, the crude oil
and natural gas that we sell. The average realized prices for crude oil and natural gas fluctuate from one period to another due to world market conditions and other factors.



Pemex-Exploration and Production sells crude oil to PMI, which then sells it to international clients. The volume of crude oil that we export is the volume
delivered to international clients as adjusted for water content according to the bill of lading and standard market practice. We base our crude oil export price formulas on a basket of international
reference prices and a constant set

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according to specific market conditions. We determine export prices of petroleum products and natural gas by reference to market conditions and direct negotiations with our clients.

Significant
changes in international crude oil prices directly affect our financial results. The impact of changes in crude oil prices on our refining activities and petrochemicals
business depends on:



The
following table sets forth the weighted average price per barrel of crude oil that PMI received from exports to international customers and the average price of its benchmark, West
Texas Intermediate crude oil, for the years indicated. Note that the average prices of West Texas Intermediate crude oil are higher than the average prices of crude oil that we export. This is
primarily due to the higher cost of refining sour crude oils, which make up a majority of our exports. See "Item 4Information on the CompanyBusiness
OverviewExploration and ProductionCrude Oil Sales."

|                                                |  | Year Ended December 31,
|----------------------------------------------- |  | -----------------------
|
|West Texas Intermediate crude oil average price |  | $                      
|PEMEX crude oil weighted average export price   |  |                        

---

|Note:    |  | The numbers in this table are average prices for the full year. Spot prices at year end are different. On November 4, 2002 the spot price for West Texas Intermediate crude oil was U.S. $26.95 per barrel and the spot
price for the PEMEX crude oil basket was an estimated U.S. $21.93 per barrel.
|-------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Sources: |  | 1996 and 1997 figures: PEMEX's 1998 Statistical Yearbook and Platt's U.S. Market Scan (McGraw-Hill Company). 1998, 1999 and 2000 figures: PMI operating statistics, which are based on information in bills of lading, and Platt's U.S. Market Scan
(McGraw-Hill Company).                           



Committees composed of officials of Petróleos Mexicanos and the subsidiary entities and representatives of various governmental agencies including,
among others, the Ministry of Finance and Public Credit, the Ministry of Energy, the General Comptroller's Office and the Ministry of Economy set the formulas that we use to determine prices for crude
oil and petroleum products sold in the domestic
market. Petróleos Mexicanos and the subsidiary entities, together with the Mexican Government, pursue a policy that keeps domestic wholesale prices generally in line with international
prices. We determine wholesale prices by reference to international prices, but make adjustments to reflect opportunity costs, transportation expenses and differences in the quality of our products
relative to international benchmarks. The retail price is comprised of the wholesale price plus the value added tax, the retailer's margin and freight costs. The Ministry of Finance and Public Credit
determines retail prices of gasoline and diesel before the beginning of each fiscal year in conjunction with the preparation of the Mexican Government's budget for that year. The Ministry of Finance
and Public Credit also adjusts gasoline and diesel prices so that they are consistent with the Mexican Government's macroeconomic targets.

Our
retail prices for gasoline and diesel reflect the addition of the indirect Special Tax on Production and Services ("IEPS Tax") which we collect on behalf of the Mexican Government,
as well as the value added tax. We charge the IEPS Tax only on gasoline, diesel and natural gas sales for

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automotive use. See "IEPS Tax, Excess Gains Duty, Hydrocarbon Duties and Other Taxes" below, for a further discussion of the IEPS Tax. For financial statement purposes, the IEPS Tax is
presented as part of Net Domestic Sales and then deducted after "Income before Hydrocarbon extraction duties, special tax on production services and other."

Natural
gas prices for domestic sale are calculated according to the Energy Regulatory Commission directives published on March 20, 1996. These prices reflect natural gas
opportunity costs and competitive conditions in international markets and at the point of sale.

The
following table compares the average prices of petroleum products in Mexico and in the United States for the years indicated.

|                             |             | 1996 |          | 1997 |   | 1998     |      | 1999 |          | 2000
|---------------------------- | ----------- | ---- | -------- | ---- | - | -------- | ---- | ---- | -------- | ----
|
|Oil Products                 |             |      |          |      |   |          |      |      |          |     
|Unleaded regular gasoline(1) |             | $    | 52.73    |      | $ | 48.32    |      | $    | 61.99    |     
|Premium gasoline(1)          |             |      | 65.23    |      |   | 55.76    |      |      | 68.86    |     
|Jet fuel(2)                  |             |      | 26.48    |      |   | 25.57    |      |      | 25.52    |     
|Kerosene(3)                  |             |      | 38.93    |      |   | 27.32    |      |      | 46.32    |     
|Natural Gas(4)               |             |      |          |      |   |          |      |      |          |     
|                             | Industrial  |      |          | 2.21 |   |          | 3.32 |      |          | 2.44
|                             | Residential |      |          | 3.57 |   |          | 6.44 |      |          | 4.06
|Selected Petrochemicals      |             |      |          |      |   |          |      |      |          |     
|Ammonia(5)                   |             |      | 186.03   |      |   | 205.85   |      |      | 166.81   |     
|Polyethylene L.D.(6)         |             |      | 1,057.82 |      |   | 1,021.25 |      |      | 1,078.84 |     
|Polyethylene H.D.(7)         |             |      | 982.54   |      |   | 935.64   |      |      | 1,058.83 |     
|Styrene(8)                   |             |      | 618.61   |      |   | 672.07   |      |      | 645.83   |     

---

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The following table sets forth the taxes and duties that we paid each of the past three years.

|                                               |       | Year ended December 31,
|---------------------------------------------- | ----- | -----------------------
|
|
|Hydrocarbon extractions duties and other taxes |       | Ps.                    
|IEPS Tax                                       |       |                        
|                                               |       |                        
|                                               | Total |                        
|                                               |       |                        

---

Note:
For a description of these taxes and duties, see "Item 4Information on the CompanyTaxes and Duties" above.

The
IEPS Tax is an indirect tax on product sales that we collect on behalf of the Mexican Government. The IEPS Tax has two effects: (1) it ensures that we retain the portion of
our sales revenues that represents the adjusted international reference prices of our products, and (2) it gives the Mexican Government the difference between the domestic retail prices and
adjusted international reference prices of diesel and gasoline.

GRAPHIC

When
international prices decrease, our wholesale price will decrease and, as a result, the IEPS Tax that we collect from consumers and transfer to the Mexican Government will increase.

For
automotive fuels, the IEPS Tax is equal to the retail price at which Pemex-Refining sells gasoline and automotive diesel to retailers less Pemex-Refining's wholesale price, value
added tax and
distribution costs. For natural gas, the IEPS Tax on Pemex-Gas and Basic Petrochemicals' natural gas sales for automotive consumption is linked to the retail price of unleaded regular
gasoline and the international reference price of natural gas.

In
addition to the IEPS Tax, we are subject to a number of other federal taxes and duties. In 2000, the sum of these taxes and duties totaled, and in 2001 the sum of these taxes and
duties is expected to total, approximately 60.8% of the sales revenues of Petróleos Mexicanos and the subsidiary entities from sales to the PMI Group and to third parties. The IEPS Tax
is credited against our hydrocarbon duties in arriving at our overall rate of taxation. In addition to these taxes and duties, we are subject to an additional 39.2% excess gains duty, which applies to
the portion of proceeds of our crude oil exports that are attributable to sales at prices in excess of a specific threshold price per barrel set by the Mexican Government. In 2000, this price was U.S.
$15.00 per barrel, and in 2001, this price was U.S. $18.00 per barrel. The effect of the excess gains duty, when combined with the regular duty rate, is that the Mexican Government, not PEMEX,
realizes all of the benefits of increases in crude oil prices over the threshold. See also "Item 4Information on the CompanyTaxes and DutiesExcess Gains Revenue
Duty." The Mexican Government resets the rate of taxes and duties applicable to PEMEX each year.

The
hydrocarbon taxes and duties affect our income because they are recorded as expenses. However, the IEPS Tax and the value added tax are indirect taxes that do not have an impact on
our

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income because they are pass-through taxes that we collect from consumers and transfer to the Mexican Government.



Mexico is the sole owner of Petróleos Mexicanos and the subsidiary entities and the Mexican Government closely regulates and supervises our
operations. Mexican Government ministers control key executive decisions at PEMEX. The Secretary of the Ministry of Energy of Mexico is the Chairman of the Board of Directors of
Petróleos Mexicanos. The General Comptroller's Office of the Mexican Government appoints Petróleos Mexicanos and the subsidiary entities' external auditors.

The
Mexican Government incorporates the annual budget and financing program of Petróleos Mexicanos and the subsidiary entities into its consolidated annual budget, which
it submits to the Mexican Congress for its approval. The Mexican Congress also designates certain of our largest capital expenditures as PIDIREGAS. See "Item 4Information on the
CompanyThe Company, Its History and DevelopmentCapital Expenditures and Investments."

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Mexico experienced high inflation during the 1980s. The annual rate of inflation (as measured by the change in the NCPI) decreased from a high of 159.2% in 1987
to 11.9% in 1992, 8.0% in 1993 and 7.1% in 1994. However, the economic events that followed the devaluation of the peso against the U.S. dollar in late 1994 and 1995, and turbulence in international
financial markets, caused inflation to increase to 52.0% in 1995, decrease to 27.7% in 1996 and 15.7% in 1997 and increase to 18.6% in 1998. In 1999, the annual inflation rate decreased to 12.3%, and
in 2000, it decreased further to 9.0%.

Mexican
inflation has affected our consolidated financial statements in the following ways:



We
revalue our fixed assets based on a hybrid of NCPI and specific-index items as determined by independent appraisers. The specific-index method takes into account usage, obsolescence,
specific costs of operation and the remaining productive life of the revalued assets. See Note 2b) to the Financial Statements.

In
1996, an independent appraiser revalued our natural gas pipeline, distribution, transportation and storage assets using the specific-cost method. In 1997, PEMEX used the
specific-cost method to revalue exploration and production assets, taking into consideration an independent appraiser's report. In 1998, we used the specific-cost method to
revalue refinery assets, including distribution, transportation and storage assets, taking into consideration Mexican Petroleum Institute appraisals. For 2000 and 1999 fixed assets, excluding
furniture and fixtures, vehicles and construction in progress, were restated based
on appraisals performed by the Mexican Petroleum Institute and by an independent appraiser. The appraisals were performed utilizing the specific index method considering usage, a factor for
obsolescence, specific costs, remaining useful lives and the relative classification of the fixed assets. Construction in progress and various immaterial assets are not restated.



The financial statements, which are prepared in accordance with Mexican GAAP, consolidate the results of Petróleos Mexicanos, the subsidiary
entities and the subsidiary companies. Certain non-material subsidiaries, however, are not consolidated and are accounted for under the cost method. For a list of the consolidated
subsidiary companies, see Note 2c) to the Financial Statements. Since 1997, the results of P.M.I. Marine Ltd., have been consolidated; such results were previously accounted for
under the cost method. In 1998, we began consolidating the assets and liabilities of Pemex Project Funding Master Trust related to PIDIREGAS projects. Beginning in 2000, we began consolidating the
results and financial condition of Mex Gas Internacional Ltd. The consolidation of the subsidiary companies (including Pemex Project Funding Master Trust) with Petróleos
Mexicanos and the subsidiary entities, after intercompany eliminations had the following effects on the financial statements of Petróleos Mexicanos and the subsidiary entities:



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In response to continuing weak crude oil prices in international markets, on March 22, 1998, the governments of Mexico, Venezuela and Saudi Arabia agreed
to reduce their crude oil output (exports in the case of Mexico) by 100 thousand barrels per day, 200 thousand barrels per day and 300 thousand barrels per day, respectively,
beginning April 1, 1998. On June 4, 1998, the same countries announced that, beginning July 1, 1998, Saudi Arabia would reduce its output by an additional 225 thousand
barrels per day, Venezuela would reduce its output by an additional 125 thousand barrels per day and Mexico would reduce its exports by an additional 100 thousand barrels per day.

On
March 23, 1999, OPEC and some non-OPEC members, including Mexico, Norway, Russia and Oman, ratified an agreement reached on March 12, 1999 to cut world crude
oil production by a total of 2.1 million barrels per day. Under this agreement, Mexico agreed to cut its crude oil exports by an additional 125 thousand barrels per day beginning on
April 1, 1999. These crude oil agreements were set to expire on March 31, 2000.

On
March 29, 2000, OPEC, excluding Iran, agreed to increase its crude oil production by 1,450 thousand barrels per day. Mexico, which is not a member of OPEC, announced on
March 29, 2000 that it would increase its exports of crude oil by 150 thousand barrels per day, beginning in April 2000. On June 21, 2000, the Ministry of Energy announced
an additional increase in crude oil exports of 75 thousand barrels per day, beginning in July 2000.

Following
OPEC's announcement in January 2001 that it would reduce crude oil production by 1.5 million barrels per day, Mexico announced it would decrease its crude oil
exports by 75 thousand barrels per day, beginning on February 1, 2001. Following a March 2001 announcement by OPEC of an additional 1.0 million barrel per day reduction in
crude oil production, on March 25, 2001, Mexico announced a further reduction in crude oil exports of 40 thousand barrels per day, beginning on April 1, 2001. On July 24,
2001, Mexico announced that it would reduce its crude oil exports by an additional 70 thousand barrels per day, beginning on September 1, 2001.

Following
OPEC's announcement that it would reduce crude oil production by 1.5 million barrels a day, on January 2, 2002 Mexico announced it would decrease its crude oil
exports by 100 thousand barrels per day to 1.66 million barrels per day for six months, beginning on January 1, 2002. Following OPEC's announcement that it would keep crude oil
production at their present levels until September 2002, on June 27, 2002, Mexico announced that it would also maintain its crude oil exports at present levels for the same period. Most
recently, following an OPEC announcement that it would maintain current crude oil production levels through fourth quarter 2002, Mexico affirmed that it would maintain its crude oil exports at their
present levels for the same period.

Restatement

We have restated our consolidated financial statements as of and for the five years ended December 31, 2000. The principal adjustments made to our
financial statements reflect the changes discussed below.



The Petroleum Works Law provides that once a well turns out to be dry, invaded with salt water or abandoned due to mechanical failure, or when the well's
production has been depleted such that abandonment is necessary due to economic unfeasibility of production, it must be plugged to ensure the maintenance of sanitary and safe conditions and to prevent
the seepage of hydrocarbons to the surface. All activities required for plugging a well are undertaken with the purpose of isolating, in a definitive and convenient manner, the cross formations in the
perforation that contains oil, gas or water in order to ensure that hydrocarbons do not seep to the surface. This law also requires that PEMEX

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obtain approval from the Ministry of Energy for the dismantlement of hydrocarbon installations, either for the purpose of replacing them with new installations or for permanent retirement.

We
had historically accrued for restoration costs in the environmental liabilities reserve. However, with respect to dismantlement and abandonment costs associated with
long-term oil and gas producing properties, we previously had not accrued these amounts (for either onshore or offshore properties), but charged them to expense at the time incurred
because the cash expenditures were insignificant to the financial results of any individual prior period.

After
an extensive evaluation, we have restated the Financial Statements to take into account estimated dismantlement and abandonment costs in determining amortization and depreciation
rates, and to include the cumulative effect of these prior period charges as a component of accumulated depreciation and amortization. We have also recognized retroactively to 1996 these future
dismantlement and abandonment costs. We recognized the costs related to currently producing and temporarily closed wells in DD&A for each period based on the units of production methodology reflecting
the life of the field properties and considering current cost estimates. In the case of the non-producing wells subject to dismantlement and abandonment, the full cost has been recognized
at the end of each period.



At the end of 1999, we entered into a series of transactions intended to unwind a collar on an equity swap based on Repsol shares, as described in Note 10
to the Financial Statements. A portion of the amount which was required to be paid in order to unwind the collar was paid in December 1999, with the remaining commitment not paid until
February 2000. Previously, the unpaid portion of this transaction was not recorded as an accrued liability at year-end 1999, and the expense related to this unpaid portion was not
recognized until 2000. However, under Mexican GAAP Bulletin A-3 and Bulletin C-12, the liability associated with this unpaid portion should have been accrued at
year-end 1999, and the related expense recognized in 1999 rather than 2000. As a result, we have restated the Financial Statements as of and for the years ended December 31, 2000
and 1999 to recognize the liability associated with this transaction at year-end 1999.

The
following table sets forth the effects of the foregoing adjustments on our income (loss) for each of the five years ended December 31, 2000 under Mexican GAAP.

|                                                                      |  | Year ended December 31, |  
|--------------------------------------------------------------------- |  | ----------------------- | -
|
|
|Income (loss) for the year, as previously reported                    |  | Ps. 16,495              |  
|Adjustments due to recognition of dismantlement and abandonment costs |  | (867                    | )
|Adjustments for Repsol derivative transactions                        |  |                         |  
|                                                                      |  |                         |  
|Income (loss) for the year, as restated                               |  | Ps. 15,628              |  
|                                                                      |  |                         |  

---

Source:PEMEX's restated financial statements.

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The
following table sets forth the effects of the foregoing adjustments on our equity for each of the five years ended December 31, 2000 under Mexican GAAP.

|                                                                      |  | Year ended December 31, |  
|--------------------------------------------------------------------- |  | ----------------------- | -
|
|
|Equity at year end, as previously reported                            |  | Ps. 155,780             |  
|Adjustments due to recognition of dismantlement and abandonment costs |  | (4,215                  | )
|Adjustments for Repsol derivative transactions                        |  |                         |  
|                                                                      |  |                         |  
|Equity at year end, as restated                                       |  | Ps. 151,565             |  
|                                                                      |  |                         |  

---

Source:PEMEX's restated financial statements.

As
the tables indicate, the restatement of the Financial Statements to recognize the effects of future dismantlement and abandonment costs resulted in an additional charge to
amortization expense, which in turn led to an increase in accumulated depreciation and amortization, a decrease in net income and a decrease in equity for each of the five years ending
December 31, 2000. The restatement of the Financial Statements to recognize the unpaid portion on the Repsol derivative transactions at year-end 1999 resulted in further decreases
in net income and equity for the year ended December 31, 1999, and
an increase in net income for the year ended December 31, 2000 offsetting the decrease in net income for that year attributable to the recognition of dismantlement and abandonment costs.

Throughout
the following Operating and Financial Review and Prospects, all amounts reflect the referenced restatement adjustments.

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Results of Operations of PEMEXFor the Year Ended December 31, 2000 Compared to the Year Ended December 31, 1999 (As Restated)



In 2000, we reported a loss of Ps. 19.7 billion on Ps. 409.1 billion in total revenues net of the IEPS Tax, as compared with a loss of Ps.
21.2 billion on Ps. 256.6 billion in total revenues net of the IEPS Tax in 1999. This 7.1% decrease in losses from 1999 to 2000 resulted primarily from an increase in domestic sales, an
increase in product inventory and the termination of certain hedging transactions. The effects of these increases were partially offset by (1) an increase in the excess gains duties that we
paid in 2000 in respect of our crude oil exports sold at prices greater than U.S. $15.00 per barrel and (2) increases in the labor reserve for pension obligations, due to higher wages and
benefits paid to employees, increased purchases of refined petroleum and other products, and increased depreciation and amortization. Our total sales, net of the IEPS Tax, reached Ps.
398.7 billion in 2000, an increase of 61.7% over 1999 total sales, net of the IEPS Tax, of Ps. 246.5 billion. The increase in total sales from 1999 to 2000 resulted primarily from an
increase in crude oil export prices, which increased crude oil export revenues, and an increase in the prices of the principal petroleum products that we sold in the domestic market.



In 2000, total consolidated export sales increased by 61.4% in peso terms (with dollar-denominated export revenues converted to pesos at the exchange rate for the
date on which the export sale was made), from Ps. 108.7 billion in 1999 to Ps. 175.4 billion in 2000. Excluding the trading activities of the PMI Group, export sales by the subsidiary
entities to the PMI Group and third parties increased by 60.8% in peso terms, from Ps. 93.7 billion in 1999 to Ps. 150.7 billion in 2000, and decreased slightly as a percentage of total
sales, net of the IEPS Tax, from 40.5% in 1999 to 40.3% in 2000. In dollar terms, excluding the trading activities of the PMI Group, export sales (which are dollar-denominated) increased by 60.6% in
2000, from U.S. $9.9 billion in 1999 to U.S. $15.9 billion in 2000. The trading and export activities of the PMI Group generated additional marginal revenues of Ps. 24.7 billion
in 2000,
64.8% higher in real peso terms than in 1999, mainly due to the increase in the prices of crude oil that PEMEX exported.

Crude
oil sales by Pemex-Exploration and Production to PMI for export accounted for 91.2% of export sales (excluding the trading activities of the PMI Group) in 2000, as compared to
89.3% in 1999. These crude oil sales increased in peso terms by 64.2% in 2000, from Ps. 83.6 billion in 1999 to Ps. 137.3 billion in 2000, and increased in dollar terms by 64.8% in 2000,
from U.S. $8.8 billion in 1999 to U.S. $14.5 billion in 2000. This increase reflected the rise in international crude oil prices. The weighted average price per barrel of crude oil that
Pemex-Exploration and Production sold to PMI for export in 2000 was U.S. $24.62, 57.6% higher than the weighted average price of U.S. $15.62 in 1999.

Export
sales of petroleum products by Pemex-Refining and Pemex-Gas and Basic Petrochemicals to the PMI Group and third parties, including natural gas liquids, decreased from
9.6% of export sales (excluding the trading activities of the PMI Group) in 1999 to 7.3% in 2000. Export sales of petroleum products, including natural gas liquids, increased by 22.2%, from Ps.
9.0 billion in 1999 to Ps. 11.0 billion in 2000, due to higher prices in international markets and higher export volumes of certain products. In dollar terms, export sales of petroleum
products, including natural gas liquids, increased by 22.9%, from U.S. $947 million in 1999 to U.S. $1,164 million in 2000.

Petrochemical
products accounted for the remainder of export sales in 1999 and 2000. Export sales of petrochemical products (including certain by-products of the
petrochemical process) increased by 140.0%, from Ps. 1.0 billion in 1999 to Ps. 2.4 billion in 2000, due to an increase in demand and in the prices of several products. In dollar terms,
export sales of petrochemical products (including certain

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by-products of the petrochemical process) increased by 124.8% in 2000, from U.S. $108.3 million in 1999 to U.S. $243.5 million in 2000.



Domestic sales, net of the IEPS Tax, increased by 62.0% in 2000, from Ps. 137.8 billion in 1999 to Ps. 223.3 billion in 2000. Domestic sales of
petroleum products other than natural gas increased by 64.8% in 2000, from Ps. 112.4 billion in 1999 to Ps. 185.2 billion in 2000, primarily due to a rise in the domestic prices of our
principal petroleum products. Domestic petrochemical sales (including sales of certain by-products of the petrochemical production process) increased from Ps. 10.0 billion in 1999
to Ps. 11.1 billion in 2000, due to an increase in the domestic market prices of the principal petrochemical products. Sales of natural gas increased from Ps. 15.4 billion in 1999 to Ps.
27.0 billion in 2000, as a result of increases in domestic demand and prices in 2000.



Other revenues increased from Ps. 7.2 billion in 1999 to Ps. 9.5 billion in 2000, primarily due to increased revenue from freight charges in
connection with the distribution of our products and an increase in the value of an investment in a foreign company accounted for under the equity method. We recorded exchange gains of Ps.
0.9 billion in 2000, as compared to exchange gains of Ps. 2.9 billion in 1999, primarily due to the effects of fluctuations in the peso/dollar exchange rate on our dollar-denominated
indebtedness.



Costs and operating expenses, which include costs of sales, transportation and distribution expenses and administrative expenses, increased by 32.5%, from Ps.
145.4 billion in 1999 to Ps. 192.6 billion in 2000. This increase was due to increases in the labor reserve for pension obligations, depreciation and amortization, salaries and wages,
purchases of petroleum products and other products, maintenance expenses. Costs related to the labor reserve for pension obligations increased by 19.6%, from Ps. 25.0 billion in 1999 to Ps.
29.9 billion in 2000. Other expenses increased by 12.8%, from Ps. 4.7 billion in 1999 to Ps. 5.3 billion in 2000, primarily due to increased freight expenses for the distribution
of liquefied petroleum gas.



Hydrocarbon extraction duties and other duties and taxes (including the IEPS Tax) increased by 40.7%, from Ps. 208.8 billion in 1999 to Ps.
293.8 billion in 2000, largely because of the increase in international crude oil prices in 2000 and the resulting increase in sales revenue. We paid Ps. 21.2 billion in excess gains
duties in 2000, representing 39.2% of the amount of our sales revenue derived from the difference between actual crude oil prices at which Pemex-Exploration and Production sold to PMI, which averaged
U.S. $24.62 per barrel for the Mexican weighted crude oil mix, and the Mexican Government's crude oil price budgetary assumption of U.S. $15.00 per barrel. We paid Ps. 13.3 billion in excess
gains duties in 1999.



Net interest expense decreased by 6.9%, from Ps. 7.2 billion in 1999 to Ps. 6.7 billion in 2000. This decrease was mainly due to the recognition of
a net gain in connection with the Repsol equity swap and collar unwind (which is discussed below under "Item 11Quantitative and Qualitative Disclosures
About Market RiskRisk Management and Financial InstrumentsEquity Swap"), which was only partially offset by an increase in uncapitalized interest incurred in connection with
PIDIREGAS projects completed in 2000.

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Results of Operations of PEMEXFor the Year Ended December 31, 1999 Compared to the Year Ended December 31, 1998 (As Restated)



In 1999, we reported a loss of Ps. 21.2 billion on Ps. 256.6 billion in total revenues net of the IEPS Tax, as compared with a loss of Ps.
11.8 billion on Ps. 199.9 billion in total revenues net of the IEPS Tax in 1998. This 79.7% increase in losses from 1998 to 1999 resulted primarily from (1) an increase in the
excess gains duties that we paid in 1999 in respect of its crude oil exports sold at prices greater than U.S. $9.25 per barrel and (2) increases in the labor reserve for pension obligations,
due to higher wages and benefits paid to employees, depreciation and amortization and purchases of refined petroleum and other products. Our total sales, net of the IEPS Tax, reached Ps.
246.5 billion in 1999, an increase of 29.0% over 1998 total sales, net of the IEPS Tax, of Ps. 191.1 billion. The increase in total sales from 1998 to 1999 resulted primarily from an
increase in crude oil export prices, which increased crude oil export revenues, and an increase in the prices of the principal petroleum products sold by us.



In 1999, total consolidated export sales increased by 50.6% in peso terms (with dollar-denominated export revenues converted to pesos at the exchange rate for the
date on which the export sale was made), from Ps. 72.2 billion in 1998 to Ps. 108.7 billion in 1999. Excluding the trading activities of the PMI Group, export sales by the subsidiary
entities to the PMI Group and third parties increased by 45.7% in peso terms, from Ps. 64.3 billion in 1998 to Ps. 93.7 billion in 1999, and increased as a percentage of total sales, net
of the IEPS Tax, from 35.1% in 1998 to 40.5% in 1999. In dollar terms, excluding the trading activities of the PMI Group, export sales (which are dollar-denominated) increased by 39.4% in 1999, from
U.S. $7.1 billion in 1998 to U.S. $9.9 billion in 1999. The trading and export activities of the PMI Group generated additional marginal revenues of Ps. 15.0 billion in 1999,
89.9% higher in real peso terms than in 1998, primarily due to increases in international crude oil prices.

Crude
oil sales by Pemex-Exploration and Production to PMI for export accounted for 89.3% of export sales (excluding the trading activities of the PMI Group) in 1999, as compared to
90.5% in 1998. These crude oil sales increased in peso terms by 43.6% in 1999, from Ps. 58.2 billion in 1998 to Ps. 83.6 billion in 1999, and increased in dollar terms by 37.5% in 1999,
from U.S. $6.4 billion in 1998 to U.S. $8.8 billion in 1999. This increase reflected the rise in international crude oil prices. The weighted average price per barrel of crude oil that
Pemex-Exploration and Production sold to PMI for export in 1999 was U.S. $15.62, 53.7% higher than the weighted average price of U.S. $10.17 in 1998.

Export
sales of petroleum products by Pemex-Refining and Pemex-Gas and Basic Petrochemicals to the PMI Group and third parties, including natural gas liquids, increased from
7.8% of export sales (excluding the trading activities of the PMI Group) in 1998 to 9.6% in 1999. Export sales of petroleum products, including natural gas liquids, increased by 80.0%, from Ps.
5.0 billion in 1998 to Ps. 9.0 billion in 1999, due to higher prices in international markets and higher export volumes of certain products. In dollar terms, export sales of petroleum
products, including natural gas liquids, increased by 71.9%, from U.S. $551 million in 1998 to U.S. $947 million in 1999.

Petrochemical
products accounted for the remainder of export sales in 1998 and 1999. Export sales of petrochemical products (including certain by-products of the
petrochemical process) decreased by 9.1%, from Ps. 1.1 billion in 1998 to Ps. 1.0 billion in 1999, due to lower demand and a decline in the prices of several products. In dollar terms,
export sales of petrochemical products (including certain by-products of the petrochemical process) decreased by 5.6% in 1999, from U.S. $114.7 million in 1998 to U.S.
$108.3 million in 1999.

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Domestic sales, net of the IEPS Tax, increased by 15.9% in 1999, from Ps. 118.9 billion in 1998 to Ps. 137.8 billion in 1999. Domestic sales of
petroleum products other than natural gas increased by 17.6% in 1999, from Ps. 95.6 billion in 1998 to Ps. 112.4 billion in 1999, primarily due to a rise in the domestic prices of our
principal petroleum products. Domestic petrochemical sales (including sales of certain by-products of the petrochemical production process) decreased from Ps. 10.3 billion in 1998
to Ps. 10.0 billion in 1999, due to a decline in international prices for petrochemicals and lower domestic demand. Sales of natural gas increased from Ps. 13.0 billion in 1998 to Ps.
15.4 billion in 1999, because domestic demand and prices were higher in 1999 than in 1998.



Other revenues decreased from Ps. 7.8 billion in 1998 to Ps. 7.2 billion in 1999 primarily due to extraordinary revenues recorded in 1998 in
connection with the sale of an investment in an affiliate. We recorded exchange gains of Ps. 2.9 billion in 1999, as compared to exchange gains of Ps. 1.0 billion in 1998, primarily due
to debt-related foreign currency exchange gains in 1999.



Costs and operating expenses, which include costs of sales, transportation and distribution expenses and administrative expenses, increased by 21.3%, from Ps.
120.7 billion in 1998 to Ps. 146.4 billion in 1999. This increase was due to increases in the labor reserve for pension obligations, depreciation and amortization, salaries and wages and
maintenance expenses. Costs related to the labor reserve for pension obligations increased by 37.4%, from Ps. 18.2 billion in 1998 to Ps. 25.0 billion in 1999. Other expenses increased
by 123.8%, from Ps. 2.1 billion in 1998 to Ps. 4.7 billion in 1999, due to increased freight expenses for the distribution of liquefied petroleum gas, an increase in the reserve for
uncollectable trade accounts, slow-moving inventory and obsolescence and a decrease in the value of an investment in a foreign company accounted for under the equity method.



Hydrocarbon extraction duties and other duties and taxes (including the IEPS Tax) increased by 37.5% from Ps. 151.9 billion in 1998 to Ps.
208.8 billion in 1999, largely because of the increase in international crude oil prices in 1999 and the resulting increase in revenues. We paid Ps. 13.3 billion in excess gains duties
in 1999, representing 39.2% of the amount of its sales revenue derived from the difference between actual crude oil prices at which Pemex-Exploration and Production sold to PMI, which averaged U.S.
$15.62 per barrel for the Mexican weighted crude oil mix in 1999, and the Mexican Government's crude oil price budgetary assumption of U.S. $9.25 per barrel. We did not pay excess gains duties in
1998.



Net interest expense increased by 148.3%, from Ps. 2.9 billion in 1998 to Ps. 7.2 billion in 1999. This increase was mainly due to a decrease in
investments in fixed assets, resulting in a decrease in the capitalization of interest in fixed assets and an increase in the interest expense recognized.

Liquidity and Capital Resources



Our total equity as of December 31, 2000 was Ps. 150.6 billion, and our total capitalization (long-term debt plus equity) amounted to
Ps. 255.0 billion.

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In
March 1990, the Mexican Government exchanged U.S. $7.58 billion worth of external debt of Petróleos Mexicanos with international commercial banks for
30-year Collateralized Fixed Rate Bonds Due 2019 and Collateralized Floating Rate Bonds Due 2019 (also called "Brady Bonds") issued by the Mexican Government. In exchange for the
cancellation of this external debt, Petróleos Mexicanos' indebtedness to the Mexican Government increased by an amount equal to U.S. $7.58 billion. The new indebtedness was
denominated in currencies other than pesos. In December 1990, the Mexican Government and Petróleos Mexicanos agreed to capitalize the indebtedness incurred in March 1990
into Petróleos Mexicanos' equity as Certificates of Contribution "A". As a condition to this capitalization, Petróleos Mexicanos agreed to pay a minimum guaranteed
dividend to the Mexican Government equal to the debt service on the capitalized debt. The total dividend on the Certificates of Contribution "A" is approved annually by the board of directors of
Petróleos Mexicanos after the close of each fiscal year. Each month, Petróleos Mexicanos makes advance payments to the Mexican Government that total a prorated portion of
the minimum guaranteed dividend.

From
1996 to 2000, Petróleos Mexicanos made annual advance payments, which were declared as dividends to the Mexican Government, as follows:

|                                                                  |  | Year Ended December 31,
|----------------------------------------------------------------- |  | -----------------------
|
|
|Total advance payments to the Mexican Government                  |  | Ps.                    
|Dividends declared in respect of Certificates of Contribution "A" |  |                        

---

Source:    PEMEX's Financial Statements.

In
December 1997, Petróleos Mexicanos' board of directors and the Mexican Government agreed to an equity reduction of the Certificates of Contribution "A" in
exchange for a cash payment to the Mexican Government of Ps. 12.12 billion (U.S. $1.5 billion). Further to that agreement, the Ministry of Finance and Public Credit, acting on behalf of
the Mexican Government, agreed to a reduction in the minimum guaranteed dividend that it would receive from Petróleos Mexicanos in 1998, 2001 and certain future years. Since 1999,
Petróleos Mexicanos has been scheduled to make a total of U.S. $4.9 billion in advance payments to the Mexican Government in respect of the principal amount of the Certificates
of Contribution "A." In 1999 and 2000, Petróleos Mexicanos paid U.S. $250 million under that arrangement. In addition, since 1999, Petróleos Mexicanos has paid
minimum guaranteed dividends on the Certificates of Contribution "A" at the rate of the three-month London Interbank Offered Rate ("LIBOR") plus 13/16% per year on the outstanding
balance of the original principal amount of the debt capitalized in March 1990.

|                                                                                                                                         |  | Year Ended December 31,
|---------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------
|
|
|Future advance payments of minimum guaranteed dividends to the Mexican Government in respect of principal amount of the capitalized debt |  |                       

---

Source:    PEMEX's Financial Statements.



During 2000 net funds provided by operating activities were Ps. 24.5 billion, a 37.6% increase from Ps. 17.8 billion in 1999. Funds from income
(which was negative in 2000) plus items that did not require cash outlays totaled Ps. 45.0 billion in 2000. New debt financings provided an additional Ps. 24.8 billion of net funds
(excluding Ps. 0.3 billion of foreign exchange gains). During 2000, we applied

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net funds of Ps. 64.0 billion for net investments at cost in fixed assets (Ps. 76.2 billion of new investments and capitalized interest, less Ps. 12.2 billion in dispositions of
fixed assets).

At
December 31, 2000, our cash and marketable securities totaled Ps. 27.8 billion, as compared to Ps. 24.0 billion at December 31, 1999. At that time, we did
not have sufficient working capital, generated exclusively from operations, for our budgeted cash flow requirements for 2001. However, based on past experience we expect to generate sufficient working
capital through:



See
also "Commitments for Capital Expenditures and Sources of Funding" below. We note that we have previously met our cash requirements for working capital, capital
expenditures and investments over the past three years with a combination of funds provided by operations and financing. See "Financing Activities" below.



For general descriptions of our current commitments for capital expenditures, see "Item 4Information on the CompanyHistory and
DevelopmentCapital Expenditures and Investments."

In
2000, Pemex-Exploration and Production invested in three PIDIREGAS and other general operating investments and strategic products. In 2001, Pemex-Exploration and Production added one
more project, the Strategic Gas Program, to its PIDIREGAS budget. In 2002, Pemex-Exploration and Production will add 23 more PIDIREGAS to its budget, for a total of 27 PIDIREGAS, for which Ps.
82,234 million is budgeted in 2002. In addition, Pemex-Exploration and Production has budgeted Ps. 27,512 million for other general operating investments and strategic products in 2002.
For more detail on the expenditures for and purpose of these investments, see "Item 4Information on the CompanyBusiness OverviewExploration and
ProductionInvestment in Exploration and Production."

Pemex-Refining
invested in one PIDIREGAS in 2000 and 2001 and invested in other general operating projects, strategic projection, acquisition of equipment, research and development and
complementary investments. For 2002, Pemex-Refining expects to invest Ps. 21,445 million in capital expenditures for three PIDIREGAS (including amounts originally budgeted for projects in 2001
that are expected to be completed in 2002), in addition to Ps. 8,942 million in other general operating projects, strategic projection, acquisition of equipment, research and development and
complementary investments. For more detail on the expenditures for and purpose of Pemex-Refining's investments, see "Item 4Information on the CompanyBusiness
OverviewRefiningInvestments."

Both
Pemex-Petrochemicals and Pemex-Gas and Basic Petrochemicals invest in projects primarily related to natural gas and condensates processing, transportation and storage.
In 2002, the Mexican
Government approved Ps. 734 million in capital expenditures for Pemex-Gas and Basic Petrochemicals' new PIDIREGAS. The combined capital expenditures for Pemex-Petrochemicals and
Pemex-Gas and Basic Petrochemicals is expected to be Ps. 7,330 million in 2002. For more detail on the expenditures for and purpose of these investments, see "Item
4Information on the CompanyBusiness OverviewPetrochemicalsInvestments."

Our
current commitments for capital expenditures have increased compared to previous years. We plan to fund these expenditures through the financing activities in which we have engaged
in the past as well as new sources. We have funded and we expect to continue to fund our commitments for

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PIDIREGAS capital expenditures primarily through the issuance of debt securities in capital markets transactions, commercial bank syndicated loans, bilateral loans from commercial banks and
guaranteed loans from export credit agencies.

To
a lesser extent, we may decide to use Pemex Finance, Ltd. to fund some PIDIREGAS if we consider it convenient in light of market conditions. The securities that we or Pemex
Finance, Ltd. issue vary in tenor, amount, currency and type of interest rate.

As
described in "Financing Activities" below, we have thus far issued U.S. $2 billion in debt securities in the international capital markets in 2002 through Pemex Project Funding
Master Trust, and we expect to issue additional securities over the rest of the year. As part of our activities for funding our capital expenditures for this year, we are considering issuing Mexican
Peso denominated debt securities in the domestic market. We have never issued debt securities in the domestic market. However, the domestic market has demonstrated significant growth over the past
five years, and we believe that this market can represent an alternative source of PIDIREGAS funding, offering competitive conditions in terms of tenor, amount and type of interest rates.
Additionally, we may also fund some PIDIREGAS through commercial bank loans denominated in Mexican Pesos.

Non-PIDIREGAS
are funded mainly through our operating revenues, and, to a lesser degree, financing activities. These financing activities include foreign trade finance loans,
direct loans (for working capital purposes) and loans from export credit agencies. These loans are predominantly short-term credit facilities. We have also obtained funds for
non-PIDIREGAS expenditures through credit acceptance facilities, bankers acceptances facilities and commercial paper programs. See also "Cash Flow from Operating, Financing
and Investing Activities," above. There are no financings related to specific non-PIDIREGAS capital expenditures.



2002 Financing Activities.During the period from January 1, 2002 to June 30, 2002, Petróleos
Mexicanos obtained direct credits in the amount of U.S. $200 million for use in financing our working capital requirements, and Pemex Project Funding Master Trust obtained U.S.
$300 million in direct loans for use in financing our capital expenditures. In addition, we participated in the following financing activities:



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In
the period from January 1, 2002 to June 30, 2002, Petróleos Mexicanos' net payments on external borrowings totaled U.S. $1.8 billion and were
allocated as follows:



At
June 30, 2002, PEMEX's total debt, excluding accrued interest, was approximately U.S. $18.6 billion. Of this amount, U.S. $16.0 billion consisted of total
long-term debt, which was composed of approximately U.S. $11.3 billion in instruments with fixed annual interest rates ranging from 1.55% to 14.5% with maturities ranging from 2002
to 2027, approximately U.S. $4.7 billion in draws on lines of credit at variable interest rates of which U.S. $4.0 billion was based on LIBOR with maturities ranging from 2002 to 2013,
and U.S. $0.7 billion in floating rate notes with maturities ranging from 2003 to 2005. Short-term debt totaled approximately U.S. $2.6 billion, consisting of U.S.
$2.4 billion of variable interest rate borrowings under various lines of credit established under committed credit facilities with various international commercial banks and U.S.
$0.2 billion of lines of credit with fixed interest rates.

The
portion of our total debt at June 30, 2002 corresponding to borrowings of Pemex Project Funding Master Trust was U.S. $10.1 billion. This amount consisted of U.S.
$5.6 billion in long-term debt at fixed interest rates with maturities ranging from 2002 to 2022, U.S. $3.7 billion in long-term debt with variable interest rates
with maturities ranging from 2002 to 2013, and U.S. $0.8 billion in short-term debt of which U.S. $0.7 billion consisted of variable interest rate borrowings under various
lines of credit. Pemex Project Funding Master Trust also has U.S. $4.3 billion in long-term debt consisting of an obligation to Pemex-Exploration and Production in respect of funds
allocated to Pemex Project Funding Master Trust arising from the sale of accounts receivables. This amount is not reflected in PEMEX's financial statements due to the effects of the consolidation of
the results of both Pemex-Exploration and Production and Pemex Project Funding Master Trust.

2001 Financing Activities.During the period from January 1 to December 31, 2001, Petróleos
Mexicanos obtained direct credits in the amount of U.S. $1,800 million for use in financing our working capital requirements, and Pemex Project Funding Master Trust obtained U.S.
$450 million in direct loans for use in financing our capital expenditures. In addition, we engaged in the following financing activities:



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In
the period from January 1, 2001 to December 31, 2001, our net payments on external borrowings totaled U.S. $5.3 billion and were allocated as follows:



At
December 31, 2001, our total debt, excluding accrued interest, was approximately U.S. $17.1 billion. Of this amount, U.S. $13.5 billion consisted of total
long-term debt, which was composed of approximately U.S. $8.7 billion in instruments with fixed annual interest rates ranging from 1.9% to 14.5% with maturities ranging from 2003 to
2027, approximately U.S. $4.8 billion in draws on lines of credit at variable interest rates of which U.S. $3.9 billion was based on LIBOR with maturities ranging from 2003 to 2011, and
U.S. $0.9 billion in floating rate notes with maturities ranging from 2003 to 2005. Short-term debt totaled approximately U.S. $3.6 billion, consisting of U.S.
$3.3 billion of variable interest rate borrowings under various lines of credit established under committed credit facilities with various international commercial banks and U.S.
$0.3 billion of bond issues with fixed interest rates.

The
portion of our total debt at December 31, 2001 corresponding to borrowings of Pemex Project Funding Master Trust was U.S. $7.5 billion. This amount consisted of U.S.
$3.2 billion in long-term debt at fixed interest rates with maturities ranging from 2003 to 2010, U.S. $3.5 billion in long-term debt with variable interest rates
with maturities ranging from 2003 to 2011, and U.S. $0.8 billion in short-term debt
of which U.S. $0.8 billion consisted of variable interest rate borrowings under various lines of credit. Pemex Project Funding Master Trust also has U.S. $4.5 billion in
long-term debt consisting of an obligation to Pemex-Exploration and Production in respect of funds allocated to Pemex Project Funding Master Trust arising from the sale of accounts
receivables; this amount is not reflected in our consolidated financial statements due to the offsetting effects of the consolidation of the results of both Pemex-Exploration and Production and Pemex
Project Funding Master Trust.

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2000 Financing Activities.During 2000, we obtained direct credits in the amount of U.S. $650 million in order to
finance our working capital requirements. In addition, we engaged in the following financing activities:



In
2000, our net payments on external borrowings totaled approximately U.S. $2.7 billion and were allocated as follows:



At
December 31, 2000, our total debt, excluding accrued interest, was approximately U.S. $14.9 billion. Of this amount, U.S. $10.9 billion consisted of total
long-term debt, which was composed of approximately U.S. $6.3 billion in instruments with fixed annual interest rates ranging from 2.0% to 14.5% with maturities ranging from 2002 to
2027, approximately U.S. $4.6 billion in draws on lines of credit at variable interest rates of which U.S. $3.4 billion was based on LIBOR with maturities ranging from 2002 to 2011, and
U.S. $1.2 billion in floating rate notes with maturities ranging from 2003 to 2005. See Note 9 to the Financial Statements. Short-term debt totaled approximately U.S.
$4.0 billion, consisting of U.S. $3.1 billion of variable interest rate borrowings under various lines of credit established under committed credit facilities with various international
commercial banks and U.S. $0.9 billion in instruments with fixed annual interest rates.

The
portion of our total debt at December 31, 2000 corresponding to borrowings of Pemex Project Funding Master Trust was U.S. $4.5 billion. This amount consisted of U.S.
$1.4 billion in long-term

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debt with fixed interest rates with maturities ranging from 2002 to 2010, U.S. $2.6 billion in long-term debt with variable interest rates with maturities ranging from 2002 to
2011, and U.S. $0.5 billion in short-term variable interest rate borrowings under various lines of credit. See Note 7 to the Financial Statements. Pemex Project Funding
Master Trust also has U.S. $4.7 billion in long-term debt consisting of an obligation to Pemex-Exploration and Production in respect of funds allocated to Pemex Project Funding
Master Trust arising from the sale of accounts receivables (see Note 7 to the Financial Statements); this amount is not reflected in our financial statements due to the effects of the
consolidation of the results of both Pemex-Exploration and Production and Pemex Project Funding Master Trust.

1999 Financing Activities.During 1999, we obtained direct credits in the amount of U.S. $350 million for use in
financing our working capital requirements. In addition, we engaged in the following financing activities:



At
December 31, 1999, our total debt, excluding accrued interest, was approximately U.S. $12.5 billion. Of this amount, U.S. $8.7 billion consisted of total
long-term debt, which was composed of approximately U.S. $6 billion in instruments with fixed annual interest rates ranging from 2% to 14.5% with maturities ranging from 2002 to
2027, approximately U.S. $2.7 billion in draws on lines of credit at variable interest rates, of which U.S. $1.5 billion based on LIBOR with maturities ranging from 2002 to 2010, and
U.S. $1.2 billion in floating rate notes with maturities ranging from 2003 to 2005. Short-term debt totaled approximately U.S. $3.7 billion, consisting of U.S.
$3.4 billion of variable interest rate borrowings under various lines of credit established under committed credit facilities with various international commercial banks, and U.S.
$0.3 billion of fixed rate debt.

The
portion of our total debt at December 31, 1999 corresponding to borrowings of Pemex Project Funding Master Trust was U.S. $1.4 billion. This amount consisted of U.S.
$0.4 billion in long-term debt with variable interest rates with maturities ranging from 2001 to 2010 and U.S. $1 billion in short-term debt with variable
interest rate borrowings. See Note 7 to the Financial Statements. Pemex Project Funding Master Trust also has U.S. $3.9 billion in long-term debt consisting of an obligation
to

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Pemex-Exploration and Production in respect of funds allocated to Pemex Project Funding Master Trust arising from sale of accounts receivables; this amount is not reflected in our financial
statements due to the effects of the consolidation of the results of both Pemex-Exploration and Production and Pemex Project Funding Master Trust.

The
table below sets forth our total indebtedness and sales of receivables as of December 31 for each of the five years from 1996 to 2000.

Total Indebtedness and Sales of Receivables of PEMEX

|                                               |                         | Year Ended December 31,(1)       
|---------------------------------------------- | ----------------------- | ---------------------------------
|
|
|Domestic Debt in Various Currencies(4)         |                         | $                                
|External Debt(5)                               |                         |                                  
|                                               | MYRA(6)                 |                                  
|                                               | Other direct bank loans |                                  
|                                               | Securities              |                                  
|                                               |                         | Bonds                            
|                                               |                         | Commercial paper                 
|                                               |                         |                                  
|                                               |                         |                                  
|                                               | Trade financing(7)      |                                  
|                                               |                         | Acceptance lines                 
|                                               |                         | Advances from commercial banks(8)
|                                               |                         |                                  
|                                               |                         |                                  
|                                               | Purchasing loans(9)     |                                  
|                                               | Financial leases        |                                  
|                                               | Project finance(10)     |                                  
|                                               |                         |                                  
|                                               |                         | Total external debt              
|                                               |                         |                                  
|Sale of future accounts receivable             |                         | $                                
|                                               |                         |                                  
|Debt and sale of future accounts receivable(3) |                         | $                                
|                                               |                         |                                  

---

Note:    Numbers may not total due to rounding.

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Source:    Petróleos Mexicanos.



Commencing December 1, 1998, Petróleos Mexicanos, Pemex-Exploration and Production, PMI and P.M.I. Services B.V. have entered into
several agreements with Pemex Finance, Ltd., a limited liability company organized under the laws of the Cayman Islands. Under these contracts, Pemex Finance, Ltd. purchases certain
existing PMI accounts receivable for crude oil as well as certain accounts receivable to be generated in the future by PMI related to crude oil. The receivables sold are those generated by the sale of
Maya crude oil to designated customers in the United States, Canada and Aruba. The net proceeds obtained by Pemex-Exploration and Production from the sale of such receivables under the agreements are
utilized for PIDIREGAS expenditures. Pemex Finance, Ltd. obtains resources for the acquisition of such accounts receivable through the placement of debt instruments in the international
markets.

As
of December 31, 2001, the outstanding long-term debt of Pemex Finance, Ltd. was composed of U.S. $4.6 billion aggregate principal amount of notes with
maturities ranging from 2003 to 2018 and interest rates ranging between 5.72% and 10.61% as well as three series of floating rate notes.

2000 Financing Activities.On February 10, 2000, Pemex Finance, Ltd. issued U.S. $800 million of 9.03%
Notes due 2011 and U.S. $150 million of 7.80% Notes due 2013. Pemex Finance, Ltd. has not incurred any additional indebtedness since February 10, 2000.

1999 Financing Activities.On February 25, 1999, Pemex Finance, Ltd. issued U.S. $300 million of 6.125%
Notes due 2003, U.S. $200 million of 8.45% Notes due 2007, U.S. $300 million of 6.55% Notes due 2008, U.S. $200 million of 8.875% Notes due 2010 and U.S. $100 million of
Floating Rate Notes due 2014. On July 27, 1999, Pemex Finance, Ltd. issued U.S. $225 million of 9.14% Notes due 2004, U.S. $600 million of 9.69% Notes due 2009, U.S.
$250 million of 7.33% Notes due 2012, U.S. $200 million of 10.61% Notes due 2017, U.S. $35 million of Floating Rate Notes, Series C, due 2004, U.S. $50 million of
9.22% Notes due 2004 and U.S. $90 million of Floating Rate Notes, Series B, due 2014.

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Results of Operations by Business Segment (As Restated)

This section presents results of our operations by business segment, including our central corporate operations and the operations of the consolidated subsidiary
companies.



The following table sets forth our trade and intersegment net sales revenues by business segment for the five fiscal years ended December 31, 2000, as well
as the percentage change in sales revenues for the years 1998 to 2000.

|                                          |                    | Year Ended December 31, |         |          |          |         |         
|----------------------------------------- | ------------------ | ----------------------- | ------- | -------- | -------- | ------- | --------
|
|
|
|Exploration and Production                |                    |                         |         |          |          |         |         
|                                          | Trade sales(1)     |                         | Ps.     | 81,337   |          | Ps.     | 81,653  
|                                          | Intersegment sales |                         |         | 87,249   |          |         | 91,378  
|                                          |                    |                         |         |          |          |         |         
|                                          |                    | Total net sales         |         | Ps.      | 168,586  |         | Ps.     
|                                          |                    |                         |         |          |          |         |         
|Refining(2)                               |                    |                         |         |          |          |         |         
|                                          | Trade sales        |                         | Ps.     | 101,169  |          | Ps.     | 128,168 
|                                          | Intersegment sales |                         |         | 7,952    |          |         | 8,670   
|                                          |                    |                         |         |          |          |         |         
|                                          |                    | Total net sales         |         | Ps.      | 109,121  |         | Ps.     
|                                          |                    |                         |         |          |          |         |         
|Gas and Basic Petrochemicals              |                    |                         |         |          |          |         |         
|                                          | Trade sales(1)     |                         | Ps.     | 23,084   |          | Ps.     | 31,157  
|                                          | Intersegment sales |                         |         | 14,626   |          |         | 14,569  
|                                          |                    |                         |         |          |          |         |         
|                                          |                    | Total net sales         |         | Ps.      | 37,710   |         | Ps.     
|                                          |                    |                         |         |          |          |         |         
|Petrochemicals                            |                    |                         |         |          |          |         |         
|                                          | Trade sales(1)     |                         | Ps.     | 13,624   |          | Ps.     | 13,397  
|                                          | Intersegment sales |                         |         | 4,319    |          |         | 3,353   
|                                          |                    |                         |         |          |          |         |         
|                                          |                    | Total net sales         |         | Ps.      | 17,943   |         | Ps.     
|                                          |                    |                         |         |          |          |         |         
|Corporate, Subsidiary Companies and Other |                    |                         |         |          |          |         |         
|                                          | Trade sales        |                         | Ps.     | 12,779   |          | Ps.     | 9,655   
|                                          | Intersegment sales |                         |         | (114,146 | )        |         | (117,970
|                                          |                    |                         |         |          |          |         |         
|                                          |                    | Total net sales         |         | Ps.      | (101,367 | )       | Ps.     
|                                          |                    |                         |         |          |          |         |         
|Total Sales                               |                    | Ps.                     | 231,993 |          | Ps.      | 264,030 |         
|                                          |                    |                         |         |          |          |         |         

---

Notes:    Numbers may not total due to rounding.

Source: PEMEX's financial statements.

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The following table sets forth our income (loss) by business segment for each year in the four-year period ended December 31, 2000, as well as
the percentage change in income for the years 1998 to 2000.

|                 |                                           | Year Ended December 31, |     |        |       |     |       
|---------------- | ----------------------------------------- | ----------------------- | --- | ------ | ----- | --- | ------
|
|
|
|Business Segment |                                           |                         |     |        |       |     |       
|                 | Exploration and Production                |                         | Ps. | 12,175 |       | Ps. | (9,027
|                 | Refining                                  |                         |     | (6,812 | )     |     | (5,729
|                 | Gas and Basic Petrochemicals              |                         |     | 2,080  |       |     | 5,121 
|                 | Petrochemicals                            |                         |     | (170   | )     |     | (2,790
|                 | Corporate, Subsidiary Companies and Other |                         |     | (140   | )     |     | 837   
|                 |                                           |                         |     |        |       |     |       
|                 |                                           | Total Income/(loss)     |     | Ps.    | 7,133 |     | Ps.   
|                 |                                           |                         |     |        |       |     |       

---

Note:
Numbers may not total due to rounding.

Source: PEMEX's financial statements.

2000 Compared to 1999 (As Restated)



In 2000, Pemex-Exploration and Production's trade sales of crude oil and natural gas to the PMI Group increased by 64.2% in peso terms and by 64.8% in U.S. dollar
terms, as a result of an increase of 57.6% in the international price of crude oil and an increase of 3.5% in the volume of crude oil exports. The weighted average price of crude oil sold by
Pemex-Exploration and Production to the PMI Group for export was U.S. $24.62 in 2000, as compared to U.S. $15.62 in 1999. Intersegment sales increased by 89.5%, principally as a result of an increase
in crude oil and natural gas sales, resulting from increases in the reference prices of these commodities. Income related to exploration and production activities improved from a loss of Ps.
5,202 million in 1999 to income of Ps. 7,128 million in 2000, primarily as a result of the improvement in revenues due to the increase in the weighted average price of crude oil realized
by Pemex-Exploration and Production, which was offset by an increase in costs associated with the labor reserve for pension obligations from Ps. 9,012 million in 1999 to Ps.
10,351 million in 2000.



In 2000, trade sales related to refining activities increased by 22.8%, from Ps. 187,381 million in 1999 to Ps. 230,059 million in 2000. Export
sales related to refining activities decreased from Ps. 4,057 million in 1999 to Ps. 3,654 million in 2000, as a result of a decrease in the volume of certain petroleum product exports.
Domestic sales related to refining activities increased by 23.5% from Ps. 183,384 million in 1999 to Ps. 226,405 million in 2000, principally due to increases in the peso prices of
refined products. The IEPS Tax decreased by Ps. 18,793 million in 2000. Intersegment sales increased by Ps. 2,900 million, largely due to increases in the sales of naphthas and
propylene. In 2000, the total loss related to refining activities was Ps. 23,139 million, as compared to a loss of Ps. 8,111 million in 1999. The increased loss was primarily due to
increased purchases of crude oil and refined products at higher reference prices and an increase in labor reserves costs from Ps. 8,903 million in 1999 to Ps. 10,933 million in 2000.

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In 2000, trade sales related to the natural gas and basic petrochemical business segment increased by 65.3%, from Ps. 38,685 million in 1999 to Ps.
63,957 million in 2000. Natural gas sales increased by 75.7% from Ps. 15,364 million in 1999 to Ps. 26,997 million in 2000, mainly due to an increase in the volume of domestic
sales. The volume of domestic sales of basic petrochemicals increased by 21.0% in 1999, from 649 thousand tons per year in 1999 to 785 thousand tons per year in 2000. Income related to
natural gas and basic petrochemicals fell by 137.3%, from income of Ps. 849 million in 1999 to a loss of Ps. 317 million in 2000, mainly due to a 107.4% increase in imports of products
used in the production process and a 25.8% increase in labor reserves costs from Ps. 1,711 million in 1999 to Ps. 2,152 million in 2000, resulting in an increase in the cost of sales and
operating expenses which was only partially offset by increased sales.



In 2000, trade sales related to the petrochemicals business segment increased by 20.6%, from Ps. 10,105 million in 1999 to Ps. 12,184 million in
2000. Prices for petrochemicals sold domestically increased for a majority of petrochemical products. In 2000, the volume of petrochemical exports increased by 105.1% from 296 thousand tons in
1999 to 607 thousand tons in 2000. Losses related to petrochemicals activities increased from Ps. 4,474 million in 1999 to Ps. 6,090 million in 2000 due to decreases in both
volumes and sale prices and to an increase in labor reserves costs from Ps. 2,308 million in 1999 to Ps. 2,702 million in 2000.



In 2000, additional marginal trade sales revenues relating to PMI's sales of crude oil and petroleum products to third parties and after intercompany eliminations
increased by 64.8% in peso terms, from Ps. 15,007 million in 1999 to Ps. 24,735 million in 2000, as a result of an increase in the international price of crude oil and an increase in the
volume of PMI's crude oil sales. The weighted average price of crude oil sold by PMI was U.S. $24.78 in 2000, as compared to U.S. $15.55 in 1999. In 2000, total income related to corporate, subsidiary
companies and other, which includes the international trading activities of the PMI Group, improved from a loss of Ps. 4.2 billion in 1999 to an income of Ps. 2.7 billion in 2000, in
part due to a recognition of the U.S. $113 million net gain in 2000 in connection with the Repsol equity swap and collar unwind, which is discussed below under "Item 11Quantitative
and Qualitative Disclosures about Market RiskRisk Management and Financial Instruments."

1999 Compared to 1998 (As Restated)



In 1999, Pemex-Exploration and Production's trade sales of crude oil and natural gas to the PMI Group increased by 43.6% in peso terms and by 37.5% in U.S. dollar
terms, as a result of an increase in the international price of crude oil offset by a 10.5% reduction in the volume of crude oil exports. The weighted average price of crude oil sold by
Pemex-Exploration and Production to the PMI Group was U.S. $15.62 in 1999, as compared to U.S. $10.17 in 1998. Intersegment sales increased by 28.7%, principally as a result of an increase in crude
oil and natural gas sales, resulting from increases in the reference prices of these commodities. Income related to exploration and production activities improved from a loss of Ps.
9,027 million in 1998 to a loss of Ps. 5,202 million in 1999, primarily as a result of the improvement in revenues due to the increase in the weighted average price of crude oil realized
by Pemex-Exploration and Production, which was offset by an increase in costs associated with the labor reserve for pension obligations from Ps. 6,701 million in 1998 to Ps.
9,012 million in 1999.

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In 1999, trade sales related to refining activities increased by 27.4%, from Ps. 147,078 million in 1998 to Ps. 187,381 million in 1999. Export
sales related to refining activities increased from Ps. 1,851 million in 1998 to Ps. 4,057 million in 1999, as a result of an increase in the volume of certain petroleum product exports.
Domestic sales related to refining activities increased by 26.2%, from Ps. 145,226 million in 1998 to Ps. 183,324 million in 1999, principally due to increases in the peso prices of
refined products. The IEPS Tax increased by Ps. 22,495 million in 1999. Intersegment sales decreased by Ps. 22 million, largely due to decreases in the sales of naphthas and propylene.
In 1999, the total loss related to refining activities was Ps. 8,111 million, as compared to a loss of Ps. 5,729 million in 1998. The increased loss was primarily due to an increase in
labor reserves costs from Ps. 6,410 million in 1998 to Ps. 8,903 million in 1999.



In 1999, trade sales related to the natural gas and basic petrochemical business segment increased by 16.2%, from Ps. 33,286 million in 1998 to Ps.
38,685 million in 1999. Natural gas sales increased by 18.0%, from Ps. 13,015 million in 1998 to Ps. 15,364 million in 1999, mainly due to an increase in the volume of domestic
sales. The volume of domestic sales of basic petrochemicals increased by 1.9% in 1999, from 637 thousand tons per year in 1998 to 649 thousand tons per year in 1999. Income related to
natural gas and basic petrochemicals fell by 83.4% from Ps. 5,121 million in 1998 to Ps. 849 million in 1999, mainly due to a 53.0% increase in imports of products used in the production
process and a 47.2% increase in labor reserves costs from Ps. 1,162 million in 1998 to Ps. 1,711 million in 1999, resulting in an increase in the cost of sales and operating expenses
which was only partially offset by increased sales.



In 1999, trade sales related to the petrochemicals business segment decreased by 3.8%, from Ps. 10,507 million in 1998 to Ps. 10,105 million in
1999. Sales volume of petrochemicals decreased by 30.1% in 1999, from 4,450 thousand tons per year in 1998 to 3,109 thousand tons per year in 1999. Prices for petrochemicals sold
domestically decreased for a majority of petrochemical products. In 1999, the volume of petrochemical exports decreased by 32.9%, from 441 thousand tons per year in 1998 to 296 thousand
tons per year in 1999. Losses related to petrochemicals activities increased from Ps. 2,790 million in 1998 to Ps. 4,474 million in 1999 due to decreases in both volumes and sale prices
and to an increase in labor reserves costs from Ps. 1,367 million in 1998 to Ps. 2,308 million in 1999.



In 1999, additional marginal trade sales revenues relating to PMI's sales of crude oil and petroleum products to third parties and after intercompany eliminations
increased by 90.3% in peso terms, from Ps. 7,885 million in 1998 to Ps. 15,007 million in 1999, as a result of an increase in the international price of crude oil offset by a 10.5%
reduction in the volume of PMI's crude oil sales. The weighted average price of crude oil sold by PMI was U.S. $15.55 in 1999, as compared to U.S. $10.16 in 1998. In 1999, income related to corporate,
subsidiary companies and other, which includes the international trading activities of the PMI Group, declined from income of Ps. 837 million in 1998 to a loss of Ps. 4.2 billion in
1999.

U.S. GAAP Reconciliation

Operating results under U.S. GAAP differ from operating results under Mexican GAAP due to several factors. The most important of these factors are differences in
methods of accounting for

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impairment of fixed assets, petroleum exploration and drilling costs, pension obligations, capitalized interest and foreign exchange losses.



Under U.S. GAAP, SFAS No. 121 requires that PEMEX evaluate its long-lived assets for impairment whenever events or circumstances indicate that
the carrying amount of an asset may not be recoverable. SFAS No. 121 requires PEMEX to write-down impaired assets to the fair value, defined as the discounted present value of
expected future cash flows on related assets.



Under Mexican GAAP, PEMEX charges oil exploration and development costs to a capital reserve rather than expensing or directly capitalizing these costs as U.S.
GAAP requires. PEMEX funds this capital reserve by charging a certain percentage to cost of sales for each barrel of crude oil extracted. PEMEX sets the percentage charged on an annual basis.



Seniority premiums and retirement plans are treated differently under U.S. GAAP and Mexican GAAP because of the different actuarial cost assumptions required by
Bulletin D-3 and SFAS No. 87. In addition, PEMEX adopted Bulletin D-3 and SFAS No. 87 at different times, which resulted in differences in period expenses due to
the differing amortization of transition amounts. During 1995, PEMEX implemented SFAS No. 106, "Employers' Accounting for Post-retirement Benefits Other than Pension", using the
transitional recognition method. PEMEX implemented SFAS 132, "Employers' Disclosure about Pensions and Other Post-retirement Benefits", effective January 1, 1998.



For Mexican GAAP purposes, PEMEX treats all interest expense as being associated with construction in progress and well development and accordingly capitalizes
all interest. For purposes of the U.S. GAAP reconciliation, PEMEX capitalizes interest by applying its average borrowing rate to its average amount of construction in progress.



PEMEX applies NIF-06 BIS "A", section A, to its financial statements to reflect the effects of inflation. NIF-06 BIS "A",
section A, provides for the restatement of fixed assets, inventories and costs of sales by indexing and/or appraisals. Because NIF-06 BIS "A", section A, does not represent a
comprehensive basis for inflation accounting, PEMEX has reversed the effects of NIF-06 BIS "A", section A, on its financial statements from the U.S. GAAP reconciliation of equity.
Under NIF-06 BIS "A", section A, a devaluation of the peso does not fully impact PEMEX's income in the year incurred because a portion of the exchange losses are capitalized into
fixed assets. Furthermore, devaluation of the peso relative to the dollar results in an increase in income to the extent that expenses remain relatively stable because they are incurred in pesos,
while revenues, which are mostly denominated in dollars or linked to international, dollar-denominated prices, increase in peso terms. In contrast, under U.S. GAAP, devaluation of the peso has a
negative impact on PEMEX's income because the exchange losses are not capitalized but are charged immediately to income.



We have restated our U.S. GAAP reconciliation of our financial statements as of and for the five years ended December 31, 2000. In addition to the
adjustments made relating to dismantlement and

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abandonment costs discussed above under "Restatement," the principal adjustments made to the reconciliation reflect the changes discussed below.

Repsol Derivative Transactions and Investment Securities.Previously, certain derivative transactions related to Repsol were accounted for
in the U.S. GAAP reconciliation, as they had not been accrued in our Mexican GAAP financial statements. In the restated Mexican GAAP financial statements included in Item 18, these transactions have
been recognized as accrued liabilities at year-end 1999, thus eliminating the difference in accounting for these transactions between Mexican and U.S. GAAP. As a result, a line item
relating to these Repsol derivative transactions in the reconciliation of our financial statements to U.S. GAAP is no longer necessary.

In
addition, we have corrected the reconciliation of our financial statements to U.S. GAAP for the years ended December 31, 2000 and 1999 to include cost basis adjustments for all
of the Repsol shares we hold. The adjusted cost basis for Repsol shares includes corrections made to the number of Repsol shares we held at December 31, 1999 and corrections made to the amount
presented as the historical cost of shares held within Strategic Money Management Company B.V. at December 31, 1999 and 2000. Previously, the cost basis for these shares considered an amount of
shares lower than the amount we actually held, and the shares were valued at the restructure of the swap, instead of at the contracted swap date. The adjustment resulted in increases in equity in each
of the years ended December 31, 2000 and 1999. PEMEX has previously accounted for, and continues to account for, the Repsol shares as available for sale securities under SFAS No. 115.

Exploration and Drilling Costs.Accumulated equity amounts related to exploration and drilling costs for the years ended
December 31, 2000, 1999, and 1998 have been restated under U.S. GAAP to reflect accumulated capital charges arising in prior periods in respect of unsuccessful developmental wells. Under U.S.
GAAP, amounts related to the drilling of unsuccessful developmental wells are capitalized, whereas these amounts are expensed under Mexican GAAP. In previous periods, due to classification
discrepancies, certain capital charges related to developmental wells had not been included as a difference in equity between U.S. GAAP and Mexican GAAP. The accumulated equity amounts have also been
revised to eliminate portions of the specific oil field exploration and drilling reserve accumulated under Mexican GAAP for future drilling costs and not fully reversed in prior periods for U.S. GAAP
purposes. Under Mexican GAAP, and as explained in Notes 2 h) and 18I(b) to the Financial Statements, a predetermined cost per barrel is charged to cost of sales for each barrel of oil produced.
For U.S. GAAP, the reserve is reversed, as are annual charges to cost of sales resulting from the accrual of such reserve. The U.S. GAAP expense for exploration and drilling equals only the
exploration and drilling costs related to unsuccessful exploratory wells. In all prior years, the income impact of the cost of sales charge related to the reserve was properly reversed. However, the
effect of the reserve was not fully reversed in U.S. GAAP equity, as it was erroneously believed that there should be a difference in equity to the extent that cost per barrel charges in Mexican GAAP
exceeded actual drilling expenditures and other exploration and production related expenditures for U.S. GAAP. Thus, the restatement is related to the fact that the reserve accrued for Mexican GAAP
was not fully reversed out of U.S. GAAP equity.

In addition, annual income amounts related to exploration and drilling have been revised for 1998 and 1999 to consider the application of additional financing costs, thus decreasing
U.S. GAAP income. The annual income amount of 2000 has been revised to consider additional exploration costs related to PIDIREGAS wells.

Accrued Vacation.Adjustments have been made to the reconciling line item related to accrued vacation. The adjustments were made to
correct mathematical errors in the recognition of annual accrued vacation charge in the reconciliation of income to U.S. GAAP.

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The
following table sets forth the effects of the foregoing adjustments on our income (loss) for each of the five years ended December 31, 2000 under U.S. GAAP.

|                                                                         |  | Year ended December 31, |  
|------------------------------------------------------------------------ |  | ----------------------- | -
|
|
|Income (loss) for the year, as originally reported, under U.S. GAAP      |  | Ps. 10,231              |  
|Adjustments due to recognition of dismantlement and abandonment costs(1) |  | (867                    | )
|Adjustments related to exploration and drilling costs                    |  |                         |  
|Adjustments related to accrued vacation                                  |  |                         |  
|                                                                         |  |                         |  
|Income (loss) for the year, as restated, under U.S. GAAP                 |  | Ps. 9,364               |  
|                                                                         |  |                         |  

---

Note:
Numbers may not total due to rounding

Source: PEMEX's restated financial statements.

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The following table sets forth the effects of the foregoing adjustments on our comprehensive income (loss) for each of the three years ended December 31, 2000 under U.S. GAAP.

|                                                                                  |  | Year ended December 31, |        
|--------------------------------------------------------------------------------- |  | ----------------------- | -------
|
|
|Comprehensive income (loss) for the year, as originally reported, under U.S. GAAP |  | Ps.                     | (24,157
|Adjustments due to recognition of dismantlement and abandonment costs(1)          |  |                         | (1,449 
|Adjustments for Repsol derivative transactions and Repsol investment securities   |  |                         |       
|Adjustments related to exploration and drilling costs                             |  |                         | 5      
|Adjustments related to accrued vacation                                           |  |                         | (48    
|                                                                                  |  |                         |        
|Comprehensive income (loss) for the year, as restated, under U.S. GAAP            |  | Ps.                     | (25,648
|                                                                                  |  |                         |        

---

Note: Numbers may not total due to rounding

Source:PEMEX's restated financial statements.

The
following table sets forth the effects of the foregoing adjustments on our equity at each of the five years ended December 31, 2000 under U.S. GAAP.

|                                                                                |  | Year ended December 31, |       
|------------------------------------------------------------------------------- |  | ----------------------- | ------
|
|
|Equity at year end, as originally reported, under U.S. GAAP                     |  | Ps.                     | 69,257
|Adjustments due to recognition of dismantlement and abandonment costs(1)        |  |                         | (4,215
|Adjustments for Repsol derivative transactions and Repsol investment securities |  |                         |       
|Adjustments related to accrued vacation                                         |  |                         |       
|Adjustments related to exploration and drilling costs                           |  |                         |       
|                                                                                |  |                         |       
|Equity at year end, as restated, under U.S. GAAP                                |  | Ps.                     | 65,042
|                                                                                |  |                         |       

---

Note:    Numbers may not total due to rounding

Source:PEMEX's restated financial statements.



For the year ended December 31, 2000, PEMEX's loss under U.S. GAAP was approximately Ps. 16.7 billion, representing a Ps. 3.0 billion
decrease from the loss recorded under Mexican GAAP. For the year ended December 31, 1999, PEMEX's loss under U.S. GAAP was approximately Ps. 15.4 billion, representing a Ps.
5.8 billion decrease from the loss recorded under Mexican GAAP and for the year ended December 31, 1998, PEMEX reported a loss under U.S. GAAP of approximately

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Ps. 27.4 billion. The adjustments to Mexican GAAP income resulted largely from the treatment of Ps. 10.4 billion and Ps. 9.5 billion of fixed assets
depreciation in 2000 and 1999, and Ps. 19.8 billion of foreign exchange losses in 1998.

PEMEX's equity under U.S. GAAP was approximately Ps. (13.6) billion at December 31, 2000 as compared to Ps. 12.9 billion at December 31, 1999. The decrease in equity
under U.S. GAAP in 2000 as compared to 1999 reflected a Ps. 10.9 billion decrease in equity for 2000 under Mexican GAAP due mainly to the loss recorded for the year and U.S. GAAP adjustments
for inflation accounting and post-retirement benefits, which increased by Ps. 12.0 billion and Ps. 5.8 billion, respectively. These adjustments were only partially offset by
a Ps. 10.4 billion decrease in fixed-assets depreciation. For a further discussion of these and other adjustments, see Note 18 to the Financial Statements.

In 1998, PEMEX adopted SFAS No. 130 "Reporting Comprehensive Income." Under U.S. GAAP, PEMEX's comprehensive loss was Ps. (20,619) million, Ps. (11,882) million, and Ps. (25,648)
million in 2000, 1999 and 1998, respectively. The other accumulated comprehensive income for 2000, 1999 and 1998 was Ps. 5,086 million, Ps. 9,008 million and Ps. 5,520 million,
respectively.



Effective January 1, 2001, PEMEX adopted Statement of Financial Accounting Standards Number 133 (SFAS 133) "Accounting for Derivative Instruments
and Hedging Activities." SFAS 133 establishes standards for recognition and measurement of derivatives and hedging activities. The adoption resulted in cumulative after-tax
decreases in net loss of approximately U.S. $395.0 million (approximately Ps. 3,780.6 million) in the first quarter of fiscal 2001. The adoption will also impact assets and liabilities
recorded on the balance sheet.

SFAS 133
requires that all derivative instruments be reported in the consolidated financial statements at fair value. Changes in the fair value of derivatives are to be recorded
each period in earnings or other comprehensive income, depending on whether the derivative is designated and effective as part of a hedged transaction, and on the type of hedge transaction. Gains or
losses on derivative instruments reported in other comprehensive income must be reclassified as earnings in the period in which earnings are affected by the underlying hedged item, and the ineffective
portion of all hedges must be recognized in earnings in the current period. These new standards may result in additional volatility in reported earnings, other comprehensive income and accumulated
other comprehensive income.

The
Financial Accounting Standards Board issued SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishing Liabilities," which is effective for
all transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001, with certain exceptions. SFAS No. 140 replaces SFAS No. 125 and
modifies certain criteria relating to qualifying special purpose entities. PEMEX has reviewed these criteria and determined that Pemex Finance, Ltd. does not meet them; consequently, PEMEX will
begin to consolidate Pemex Finance, Ltd. effective January 1, 2001 for U.S. GAAP purposes.

The
American Institute of Certified Public Accountants has issued SOP 98-5 related to the reporting of the costs of start-up activities. SOP 98-5 is
required to be adopted as of December 31, 1999 and reported as a cumulative effect of a change in accounting principle. We have evaluated the effect of SOP 98-5 on our financial
statements and have determined that no adjustment will be required as we have no qualifying deferred charges.

Requirements
of the new Mexican accounting Bulletin C-2, "Financial Instruments," went into effect on January 1, 2001. The new bulletin establishes the basic rules to
be observed by the issuers of, and the investors in, financial instruments when valuing, presenting and disclosing these instruments in the financial information. This bulletin also establishes the
rules and conditions that must be met to

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offset financial assets and liabilities and requires that financial instruments and derivatives be valued at their fair value, except those classified as "held to maturity," which are to be presented
at cost. Management estimates that the effect of the adoption as of January 1, 2001, of this statement will be an expense of approximately Ps. 1,327.5 million (equivalent to U.S.
$138.6 million) in the consolidated statement of income.

Change in Independent Auditors

The General Comptroller's Office of the Mexican Government, which we refer to as SECODAM, periodically assigns new independent auditors to PEMEX. Pursuant to
actions by SECODAM, in 1998 PricewaterhouseCoopers, S.C. ceased to be the independent auditors of PEMEX at the end of fiscal year ended December 31, 1997, and Mancera, S.C. (a member practice
of Ernst & Young Global) were assigned as the independent auditors for PEMEX on September 25, 1998 for the fiscal years ended December 31, 1998, 1999, and 2000. Pursuant to
actions by SECODAM, on October 5, 2001, Mancera, S.C. ceased to be the independent auditors of PEMEX at the end of fiscal year ended December 31, 2000, and Ruiz, Urquiza y
Cía., S.C. (formerly a member firm of Andersen Worldwide S.C.) was initially assigned as PEMEX's new auditors beginning in the fiscal year ended December 31, 2001. On
May 9, 2002, due to the indictment of Arthur Andersen LLP, SECODAM decided to terminate the engagement of Ruiz, Urquiza y Cía., S.C. for PEMEX's financial statements to be
included in its annual report on Form 20-F for the fiscal year ended December 31, 2001, and instead appointed PricewaterhouseCoopers, S.C. as the current independent auditors
to audit those financial statements. As of that date, Ruiz, Urquiza y Cía., S.C. delivered only an audit report on PEMEX's financial statements prepared in accordance with Mexican
Financial Reporting Standards applicable to Mexican public-sector entities.

The
independent auditors' reports on the financial statements for the 1998, 1999 and 2000 fiscal years have no adverse opinions or disclaimer of opinions, nor do such reports modify or
qualify as to uncertainty, audit scope or accounting principles. For the 1996 and 1997 fiscal years, we had no disagreements with PricewaterhouseCoopers, S.C. on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure. For the 1998, 1999 and 2000 fiscal years, we had no disagreements with Mancera, S.C. on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure. Ruiz, Urquiza y Cía., S.C. did not and will not deliver an audit report on PEMEX's consolidated financial
statements to be included in its annual report on Form 20-F for the 2001 fiscal year. For the 2001 fiscal year, we had no disagreements with Ruiz, Urquiza y Cía.,
S.C. on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure with respect to its report on our financial statements prepared in accordance
with Mexican Financial Reporting Standards applicable to Mexican public-sector entities. The decision to change accountants in each of the above instances was made by SECODAM.

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Item 6. Directors, Senior Management and Employees

An eleven-member board of directors governs Petróleos Mexicanos. The President of Mexico appoints six members, including the Chairman of the Board
of Directors. A recent amendment to the Organic Law requires that the members of the Board of Directors of Petróleos Mexicanos include the Secretary of the Ministry of the Environment
and Natural Resources. The President of Mexico also appoints the Director General of Petróleos Mexicanos. The Petroleum Workers' Union, which we refer to as the Union, selects the
remaining five directors from among our employees. Alternate directors are authorized to serve on the Board of Directors in place of directors who are unable to attend meetings or otherwise
participate in the activities of the Board. The members of the Board of Directors are not appointed for a specific term. The members of the Board of Directors, except for those members selected by the
Union, serve subject to the discretion of the President of Mexico.

On
May 1, 2001, regulations under the Organic Law were amended to create an Advisory Committee to the Board of Directors of Petróleos Mexicanos, composed of eight
members, including two representatives of the Mexican Government (the Secretary of the Ministry of Energy and the Director General of Petróleos Mexicanos) and six other persons selected
by the President of Mexico. The members of the Advisory Committee participate in, but may not vote at, the meetings of the Board. The Advisory Committee is required to meet at least four times per
year. Additionally, the Board, its Chairman or the Director General of Petróleos Mexicanos may request extraordinary meetings.

An
eight-member board of directors governs each subsidiary entity. Each of these boards consists of the Director General of Petróleos Mexicanos, the Director General of
each of the other three subsidiary entities and four additional directors, who are each appointed by the President of Mexico. The Director General of Petróleos Mexicanos serves as
Chairman of the board of each subsidiary entity. Neither the members of the boards of directors nor the executive officers are appointed for a specific term. The members of the boards of directors and
the Directors General serve subject to the discretion of the President of Mexico.

On
December 2, 2000, in conjunction with the political transition that occurred upon the inauguration of Vicente Fox Quesada as President of Mexico, we announced that
Mr. Raúl Muñoz Leos, former President and Director General of DuPont México, S.A. de C.V. was appointed Director General of Petróleos
Mexicanos, effective on such date.

At
an extraordinary session of the Board of Directors, held on May 7, 2001, the board also approved the creation of, and confirmed the appointments for, five new executive
offices: Corporate Director of Strategic Planning, Corporate Director of Operations, Corporate Director of Engineering and Project Development, Corporate Director for Competitiveness and Innovation
and Executive Coordinator.

The
following tables set forth certain information with respect to directors and executive officers of Petróleos Mexicanos and each of the subsidiary entities as of
June 13, 2001.

Petróleos MexicanosDirectors and Executive Officers

|Name                          |  | Position with Petróleos Mexicanos                                                                                                                                                                                                                                                                                                                                                                    |  | Year Appointed
|----------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Mr. Ernesto Martens Rebolledo |  | Director, Chairman of the Board of Directors of Petróleos
Mexicanos and Secretary of the Ministry of Energy
Born: 1933
Other directorships: Director of the Federal Electricity Commission; Director of Luz y Fuerza del Centro; Director of Banco Nacional de Comercio Exterior, S.N.C.; Director of Nacional Financiera, S.N.C. and Member of the Technical Board of the
National Water Commission |  | 2001          

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|Mr. José Luis Romero Hicks       |  | Director and Director General of the National Bank of Foreign Trade
Born: 1957
Other directorships: Director of Banco Nacional de Comercio Exterior, S.N.C.; Director of Seguros Bancomext; Director of Ocean Garden Products, Inc.; Director of Exportadores Mexicanos, S.A. de C.V.; Director of Coordinadora de Asistencia
Administrativa, S.A. de C.V.; Director of Desarrollo Inmobiliario Especializado, S.A. de C.V. and Director of World Trade Center
Business experience: Corporate Director of Finance and Planning of Desarrolladora Metropolitana, S.A. de C.V. and Secretary of the Ministry of Finance of the State of Guanajuato |  | 2001
|-------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|Mr. Santiago Levy Algazi         |  | Director and Director General of the Mexican Institute for Social Security
Born: 1956
Business experience: President of the Federal Competition Commission and Undersecretary of Disbursements of the Ministry of Finance and Public Credit                                                                                                                                                                                                                                                                                                                                                                                                      |  | 2001
|Mr. Luis Ernesto Derbez Bautista |  | Director and Secretary of the Ministry of Economy
Born: 1947
Business experience: Economic Program Coordinator of President Vicente Fox and Professor of the Graduate School of Administration of the Technological Institute of Superior Studies in Monterrey ITESM                                                                                                                                                                                                                                                                                                                                                                             |  | 2001
|Mr. Pedro Cerisola y Weber       |  | Director and Secretary of the Ministry of Communications and Transportation
Born: 1949
Other directorships: Chairman of the board of directors of Aeropuertos y Servicios Auxiliares; Chairman of the board of directors of Caminos y Puentes Federales de Ingresos y Servicios Conexos; Director of Banco Nacional de Obras y Servicios
Públicos, S.N.C.; Chairman of the board of directors of Telecom; Chairman of the board of directors of Servicio Postal Mexicano                                                                                                                                                                         |  | 2001
|                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |     

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|Mr. José Francisco Gil Díaz   |  | Director and Secretary of the Ministry of Finance and Public Credit
Born: 1943
Business experience: Director General of Avantel; Deputy Governor of Banco de México and Undersecretary of the Ministry of Finance and Public Credit                                      |  | 2001
|----------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|Mr. Ramón Hernández Toledo    |  | Director and Union Representative
Born: 1937
Business experience: Field supervisor and Other positions in PEMEX                                                                                                                                                          |  | 1992
|Mr. Pablo Pavón Vinales       |  | Director and Union Representative
Born: 1945
Business experience: Other positions in PEMEX                                                                                                                                                                               |  | 1992
|Mr. Ricardo Aldana Prieto     |  | Senator and Union Representative
Born: 1954
Business experience: General Secretary of Section 40 of the Union                                                                                                                                                            |  | 2001
|Mr. Alejandro Sánchez Narváez |  | Director and Union Representative
Born: 1952
Business experience: Other positions in PEMEX                                                                                                                                                                               |  | 2001
|Mr. Mario Martínez Aldana     |  | Director and Union Representative
Born: 1952
Business experience: Other positions in PEMEX                                                                                                                                                                               |  | 2001
|Mr. Raúl Muñoz Leos           |  | Director General
Born: 1939
Business experience: Executive Vice President and President and Director General of Du Pont México, S.A. de C.V. Other Directorships: Director of AFORE Garante                                                                              |  | 2000
|Mr. Juan José Suárez Coppel   |  | Corporate Director of Finance
Born: 1959
Business experience: Chief of Staff of the Secretary of the Ministry of Finance and Public Credit; Corporate Treasury Director of Grupo Televisa; and Director of the Derivatives Trading Desk in Banco Nacional de México S.A. |  | 2001
|                              |  |                                                                                                                                                                                                                                                                          |  |     

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|Mr. Emilio Marco Aguilar         |  | Deputy Director of Programming and Budget
Born: 1952
Business experience: Associate Managing Director of Budgeting; Associate Managing Director of Operation and Results Evaluation and Deputy Manager of Analysis and Evaluation                                                                                                                                                  |  | 1996
|-------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Mr. Cristobal S. Gutiérrez Ponce |  | Deputy Director of Financial Information Systems
Born: 1954
Other directorships: Director of Servicios Aéreos Especializados Mexicanos, S.A. de C.V.
Business experience: General accountant of Lance, S.A. de C.V.; Associate Managing Director of Accounting of P.M.I. Comercio Internacional, S.A. de C.V. and Associate Managing Director of Accounting of Petróleos Mexicanos |  | 1998
|Mr. Gustavo Rovirosa Renero      |  | Deputy Director of the Assets Streamlining Unit
Born: 1939
Business experience: Commissary of the General Comptroller's Office; Director of Administrative Services and Advisor of the Director General of Aseguradora Hidalgo, S.A.                                                                                                                                               |  | 2000
|Mr. Jorge Lanz de la Isla        |  | Deputy Director of Finance and Treasury
Born: 1952
Business experience: Director General of Servicios a la Infraestructura Aeroportuaria del Pacífico, S.A. de C.V. and Director General of Servicios Aeroportuarios del Sureste, S.A. de C.V.                                                                                                                                     |  | 2000
|Mr. Julio Camelo Martínez        |  | Corporate Director of Administration
Born: 1937
Business experience: Undersecretary of Planning of the Ministry of Public Education; Undersecretary of Planning of the Ministry of Agrarian Reform and Municipal President of Monterrey                                                                                                                                            |  | 2001
|Mr. Julio Pindter González       |  | Deputy Director of Labor Relations
Born: 1931
Business experience: Superintendent of Personal Integration, Deputy Manager and Associate Managing Director of Personnel of Petróleos Mexicanos                                                                                                                                                                                      |  | 1993
|                                 |  |                                                                                                                                                                                                                                                                                                                                                                                    |  |     

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|(Vacant)                            |  | Deputy Director of Services                                                                                                                                                                                                                                                           |  |     
|----------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Mr. Víctor Manuel Vázquez Zárate    |  | Deputy Director of Medical Services
Born: 1943
Business experience: Deputy Manager of Administration of Petróleos Mexicanos and Associate Managing Director of Medical Services of Petróleos Mexicanos                                                                                |  | 2000
|Mr. Rafael Fernández de la Garza    |  | Corporate Director of Industrial Safety and Environmental Protection
Born: 1948
Business experience: Chief of Engineering of the Carboelectric Central Facility of Río Escondido and Manager and Chief of Engineering of the of the Nucleoelectrical Central Facility of Laguna Verde |  | 1997
|Mr. Roberto Osegueda Villaseñor     |  | Corporate Director for Strategic Planning
Born: 1938
Business experience: Attorney of OMV, Ingeniería Comercial, S.A. de C.V.; Director General of Grupo Solus, S.A. de C.V. and Coordinator of the Corporate Planning Unit of Petróleos Mexicanos                                    |  | 2001
|Mr. Pedro Carlos Gómez Flores       |  | Deputy Director of Sector Relations
Born: 1951
Business experience: Deputy Director of Natural Gas and Sulphur of Pemex-Gas and Basic Petrochemicals, Deputy Director of Distribution of Pemex-Refining and Deputy Director of Strategic Planning of Petróleos Mexicanos              |  | 2001
|Mr. José Antonio Ceballos Soberanis |  | Corporate Director of Operations
Born: 1943
Business experience: Deputy Director of Trading of Pemex-Refining and Director General of Pemex-Exploration and Production                                                                                                                |  | 2001
|Mr. Othón Canales Treviño           |  | Corporate Director for Competitiveness and Innovation
Born: 1952
Business experience: Director General of Quimi-Corp Internacional, S.A. de C.V.; Director General of Othón Canales Ingenieros, S.C. and Deputy Director of Resistol, S.A.                                            |  | 2001
|                                    |  |                                                                                                                                                                                                                                                                                       |  |     

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|Mr. Andrés Moreno Fernández     |  | Corporate Director of Engineering and Project Development
Born: 1938
Other directorships: Chairman of the board of directors of Lumbreras y Túneles, S.A. de C.V.
Business experience: Director General of Construction and Hydraulic Operation of the Department of the Federal District; Deputy Director of Construction of the Federal Electricity Commission |  | 2001
|------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Mr. Ernesto Ríos Montero        |  | Deputy Director of Engineering
Born: 1936
Business experience: Plant Manager of Síntesis Orgánicas, S.A., Executive Vice President of Grupo Bufete Industrial and Director of Consultoría Empresarial Ejecutiva                                                                                                                                                  |  | 2001
|Mr. Jorge Alberto Aguilar López |  | Deputy Director of Contracting
Born: 1956
Business experience: Project Director of Grupo México and Manager of Financial Planning of the Federal Electricity Commission                                                                                                                                                                                          |  | 2001
|Mr. Renato Valle Fabela         |  | Deputy Director of Industrial Plant Projects
Born: 1946
Business experience: Advisor of design, construction, supervision and mounting of electromechanical equipment of hydraulic works in the National Water Commission and Manager of Thermolectrical Construction Projects of the Federal Electricity
Commission                                             |  | 2001
|Mr. Gerardo Rueda Rábago        |  | Corporate General Comptroller
Born: 1937
Business experience: Manager of Auditing; Manager of Budget and Accounting and Director of the Comptroller's Office of Banco de México                                                                                                                                                                                  |  | 1997
|(Vacant)                        |  | Deputy Comptroller of Evaluation and Control                                                                                                                                                                                                                                                                                                                     |  |     
|Mr. Manuel Vázquez Bustillos    |  | Deputy Comptroller of Auditors
Born: 1939
Business experience: General Comptroller of the Ministry of Energy; General Comptroller of the Institute of Security and Social Services of Government Employees and Associate Managing Director of Supervision of Entities and Affiliates of
Petróleos Mexicanos                                                      |  | 1997
|                                |  |                                                                                                                                                                                                                                                                                                                                                                  |  |     

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|Mr. Salvador Gómez Ávila          |  | Corporate Auditor of Industrial Safety and Environmental Protection
Born: 1943
Business experience: Associate Managing Director of Strategic Planning and Deputy Director of Planning of Pemex-Petroquímica                                    |  | 1998
|--------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Mr. Melchor de los Santos Ordóñez |  | Executive Coordinator
Born: 1950
Business experience: Senator; Director of Delegations of Banco Nacional de Obras y Servicios Públicos, S.N.C. and President of the Autonomous University of Coahuila                                          |  | 2001
|Mr. Moisés Ithuriel Orozco García |  | Executive Advisor to the Director General
Born: 1968
Business experience: Advisor of the Coordinator of the Corporate Planning Unit; Advisor to the Director General and Executive Coordinator of the Direction General of Petróleos Mexicanos |  | 2001

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Pemex-Exploration and ProductionDirectors and Executive Officers

|Name                                |  | Position with Pemex-Exploration and Production                                                                                                                                                                                                                                                                                                           |  | Year Appointed
|----------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Mr. Raúl Muñoz Leos                 |  | Director, Chairman of the board of directors of Pemex-Exploration and Production (refer to Petróleos Mexicanos)
Born: 1939
Business experience: Executive Vice President and President and Director General of Du Pont México, S.A. de C.V. Other Directorships: Director of AFORE Garante                                                               |  | 2000          
|Mr. Armando Leal Santa Ana          |  | Director (refer to Pemex-Refining)                                                                                                                                                                                                                                                                                                                       |  | 2001          
|Mr. Marcos Ramírez Silva            |  | Director (refer to Pemex-Gas and Basic Petrochemicals)                                                                                                                                                                                                                                                                                                   |  | 1996          
|(Vacant)                            |  | Director (refer to Pemex-Petrochemicals)                                                                                                                                                                                                                                                                                                                 |  |               
|Mr. Carlos Hurtado López            |  | Director and Undersecretary of Disbursements of the Ministry of Finance and Public Credit
Business experience: Coordinator of Advisors in Economic and Social Development Matters; coordinator of advisors of the Ministry of Finance and Public Credit and Mexico's Representative of the Organization for Economic Co-operation and Development
(OECD) |  | 2001          
|Mr. Juan Antonio Bargés Mestres     |  | Director and Undersecretary of Hydrocarbons of the Ministry of Energy
Born: 1945
Other directorships: Director of Banco Nacional de Comercio Exterior, S.N.C. and Director of Nacional Financiera, S.N.C.
Business experience: Director of Planning and Director General of Aeronaútica Civil                                                            |  | 2001          
|Mr. Antonio Juan-Marcos Issa        |  | Director and Coordinator of Advisors of the Director General of Petróleos Mexicanos
Born: 1946
Business experience: Representative of Petróleos Mexicanos for Europe; Regional Director of the Ministry of Foreign Relations and Secretary of Finance of the Government of Coahuila                                                                      |  | 2001          
|Mr. Luis Fernando de la Calle Pardo |  | Director and Undersecretary of International Commercial Negotiations of the Ministry of Economy
Born: 1957
Business experience: Economist in the World Bank; Minister of Commercial Affairs and Director of the Washington Office of the Ministry of Commerce and Industrial Development                                                                 |  | 2001          
|                                    |  |                                                                                                                                                                                                                                                                                                                                                          |  |               

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|Mr. Luis Ramírez Corzo               |  | Director General
Born: 1948
Business experience: Mexican Petroleum Institute; Manager of DINA Vulcano, S.A. and Director General of Turbinas Solar, S.A. de C.V.                                                                                                                                                                                              |  | 2001
|------------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Mr. Antonio Acuña Rosado             |  | Director of Cantarell Project
Born: 1938
Business experience: Deputy Director of Construction; Deputy Director of Technical Services and Deputy Director of the Northeastern Marine Region of Pemex-Exploration and Production                                                                                                                                |  | 1998
|(Vacant)                             |  | Deputy DirectorNortheastern Marine Region                                                                                                                                                                                                                                                                                                                    |  |     
|Mr. Maclovio Esteban Yáñez Mondragón |  | Deputy DirectorNorth Region
Born: 1948
Business experience: Head of the Technology Department (Southeastern Region); Associate Managing Director of Perforation and Well Maintenance (Marine Region) and Associate Managing Director of Perforation and Well Maintenance (South Region) of
Pemex-Exploration and Production                                  |  | 1995
|Mr. Héctor Leyva Torres              |  | Deputy DirectorSouthwestern Marine Region
Born: 1948
Other directorships: Director of Administración Portuaria Integral de Dos Bocas Business experience: Associate Managing Director of Production (Marine Region); Associate Managing Director of Production (Southern Region) and Deputy Director of
the South Region of Pemex-Exploration and Production |  | 1997
|Mr. Miguel Angel Rivera Villaseñor   |  | Deputy Director of Management and Finance
Born: 1945
Business experience: Director General of the Metal Mechanical Industry and Capital Assets of the Ministry of Commerce and Industrial Development; Executive Coordinator of Programming and Financial Control and Deputy Director of Proceeds and Financial
Programming                                   |  | 1995
|                                     |  |                                                                                                                                                                                                                                                                                                                                                               |  |     

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|Mr. Alfredo Eduardo Guzmán Baldizán |  | Executive Coordinator of Exploration Strategies
Born: 1947
Business experience: Associate Managing Director of Exploración (Northern Region) and Associate Managing Director of Planning (Northern Region) of Pemex-Exploration and Production                                                         |  | 1999
|----------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|Mr. Carlos Rasso Zamora             |  | Deputy Director of Drilling and Well Maintenance
Born: 1946
Business experience: Inspector of Mines and Hydrocarbons of the Ministry of National Patrimony; Superintendent and Zone Manager in Petróleos Mexicanos                                                                                     |  | 1997
|Mr. Horacio Guevara Montalvo        |  | Deputy Director of Planning
Born: 1946
Business experience: Associate Managing Director of Evaluation and Information of Petróleos Mexicanos; Associate Managing Director of Planning and Deputy Director of Planning of Pemex-Gas and Basic Petrochemicals                                            |  | 1997
|Mr. Carlos A. Morales Gil           |  | Deputy DirectorSouth Region
Born: 1954
Business experience: Associate Managing Director of Production (South Region); Associate Managing Director of Planning (South Region) and Associate Managing Director of Analysis and Investment Evaluation (South Region) of Pemex-Exploration and
Production |  | 1998
|Mr. Guillermo Cruz Domínguez Vargas |  | Deputy Director of Technology and Professional Development
Born: 1946
Business experience: Associate Managing Director of Production (South Region); Associate Managing Director of Planning (Marine Region) and Associate Managing Director of Planning of Pemex-Exploration and Production           |  | 1996
|Mr. Pedro Silva López               |  | Executive Director of Gas Strategic Program
Born: 1953
Business experience: Associate Managing Director of Strategic Planning; Associate Managing Director of the Burgos Project (Northern Region) and Associate Managing Director of Planning (North Region) of Pemex-Exploration and Production      |  | 1999
|                                    |  |                                                                                                                                                                                                                                                                                                        |  |     

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|Mr. Silvano Torres Xolio      |  | Auditor of Industrial Safety and Environmental Protection
Born: 1952
Business experience: Associate Managing Director of Industrial Safety and Environmental Protection, Deputy Manager of Industrial Safety and Environmental Protection and Superintendent of Industrial Safety and Environmental Protection of
Pemex-Exploration and Production |  | 1996
|----------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Mr. Alfredo Félix Díaz Casado |  | Internal Comptroller
Born: 1934
Business experience: Chief of Auditing and delegate of the Institute of Security and Social Services for Government Workers                                                                                                                                                                                        |  | 1999

Pemex-RefiningDirectors and Executive Officers

|Name                            |  | Position with Pemex-Refining                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | Year Appointed
|------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Mr. Raúl Muñoz Leos             |  | Director, Chairman of the board of directors of Pemex Refining (refer to Petróleos Mexicanos)
Born: 1939
Business experience: Executive Vice President and President and Director General of Du Pont México, S.A. de C.V.
Other Directorships: Director of AFORE Garante                                                                                                                                                                                                                       |  | 2000          
|Mr. Luis Ramírez Corzo          |  | Director (refer to Pemex-Exploration and Production)                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 2001          
|Mr. Marcos Ramírez Silva        |  | Director (refer to Pemex-Gas and Basic Petrochemicals)                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | 1996          
|(Vacant)                        |  | Director                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |               
|Mr. Carlos Hurtado López        |  | Director (refer to Pemex-Exploration and Production)                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 2001          
|Mr. Juan Antonio Bargés Mestres |  | Director (refer to Pemex-Exploration and Production)                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 2001          
|Mr. Antonio Juan-Marcos Issa    |  | Director (refer to Pemex-Exploration and Production)                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 2001          
|Juan Bueno Torio                |  | Director and Undersecretary for the Small and Medium Enterprise of the Ministry of Economy
Born: 1953
Other directorships: Director of Banco Nacional de Comercio Exterior, S.N.C.; Director of Centro de Investigación y Asesoría Tecnológica en Cuero y Calzado; Director of Nacional Financiera, S.N.C.; Director of Ocean Garden
Products; Inc., Director of Consejo de Fomento Económico del D.F.; Director of Exportadores Asociados, S.A. de C.V.; Director of Ferrocarriles Nacionales |  | 2001          
|                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |               

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|Mr. Armando Leal Santa Ana    |  | Director General
Born: 1937
Other directorships: Director of Mexicana de Lubricantes, S.A. de C.V.
Business Experience: Associate Managing Director of Production Control; Deputy Director of Production and Director General of Pemex Petrochemicals                     |  | 2001
|----------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|(Vacant)                      |  | Deputy Director of Production                                                                                                                                                                                                                                             |  |     
|Mr. Emilio Aguado Calvet(1)   |  | Deputy Director of Trading
Born: 1954
Business experience: Executive Coordinator of Planning of Petróleos Mexicanos; Deputy Director of Trading of Pemex Petrochemicals and Deputy Director of Planning of Pemex-Exploration and Production                               |  | 1995
|Mr. Guillermo Bert Meray      |  | Deputy Director of Distribution
Born: 1947
Business experience: Associate Managing Director of Storage and Distribution Terminals; Associate Managing Director of Supply and Operation and Associate Managing Director of Operation of Marine Terminals of Pemex Refining |  | 1999
|Mr. Rudy Omar Albertos Cámara |  | Deputy Director of Management and Finance
Born: 1942
Business experience: Director General of Financial Resources of the Ministry of Public Education and Deputy Director of Administration and Finance of Pemex-Exploration and Production                               |  | 1995
|Mr. Guillermo Ruiz Gutiérrez  |  | Deputy Director of Planning and Evaluation
Born: 1959
Business experience: Various positions in PEMEX                                                                                                                                                                     |  | 1994
|                              |  |                                                                                                                                                                                                                                                                           |  |     

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|Mr. Eduardo Vergara Cabrera   |  | Deputy Director of Projects
Born: 1944
Business experience: Associate Managing Director of Projects; Deputy Director of Industrial Plants of the Mexican Petroleum Institute and Deputy Director of Project Development of Pemex Refining                            |  | 1996
|----------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Mr. Francisco Aparicio Varela |  | Internal Comptroller
Born: 1946
Business experience: Director of Trading of Servicios Aeroportuarios del Sureste; Director of Projects of Trituradores Basálticos y Derivados, S.A. de C.V. and Coordinator of Refining and Petrochemicals of the Ministry of Energy |  | 2001
|Mr. Roberto Andrade Cruz      |  | Auditor of Industrial Safety and Environmental Protection
Born: 1942
Business experience: Superintendent of Evaluation; Associate Managing Director of Strategic Planning and Deputy Director of Technical Services of Pemex Refining                                |  | 1998

---

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Pemex-Gas and Basic PetrochemicalsDirectors and Executive Officers

|Name                               |  | Position with Pemex-Gas and Basic Petrochemicals                                                                                                                                                                                                                                                                   |  | Year Appointed
|---------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------
|Mr. Raúl Muñoz Leos                |  | Director, Chairman of the board of directors of Pemex-Gax and Basic Petrochemicals (refer to Petróleos Mexicanos)
Born: 1939
Business experience: Executive Vice President and President and Director General of Du Pont México, S.A. de C.V.
Other Directorships: Director of AFORE Garante                       |  | 2000          
|Mr. Luis Ramírez Corzo             |  | Director (refer to Pemex-Exploration and Production)                                                                                                                                                                                                                                                               |  | 2001          
|Mr. Armando Leal Santa Ana         |  | Director (refer to Pemex-Refining)                                                                                                                                                                                                                                                                                 |  | 2001          
|(Vacant)                           |  | Director (refer to Pemex-Petrochemicals)                                                                                                                                                                                                                                                                           |  |               
|Mr. Carlos Hurtado López           |  | Director (refer to Pemex-Exploration and Production)                                                                                                                                                                                                                                                               |  | 2001          
|Mr. Juan Antonio Bargés Mestres    |  | Director (refer to Pemex-Exploration and Production)                                                                                                                                                                                                                                                               |  | 2001          
|Mr. Antonio Juan-Marcos Issa       |  | Director (refer to Pemex-Exploration and Production)                                                                                                                                                                                                                                                               |  | 2001          
|Mr. Angel Villalobos Rodríguez     |  | Director and Coordinator of Advisors of the Secretary of Economy
Born: 1958
Business experience: Manager of Economic Studies of Corporativo Vitro and Partner of Compass Consultores                                                                                                                               |  | 2001          
|Mr. Marcos Ramírez Silva           |  | Director General
Born: 1957
Business experience: Commercial Director of Petroleum and Petrochemical Products of P.M.I. Comercio Internacional, S.A. de C.V.; Deputy Director of Planning and Operative Control and Deputy Director of Liquefied Gas and Basic Petrochemicals of Pemex
Gas and Basic Petrochemicals |  | 1996          
|Mr. Roberto Ramírez Soberón        |  | Deputy Director of Planning
Born: 1950
Business experience: Chief of Analysts of Banco de México and various positions in PEMEX                                                                                                                                                                                    |  | 1997          
|Mr. Salvador García-Luna Rodríguez |  | Deputy Director of Liquefied Gas and Basic Petrochemicals
Born: 1959
Business experience: Deputy Manager of Residuals; Commercial Director of Petroleum Products and Commercial Director of Crude Oil of P.M.I. Comercio Internacional, S.A. de C.V.                                                               |  | 1996          
|                                   |  |                                                                                                                                                                                                                                                                                                                    |  |               

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|Mr. Luis Felipe Luna Melo          |  | Deputy Director of Natural Gas
Born: 1956
Business experience: Commercial representative in Tokyo and Deputy Manager of Analysis of P.M.I. Comercio Internacional, S.A. de C.V. and President of P.M.I. Norteamérica, S.A. de C.V.                                                     |  | 1996
|---------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Mr. Jesús Alfredo Sánchez Sánchez  |  | Deputy Director of Management and Finance
Born: 1950
Business experience: Internal Comptroller of P.M.I. Comercio Internacional, S.A. de C.V.; Associate Managing Director of Financial Administration and Associate Managing Director of Treasury of Petróleos Mexicanos              |  | 1997
|Mr. Armando Arenas Briones         |  | Deputy Director of Production
Born: 1948
Business experience: Various positions in PEMEX                                                                                                                                                                                               |  | 1996
|Mr. Claudio Urencio Castro         |  | Deputy Director of Pipelines
Born: 1949
Business Experience: Director General of Programming and Budget of the Federal District Department; Director of Economic Research of Bancomer and General Director of Economic Analysis of the Ministry of Commerce and Industrial Development |  | 1996
|Mr. Francisco Ricardo Manzo García |  | Associate Managing Director of Industrial Safety and Environmental Protection
Born: 1941
Business experience: Various positions in PEMEX                                                                                                                                               |  | 1997
|Mr. Rene Ojeda Delgado             |  | Internal Comptroller
Born: 1953
Business experience: Advisor coordinator of the Ministry of Programming and Budget; Deputy Comptroller of the Ministry of Health and Deputy Comptroller of Auditing of the Ministry of Social Development                                              |  | 1999

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Pemex-PetrochemicalsDirectors and Executive Officers

|Name                            |  | Position with Pemex-Petrochemicals                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | Year Appointed
|------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Mr. Raúl Muñoz Leos             |  | Director, Chairman of the board of directors of Pemex-Petrochemicals (refer to Petróleos Mexicanos)
Born: 1939
Business experience: Executive Vice President and President and Director General of Du Pont México, S.A. de C.V.
Other Directorships: Director of AFORE Garante                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | 2000          
|Mr. Luis Ramírez Corzo          |  | Director (refer to Pemex-Exploration and Production)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | 2001          
|Mr. Armando Leal Santa Ana      |  | Director (refer to Pemex-Refining)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 2001          
|Mr. Marcos Ramírez Silva        |  | Director (refer to Pemex-Gas and Basic Petrochemicals)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 1996          
|Mr. Carlos Hurtado López        |  | Director (refer to Pemex-Exploration and Production)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | 2001          
|Mr. Juan Antonio Bargés Mestres |  | Director (refer to Pemex-Exploration and Production)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | 2001          
|Mr. Antonio Juan-Marcos Issa    |  | Director (refer to Pemex-Exploration and Production)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | 2001          
|Mr. Juan Antonio García Villa   |  | Director and Undersecretary of Regulation and Services to Industry and Foreign Trade
Born: 1945
Other directorships: Director of Consejo Directivo del Centro Nacional de Metrología; Director of Instituto Nacional de la Propiedad Industrial; Director of the Comisión Federal de Electricidad; Director of Comisión Nacional para
el Ahorro de Energía; Director of Fondo de Información y Documentación para la Industria; Director of Corporación Mexicana de Investigación en Materiales, S.A. de C.V.; Director of Centro de Investigación en
Química Aplicada; Director of Centro de Ingeniería y Desarrollo Industrial; Director of Telecomunicaciones de México; Director of Entidad Mexicana de Acreditación; Director of Normalización y Certificación de
Competencia Laboral; Director of Laboratorios de Biológicos y Reactivos Mexicanos and Director of Sistemas y Transportes Eléctricos del Gobierno del Distrito Federal Business experience: Senator and Representative |  | 2001          
|                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |               

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|(Vacant)                        |  | Director General                                                                                                                                                                                                                            |  |     
|------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|(Vacant)                        |  | Deputy Director of Planning                                                                                                                                                                                                                 |  |     
|(Vacant)                        |  | Deputy Director of Management and Finance                                                                                                                                                                                                   |  |     
|Mr. César González Velazco      |  | Deputy Director of Trading
Born: 1954
Business experience: Sales Manager of Polymers of Pemex Petrochemicals and Director General of Petroquímica Cosoleacaque, S.A. de C.V.                                                                |  | 1998
|Mr. Francisco A. Romero Garibay |  | Auditor of Quality, Industrial Safety and Environmental Protection
Born: 1955
Business experience: Various positions in PEMEX                                                                                                               |  | 1999
|Mr. Luis Torregrosa Armentia    |  | Internal Comptroller
Born: 1948
Business experience: Internal Comptroller of Ferrocarriles del Noreste; Internal Comptroller of Compañía Nacional de Subsistencias Populares and Internal Comptroller of the Federal Electricity Commission |  | 1999

Compensation of Directors and Officers

For the year ended December 31, 2000, the aggregate compensation of executive officers of Petróleos Mexicanos and the subsidiary entities
(68 persons) paid or accrued in that year for services in all capacities was approximately Ps. 143 million. Directors do not receive compensation for their services.

Board Practices

Neither the members of the boards of directors nor the executive officers are appointed for a specific term. The members of the boards of directors, except for
those members selected by the Union, and the Directors General of Petróleos Mexicanos and the subsidiary entities serve subject to the discretion of the President of Mexico.

Petróleos
Mexicanos has established an audit committee which cooperates with the Board of Directors of Petróleos Mexicanos and the Office of the Director
General in improving the organization, operation, and achievement of financial and budgetary results. The main functions of the Audit Committee are (i) to promote the economy, efficiency,
efficacy and effectiveness of PEMEX with regard to operations, modernization, and compliance with government regulations; (ii) to cooperate with the Board of Directors of
Petróleos Mexicanos in assimilating, analyzing and summarizing the matters in which the Audit Committee is involved, and (iii) to provide advice to Petróleos
Mexicanos and the subsidiary entities. In the performance of its duties, the Audit Committee analyzes, among

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other data, financial and operative information, performance indicators, reported problems and recommendations presented by the different control areas, and the independent auditors report to the
financial statements. The Audit Committee is permanent and meets at least four times a year prior to the meetings of the Board of Directors of Petróleos Mexicanos.

As
of June 13, 2001, the audit committee was composed of the following members:

|Name and position in audit committee       |  | Position of the members of the audit committee                                                                   
|------------------------------------------ |  | -----------------------------------------------------------------------------------------------------------------
|Mr. Raúl Muñoz Leos, President             |  | Director General of Petróleos Mexicanos                                                                          
|Mr. Gerardo Rueda Rábago, Executive Member |  | Corporate General Comptroller                                                                                    
|Mr. Felipe Ramón y Castañeda, Member       |  | Commissary for Petróleos Mexicanos                                                                               
|Mr. César Chavira Enriquez, Member         |  | Representative of General Comptroller's Office (Follow-Up and Evaluation Unit for Public Performance)            
|Mr. Juan José Suárez Coppel, Member        |  | Representative of Financial Area of Petróleos Mexicanos                                                          
|Mr. Julio Camelo Martínez, Member          |  | Representative of Administrative Area of Petróleos Mexicanos                                                     
|Mr. Juan Arturo Lim Medrano, Member        |  | Representative of the Ministry of Finance (Office of the General Director of Programming and Sectorial Budgeting)
|Mr. Jorge Bazúa Rueda, Member              |  | Representative of the Ministry of Energy (Policy and Budgetary Control Department)                               

In
addition, through late 2001, Mancera, S.C., through Mr. Luis Celhay López, attended the Audit Committee meetings and presented reports in connection with the
tasks performed.

Employees

Excluding employees of the PMI Group and including those employed by PEMEX on a temporary basis, at December 31, 2000, Petróleos Mexicanos
and the subsidiary entities had 135,091 employees, as compared with 132,496 at December 31, 1999. During 2000, Petróleos Mexicanos and the subsidiary entities employed an average
of 24,992 temporary employees. The following table sets forth the number of employees of Petróleos Mexicanos, the subsidiary entities and the PMI Group for the past five years.

|                                   |       | At December 31, |         |       
|---------------------------------- | ----- | --------------- | ------- | ------
|
|
|Pemex-Refining                     |       | 43,961          |         | 44,722
|Pemex-Exploration and Production   |       | 35,096          |         | 34,467
|Pemex-Petrochemicals               |       | 13,390          |         | 12,488
|Pemex-Gas and Basic Petrochemicals |       | 11,793          |         | 12,507
|Petróleos Mexicanos                |       | 16,705          |         | 17,036
|                                   |       |                 |         |       
|                                   | Total |                 | 120,945 |       
|                                   |       |                 |         |       
|PMI Group                          |       | 283             |         | 285   

---

Source: Petróleos Mexicanos.

The
Union represents approximately 76% of the work force of Petróleos Mexicanos and the subsidiary entities. The members of the Union are our employees and they elect
their own leadership

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from among their ranks. Since the Union's official establishment in 1938, we have experienced no labor strikes, and although we have experienced work stoppages for short periods of time, none of
these stoppages has had a significant material adverse effect on our operations. However, the Comptroller General's office has recently announced an investigation into certain alleged improper
diversions of federal monies by Union officials. See "Item 8Financial InformationLegal ProceedingsMexican Government Audits and Other Investigations."

Our
relationship with our employees is regulated by theLey Federal del Trabajo(Federal Labor Law) and a collective bargaining agreement
between Petróleos Mexicanos and the Union. The collective bargaining agreement regulates extensively all aspects of the relationship of Petróleos Mexicanos and the
subsidiary entities with their employees. The collective bargaining agreement is subject to renegotiation every two years, although salaries are reviewed annually. Wages increased by 12% in 2000 and
15% in 1999, in line with the Mexican Government's price and wage accords. Petróleos Mexicanos and the Union renewed the collective bargaining agreement effective August 1, 2001,
pursuant to which wages were increased by 8.5%. The renewed contract was set to expire on July 31, 2003. However, recently, following an impasse in negotiations over salaries and a threat of a
strike, on September 29, 2002,
PEMEX and the Union reached an agreement on a total salary increase of 7.3% (consisting of a 5.5% increase in wages and a 1.8% increase in benefits). PEMEX will pay this increase in wages and benefits
to its workers, including retirees in accordance with the collective bargaining agreement, retroactively to August 1, 2002.

In
accordance with the collective bargaining agreement and the Federal Labor Law, Petróleos Mexicanos and the subsidiary entities are under an obligation to pay seniority
premiums to retiring employees and pension and death benefits to retired employees or their survivors. Retirees are entitled to receive increases in their pensions whenever salary increases are
granted to current employees. We also provide health and medical benefits to employees, retired employees and their families and, subject to our overall budgetary constraints, we provide an
interest-rate subsidy on employees' mortgage loans.

On
November 5, 1997 the Ministry of Finance and Public Credit and the Board of Directors of Petróleos Mexicanos authorized the formation of a new trust called the
Pemex Labor Fund. This fund is a vehicle to fund labor liabilities, current pension payments and seniority premiums. We have designed a contribution plan to increase the funds held in this trust and
to continue to make payments on outstanding labor and pension liabilities. Our contributions to the Pemex Labor Fund amounted to Ps. 12,177 million in 1999 and Ps. 3,442 million in 2000.

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Item 7. Major Shareholders and Related Party Transactions

Major Shareholders

Petróleos Mexicanos and the subsidiary entities have no shareholders because they are decentralized public entities of the Mexican Government. The
Mexican Government closely regulates and supervises our operations; it incorporates the annual budget and financing programs of Petróleos Mexicanos and the subsidiary entities into its
consolidated annual budget, which it submits to the Mexican Congress for its approval.

The
Mexican Government also directs many executive decisions at PEMEX. Mexican Government ministers hold a majority of the seats on the Board of Directors of Petróleos
Mexicanos, and the Secretary of the Ministry of Energy of Mexico is the Chairman of the Board. The General Comptroller's Office of the Mexican Government appoints PEMEX's external auditors and the
Director General of Petróleos Mexicanos is a member of the President of Mexico's cabinet and the Mexican Government. See also "Item 3Key InformationRisk
FactorsRisk Factors Related to the Relationship between PEMEX and the Mexican Government" and "Item 10Additional InformationShare Capital."

Related Party Transactions

Under Article 8, Section XI of theLey Federal de Responsabilidades Administrativas de los Servidores
Públicos(Federal Law of Administrative Responsibilities of Public Servants), which is applicable to all of our employees, PEMEX's employees are obligated to
"recuse themselves from intervening in any way in the attention to, processing or resolution of matters in which they might have personal, family or business interest, including those where some
benefit can result for themselves, their spouse, blood or affinity relatives up to the fourth degree, or civil relatives, or for third parties with which they have professional, laboral, or business
relations, or for partners or partnerships where the public servant or the persons referred above are or have been members of."

Item 8. Financial Information

Legal Proceedings



In the ordinary course of our business, we are a party to various legal actions, including those involving labor claims of former and present employees. These
labor disputes relate to severance payments, life insurance benefits, extensions of labor contracts, level of wages, improper termination and employee housing. We do not expect these lawsuits to have
a material adverse effect on our financial condition or future results of operations.

On
September 29, 2002, PEMEX and the Union reached an agreement that, among other things, settled negotiations relating to their annual salary review. For more information
regarding this agreement, see "Item 6Directors, Senior Management and EmployeesEmployees."



Following the change in presidential administrations, in 2001, the General Comptroller's Office of the Mexican Government, which we refer to as SECODAM, conducted
an audit of PEMEX's operations in 2000 and previous years. In the audit, SECODAM identified a series of transactions between PEMEX and the Union during 2000 which PEMEX believes involved illicit
behavior. We describe the transactions, allegations and related proceedings below.

On
January 21, 2002, SECODAM announced that it had submitted a criminal complaint to theProcuraduría General de la
República(the Office of the Federal Attorney General) for the diversion of

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Ps. 1,580 million in federal monies from PEMEX to the Union from March 2000 to October 2000. SECODAM has alleged that the payments were not properly made under applicable Mexican
laws and government regulations.

In
addition, the Federal Attorney General has filed charges against certain former officers of PEMEX charging them with exceeding the scope of their corporate powers in executing the
several transactions under investigation. On March 20, 2002, Petróleos Mexicanos filed three criminal complaints with the Federal Attorney General requesting prosecution
principally of Rogelio Montemayor Seguy (former Director General), Carlos Juaristi Septién (former Corporate Management Director) and Juan José Domene Berlanga (former
Chief Financial Officer) for acting illegally, outside the scope of their corporate powers and without the consent of PEMEX's Board of Directors, PEMEX's general counsel or the Mexican Government to
illegally divert to the Union and certain of its representatives a total of Ps. 1,660 million (which includes the Ps. 1,580 previously identified by SECODAM in its complaint).
Mr. Montemayor resigned from PEMEX effective November 30, 2000 concurrent with President Fox's appointment of Raúl Muñoz Leos as Director General.
Messrs. Juaristi and Domene ended their affiliation with PEMEX in February 2000 as a result of the change in administration following the appointment of Mr. Muñoz
Leos. If the former officers or any other parties are found guilty, Mexican law requires the court to order restitution to PEMEX for the improperly diverted amounts. To date, PEMEX has not sought
restitution from the Union, because the Union has not been identified as a criminal defendant in its own right. PEMEX notes that it plans to pursue any legal action necessary to obtain restitution
from whomever is found responsible.

In
May 2002, a Mexican federal judge issued arrest warrants against certain former officers of Petróleos Mexicanos (including Messrs. Montemayor, Juaristi
and Domene) for their embezzlement and unlawful use of their corporate powers and privileges. On July 1, 2002, Mr. Montemayor elected to surrender himself to U.S. federal authorities in
Texas instead of federal authorities in Mexico. The Mexican Government has formally requested that the U.S. authorities extradite Mr. Montemayor to Mexico; the hearing on his extradition is set
for December 8, 2002.

On
September 10, 2002, the Federal Attorney General submitted a request to the Mexican Congress that it remove the legislative immunity from prosecution of Senator Ricardo Aldana
Prieto, who is a member of the Board of Directors of Petróleos Mexicanos as a representative of the Union, as well as the legislative immunity of federal Congressman Carlos Romero
Deschamps and of state representative Jesús Olvera Méndez. If the Mexican Congress strips these individuals of their legislative immunity, the Federal Attorney General
will be able to proceed with their criminal prosecution for their participation in the illegal diversion of PEMEX funds.

Since
learning from SECODAM about the illegal diversion of funds, PEMEX has been cooperating with SECODAM and the Office of the Federal Attorney General to prosecute the responsible
persons. In addition, our Director General has promoted a number of initiatives and has enacted certain rules in order to promote a culture of ethics and prevent corruption in PEMEX's daily
operations. For example, on July 31, 2002, an ethics code was published in the Official Gazette of the Federation containing rules to promote legality, honesty, integrity, loyalty, impartiality
and efficiency in the performance of public work by public officers. In addition, all of PEMEX's officers are now required to attend an ethics program and PEMEX is currently developing a corporate
code of ethics that will better define the duties and scope of corporate powers of all officers in order to prevent abuses.
Separately, SECODAM, through its audit representatives at PEMEX, is analyzing the illegal transactions involving the Union to determine how to better implement federal laws and internal regulations
applicable to PEMEX and its officers in order to prevent future abuses. PEMEX expects that these efforts will result in a more effective system of internal controls.

We
note that we recorded the Ps. 1,660 million, the diversion of which is the subject of the prosecution, as an administrative expense in 2000. In the event that we receive any
restitution in the

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future with respect to this matter, it will be appropriately recorded as a gain in the period in which cash is received, in accordance with Mexican and U.S. GAAP.



We prevailed in a legal claim before a Mexican federal court brought by Comercio Exterior y Materias Primas S.A. (CEMP), a service provider to Pemex-Exploration
and Production, for damages in the amount of U.S. $104.6 million and Ps. 62.4 million as compensation for services provided by CEMP but not paid by Pemex-Exploration and Production. CEMP
appealed that decision to the Mexican Supreme Court, and on November 26, 2001, Pemex-Exploration and Production prevailed in the appeal and was absolved of all related claims made by CEMP.

In
September 2001, Conproca, the construction company performing construction and maintenance services for Pemex-Refining's Cadereyta refinery, filed a claim for arbitration in
accordance with the International Chamber of Commerce rules against Pemex-Refining related to expenses incurred by Conproca in providing such services. The claim is for U.S. $497.4 million. We
are currently participating in mediation to resolve this dispute supported by the ordinary Mexican legal defenses. Pemex-Refining believes that it has sufficient elements to support its acquittal.
Accordingly, we have not created a reserve to pay for any potential judgment or settlement.

In
December 2001, Odin Construcciones, S.A. de C.V. (Odin), a Mexican construction company, filed a claim for damages against Petróleos Mexicanos related to works
concluded but not yet paid. The claim was for approximately U.S. $103 million. In March 2002, a Mexican federal court entered a judgment in PEMEX's favor. However, Odin filed an appeal
to reverse that decision. We do not expect that the results of this appeal will have a material adverse effect on our financial condition or future results of operations.

In
October 2000, in accordance with Article 73 of the Acquisitions, Leasing and Public Sector Services Law, Pemex-Refining settled a legal dispute with Productos
Ecológicos S.A. de C.V. (Proesa) relating to the early termination of a long-term MTBE supply and services contract involving an MTBE plant that was never built before the
Court for International Arbitration of the International Chamber of
Commerce. Proesa's initial claim against Pemex-Refining was for approximately U.S. $650 million. However, after discussion and negotiation in private arbitration proceedings, Pemex-Refining
agreed to settle the dispute for a total amount of approximately U.S. $146.5 million (U.S. $127 million plus taxes). The settlement was formalized by an agreement between Pemex-Refining
and Proesa, dated October 16, 2000, and fully paid on the same date; the full payment was recorded as an expense in 2000. SECODAM is currently reviewing the contracts entered into by
Pemex-Refining and Proesa on a confidential basis.



On June 29, 1999, Save Domestic Oil, Inc., a group of independent oil producers in the United States, filed a petition before the U.S. Department of
Commerce and the International Trade Commission pursuant to the United States' antidumping and countervailing duty laws against imports of crude oil from Mexico, Saudi Arabia, Venezuela and Iraq. The
United States' antidumping and countervailing duty laws provide for the imposition of additional duties on imports of merchandise if certain determinations as to the existence of dumped prices or
countervailing subsidies and material injury or threat thereof to the relevant U.S. industry are made. On August 9, 1999, the U.S. Department of Commerce determined that it would not initiate
antidumping and countervailing duty investigations on crude oil from Mexico, Saudi Arabia and Iraq. The U.S. Department of Commerce dismissed the petition, stating that it was prohibited by law from
initiating investigations because there was not the requisite U.S. industry support for the petition. The U.S. Department of Commerce has stated that its decision not to initiate investigations means
that these cases are closed and that neither

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the U.S. Department of Commerce nor the International Trade Commission will take further action. On September 7, 1999, Save Domestic Oil, Inc. filed a complaint against the United
States seeking review of the U.S. Department of Commerce's decision. This action is still pending.

Dividends

In March 1990, as a result of the implementation of the 1989-92 Financing Package for Mexico, our commercial bank creditors exchanged U.S.
$7.58 billion of Petróleos Mexicanos' external indebtedness for Brady Bonds issued by the Mexican Government. At the same time, Petróleos Mexicanos' indebtedness
to the Mexican Government increased by the same amount; the new indebtedness was denominated in currencies other than pesos. In December 1990, the Mexican Government and
Petróleos Mexicanos agreed to capitalize this indebtedness, converting it into Certificates of Contribution "A". As a condition of this capitalization, Petróleos
Mexicanos agreed to pay a minimum guaranteed dividend to the Mexican Government equal to the debt service on the capitalized debt. The board of directors of Petróleos Mexicanos approves
the total dividend on the Certificates of Contribution "A" after the end of each fiscal year, although Petróleos Mexicanos pays an amount equal to the minimum guaranteed dividend to the
Mexican Government in monthly advance payments during the year. During 1996, 1997, 1998, 1999 and 2000, Petróleos Mexicanos made advance payments to the Mexican Government in the
aggregate of Ps. 6,782 million, Ps. 5,804 million, Ps. 3,064 million, Ps. 5,138 million and Ps. 5,564 million, respectively, towards the minimum guaranteed dividends
for those years. See "Item 5Operating and Financial
Review and ProspectsLiquidity and Capital ResourcesEquity Structure and the Certificates of Contribution "A."'

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Item 9. The Offer and Listing

Trading in the securities issued by Petróleos Mexicanos and Pemex Project Funding Master Trust takes place primarily on the Luxembourg Stock
Exchange.

Item 10. Additional Information

Share Capital

Petróleos Mexicanos and the subsidiary entities have no shareholders because they are decentralized public entities of the Mexican Government. For
a discussion of the structure of the Mexican Government's equity in PEMEX, see "Item 5Operating and Financial Review and ProspectsLiquidity and Capital
ResourcesEquity Structure and the Certificates of Contribution "A"."

Memorandum and Articles of Association

Petróleos Mexicanos and each of the subsidiary entities is a decentralized public entity of the Mexican Government. The Mexican Congress
established Petróleos Mexicanos by a decree dated June 7, 1938 effective July 20, 1938. None of Petróleos Mexicanos or the subsidiary entities has bylaws or
articles of association. On July 17, 1992, the Mexican Congress created the subsidiary entities out of operations that had previously been directly managed by Petróleos
Mexicanos. Petróleos Mexicanos and its four subsidiary entities, Pemex-Exploration and Production, Pemex-Refining, Pemex-Gas and Basic Petrochemicals and
Pemex-Petrochemicals, are decentralized public entities of the Mexican Government, and each is a legal entity empowered to own property and carry on business in its own name. The activities of
Petróleos Mexicanos and the subsidiary entities are regulated by the Political Constitution of the United Mexican States, the Regulatory Law, the Organic Law, regulations issued
pursuant to the Regulatory Law and other federal laws and regulations. See "Item 4Information on the CompanyHistory and Development." Six members of the Board of Directors of
Petróleos Mexicanos, including the Chairman, are appointed by the President of Mexico. Our Union selects the remaining
five directors from among employees of Petróleos Mexicanos and the subsidiary entities. An eight-member board of directors governs each subsidiary entity. Each of these boards consists
of the Director General of Petróleos Mexicanos, the Director General of each of the other three subsidiary entities and four additional directors, who are each appointed by the
President of Mexico. The members of the boards of directors of Petróleos Mexicanos and each of the subsidiary entities are not appointed for a specific term, and, except for those
members selected by the Union, they serve subject to the discretion of the President of Mexico.

Material Contracts

On June 16, 1993, in connection with the establishment of its U.S. $500,000,000 Medium-Term Notes, Series A, Program,
Petróleos Mexicanos entered into a Fiscal Agency Agreement with Bankers Trust Company (currently Deutsche Bank Trust Company Americas, which we refer to as "Deutsche Bank"), as Fiscal
Agent. On February 26, 1998, in connection with the establishment of its U.S. $1,500,000,000 Medium-Term Notes, Series B, Program, Petróleos Mexicanos amended
and restated the Fiscal Agency Agreement. Under the new program, Petróleos Mexicanos issued the following securities:



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On
July 24, 1998, Petróleos Mexicanos increased the aggregate principal amount of debt securities issuable under its medium-term notes program to U.S.
$3,500,000,000. Following this increase, Petróleos Mexicanos issued the following securities:



On
October 5, 1999, Petróleos Mexicanos increased the aggregate principal amount of debt securities issuable under its medium-term notes program to U.S.
$6,000,000,000. Following the increase, Petróleos Mexicanos issued the following securities:



On
November 10, 1998, Petróleos Mexicanos created Pemex Project Funding Master Trust. The Trust Agreement, dated November 10, 1998, among
Petróleos Mexicanos, The Bank of New York and The Bank of New York (Delaware) establishes Pemex Project Funding Master Trust and designates The Bank of New York as Managing Trustee and
The Bank of New York (Delaware) as Delaware Trustee. On the same date, Petróleos Mexicanos, the subsidiary entities and Pemex Project Funding Master Trust entered into an Assignment and
Indemnity Agreement with The Bank of New York. This agreement provides for the assignment by the subsidiary entities to Pemex Project Funding Master Trust of certain payment obligations relating to
PIDIREGAS, the arrangement by Petróleos Mexicanos of financing on behalf of Pemex Project Funding Master Trust to meet such payment obligations, the payment by Petróleos
Mexicanos and the subsidiary entities to Pemex Project Funding Master Trust of the amounts necessary to meet Pemex Project Funding Master Trust's obligations under such financings and the
indemnification of Pemex Project Funding Master Trust by Petróleos Mexicanos and the subsidiary entities.

On
December 1, 1998, a Receivables Purchase Agreement was entered into by and among Pemex Finance, Ltd., PMI, P.M.I. Services, B.V. and Pemex-Exploration and
Production. Pursuant to this agreement, Pemex-Exploration and Production agrees to export at least 90% of its exports of crude oil to PMI, which in turn agrees to sell all current and expected
eligible receivables to P.M.I. Services, B.V. upon the request of Pemex Finance, Ltd. P.M.I. Services, B.V. agrees to sell such eligible receivables to Pemex Finance, Ltd.
contemporaneously with its purchase of them.

On
July 31, 2000, in connection with the establishment of a U.S. $3,000,000,000 Medium Term Notes, Series A, Program on behalf of Pemex Project Funding Master Trust,
Petróleos Mexicanos and Pemex Project Funding Master Trust entered into an Indenture Agreement with Deutsche Bank, as Trustee. This agreement provides for the issuance by Pemex Project
Funding Master Trust from time to time of unsecured debt securities. These issuances are unconditionally guaranteed by Petróleos Mexicanos. Pursuant to a Guaranty Agreement, dated
July 29, 1996, Petróleos Mexicanos' obligations are jointly and severally guaranteed by Pemex-Exploration and Production, Pemex-Refining and Pemex-Gas and Basic
Petrochemicals. Pursuant to the Indenture Agreement, Pemex Project Funding Master Trust has issued the following securities:



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On
November 14, 2001, Pemex Project Funding Master Trust increased the aggregate principal amount of debt securities issuable under its medium-term notes program to
U.S. $6,000,000,000. Following the increase, Pemex Project Funding Master Trust issued the following securities:



On
November 24, 2000, the Mexican Government, through the Ministry of Finance and Public Credit, as transferor, Pemex Project Funding Master Trust, as transferee, and
Petróleos Mexicanos, as guarantor, entered into a Transfer of Funds Agreement (Convenio de Derivación de Fondos) whereby
the Ministry of Finance and Public Credit transferred U.S. $676,161,058 net in cash to Pemex Project Funding Master Trust which will assume U.S. $698.3 million of the Mexican Government's
payment obligations beginning on December 31, 2002.

As
of December 31, 2000 and 1999, PEMEX has entered into contracts with various contractors for an amount of Ps. 68,972,196 and Ps. 68,076,764, respectively. These contracts are
for the development of PIDIREGAS and are therefore subject to standards required in NIF-09 A, which is a Mexican accounting guideline that outlines specific accounting and budgetary
treatment applicable to
PIDIREGAS. For an explanation of NIF-09 A, see "Item 4Information on the CompanyHistory and DevelopmentCapital Expenditures and Investment" and
Note 2(d) to the Financial Statements.

Exchange Controls

Mexico has had a free market for foreign exchange since 1991, and the government has allowed the peso to float freely against the U.S. dollar since
December 1994. There can be no assurance that the government will maintain its current foreign exchange policies. See "Item 3Key InformationExchange Rates." and "Item
3Key InformationRisk FactorsConsiderations related to Mexico."

Taxation



Pursuant to a registration statement on Form F-4 (File No. 333-7796), which was declared effective by the U.S. Securities
and Exchange Commission, which we refer to as the Commission, on October 17, 1997, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining, and
Pemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act of 1933 up to U.S. $600,000,000 of 8.85% Global Guaranteed Notes due 2007 and up to U.S. $400,000,000 of 9.50%
Global Guaranteed Bonds due 2027. These securities are collectively referred to as the "1997 Securities".

Pursuant
to a registration statement on Form F-4 (File No. 333-9310), which was declared effective by the Commission on August 24, 1998,
Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining, and Pemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act of 1933 up to U.S.
$350,000,000 of 83/8% Global Guaranteed Notes due 2005 and up to U.S. $350,000,000 of 91/4% Global Guaranteed Bonds due 2018. These securities are collectively referred
to as the "1998 Securities".

Pursuant
to a registration statement on Form F-4 (File No. 333-10906), which was declared effective by the Commission on October 1, 1999,
Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining, and Pemex-Gas and Basic Petrochemicals, registered pursuant to the Securities Act of 1933 up to U.S.
$600,000,000 of 93/8% Notes due December 2, 2008, Puttable at Par on December 2, 2001 (the "Puttable Notes"). Pursuant to a registration statement on
Form F-4 (File

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No. 333-10706), which was declared effective by the Commission on October 1, 1999, Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining, and
Pemex-Gas and Basic Petrochemicals registered pursuant to the Securities Act of 1933 up to U.S. $500,000,000 of 9.50% Puttable or Mandatorily Exchangeable Securities
(POMESSM) due 2027. The securities registered in 1999 under these two registration statements are collectively referred to as the "1999 Securities."



The following summary contains a description of the principal Mexican and U.S. federal income tax consequences of the ownership and disposition of the 1997
Securities, the 1998 Securities and the 1999 Securities (all as defined above), but it does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a
decision to invest in, or dispose of, the 1997 Securities, 1998 Securities or the 1999 Securities.

This
summary is based on the federal tax laws of Mexico and the United States in force on the date of this Form 20-F, including the provisions of the income tax treaty
between the United States and Mexico together with related protocol (the "Tax Treaty") (which are subject to change), and does not describe any tax consequences arising under the laws of any state or
municipality in Mexico, the United States or any other jurisdiction, or the laws of any taxing jurisdiction other than the federal laws of Mexico and the United States.

Mexico
has also entered into, or is negotiating, tax treaties with various countries that may have effects on holders of 1997 Securities, 1998 Securities or 1999 Securities. This summary
does not discuss the consequences (if any) of such treaties.

Each
holder or beneficial owner of 1997 Securities, 1998 Securities or 1999 Securities should consult its tax advisor as to the Mexican, United States or other tax consequences of the
ownership and disposition of those securities, including the effect of any foreign, state or municipal tax laws, and the consequences of the application of any tax treaty to which Mexico is a party.



This summary of certain Mexican federal tax considerations refers only to holders of 1997 Securities, 1998 Securities or 1999 Securities that are not residents of
Mexico for Mexican tax purposes and that do not conduct a trade or business in Mexico through a permanent establishment (we refer to any such non-resident holder as a "Foreign Holder").
For purposes of Mexican taxation, an individual is a resident of Mexico if he has established his domicile in Mexico, unless he has resided in another
country for more than 183 calendar days, whether consecutive or not in any calendar year and can demonstrate that he has become a resident of that other country for tax purposes.

A
legal entity is a resident of Mexico if;



If
a person has a permanent establishment or fixed base in Mexico, such permanent establishment shall be required to pay taxes in Mexico on income attributable to such permanent
establishment in accordance with Mexican federal tax law.

Taxation of Interest.Under theLey del Impuesto Sobre la Renta(Income Tax
Law), payments of interest (which is deemed to include any amounts paid in excess of the original issue price), made by a Mexican issuer (including Petróleos Mexicanos) in respect of
notes or bonds and other debt securities

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to a Foreign Holder will generally be subject to a Mexican withholding tax assessed at a rate of 4.9%, if the following requirements are met:



If
the requirements for the 4.9% rate are not met, the rate of withholding tax on payments to a Foreign Holder will be 10%.

If
the effective beneficiaries, directly or indirectly, individually or jointly with related parties, receive more than 5% of the interest paid on notes or bonds and (1) own
directly or indirectly, individually or jointly, with related parties, more than 10% of the voting stock of the issuer or (2) are entities 20% or more of whose stock is owned directly or
indirectly, individually or jointly, by parties related to the issuer, the Mexican withholding tax rate applicable to payment of interest on notes or bonds may be significantly higher.

Payments
of interest made by Petróleos Mexicanos or Pemex-Exploration and Production, Pemex-Refining, and Pemex-Gas and Basic Petrochemicals in respect of the
1997 Securities, the 1998 Securities and the 1999 Securities to non-Mexican pension or retirement funds will be exempt from Mexican withholding taxes, provided that any such fund:



Additional Amounts.Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining, and
Pemex-Gas and Basic Petrochemicals have agreed, subject to specified exceptions and limitations, to:



If
Petróleos Mexicanos pays Additional Amounts in respect of such Mexican withholding taxes, any refunds received with respect to such Additional Amounts will be for the
account of Petróleos Mexicanos.

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Holders
or beneficial owners of the 1997 Securities, the 1998 Securities or the 1999 Securities may be requested to provide certain information or documentation necessary to enable
Petróleos Mexicanos or Pemex-Exploration and Production, Pemex-Refining, and Pemex-Gas and Basic Petrochemicals to establish the appropriate Mexican withholding tax rate
applicable to such holders or beneficial owners. In the event that the specified information or documentation concerning the holder or beneficial owner, if requested, is not provided on a timely
basis, the obligation of Petróleos Mexicanos or Pemex-Exploration and Production, Pemex-Refining, and Pemex-Gas and Basic Petrochemicals to pay Additional Amounts may be
limited.

Taxation of Dispositions.Capital gains resulting from the sale or other disposition of the 1997 Securities, the 1998
Securities or the 1999 Securities by a Foreign Holder will not be subject to Mexican income or withholding taxes.

Other Mexican Tax Considerations.Under the Income Tax Law, any discount received by a non-resident upon purchase
of the notes or bonds issued by a Mexican issuer, are deemed interest income, and therefore, subject to taxes in Mexico. Such interest income is calculated as the difference between the face value
(plus accrued interest not subject to withholding) and the purchase price of such notes or bonds. If any such note or bond is sold by a Mexican resident or a non-resident with a permanent
establishment in Mexico, such taxes must be paid by the seller, on behalf of the non-resident purchaser, within 15 days after the sale. However, when the sale is made by a Foreign
Holder, the Income Tax law is unclear as to how such taxes, if any, would be paid by or on behalf of the purchaser.

Transfer and Other Taxes.There are no Mexican stamp, registration, or similar taxes payable by a Foreign Holder in
connection with the purchase, ownership or disposition of the 1997 Securities, the 1998 Securities or the 1999 Securities. A Foreign Holder of the 1997 Securities, the 1998 Securities or the 1999
Securities will not be liable for Mexican estate, succession, gift, inheritance or similar tax with respect to such securities.

United States Taxation

This summary of certain U.S. federal income tax considerations deals principally with persons that will hold the 1997 Securities, the 1998 Securities or the 1999
Securities as capital assets and whose functional currency is the United States dollar. This summary does not purport to be a comprehensive description of all the tax considerations that may be
relevant to any particular investor, including tax considerations that arise from rules of general application or that are assumed to be known to investors. This summary generally does not address the
tax treatment of holders that may be subject to special tax rules, such as banks, insurance companies, tax-exempt organizations, dealers in securities or currencies, traders in securities
electing to mark to market, or persons that hold the 1997 Securities, the 1998 Securities or the 1999 Securities as a position in a "straddle" for tax purposes or as part of a "synthetic security" or
a "conversion transaction" or other integrated investment comprised of such securities and one or more other investments, nor does it address the tax treatment of holders that do not acquire the 1997
Securities, the 1998 Securities or the 1999 Securities at their issue price as part of the initial distribution. Investors who purchase the 1997 Securities, the 1998 Securities or the 1999 Securities
at a price other than the issue price should consult their tax advisor as to the possible applicability to them of the amortizable bond premium or market discount rules. As used in this section
"Taxation," the term "United States Holder" means an individual who is a citizen or resident of the United States, a U.S. domestic corporation, or any other person that is subject to U.S. federal
income taxation on a net income basis in respect of its investment in the 1997 Securities, the 1998 Securities or the 1999 Securities.

Taxation of Interest and Additional Amounts. A United States Holder will treat the gross amount of interest and Additional Amounts
(i.e., without reduction for Mexican withholding taxes) as ordinary

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interest income in respect of the 1997 Securities, the 1998 Securities or the 1999 Securities. Mexican withholding taxes paid at the appropriate rate applicable to the United States Holder will be
treated as foreign income taxes eligible for credit against such United States Holder's U.S. federal income tax liability, subject to generally applicable limitations and conditions, or, at the
election of such United States Holder, for deduction in computing such United States Holder's taxable income. Interest and Additional Amounts will constitute income from sources without the United
States for U.S. foreign tax credit purposes. Such income generally will constitute "passive income" or, in the case of certain United States Holders, "financial services income" for U.S. foreign tax
credit purposes unless the Mexican withholding tax applicable to the United States Holder is imposed at a rate of at least 5%, in which case such income generally will constitute "high withholding tax
interest."

The
calculation of foreign tax credits and, in the case of a United States Holder that elects to deduct foreign taxes, the availability of deductions, involves the application of rules
that depend on a United States Holder's particular circumstances. United States Holders should consult their own tax advisors regarding the availability of foreign tax credits and the treatment of
Additional Amounts.

Foreign
tax credits may not be allowed for withholding taxes imposed in respect of certain short-term or hedged positions in securities or in respect of arrangements in which
a United States Holder's expected
economic profits is insubstantial. United States Holders should consult their own advisors concerning the implications of these rules in light of their particular circumstances.

Taxation of Dispositions.Upon the sale, exchange or retirement of a 1997 Security, 1998 Security or 1999 Security, a United
States Holder will generally recognize a gain or loss equal to the difference between the amount realized (less any amounts attributable to accrued and unpaid interest not previously includible in
gross income, which will be taxable as ordinary income) and the holder's tax basis in such security. Gain or loss recognized by a United States Holder on the sale, redemption or other disposition of
the 1997 Securities, the 1998 Securities or the 1999 Securities generally will be long-term capital gain or loss if, at the time of disposition, the securities have been held for more than
one year. Long-term capital gain realized by an individual United States Holder is generally taxed at lower rates than short-term capital gains or ordinary income.

Non-United States Holders.Holders of the 1997 Securities, the 1998 Securities or the 1999 Securities that are,
with respect to the United States, non-resident aliens or foreign corporations (Non-United States Holders) will not be subject to U.S. federal income taxes, including
withholding taxes, on payments of interest on the securities so long as the requirements described under "Backup Withholding and Information Reporting" are satisfied, unless such income is effectively
connected with the conduct by the Non-United States Holder of a trade or business in the United States.

The
gain realized on any sale or exchange of the 1997 Securities, the 1998 Securities or the 1999 Securities by a Non-United States Holder will not be subject to U.S. federal
income tax, including withholding tax, unless (i) such gain is effectively connected with the conduct by the holder of a trade or business in the United States or (ii) in the case of
gain realized by an individual holder, the holder is present in the United States for 183 days or more in the taxable year of the sale and either (A) such gain or income is attributable
to an office or other fixed place of business maintained in the United States by such holder or (B) such holder has a tax home in the United States.

A
1997 Security, 1998 Security or 1999 Security held by an individual holder who at the time of death is a nonresident alien will not be subject to United States federal estate tax.

Backup Withholding and Information Reporting.The principal paying agent for the 1997 Securities, the 1998 Securities or the
1999 Securities will be required to file information returns with the Internal Revenue Service with respect to payments made to certain United States Holders of those securities. In addition, certain
United States Holders may be subject to a backup withholding tax in respect of such payments, unless they (i) provide their accurate taxpayer identification numbers to the principal paying

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agent and certify that they are not subject to backup withholding or (ii) otherwise establish an exemption from the backup withholding tax. Non-United States Holders may be
required to comply with applicable certification procedures to establish that they are not United States Holders in order to avoid the application of such information reporting requirements and backup
withholding tax.

DOCUMENTS ON DISPLAY

We are subject to the information requirements of the Securities Exchange Act of 1934, as amended. In accordance with these requirements, we file reports,
including annual reports on Form 20-F, and other information with the SEC. These materials, including this annual report, and the exhibits thereto, may be inspected and copied at
the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. In addition, any filings with the SEC we make electronically will be available to the public over the Internet at the SEC's web site at http://www.sec.gov.

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Item 11. Quantitative and Qualitative Disclosures About Market Risk

Risk Management and Financial Instruments

Because we generate significant revenues from international business, we face significant market risks from changes in interest rates, commodity prices and
foreign exchange rates. Managing risk exposure is a high priority for our senior management and risk management committee, which is composed of representatives of Petróleos Mexicanos
and the subsidiary entities, Banco de México, the Ministry of Finance and Public Credit and PMI. From August 1997 to December 1998, the risk management committee worked
with a group of outside consultants to tailor a system for our risk management. In December 1998, these consultants proposed a risk management program that includes:



During
2000, the Board of Directors of Petróleos Mexicanos approved a restructuring of the risk management committee and adopted certain risk management policies in
accordance with this new program.

During
2001, the Board of Directors of Petróleos Mexicanos approved a restructuring of the risk management area and created the Risk Management Deputy Direction, whose
objective is to develop the financial and operational risk management strategy for Petróleos Mexicanos and the subsidiary
entities and to establish institutional regulations consistent with a consolidated risk management approach.



Our exports and domestic sales are related to market prices in U.S. dollars, thus exposing us to fluctuations in international hydrocarbon prices. We share this
risk with the Mexican Government through our current fiscal regime, which creates joint responsibility among the different government entities and PEMEX to establish benchmarks to achieve the desired
risk profile. As a result, our revenues in 1998 were negatively affected due to a significant decline in hydrocarbon prices during that year. In order to lessen this effect, the Mexican Government,
along with PEMEX, agreed in March 1998, June 1998 and March 1999 to reduce the volume of our crude oil exports in conjunction with the major international oil producers to improve
international oil prices. In March and June 2000, the Mexican Government announced that Mexico would increase its crude oil production beginning in April 2000. In January 2001,
March 2001 and January 2002, the Mexican Government announced that it would again reduce Mexico's crude oil exports. Most recently, in June 2002 and September 2002, Mexico
announced that it would maintain its crude oil exports at their present levels through the end of 2002. See "Item 5Operating and Financial Review and
ProspectsGeneralExport Agreements." We do not hedge against fluctuations in crude oil prices.

In
the past few years, PMI entered into several long-term Maya crude oil supply agreements. Under these agreements, PMI provides purchasers with certain support mechanisms to
protect, under certain adverse market conditions, the investments the purchasers made in accordance with the agreements. Given the conditions of crude oil markets, placing additional volumes of crude
oil in more refineries that are able to process the heavy crude oil that Pemex-Exploration and Production produces supports the overall average price of crude oil exports. We perceive the risk under
these agreements as manageable, without the need for hedging instruments, since in the worst case market scenario the

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expected additional value derived from crude oil exports should exceed the expected cost of the support mechanisms.

We
do not attempt to actively manage the commodity price risk related to our future revenues, but instead to effectively manage our operational, financing and investment commitments, in
order to promote stable cash flows.



We balance our overall petroleum product and natural gas supply and demand, through PMI Trading, and manage our current and future short-term price
risk, by entering into energy futures, forwards, swaps and options in various markets. Derivative commodity instruments are only used for offsetting market exposures arising from the company's spot
commercial operations; thus, energy derivatives are held for purposes other than trading. Our benchmark for petroleum product and natural gas commercial activities is the prevailing market price. We
use "value at risk" analysis using statistical tools, including "risk metric" methodology, to measure the commodity price risks daily. This includes managed physical commodities as well as hedging
derivatives because PMI Trading manages this risk on a combined basis. As of December 31, 2000, the value at risk as measured against the above-mentioned benchmark was U.S.
$2.48 million.

As
described above under "Item 4Information on the CompanyBusiness OverviewGas and Basic PetrochemicalsNatural Gas Risk Management,"
we have entered into a number of three-year agreements with Mexican industrial consumers that hold outstanding natural gas price hedging instruments to sell natural gas at a fixed
reference price of U.S. $4.00 per million BTUs. As part of our risk management strategy, we have also entered into a number of derivative instruments to hedge these fixed price sales under the
three-year agreements, while locking in a profit margin; we entered into these derivative instruments for approximately 91% of the total volume of natural gas sold under these
three-year fixed price agreements.

The
risk management strategy used to hedge these fixed price sales left us with an exposure to basis risk arising from the difference between the index used to hedge the natural gas
sales at a fixed price and the index used as reference to mark to market these contracts. This basis risk is treated as an inefficiency of the transaction and may impact our earnings in a period other
than the one during which the transaction was realized.



A significant amount of our revenues is derived from exports of crude oil and petroleum products, which are priced and payable in U.S. dollars. Moreover, our
revenues net of the IEPS Tax from domestic sales of petroleum products and petrochemicals are related to the international dollar-denominated prices of these products. By contrast, most of our costs
of sales and other expenses, other than hydrocarbon duties, are payable in pesos and are not linked to the U.S. dollar. As a result, the peso's depreciation against the U.S. dollar increases our
income in peso terms. Appreciation of the peso relative to the U.S. dollar has the opposite effect.

Because
we generate significant U.S. dollar revenues, we generally borrow in U.S. dollars. Petróleos Mexicanos also borrows in other foreign currencies if those currencies
offer advantageous financing
rates. Since 1991, Petróleos Mexicanos has entered into currency swaps to hedge against movements in exchange rates when it borrows in currencies other than U.S. dollars. In 1995,
Petróleos Mexicanos' hedging activities consisted primarily of interest-rate and currency swaps. In 1996 and 1997, Petróleos Mexicanos entered into currency
forwards to fix the Japanese yen exchange rate for all 1997 Japanese yen debt-service expenses, including principal and interest payments, and U.S. dollar currency swaps of new
non-dollar debt obligations. There were no open positions on these forwards as of December 31, 2000. In 2000, Petróleos Mexicanos did not enter into any new contracts
for interest-rate

159

---

or peso/dollar forwards. In 2000, Petróleos Mexicanos did not enter into any new cross-currency swaps. At year end 2000, U.S. $1,068 million of these swaps were outstanding.

In
2001, Petróleos Mexicanos entered into various cross-currency swaps to hedge currency risk arising from Euro and Japanese yen-denominated debt obligations
issued by Pemex Project Funding Master Trust. As of December 31, 2001, the aggregate notional amount of these new swaps was U.S. $884 million.

We
capitalize our debt-related foreign exchange losses on our balance sheet, but only up to the increase in the restated value of our fixed assets in the same period. We
capitalized our debt-related foreign exchange loss of Ps. 19,793 million in 1998. In 1999, we did not capitalize debt-related foreign exchange losses as the net exchange
result was a gain that was recorded in the income statement. In 2000, we capitalized debt-related foreign exchange losses of Ps. 140 million resulting from foreign exchange losses
of certain subsidiary entities (the remaining subsidiary entities recorded foreign exchange gains). We do not capitalize debt-related foreign exchange gains nor foreign exchange gains or
losses related to its operations, which consist mainly of gains and losses on receivables for export sales and payables to foreign suppliers; we record these gains or losses in its results of
operations. We recorded foreign exchange gains from operations of Ps. 984 million in 1998. As we had net debt-related foreign exchange gains in 1999 and 2000, we recorded total net
foreign exchange gains from operations and debt of Ps. 2,950 million in 1999 and Ps. 877 million in 2000.



Petróleos Mexicanos is exposed to increases in interest rates because the interest rate on most of its debt and the minimum guaranteed dividend
rate on the Certificates of Contribution "A" fluctuate with changes in international interest rates. To mitigate this risk, Petróleos Mexicanos uses interest-rate swaps and
option contracts to reduce its exposure and to maintain an appropriate mix of fixed and floating rate exposure in its debt portfolio. Petróleos Mexicanos' interest rate hedging
activities consist principally of interest-rate swaps that effectively convert floating rate exposure into fixed rate payments and, to a lesser extent, interest-rate caps,
interest-rate floors and interest-rate collars, as described below.

Interest-rate caps.In 1994, our hedging committee eliminated some of the protection provided by its
interest-rate swaps by selling interest-rate caps. Under these agreements, Petróleos Mexicanos receives a
premium and, in return, is obligated to pay the holder of the cap, on the exercise date of such cap, the amount calculated with reference to a notional principal amount, by which the floating interest
rate for that date exceeds the rate specified in the cap agreement. As of December 31, 2000 the aggregate notional amount of written caps totaled U.S. $100 million, with fixed
interest-rate caps ranging from 9.5% to 10% and with expiration dates in 2001.

Interest-rate floors.Petróleos Mexicanos did not enter into any interest-rate floor
sales or purchases in 2000, nor was Petróleos Mexicanos subject to any interest-rate floor agreements as of December 31, 2000.

Interest-rate swaps.Under interest-rate swap agreements, we are obligated to make payments based on
a fixed interest rate and are entitled to receive payments based on the floating three-month LIBOR. As of December 31, 2000 Petróleos Mexicanos was a party to
interest-rate swap agreements totaling an aggregate notional amount of U.S. $350 million, with an average fixed interest rate of approximately 7.3180% and a weighted average term of
approximately 1.25 years. As of December 31, 2001, the notional amount outstanding was U.S. $100 million, maturing in 2004.

Interest-rate collars.In 2000, Petróleos Mexicanos neither purchased, nor remained subject to,
any interest-rate collars.

160

---

The
market value of Petróleos Mexicanos' aggregate derivatives position was negative U.S. $142.7 million (negative Ps. 1,358.4 million) as of
December 31, 1999 and negative U.S. $246.3 million (negative Ps. 2,357.7 million) as of December 31, 2000.

The
effects on the consolidated statements of income of entering into "swap" transactions are recorded as incurred and when the precise settlement amounts are known. The effects on the
consolidated statements of income of other derivative instruments, including premiums paid or received, are recognized at the date of receipt or payment. Such amounts are included in the consolidated
statements of income within the "Interest, net" caption. See Note 10 to the Financial Statements.

As
a creditor, Petróleos Mexicanos faces the risk that counterparties will not pay their obligations. To minimize this risk, Petróleos Mexicanos monitors
counterparties' creditworthiness and exposure to derivative instruments. Petróleos Mexicanos also deals exclusively with major financial institutions and maintains a diversified
portfolio.



As discussed in Note 10 to the Financial Statements Petróleos Mexicanos currently holds two equity swaps. Petróleos Mexicanos
entered into an equity swap with Morgan Guaranty Trust Company of New York (currently J.P. Morgan Chase Bank, which we refer to as "J.P. Morgan Chase") with respect to shares of Repsol YPF, S.A.
("Repsol") sold by P.M.I. Holdings B.V. to Strategic Money Management Company B.V. ("SMM trust"). Concurrently with this sale, Petróleos Mexicanos received from SMM trust a right
of first refusal in the event that SMM trust were to sell the Repsol shares. In 1996, the transaction was renewed and restructured as a call-spread swap. At December 31, 1998, the
market value of Repsol shares was U.S. $54.61 per share. In April 1999, the Repsol shares split three-to-one into 44,985,000 shares, and the strike price was adjusted to
U.S. $10.37 per share. To allow Petróleos Mexicanos to participate in all of the appreciation of the value of the shares, beginning in October 1999 Petróleos
Mexicanos unwound the collar that was agreed to in 1996, keeping the strike price at U.S. $10.37 per share. Upon the maturity of this swap in March 2000, Petróleos Mexicanos
restructured the swap with J.P. Morgan Chase, resulting in a swap with respect to 26,427,781 Repsol shares divided in three tranches, having one-, two- and
three-year maturities, respectively. As a result of the maturity of the original swap and its restructuring, Petróleos Mexicanos received 18,557,219 Repsol shares as
payment. In connection with the unwinding of the collar as well as the restructuring of the swap, Petróleos Mexicanos recognized a net gain of U.S. $113 million. Upon the
maturity of the one-year tranche of the restructured J.P. Morgan Chase swap in 2001, Petróleos Mexicanos entered into a new swap with J.P. Morgan Chase for another three
months, commencing in April 2001. Since then, this swap has been renewed periodically, and, upon its expiration in June 2002, Petróleos Mexicanos entered into a new swap
with ABN Amro Bank N.V. for another three months. Upon the maturity of the two-year tranche of the restructured J.P. Morgan Chase swap in April 2002, Petróleos
Mexicanos entered into a new swap with BNP Paribas, France for three months.

In
addition, in January 2000, Petróleos Mexicanos entered into a second equity swap with Chase Manhattan International Limited with respect to 13,679,704 Repsol
shares sold to that bank and maturing in three years. As of December 31, 2000 the market value of the Repsol shares was U.S. $16.125 per share.

The
following tables set forth our portfolio of debt and derivative financial instruments that are sensitive to changes in interest rates as of December 31, 2000. It should be
noted that:



161

---



162

---





Quantitative Disclosure of Market Risk (Interest Rate Sensitivity) as of December 31, 2000 (1)

|                            |                                  | Year of Expected Maturity Date |           
|--------------------------- | -------------------------------- | ------------------------------ | ----------
|
|
|Liabilities                 |                                  |                                |           
|Outstanding debt            |                                  |                                |           
|                            | Fixed rate (U.S. dollars)        |                                | 7,511,034 
|                            |                                  | Average Interest Rate (%)      |           
|                            | Fixed rate (Japanese yen)        |                                | 1,078,196 
|                            |                                  | Average Interest Rate (%)      |           
|                            | Fixed rate (British pounds)      |                                |          
|                            |                                  | Average Interest Rate (%)      |           
|                            | Fixed rate (French francs)       |                                | 707       
|                            |                                  | Average Interest Rate (%)      |           
|                            | Fixed rate (Austrian schillings) |                                | 323,550   
|                            |                                  | Average Interest Rate (%)      |           
|                            | Fixed rate (Deutsche marks)      |                                | 6,017     
|                            |                                  | Average Interest Rate (%)      |           
|                            | Fixed rate (Euro)                |                                |          
|                            |                                  | Average Interest Rate (%)      |           
|Total fixed rate debt       |                                  | 8,919,504                      |           
|                            |                                  |                                |           
|                            | Variable rate (U.S. dollars)(2)  |                                | 29,433,608
|                            | Variable rate (Swiss francs)     |                                | 1,110     
|                            | Variable rate (Deutsche marks)   |                                | 6,129     
|                            | Variable rate (Belgian francs)   |                                | 511       
|                            |                                  |                                |           
|Total variable rate debt(1) |                                  | 29,441,358                     |           
|                            |                                  |                                |           
|                            |                                  | Total Debt(3)                  |           
|                            |                                  |                                |           

---

Note: Numbers may not total due to rounding.

Source: Petróleos Mexicanos.

163

---



Quantitative Disclosure of Market Risk (Interest Rate Risk) as of December 31, 2000(1)    Derivative financial instruments held or issued for purposes other than trading:

|                          |                                    | Year of Expected Maturity Date          |                         
|------------------------- | ---------------------------------- | --------------------------------------- | ------------------------
|
|
|Interest Rate Derivatives |                                    |                                         |                         
|Hedging Instruments(2)    |                                    |                                         |                         
|                          | Interest Rate Swaps (U.S. Dollars) |                                         |                         
|                          |                                    | Variable to fixed                       |                         
|                          |                                    |                                         | Average pay rate (%)    
|                          |                                    |                                         | Average receive rate (%)
|                          |                                    | Variable to variable                    |                         
|                          |                                    |                                         | Average pay rate (%)    
|                          |                                    |                                         | Average receive rate (%)
|                          | Cross-Currency Swaps               |                                         |                        
|                          |                                    | Euro to U.S. dollars                    |                         
|                          |                                    | Italian lire to U.S. dollars            |                         
|                          |                                    | British pounds to U.S. Dollars          |                         
|Non-Hedging Instruments   |                                    |                                         |                         
|                          | Caps Written                       |                                         | 957,220                 
|                          |                                    | Average receive rate (strike price) (%) |                         
|                          |                                    | Average pay rate (%)                    |                         
|                          |                                    |                                         |                         

---

|Note:   | Numbers may not total due to rounding.                                                                                                                              
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1)     | The information in this table has been calculated using exchange rate of Ps. 9.5722 = U.S. $1.00.                                                                   
|(2)     | We have entered into derivative transactions to hedge against interest-rate risk in connection with $350 million of our variable-rate, U.S. dollar-denominated debt.
|Source: | Petróleos Mexicanos.                                                                                                                                                

164

---

Item 12. Description of Securities Other than Equity Securities

Not applicable.

Item 13. Defaults, Dividend Arrearages and Delinquencies

Not applicable.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

Not applicable.

Item 15. Controls and Procedures

Not applicable.

Item 16. [Reserved]

Item 17. Financial Statements

Not applicable.

Item 18. Financial Statements

Please refer to Item 19(a) for a list of all Financial Statements filed as a part of this Form 20-F.

165

---

Item 19. Exhibits

(a)  List of Financial Statements:

PageReport of Mancera, S.C. (a member practice of Ernst & Young Global), Independent Auditors

F-2Consolidated Balance Sheets as of December 31, 2000 and 1999

F-4Consolidated Statements of Operations for the years ended December 31, 2000, 1999 and 1998

F-5Consolidated Statements of Changes in Equity for the years ended December 31, 2000, 1999 and 1998

F-6Consolidated Statements of Changes in Financial Position for the years ended December 31, 2000, 1999 and 1998

F-7Notes to the Consolidated Financial Statements

F-8Unaudited Supplemental Consolidated Information Prepared on a Price-level Adjusted Basis

F-80Appendix: Reports of Other Independent Accountants

F/A-1Report of PricewaterhouseCoopers of Financial Position of Integrated Trade Systems, Inc.

F/A-2Report of PricewaterhouseCoopers of Financial Position of P.M.I. Trading Limited Mexican Branch

F/A-4Report of PricewaterhouseCoopers of Financial Position of P.M.I. Holdings North America, Inc.

F/A-6Report of PricewaterhouseCoopers of Financial Position of P.M.I. Holdings N.V.

F/A-8Report of PricewaterhouseCoopers of Financial Position of P.M.I. Holdings B.V., Amsterdam

F/A-11Report of PricewaterhouseCoopers of Financial Position of P.M.I. Norteamérica, S.A. de C.V.

F/A-14Report of PricewaterhouseCoopers of Financial Position of P.M.I. Marine Limited Mexican Branch

F/A-16Report of PricewaterhouseCoopers of Financial Position of P.M.I. Services B.V., Amsterdam

F/A-18Report of PricewaterhouseCoopers of Financial Position of P.M.I. Services North America, Inc.

F/A-21Report of PricewaterhouseCoopers of Financial Position of Kot Insurance Company, Ltd.

F/A-23


(b)  List of Exhibits

166

---

167

---

Exhibit 4.4
to Amendment No. 1 to Petróleos Mexicanos' annual report on Form 20-F/A (File No. 0-99) on November 15, 2002 and incorporated by reference
herein).

168

---

SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant certifies that it meets all of the requirements for
filing on Form 20-F/A and has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.

| |  | PETROLEOS MEXICANOS
| |  | -------------------
| |  | By:                

Date: December 2, 2002

---

CERTIFICATIONS

I,
Raúl Muñoz Leos, certify that:

|Date: December 2, 2002 |  |  | /s/RAÚL MUÑOZ LEOSName: Raúl Muñoz Leos
Title: Director General/Chief Executive Officer
|---------------------- |  |  | ---------------------------------------------------------------------------------------

---

CERTIFICATIONS

I,
Juan José Suárez Coppel, certify that:

|Date: December 2, 2002 |  |  | /s/JUAN JOSÉ SUÁREZ COPPELName: Juan José Suárez Coppel
Title: Chief Financial Officer
|---------------------- |  |  | --------------------------------------------------------------------------------------

---



INDEX TO FINANCIAL STATEMENTS

|                                                                                                              |                                                                                                 | Page 
|------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------- | -----
|Report of Mancera, S.C. (a member practice of Ernst & Young Global), Independent Auditors                     |                                                                                                 | F-2  
|Consolidated Balance Sheets as of December 31, 2000 and 1999                                                  |                                                                                                 | F-4  
|Consolidated Statements of Operations for the years ended December 31, 2000, 1999 and 1998                    |                                                                                                 | F-5  
|Consolidated Statements of Changes in Equity for the years ended December 31, 2000, 1999 and 1998             |                                                                                                 | F-6  
|Consolidated Statements of Changes in Financial Position for the years ended December 31, 2000,
1999 and 1998 |                                                                                                 | F-7  
|Notes to the Consolidated Financial Statements                                                                |                                                                                                 | F-8  
|Unaudited Supplemental Consolidated Information Prepared on a Price-level Adjusted Basis                      |                                                                                                 | F-80 
|AppendixReports of Other Independent Accountants                                                             |                                                                                                 | F/A-1
|                                                                                                              | Report of PricewaterhouseCoopers of Financial Position of Integrated Trade Systems, Inc.        |      
|                                                                                                              | Report of PricewaterhouseCoopers of Financial Position of P.M.I. Trading Limited Mexican Branch |      
|                                                                                                              | Report of PricewaterhouseCoopers of Financial Position of P.M.I. Holdings North America, Inc.   |      
|                                                                                                              | Report of PricewaterhouseCoopers of Financial Position of P.M.I. Holdings N.V.                  |      
|                                                                                                              | Report of PricewaterhouseCoopers of Financial Position of P.M.I. Holdings B.V., Amsterdam       |      
|                                                                                                              | Report of PricewaterhouseCoopers of Financial Position of P.M.I. Norteamérica, S.A. de C.V.     |      
|                                                                                                              | Report of PricewaterhouseCoopers of Financial Position of P.M.I. Marine Limited Mexican Branch  |      
|                                                                                                              | Report of PricewaterhouseCoopers of Financial Position of P.M.I. Services B.V., Amsterdam       |      
|                                                                                                              | Report of PricewaterhouseCoopers of Financial Position of P.M.I. Services North America, Inc.   |      
|                                                                                                              | Report of PricewaterhouseCoopers of Financial Position of Kot Insurance Company, Ltd.           |      

F-1

---



REPORT OF THE INDEPENDENT AUDITORS

To
the General Comptroller Office
and the Board of Directors of
Petróleos Mexicanos

We
have audited the accompanying consolidated balance sheets of Petróleos Mexicanos, Subsidiary Entities and Subsidiary Companies as of December 31, 2000 and 1999,
and the related consolidated statements of operations, changes in equity and changes in financial position for each of the three years in the period ended December 31, 2000. These financial
statements are the responsibility of the Management of Petróleos Mexicanos, Subsidiary Entities and Subsidiary Companies. Our responsibility is to express an opinion on these financial
statements based on our audits. We did not audit the financial statements of certain Subsidiary Companies, whose statements reflect total assets constituting 1% and 2% in 2000 and 1999, respectively,
and total revenues constituting 8% in 2000 and 1999 and 3% in 1998, of the related consolidated totals. Those financial statements were audited by other auditors whose reports have been furnished to
us and are included herein, and our opinion, insofar as it relates to data included for those Subsidiary Companies, is based solely on the reports of the other auditors.

We
conducted our audits in accordance with auditing standards generally accepted in Mexico and the United States. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement and are prepared in accordance with accounting principles generally accepted in Mexico. An audit includes
examining, on a test basis, evidence supporting the amounts (including the reconciliation of the financial statements of Petróleos Mexicanos, the Subsidiary Entities and Subsidiary
Companies to generally accepted accounting principles in the United States) and disclosures made in the consolidated financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by Management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of other auditors provide a reasonable
basis for our opinion.

The
effects of inflation are recognized in conformity with Financial Reporting Standard (NIF) 06 BIS "A" Section A (see Note 2 b) to the accompanying consolidated
financial statements), which affect only the equity caption titled, "Revaluation surplus". The difference between this standard and accounting
principles generally accepted in Mexico, Bulletin B-10, is disclosed in Note 14 to the consolidated financial statements.

In
our opinion, based on our audits and the reports of other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Petróleos Mexicanos, Subsidiary Entities and Subsidiary Companies as of December 31, 2000 and 1999, and the consolidated results of their operations,
changes in equity and changes in financial position for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in Mexico and
as to the recognition of inflation, in accordance with NIF 06 BIS "A" section A (see Notes 2 b) and 14 to the consolidated financial statements), which differ in certain respects from
those followed in the United States (see Note 18 to the consolidated financial statements).

F-2

---

As
discussed in Note 2 (s), the accompanying consolidated financial statements as of and for the years ended December 31, 2000, 1999, and 1998 have been restated with
respect to estimated dismantlement and abandonment costs, and certain derivative transactions. Additionally, the accompanying US GAAP reconciliation as of and for the years ended December 31,
2000, 1999, and 1998 has also been restated as discussed in Note 18 I (t) for certain derivative transactions and items related to exploration and drilling costs.

| |  | Mancera, S.C.
A Member Practice of Ernst & Young Global
| |  | -------------------------------------------------------
| |  | /s/J. ALFONSO CAMPAÑA R.J. Alfonso Campaña R.          

Mexico City, Mexico
May 14, 2001, except for Note 2 (s), as to which the date is September 27, 2002, and
Note 18 I (t), as to which the date is November 27, 2002

F-3

---



PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES  CONSOLIDATED BALANCE SHEETS  AS OF DECEMBER 31, 2000 and 1999  (In thousands of pesos and thousands of U.S. dollars)

|             |                                                                                               | 2000                                                      |            | 2000                         |            | 1999        |            
|------------ | --------------------------------------------------------------------------------------------- | --------------------------------------------------------- | ---------- | ---------------------------- | ---------- | ----------- | -----------
|
|ASSETS:      |                                                                                               |                                                           |            |                              |            |             |            
|             | Current assets:                                                                               |                                                           |            |                              |            |             |            
|             |                                                                                               | Cash and cash equivalents                                 |            | US$                          | 2,907,048  |             | Ps.        
|             |                                                                                               | Accounts, notes receivable and other                      |            |                              | 5,923,567  |             |            
|             |                                                                                               | Inventories, net                                          |            |                              | 2,597,536  |             |            
|             |                                                                                               |                                                           |            |                              |            |             |            
|             |                                                                                               |                                                           |            | Total current assets         |            |             | 11,428,151 
|             | Properties, net                                                                               |                                                           |            | 40,557,508                   |            |             | 388,224,576
|             | Intangible asset derived from the actuarial computation of labor obligations and other assets |                                                           |            | 6,879,338                    |            |             | 65,850,397 
|             |                                                                                               |                                                           |            |                              |            |             |            
|             |                                                                                               |                                                           |            | Total assets                 |            | US$         | 58,864,997 
|             |                                                                                               |                                                           |            |                              |            |             |            
|LIABILITIES: |                                                                                               |                                                           |            |                              |            |             |            
|             | Current liabilities:                                                                          |                                                           |            |                              |            |             |            
|             |                                                                                               | Current portion of long-term debt                         |            | US$                          | 4,226,518  |             | Ps.        
|             |                                                                                               | Current portion of notes payable to contractors           |            |                              | 130,138    |             |            
|             |                                                                                               | Suppliers                                                 |            |                              | 2,366,409  |             |            
|             |                                                                                               | Accounts payable and accrued expenses                     |            |                              | 637,529    |             |            
|             |                                                                                               | Taxes payable                                             |            |                              | 2,643,998  |             |            
|             |                                                                                               |                                                           |            |                              |            |             |            
|             |                                                                                               |                                                           |            | Total current liabilities    |            |             | 10,004,592 
|             |                                                                                               | Long-term debt                                            |            |                              | 10,903,452 |             |            
|             |                                                                                               | Notes payable to contractors                              |            |                              | 1,687,467  |             |            
|             |                                                                                               | Sale of future accounts receivable                        |            |                              | 5,429,951  |             |            
|             |                                                                                               | Reserve for sundry creditors and others                   |            |                              | 636,722    |             |            
|             |                                                                                               | Reserve for retirement payments, pensions and indemnities |            |                              | 14,469,192 |             |            
|             |                                                                                               |                                                           |            |                              |            |             |            
|             |                                                                                               |                                                           |            | Total liabilities            |            |             | 43,131,376 
|             |                                                                                               |                                                           |            |                              |            |             |            
|EQUITY:      |                                                                                               |                                                           |            |                              |            |             |            
|             | Certificates of Contribution "A"                                                              |                                                           |            | 1,067,932                    |            |             | 10,222,463 
|             | Specific oil-field exploration and depletion reserve                                          |                                                           |            | 1,325,868                    |            |             | 12,691,475 
|             | Revaluation surplus                                                                           |                                                           |            | 18,183,299                   |            |             | 174,054,170
|             | Retained (losses) earnings:                                                                   |                                                           |            |                              |            |             |            
|             |                                                                                               |                                                           |            | Prior years                  |            |             | (2,784,349 
|             |                                                                                               |                                                           |            | Current year                 |            |             | (2,059,129 
|             |                                                                                               |                                                           |            |                              |            |             |            
|             |                                                                                               |                                                           | (4,843,478 | )                            |            | (46,362,736 | )          
|             |                                                                                               |                                                           |            |                              |            |             |            
|             |                                                                                               |                                                           |            | Total equity                 |            |             | 15,733,621 
|             |                                                                                               |                                                           |            |                              |            |             |            
|             |                                                                                               |                                                           |            | Total liabilities and equity |            | US$         | 58,864,997 
|             |                                                                                               |                                                           |            |                              |            |             |            

See
accompanying notes.

F-4

---



PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES  CONSOLIDATED STATEMENTS OF OPERATIONS  FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 and 1998  (In thousands of pesos and thousands of U.S.
dollars)

|                                                                                              |  | 2000 |            | 2000 |     | 1999        |   | 1998 |            
|--------------------------------------------------------------------------------------------- |  | ---- | ---------- | ---- | --- | ----------- | - | ---- | -----------
|
|Net sales:                                                                                    |  |      |            |      |     |             |   |      |            
|Domestic                                                                                      |  | US$  | 30,596,967 |      | Ps. | 292,880,287 |   | Ps.  | 226,137,090
|Export                                                                                        |  |      | 18,322,570 |      |     | 175,387,308 |   |      | 108,676,689
|                                                                                              |  |      |            |      |     |             |   |      |            
|                                                                                              |  |      | 48,919,537 |      |     | 468,267,595 |   |      | 334,813,779
|Foreign exchange gain, net                                                                    |  |      | 91,592     |      |     | 876,736     |   |      | 2,949,615  
|Other revenues                                                                                |  |      | 997,033    |      |     | 9,543,799   |   |      | 7,215,362  
|                                                                                              |  |      |            |      |     |             |   |      |            
|Total revenues                                                                                |  |      | 50,008,162 |      |     | 478,688,130 |   |      | 344,978,756
|Costs and operating expenses:                                                                 |  |      |            |      |     |             |   |      |            
|Cost of sales                                                                                 |  |      | 15,990,038 |      |     | 153,059,837 |   |      | 113,512,525
|Transportation and distribution expenses                                                      |  |      | 1,317,269  |      |     | 12,609,161  |   |      | 10,867,571 
|Administrative expenses                                                                       |  |      | 2,817,816  |      |     | 26,972,703  |   |      | 21,076,266 
|Interest, net                                                                                 |  |      | 694,930    |      |     | 6,652,005   |   |      | 7,155,959  
|Other expenses                                                                                |  |      | 557,577    |      |     | 5,337,243   |   |      | 4,696,975  
|                                                                                              |  |      |            |      |     |             |   |      |            
|Total costs and operating expenses                                                            |  |      | 21,377,630 |      |     | 204,630,949 |   |      | 157,309,296
|Income before hydrocarbon extraction duties, special tax on production and services and other |  |      | 28,630,532 |      |     | 274,057,181 |   |      | 187,669,460
|Hydrocarbon extraction duties and other                                                       |  |      | 23,423,148 |      |     | 224,211,053 |   |      | 120,476,988
|Special tax on production and services (IEPS)                                                 |  |      | 7,266,513  |      |     | 69,556,520  |   |      | 88,349,243 
|                                                                                              |  |      |            |      |     |             |   |      |            
|                                                                                              |  |      | 30,689,661 |      |     | 293,767,573 |   |      | 208,826,231
|                                                                                              |  |      |            |      |     |             |   |      |            
|Net loss for the year                                                                         |  | US$  | (2,059,129 | )    | Ps. | (19,710,392 | ) | Ps.  | (21,156,771
|                                                                                              |  |      |            |      |     |             |   |      |            

See accompanying notes.

F-5

---



PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES  CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY  FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 and 1998  (In thousands of pesos and
thousands of U.S. dollars)

|                                             |                                                                                                                 |     |            | Specific
oil-field
exploration
and
depletion
reserve |     |            |           |     |             |            |     |             |            
|-------------------------------------------- | --------------------------------------------------------------------------------------------------------------- | --- | ---------- | ---------------------------------------------------- | --- | ---------- | --------- | --- | ----------- | ---------- | --- | ----------- | -----------
|
|
|
|Balances at December 31, 1997    As Restated |                                                                                                                 | Ps. | 10,222,463 |                                                      | Ps. | 8,227,056  |           | Ps. | 112,959,504 |            | Ps. | 14,580,004  |            
|                                             | Transfer to prior years' retained earnings                                                                      |     |            |                                                     |     |            |          |     |             |           |     |             | 7,133,256  
|                                             | Other equity movements.                                                                                         |     |            |                                                     |     |            |          |     |             |           |     |             | (1,237,056 
|                                             | Minimum guarantee dividends paid to the Mexican Government approved by the Board of Directors on May 7, 1998    |     |            |                                                     |     |            |          |     |             |           |     |             | (5,803,941 
|                                             | Adjustment to retained earnings for increase in Pemex-Petroquímicas' accumulated deficit                        |     |            |                                                     |     |            |          |     |             |           |     |             | (267,701   
|                                             | Increase in specific oil-field exploration and depletion reserve                                                |     |            |                                                     |     |            | 167,076   |     |             |           |     |             |           
|                                             | Effect of restatement in the year, net                                                                          |     |            |                                                     |     |            |          |     |             | 32,745,269 |     |             |           
|                                             | Net loss for the year                                                                                           |     |            |                                                     |     |            |          |     |             |           |     |             |           
|                                             |                                                                                                                 |     |            |                                                      |     |            |           |     |             |            |     |             |            
|Balances at December 31, 1998    As Restated |                                                                                                                 |     | 10,222,463 |                                                      |     | 8,394,132  |           |     | 145,704,773 |            |     | 14,404,562  |            
|                                             | Transfer to prior years' retained earnings                                                                      |     |            |                                                     |     |            |          |     |             |           |     |             | (11,587,990
|                                             | Other equity movements                                                                                          |     |            |                                                     |     |            |          |     |             |           |     |             | 968,774    
|                                             | Minimum guarantee dividends paid to the Mexican Government approved by the Board of Directors on August 3, 1999 |     |            |                                                     |     |            |          |     |             |           |     |             | (3,063,747 
|                                             | Dividends paid to the Mexican Government approved by the Board of Directors on August 3, 1999                   |     |            |                                                     |     |            |          |     |             |           |     |             | (779,517   
|                                             | Increase in specific oil-field exploration and depletion reserve                                                |     |            |                                                     |     |            | 2,055,350 |     |             |           |     |             |           
|                                             | Effect of restatement in the year, net                                                                          |     |            |                                                     |     |            |          |     |             | 16,306,888 |     |             |           
|                                             | Net loss for the year                                                                                           |     |            |                                                     |     |            |          |     |             |           |     |             |           
|                                             |                                                                                                                 |     |            |                                                      |     |            |           |     |             |            |     |             |            
|Balances at December 31, 1999    As Restated |                                                                                                                 |     | 10,222,463 |                                                      |     | 10,449,482 |           |     | 162,011,661 |            |     | (57,918     | )          
|                                             | Transfer to prior years' retained earnings                                                                      |     |            |                                                     |     |            |          |     |             |           |     |             | (21,156,771
|                                             | Other equity movements                                                                                          |     |            |                                                     |     |            |          |     |             |           |     |             | (68,692    
|                                             | Minimum guarantee dividends paid to the Mexican Government approved by the Board of Directors on May 9, 2000    |     |            |                                                     |     |            |          |     |             |           |     |             | (5,137,889 
|                                             | Dividends paid to the Mexican Government approved by the Board of Directors on May 9, 2000                      |     |            |                                                     |     |            |          |     |             |           |     |             | (231,074   
|                                             | Increase in specific oil-field exploration and depletion reserve                                                |     |            |                                                     |     |            | 2,241,993 |     |             |           |     |             |           
|                                             | Effect of restatement in the year, net                                                                          |     |            |                                                     |     |            |          |     |             | 12,042,509 |     |             |           
|                                             | Net loss for the year                                                                                           |     |            |                                                     |     |            |          |     |             |           |     |             |           
|                                             |                                                                                                                 |     |            |                                                      |     |            |           |     |             |            |     |             |            
|Balances at December 31 2000As Restated      |                                                                                                                 | Ps. | 10,222,463 |                                                      | Ps. | 12,691,475 |           | Ps. | 174,054,170 |            | Ps. | (26,652,344 | )          
|                                             |                                                                                                                 |     |            |                                                      |     |            |           |     |             |            |     |             |            

See accompanying notes.

F-6

---



PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES  CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION  FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 and 1998  (In thousands of pesos
and thousands of U.S. dollars)

|                                                   |                                                                                                            | 2000                                                  |                                                           | 2000       |     | 1999       |             | 1998 |           
|-------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | ----------------------------------------------------- | --------------------------------------------------------- | ---------- | --- | ---------- | ----------- | ---- | ----------
|
|Operating activities:                              |                                                                                                            |                                                       |                                                           |            |     |            |             |      |           
|                                                   | Net loss                                                                                                   |                                                       | US$                                                       | (2,059,129 | )   | Ps.        | (19,710,392 | )    | Ps.       
|                                                   |                                                                                                            | Charges to operations not requiring the use of funds: |                                                           |            |     |            |             |      |           
|                                                   |                                                                                                            |                                                       | Depreciation                                              |            |     | 2,722,565  |             |      | 26,060,936
|                                                   |                                                                                                            |                                                       | Reserve for retirement payments, pensions and indemnities |            |     | 3,123,786  |             |      | 29,901,504
|                                                   |                                                                                                            |                                                       | Specific oil-field exploration and depletion reserve      |            |     | 840,802    |             |      | 8,048,328 
|                                                   |                                                                                                            |                                                       | Reserve for sundry creditors and others                   |            |     | 75,155     |             |      | 719,397   
|                                                   |                                                                                                            |                                                       |                                                           |            |     |            |             |      |           
|                                                   |                                                                                                            |                                                       | 4,703,179                                                 |            |     | 45,019,773 |             |      | 36,948,200
|Variances in:                                      |                                                                                                            |                                                       |                                                           |            |     |            |             |      |           
|                                                   | Accounts, notes receivable and other                                                                       |                                                       |                                                           | (983,863   | )   |            | (9,417,731  | )    |           
|                                                   | Inventories                                                                                                |                                                       |                                                           | (903,189   | )   |            | (8,645,509  | )    |           
|                                                   | Intangible asset derived from the actuarial computation of labor obligations and other assets              |                                                       |                                                           | (980,912   | )   |            | (9,389,482  | )    |           
|                                                   | Suppliers                                                                                                  |                                                       |                                                           | 616,369    |     |            | 5,900,009   |      |           
|                                                   | Accounts payable and accrued expenses                                                                      |                                                       |                                                           | 72,580     |     |            | 694,744     |      |           
|                                                   | Taxes payable                                                                                              |                                                       |                                                           | 67,225     |     |            | 643,493     |      |           
|                                                   | Reserve for sundry creditors and others                                                                    |                                                       |                                                           | 58,878     |     |            | 563,594     |      |           
|                                                   | Reserve for retirement payments, pensions and Indemnities                                                  |                                                       |                                                           | 514,580    |     |            | 4,925,662   |      |           
|                                                   | Exploration and well-drilling expenses charged to the specific oil-field exploration and depletion reserve |                                                       |                                                           | (606,583   | )   |            | (5,806,335  | )    |           
|                                                   |                                                                                                            |                                                       |                                                           |            |     |            |             |      |           
|                                                   | Funds provided by operating activities                                                                     |                                                       |                                                           | 2,558,264  |     |            | 24,488,218  |      |           
|Financing activities:                              |                                                                                                            |                                                       |                                                           |            |     |            |             |      |           
|                                                   | Minimum guarantee dividends paid to the Mexican Government                                                 |                                                       |                                                           | (536,751   | )   |            | (5,137,889  | )    |           
|                                                   | Adjustment to retained earnings                                                                            |                                                       |                                                           | (7,176     | )   |            | (68,692     | )    |           
|                                                   | Dividends paid to the Mexican Government                                                                   |                                                       |                                                           | (24,140    | )   |            | (231,074    | )    |           
|                                                   | Notes payable to contractors                                                                               |                                                       |                                                           | 1,629,632  |     |            | 15,599,161  |      |           
|                                                   | Debt                                                                                                       |                                                       |                                                           | 2,559,864  |     |            | 24,503,534  |      |           
|                                                   | Sale of future accounts receivable                                                                         |                                                       |                                                           | 906,357    |     |            | 8,675,835   |      |           
|                                                   |                                                                                                            |                                                       |                                                           |            |     |            |             |      |           
|                                                   | Funds provided by financing activities                                                                     |                                                       |                                                           | 4,527,786  |     |            | 43,340,875  |      |           
|Investing activities:                              |                                                                                                            |                                                       |                                                           |            |     |            |             |      |           
|                                                   | Increase in fixed assets, net                                                                              |                                                       |                                                           | (6,684,886 | )   |            | (63,989,070 | )    |           
|                                                   |                                                                                                            |                                                       |                                                           |            |     |            |             |      |           
|                                                   | Funds used in investing activities                                                                         |                                                       |                                                           | (6,684,886 | )   |            | (63,989,070 | )    |           
|                                                   |                                                                                                            |                                                       |                                                           |            |     |            |             |      |           
|                                                   | Net increase (decrease) in cash and cash equivalents                                                       |                                                       |                                                           | 401,164    |     |            | 3,840,023   |      |           
|Cash and cash equivalents at beginning of the year |                                                                                                            |                                                       | 2,505,884                                                 |            |     | 23,986,823 |             |      | 14,631,303
|                                                   |                                                                                                            |                                                       |                                                           |            |     |            |             |      |           
|Cash and cash equivalents at end of the year       |                                                                                                            | US$                                                   | 2,907,048                                                 |            | Ps. | 27,826,846 |             | Ps.  | 23,986,823
|                                                   |                                                                                                            |                                                       |                                                           |            |     |            |             |      |           

See accompanying notes.

F-7

---



PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS        For The Years Ended December 31, 2000, 1999 and 1998        (In thousands of pesos and thousands of U.S. dollars)

1.    Structure and business activities of Petróleos Mexicanos, Subsidiary Entities and Subsidiary Companies

As a result of the nationalization of the foreign-owned oil companies then operating in the United Mexican States (Mexico), Petróleos Mexicanos was
established by a decree of the Mexican Congress dated June 7, 1938 and effective July 20, 1938. Petróleos Mexicanos and the Subsidiary Entities (PEMEX) are Decentralized
Public Entities of the Federal Government of Mexico (the Mexican Government) and together they comprise Mexico's state oil and gas company.

The
activities of PEMEX are regulated by theLey Reglamentaria del Artículo 27 Constitucional en el Ramo del
Petróleo,(the Regulatory Law to Constitutional Article 27 in the Petroleum Sector, or the Regulatory Law) effective November 30, 1958, as amended
effective May 12, 1995 and November 14, 1996, andConstitución Política de los Estados Unidos Mexicanos(Political Constitution of the United Mexican States), theLey Orgánica de Petróleos Mexicanos y Organismos Subsidiarios(the Organic Law of Petróleos Mexicanos and Subsidiary Entities, or the Organic Law), effective July 17, 1992, as amended effective January 1, 1994. Under the Organic Law
and related regulations, Petróleos Mexicanos is entrusted with the central planning activities and the strategic management of Mexico's petroleum industry. For purposes of these
financial statements, capitalized words carry the meaning attributed to them herein or the meaning as defined in the Political Constitution of the United Mexican States or the Organic Law.

The
Organic Law establishes a structure that consists of decentralized legal entities of a technical, industrial and commercial nature, with their own corporate identity and equity. The
Subsidiary Entities (defined below) are controlled by and have characteristics of subsidiaries of Petróleos Mexicanos. The Subsidiary Entities, which are legally empowered to own
property and conduct business in their own names, are:



The
strategic activities entrusted to Petróleos Mexicanos and Subsidiary Entities by the Organic Law can be performed only by PEMEX and cannot be delegated or
subcontracted. Pemex-Petrochemicals is an exception and may delegate and/or subcontract certain duties.

The
principal objectives of the Subsidiary Entities are as follows:



F-8

---



Petróleos
Mexicanos assigned to its Subsidiary Entities all the assets and liabilities needed to carry out activities; these assets and liabilities were incorporated into
the Subsidiary Entities' initial capital contribution. Additionally, Petróleos Mexicanos assigned to the Subsidiary Entities all the personnel needed for their operations, and the
Subsidiary Entities assumed all the related liabilities.

The
principal distinction between Subsidiary Entities and Subsidiary Companies is that Subsidiary Entities are decentralized public entities created by Article 2 of the Organic
Law of Petróleos Mexicanos, whereas the Subsidiary Companies are companies that have been formed in accordance with the general corporations law of each of the respective jurisdictions
in which they are incorporated and are managed as other private corporations subject to the law.

As
used herein, Subsidiary Companies are defined as those entities which are (a) not Subsidiary Entities and (b) in which Petróleos Mexicanos has greater
than a 50% ownership investment. For purposes of these financial statements, the Pemex Project Funding Master Trust (the Trust) is also defined as a Subsidiary Company. "Non-consolidated
subsidiary companies", as used herein, are defined as those entities which are (a) not Subsidiary Entities or Subsidiary Companies and (b) in which Petróleos Mexicanos has
less than a 50% ownership interest.

2.    Accounting policies

The principal accounting policies followed by PEMEX in the preparation of these consolidated financial statements are summarized below:

a)    Accounting basis for the preparation of financial information

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in Mexico (Mexican GAAP) as
issued by the Mexican Institute of Public Accountants (IMCP) and as to the recognition of inflation, in accordance with Financial Reporting Standard (NIF) 06-BIS "A" section A as
issued by the Ministry of Finance and Public Credit (SHCP) and by the General Comptroller Office (SECODAM).

b)    Effects of inflation on the financial information

Effects of inflation on the financial information are computed and recorded in accordance with the guidelines established in NIF-06-BIS
"A" section A.

In
accordance with NIF-06-BIS "A" section A, fixed assets (property and equipment), together with accumulated depreciation and amortization, are restated
for balance sheet presentation at net replacement cost. Obsolete and abandoned assets, as well as construction assets, are not restated.

The
main differences between Mexican GAAP Bulletin B-10, "Recognition of the Effects of Inflation on Financial Information," and NIF-06-BIS "A"
section A are described below. A summary of the significant differences between those two standards is presented in Note 14.

F-9

---

(i)  The
restatement of the assets referred to in NIF-06-BIS "A" section A must be completed in accordance with the rules established therein,
and restatements should be made by applying the constant-peso-value method based on the National Consumer Price Index (NCPI). In specific circumstances, when there is
justification, a company may elect to use the specific-cost method or the specific-index method, these methods being based upon technical studies. Effective January 1, 1997, the use
of independent appraisals was disallowed under Mexican GAAP. PEMEX has elected to use a hybrid of NCPI and specific index items as determined by independent appraisers.

(ii)  NIF-06-BIS
"A" section A does not consider the concept of fair value as referred to in Mexican GAAP. Therefore, the balance sheet
reflects restated fixed assets without consideration of fair value.

(iii)  In
accordance with the rules of NIF-06-BIS "A" section A, the difference between the historical cost of assets, including interest and
exchange rate fluctuations, and the restated amounts that are generated from the restatement of fixed assets and investments, are recorded in the equity account "Revaluation surplus."

(iv)  NIF-06-BIS
"A" section A allows capitalization of the exchange rate fluctuations and the interest derived from identifiable liabilities
associated with fixed assets. Bulletin B-10 only allows capitalization of interest that can be identified with specific fixed assets in the construction or installation phase.

(v)  NIF-06-BIS
"A" section A requires that the recognition of the effects of inflation in the financial statements be obtained exclusively by
restatement of non-monetary assets. In accordance with Bulletin B-10, as amended, it is necessary, however, that the effects of inflation in the equity accounts be recognized
and quantified and recorded in the monetary position results of each period. Additionally, Bulletin B-10, as amended, requires that all items presented in the financial statements be
expressed in constant Mexican pesos with purchasing power at the latest balance sheet date. NIF-06-BIS "A" section A does not require this remeasurement.

c)    Consolidation

The consolidated financial statements include the accounts of Petróleos Mexicanos, the Subsidiary Entities, and the Subsidiary Companies in which
Petróleos Mexicanos owns more than a 50% interest. All material intercompany transactions have been eliminated in the consolidation.

The
Subsidiary Companies that are consolidated are as follows: P.M.I. Comercio Internacional, S.A. de C.V. (PMI); P.M.I. Trading Ltd.; P.M.I. Holdings North
America, Inc.; P.M.I. Holdings, N.V.; P.M.I. Holdings, B.V.; P.M.I. Norteamérica, S.A. de C.V.; Kot Insurance Co. Ltd.; Integrated Trade
Systems, Inc.; P.M.I. Marine Limited; P.M.I. Services, B.V.; Pemex Internacional España, S.A.; Pemex Services Europe Ltd.; P.M.I. Services North
America, Inc., and Mex Gas Internacional, Ltd. since 2000; additionally, the Trust is also consolidated. The inclusion of these subsidiaries and the Trust in the consolidation, after
eliminations, increased total assets under Mexican GAAP by Ps. 52,391,000 (Ps. 14,860,000 in 1999), increased equity under Mexican GAAP by Ps. 2,054,000 (Ps. 99,000 in 1999), and decreased net loss
for the year under Mexican GAAP by Ps. 2,038,000 (increased net loss for the year by Ps. 484,000 in 1999 and decreased net loss for the year by Ps. 993,000 in 1998).

F-10

---

Certain
investments in Subsidiary Companies and other non-consolidated subsidiary companies, due to their immateriality in relation to PEMEX's total assets and results, are
accounted for under the cost method.

d)    Long-term productive infrastructure projects (PIDIREGAS)

The investment in long-term productive infrastructure projects (PIDIREGAS) and related liabilities are recorded in accordance with
NIF-09-A applicable toEntidades Paraestatales de la Administración Pública Federal(State-owned
Entities of the Federal Public Administration). In addition to outlining specific accounting treatment, NIF-09-A also identifies specific budgetary and legal requirements
governing PIDIREGAS projects.

During
1997, PEMEX began investing in certain capital expenditure projects that were financed with long-term debt obligations. Such investment expenses and related
liabilities will be recognized in the accounting records in future years under NIF-09-A, which provides for only liabilities having maturities expiring in less than three years
to be recorded to the accounting records. In accordance with Mexican GAAP consolidation principles, all the accounts related to those projects were reincorporated into the consolidated financial
statements at December 31, 2000, 1999 and 1998, i.e., all effects of NIF-09-A are excluded.

On
December 31, 1998, PEMEX transferred all assets and liabilities related to these PIDIREGAS projects, for an amount equaling Ps. 12,104,010, to the Trust, which is a business
trust organized under the laws of Delaware on November 10, 1998 with The Bank of New York and The Bank of New York (Delaware), acting as Trustees. The main objective of the Trust is to
administer financial resources related to long-term projects of productive infrastructure, such financial resources being designated by PEMEX for that purpose. The Trust has been
consolidated in the financial statements at December 31, 2000, 1999 and 1998 in accordance with consolidation principles detailed in Mexican GAAP Bulletin B-8 "Consolidated and
Combined Financial Statements and Valuation of Permanent Investments in Stocks."

e)    Exploration and drilling costs

The successful efforts method of accounting is followed. Exploration and drilling costs are charged to the specific oil-field exploration and
depletion reserve. Accumulated drilling costs corresponding to successful oil wells are capitalized out of this reserve.

f)    Specific oil-field exploration and depletion reserve

The specific oil-field exploration and depletion reserve is established to cover current and future exploration and drilling costs. As crude oil and
gas are extracted from existing wells, the equity reserve is increased based on a calculated exploration and drilling cost per barrel of crude oil, with a corresponding amount being charged to cost of
sales. Drilling costs as incurred are charged against this reserve. Accumulated drilling costs related to successful wells are capitalized as fixed assets and a corresponding amount is added back to
the reserve.

PEMEX
determines the budgeted exploration and drilling costs per barrel of crude oil based upon engineering studies. During 2000, PEMEX maintained the cost per barrel of 5.48 pesos, an
amount equal to that charged for the year ended December 31, 1999, while in 1998 the cost increased from

F-11

---

4.23 pesos to 5.48 pesos. This increase resulted in an additional charge to cost of sales of Ps. 1,884,546 in 1998.

g)    Inventory valuation

Inventories are valued as follows:



F-12

---



h)    Properties

PEMEX's assets are initially recorded at acquisition cost or construction cost. Exchange losses arising from the impact of exchange rate fluctuations on
associated foreign currency denominated debt and interest costs are capitalized as part of the asset cost. In accordance with NIF-06- BIS "A" section A (see
Note 2b)), the book values of these accounts are restated annually based on independent appraisals. The recorded value of these assets cannot exceed the annual appraisal value. Projects in
progress are not restated.

Property,
plant and equipment assets are depreciated using the straight-line method at annual rates determined from studies performed by independent appraisers. PEMEX begins
to compute depreciation the year after the asset is placed into service. The depreciation rates used by PEMEX are as follows:

%

YearsBuildings

3

33Plant and drilling equipment

3-5

20-33Furniture and fixtures

10

10Offshore platforms

4

25Transportation equipment

4-20

5-25Pipelines

4

25Software/computers

10-25

4-10


Related
gains or losses from the sale or disposal of fixed assets are recognized in operations.

PEMEX
amortizes its well assets using the units-of-production (UOP) method. The amount to be recognized as amortization expense is calculated based upon the
number of equivalent crude oil barrels extracted from each specific field as compared to total field reserves.

Estimated
dismantlement and abandonment costs are taken into account, on an undiscounted current cost basis, in determining amortization and depreciation rates. No salvage value is
considered when determining such rates.

i)    Foreign currency balances and transactions

Transactions denominated in foreign currency are recorded at the respective exchange rates prevailing on the day that the transactions are entered into and the
related asset or liability is recorded. Assets and liabilities in foreign currencies are stated in pesos at the rates in effect at the balance sheet date and published by SHCP. As described in
Note 2h), in accordance with NIF-06-BIS "A" section A, exchange losses arising from the impact of currency fluctuations on the value of the foreign currency
denominated debt and related interest costs are capitalized as part of fixed assets. In the period ended December 31, 2000, foreign exchange losses of Ps. 139,692 were capitalized, while in
1999 there were no exchange losses capitalized, as PEMEX recorded an exchange gain on such assets and related debt; during 1998, exchange losses of Ps, 17,966,755 were capitalized. Foreign exchange
losses which are not capitalized, and all foreign exchange gains, are charged and credited, respectively, to operations. This generated net exchange gains credited to operations of Ps. 876,736, Ps.
2,949,615 and Ps. 983,601 in 2000, 1999 and 1998, respectively.

j)    Retirement benefits and seniority premiums

PEMEX has established a pension plan for retirement and seniority premiums to be paid to its employees. The liability is computed by an independent actuary, based
on the projected unit-credit method. PEMEX has recorded in these consolidated financial statements the results of such study in accordance with Mexican GAAP Bulletin D-3,
"Labor Obligations," except that due to the recognition

F-13

---

of the effects of inflation in accordance with NIF-06-BIS "A" section A, the liabilities are computed using nominal interest rates.

Payments
for indemnities to dismissed personnel are charged to operations if and when the expense is incurred.

k)    Cost of sales

Cost of sales is determined by adding to inventories at the beginning of the year the increase in the specific oil-field exploration and depletion
reserve (a fixed charge per extracted barrel), the operating cost of oil fields, refineries and plants (including self-consumed products), the purchase cost of crude oil and refined and
other products, and deducting the value of inventories at the end of the year. Cost of sales also includes a portion of depreciation and amortization expense associated with assets used in operations.

l)    Taxes and federal duties

PEMEX is subject to special tax laws, which are based on petroleum revenues and do not generate temporary differences or deferred income taxes. PEMEX is not
subject to theLey del Impuesto Sobre la Renta(Income Tax Law) or theLey del Impuesto al Activo(Assets Tax Law). Some of the Subsidiary Companies are subject to the Income Tax Law; however, such Subsidiary Companies do not generate significant deferred tax liabilities.

PEMEX
is subject to the following duties and taxes: hydrocarbon extraction duties, hydrocarbon income tax and the Special Tax on Production and Services (IEPS tax). PEMEX is also subject
to value added tax (VAT).

Effective
January 1, 1994, hydrocarbon extraction duties are calculated at a rate of 52.3% on the net cash flows of the difference between crude oil sales and extraction costs and
expenses. Extraordinary and additional hydrocarbon extraction duties are calculated at a rate of 25.5% and 1.1%, respectively, on the same basis. The hydrocarbon income tax is equivalent to the
regular income tax applied to all Mexican corporations, a tax to which PEMEX is not subject; this rate in 2000 and 1999 was 35% and 34% in 1998.

The
sum of the above duties and taxes must equal 60.8% of PEMEX's annual sales revenues to third parties (and an additional 39.2% of the portion of revenues in respect of crude oil sales
at prices in excess of U.S. $15.00 dollars, U.S. $9.25 dollars and U.S. $15.50 dollars per barrel for 2000, 1999, and 1998, respectively). Therefore, to the extent that the sum of hydrocarbon
extraction duties is less than 60.8% of sales to third parties, additional taxes are paid to reach that level.

m)  Special Tax on Production and Services (IEPS tax)

The IEPS tax charged to customers is a tax on the domestic sales of gasoline and diesel. The applicable rates depend on, among other factors, the product,
producer's price, freight costs, commissions and the region in which each product is sold. For financial statement purposes, the IEPS tax is presented as part of "Net domestic sales" and then deducted
after "Income before hydrocarbon extraction duties, special tax on production and services and other".

n)    Revenue recognition

For all export products, risk of loss and ownership title is transferred upon shipment, and thus PEMEX records sales revenue upon shipment to customers abroad.
Respective to certain domestic sales in which the customer takes product delivery at a PEMEX facility, sales revenues are recorded upon product pick-up. For domestic sales in which PEMEX
is responsible for product delivery, risk of

F-14

---

loss and ownership is transferred at the delivery point, and PEMEX records sales revenue upon delivery.

o)    Risk management instruments

The effects on the consolidated statements of operations of entering into "swap" transactions are recorded as incurred and when the precise settlement amounts are
known. The effects on the consolidated statements of operations of other derivative instruments, including premiums paid or received, are recognized at the date of receipt or payment. Such amounts are
included in the consolidated statements of operations within the "Interest, net" caption. (See Note 10).

Requirements
of the new Mexican accounting Bulletin C-2,Financial Instruments,went into effect on January 1, 2001.
The new bulletin establishes the basic rules to be observed by the issuers of, and the investors in, financial instruments when valuing, presenting and disclosing these instruments in the financial
information. This bulletin also establishes the rules and conditions that must be met to offset financial assets and liabilities and requires that financial instruments and derivatives be valued at
their fair value, except those classified as "held to maturity," which are to be presented at cost. Management
estimates that the effect of the adoption as of January 1, 2001, of this statement will be an expense of approximately Ps. 1,327,500 (equivalent to U.S. $138,600) in the consolidated statement
of operations.

The
effect at January 1, 2001 is comprised primarily of the effect of an equity swap related to Repsol shares (see additional discussion in Note 10) and the effect of
valuation offset between debt and related swap. In 2000, Petróleos Mexicanos entered into two equity swaps related to Repsol. The purpose of these equity swaps is to allow PEMEX in the
future to buy back shares sold to financial institutions to secure financing at the exact price such shares were sold. As C-2 has no provision for hedging forecasted transactions, nor does
it permit the equity swap as a hedge as the Repsol shares are considered to have been sold for Mexican GAAP purposes, the full effect of mark to market valuations related to the equity swap must be
recognized in current period earnings. This effect at December 31, 2000 is U.S. $129,700. Petróleos Mexicanos enters into interest rate and cross currency swaps to hedge its
borrowings in currencies other than the U.S. dollar. These swaps are entered into at or near inception of the debt and carry similar terms and conditions; thus forming an "exact match" financial
hedge.

PEMEX
believes that it has performed the calculations of financial instruments and derivative financial instruments, together with calculations required for items qualifying as hedges,
in accordance with the rules set forth in Bulletin C-2. However, as there are important sections of Bulletin C-2 that do not give clear guidance, PEMEX is in the process of
reviewing and reassessing methodology applied. Thus, final transition adjustment may differ from that currently approximated.

p)    Use of estimates

Preparation of the financial statements requires the use of estimates. Management makes estimates and assumptions that affect the amounts and the disclosures
presented as of the date of the consolidated financial statements. Actual results could differ from those estimates; however, management does not believe such differences will be material.

Events
and occurrences, which could result in financial statement loss, are reviewed periodically, and contingencies identified are assessed as remote, possible or probable in accordance
with Bulletin C-12, "Contingencies and Commitments". When a loss contingency is viewed to be possible, it is disclosed together with a range of potential loss, when determinable. When a
loss contingency is viewed to be probable, it is disclosed and an accrual as to the most likely loss scenario is incorporated to the financial statements.

F-15

---

q)    Convenience translation

United States dollar amounts shown in the balance sheets, the statements of operations and the statements of changes in financial position have been included
solely for the convenience of the reader. Such amounts are translated from pesos, as a matter of arithmetic computation only, at an exchange rate of 9.5722 pesos per U.S. dollar, which is the
December 31, 2000 exchange rate for the settlement of obligations in foreign currencies provided by Banco de México and the SHCP. Translations herein should not be construed as a
representation that the peso amounts have been or could be converted into U.S. dollars at the foregoing rate or any other rate.

r)    Reclassifications

Certain reclassifications have been made to 1999 and 1998 amounts presented in the consolidated financial statements and related notes to conform such amounts and
disclosures to the presentation adopted for 2000 reporting.

s)    Restatement

PEMEX restated its consolidated Financial Statements as of and for the three years ended December 31, 2000. The principal adjustments made to the financial
statements reflect the changes discussed below.

Dismantlement and Abandonment Costs

The Petroleum Works Law provides that once a well turns out to be dry, invaded with salt water or abandoned due to mechanical failure, or when the well's
production has been depleted such that abandonment is necessary due to economic unfeasibility of production, it must be plugged to ensure the maintenance of sanitary and safe conditions and to prevent
the seepage of hydrocarbons to the surface. All activities required for plugging a well are undertaken with the purpose of isolating, in a definitive and convenient manner, the cross formations in the
perforation that contains oil, gas or water in order to ensure that hydrocarbons do not seep to the surface. This law also requires that PEMEX obtain approval from the Ministry of Energy for the
dismantlement of hydrocarbon installations, either for the purposes of replacing them with new installations or for permanent retirement.

PEMEX
historically accrued for restoration costs, such accrual being recorded within the environmental liabilities reserve. Previously, dismantlement and abandonment costs associated
with long-term oil and gas producing properties were charged to expense at the time incurred, because the cash expenditures were insignificant to the financial results of any prior period.

After
an extensive evaluation, PEMEX restated its financial statements for the periods presented herein to take into account estimated dismantlement and abandonment costs in determining
amortization and depreciation rates and to include the cumulative effect of such prior period charges as a component of accumulated depreciation and amortization. The cumulative effect to opening
retained earnings at December 31, 1997 was Ps. 5,028 thousand. PEMEX also recognized retroactively to the earliest period presented these future abandonment and dismantlement costs.

PEMEX
recognizes the costs related to currently producing and temporarily closed wells in DD&A for each period based on a units of production methodology reflecting life of field
properties and considering current cost estimates. In the case of the non-producing wells subject to abandonment and dismantlement, the full dismantlement and abandonment cost has been
recognized at the end of each period based on the life of the well, rather than the field. Abandonment and dismantlement costs recognized in the financial statements are based on undiscounted current
cost.

F-16

---

Repsol derivative transactions

At the end of 1999, PEMEX entered into a series of transactions intended to unwind a collar placed on an equity swap based on Repsol shares (see note 10).
A portion of the amount that was required to be paid in order to unwind the collar was paid in December 1999, with the remaining commitment not paid until February 2000. Previously, the unpaid
portion of this transaction was not recorded as an accrued liability at year-end 1999, and the expense related to this unpaid portion was not recognized until 2000. PEMEX restated these
financial statements as of and for the years ended December 31, 2000 and 1999 to recognize the liability associated with this transaction at year-end 1999, as this liability should
have been accrued at year-end 1999 in accordance with Bulletin A-3 "Realization and Accounting Period" and Bulletin C-12 and the related expense recognized in 1999
rather than 2000.

The
following table presents the effects of the aforementioned adjustments on income (loss) for each of the three years ended December 31, 2000, under Mexican GAAP:

2000

1999

1998Income (loss) for the year, as previously reported

Ps.
(20,117,395
)
Ps.
(18,227,869
)
Ps.
(10,139,115
)Adjustments due to recognition of abandonment and dismantlement obligations


(1,200,666
)

(1,321,233
)

(1,448,875
)Adjustments for Repsol derivative transactions


1,607,669


(1,607,669
)

Income (loss) for the year, as restated

Ps.
(19,710,392
)
Ps.
(21,156,771
)
Ps.
(11,587,990
)


The
following table presents the effects of the aforementioned adjustments on equity at each of the three years ended December 31, 2000 under Mexican GAAP:

2000

1999

1998Equity at year end, as previously reported

Ps.
159,604,369

Ps.
170,874,917

Ps.
173,615,038Adjustments due to recognition of abandonment and dismantlement obligations:


(8,998,997
)

(7,798,331
)

(6,477,098
)Adjustments for Repsol derivative transactions:





(1,607,669
)

Equity at year end, as restated

Ps.
150,605,372

Ps.
161,468,917

Ps.
167,137,940


F-17

---

3.    Accounts, notes receivable and other

Accounts, notes receivable and other amounts presented in the consolidated balance sheets are as follows:

2000

1999Tradedomestic

Ps.
26,340,778

Ps.
18,498,240Tradeforeign


10,072,988


11,646,382Pemex Finance, Ltd.


6,926,132


5,573,003Mexican Government (Note 12) Advance payments on minimum guarantee dividends


5,563,799


5,137,889Other accounts receivable


9,012,465


7,405,039Less: Allowance for doubtful accounts


(1,214,596
)

(976,718
)Ps.
56,701,566

Ps.
47,283,835


4.    Inventories

At December 31, 2000 and 1999, inventories presented in the consolidated balance sheets are as follows:

2000

1999Crude oil, refined products, derivatives and Petrochemical products

Ps.
21,591,377

Ps.
13,031,685Materials and supplies in stock


4,823,858


5,232,211Less: allowance for slow-moving inventory and obsolescence reserve


(2,261,065
)

(2,420,856
)24,154,170


15,843,040Materials in transit


709,968


375,589Ps.
24,864,138

Ps.
16,218,629


5.    Properties

2000

1999Land

Ps.
32,943,681

Ps.
29,464,466Buildings


14,886,795


15,479,487Wells and field assets


79,362,124


43,372,630Plants, furnishings and equipment


184,889,326


161,676,984Offshore platforms


10,075,207


9,330,641322,157,133


259,324,208Fixed assets pending disposition


555,652


520,903Construction spares


331,840


371,324Construction in progress


65,179,951


78,037,498Total

Ps.
388,224,576

Ps.
338,253,933


F-18

---



6.    Intangible asset derived from the actuarial computation of labor obligations and other assets

As of December 31, 2000 and 1999, the intangible and other assets amount consists of:

2000

1999Intangible asset derived from the actuarial computation of labor obligations (Note 11)

Ps.
54,133,613

Ps.
45,704,685Long-term investments and other assets


11,716,784


10,799,939Ps.
65,850,397

Ps.
56,504,624


P.M.I.
Norteamerica, S.A. de C.V. has a joint venture with Shell Oil Company, in which it owns a 50% interest in a petroleum refinery located in Deer Park, Texas. The investment
is accounted for under the equity method and amounts to Ps. 2,229,238 and Ps. 1,992,093, respectively, at December 31, 2000 and 1999. During 2000, 1999 and 1998, PEMEX recorded Ps. 498,983, Ps.
(687,301) and Ps. 174,782 respectively, of earnings (losses) relative to its interest in the joint venture. During 2000, 1999 and 1998, PEMEX paid the joint venture Ps. 3,217,047, Ps. 1,627,591 and
Ps. 2,245,763 respectively, for the processing of petroleum. During 2000, 1999 and 1998 PEMEX, through its subsidiary, paid Ps. 15,768, Ps. 29,259 and Ps. 623,069 respectively, to the joint venture
under the terms of the contract which calls for contributions from P.M.I. Norteamérica, S.A. de C.V. based on the refinery's operating margin. In July 2000, the above
noted contract was modified retroactively respective to contribution on refining operating margin; amounts presented are as revised per modified contract.

Long-term
investments include the equity interest in Mexicana de Lubricantes, S.A. de C.V. (Mexlub), an associated company, for Ps. 686,937 and Ps. 570,163 at
December 31, 2000 and 1999, respectively. This corresponds to a 49% interest in Mexlub, accounted for under the equity method.

Equity,
including restatement effects, proportionally attributable to PEMEX from its non-consolidated subsidiary companies and other companies, according to those entities'
financial statements as of December 31, 2000 is Ps. 4,545,769 (Ps. 3,053,265 in 1999). This includes PEMEX's proportional share in the non-consolidated subsidiaries and other
companies' results for the year ended December 31, 2000 of Ps. 1,155,464 (Ps. 230,504 in 1999 and Ps. 343,606 in 1998).

F-19

---

7.    Sale of future accounts receivable

On December 1, 1998, Petróleos Mexicanos, Pemex-Exploration and Production, PMI and P.M.I. Services, B.V., entered into several agreements
with Pemex Finance, Ltd. (Pemex Finance), a limited liability company which was organized under the laws of the Cayman Islands. Under these agreements, Pemex Finance purchases certain existing
accounts receivable for crude oil, as well as certain accounts receivable to be generated in the future by Pemex-Exploration and Production and PMI related to crude oil. The receivables sold are those
generated by the sale of Maya crude oil to designated customers in the United States, Canada, and Aruba. The net resources obtained by Pemex-Exploration and Production from the sale of such
receivables under the agreements are utilized for PIDIREGAS projects (see Note 2d)). At December 31, 2000 and 1999, the sales under these agreements were Ps. 51,976,573 and Ps.
43,300,738, respectively.

"Sale
of future accounts receivable" has been classified as a long-term liability as of December 31, 2000. Such classification has been made retroactive to
December 31, 1999. The agreements between Petróleos Mexicanos, Pemex-Exploration and Production, PMI, P.M.I. Services B.V. and Pemex Finance establish short-term
repayments; however, such agreements are evergreen and it is not expected that current resources will be used in repayments as the agreements do not bear a re-financing risk. Pemex Finance
has proven continuous ability to contract debt in the international market sufficient to sustain the acquisition of accounts receivable from PEMEX.

8.    Notes payable to contractors

At December 31, 2000 and 1999, the notes payable to contractors amount was comprised of:

2000

1999Total notes payable to contractors(a),(b)

Ps.
17,398,476

Ps.
1,799,315Less: Current portion of notes payable to contractors


1,245,707


159,017Notes payable to contractors (long-term)

Ps.
16,152,769

Ps.
1,640,298


---



F-20

---

9. Long-term debt

The following debts were contracted during 2000:

Foreign
trade lines of credit in the amount of U.S.$ 465,000 extended by various banks. These lines of credit are to finance crude oil and petrochemical imports and exports, as well as
crude oil pre-exports. The full amount of these lines of credit was committed at December 31, 2000.

PEMEX
used U.S.$ 107,000 in lines of credit extended by Société Générale, HSBC Investment Bank plc, Banco Santander Central
Hispano, K.F.W. and Export Development Corporation. At December 31, 2000, U.S.$ 127,300 of these lines of credit was not committed.

PEMEX
obtained direct loans for U.S.$ 650,000: U.S.$ 350,000 from Banco Santander, S.A. and U.S.$ 300,000 from Nacional Financiera.

PEMEX
obtained U.S.$ 173,000 through the Pemex Capital, Inc. commercial paper program and it reused U.S.$ 265,000.

PEMEX
reused U.S.$ 691,000 of banker's acceptances, U.S.$ 521,000 of which corresponded to the J.P. Morgan line of credit and U.S.$ 170,000 to the Industrial Bank of Japan line of
credit.

To
finance projects, PEMEX used U.S.$ 32,000. At December 31, 2000, U.S.$ 14,900 and 335,600 million Japanese yen were not committed.

The
Trust contracted during 2000:



During
1999, Petróleos Mexicanos contracted several lines of credit totaling U.S. $1,394,000 to finance trade operations for the import and export of petroleum products
and petrochemical products, as well as the pre-export of crude oil. The full amount of these lines of credit was committed at December 31, 1999.

During
1999, U.S. $234,000 were obtained through purchasing loans contracted in the United States. This amount was financed through lines of credit with
Société Générale, Standard Chartered Bank, Midland Bank (HSBC), K.F.W., Export Development Corp. and Banesto.

In
1999, Petróleos Mexicanos placed two bond issues with a total value of U.S. $687,000. These issuances were:



F-21

---



During
1999, U.S. $398,000 related to a commercial paper program with Bank of America, and supported with a letter of credit from Société
Générale, was used. Also, U.S. $307,000 related to a new commercial paper program, supported with a letter of credit from Barclay's Bank, was used in 1999.

In
1999, two new bank acceptance programs were initiated. Petróleos Mexicanos used the total available amount of U.S. $896,000, which included U.S. $621,000 corresponding
to a program with J.P. Morgan and U.S. $275,000 corresponding to a program with the Industrial Bank of Japan.

During
1999, Petróleos Mexicanos contracted several direct lines of credit totaling U.S. $350,000; this amount was obtained for use in financing working capital
requirements.

In
1999, the Trust entered into foreign trade agencies guaranteed loans in the amount of U.S.$ 167,000 of which U.S.$ 148,000 correspond to ABN AMRO Bank and U.S.$ 19,000 to HSBC
Investment Bank.

In
1983, 1985, 1987, and 1990, Petróleos Mexicanos, together with the Mexican Government, entered into various covenants with the international banking community for
restructuring its debt. As a result of the final agreement, the remaining balance of the restructured Mexican Government debt retained, principally, the same interest rate conditions as had been
negotiated in 1987. The agreed upon periods of amortization included a provision for division of the debt into two main portions with amortization over 52 and 48 quarters, respectively. The first
amortization period began in 1994 and the second began in 1995, with both scheduled to end in December of 2006.

Each
year, the SHCP approves PEMEX's annual budget and its annual financing program. The Mexican Government incorporates PEMEX's annual budget and annual financing program into the
budget of the Mexican Government, which the Chamber of Deputies of Mexico must approve each year. PEMEX's debt is not an obligation of, or guaranteed by, the Mexican Government. However, under the Ley General de Deuda
Pública(the General Law of Public Debt), PEMEX's foreign debt obligations must be approved by and registered with
the SHCP and are considered Mexican external public debt. Although Petróleos Mexicanos' debt is not guaranteed by the Mexican Government, Petróleos Mexicanos' external
debt has receivedpari passutreatment in previous debt restructurings. Based upon such past experience, management of Petróleos
Mexicanos has no reason to believe that current and future external debt of Petróleos Mexicanos would not receive similar treatment in any future debt restructuring.

Petróleos
Mexicanos has repayments in 2001 related to current portion of long-term debt. A portion of this debt, primarily bankers acceptances and commercial
paper, is contractually committed until the year 2002-2003, and thus does not bear a re-financing risk.

Management
has evaluated anticipated future cash flows and believes that cash flows from operations will be sufficient to cover such repayments, however, Petróleos
Mexicanos recognizes that in the event of economic downturn, the ability to pay debt repayments in a timely fashion may depend upon Petróleos Mexicanos' ability to attain additional
financings and/or re-negotiate terms associated with present debt. Management of Petróleos Mexicanos believes that such re-negotiations and additional financings
as are necessary will be achievable and, additionally, management believes that PEMEX will have sufficient cash flow to continue its exploration and development program as scheduled to exploit those
reserves which have been classified as proved developed and undeveloped (see Note 21) at December 31, 2000.

F-22

---

As
of December 31, 2000 and 1999, long-term debt was as follows:

|                                            |                                        |                                                               |                                                                             |                 |                     | December 31, 2000(5) |             | December 31, 1999(5)
|------------------------------------------- | -------------------------------------- | ------------------------------------------------------------- | --------------------------------------------------------------------------- | --------------- | ------------------- | -------------------- | ----------- | --------------------
|
|U. S. dollars:                              |                                        |                                                               |                                                                             |                 |                     |                      |             |                     
|                                            | Unsecured loans(1)                     |                                                               | Domestic and LIBOR plus 0.8125                                              |                 | Various to 2006     |                      | Ps.         | 6,313,392           
|                                            | Unsecured loans                        |                                                               | LIBOR plus .8125 to. 1.05                                                   |                 | 2001                |                      |             | 6,221,930           
|                                            | Acceptance lines                       |                                                               | Acceptance rate and LIBOR plus 1.75%, and 2%                                |                 | 2002                |                      |             | 8,423,536           
|                                            | Bonds                                  |                                                               | Various from 6.498% to 9.5% and LIBOR plus 1.0 and UMS less 45 basis points |                 | Various to 2027     |                      |             | 44,032,130          
|                                            | Financing assigned to PIDIREGAS        |                                                               | 8.85% to 9.5%                                                               |                 | Various to 2027     |                      |             | 35,093,125          
|                                            | Purchasing loans and project financing |                                                               | Various from 2.0 to 8.28 and LIBOR plus 0.0625 to 2.00                      |                 | Various to 2011     |                      |             | 4,169,890           
|                                            | Leasing contracts                      |                                                               | Various from 10.25% to 11.74% and LIBOR plus 0.0 to 2.25                    |                 | Various to 2012     |                      |             | 4,184,966           
|                                            | Commercial paper                       |                                                               | Discount rate prevailing in the market                                      |                 | From 60 to 150 days |                      |             | 4,278,773           
|                                            | External trade loans                   |                                                               | LIBOR plus 0.625 to 0.75                                                    |                 | Various to 2002     |                      |             | 3,781,019           
|                                            |                                        |                                                               |                                                                             |                 |                     |                      |             |                     
|Total financing denominated in U.S. dollars |                                        |                                                               |                                                                             |                 |                     |                      | 116,498,761 |                     
|                                            |                                        |                                                               |                                                                             |                 |                     |                      |             |                     
|Euros: Bonds                                |                                        | From 7.75% to 8.00%                                           |                                                                             | Various to 2007 |                     |                      | 6,242,749   |                     
|                                            |                                        |                                                               |                                                                             |                 |                     |                      |             |                     
|Italian lire: Bonds                         |                                        | Various from 7.375% to 11.25% and LIBOR plus 165 basis points |                                                                             | Various to 2007 |                     | Ps.                  | 7,134,376   |                     
|                                            |                                        |                                                               |                                                                             |                 |                     |                      |             |                     
|Japanese yen:                               |                                        |                                                               |                                                                             |                 |                     |                      |             |                     
|                                            | Project financing                      |                                                               | From 2.0% to 6.6% and prime in yen                                          |                 | Various to 2015     |                      | Ps.         | 10,583,011          
|                                            |                                        |                                                               |                                                                             |                 |                     |                      |             |                     
|Other currencies(2)                         |                                        |                                                               |                                                                             | Various to 2016 |                     |                      | 2,226,998   |                     
|                                            |                                        |                                                               |                                                                             |                 |                     |                      |             |                     
|                                            |                                        | Total principal in pesos(3)                                   |                                                                             |                 |                     |                      |             |                     
|                                            |                                        | Plus: Accrued interest                                        |                                                                             |                 |                     |                      |             |                     
|                                            |                                        |                                                               |                                                                             |                 |                     |                      |             |                     
|                                            |                                        | Total principal and Interest                                  |                                                                             |                 |                     |                      |             |                     
|                                            |                                        | Less: Short-term Maturities                                   |                                                                             |                 |                     |                      |             |                     
|                                            |                                        |                                                               |                                                                             |                 |                     |                      |             |                     
|                                            |                                        | Long-term debt                                                |                                                                             |                 |                     |                      |             | Ps.                 
|                                            |                                        |                                                               |                                                                             |                 |                     |                      |             |                     

|           |  | 2001 |            | 2002 |     | 2003       |  | 2004 |            | 2005 |     | Over 5 years |  | Total
principal
amount of debt
|---------- |  | ---- | ---------- | ---- | --- | ---------- |  | ---- | ---------- | ---- | --- | ------------ |  | ------------------------------
|Maturities |  | Ps.  | 38,315,870 |      | Ps. | 11,069,169 |  | Ps.  | 11,295,013 |      | Ps. | 10,063,158   |  | Ps.                           
|           |  |      |            |      |     |            |  |      |            |      |     |              |  |                               

---

Notes to table:

F-23

---



10. Financial instruments

PEMEX operates internationally and thus is significantly exposed to market risk associated with interest rates, commodity prices, and foreign exchange rates.
Petróleos Mexicanos and P.M.I. Trading, Ltd. use derivative financial instruments to manage interest rate and foreign exchange rate risks, as explained below.

Notional amounts and credit exposures of derivatives

The notional amounts of the derivatives described in the Interest-rate risk management section below do not represent the amounts exchanged with
counterparties, and therefore they do not represent an
actual measure of Petróleos Mexicanos' exposure. The amounts exchanged are calculated on the basis of the notional contract amounts, as well as on other terms of the derivatives, which
relate to interest rates, exchange rates, securities prices, and the volatility of these rates and prices. Petróleos Mexicanos' cross currency swaps imply an exchange of notional
amounts; therefore, these swaps are generally entered into with creditors on the underlying debt to avoid credit risk in the notional amounts. All financial instruments are held for purposes other
than trading.

As
a creditor, Petróleos Mexicanos' faces the risk that counterparties might fail to meet payment obligations, which could cause credit-related losses in the event of
nonperformance by the counterparties that issued the financial instruments. The maximum exposure for such losses is the premium paid for the instrument and any unrealized gains or losses on the
instrument. To minimize this risk, Petróleos Mexicanos monitors the credit worthiness and exposure to derivative instruments of counterparties, while dealing exclusively with major
financial institutions and maintaining a diversified portfolio. As of December 31, 2000 and 1999, the cash required from counterparties, if they all were to fail to pay their interest rate swap
obligations, is immaterial, including the established netting agreements.

Petróleos
Mexicanos' Risk Management Committee, composed of representatives of Petróleos Mexicanos, Banco de México, SHCP and PMI, authorizes
PEMEX's risk management policies and strategies and supervises the investment activities carried out by Petróleos Mexicanos.

Interest-rate risk management

Strategies employed by PEMEX relative to interest-rate risk management allow Petróleos Mexicanos and the Trust to reduce cost of
financing fluctuations relative to long-term debt and

F-24

---

minimum guaranteed dividend payments. Interest rate derivatives allow Petróleos Mexicanos to complete long-term borrowings at fixed rates and to select the appropriate
level of variable-rate and fixed-rate debt for Petróleos Mexicanos.

Interest
rate derivatives allow Petróleos Mexicanos and the Trust to modify the characteristics of its liabilities, in a cost efficient manner. At December 31,
2000, the effective interest rate on approximately 51% (57% in 1999) of Petróleos Mexicanos' and the Trust debt was converted to fixed rates as stipulated in the debt agreements or
through the use of derivatives.

Hedging activities

The derivative financial instruments used in Petróleos Mexicanos' interest hedging activities consist primarily of: (i) interest rate swaps,
in which Petróleos Mexicanos is obligated to make payments based on a fixed interest rate and entitled to receive payments generally based on the three-month LIBOR interest rate; and,
to a lesser extent, (ii) interest rate caps, which set a fixed interest rate ceiling.

The
level of variable-rate debt is determined by the Petróleos Mexicanos Finance Department and is authorized by the PEMEX Risk Management Committee, primarily
based on the average expected interest rates, the shape of the yield curve, and the sensitivity of operating cash flows and capital expenditures to interest rates.

In
October 1997, Petróleos Mexicanos entered into a LIBOR Basket Swap where U.S. LIBOR was exchanged for a basket of LIBOR rates in other currencies (payable in
U.S. dollars). To avoid the negative effects of fixing the interest rate in those currencies under a steep yield curve environment, Petróleos Mexicanos decided to pay floating rate in
the LIBOR Basket Swap. This operation ended October 2000.

Average
variable rates are based on rates that are implied by the yield curve at the reporting date; these rates may change significantly, affecting future cash flows.

Non-hedging activities

During 1994, Petróleos Mexicanos sold interest-rate caps, which are still in place, to synthetically remove the fixed leg of the
interest-rate swaps once the market interest rates increase above the swap fixed rate in exchange for a premium.

The
following table indicates the types of swaps contracted, their duration, and their respective interest rates as of December 31, 2000 and 1999:

Interest Rate Derivatives(1)
Hedging Activities

|                       |                                   | Notional Amount 2000(2) |           | Fair Value 2000(3) |     | Notional Amount 1999(2) |   | Fair Value 1999(3) |           
|---------------------- | --------------------------------- | ----------------------- | --------- | ------------------ | --- | ----------------------- | - | ------------------ | ----------
|Receive fixed swaps    |                                   | Ps.                     | 3,350,270 |                    | Ps. | (56,478                 | ) | Ps.                | 25,688,610
|                       | Weighted average (maturity years) |                         |           | 1.25               |     |                         |  |                    |           
|                       | Average receive rate              |                         |           | 7.32               | %   |                         |  |                    |           
|                       | Average pay rate                  |                         |           | 5.84               | %   |                         |  |                    |           
|Receive variable swaps |                                   | Ps.                     |          |                    | Ps. |                        |   | Ps.                | 5,946,438 
|                       | Weighted average (maturity years) |                         |           |                   |     |                         |  |                    |           
|                       | Average receive rate              |                         |           |                   |     |                         |  |                    |           
|                       | Average pay rate                  |                         |           |                   |     |                         |  |                    |           

F-25

---

---

Notes
to table:

The
following table indicates the interest rate options contracted, the fair values, and the respective interest rates as of December 31, 2000 and 1999:

Interest Rate Derivatives(1)
Non-Hedging Activities

|             |                                   | Notional Amount 2000(2) |         | Fair Value 2000(3) |     | Notional Amount 1999(2) |   | Fair Value 1999(3) |          
|------------ | --------------------------------- | ----------------------- | ------- | ------------------ | --- | ----------------------- | - | ------------------ | ---------
|Caps Written |                                   | Ps.                     | 957,220 |                    | Ps. |                        |   | Ps.                | 2,854,290
|             | Weighted average (maturity years) |                         |         | .37                |     |                         |  |                    |          
|             | Average receive rate              |                         |         | 9.84               | %   |                         |  |                    |          
|             | Average pay rate                  |                         |         | 5.79               | %   |                         |  |                    |          

---

Notes
to table:

Foreign exchange risk management

Petróleos Mexicanos enters into cross-currency swaps to manage its foreign exchange risk. The purpose of Petróleos Mexicanos'
foreign-currency hedging activities is to protect PEMEX from changes in exchange rates. Because a significant portion of PEMEX's revenues is denominated in U.S. dollars, Petróleos
Mexicanos' borrowings are generally denominated in U.S. dollars. However, Petróleos Mexicanos also borrows in currencies other than U.S. dollars to take advantage of financing
conditions in various currencies. Since 1991, Petróleos Mexicanos has entered into cross-currency swaps, to hedge against movements in U.S. dollar exchange rates. These currency
derivatives have been used to convert bond issuance amounts denominated in other currencies into U.S. dollars.

F-26

---

The
following table indicates the types of cross-currency swaps used and their respective fair values at December 31, 2000 and 1999:

|                                |  | Notional
Amount
2000 |            | Fair
Value
2000 |     | Notional
Amount
1999 |   | Fair
Value
1999 |           
|------------------------------- |  | -------------------- | ---------- | --------------- | --- | -------------------- | - | --------------- | ----------
|Cross Currency Swaps            |  |                      |            |                 |     |                      |   |                 |           
|Italian lire to U.S. dollars    |  | Ps.                  | 3,954,755  |                 | Ps. | (1,033,136           | ) | Ps.             | 3,930,833 
|British pounds to U.S. dollars  |  |                      | 1,191,739  |                 |     | (106,695             | ) |                 |          
|Pounds sterling to U.S. dollars |  |                      |           |                 |     |                     |   |                 | 1,184,530 
|Euro to U.S. dollars            |  |                      | 5,082,754  |                 |     | (1,161,406           | ) |                 | 5,052,010 
|                                |  |                      |            |                 |     |                      |   |                 |           
|                                |  | Ps.                  | 10,229,248 |                 | Ps. | (2,301,237           | ) | Ps.             | 10,167,373
|                                |  |                      |            |                 |     |                      |   |                 |           

Investments portfolio risk management

During 1994, through a finance transaction amounting to U.S. $467,000 (approximately Ps. 1,597,000), P.M.I. Holdings, B.V. sold to Strategic Money
Management Company B.V. (SMM trust) substantially all of its share holdings representing 5% of the outstanding shares of Repsol, S.A. (Repsol). Concurrent with this, Petróleos Mexicanos
entered into an equity swap with J.P. Morgan, under which Petróleos Mexicanos agreed to pay interest to J.P. Morgan based on the notional amount of U.S. $467,000; this interest to be
payable on a semi-annual basis. In exchange, J.P. Morgan agreed to pay Petróleos Mexicanos an amount equal to the dividends on the Repsol shares and assign the voting rights
of those shares to Petróleos Mexicanos.

At
termination of the swap, upon the sale of the Repsol shares (quote final value) by the SMM trust, J.P. Morgan will retain the notional amount, U.S. $467,000, and
Petróleos Mexicanos will realize the net profit or loss, as applicable. In connection with these transactions, Petróleos Mexicanos also received from SMM trust two
rights. First, Petróleos Mexicanos received the right of first refusal in the event the SMM trust were to sell the Repsol shares, and second, Petróleos Mexicanos received
the voting rights associated with the Repsol shares until the earlier of the date the shares were sold by SMM trust or November 14, 1999.

In
1996, Petróleos Mexicanos renewed for an additional 36 months the transaction with J.P. Morgan and restructured such to a call-spread swap, with
amount payable at termination by J.P. Morgan of not less than U.S. $31.12 dollars per share nor greater than U.S. $46.48 dollars per share.

In
1999, PEMEX renewed the call-spread swap for one additional year. In April 1999, Repsol declared a three-to-one stock split; consequently,
the number of shares in the swap became 44,985,000 and the floor and ceiling prices were U.S.$ 10.374 dollars and U.S.$ 15.492 dollars, respectively.

In
July 1999, PEMEX purchased shares of Repsol-YPF, S.A. to maintain its equity interest in Repsol at approximately 5%, after Repsol's stock capitalization to finance
the purchase of Yacimientos Petrolíferos Fiscales, S.A.

In
December 1999, the collar component of the call spread swap with J.P. Morgan was settled. This enabled PEMEX not to limit potential gains. The resulting structure is that of an
asset swap. The realized cost of termination of the collar component was Ps. 2,666,173, with Ps. 1,058,504 being paid in 1999 and Ps. 1,607,669 being paid in early 2000; the full expense related to
collar termination cost was recorded in 1999.

F-27

---

In January 2000, a PEMEX subsidiary sold 13,679,704 shares of Repsol-YPF purchased in July 1999 for U.S.$ 21.31025 dollars per share. Simultaneously, PEMEX
contracted a three-year swap with Chase Manhattan International Limited for a notional amount of U.S.$ 292,000 and the same number of shares. This was done to maintain the corporate and
economic rights of the shares in exchange for a financial return.

In
March 2000, the J.P. Morgan swap for a notional amount of U.S.$ 467,000 was rolled over, with maturities of one, two and three years. As a result of the restructuring of the
transactions, the swap rollover was made with 26,427,781 shares, with 18,557,219 shares becoming the property of PEMEX.

11. Reserve for retirement payments, pensions and seniority premiums

PEMEX has labor obligations for seniority premiums and pensions, according to regulations established by theLey Federal del
Trabajo(the "Federal Labor Law"), and provisions in the individual and collective labor contracts. This compensation is only payable after the worker or employee has worked a
certain number of years. Benefits are based on the employee's compensation as of his retirement date, as well as years of service. PEMEX has established a reserve for retirement and seniority premium
benefits, determined by independent actuaries. The reserve is calculated by the projected unit-credit method.

The
net cost of the plan recorded in the consolidated statements of operations amounted to Ps.29,901,504, Ps.25,022,850 and Ps.18,208,805 in 2000, 1999 and 1998, respectively. The amount
of benefits projected for pensions and seniority premiums, determined by independent actuaries, is as follows:

2000

1999Obligation for current benefits

Ps.
147,537,355

Ps.
115,215,679Additional amount for projected benefits


44,146,568


38,993,421Obligation for projected benefits


191,683,923


154,209,100Less:Plan assets (trust funds)


9,330,702


11,933,446182,353,221


142,275,654Transition liability to be amortized over 7 years, retirement payments, seniority premiums, and other effects of the actuarial computation


97,984,838


84,305,509Net projected liability


84,368,383


57,970,145Additional liability derived from the excess of obligation for current benefits over net projected liability


54,133,613


45,704,685Accumulated obligation

Ps.
138,501,996

Ps.
103,674,830


12. Equity

On December 31, 1990, certain debt owed by Petróleos Mexicanos to the Mexican Government was capitalized as equity. This capitalization
amounted to Ps. 22,334,195 (U.S. $7,577,000) and was authorized by the Board of Directors of Petróleos Mexicanos (the "Board of Directors"). The capitalization agreement between
Petróleos Mexicanos and the Mexican Government stipulates that the Certificates of Contribution "A" constitute permanent capital.

F-28

---

As
a condition of this capitalization, Petróleos Mexicanos agreed to pay a minimum guarantee dividend(rendimiento mínimo
garantizado)to the Mexican Government, equal to the debt service for the capitalized debt. The minimum guaranteed dividend consists of the payment of principal and interest in
the same terms and conditions as those originally agreed upon with international creditors until the year 2006, at the exchange rates in effect as of the date payments are made. Such payments must be
approved annually by the Board of Directors.

In
December 1997, the Board of Directors and the Mexican Government agreed to an equity reduction of the Certificates of Contribution "A" in exchange for a cash payment to the
Mexican Government of Ps. 12,118,050 (U.S. $1,500,000). Petróleos Mexicanos and the Ministry of Finance and Public Credit have agreed upon a corresponding reduction in the future
payments of the minimum guarantee dividend.

During
2000, Petróleos Mexicanos paid Ps. 5,563,799 (Ps. 5,137,889 during 1999) to the Mexican Government in advance payments on account of the minimum guaranteed
dividend. These payments will be applied to the final amount that the Board of Directors approves as total annual results.

On
October 31, 1998, PEMEX liquidated its investment in the shares of Distribuidora de Gas Natural del Estado de México, S.A. de C.V., and recorded a gain in other
revenues of Ps. 406,677. PEMEX also recorded in the 1998 operating results, dividends of Ps. 372,840 received during the year from that company. All proceeds obtained from these operations were
deposited in the Federal Treasury, through a dividend in the favor of the Mexican Government, approved by the Board of Directors on August 3, 1999.

On
January 31, 1999, PEMEX liquidated its investment in the shares of Distribuidora de Gas de Querétaro, S.A. de C.V., and recorded a gain of Ps. 231,074 in the
1999 operating results. The proceeds obtained from that operation were deposited in the Federal Treasury, through a dividend in the favor of the Mexican Government, approved by the Board of Directors
on May 9, 2000.

F-29

---

13. Foreign currency position

PEMEX has the following assets and liabilities denominated in foreign currencies which are stated in Mexican pesos at the exchange rate prevailing at
December 31, 2000 and 1999:

|                                                              |  | Amount in foreign currency
(Thousands) |  |               |  |                |  
|------------------------------------------------------------- |  | -------------------------------------- |  | ------------- |  | -------------- | -
|
|2000:                                                         |  |                                        |  |               |  |                |  
|U.S. dollars                                                  |  | 4,297,065                              |  | 14,044,116    |  | (9,747,051     | )
|                                                              |  |                                        |  |               |  |                |  
|Japanese yen                                                  |  | 12                                     |  | 127,244,317   |  | (127,244,305   | )
|                                                              |  |                                        |  |               |  |                |  
|Deutsche marks                                                |  |                                       |  | 10,924        |  | (10,924        | )
|                                                              |  |                                        |  |               |  |                |  
|Italian lire                                                  |  | 22,101                                 |  | 1,300,000,184 |  | (1,299,978,083 | )
|                                                              |  |                                        |  |               |  |                |  
|Pounds sterling                                               |  |                                       |  | 127,075       |  | (127,075       | )
|                                                              |  |                                        |  |               |  |                |  
|Austrian schillings                                           |  | 1                                      |  | 506,089       |  | (506,088       | )
|                                                              |  |                                        |  |               |  |                |  
|Swiss francs                                                  |  |                                       |  | 1,056         |  | (1,056         | )
|                                                              |  |                                        |  |               |  |                |  
|French francs                                                 |  |                                       |  | 4,943         |  | (4,943         | )
|                                                              |  |                                        |  |               |  |                |  
|Dutch guilders                                                |  |                                       |  |              |  |               |  
|                                                              |  |                                        |  |               |  |                |  
|Euros                                                         |  |                                       |  | 675,000       |  | (675,000       | )
|                                                              |  |                                        |  |               |  |                |  
|Belgium francs                                                |  |                                       |  | 173,814       |  | (173,814       | )
|                                                              |  |                                        |  |               |  |                |  
|Other currencies                                              |  | various                                |  | various       |  | various        |  
|                                                              |  |                                        |  |               |  |                |  
|Net short position, before foreign-currency hedging (Note 10) |  |                                        |  |               |  |                |  
|                                                              |  |                                        |  |               |  |                |  

|1999:                                                         |  |           |  |               |  |                |   |         |  |     |             |  
|------------------------------------------------------------- |  | --------- |  | ------------- |  | -------------- | - | ------- |  | --- | ----------- | -
|U.S. dollars                                                  |  | 4,368,277 |  | 11,426,361    |  | (7,058,084     | ) | 9.5143  |  | Ps. | (67,152,729 | )
|                                                              |  |           |  |               |  |                |   |         |  |     |             |  
|Japanese yen                                                  |  | 947,753   |  | 96,799,780    |  | (95,852,027    | ) | 0.0931  |  |     | (8,923,824  | )
|                                                              |  |           |  |               |  |                |   |         |  |     |             |  
|Deutsche marks                                                |  |          |  | 12,753        |  | (12,753        | ) | 4.8776  |  |     | (62,204     | )
|                                                              |  |           |  |               |  |                |   |         |  |     |             |  
|Italian lire                                                  |  | 20,414    |  | 1,300,000,000 |  | (1,299,979,586 | ) | 0.0049  |  |     | (6,369,900  | )
|                                                              |  |           |  |               |  |                |   |         |  |     |             |  
|Pounds sterling                                               |  | 51,906    |  | 127,062       |  | (75,156        | ) | 15.3789 |  |     | (1,155,817  | )
|                                                              |  |           |  |               |  |                |   |         |  |     |             |  
|Austrian schillings                                           |  |          |  | 506,100       |  | (506,100       | ) | 0.6933  |  |     | (350,879    | )
|                                                              |  |           |  |               |  |                |   |         |  |     |             |  
|Swiss francs                                                  |  |          |  | 1,241         |  | (1,241         | ) | 5.9472  |  |     | (7,380      | )
|                                                              |  |           |  |               |  |                |   |         |  |     |             |  
|French francs                                                 |  |          |  | 5,068         |  | (5,068         | ) | 1.4544  |  |     | (7,371      | )
|                                                              |  |           |  |               |  |                |   |         |  |     |             |  
|Dutch guilders                                                |  | 782,329   |  |              |  | 782,329        |   | 4.3290  |  |     | 3,386,702   |  
|                                                              |  |           |  |               |  |                |   |         |  |     |             |  
|Euros                                                         |  |          |  | 175,000       |  | (175,000       | ) | 9.5400  |  |     | (1,669,500  | )
|                                                              |  |           |  |               |  |                |   |         |  |     |             |  
|Other currencies                                              |  | various   |  | various       |  | various        |   | various |  |     | (4,046      | )
|                                                              |  |           |  |               |  |                |   |         |  |     |            
|Net short position, before foreign-currency hedging (Note 10) |  |           |  |               |  |                |   |         |  | Ps. | (82,316,948 | )
|                                                              |  |           |  |               |  |                |   |         |  |     |            

F-30

---

14. Effects of inflation on the financial information

The following table reflects the approximate effects of inflation on PEMEX's financial information in accordance with Bulletin B-10 (Amounts as
calculated under Bulletin B-10 columns), except that the concept of fair value has not been included (Note 2.b) see subsequent discussion in this Note. The Basic financial
statements column is prepared in accordance with NIF-06-BIS "A" section A.

|Effect on Balance sheets                             |                                                     
|---------------------------------------------------- | ----------------------------------------------------
|
|
|Equity:                                              |                                                     
|Certificates of Contribution "A"                     |                                                     
|Specific oil-field exploration and depletion reserve |                                                     
|Revaluation surplus                                  |                                                     
|Retained (losses) earnings:                          |                                                     
|                                                     | Prior years                                         
|                                                     | Current year                                        
|Restatement of equity                                |                                                     
|Deficiency from the restatement of equity:           |                                                     
|                                                     | Loss on accumulated monetary Position               
|                                                     | Equity monetary result                              
|                                                     | Accumulated deficit from holding non-monetary assets
|                                                     |                                                     
|                                                     |                                                     
|                                                     |                                                     

|Effect on statements of operations |                                                               
|---------------------------------- | --------------------------------------------------------------
|
|Comprehensive cost of financing:   |                                                               
|                                   | Interest expense and exchange loss capitalized in fixed assets
|                                   | Monetary position gain, Net                                   
|                                   |                                                               
|                                   |                                                               
|                                   |                                                               

The
above table was prepared using the following procedures and assumptions:





F-31

---







There
is evidence that the restated amounts of some of the assets might exceed their "fair value," fair value being defined as the amount of the net cash flows that are reasonably
expected to be received from the use of such assets. The approximate amounts of that overstatement at December 31, 2000 and 1999, are estimated at Ps. 30,407,300 and Ps. 22,751,500,
respectively; these amounts have not been deducted from the restated amount of the assets, as required by Bulletin B-10. As stated in Note 2b), NIF-06-BIS
"A" section A does not consider the concept of fair value.

The
consolidated balance sheets as of December 31, 2000 and 1999 are stated in pesos with purchasing power restated as of those dates and the related consolidated statements of
operations are stated in pesos reflecting average purchasing power for those years. The consolidated balance sheets are prepared under a NIF-06-BIS "A" section A basis,
(see Note 2b)).

15.  Commitments and contingencies



F-32

---



The
contracts which have been signed to date include:



F-33

---



16.  Subsidy

In 2000 and 1999, the official sale price of liquid petroleum gas (LPG) was controlled, and PEMEX could not recoup from the consumer the true economic cost (in
terms of price and exchange rate) of the importation of such gas. In 2000 and 1999, the difference between official sale price and economic cost resulted in a loss of Ps. 5,098,000 and
Ps. 3,437,000, respectively, to PEMEX from the sales of LPG.

17.  Hydrocarbon reserves (unaudited)

In accordance with the Political Constitution of the United Mexican States and the Organic Law, all reserves of petroleum and other hydrocarbons in Mexico are the
property of the nation. Furthermore, as mandated by the Organic Law, PEMEX has the exclusive right to extract and exploit the resources. Mexico's proved reserves of hydrocarbons were
25,071 million barrels of oil equivalent at December 31, 1999 and 23,525 million barrels of oil equivalent at December 31, 2000. As previously indicated, reserves have been
adjusted by revisions, increases and developments and have been decreased by the production for the year.

18.  Differences between Mexican GAAP and U. S. GAAP

A summary of the significant differences between accounting principles followed by PEMEX and its Subsidiary Companies and generally accepted accounting principles
in the United States (U.S. GAAP) is presented below.

The
accompanying consolidated financial statements have been prepared in accordance with Mexican GAAP and, as to the recognition of inflation, in accordance with
NIF-06-BIS "A" section A applicable to public-sector entities, which differs in certain significant respects from U.S. GAAP. Such

F-34

---

differences involve methods for measuring the amounts shown in the consolidated financial statements, as well as additional disclosures required by U.S. GAAP.

I. Differences in measurement methods:

The principal differences between Mexican GAAP and U.S. GAAP are disclosed below. (Loss) income represents pre-tax income, because PEMEX is not
subject to Mexican income taxes, and is reconciled as follows:

|                                              |                                         | 2000 |             | 1999       |     | 1998        |           
|--------------------------------------------- | --------------------------------------- | ---- | ----------- | ---------- | --- | ----------- | ----------
|
|Loss for the year reported under Mexican GAAP |                                         | Ps.  | (19,710,392 | )          | Ps. | (21,156,771 | )         
|                                              |                                         |      |             |            |     |             |           
|U.S. GAAP adjustments:                        |                                         |      |             |            |     |             |           
|                                              | Exploration and drilling costs(a)       |      |             | 3,710,002  |     |             | 4,692,946 
|                                              | Pensions and seniority premiums(c)      |      |             | (203,877   | )   |             | (10,742   
|                                              | Post retirement benefits(c)             |      |             | (5,777,295 | )   |             | (5,067,595
|                                              | Accrued vacation(d)                     |      |             | (83,096    | )   |             | (171,957  
|                                              | Fixed asset depreciation(f)             |      |             | 10,364,367 |     |             | 9,501,544 
|                                              | Foreign currency exchange losses(g)     |      |             | (139,692   | )   |             |          
|                                              | Capitalization of interest(h)           |      |             | 471,555    |     |             | 748,164   
|                                              | Accounting for derivatives(j)           |      |             | (11,005    | )   |             | (11,776   
|                                              | Sale of shares of Repsol(k)             |      |             | (118,742   | )   |             |          
|                                              | Sale of air transport assets(l)         |      |             |           |     |             | 34,097    
|                                              | Fixed asset impairment(n)               |      |             | (3,236,480 | )   |             | (3,928,205
|                                              | Profit in inventory(r)                  |      |             | (518,791   | )   |             |          
|                                              | Depreciation convention(s)              |      |             | (1,443,270 | )   |             |          
|                                              |                                         |      |             |            |     |             |           
|Total U.S. GAAP adjustments, net              |                                         |      | 3,013,676   |            |     | 5,786,476   |           
|                                              |                                         |      |             |            |     |             |           
|Loss for the year under U.S. GAAP             |                                         | Ps.  | (16,696,716 | )          | Ps. | (15,370,295 | )         
|                                              |                                         |      |             |            |     |             |           
|                                              |                                         |      |             |            |     |             |           
|Loss for the year under U.S. GAAP             |                                         | Ps.  | (16,696,716 | )          | Ps. | (15,370,295 | )         
|Other comprehensive (loss) income:            |                                         |      |             |            |     |             |           
|                                              | Unrealized (losses) gains on securities |      |             | (3,922,094 | )   |             | 3,487,966 
|                                              |                                         |      |             |            |     |             |           
|                                              | Other comprehensive (loss) income:      |      |             | (3,922,094 | )   |             | 3,487,966 
|Comprehensive loss                            |                                         | Ps.  | (20,618,810 | )          | Ps. | (11,882,329 | )         
|                                              |                                         |      |             |            |     |             |           
|Accumulated other comprehensive income        |                                         | Ps.  | 5,086,274   |            | Ps. | 9,008,368   |           
|                                              |                                         |      |             |            |     |             |           

F-35

---

|                                  |                                                              | 2000
As Restated |              | 1999
As Restated |    
|--------------------------------- | ------------------------------------------------------------ | ---------------- | ------------ | ---------------- | ---
|Equity is reconciled as follows:  |                                                              |                  |              |                  |    
|Equity under Mexican GAAP         |                                                              | Ps.              | 150,605,372  |                  | Ps.
|U. S. GAAP adjustments:           |                                                              |                  |              |                  |    
|                                  | Exploration and drilling costs(a)                            |                  |              | 17,434,129       |    
|                                  | Fixed assetsunits-of-production accumulated amortization(b) |                  |              | (1,756,225       | )  
|                                  | Pensions and seniority premiums(c)                           |                  |              | (3,245,201       | )  
|                                  | Post retirement benefits(c)                                  |                  |              | (19,555,116      | )  
|                                  | Accrued vacation(d)                                          |                  |              | (401,351         | )  
|                                  | Inflation accountingfixed assets valuation(e)               |                  |              | (102,841,242     | )  
|                                  | Fixed assetsaccumulated depreciation(f)                     |                  |              | 33,733,786       |    
|                                  | Fixed assetsforeign currency exchange losses(g)             |                  |              | (64,507,568      | )  
|                                  | Fixed assetscapitalization of interest(h)                   |                  |              | (3,730,078       | )  
|                                  | Accounting for derivatives(j)                                |                  |              |                 |    
|                                  | Sale of shares of Repsol(k)                                  |                  |              | (361,150         | )  
|                                  | Advanced payments on minimum guaranteed dividend(m)          |                  |              | (5,563,799       | )  
|                                  | Fixed assets-impairment(n)                                   |                  |              | (16,502,466      | )  
|                                  | Accounting for investment securities(o)                      |                  |              | 5,086,274        |    
|                                  | Profit in inventory(r)                                       |                  |              | (518,791         | )  
|                                  | Depreciation convention(s)                                   |                  |              | (1,443,270       | )  
|                                  |                                                              |                  |              |                  |    
|Total U. S. GAAP adjustments, net |                                                              |                  | (164,172,068 | )                |    
|                                  |                                                              |                  |              |                  |    
|Equity under U. S. GAAP           |                                                              | Ps.              | (13,566,696  | )                | Ps.
|                                  |                                                              |                  |              |                  |    

F-36

---

Explanation of reconciling items:

As
discussed in Notes 2 e) and 2 f), under Mexican GAAP, exploration and drilling costs are charged to the equity reserve for exploration and depletion of oil fields. Exploration
and drilling costs related to successful oil wells are credited to the equity reserve and recorded as fixed assets. Cost of sales is recognized by recording a per-crude oil barrel quota
charge in the statement of operations and recording a credit to the equity reserve. The equity reserve may be increased by a charge to operations.

Under
U.S. GAAP, costs of drilling exploratory wells and exploratory-type stratigraphic test wells are initially capitalized and are charged to expense if proved reserves are
not found. Development costs, including the costs of drilling development wells and development-type stratigraphic test wells are capitalized. The capitalized costs of wells and related
equipment are amortized on a units-of-production (UOP) basis, as the related oil and gas reserves are extracted; costs of unproved properties are assessed periodically and a
loss is recognized if the properties are impaired (See also Note 18 I (n)). PEMEX has accordingly adjusted operations and equity to reflect the impact of U.S. GAAP on exploration and drilling
costs; i.e., The Mexican GAAP operations charge related to the cost per barrel has been reversed, the equity account related to the specific oil field exploration and drilling reserve has been
reversed to zero, and costs related to properties in exploration and development phase have been capitalized in accordance with U.S. GAAP.

In
1998, PEMEX switched to the UOP method of amortization for its well and platform assets. In 1997, for Mexican GAAP purposes, PEMEX amortized its well and platform assets using the
straight line method. Thus, in 1997 an adjustment was necessary for U.S. GAAP purposes to account for such assets under the UOP method. For the year ended December 31, 1997, the units of
production method generated Ps.1,283,618 more in amortization expense than the straight line method and PEMEX has accordingly adjusted operations and equity for such effect. The effect of this change
in accounting principle is immaterial to the consolidated financial statements. PEMEX has accounted for the UOP conversion on a prospective basis only and no cumulative catch up adjustment was made
for purposes of Mexican GAAP.

At
December 31, 2000, 1999, and 1998 all reserves presented in the notes to the consolidated financial statements meet the definition of proved reserves under
Rule 4-10(a) of Regulation S-X and all UOP calculations are made using these bases.

Bulletin
D-3 was issued in 1992 by the IMCP. It establishes the procedures for measuring the expenses and liabilities for pension plans and seniority premiums. The primary
differences between PEMEX's application of Bulletin D-3 and Statement of Financial Accounting Standards (SFAS) No. 87 "Employers Accounting for Pensions" relate to actuarial
assumptions and implementation dates. PEMEX adopted SFAS No. 87 effective January 1, 1989 and recorded a transition obligation on adoption which is being amortized over 15 years.

Under
U.S. GAAP, PEMEX follows the guidelines of SFAS No. 106, "Employers' Accounting for Post-Retirement Benefits Other Than Pensions," in accounting for health
service and other supplemental payments provided to retirees. SFAS No. 106 requires the accrual of the expected cost of providing such benefits to employees during the years that the employees
render service. Under Mexican GAAP, PEMEX accounts for supplemental payments under its Bulletin D-3 calculations. PEMEX, however, accounts for other health service benefits on a
pay-as-you-go basis under Mexican GAAP.

F-37

---

PEMEX
implemented SFAS 132 effective January 1, 1998. This statement expanded disclosures to be made relative to pensions and other post-retirement benefit
obligations, but did not have a material impact on calculations made under SFAS 87 or SFAS 106.

Under
Mexican GAAP, vacation expense is recognized when taken rather than in the period earned by the employee, which is required under U.S. GAAP.

U.S.
GAAP does not require the recognition of the effects of inflation on the consolidated financial statements. As mentioned in Note 2 b), PEMEX's consolidated financial
statements recognize the effects of inflation according to NIF-06-BIS "A" section A, which requires that non-monetary assets, including inventories of
materials and supplies and fixed assets be restated to their net realizable value through appraisals made by independent appraisers or by using the specific price index (SPI); the difference is
recorded as a revaluation surplus.

Since
NIF-06-BIS "A" section A is not deemed to be a comprehensive method of accounting for inflation (as discussed in Note 14), PEMEX has
eliminated, retroactively to 1992, the effect of revaluation of fixed assets, inventories and costs of sales from the reconciliation of operations and equity. PEMEX has not adjusted the depreciation
effect of fixed asset revaluations prior to 1992 under NIF-06-BIS "A" section A for the reconciliation of operations and equity. For U.S. GAAP purposes, the 1992
balances became the historical basis of the fixed assets under an accommodation granted by the U.S. Securities and Exchange Commission.

Under
Mexican GAAP, PEMEX depreciates the book value of its fixed assets; such book value includes amounts capitalized for foreign exchange losses and restatements for inflation. For
U.S. GAAP purposes, PEMEX has reversed the depreciation expense attributable to restatements for inflation and foreign exchange losses which are included in the basis of fixed assets.

Under
Mexican GAAP, exchange losses arising from debt are capitalized as part of fixed assets; the net amount of the remaining net exchange differences is reflected in the statement of
operations, debited to costs and operating expenses or credited to revenues.

To
conform with U.S. GAAP, all exchange gains or losses have been recognized in results of operations for 2000, 1999 and 1998 in the reconciliation of operations and equity. In addition,
under U.S. GAAP, foreign currency transaction gains or losses would be reported as non-operating income or expenses. As further explained in Note 5(c), there were no foreign
currency exchange losses capitalized in 1999, primarily as a result of a strong peso, and therefore, no adjustment has been accorded to the reconciliation for 1999.

Under
Mexican GAAP, interest is capitalized to property, plant and equipment based upon total interest cost incurred on loans identified with construction projects, whether or not
amounts borrowed have been spent on such projects.

Under
U.S. GAAP, interest is capitalized based upon total interest incurred in proportion to additions to construction in progress. PEMEX has accordingly adjusted operations and equity
to reflect the U.S. GAAP requirements for capitalizing interest. The adjustment for capitalized interest is presented net of the effects of depreciation related to amounts previously capitalized for
such assets.

F-38

---

Interest
costs for the years ended December 31, 2000, 1999 and 1998, for Mexican GAAP and U.S. GAAP purposes were allocated as follows:

|                    |                                                                      | 2000 |     | 1999       |  | 1998
|------------------- | -------------------------------------------------------------------- | ---- | --- | ---------- |  | ----
|Under Mexican GAAP: |                                                                      |      |     |            |  |     
|                    | Interest capitalized in fixed assets                                 |      | Ps. | 3,913,180  |  | Ps. 
|                    | Interest in the specific oil-field exploration and depletion reserve |      |     | 814,739    |  |     
|                    | Interest expense                                                     |      |     | 15,618,066 |  |     
|                    |                                                                      |      |     |            |  |     
|                    | Total interest cost                                                  |      | Ps. | 20,345,985 |  | Ps. 
|                    |                                                                      |      |     |            |  |     
|Under U.S. GAAP:    |                                                                      |      |     |            |  |     
|                    | Interest capitalized in fixed assets                                 |      | Ps. | 4,273,611  |  | Ps. 
|                    | Interest expense                                                     |      |     | 16,072,374 |  |     
|                    |                                                                      |      |     |            |  |     
|                    | Total interest cost                                                  |      | Ps. | 20,345,985 |  | Ps. 
|                    |                                                                      |      |     |            |  |     

PEMEX
has an internal structure to identify and quantify restoration costs. This internal structure identifies affected areas on a site by site basis through periodic reports received
from field managers and outlines the manner in which extent of contamination is to be assessed and contained. PEMEX accrues liabilities related to remediation liabilities when such are known and
reasonably estimable, generally defined as the point in which an initial study reveals the presence of contamination and a reasonable estimate of the size of the affected area and related remediation
costs can be determined.

Since
1994, under the direction of the Mexican Government, PEMEX has contracted with external engineers for the performance of operational audits which included environmental assessments
of the sites being audited. These assessments include cost estimates for remedying any shortfall in compliance with Mexican environmental laws. Such remedies can include improving the operating
efficiency of plants, cleaning up contaminated land and water, and investing in capital expenditures to minimize the effect of PEMEX's operations on the environment. Through December 31, 2000,
373 operational audits have been completed and have been sent to the Mexican Government for approval. After approval by the Mexican Government, PEMEX reviews the audits and determines which findings
can be resolved by changing current plant or drilling operations and implementing the current capital expenditures plan. In addition, PEMEX recalculates the estimated cost of environmental cleanups
using domestic labor rates instead of the higher international labor rates used by the engineers in calculating such costs. Having completed such an analysis, PEMEX adjusts the estimated costs to
bring the plant into compliance with Environmental Law and then negotiates an agreement with the Mexican Government stipulating the terms, amounts to be expended and the steps to be taken to bring the
site into compliance with Environmental Law.

For
U.S. GAAP purposes, environmental expenditures are expensed or capitalized depending on their future economic benefit. Expenditures that relate to an existing condition caused by
past operations and that have no future economic benefit are expensed. Liabilities for expenditures of a non-capital nature are recorded on an undiscounted basis when environmental
assessment and/or remediation is probable and the costs can be reasonably estimated.

Under
U.S. GAAP and Mexican GAAP, PEMEX has established accruals for restoration and removal costs identified in their operational audits. On the basis of its internal evaluation of the
environmental findings in the operational audits and ongoing negotiations with the Mexican Government regarding
the resolution of such findings, PEMEX recorded liabilities because when remedial efforts are probable and the amounts can be reasonably estimated. The amount and timing of such expenditures are
subject to further negotiations with the Mexican Government.

F-39

---

During
2000 and 1999, PEMEX invested Ps. 2,711,000 and Ps. 1,873,000, respectively, in various environmental projects. PEMEX has budgeted approximately Ps. 3,349,000 for environmental
projects in 2001. The most important of these projects have been directed to the modernization of installations, the implementation of systems and control mechanisms to monitor atmospheric pollution,
the acquisition of equipment to clean hydrocarbon spills, the expansion of aquatic effluent systems, the restoration and reforestation of affected areas, studies for environmental investigation and
the conduct of environmental audits. In addition, PEMEX has engaged in extensive research and development efforts to develop capacity for increased production of unleaded gasoline, diesel and fuel oil
with lower sulfur content and alternative fuels, such as industrial oil gas and natural gas. Currently, PEMEX is developing (Procedimiento para la Determinación
de Gastos Asociados a las Actividades de Seguridad Industrial y Protección Ambiental) a procedure to determine the costs and expenses related to the activities
associated with integral safety and environmental management.

Management
of PEMEX believes that its operations are in substantial compliance with Environmental Law as such law has been historically interpreted and enforced.

PEMEX
has contracted insurance policies to cover the cost of environmental contingencies. The accruals for U.S. and Mexican GAAP purposes are not reflected net of any amounts forthcoming
under such policies.

Written instruments:Under Mexican GAAP, PEMEX records income on its written options as the premiums are collected. Gains and
losses on written options are recognized on a cash basis on each contractual payment date (see also Note 10). Under U.S. GAAP, PEMEX records option premiums as deferred income when received and
amortizes the deferred income in relation to the market value of the option with gains and losses recorded in current operations.

Purchased instruments:Under Mexican GAAP, the cost of premiums on purchased options are expensed when paid. Gains and losses
on purchased options are recognized on a cash basis on each contractual payment date. Under U.S. GAAP, the premiums paid for interest rate options and cap agreements purchased are amortized to
interest expense over the terms of the agreements. In addition, purchased options which are non-hedging instruments are marked to market with gains and losses recorded in
current operations. Amounts receivable or payable under purchased instruments are recognized as an adjustment to interest expense.

Under Mexican GAAP and as discussed in Note 10, PEMEX recorded a Ps. 118,742 gain in 2000 and a Ps. 242,408 gain in 1994 on the transfer of its Repsol shares to Chase and J.P.
Morgan trusts. For U.S. GAAP purposes, the transfer of the shares does not meet the criteria for sale recognition and accordingly, the gain was reversed and the transfer of the shares treated as a
financing transaction.

Under
Mexican GAAP, during 1994, PEMEX recorded a gain of Ps. 340,969 on the sale of its air transport division to a newly created company, Servicios Aéreos Especializados
Mexicanos, S.A. (SAEMSA), in exchange for a 49% ownership interest in such company plus other consideration of Ps. 291,103. Under Mexican GAAP, the gain was calculated by including the imputed fair
value of the 49% interest in SAEMSA which was received by PEMEX as part of the sale proceeds. Under the sale agreement, PEMEX will continue to have more than a minor use of the property through a
leaseback. For U.S. GAAP purposes, this transaction is treated as a sale-leaseback, accordingly, the realized gain was deferred, and will be amortized into income over the term of the
lease. The amortization of the deferred gain during 1999 and 1998 amounted to Ps.34,097, and Ps. 68,194, respectively. At December 31, 1999, the deferred gain related to this transaction was
fully amortized to income.

F-40

---

Under
Mexican GAAP, advance payments on the minimum guarantee dividend owed to the Mexican Government, derived from the capitalization of debt as described in Note 12, are
recorded as an account receivable which is reserved against retained earnings upon formalization of the amount by the Board of Directors of Petróleos Mexicanos.

Under
U.S. GAAP, such balances are considered as a reduction in equity. PEMEX has accordingly adjusted equity to reflect such U.S. GAAP reduction in equity.

The
effective rate used to calculate the minimum guaranteed dividend is LIBOR plus 0.8125% (which was in a range from 7.1820% to 7.8055% and from 5.9404% to 6.4740% for 2000 and 1999,
respectively).

In
connection with the reduction of the Certificates of Contribution "A" described in Note 12, Petróleos Mexicanos and the Mexican Government agreed to modify the
schedule of the minimum guaranteed dividend payments for future years commencing in 1998.

The
scheduled maturities on the original principal amount of the capitalized debt over the next five years is as follows:

Year2001

U.S. $
2002


873,8482003


873,8482004


873,8482005


873,848Thereafter


873,848U.S. $
4,369,240


For
U.S. GAAP purposes, effective January 1, 1996, PEMEX adopted SFAS No.121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of." SFAS No.121 provides criteria for when and in what circumstances an impairment loss (write-down) should be recorded and the manner in which the write-down
should be measured. An evaluation of impairment is undertaken whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Under SFAS No.121, the impairment
criteria is met when the carrying value of assets exceeds the sum of expected future cash flows (undiscounted and without interest charges) of related assets. The asset is written down to fair value,
if available, or the present value of expected future cash
flows. PEMEX measures impairment of its oil and gas producing assets based on the undiscounted estimated future cash flows associated with estimated proved reserves on a field basis.

In
determining the estimated future cash flows for impairment purposes for all periods presented, hydrocarbon duties based on sales to third parties have not been included in the net
cash flow calculation. In accordance with the requirements of SFAS 121, management believes that the hydrocarbon duties paid are similar in nature to income taxes or dividend distributions
payable to its parent, and therefore are properly excluded from the net cash flow calculation.

The
impact of the adoption of SFAS No.121 was to reduce long-term assets with a corresponding charge to operations of Ps. 3,236,480, Ps. 3,928,205 and Ps.1,831,482, in 2000,
1999 and 1998, respectively. In 2000 the expense relates primarily to refining assets and petrochemical plants. In 1999 the expense relates primarily to exploration and production assets and secondary
petrochemical plants, with an immaterial amount of impairment being related to gas and basic petrochemical assets. In 1998, the expense relates primarily to secondary petrochemical plants, with an
immaterial amount of

F-41

---

impairment being related to producing fields. Expected cash flows and fair values were estimated internally using PEMEX methodology and practices for valuing similar properties to be acquired or
sold.

In
1996, PEMEX adopted SFAS No.115 "Accounting for Certain Investments in Debt and Equity Securities" for U.S. GAAP purposes and has recorded the adjustment to equity as the cumulative
effect of change in accounting principle. PEMEX has classified its investment securities as "Available-for-Sale" and, accordingly, they are recorded at fair value with
unrealized gains and losses excluded from operations and reported in other comprehensive income (loss). The fair value of the securities is determined by quoted market prices at December 31,
2000. At December 31, 1999 and 1998, PEMEX had a call spread swap in place. Thus, at December 31, 1999 and 1998 the fair value of the securities is determined by quoted market prices, or
in the event that the quoted market price exceeds the maximum price receivable under the call spread, fair value is stated as the amount receivable in accordance with the call spread swap. (See
discussion in Note 10). The cost and fair value of PEMEX's investments at December 31, 2000, 1999 and 1998 is as follows:

As Restated:

|2000          |  | 1999          |  | 1998         
|------------- |  | ------------- |  | -------------
|
|Ps. 3,968,724 |  | Ps. 9,054,998 |  | Ps. 5,086,274

Under Mexican GAAP, investment securities are carried at cost. The unrealized gain for U.S. GAAP purposes is largely explained by the appreciation
of the underlying security price.

Under
Mexican GAAP, the IEPS is reflected as part of "Net domestic sales" when charged to customers and then deducted from "Income before hydrocarbon extraction duties, special tax on
production and services and other."

Under
U.S. GAAP, this tax would have no net effect on revenues nor would it be deducted after "Income before hydrocarbon extraction duties, special tax on production and services and
other", as both the amount charged to customers and the amount accrued as payable to the tax authorities would be reflected in revenues.

As
a result, under U.S. GAAP, revenues would have been less than those reflected under Mexican GAAP by Ps. 69,556,520, Ps. 88,349,243, and Ps. 65,854,312, for the years ended
December 31, 2000,
1999 and 1998, respectively. Neither would those amounts have been deducted after "Income before hydrocarbon extraction duties, special tax on production and services and other."

Under
Mexican GAAP, PEMEX presents statements of changes in financial position. In contrast with the statements of cash flows required by U.S. GAAP, PEMEX's statements of changes in
financial position do not include certain information relating to the three major categories of sources and uses of funds: operating, financing and investing activities.

Under
U.S. GAAP, the following information would be disclosed separately in reconciling loss for the year to funds provided by operations: changes in hydrocarbon extraction duties,
changes in allowances for doubtful accounts and slow-moving inventories, net exchange gains or losses and accrued interest income from affiliates. Additionally, under U.S. GAAP, borrowings
and repayments of debt would be presented separately in arriving at funds from financing activities, and investments in and the

F-42

---

proceeds from the sale of property, wells, plants and transportation equipment would be presented separately in arriving at funds from investment activities. In the statements of changes in financial
position, PEMEX has disclosed information within the financing and investment categories on a net basis.

The
following table details the effects discussed above using Mexican GAAP measurement methods and U.S. GAAP presentation:

|                                                                                 |               | 2000                      |             | 1999      |          | 1998        |           
|-------------------------------------------------------------------------------- | ------------- | ------------------------- | ----------- | --------- | -------- | ----------- | ----------
|Cash flows from operating activities:                                            |               |                           |             |           |          |             |           
|Loss for the year plus or less charges or credits not requiring the use of cash: |               |                           |             |           |          |             |           
|Following U.S. GAAP presentation                                                 |               | Ps.                       | 44,966,205  |           | Ps.      | 38,151,056  |           
|                                                                                 | Difference(1) |                           |             | 53,568    |          |             | (1,202,856
|                                                                                 |               |                           |             |           |          |             |           
|Under Mexican GAAP                                                               |               |                           | 45,019,773  |           |          | 36,948,200  |           
|                                                                                 |               |                           |             |           |          |             |           
|Increase (decrease) in assets and liabilities:                                   |               |                           |             |           |          |             |           
|Following U.S. GAAP presentation                                                 |               |                           | (21,795,652 | )         |          | (22,913,660 | )         
|                                                                                 | Differences   |                           |             |           |          |             |           
|                                                                                 |               | Accounts receivable(3)    |             |           | 467,523  |             |           
|                                                                                 |               | Inventory(1)              |             |           | (159,791 | )           |           
|                                                                                 |               | Sundry credits reserve(1) |             |           | 563,594  |             |           
|                                                                                 |               | Interest, net             |             |           | 392,771  |             |           
|                                                                                 |               |                           |             |           |          |             |           
|Under Mexican GAAP                                                               |               |                           | (20,531,555 | )         |          | (19,167,535 | )         
|                                                                                 |               |                           |             |           |          |             |           
|Following U.S. GAAP presentation                                                 |               |                           | 23,170,553  |           |          | 15,237,396  |           
|                                                                                 | Differences   |                           |             | 1,317,665 |          |             | 2,543,269 
|                                                                                 |               |                           |             |           |          |             |           
|Under Mexican GAAP                                                               |               | Ps.                       | 24,488,218  |           | Ps.      | 17,780,665  |           
|                                                                                 |               |                           |             |           |          |             |           

F-43

---



|                                                                                                                                                     |                                                 | 2000                                                       |             | 1999        |             | 1998        |            
|---------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | ---------------------------------------------------------- | ----------- | ----------- | ----------- | ----------- | -----------
|Cash flows from financing activities:                                                                                                                |                                                 |                                                            |             |             |             |             |            
|                                                                                                                                                     | New long-term financing                         |                                                            | Ps.         | 77,407,465  |             | Ps.         | 68,091,176 
|                                                                                                                                                     | Financing payments                              |                                                            |             | (52,835,673 | )           |             | (64,101,015
|                                                                                                                                                     | Dividends paid to the Mexican Government        |                                                            |             | (5,563,799  | )           |             | (5,137,889 
|                                                                                                                                                     | Advance payment on guaranteed minimum dividends |                                                            |             | (299,766    | )           |             | 189,257    
|                                                                                                                                                     | Sale of future accounts receivable              |                                                            |             | 8,675,835   |             |             | 26,702,250 
|                                                                                                                                                     |                                                 |                                                            |             |             |             |             |            
|                                                                                                                                                     |                                                 | Net increase in financing following U.S. GAAP presentation |             |             | 27,384,062  |             |            
|Difference:                                                                                                                                          |                                                 |                                                            |             |             |             |             |            
|                                                                                                                                                     | Foreign currency exchange (gain) loss           |                                                            |             | (461,029    | )           |             | (3,652,678 
|                                                                                                                                                     | Interest accrued, not paid                      |                                                            |             | 392,771     |             |             | 1,156,428  
|                                                                                                                                                     | Dividends paid to the Mexican Government(4)     |                                                            |             | 425,910     |             |             | 2,074,142  
|                                                                                                                                                     | Notes payable to contractors                    |                                                            |             | 15,599,161  |             |             | 1,799,315  
|                                                                                                                                                     |                                                 |                                                            |             |             |             |             |            
|                                                                                                                                                     |                                                 | Net increase in financing under Mexican GAAP               |             | Ps.         | 43,340,875  |             | Ps.        
|                                                                                                                                                     |                                                 |                                                            |             |             |             |             |            
|Cash flows from investing activities:                                                                                                                |                                                 |                                                            |             |             |             |             |            
|                                                                                                                                                     | Acquisition of fixed assets                     |                                                            | Ps.         | (60,633,593 | )           | Ps.         | (38,697,694
|                                                                                                                                                     | Disposal of fixed assets(2)                     |                                                            |             | 12,383,376  |             |             | 4,950,878  
|                                                                                                                                                     |                                                 |                                                            |             |             |             |             |            
|Net investment at cost in property, wells, plants and transportation equipment under U.S. GAAP                                                       |                                                 |                                                            | (48,250,217 | )           |             | (33,746,816 | )          
|Capitalized exchange loss                                                                                                                            |                                                 |                                                            | (139,692    | )           |             |            |            
|Acquisitions not requiring cash                                                                                                                      |                                                 |                                                            | (15,599,161 | )           |             | (1,799,315  | )          
|                                                                                                                                                     |                                                 |                                                            |             |             |             |             |            
|Net investment at cost in property, wells, plants and transportation equipment under Mexican GAAP (including capitalized exchange loss and interest) |                                                 | Ps.                                                        | (63,989,070 | )           | Ps.         | (35,546,131 | )          
|                                                                                                                                                     |                                                 |                                                            |             |             |             |             |            
|                                                                                                                                                     | Supplemental cash flow information:             |                                                            |             |             |             |             |            
|                                                                                                                                                     |                                                 | Cash payments for taxes                                    |             | Ps.         | 288,474,111 |             | Ps.        
|                                                                                                                                                     |                                                 | Cash payments for interest, net of amount capitalized      |             |             | 19,953,214  |             |            

---

Under
Mexican GAAP, PEMEX values crude oil and derivatives for export at net realizable value. In contrast, U.S. GAAP requires that inventories not be valued above cost. For U.S. GAAP
purposes, PEMEX has eliminated the effect of profit in inventory and has increased such amount to U.S. GAAP loss presented. For the years ending December 31, 1999 and 1998 this adjustment was
immaterial to the U.S. GAAP reconciliation primarily due to reduced volumes of crude inventory at year-end 1999 and low year-end crude prices in 1998.

F-44

---

Under
Mexican GAAP, PEMEX begins to depreciate assets the year after which they are placed in service. In accordance with U.S. GAAP assets should be depreciated from the date placed in
service or using a mid-year convention. For the year ended December 31, 2000, due to significant new PIDIREGAS projects financed through the Trust, an adjustment for depreciation
has been added to the U.S. GAAP reconciliation. Additional U.S. GAAP depreciation at December 31, 1999 and 1998 related to PIDIREGAS projects was immaterial and thus not considered as an
adjustment to the reconciliation as of those dates.

PEMEX
restated its U.S. GAAP reconciliation as of and for the three years ended December 31, 2000. The principal adjustments made to the reconciliation reflect the changes
discussed below.

Previously,
certain derivative transactions related to Repsol were accounted for in the reconciliation. In the restated Mexican GAAP financial statements, these transactions have been
recognized as accrued liabilities at year-end 1999, thus eliminating the difference in accounting between Mexican and U.S. GAAP. Further, the U.S. GAAP reconciliation for the years ended
December 31, 1999 and 2000 has been revised to include cost basis adjustments for all Repsol shares held by PEMEX and subsidiary companies. The adjusted cost basis for Repsol shares includes
corrections made to the number of shares held by PEMEX at year-end 1999 and corrections made to the amount presented as the historical cost of shares held within the Strategic Money
Management Company B.V. at December 31, 2000 and 1999. PEMEX has in the past and will in the future continue to account for the Repsol shares as available for sale securities under
SFAS 115.

Accumulated
equity amounts related to exploration and drilling costs for the years ended December 31, 2000, 1999, and 1998 have been restated to reflect accumulated capital
charges arising in prior periods under U.S. GAAP respective to unsuccessful developmental wells. Under U.S. GAAP, amounts relating to the drilling of unsuccessful developmental wells are capitalized,
whereas such amounts are expensed under Mexican GAAP. In previous periods, due to classification discrepancies, certain capital charges related to developmental wells had not been included as a U.S.
GAAP versus Mexican GAAP equity difference. The accumulated equity amounts have also been revised to eliminate portions of the specific oil field exploration and drilling reserve accumulated under
Mexican GAAP for future drilling costs and not fully reversed in prior periods for U.S. GAAP purposes. Furthermore, under Mexican GAAP and as explained in Notes 2(h) and 18 I (b), a predetermined cost
per barrel is charged to cost of sales for each barrel of oil produced. Drilling and other exploration and development costs are then charged against the reserve, as incurred, for Mexican GAAP with
any expenditures related to successful wells then being capitalized out of the reserve to an appropriate fixed asset account. For U.S. GAAP, the reserve is reversed, as are annual charges to cost of
sales resulting from the accrual of such reserve, and the U.S. GAAP expense for exploration and drilling equals only the exploration and drilling costs related to unsuccessful exploratory wells. In
all prior years, the income impact of the cost of sales charge related to the reserve was properly reversed; however, the effect of the reserve was not fully reversed in U.S. GAAP equity, as it was
erroneously believed that there should be a difference in equity to the extent that cost per barrel charges in Mexican GAAP exceeded actual drilling expenditures and other exploration and production
related expenditures for U.S. GAAP. Thus, the restatement is related to the fact that the reserve accrued for Mexican GAAP was not fully reversed out of U.S. GAAP equity.

Annual income amounts related to exploration and drilling have been revised for 1998 and 1999 to consider the application of additional financing costs, thus decreasing U.S. GAAP income.
The annual income amount for 2000 has been revised to consider additional exploration costs related to PIDIREGAS wells.

Adjustments
have also been made to the reconciling line item related to accrued vacation. These adjustments were made to correct mathematical errors in the recognition of the reconciling
item for annual accrued vacation charge.

F-45

---

As
explained in Note 2 (s) the Mexican GAAP financial statements have been restated to include an estimate for future dismantlement and abandonment obligations on an
undiscounted current cost basis. This adjustment recognized for Mexican GAAP is also an adjustment for U.S. GAAP, and therefore has been considered in the U.S. GAAP reconciliation restatement tables.

The
following table presents the effects of the aforementioned adjustments on income (loss) for each of the three years ended December 31, 2000, under U.S. GAAP:

|                                                                                    |  | 2000 |             | 1999 |     | 1998        |  
|----------------------------------------------------------------------------------- |  | ---- | ----------- | ---- | --- | ----------- | -
|Income (loss) for the year, as originally reportedU.S.GAAP                         |  | Ps.  | (12,707,801 | )    | Ps. | (13,011,669 | )
|Adjustment recognized under Mexican and U.S. GAAP for dismantlement and abandonment |  |      | (1,200,666  | )    |     | (1,321,233  | )
|Adjustments related to exploration and drilling costs                               |  |      | (2,622,057  | )    |     | (659,353    | )
|Adjustments related to accrued vacation                                             |  |      | (166,192    | )    |     | (378,040    | )
|                                                                                    |  |      |             |      |     |             |  
|Income (loss) for the year as restatedU.S. GAAP                                    |  | Ps.  | (16,696,716 | )    | Ps. | (15,370,295 | )
|                                                                                    |  |      |             |      |     |             |  

---

Notes to Table:The previously presented U.S. GAAP reconciliation included an item to recognize an additional accrued liability related to
Repsol transactions, as this amount had not formerly been
accrued in the Mexican GAAP financial statements. As the Repsol accrued liability has now been recognized in the restated financial statements, such a reconciling item is no longer necessary.

The
following table presents the effects of the aforementioned adjustments on comprehensive income (loss) for each of the three years ended December 31, 2000 under U.S. GAAP:

|                                                                                    |  | 2000 |             | 1999 |     | 1998        |  
|----------------------------------------------------------------------------------- |  | ---- | ----------- | ---- | --- | ----------- | -
|Comprehensive income (loss) for the year as originally reportedU.S. GAAP           |  | Ps.  | (19,865,845 | )    | Ps. | (9,935,645  | )
|Adjustment recognized under Mexican and U.S. GAAP for dismantlement and abandonment |  |      | (1,200,666  | )    |     | (1,321,233  | )
|Adjustments related to Repsol collar and Repsol investment securities               |  |      | 3,235,950   |      |     | 411,942     |  
|Adjustments related to exploration and drilling costs                               |  |      | (2,622,057  | )    |     | (659,353    | )
|Adjustments related to accrued vacation                                             |  |      | (166,192    | )    |     | (378,040    | )
|                                                                                    |  |      |             |      |     |             |  
|Comprehensive income (loss) for the year as restatedU.S. GAAP                      |  | Ps.  | (20,618,810 | )    | Ps. | (11,882,329 | )
|                                                                                    |  |      |             |      |     |             |  

The
following table presents the effects of the aforementioned adjustments on equity at each of the two years ended December 31, 2000 under U.S. GAAP:

|                                                                                    |  | 2000 |             | 1999 |    
|----------------------------------------------------------------------------------- |  | ---- | ----------- | ---- | ---
|Equity at year end, as originally reportedU.S. GAAP                                |  | Ps.  | (9,347,590  | )    | Ps.
|Adjustment recognized under Mexican and U.S. GAAP for dismantlement and abandonment |  |      | (8,998,997  | )    |    
|                                                                                    |  |      |             |      |    
|Adjustments related to Repsol collar and Repsol investment securities               |  |      | 5,678,557   |      |    
|Adjustments related to accrued vacation                                             |  |      | (602,983    | )    |    
|Adjustments related to exploration and drilling costs                               |  |      | (295,683    | )    |    
|                                                                                    |  |      |             |      |    
|Equity for the year as restatedU.S. GAAP                                           |  | Ps.  | (13,566,696 | )    | Ps.
|                                                                                    |  |      |             |      |    

F-46

---

II. Additional disclosure requirements:

As
of January 1, 1998, PEMEX adopted Statement 130, Reporting Comprehensive Income. Statement 130 establishes new rules for the reporting and display of comprehensive income
(loss) and its components; however, the adoption of Statement 130 had no impact on PEMEX's net loss or shareholders' equity. Statement 130 requires certain items, including unrealized gains or losses
on PEMEX's investment securities, which prior to adoption were reported separately in shareholders' equity, to be included in other comprehensive income (loss). Prior year financial information has
been provided to conform to the requirements of Statement 130.

Cash
and cash equivalents include all cash balances and highly liquid instruments purchased with an original maturity of three months or less.

SFAS
No. 87 is followed by PEMEX for the calculation of seniority premiums and pension expense under U.S. GAAP.

The
calculation of pension cost and benefit obligations under SFAS No. 87 requires considerable judgment with respect to choosing actuarial assumptions. Each significant
assumption should reflect the best estimate of the plan's future experience solely with respect to that assumption. Assumed discount rates and compensation levels often have the greatest effect on
pension cost and benefit obligations and are related because both are affected by some of the same economic factors. The discount rate should be based upon the current prices for settling the pension
obligation, referred to as the "settlement rate." Assumed compensation levels should reflect the best estimate of actual future compensation levels for the individuals involved and be consistent with
assumed discount rates to the extent that both incorporate expectations of the same future economic conditions, such as inflation.

Applying
these provisions of SFAS No. 87 in a historically inflationary environment such as Mexico creates unique problems which are complicated by economic events since
December 1994. The opportunity for a company to settle a pension obligation at any particular point in time may not exist; long term financial instruments may not exist in Mexico as they do in
the United States and volatile inflation rates may make it difficult to predict compensation progression.

SFAS
No. 87 does not include specific guidance under these conditions. PEMEX believes it is appropriate to use actuarial assumptions which include an estimate of
long-term inflation (nominal rates). PEMEX has determined its discount rate and salary progression rate for SFAS No. 87 including a long-term inflation rate.

An
alternative approach to actuarial assumptions where benefits are indexed to inflation (which is not generally the case in Mexico) would be to eliminate the effect of inflation in the
assumptions (i.e.,use real rates). PEMEX believes that the effect on the U.S. GAAP reconciliation of net loss would not be materially different under
this approach. However, the "accumulated benefit obligation" and the related minimum liability for pensions can be affected by the discount rate used. Under SFAS No. 87, the accumulated benefit
obligation is the present value of expected future benefit payments based upon an employee's service to date without assuming any increase in the employee's compensation. If the accumulated benefit
obligation were calculated using an assumed real discount rate of 4.6%, the accumulated benefit obligation calculated under SFAS No. 87 would be Ps. 135,589,764

F-47

---

The
components of net seniority premium and pension plan cost, calculated in accordance with SFAS No. 87, consist of the following:

|                                                            |  | 2000 |            | 1999 |     | 1998       |  
|----------------------------------------------------------- |  | ---- | ---------- | ---- | --- | ---------- | -
|Service cost: benefits earned during the year               |  | Ps.  | 3,382,551  |      | Ps. | 2,931,948  |  
|Interest cost on projected benefit obligation               |  |      | 15,427,141 |      |     | 12,180,626 |  
|Expected return on plan assets                              |  |      | (1,196,607 | )    |     | (599,638   | )
|Net amortization and deferral                               |  |      | 2,989,946  |      |     | 2,409,896  |  
|Amortization of net transition obligation                   |  |      | 1,122,160  |      |     | 1,122,160  |  
|                                                            |  |      |            |      |     |            |  
|Net cost under U.S. GAAP                                    |  |      | 21,725,191 |      |     | 18,044,992 |  
|Net cost under Mexican GAAP                                 |  |      | 21,521,314 |      |     | 18,034,250 |  
|                                                            |  |      |            |      |     |            |  
|Additional expense that would be recognized under U.S. GAAP |  | Ps.  | 203,877    |      | Ps. | 10,742     |  
|                                                            |  |      |            |      |     |            |  

Actuarial
assumptions used in the calculation of net seniority premium and pension plan cost under U.S. GAAP as of December 31 are:

|                                            |  | 2000  |   | 1999  |   | 1998  |  
|------------------------------------------- |  | ----- | - | ----- | - | ----- | -
|Discount rate                               |  | 12.00 | % | 14.00 | % | 14.00 | %
|Rates of increase in compensation levels    |  | 8.00  | % | 10.00 | % | 10.00 | %
|Expected long-term rate of return on assets |  | 13.00 | % | 15.00 | % | 15.00 | %

The
combined seniority premium and pension plan liability as of December 31, 2000 and 1999 under SFAS No. 87 is as follows:

|                                                                              |                                | 2000 |             | 1999        |    
|----------------------------------------------------------------------------- | ------------------------------ | ---- | ----------- | ----------- | ---
|Actuarial present value of benefit obligations:                               |                                |      |             |             |    
|                                                                              | Vested benefit obligation      |      | Ps.         | 85,176,517  |    
|                                                                              |                                |      |             |             |    
|                                                                              | Accumulated benefit obligation |      | Ps.         | 107,038,918 |    
|                                                                              |                                |      |             |             |    
|Projected benefit obligation                                                  |                                | Ps.  | 140,678,169 |             | Ps.
|Plan assets at fair value                                                     |                                |      | 9,330,702   |             |    
|                                                                              |                                |      |             |             |    
|Projected benefit obligation in excess of plan assets                         |                                |      | 131,347,467 |             |    
|Unrecognized net loss                                                         |                                |      | (29,206,268 | )           |    
|Unrecognized transition obligation                                            |                                |      | (4,488,651  | )           |    
|Prior service cost                                                            |                                |      | (29,949,677 | )           |    
|                                                                              |                                |      |             |             |    
|Accrued liability under U.S. GAAP                                             |                                |      | 67,702,871  |             |    
|Accrued costs recognized in the consolidated balance sheet under Mexican GAAP |                                |      | 64,457,616  |             |    
|                                                                              |                                |      |             |             |    
|Net U.S. GAAP adjustment to seniority premium and pension plan liability      |                                | Ps.  | 3,245,255   |             | Ps.
|                                                                              |                                |      |             |             |    
|Additional minimum liability                                                  |                                | Ps.  | 30,005,345  |             | Ps.
|                                                                              |                                |      |             |             |    

The
plan's assets consist primarily of cash, investments, and an interest in a real estate joint venture.

F-48

---

In accordance with the provisions of SFAS No. 87, PEMEX has reflected, for U.S. GAAP purposes, an additional minimum liability at the end of each year representing the excess of
the accumulated benefit obligations over the fair value of plan assets and accrued pension liabilities. The additional minimum liability is offset by recording an intangible asset and, accordingly,
has no impact on operations or equity.

PEMEX
has implemented SFAS No. 106 effective January 1, 1995, using the transitional recognition method. PEMEX's previous practice was to expense these costs on a
pay-as-you-go basis.

In
addition to pensions, PEMEX makes supplemental payments and provides health care benefits to retired employees. PEMEX regularly determines the level of its supplemental payments
considering inflationary conditions. Health care is provided through a regional network of PEMEX hospitals and medical centers, which also provide care to active PEMEX employees. No commitments have
been made regarding the level of such contributions in the future.

For
Mexican GAAP purposes PEMEX has included the projected costs associated with the supplemental payments in its determination of pension obligation under Bulletin D-3, but
has excluded the costs associated with medical care, which is accounted for on a pay-as-you-go basis. There are no plan assets for post-retirement
benefits.

The
components of other post-retirement benefits expense consist of the following for the years ended December 31, 2000, 1999 and 1998:

|                                           |  | 2000 |           | 1999 |     | 1998     
|------------------------------------------ |  | ---- | --------- | ---- | --- | ---------
|
|Service cost                               |  | Ps.  | 1,117,257 |      | Ps. | 867,337  
|Interest cost                              |  |      | 5,608,284 |      |     | 5,198,901
|Amortization of actuarial gains and losses |  |      | 1,380,969 |      |     | 822,956  
|Amortization of transition obligation      |  |      | 418,020   |      |     | 518,346  
|                                           |  |      |           |      |     |          
|Net expense under U.S. GAAP                |  |      | 8,524,530 |      |     | 7,407,540
|Expense under Mexican GAAP                 |  |      | 8,380,310 |      |     | 1,774,465
|                                           |  |      |           |      |     |          
|Additional (less) expense under U.S. GAAP  |  | Ps.  | 144,220   |      | Ps. | 5,633,075
|                                           |  |      |           |      |     |          

Actuarial assumptions used in the calculation of other post-retirement benefits under U.S. GAAP as of December 31 were:

|                            |  | 2000  |   | 1999  |   | 1998  |  
|--------------------------- |  | ----- | - | ----- | - | ----- | -
|Discount rate               |  | 12.00 | % | 14.00 | % | 14.00 | %
|Health care cost trend rate |  | 8.00  | % | 10.00 | % | 10.00 | %

Since
the other post-retirement benefits are not based on levels of compensation, it is not necessary to use salary increase assumptions to determine expenses. The effect of
a 1% increase in the health care cost trend rate is to increase net expense for post-retirement benefits by Ps. 1,292,063 (Ps. 1,099,868 for 1999) and increase the accumulated
post-retirement benefit obligation by Ps. 8,249,215 (Ps. 6,065,326 for 1999). The effect of a 1% decrease in the health care cost trend rate is to decrease net expense for
post-retirement benefits by Ps. 1,072,910 (Ps. 918,605 for 1999) and decrease the accumulated post-retirement benefit obligation by Ps. 6,983,839 (Ps. 5,171,536 for 1999).

F-49

---

The
other post-retirement benefit liability as of December 31, 2000 and 1999 is as follows:

|                                                         |                                    | 2000  |             | 1999       |           
|-------------------------------------------------------- | ---------------------------------- | ----- | ----------- | ---------- | ----------
|
|Accumulated unfunded post retirement benefit obligation: |                                    |       |             |            |           
|                                                         | Retirees                           |       | Ps.         | 27,979,125 |           
|                                                         | Fully eligible active participants |       |             | 1,410,301  |           
|                                                         | Other active plan participants     |       |             | 21,615,697 |           
|                                                         |                                    |       |             |            |           
|                                                         |                                    | Total |             |            | 51,005,123
|Unrecognized actuarial losses                            |                                    |       | (2,837,908  | )          |           
|Prior service cost and plan amendments                   |                                    |       | (23,680,190 | )          |           
|Unamortized transition obligation                        |                                    |       | (4,924,587  | )          |           
|                                                         |                                    |       |             |            |           
|Net post-retirement benefit liability:                   |                                    |       |             |            |           
|U.S. GAAP                                                |                                    |       | 19,562,438  |            |           
|Mexican GAAP                                             |                                    |       | 19,911,397  |            |           
|                                                         |                                    |       |             |            |           
|Net U.S. GAAP adjustment                                 |                                    | Ps.   | (348,959    | )          | Ps.       
|                                                         |                                    |       |             |            |           

PEMEX has implemented SFAS No. 132 effective January 1, 1998. As required by this statement, the following tables present a
reconciliation of the beginning and ending balances of plan assets' fair value and the accumulated benefit obligation.

|                                               |  | Seniority Premiums and Pension Benefits |             | Supplemental Payments |     | Health Services |  
|---------------------------------------------- |  | --------------------------------------- | ----------- | --------------------- | --- | --------------- | -
|
|Change in benefit obligation                   |  |                                         |             |                       |     |                 |  
|Benefits obligation at beginning of year       |  | Ps.                                     | 112,840,555 |                       | Ps. | 89,392,094      |  
|Service cost                                   |  |                                         | 3,382,551   |                       |     | 2,931,948       |  
|Interest cost                                  |  |                                         | 15,427,141  |                       |     | 12,180,626      |  
|Plan participant's contributions               |  |                                         |            |                       |     |                |  
|Amendments                                     |  |                                         | 9,970,450   |                       |     | 6,243,428       |  
|Actuarial (gains)/losses                       |  |                                         | 4,543,317   |                       |     | 6,707,933       |  
|Benefits paid                                  |  |                                         | (5,485,845  | )                     |     | (4,615,474      | )
|                                               |  |                                         |             |                       |     |                 |  
|Benefits obligation at end of year             |  | Ps.                                     | 140,678,169 |                       | Ps. | 112,840,555     |  
|                                               |  |                                         |             |                       |     |                 |  
|Change in plan assets                          |  |                                         |             |                       |     |                 |  
|Fair value of plan assets at beginning of year |  | Ps.                                     | 11,933,446  |                       | Ps. | 4,846,348       |  
|Actual return on plan assets                   |  |                                         | 1,520,837   |                       |     | 1,208,932       |  
|Company contributions                          |  |                                         | 1,309,284   |                       |     | 10,450,120      |  
|Plan participant's contributions               |  |                                         |            |                       |     |                |  
|Benefits paid                                  |  |                                         | (5,432,865  | )                     |     | (4,571,954      | )
|                                               |  |                                         |             |                       |     |                 |  
|Fair value of plan assets at end of year       |  | Ps.                                     | 9,330,702   |                       | Ps. | 11,933,446      |  
|                                               |  |                                         |             |                       |     |                 |  

(d)  Leases

During
2000, 1999 and 1998, PEMEX's rent expense under operating leases amounted to Ps. 49,379, Ps. 69,762, and Ps. 68,776, respectively.

F-50

---

PEMEX
enters into non-cancelable lease arrangements for equipment used in the ordinary course of business. The following table shows the future minimum obligations under
lease commitments in effect at December 31, 2000:

Capital
Leases(1)

Operating
Leases2001

Ps.
1,388,170

Ps.
18,3342002


613,549


4,0942003


568,954


2004


793,625


2005


663,104


Thereafter


2,573,556


Ps.
6,600,958

Ps.
22,428


---

Assets
acquired under capital leases, together with their related depreciation, are included in Properties, net.

(e)  Interest,
net

For
Mexican GAAP purposes, interest, net is presented as an operating cost in the statement of operations. For U.S. GAAP purposes, interest, net would be presented as a
non-operating item in the statement of operations.

(f)    Business
segment information

Effective
January 1, 1998, PEMEX adopted SFAS 131 "Disclosure about Segments of an Enterprise and Related Information." The impact of adoption of SFAS 131 is
additional financial and descriptive information about reportable operating segments, including entity-wide disclosures about products and services that the entity provides, significant
countries wherein revenues are generated, and significant customers.

PEMEX's
primary business is the exploration for and production of crude oil and natural gas and the refining and marketing of petroleum products conducted through four business segments:
Pemex-Exploration and Production, Pemex-Refining, Pemex-Gas and Basic Petrochemicals, and Pemex-Petrochemicals. Management makes decisions related to the operations of the consolidated
business along these four strategic lines.

The
primary sources of revenue for the segments are as described below:



F-51

---







In
making performance analyses for the entities, PEMEX management focuses on sales volumes and gross revenues as the primary indicators.

Income
(loss) and identifiable assets for each segment have been determined after intersegment adjustments. Sales between segments are made at internal transfer prices established by
PEMEX which reflect international market prices.

|                                                 |              | Exploration and
Production |             | Refining    |  | Gas and Basic
Petrochemicals |             | Petrochemicals |            | Corporate
and Other |  | Intersegment
Eliminations |            | Total |            
|------------------------------------------------ | ------------ | -------------------------- | ----------- | ----------- |  | ---------------------------- | ----------- | -------------- | ---------- | ------------------- |  | ------------------------- | ---------- | ----- | -----------
|Year ended December 31,
2000, As Restated
Sales: |              |                            |             |             |  |                              |             |                |            |                     |  |                           |            |       |            
|                                                 | Trade        |                            | Ps.         | 137,332,942 |  | Ps.                          | 230,059,161 |                | Ps.        | 63,956,948          |  | Ps.                       | 12,183,505 |       | Ps.        
|                                                 | Intersegment |                            |             | 174,874,390 |  |                              | 9,600,123   |                |            | 25,899,156          |  |                           | 2,720,032  |       |            
|                                                 |              |                            |             |             |  |                              |             |                |            |                     |  |                           |            |       |            
|Total net sales                                  |              |                            | 312,207,332 |             |  | 239,659,284                  |             |                | 89,856,104 |                     |  | 14,903,537                |            |       | 246,711,873
|Interest, revenue                                |              |                            | 1,440,422   |             |  | 168,612                      |             |                | 146,969    |                     |  | 140,352                   |            |       | 12,795,601 
|Interest, expense                                |              |                            | 7,791,613   |             |  | 5,095,985                    |             |                | 637,231    |                     |  | 464,829                   |            |       | 15,887,019 
|Income (loss)                                    |              |                            | 7,128,264   |             |  | (23,138,923                  | )           |                | (317,025   | )                   |  | (6,089,717                | )          |       | 5,512,591  
|Depreciation and Amortization                    |              |                            | 16,132,052  |             |  | 5,536,985                    |             |                | 2,885,617  |                     |  | 934,314                   |            |       | 571,968    
|Acquisition of Fixed
assets(3)                   |              |                            | 47,248,730  |             |  | 30,198,372                   |             |                | 4,986,457  |                     |  | 1,262,954                 |            |       | (7,463,759 
|                                                 | Total assets |                            |             | 311,900,547 |  |                              | 162,392,658 |                |            | 53,749,219          |  |                           | 26,739,557 |       |            
|Year ended December 31, 1999, As Restated Sales: |              |                            |             |             |  |                              |             |                |            |                     |  |                           |            |       |            
|                                                 | Trade        |                            | Ps.         | 83,634,745  |  | Ps.                          | 187,381,338 |                | Ps.        | 38,685,177          |  | Ps.                       | 10,105,410 |       | Ps.        
|                                                 | Intersegment |                            |             | 92,281,333  |  |                              | 6,699,593   |                |            | 13,898,662          |  |                           | 1,930,196  |       |            
|                                                 |              |                            |             |             |  |                              |             |                |            |                     |  |                           |            |       |            
|Total net sales                                  |              |                            | 175,916,078 |             |  | 194,080,931                  |             |                | 52,583,839 |                     |  | 12,035,606                |            |       | 153,511,731
|Interest, revenue                                |              |                            | 407,784     |             |  | 821,806                      |             |                | 672,806    |                     |  | 301,344                   |            |       | 12,847,768 
|Interest, expense                                |              |                            | 4,276,874   |             |  | 2,068,967                    |             |                | 206,528    |                     |  | 65,149                    |            |       | 15,734,671 
|Income (loss)                                    |              |                            | (5,202,009  | )           |  | (8,111,242                   | )           |                | 848,958    |                     |  | (4,473,763                | )          |       | (3,028,467 
|Depreciation and Amortization                    |              |                            | 14,079,496  |             |  | 5,057,886                    |             |                | 3,087,577  |                     |  | 1,106,596                 |            |       | 609,471    
|Acquisition of Fixed
assets(2)                   |              |                            | 4,323,398   |             |  | 7,513,197                    |             |                | 2,466,565  |                     |  | 669,826                   |            |       | 25,524,023 
|                                                 | Total assets |                            |             | 231,824,328 |  |                              | 141,822,632 |                |            | 42,182,869          |  |                           | 26,553,108 |       |            
|Year ended December 31, 1998, As Restated Sales: |              |                            |             |             |  |                              |             |                |            |                     |  |                           |            |       |            
|                                                 | Trade        |                            | Ps.         | 58,231,609  |  | Ps.                          | 147,077,820 |                | Ps.        | 33,285,761          |  | Ps.                       | 10,506,736 |       | Ps.        
|                                                 | Intersegment |                            |             | 71,693,732  |  |                              | 6,721,590   |                |            | 13,670,035          |  |                           | 1,870,035  |       |            
|                                                 |              |                            |             |             |  |                              |             |                |            |                     |  |                           |            |       |            
|Total net sales                                  |              |                            | 129,925,341 |             |  | 153,799,410                  |             |                | 46,955,796 |                     |  | 12,376,771                |            |       | 107,268,589
|Interest, revenue                                |              |                            | 212,354     |             |  | 1,284,724                    |             |                | 549,810    |                     |  | 985,147                   |            |       | 14,173,375 
|Interest, expense                                |              |                            | 3,942,681   |             |  | 1,989,954                    |             |                | 189,348    |                     |  | 409,058                   |            |       | 13,480,240 
|Income (loss)                                    |              |                            | (9,027,155  | )           |  | (5,728,930                   | )           |                | 5,121,384  |                     |  | (2,790,225                | )          |       | 586,585    
|Depreciation and Amortization                    |              |                            | 8,569,140   |             |  | 2,645,426                    |             |                | 2,451,349  |                     |  | 1,569,851                 |            |       | 461,220    
|Acquisition of Fixed
assets(1)                   |              |                            | 9,632,353   |             |  | 6,355,009                    |             |                | 3,548,918  |                     |  | 1,340,508                 |            |       | 23,058,760 
|                                                 | Total assets |                            |             | 156,517,546 |  |                              | 121,234,482 |                |            | 41,326,187          |  |                           | 23,213,147 |       |            

---

F-52

---

Geographical segment information:

The
majority of PEMEX's operations are in Mexico. The following shows PEMEX's domestic and export sales for the years ended December 31:

|                                  |  | 2000 |             | 1999 |     | 1998       
|--------------------------------- |  | ---- | ----------- | ---- | --- | -----------
|Domestic sales                    |  | Ps.  | 292,880,287 |      | Ps. | 226,137,090
|United States                     |  |      | 137,065,181 |      |     | 84,278,772 
|Canada, Central and South America |  |      | 19,573,224  |      |     | 10,900,272 
|Europe                            |  |      | 15,591,932  |      |     | 11,052,419 
|Far East                          |  |      | 3,156,971   |      |     | 2,445,226  
|                                  |  |      |             |      |     |            
|Total export sales                |  |      | 175,387,308 |      |     | 108,676,689
|                                  |  |      |             |      |     |            
|Total sales                       |  | Ps.  | 468,267,595 |      | Ps. | 334,813,779
|                                  |  |      |             |      |     |            

PEMEX
does not have significant long-lived assets outside of Mexico.

(g)  Fair
value of financial instruments:

The
estimated fair value of financial instruments, for which it is practicable to estimate that value, as of December 31, 2000 and 1999 is as follows:

|            |                                    | 2000 |     | 1999       
|----------- | ---------------------------------- | ---- | --- | -----------
|
|Assets:     |                                    |      |     |            
|            | Cash and cash equivalents          |      | Ps. | 27,826,846 
|            | Accounts receivable                |      |     | 56,701,566 
|Liabilities |                                    |      |     |            
|            | Accounts payable                   |      | Ps. | 30,000,004 
|            | Sale of future accounts receivable |      |     | 51,976,573 
|            | Taxes payable                      |      |     | 25,308,881 
|            | Short-term debt                    |      |     | 40,457,071 
|            | Long-term debt                     |      |     | 104,370,025
|            | Notes payable to contractors       |      | Ps. | 16,152,769 

The
reported amounts of financial instruments such as cash equivalents, accounts receivable and payable, taxes payable and short-term debt approximate fair value because of
their short maturities.

The
fair value of long-term debt is determined by reference to market quotes, and where quotes are not available, is based on discounted cash flow analyses. Because
assumptions significantly affect the derived fair value and they are inherently subjective in nature, the estimated fair values cannot be substantiated by comparison to independent market quotes and,
in many cases, the estimated fair values would not necessarily be realized in an immediate sale or settlement of the instrument.

The
fair value of bonds issued in currencies other than U.S. dollars includes the fair value of the cross-currency swaps used to convert the debt into U.S. dollars.

The
accrual method of accounting is permitted for derivative financial instruments that are designated as and effective as a hedge. Such instruments would be accounted for as part of the
transactions being hedged when they mature, are sold, are terminated or if the anticipated transactions are no longer expected to occur. For information related to the fair value of financial
instruments see Note 10.

F-53

---

(h)  Valuation
and qualifying accounts

The
valuation and qualifying accounts for PEMEX are as follows:

|Description                                                                |                                                      | Balance at
beginning of
period |     | Additions charged
to costs and
expenses |  | Deductions |         | Balance at end of
period
|-------------------------------------------------------------------------- | ---------------------------------------------------- | ------------------------------ | --- | --------------------------------------- |  | ---------- | ------- | ------------------------
|For the year ended December 31, 1998                                       |                                                      |                                |     |                                         |  |            |         |                         
|Reserves deducted in the balance sheet from the assets to which they apply |                                                      |                                |     |                                         |  |            |         |                         
|                                                                           | Allowance for uncollectible trade accounts           |                                | Ps. | 546,030                                 |  | Ps.        | 147,703 |                         
|                                                                           | Allowance for slow-moving inventory and obsolescence |                                | Ps. | 2,122,045                               |  | Ps.        | 239,220 |                         
|For the year ended December 31, 1999                                       |                                                      |                                |     |                                         |  |            |         |                         
|Reserves deducted in the balance sheet from the assets to which they apply |                                                      |                                |     |                                         |  |            |         |                         
|                                                                           | Allowance for uncollectible trade accounts           |                                | Ps. | 670,751                                 |  | Ps.        | 306,427 |                         
|                                                                           | Allowance for slow-moving inventory and obsolescence |                                | Ps. | 2,281,359                               |  | Ps.        | 489,031 |                         
|For the year ended December 31, 2000                                       |                                                      |                                |     |                                         |  |            |         |                         
|Reserves deducted in the balance sheet from the assets to which they apply |                                                      |                                |     |                                         |  |            |         |                         
|                                                                           | Allowance for uncollectible trade accounts           |                                | Ps. | 976,718                                 |  | Ps.        | 331,470 |                         
|                                                                           | Allowance for slow-moving inventory and obsolescence |                                | Ps. | 2,420,856                               |  | Ps.        | 194,422 |                         

---

Note:The above valuation and qualifying accounts are presented in accordance with U.S. GAAP. The Mexican GAAP
accounts titled "reserve for sundry creditors and others," "reserve for retirement payments, pensions, and indemnities," and "specific oil field exploration and depletion reserve" are accrued
liability accounts and not valuation and qualifying accounts and have not been included in the table above.

(i)    Significant
risks and uncertainties

Environmental

The ultimate costs to be incurred in relation to PEMEX's environmental contingencies may exceed the total amounts reserved. Additional liabilities may be accrued
as the assessment work is completed and formal remedial plans are formulated. Numerous factors affect the reliability and precision of clean-up cost estimates, including the individual
characteristics of the site, the lack of specific guidance in levels of permissible pollution and type of technology available for the remediation.

PEMEX
accrues an environmental liability when such liability has been identified through its internal structure and processes and sufficient basic knowledge is available to form a
preliminary evaluation as to remediation cost. In many cases, investigations are not yet at a stage where PEMEX is able to quantify the liability or estimate a range of possible exposure. In such
cases, the amounts of PEMEX's liabilities are indeterminate due to the unknown magnitude of possible contamination, the imprecise and conflicting engineering evaluations and estimates of proper
cleanup methods and costs, the unknown timing and extent of the corrective actions that may be required, and the ambiguities in Mexican environmental laws and regulations.

PEMEX
is not aware of any unasserted claims or any material circumstance which may give rise to such, and therefore, no amounts related to such have been reflected in the environmental
accrual. As PEMEX has exclusive rights to production and processing of crude oil, natural gas, and refined products within Mexico, there are no instances of joint liability; PEMEX is the sole
responsible party in the event of environmental damage. No environmental liability amounts accrued at December 31, 2000

F-54

---

are expected to be recoverable through insurance. Environmental liabilities accrued in the consolidated financial statements as of December 31, 2000 are divided among the operating units as
follows:

In thousands of
Mexican PesosPemexExploration and Production

1,787,169PemexRefining

918,646PemexGas and Basic Petrochemicals

109,581PemexPetrochemicals

22,362Total Environmental Liability Accrual

2,837,758


The
estimated liabilities as of December 31, 2000 reflect an accrual for all probable environmental liabilities, primarily the sites identified in internal environmental reviews
and PROFEPA audits and the costs of the corrective action plans for the sites identified as environmental cleanup priorities. Additionally, the estimated liabilities include a financial forecast for
those sites which have been identified, but for which a corrective action plan has not yet been finalized. These estimated liabilities include assumptions as to initial evaluation of damage, including
land acreage to be remediated, depth of contamination and type of contamination.

Government

The operations and earnings of PEMEX have been, and may in the future be, affected from time to time in varying degree by political developments and laws and
regulations, such as forced divestiture of assets, restrictions on production, price controls, tax increases, cancellation of contract rights, refined product specifications, environmental, health and
safety regulations. Both the likelihood of such occurrences and their overall effect upon PEMEX are not predictable.

Labor

PEMEX employees belonging to the Union of Petroleum Workers of the Mexican Republic represent approximately 76% of the workforce. They have a collective
bargaining agreement which is renegotiated every two years and has no firm expiration date.

Product prices

Because PEMEX's major products are commodities, significant changes in the prices of crude oil, natural gas and chemical products could have a significant impact
on PEMEX's results of operations in any particular year. Crude oil represents approximately 34% of PEMEX's sales revenues net of IEPS which makes it reasonably possible that PEMEX is vulnerable to
near-term severe impacts from fluctuations in prices.

General

PEMEX has certain other contingent liabilities with respect to litigation, claims and contractual agreements arising in the ordinary course of business. Although
these contingencies could result in expenses or judgments that could be material to PEMEX's results of operations for a given reporting period, on the basis of management's best assessment of the
ultimate amount and timing of these events, such expenses or judgments are not expected to have a material adverse effect on PEMEX's operations, financial position, condition or liquidity.

F-55

---

(j)    Concentration of credit risk

PEMEX
is subject to credit risk through trade receivables, short-term cash investments and derivative financial instruments. A significant portion of PEMEX's sales are to
customers whose activities are related to the oil and gas industry, including some who are located in foreign countries (primarily the United States). PEMEX generally extends credit to these customers
and, therefore, collection of receivables is affected by the economy of the oil and gas industry and the country of Mexico (since there is a strong demand for its products in its domestic market).
Also, with respect to foreign sales, collection may be more difficult in the event of a default. However, PEMEX closely monitors extensions of credit and has never experienced significant credit
losses. Also, most foreign sales are made to large, well-established companies.

PEMEX
invests excess cash in low-risk, liquid instruments, which are placed with a wide array of institutions. See Note 10 for discussion of credit risks with respect
to financial instruments which are held with a limited number of credit worthy-financial institutions.

(k)  Capitalized
software costs

Direct
internal and external costs related to the development of internal use software are deferred and included in other assets. Capitalized software costs as of December 31,
2000, 1999 and 1998 amounted to Ps. 643,800, Ps. 434,518 and Ps. 317,777, respectively.

(l)    Recently
issued accounting standards (unaudited)

Effective
January 1, 2001, PEMEX adopted Statement of Financial Accounting Standards No. 133 (SFAS 133) "Accounting for Derivative Instruments and Hedging
Activities". SFAS 133 establishes standards for recognition and measurement of derivatives and hedging activities. The adoption resulted in cumulative decreases in net loss of approximately
U.S. $394,961 (Ps. 3,780,649 approximately) in the first quarter of fiscal 2001. The adoption will also impact assets and liabilities recorded on the balance sheet.

SFAS 133
requires that all derivative instruments be reported in the consolidated financial statements at fair value. Changes in the fair value of derivatives are to be recorded
each period in earnings or other comprehensive income (loss), depending on whether the derivative is designated and effective as part of a hedged transaction, and on the type of hedge transaction.
Gains or losses on derivative instruments reported in other comprehensive income (loss) must be reclassified as earnings in the period in which earnings are affected by the underlying hedged item, and
the ineffective portion of all hedges must be recognized in earnings in the current period. These new standards may result in additional volatility in reported earnings, other comprehensive income
(loss) and accumulated other comprehensive income (loss).



Transactions denominated in currencies other that the entity's functional currency are converted to the functional currency using current exchange rates.
Transaction gains or losses are included in operations. As part of its strategy to manage exchange risk, PEMEX mainly borrows U.S. dollars to finance assets (i.e. oil and gas reserve exploitation)
that will be realized in U.S. dollars.



PEMEX's operations involve managing market risks related to changes in commodity prices. Derivative financial instruments, specifically swaps, options and other
contracts, are used to reduce and manage those risks.

PEMEX
addresses commodity market risk by selecting instruments whose value fluctuations correlate strongly with the underlying commodity being hedged. Petróleos Mexicanos
enters into swaps,

F-56

---

options, and other derivative contracts to hedge the price risks associated with the various commodities purchased and sold. Petróleos Mexicanos does not obtain collateral to support
the agreements but monitors the financial viability of counter-parties and believes its credit risk is minimal on these transactions. In the event of nonperformance, Petróleos Mexicanos
would be exposed to price risk. PEMEX and the Subsidiary Companies have some risk of accounting loss since the price received for the product at the actual physical delivery point may differ from the
prevailing price at the delivery point required for settlement of the hedging transaction.

19.  Subsidiary guarantor information

The following consolidating information presents condensed balance sheets at December 31, 2000 and 1999 and condensed statements of operations and changes
in financial position for the years ended December 31, 2000, 1999 and 1998 of Petróleos Mexicanos, Pemex-Exploration and Production, Pemex-Refining, Pemex-Gas and
Basic Petrochemicals, and Pemex-Petrochemicals and the consolidated Subsidiary Companies. These statements are prepared in conformity with accounting principles generally accepted in Mexico and as to
the recognition of inflation, in accordance with NIF-06-BIS "A" section A (see Notes 2 b) and 14 to the consolidated financial statements), with one exception.
The exception being that the Subsidiary Entities and Subsidiary Companies are accounted for as investments under the equity method rather than being consolidated. Pemex-Exploration and Production,
Pemex-Refining and Pemex-Gas and Basic Petrochemicals (collectively the Subsidiary Guarantors) and Pemex-Petrochemicals are controlled by and have the characteristic of subsidiaries of
Petróleos Mexicanos. Pemex-Petrochemicals, the Subsidiary Companies and the Trust, collectively, comprise the Non-Guarantor Subsidiaries (Non-Guarantor
Subsidiaries). Petróleos Mexicanos and the Trust are the only entities authorized to contract debt, and thus all guaranteed debt is held by these entities. The guarantees of the
Subsidiary Guarantors are full and unconditional and joint and several. Management has not presented separate financial statements for the Subsidiary Guarantors because it has determined that such
information is not material to investors.

The
significant differences between Mexican and U.S. GAAP as they affect PEMEX and the Subsidiary Companies are established in Note 18. The U.S. GAAP adjustments related to
exploration and drilling costs and units of production amortization are exclusive to Pemex-Exploration and Production. The U.S. GAAP adjustment related to fixed asset impairment relates to
Pemex-Exploration and Production, Pemex-Refining and Pemex-Petrochemicals. U.S. GAAP adjustments pertaining to advance payment on minimum guaranteed dividends, investment securities, and the sale of
Repsol shares relate exclusively to Petróleos Mexicanos. The U.S. GAAP adjustment to account for derivatives relates primarily to Petróleos Mexicanos. All other U.S. GAAP
adjustments relate collectively to Petróleos Mexicanos, the Subsidiary Guarantors, and Pemex-Petrochemicals.

F-57

---



SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION  BALANCE SHEET  As of December 31, 2000

|As Restated                                                                                   |                                      | Corporate                    |             | Subsidiary
Guarantors |             | Non-Guarantor
Subsidiaries |            | Eliminations |            | PEMEX
Consolidated |            
|--------------------------------------------------------------------------------------------- | ------------------------------------ | ---------------------------- | ----------- | --------------------- | ----------- | -------------------------- | ---------- | ------------ | ---------- | ------------------ | -----------
|ASSETS                                                                                        |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|Current Assets:                                                                               |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              | Cash and cash equivalents            |                              | Ps.         | 14,428,209            |             | Ps.                        | 1,452,602  |              | Ps.        | 11,946,035         |            
|                                                                                              | Accounts, notes receivable and other |                              |             | 80,976,771            |             |                            | 94,668,605 |              |            | 103,931,208        |            
|                                                                                              | Inventories, net                     |                              |             | 188,647               |             |                            | 21,364,219 |              |            | 3,307,105          |            
|                                                                                              |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              |                                      | Total current assets         |             |                       | 95,593,627  |                            |            | 117,485,426  |            |                    | 119,184,348
|Long term debt receivableintercompany                                                        |                                      |                              | 57,154,732  |                       |             |                           |            |              |           |                    |            
|Investments in subsidiaries                                                                   |                                      |                              | 182,890,968 |                       |             |                           |            |              | 5,514,460  |                    |            
|Properties, net                                                                               |                                      |                              | 9,214,929   |                       |             | 316,477,604                |            |              | 18,530,892 |                    |            
|Intangible asset derived from the actuarial computation of labor obligations and other assets |                                      |                              | 12,776,048  |                       |             | 94,079,394                 |            |              | 2,559,701  |                    |            
|                                                                                              |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              |                                      | Total assets                 |             | Ps.                   | 357,630,304 |                            | Ps.        | 528,042,424  |            | Ps.                | 145,789,401
|                                                                                              |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|LIABILITIES                                                                                   |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|Current liabilities:                                                                          |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              | Current portion of long-term debt    |                              | Ps.         | 114,135,746           |             | Ps.                        | 52,139,993 |              | Ps.        | 14,507,684         |            
|                                                                                              | Accounts payableintercompany        |                              |             |                      |             |                            | 33,904,305 |              |            | 6,551,679          |            
|                                                                                              | Other current liabilities            |                              |             | 1,910,274             |             |                            | 39,930,032 |              |            | 14,497,538         |            
|                                                                                              |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              |                                      | Total current liabilities    |             |                       | 116,046,020 |                            |            | 125,974,330  |            |                    | 35,556,901 
|Long-term debt                                                                                |                                      |                              | 70,126,090  |                       |             | 52,799,597                 |            |              | 83,557,996 |                    |            
|Sale of future accounts receivable                                                            |                                      |                              |            |                       |             | 51,976,573                 |            |              |           |                    |            
|Reserve for retirement payments, pensions, indemnities, sundry creditors, and others          |                                      |                              | 16,319,176  |                       |             | 129,436,724                |            |              | 11,837,927 |                    |            
|                                                                                              |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              |                                      | Total liabilities            |             |                       | 202,491,286 |                            |            | 360,187,224  |            |                    | 130,952,824
|                                                                                              |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|EQUITY                                                                                        |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|Equity accounts                                                                               |                                      |                              | (16,105,298 | )                     |             | 70,071,754                 |            |              | 3,171,404  |                    |            
|Revaluation surplus                                                                           |                                      |                              | 171,244,316 |                       |             | 97,783,446                 |            |              | 11,665,173 |                    |            
|                                                                                              |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              |                                      |                              | 155,139,018 |                       |             | 167,855,200                |            |              | 14,836,577 |                    |            
|                                                                                              |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              |                                      | Total liabilities and equity |             | Ps.                   | 357,630,304 |                            | Ps.        | 528,042,424  |            | Ps.                | 145,789,401
|                                                                                              |                                      |                              |             |                       |             |                            |            |              |            |                    |            

F-58

---



SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION  BALANCE SHEET  As of December 31, 1999

|As Restated                                                                                   |                                      | Corporate                    |             | Subsidiary
Guarantors |             | Non-Guarantor
Subsidiaries |            | Eliminations |            | PEMEX
Consolidated |            
|--------------------------------------------------------------------------------------------- | ------------------------------------ | ---------------------------- | ----------- | --------------------- | ----------- | -------------------------- | ---------- | ------------ | ---------- | ------------------ | -----------
|ASSETS                                                                                        |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|Current Assets:                                                                               |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              | Cash and cash equivalents            |                              | Ps.         | 18,646,698            |             | Ps.                        | 1,183,963  |              | Ps.        | 4,156,162          |            
|                                                                                              | Accounts, notes receivable and other |                              |             | 38,404,173            |             |                            | 99,090,771 |              |            | 67,370,849         |            
|                                                                                              | Inventories, net                     |                              |             | 7,852                 |             |                            | 14,331,593 |              |            | 2,273,163          |            
|                                                                                              |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              |                                      | Total current assets         |             |                       | 57,058,723  |                            |            | 114,606,327  |            |                    | 73,800,174 
|Long term debt receivableintercompany                                                        |                                      |                              | 56,676,129  |                       |             |                           |            |              |           |                    |            
|Investments in subsidiaries                                                                   |                                      |                              | 181,981,073 |                       |             |                           |            |              | 7,565,566  |                    |            
|Properties, net                                                                               |                                      |                              | 9,427,696   |                       |             | 258,922,155                |            |              | 18,019,481 |                    |            
|Intangible asset derived from the actuarial computation of labor obligations and other assets |                                      |                              | 6,655,042   |                       |             | 42,301,347                 |            |              | 3,293,978  |                    |            
|                                                                                              |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              |                                      | Total assets                 |             | Ps.                   | 311,798,663 |                            | Ps.        | 415,829,829  |            | Ps.                | 102,679,199
|                                                                                              |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|LIABILITIES                                                                                   |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|Current liabilities:                                                                          |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              | Current portion of long-term debt    |                              | Ps.         | 44,555,506            |             | Ps.                        | 14,781,274 |              | Ps.        | 8,835,984          |            
|                                                                                              | Accounts payableintercompany        |                              |             | 5,882,487             |             |                            | 18,108,153 |              |            | 13,780,248         |            
|                                                                                              | Other current liabilities            |                              |             | 4,252,744             |             |                            | 35,069,863 |              |            | 8,771,765          |            
|                                                                                              |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              |                                      | Total current liabilities    |             |                       | 54,690,737  |                            |            | 67,959,290   |            |                    | 31,387,997 
|Long-term debt                                                                                |                                      |                              | 75,989,074  |                       |             | 56,544,121                 |            |              | 43,929,899 |                    |            
|Sale of future accounts receivable                                                            |                                      |                              |            |                       |             | 43,300,738                 |            |              |           |                    |            
|Reserve for retirement payments, pensions, indemnities, sundry creditors, and others          |                                      |                              | 11,446,093  |                       |             | 88,586,326                 |            |              | 9,887,322  |                    |            
|                                                                                              |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              |                                      | Total liabilities            |             |                       | 142,125,904 |                            |            | 256,390,475  |            |                    | 85,205,218 
|                                                                                              |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|EQUITY                                                                                        |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|Equity accounts                                                                               |                                      |                              | 7,823,649   |                       |             | 72,585,133                 |            |              | 5,251,246  |                    |            
|Revaluation surplus                                                                           |                                      |                              | 161,849,110 |                       |             | 86,854,221                 |            |              | 12,222,735 |                    |            
|                                                                                              |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              |                                      |                              | 169,672,759 |                       |             | 159,439,354                |            |              | 17,473,981 |                    |            
|                                                                                              |                                      |                              |             |                       |             |                            |            |              |            |                    |            
|                                                                                              |                                      | Total liabilities and equity |             | Ps.                   | 311,798,663 |                            | Ps.        | 415,829,829  |            | Ps.                | 102,679,199
|                                                                                              |                                      |                              |             |                       |             |                            |            |              |            |                    |            

F-59

---



SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION  STATEMENT OF OPERATIONS  For the year ended December 31, 2000

|As Restated                                                                                          |                                               | Corporate                          |             | Subsidiary
Guarantors |            | Non-Guarantor
Subsidiaries |             | Eliminations |             | PEMEX
Consolidated |            
|---------------------------------------------------------------------------------------------------- | --------------------------------------------- | ---------------------------------- | ----------- | --------------------- | ---------- | -------------------------- | ----------- | ------------ | ----------- | ------------------ | -----------
|Net sales                                                                                            |                                               | Ps.                                | 22,129,563  |                       | Ps.        | 641,722,720                |             | Ps.          | 239,485,847 |                    | Ps.        
|Other revenues                                                                                       |                                               |                                    | 574,735     |                       |            | 9,367,075                  |             |              | 10,816,326  |                    |            
|                                                                                                     |                                               |                                    |             |                       |            |                            |             |              |             |                    |            
|Total revenues                                                                                       |                                               |                                    | 22,704,298  |                       |            | 651,089,795                |             |              | 250,302,173 |                    |            
|Costs and operating expenses:                                                                        |                                               |                                    |             |                       |            |                            |             |              |             |                    |            
|                                                                                                     | Cost of sales                                 |                                    |             |                      |            |                            | 325,946,683 |              |             | 241,568,215        |            
|                                                                                                     | Transportation and distribution expenses      |                                    |             |                      |            |                            | 12,058,906  |              |             | 649,516            |            
|                                                                                                     | Administration expenses                       |                                    |             | 14,996,555            |            |                            | 19,275,246  |              |             | 3,111,839          |            
|                                                                                                     | Other expenses                                |                                    |             | 7,038,378             |            |                            | 17,535,771  |              |             | 7,211,332          |            
|                                                                                                     |                                               |                                    |             |                       |            |                            |             |              |             |                    |            
|                                                                                                     |                                               | Total costs and operating expenses |             |                       | 22,034,933 |                            |             | 374,816,606  |             |                    | 252,540,902
|Equity participation in subsidiaries                                                                 |                                               |                                    | (21,216,737 | )                     |            |                           |             |              |            |                    |            
|Capitalization of Master Trust operations                                                            |                                               |                                    |            |                       |            |                           |             |              | 2,034,574   |                    |            
|                                                                                                     |                                               |                                    |             |                       |            |                            |             |              |             |                    |            
|(Loss) income before hydrocarbon extraction duties, and other special tax on production and services |                                               |                                    | (20,547,372 | )                     |            | 276,273,189                |             |              | (204,155    | )                  |            
|                                                                                                     | Hydrocarbon extraction duties and other       |                                    |             |                      |            |                            | 223,044,353 |              |             | 1,042,336          |            
|                                                                                                     | Special tax on production and services (IEPS) |                                    |             |                      |            |                            | 69,556,520  |              |             |                   |            
|                                                                                                     |                                               |                                    |             |                       |            |                            |             |              |             |                    |            
|                                                                                                     |                                               |                                    |            |                       |            | 292,600,873                |             |              | 1,042,336   |                    |            
|                                                                                                     |                                               |                                    |             |                       |            |                            |             |              |             |                    |            
|(Loss) income for the year                                                                           |                                               | Ps.                                | (20,547,372 | )                     | Ps.        | (16,327,684                | )           | Ps.          | (1,246,491  | )                  | Ps.        
|                                                                                                     |                                               |                                    |             |                       |            |                            |             |              |             |                    |            

F-60

---



SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION  STATEMENT OF OPERATIONS  For the year ended December 31, 1999

|As Restated                                                                                          |                                               | Corporate                          |             | Subsidiary
Guarantors |            | Non-Guarantor
Subsidiaries |             | Eliminations |             | PEMEX
Consolidated |            
|---------------------------------------------------------------------------------------------------- | --------------------------------------------- | ---------------------------------- | ----------- | --------------------- | ---------- | -------------------------- | ----------- | ------------ | ----------- | ------------------ | -----------
|Net sales                                                                                            |                                               | Ps.                                | 16,774,887  |                       | Ps.        | 422,580,848                |             | Ps.          | 148,772,450 |                    | Ps.        
|Other revenues                                                                                       |                                               |                                    | 2,818,391   |                       |            | 8,830,443                  |             |              | 2,882,073   |                    |            
|                                                                                                     |                                               |                                    |             |                       |            |                            |             |              |             |                    |            
|Total revenues                                                                                       |                                               |                                    | 19,593,278  |                       |            | 431,411,291                |             |              | 151,654,523 |                    |            
|Costs and operating expenses:                                                                        |                                               |                                    |             |                       |            |                            |             |              |             |                    |            
|                                                                                                     | Cost of sales                                 |                                    |             |                      |            |                            | 201,972,991 |              |             | 147,802,262        |            
|                                                                                                     | Transportation and distribution expenses      |                                    |             |                      |            |                            | 10,570,323  |              |             | 434,286            |            
|                                                                                                     | Administration expenses                       |                                    |             | 11,280,125            |            |                            | 15,447,974  |              |             | 2,980,546          |            
|                                                                                                     | Other expenses                                |                                    |             | 11,543,220            |            |                            | 8,297,322   |              |             | 444,033            |            
|                                                                                                     |                                               |                                    |             |                       |            |                            |             |              |             |                    |            
|                                                                                                     |                                               | Total costs and operating expenses |             |                       | 22,823,345 |                            |             | 236,288,610  |             |                    | 151,661,127
|Equity participation in subsidiaries                                                                 |                                               |                                    | (15,616,823 | )                     |            |                           |             |              |            |                    |            
|                                                                                                     |                                               |                                    |             |                       |            |                            |             |              |             |                    |            
|(Loss) income before hydrocarbon extraction duties, and other special tax on production and services |                                               |                                    | (18,846,890 | )                     |            | 195,122,681                |             |              | (6,604      | )                  |            
|                                                                                                     | Hydrocarbon extraction duties and other       |                                    |             |                      |            |                            | 119,237,731 |              |             | 1,239,257          |            
|                                                                                                     | Special tax on production and services (IEPS) |                                    |             |                      |            |                            | 88,349,243  |              |             |                   |            
|                                                                                                     |                                               |                                    |             |                       |            |                            |             |              |             |                    |            
|                                                                                                     |                                               |                                    |            |                       |            | 207,586,974                |             |              | 1,239,257   |                    |            
|                                                                                                     |                                               |                                    |             |                       |            |                            |             |              |             |                    |            
|(Loss) income for the year                                                                           |                                               | Ps.                                | (18,846,890 | )                     | Ps.        | (12,464,293                | )           | Ps.          | (1,245,861  | )                  | Ps.        
|                                                                                                     |                                               |                                    |             |                       |            |                            |             |              |             |                    |            

F-61

---



SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION  STATEMENT OF OPERATIONS  For the year ended December 31, 1998

|As Restated                                                                                          |                                          | Corporate                          |             | Subsidiary
Guarantors |           | Non-Guarantor
Subsidiaries |             | Eliminations |             | PEMEX
Consolidated |            
|---------------------------------------------------------------------------------------------------- | ---------------------------------------- | ---------------------------------- | ----------- | --------------------- | --------- | -------------------------- | ----------- | ------------ | ----------- | ------------------ | -----------
|Net sales                                                                                            |                                          | Ps.                                | 10,438,730  |                       | Ps.       | 330,680,547                |             | Ps.          | 109,206,630 |                    | Ps.        
|Other revenues                                                                                       |                                          |                                    | (792,046    | )                     |           | 8,938,315                  |             |              | 1,131,488   |                    |            
|                                                                                                     |                                          |                                    |             |                       |           |                            |             |              |             |                    |            
|Total revenues                                                                                       |                                          |                                    | 9,646,684   |                       |           | 339,618,862                |             |              | 110,338,118 |                    |            
|Costs and operating expenses:                                                                        |                                          |                                    |             |                       |           |                            |             |              |             |                    |            
|                                                                                                     | Cost of sales                            |                                    |             |                      |           |                            | 167,803,692 |              |             | 108,693,697        |            
|                                                                                                     | Transportation and distribution expenses |                                    |             |                      |           |                            | 9,155,325   |              |             | 240,955            |            
|                                                                                                     | Administrative expenses                  |                                    |             | 10,181,513            |           |                            | 15,012,920  |              |             | 2,801,838          |            
|                                                                                                     | Other expenses                           |                                    |             | (397,095              | )         |                            | 6,214,727   |              |             | (148,612           | )          
|                                                                                                     |                                          |                                    |             |                       |           |                            |             |              |             |                    |            
|                                                                                                     |                                          | Total costs and operating expenses |             |                       | 9,784,418 |                            |             | 198,186,664  |             |                    | 111,587,878
|Equity participation in subsidiaries                                                                 |                                          |                                    | (10,994,104 | )                     |           |                           |             |              |            |                    |            
|                                                                                                     |                                          |                                    |             |                       |           |                            |             |              |             |                    |            
|(Loss) income before hydrocarbon extraction duties, and other special tax on production and services |                                          |                                    | (11,131,838 | )                     |           | 141,432,198                |             |              | (1,249,760  | )                  |            
|                                                                                                     | Hydrocarbon extraction duties and other  |                                    |             |                      |           |                            | 85,230,640  |              |             | 802,582            |            
|Special tax on production and services (IEPS)                                                        |                                          |                                    |            |                       |           | 65,854,312                 |             |              |            |                    |            
|                                                                                                     |                                          |                                    |             |                       |           |                            |             |              |             |                    |            
|                                                                                                     |                                          |                                    |            |                       |           | 151,084,952                |             |              | 802,582     |                    |            
|                                                                                                     |                                          |                                    |             |                       |           |                            |             |              |             |                    |            
|(Loss) income for the year                                                                           |                                          | Ps.                                | (11,131,838 | )                     | Ps.       | (9,652,754                 | )           | Ps.          | (2,052,342  | )                  | Ps.        
|                                                                                                     |                                          |                                    |             |                       |           |                            |             |              |             |                    |            

F-62

---



SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION  STATEMENT OF CHANGES IN FINANCIAL POSITION  For the year ended December 31, 2000

|                                                   |                                                 | Corporate |             | Subsidiary
Guarantors |     | Non-Guarantor
Subsidiaries |             | Elimination |             | PEMEX
Consolidated |    
|-------------------------------------------------- | ----------------------------------------------- | --------- | ----------- | --------------------- | --- | -------------------------- | ----------- | ----------- | ----------- | ------------------ | ---
|Funds (used in) provided by operating activities   |                                                 | Ps.       | (62,080,063 | )                     | Ps. | (10,216,646                | )           | Ps.         | (34,901,498 | )                  | Ps.
|Financing activities:                              |                                                 |           |             |                       |     |                            |             |             |             |                    |    
|                                                   | Sale of future accounts receivable              |           |             |                      |     |                            | 8,675,835   |             |             |                   |    
|                                                   | Long-term debt                                  |           |             | 63,717,256            |     |                            | 35,413,510  |             |             | 45,299,798         |    
|                                                   | Net income distributions to Petróleos Mexicanos |           |             | (11,894,564           | )   |                            | 11,143,060  |             |             | 751,504            |    
|                                                   | Other changes in equity and retained earnings   |           |             | (5,623,568            | )   |                            | 26,433,760  |             |             | (1,341,824         | )  
|                                                   |                                                 |           |             |                       |     |                            |             |             |             |                    |    
|Funds provided by (used in) financing activities   |                                                 |           | 46,199,124  |                       |     | 81,666,165                 |             |             | 44,709,478  |                    |    
|Investing activities:                              |                                                 |           |             |                       |     |                            |             |             |             |                    |    
|                                                   | Increase in fixed assets, net                   |           |             | 9,050,823             |     |                            | (71,180,882 | )           |             | (2,018,105         | )  
|                                                   | Investments in subsidiaries                     |           |             | 2,611,627             |     |                            |            |             |             |                   |    
|                                                   |                                                 |           |             |                       |     |                            |             |             |             |                    |    
|Funds provided by (used in) investing activities   |                                                 |           | 11,662,450  |                       |     | (71,180,882                | )           |             | (2,018,105  | )                  |    
|                                                   |                                                 |           |             |                       |     |                            |             |             |             |                    |    
|(Decrease) increase in cash and cash equivalents   |                                                 |           | (4,218,489  | )                     |     | 268,637                    |             |             | 7,789,875   |                    |    
|Cash and cash equivalents at beginning of the year |                                                 |           | 18,646,698  |                       |     | 1,183,963                  |             |             | 4,156,162   |                    |    
|                                                   |                                                 |           |             |                       |     |                            |             |             |             |                    |    
|Cash and cash equivalents at the end of the year   |                                                 | Ps.       | 14,428,209  |                       | Ps. | 1,452,600                  |             | Ps.         | 11,946,037  |                    | Ps.
|                                                   |                                                 |           |             |                       |     |                            |             |             |             |                    |    

F-63

---

SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION  STATEMENT OF CHANGES IN FINANCIAL POSITION  For the year ended December 31, 1999

|                                                   |                                                        | Corporate |             | Subsidiary
Guarantors |     | Non-Guarantor
Subsidiaries |            | Eliminations |             | PEMEX
Consolidated |    
|-------------------------------------------------- | ------------------------------------------------------ | --------- | ----------- | --------------------- | --- | -------------------------- | ---------- | ------------ | ----------- | ------------------ | ---
|Funds provided by (used in) operating activities   |                                                        | Ps.       | 21,139,652  |                       | Ps. | (16,904,904                | )          | Ps.          | (20,120,629 | )                  | Ps.
|Financing activities:                              |                                                        |           |             |                       |     |                            |            |              |             |                    |    
|                                                   | Sale of future accounts receivable                     |           |             |                      |     |                            | 26,702,250 |              |             |                   |    
|                                                   | Long-term debt                                         |           |             | (224,763              | )   |                            | (9,700,795 | )            |             | 23,199,712         |    
|                                                   | Net income (loss) distributions to Petróleos Mexicanos |           |             | (10,766,871           | )   |                            | 8,185,826  |              |             | 854,362            |    
|                                                   | Other changes in equity and retained earnings          |           |             | (3,843,264            | )   |                            | 1,780,238  |              |             | (3,309,823         | )  
|                                                   |                                                        |           |             |                       |     |                            |            |              |             |                    |    
|Funds (used in) provided by financing activities   |                                                        |           | (14,834,898 | )                     |     | 26,967,519                 |            |              | 20,744,251  |                    |    
|Investing activities:                              |                                                        |           |             |                       |     |                            |            |              |             |                    |    
|                                                   | Increase in fixed assets, net                          |           |             | (773,080              | )   |                            | (9,544,561 | )            |             | (235,848           | )  
|                                                   | Investments in subsidiaries                            |           |             | 2,534,631             |     |                            |           |              |             |                   |    
|                                                   |                                                        |           |             |                       |     |                            |            |              |             |                    |    
|Funds provided by (used in) investing activities   |                                                        |           | 1,761,551   |                       |     | (9,544,561                 | )          |              | (235,848    | )                  |    
|                                                   |                                                        |           |             |                       |     |                            |            |              |             |                    |    
|Increase in cash and cash equivalents              |                                                        |           | 8,066,305   |                       |     | 518,054                    |            |              | 387,774     |                    |    
|Cash and cash equivalents at beginning of the year |                                                        |           | 10,580,393  |                       |     | 665,909                    |            |              | 3,768,388   |                    |    
|                                                   |                                                        |           |             |                       |     |                            |            |              |             |                    |    
|Cash and cash equivalents at the end of the year   |                                                        | Ps.       | 18,646,698  |                       | Ps. | 1,183,963                  |            | Ps.          | 4,156,162   |                    | Ps.
|                                                   |                                                        |           |             |                       |     |                            |            |              |             |                    |    

F-64

---



SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION  STATEMENT OF CHANGES IN FINANCIAL POSITION  For the year ended December 31, 1998

|                                                   |                                                 | Corporate |             | Subsidiary
Guarantors |     | Non-Guarantor
Subsidiaries |             | Eliminations |             | PEMEX
Consolidated |    
|-------------------------------------------------- | ----------------------------------------------- | --------- | ----------- | --------------------- | --- | -------------------------- | ----------- | ------------ | ----------- | ------------------ | ---
|Funds (used in) provided by operating activities   |                                                 | Ps.       | (31,421,631 | )                     | Ps. | 7,288,141                  |             | Ps.          | 341,638     |                    | Ps.
|Financing activities:                              |                                                 |           |             |                       |     |                            |             |              |             |                    |    
|                                                   | Sale of future accounts receivable              |           |             |                      |     |                            | 16,598,488  |              |             |                   |    
|                                                   | Long-term debt                                  |           |             | 23,311,143            |     |                            | 27,637,836  |              |             | 26,577,804         |    
|                                                   | Long-term debt receivable  intercompany        |           |             |                      |     |                            |            |              |             | 2,624,090          |    
|                                                   | Net income (loss) passed to Petróleos Mexicanos |           |             | 7,818,186             |     |                            | (8,255,828  | )            |             | 53,207             |    
|                                                   | Other changes in equity and retained earnings   |           |             | (5,803,941            | )   |                            | (5,381,404  | )            |             | (975,145           | )  
|                                                   |                                                 |           |             |                       |     |                            |             |              |             |                    |    
|Funds provided by (used in) financing activities   |                                                 |           | 25,325,388  |                       |     | 30,599,092                 |             |              | 28,279,956  |                    |    
|Investing activities:                              |                                                 |           |             |                       |     |                            |             |              |             |                    |    
|                                                   | Increase in fixed assets, net                   |           |             | (1,007,480            | )   |                            | (37,941,429 | )            |             | (27,506,828        | )  
|                                                   | Investments in subsidiaries                     |           |             | 6,435,427             |     |                            |            |              |             |                   |    
|                                                   |                                                 |           |             |                       |     |                            |             |              |             |                    |    
|Funds provided by (used in) investing activities   |                                                 |           | 5,427,947   |                       |     | (37,941,429                | )           |              | (27,506,828 | )                  |    
|                                                   |                                                 |           |             |                       |     |                            |             |              |             |                    |    
|(Decrease) increase in cash and cash equivalents   |                                                 |           | (668,296    | )                     |     | (54,196                    | )           |              | 1,114,766   |                    |    
|Cash and cash equivalents at beginning of the year |                                                 |           | 10,865,302  |                       |     | 720,105                    |             |              | 2,653,622   |                    |    
|                                                   |                                                 |           |             |                       |     |                            |             |              |             |                    |    
|Cash and cash equivalents at the end of the year   |                                                 | Ps.       | 10,197,006  |                       | Ps. | 665,909                    |             | Ps.          | 3,768,388   |                    | Ps.
|                                                   |                                                 |           |             |                       |     |                            |             |              |             |                    |    

F-65

---

20.    PIDIREGAS liabilities and the Pemex Project Funding Master Trust

The Trust, a consolidated entity, which is a business trust, was organized under the laws of Delaware on November 10, 1998 with The Bank of New York and
The Bank of New York (Delaware), acting as Trustees. The main objective of the Trust is to administer financial resources related to PIDIREGAS projects, such financial resources being designated by
PEMEX for that purpose, by assuming payment obligations under contracts relating to PIDIREGAS projects and acting as the borrower under financing arrangements for PIDIREGAS projects.

Under
an Assignment and Indemnity Agreement dated November 10, 1998, among Petróleos Mexicanos, the Trust and the Subsidiary Guarantors, Petróleos
Mexicanos and the Subsidiary Guarantors have certain obligations to the Trust with respect to the liabilities incurred by the Trust in connection with the PIDIREGAS projects. These obligations
include:



On
December 31, 1998, PEMEX transferred all assets and liabilities related to PIDIREGAS projects for an amount equaling Ps.12,104,010 to the Trust. The Trust has been consolidated
in the financial statements of PEMEX at December 31, 2000, 1999 and 1998 in accordance with consolidation principles detailed in Mexican GAAP Bulletin B-8 "Consolidated and Combined
Financial Statements and Valuation of Permanent Investments in Stocks." In accordance with U.S. accounting principles, the
Trust is a special purpose entity requiring consolidation to the financial statements as it does not meet non-consolidation criteria as specified in U.S. accounting literature.

The
following consolidating information presents condensed consolidating balance sheets at December 31, 2000 and 1999 and condensed consolidating statements of operations and
statements of changes in financial position for the years ended December 31, 2000, 1999 and 1998 of the Trust, Petróleos Mexicanos, Pemex-Exploration and Production,
Pemex-Refining, Pemex-Gas and Basic Petrochemicals, and Pemex-Petrochemicals and the consolidated Subsidiary Companies. These financial statements are prepared in conformity with Mexican
GAAP and as to the recognition of inflation, in accordance with NIF-06-BIS "A" section A (see Notes 2 b) and 14 to the consolidated financial statements), except
that in the following condensed financial information the Trust and the Subsidiary Entities are accounted for as investments under the equity method rather than being consolidated.
Pemex-Petrochemicals and the Subsidiary Guarantors are controlled by and have the characteristics of subsidiaries of Petróleos Mexicanos. Petróleos Mexicanos' guaranty of
the indebtedness of the Trust is full and unconditional. The guaranties by the Subsidiary Guarantors of Petróleos Mexicanos' guaranty of the Trust's payment obligations are full and
unconditional and joint and several.

Petróleos
Mexicanos and the Trust are the only entities authorized to contract debt, and thus all guaranteed debt is held by these entities.

F-66

---



BALANCE SHEET  As of December 31, 2000

|As Restated                                                                                   |                                      | Corporate                    |             | Master Trust |             | Subsidiary
Guarantors |            | Non-Guarantor
Subsidiaries |             | Eliminations |             | PEMEX
Consolidated |           
|--------------------------------------------------------------------------------------------- | ------------------------------------ | ---------------------------- | ----------- | ------------ | ----------- | --------------------- | ---------- | -------------------------- | ----------- | ------------ | ----------- | ------------------ | ----------
|ASSETS                                                                                        |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|Current assets:                                                                               |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              | Cash and cash equivalents            |                              | Ps.         | 14,428,209   |             | Ps.                   | 8,057,964  |                            | Ps.         | 1,452,602    |             | Ps.                | 3,888,071 
|                                                                                              | Accounts, notes receivable and other |                              |             | 80,976,771   |             |                       | 88,026,014 |                            |             | 94,668,605   |             |                    | 15,905,194
|                                                                                              | Inventories, net                     |                              |             | 188,647      |             |                       |           |                            |             | 21,364,219   |             |                    | 3,307,105 
|                                                                                              |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              |                                      | Total current assets         |             |              | 95,593,627  |                       |            | 96,083,978                 |             |              | 117,485,426 |                    |           
|Long-term debt receivable-intercompany                                                        |                                      |                              | 57,154,732  |              |             |                      |            |                            |            |              |             |                   |           
|Investments in subsidiaries                                                                   |                                      |                              | 182,890,968 |              |             |                      |            |                            |            |              |             | 5,514,460          |           
|Properties, net                                                                               |                                      |                              | 9,214,929   |              |             |                      |            |                            | 316,477,604 |              |             | 18,530,892         |           
|Intangible asset derived from the actuarial computation of labor obligations and other assets |                                      |                              | 12,776,048  |              |             |                      |            |                            | 94,079,394  |              |             | 2,559,701          |           
|                                                                                              |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              |                                      | Total assets                 |             | Ps.          | 357,630,304 |                       | Ps.        | 96,083,978                 |             | Ps.          | 528,042,424 |                    | Ps.       
|                                                                                              |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|LIABILITIES                                                                                   |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|Current liabilities:                                                                          |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              | Current portion of long-term debt    |                              | Ps.         | 114,135,746  |             | Ps.                   | 5,885,494  |                            | Ps.         | 52,139,993   |             | Ps.                | 8,622,190 
|                                                                                              | Accounts payable-intercompany        |                              |             |             |             |                       |           |                            |             | 33,904,305   |             |                    | 6,551,679 
|                                                                                              | Other current liabilities            |                              |             | 1,910,274    |             |                       | 6,848,735  |                            |             | 39,930,032   |             |                    | 7,648,803 
|                                                                                              |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              |                                      | Total current liabilities    |             |              | 116,046,020 |                       |            | 12,734,229                 |             |              | 125,974,330 |                    |           
|Long-term debt                                                                                |                                      |                              | 70,126,090  |              |             | 83,349,749            |            |                            | 52,799,597  |              |             | 208,247            |           
|Sale of future accounts receivable                                                            |                                      |                              |            |              |             |                      |            |                            | 51,976,573  |              |             |                   |           
|Reserve for retirement payments, pensions, indemnities sundry creditors, and others           |                                      |                              | 16,319,176  |              |             |                      |            |                            | 129,436,724 |              |             | 11,837,927         |           
|                                                                                              |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              |                                      | Total liabilities            |             |              | 202,491,286 |                       |            | 96,083,978                 |             |              | 360,187,224 |                    |           
|                                                                                              |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|EQUITY                                                                                        |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|Equity accounts                                                                               |                                      |                              | (16,105,298 | )            |             |                      |            |                            | 70,071,754  |              |             | 3,171,404          |           
|Revaluation surplus                                                                           |                                      |                              | 171,244,316 |              |             |                      |            |                            | 97,783,446  |              |             | 11,665,173         |           
|                                                                                              |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              |                                      |                              | 155,139,018 |              |             |                      |            |                            | 167,855,200 |              |             | 14,836,577         |           
|                                                                                              |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              |                                      | Total liabilities and equity |             | Ps.          | 357,630,304 |                       | Ps.        | 96,083,978                 |             | Ps.          | 528,042,424 |                    | Ps.       
|                                                                                              |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           

F-67

---



BALANCE SHEET  As of December 31, 1999

|As Restated                                                                                   |                                      | Corporate                    |             | Master Trust |             | Subsidiary
Guarantors |            | Non-Guarantor
Subsidiaries |             | Eliminations |             | PEMEX
Consolidated |           
|--------------------------------------------------------------------------------------------- | ------------------------------------ | ---------------------------- | ----------- | ------------ | ----------- | --------------------- | ---------- | -------------------------- | ----------- | ------------ | ----------- | ------------------ | ----------
|ASSETS                                                                                        |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|Current assets:                                                                               |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              | Cash and cash equivalents            |                              | Ps.         | 18,646,698   |             | Ps.                   | 589,382    |                            | Ps.         | 1,183,963    |             | Ps.                | 3,566,780 
|                                                                                              | Accounts, notes receivable and other |                              |             | 38,404,173   |             |                       | 52,819,322 |                            |             | 99,090,771   |             |                    | 14,551,527
|                                                                                              | Inventories, net                     |                              |             | 7,852        |             |                       |           |                            |             | 14,331,593   |             |                    | 2,273,163 
|                                                                                              |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              |                                      | Total current assets         |             |              | 57,058,723  |                       |            | 53,408,704                 |             |              | 114,606,327 |                    |           
|Long-term debt receivableintercompany                                                        |                                      |                              | 56,676,129  |              |             |                      |            |                            |            |              |             |                   |           
|Investments in subsidiaries                                                                   |                                      |                              | 181,981,073 |              |             |                      |            |                            |            |              |             | 7,565,566          |           
|Properties, net                                                                               |                                      |                              | 9,427,696   |              |             |                      |            |                            | 258,922,155 |              |             | 18,019,481         |           
|Intangible asset derived from the actuarial computation of labor obligations and other assets |                                      |                              | 6,655,042   |              |             |                      |            |                            | 42,301,347  |              |             | 3,293,978          |           
|                                                                                              |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              |                                      | Total assets                 |             | Ps.          | 311,798,663 |                       | Ps.        | 53,408,704                 |             | Ps.          | 415,829,829 |                    | Ps.       
|                                                                                              |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|LIABILITIES                                                                                   |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|Current liabilities:                                                                          |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              | Current portion of long-term debt    |                              | Ps.         | 44,555,506   |             |                       | 8,510,104  |                            |             | 14,781,274   |             |                    | 325,880   
|                                                                                              | Accounts payable-intercompany        |                              |             | 5,882,487    |             |                       |           |                            |             | 18,108,153   |             |                    | 13,780,248
|                                                                                              | Other current liabilities            |                              |             | 4,252,744    |             |                       | 2,223,596  |                            |             | 35,069,863   |             |                    | 6,548,169 
|                                                                                              |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              |                                      | Total current liabilities    |             |              | 54,690,737  |                       |            | 10,733,700                 |             |              | 67,959,290  |                    |           
|Long-term debt                                                                                |                                      |                              | 75,989,074  |              |             | 42,675,004            |            |                            | 56,544,121  |              |             | 1,254,895          |           
|Sale of future accounts receivable                                                            |                                      |                              |            |              |             |                      |            |                            | 43,300,738  |              |             |                   |           
|Reserve for retirement payments, pensions, indemnities, sundry creditors, and others          |                                      |                              | 11,446,093  |              |             |                      |            |                            | 88,586,326  |              |             | 9,887,322          |           
|                                                                                              |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              |                                      | Total liabilities            |             |              | 142,125,904 |                       |            | 53,408,704                 |             |              | 256,390,475 |                    |           
|                                                                                              |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|EQUITY                                                                                        |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|Equity accounts                                                                               |                                      |                              | 7,823,649   |              |             |                      |            |                            | 72,585,133  |              |             | 5,251,246          |           
|Revaluation surplus                                                                           |                                      |                              | 161,849,110 |              |             |                      |            |                            | 86,854,221  |              |             | 12,222,735         |           
|                                                                                              |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              |                                      |                              | 169,672,759 |              |             |                      |            |                            | 159,439,354 |              |             | 17,473,981         |           
|                                                                                              |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           
|                                                                                              |                                      | Total liabilities and equity |             | Ps.          | 311,798,663 |                       | Ps.        | 53,408,704                 |             | Ps.          | 415,829,829 |                    | Ps.       
|                                                                                              |                                      |                              |             |              |             |                       |            |                            |             |              |             |                    |           

F-68

---



STATEMENT OF OPERATIONS  For the year ended December 31, 2000

|As Restated                                                                                             |                                               | Corporate                          |             | Master Trust |            | Subsidiary
Guarantors |           | Non-Guarantor
Subsidiaries |             | Eliminations |             | PEMEX
Consolidated |            
|------------------------------------------------------------------------------------------------------- | --------------------------------------------- | ---------------------------------- | ----------- | ------------ | ---------- | --------------------- | --------- | -------------------------- | ----------- | ------------ | ----------- | ------------------ | -----------
|Net sales                                                                                               |                                               | Ps.                                | 22,129,563  |              | Ps.        |                      |           | Ps.                        | 641,722,720 |              | Ps.         | 239,485,847        |            
|Other revenues                                                                                          |                                               |                                    | 574,735     |              |            | 4,118,225             |           |                            | 9,367,075   |              |             | 6,698,101          |            
|                                                                                                        |                                               |                                    |             |              |            |                       |           |                            |             |              |             |                    |            
|Total revenues                                                                                          |                                               |                                    | 22,704,298  |              |            | 4,118,225             |           |                            | 651,089,795 |              |             | 246,183,948        |            
|Costs and operating expenses:                                                                           |                                               |                                    |             |              |            |                       |           |                            |             |              |             |                    |            
|                                                                                                        | Cost of sales                                 |                                    |             |             |            |                       |          |                            |             | 325,946,683  |             |                    | 241,568,215
|                                                                                                        | Transportation and distribution expenses      |                                    |             |             |            |                       |          |                            |             | 12,058,906   |             |                    | 649,516    
|                                                                                                        | Administrative expenses                       |                                    |             | 14,996,555   |            |                       | 14,355    |                            |             | 19,275,246   |             |                    | 3,097,484  
|                                                                                                        | Other expenses                                |                                    |             | 7,038,378    |            |                       | 6,138,444 |                            |             | 17,535,771   |             |                    | 1,072,888  
|                                                                                                        |                                               |                                    |             |              |            |                       |           |                            |             |              |             |                    |            
|                                                                                                        |                                               | Total costs and operating expenses |             |              | 22,034,933 |                       |           | 6,152,799                  |             |              | 374,816,606 |                    |            
|Equity participation in subsidiaries                                                                    |                                               |                                    | (21,216,737 | )            |            |                      |           |                            |            |              |             |                   |            
|Capitalization of Trust operations                                                                      |                                               |                                    |            |              |            | 2,034,574             |           |                            |            |              |             |                   |            
|                                                                                                        |                                               |                                    |             |              |            |                       |           |                            |             |              |             |                    |            
|(Loss) income before hydrocarbon extraction duties and other and special tax on production and services |                                               |                                    | (20,547,372 | )            |            |                      |           |                            | 276,273,189 |              |             | (204,155           | )          
|                                                                                                        | Hydrocarbon extraction duties and other       |                                    |             |             |            |                       |          |                            |             | 223,044,353  |             |                    | 1,042,336  
|                                                                                                        | Special tax on production and services (IEPS) |                                    |             |             |            |                       |          |                            |             | 69,556,520   |             |                    |           
|                                                                                                        |                                               |                                    |             |              |            |                       |           |                            |             |              |             |                    |            
|                                                                                                        |                                               |                                    |            |              |            |                      |           |                            | 292,600,873 |              |             | 1,042,336          |            
|                                                                                                        |                                               |                                    |             |              |            |                       |           |                            |             |              |             |                    |            
|(Loss) income for the year                                                                              |                                               | Ps.                                | (20,547,372 | )            | Ps.        |                      |           | Ps.                        | (16,327,684 | )            | Ps.         | (1,246,491         | )          
|                                                                                                        |                                               |                                    |             |              |            |                       |           |                            |             |              |             |                    |            

F-69

---



STATEMENT OF OPERATIONS  For the year ended December 31, 1999

|As Restated                                                                                             |                                               | Corporate                          |             | Master Trust |            | Subsidiary
Guarantors |           | Non-Guarantor
Subsidiaries |             | Eliminations |             | PEMEX
Consolidated |            
|------------------------------------------------------------------------------------------------------- | --------------------------------------------- | ---------------------------------- | ----------- | ------------ | ---------- | --------------------- | --------- | -------------------------- | ----------- | ------------ | ----------- | ------------------ | -----------
|Net sales                                                                                               |                                               | Ps.                                | 16,774,887  |              | Ps.        |                      |           | Ps.                        | 422,580,848 |              | Ps.         | 148,772,450        |            
|Other revenues                                                                                          |                                               |                                    | 2,818,391   |              |            | 169,403               |           |                            | 8,830,443   |              |             | 2,882,073          |            
|                                                                                                        |                                               |                                    |             |              |            |                       |           |                            |             |              |             |                    |            
|Total revenues                                                                                          |                                               |                                    | 19,593,278  |              |            | 169,403               |           |                            | 431,411,291 |              |             | 151,654,523        |            
|Costs and operating expenses:                                                                           |                                               |                                    |             |              |            |                       |           |                            |             |              |             |                    |            
|                                                                                                        | Cost of sales                                 |                                    |             |             |            |                       |          |                            |             | 201,972,991  |             |                    | 147,802,262
|                                                                                                        | Transportation and distribution expenses      |                                    |             |             |            |                       |          |                            |             | 10,570,323   |             |                    | 434,286    
|                                                                                                        | Administrative expenses                       |                                    |             | 11,280,125   |            |                       | 1,795     |                            |             | 15,447,974   |             |                    | 2,980,546  
|                                                                                                        | Other expenses                                |                                    |             | 11,543,220   |            |                       | 3,733,938 |                            |             | 8,297,322    |             |                    | 444,033    
|                                                                                                        |                                               |                                    |             |              |            |                       |           |                            |             |              |             |                    |            
|                                                                                                        |                                               | Total costs and operating expenses |             |              | 22,823,345 |                       |           | 3,735,733                  |             |              | 236,288,610 |                    |            
|Equity participation in subsidiaries                                                                    |                                               |                                    | (15,616,823 | )            |            |                      |           |                            |            |              |             |                   |            
|Capitalization of Trust operations                                                                      |                                               |                                    |            |              |            | 3,566,330             |           |                            |            |              |             |                   |            
|                                                                                                        |                                               |                                    |             |              |            |                       |           |                            |             |              |             |                    |            
|(Loss) income before hydrocarbon extraction duties and other and special tax on production and services |                                               |                                    | (18,846,890 | )            |            |                      |           |                            | 195,122,681 |              |             | (6,604             | )          
|                                                                                                        | Hydrocarbon extraction duties and other       |                                    |             |             |            |                       |          |                            |             | 119,237,731  |             |                    | 1,239,257  
|                                                                                                        | Special tax on production and services (IEPS) |                                    |             |             |            |                       |          |                            |             | 88,349,243   |             |                    |           
|                                                                                                        |                                               |                                    |             |              |            |                       |           |                            |             |              |             |                    |            
|                                                                                                        |                                               |                                    |            |              |            |                      |           |                            | 207,586,974 |              |             | 1,239,257          |            
|                                                                                                        |                                               |                                    |             |              |            |                       |           |                            |             |              |             |                    |            
|(Loss) income for the year                                                                              |                                               | Ps.                                | (18,846,890 | )            | Ps.        |                      |           | Ps.                        | (12,464,293 | )            | Ps.         | (1,245,861         | )          
|                                                                                                        |                                               |                                    |             |              |            |                       |           |                            |             |              |             |                    |            

F-70

---



STATEMENT OF OPERATIONS  For the year ended December 31, 1998

|As Restated                                                                                             |                                               | Corporate                          |             | Master Trust |           | Subsidiary
Guarantors |         | Non-Guarantor
Subsidiaries |             | Eliminations |             | PEMEX
Consolidated |            
|------------------------------------------------------------------------------------------------------- | --------------------------------------------- | ---------------------------------- | ----------- | ------------ | --------- | --------------------- | ------- | -------------------------- | ----------- | ------------ | ----------- | ------------------ | -----------
|Net sales                                                                                               |                                               | Ps.                                | 10,438,730  |              | Ps.       |                      |         | Ps.                        | 330,680,547 |              | Ps.         | 109,206,630        |            
|Other revenues                                                                                          |                                               |                                    | (792,046    | )            |           |                      |         |                            | 8,938,315   |              |             | 1,131,488          |            
|                                                                                                        |                                               |                                    |             |              |           |                       |         |                            |             |              |             |                    |            
|Total revenues                                                                                          |                                               |                                    | 9,646,684   |              |           |                      |         |                            | 339,618,862 |              |             | 110,338,118        |            
|Costs and operating expenses:                                                                           |                                               |                                    |             |              |           |                       |         |                            |             |              |             |                    |            
|                                                                                                        | Cost of sales                                 |                                    |             |             |           |                       |        |                            |             | 167,803,692  |             |                    | 108,693,697
|                                                                                                        | Transportation and distribution expenses      |                                    |             |             |           |                       |        |                            |             | 9,155,325    |             |                    | 240,955    
|                                                                                                        | Administrative expenses                       |                                    |             | 10,181,513   |           |                       |        |                            |             | 15,012,920   |             |                    | 2,801,838  
|                                                                                                        | Other expenses                                |                                    |             | (397,095     | )         |                       | 226,605 |                            |             | 6,214,727    |             |                    | (148,612   
|                                                                                                        |                                               |                                    |             |              |           |                       |         |                            |             |              |             |                    |            
|                                                                                                        |                                               | Total costs and operating expenses |             |              | 9,784,418 |                       |         | 226,605                    |             |              | 198,186,664 |                    |            
|Equity participation in subsidiaries                                                                    |                                               |                                    | (10,994,104 | )            |           |                      |         |                            |            |              |             |                   |            
|Capitalization of Trust operations                                                                      |                                               |                                    |            |              |           | 226,605               |         |                            |            |              |             |                   |            
|                                                                                                        |                                               |                                    |             |              |           |                       |         |                            |             |              |             |                    |            
|(Loss) income before hydrocarbon extraction duties and other and special tax on production and services |                                               |                                    | (11,131,838 | )            |           |                      |         |                            | 141,432,198 |              |             | (1,249,760         | )          
|                                                                                                        | Hydrocarbon extraction duties and other       |                                    |             |             |           |                       |        |                            |             | 85,230,640   |             |                    | 802,582    
|                                                                                                        | Special tax on production and services (IEPS) |                                    |             |             |           |                       |        |                            |             | 65,854,312   |             |                    |           
|                                                                                                        |                                               |                                    |             |              |           |                       |         |                            |             |              |             |                    |            
|                                                                                                        |                                               |                                    |            |              |           |                      |         |                            | 151,084,952 |              |             | 802,582            |            
|                                                                                                        |                                               |                                    |             |              |           |                       |         |                            |             |              |             |                    |            
|(Loss) income for the year                                                                              |                                               | Ps.                                | (11,131,838 | )            | Ps.       |                      |         | Ps.                        | (9,652,754  | )            | Ps.         | (2,052,342         | )          
|                                                                                                        |                                               |                                    |             |              |           |                       |         |                            |             |              |             |                    |            

F-71

---

STATEMENT OF CHANGES IN FINANCIAL POSITION  For the year ended December 31, 2000

|                                                   |                                                 | Corporate |             | Master Trust |     | Subsidiary
Guarantors |            | Non-Guarantor
Subsidiaries |             | Eliminations |     | PEMEX
Consolidated |           
|-------------------------------------------------- | ----------------------------------------------- | --------- | ----------- | ------------ | --- | --------------------- | ---------- | -------------------------- | ----------- | ------------ | --- | ------------------ | ----------
|Funds (used in) provided by operating activities   |                                                 | Ps.       | (62,080,063 | )            | Ps. | (30,581,553           | )          | Ps.                        | (10,216,646 | )            | Ps. | (4,319,945         | )         
|Financing activities:                              |                                                 |           |             |              |     |                       |            |                            |             |              |     |                    |           
|                                                   | Sale of future accounts receivable              |           |             |             |     |                       |           |                            |             | 8,675,835    |     |                    |          
|                                                   | Long-term debt                                  |           |             | 63,717,256   |     |                       | 38,050,136 |                            |             | 35,413,510   |     |                    | 7,249,662 
|                                                   | Net income distributions to Petróleos Mexicanos |           |             | (11,894,564  | )   |                       |           |                            |             | 11,143,060   |     |                    | 751,504   
|                                                   | Other changes in equity and retained earnings   |           |             | (5,623,568   | )   |                       |           |                            |             | 26,433,760   |     |                    | (1,341,824
|                                                   |                                                 |           |             |              |     |                       |            |                            |             |              |     |                    |           
|Funds provided by (used in) financing activities   |                                                 |           | 46,199,124  |              |     | 38,050,136            |            |                            | 81,666,165  |              |     | 6,659,342          |           
|Investing activities:                              |                                                 |           |             |              |     |                       |            |                            |             |              |     |                    |           
|                                                   | Increase in fixed assets, net                   |           |             | 9,050,823    |     |                       |           |                            |             | (71,180,882  | )   |                    | (2,018,105
|                                                   | Investments in subsidiaries                     |           |             | 2,611,627    |     |                       |           |                            |             |             |     |                    |          
|                                                   |                                                 |           |             |              |     |                       |            |                            |             |              |     |                    |           
|Funds provided by (used in) investing activities   |                                                 |           | 11,662,450  |              |     |                      |            |                            | (71,180,882 | )            |     | (2,018,105         | )         
|                                                   |                                                 |           |             |              |     |                       |            |                            |             |              |     |                    |           
|(Decrease) increase in cash and cash equivalents   |                                                 |           | (4,218,489  | )            |     | 7,468,583             |            |                            | 268,637     |              |     | 321,292            |           
|Cash and cash equivalents at beginning of the year |                                                 |           | 18,646,698  |              |     | 589,382               |            |                            | 1,183,963   |              |     | 3,566,780          |           
|                                                   |                                                 |           |             |              |     |                       |            |                            |             |              |     |                    |           
|Cash and cash equivalents at the end of the year   |                                                 | Ps.       | 14,428,209  |              | Ps. | 8,057,965             |            | Ps.                        | 1,452,600   |              | Ps. | 3,888,072          |           
|                                                   |                                                 |           |             |              |     |                       |            |                            |             |              |     |                    |           

F-72

---



STATEMENT OF CHANGES IN FINANCIAL POSITION  For the year ended December 31, 1999

|                                                   |                                                        | Corporate |             | Master Trust |     | Subsidiary
Guarantors |            | Non-Guarantor
Subsidiaries |             | Eliminations |     | PEMEX
Consolidated |           
|-------------------------------------------------- | ------------------------------------------------------ | --------- | ----------- | ------------ | --- | --------------------- | ---------- | -------------------------- | ----------- | ------------ | --- | ------------------ | ----------
|Funds provided by (used in) operating activities   |                                                        | Ps.       | 21,139,652  |              | Ps. | (24,021,915           | )          | Ps.                        | (16,904,904 | )            | Ps. | 3,901,286          |           
|Financing activities:                              |                                                        |           |             |              |     |                       |            |                            |             |              |     |                    |           
|                                                   | Sale of future accounts receivable                     |           |             |             |     |                       |           |                            |             | 26,702,250   |     |                    |          
|                                                   | Long-term debt                                         |           |             | (224,763     | )   |                       | 24,611,297 |                            |             | (9,700,795   | )   |                    | (1,411,585
|                                                   | Net income (loss) distributions to Petróleos Mexicanos |           |             | (10,766,871  | )   |                       |           |                            |             | 8,185,826    |     |                    | 854,362   
|                                                   | Other changes in equity and retained earnings          |           |             | (3,843,264   | )   |                       |           |                            |             | 1,780,238    |     |                    | (3,309,823
|                                                   |                                                        |           |             |              |     |                       |            |                            |             |              |     |                    |           
|Funds (used in) provided by financing activities   |                                                        |           | (14,834,898 | )            |     | 24,611,297            |            |                            | 26,967,519  |              |     | (3,867,046         | )         
|Investing activities:                              |                                                        |           |             |              |     |                       |            |                            |             |              |     |                    |           
|                                                   | Increase in fixed assets, net                          |           |             | (773,080     | )   |                       |           |                            |             | (9,544,561   | )   |                    | (235,848  
|                                                   | Investments in subsidiaries                            |           |             | 2,534,631    |     |                       |           |                            |             |             |     |                    |          
|                                                   |                                                        |           |             |              |     |                       |            |                            |             |              |     |                    |           
|Funds provided by (used in) investing activities   |                                                        |           | 1,761,551   |              |     |                      |            |                            | (9,544,561  | )            |     | (235,848           | )         
|                                                   |                                                        |           |             |              |     |                       |            |                            |             |              |     |                    |           
|Increase (decrease) in cash and cash equivalents   |                                                        |           | 8,066,305   |              |     | 589,382               |            |                            | 518,054     |              |     | (201,608           | )         
|Cash and cash equivalents at beginning of the year |                                                        |           | 10,580,393  |              |     |                      |            |                            | 665,909     |              |     | 3,768,388          |           
|                                                   |                                                        |           |             |              |     |                       |            |                            |             |              |     |                    |           
|Cash and cash equivalents at the end of the year   |                                                        | Ps.       | 18,646,698  |              | Ps. | 589,382               |            | Ps.                        | 1,183,963   |              | Ps. | 3,566,780          |           
|                                                   |                                                        |           |             |              |     |                       |            |                            |             |              |     |                    |           

F-73

---

STATEMENT OF CHANGES IN FINANCIAL POSITION  For the year ended December 31, 1998

|                                                   |                                                        | Corporate |             | Master Trust |     | Subsidiary
Guarantors |            | Non-Guarantor
Subsidiaries |             | Eliminations |     | PEMEX
Consolidated |          
|-------------------------------------------------- | ------------------------------------------------------ | --------- | ----------- | ------------ | --- | --------------------- | ---------- | -------------------------- | ----------- | ------------ | --- | ------------------ | ---------
|Funds (used in) provided by operating activities   |                                                        | Ps.       | (31,421,631 | )            | Ps. | (26,573,811           | )          | Ps.                        | 7,288,141   |              | Ps. | 249,876            |          
|Financing activities:                              |                                                        |           |             |              |     |                       |            |                            |             |              |     |                    |          
|                                                   | Sale of future accounts receivable                     |           |             |             |     |                       |           |                            |             | 16,598,488   |     |                    |         
|                                                   | Long-term debt                                         |           |             | 23,311,143   |     |                       | 26,573,811 |                            |             | 27,637,836   |     |                    | 3,993    
|                                                   | Long-term debt receivable  intercompany               |           |             |             |     |                       |           |                            |             |             |     |                    | 2,624,090
|                                                   | Net income (loss) distributions to Petróleos Mexicanos |           |             | 7,818,186    |     |                       |           |                            |             | (8,255,828   | )   |                    | 53,207   
|                                                   | Other changes in equity and retained earnings          |           |             | (5,803,941   | )   |                       |           |                            |             | (5,381,404   | )   |                    | (975,145 
|                                                   |                                                        |           |             |              |     |                       |            |                            |             |              |     |                    |          
|Funds provided by (used in) financing activities   |                                                        |           | 25,325,388  |              |     | 26,573,811            |            |                            | 30,599,092  |              |     | 1,706,145          |          
|Investing activities:                              |                                                        |           |             |              |     |                       |            |                            |             |              |     |                    |          
|                                                   | Increase in fixed assets, net                          |           |             | (1,007,480   | )   |                       |           |                            |             | (37,941,429  | )   |                    | (841,255 
|                                                   | Investments in subsidiaries                            |           |             | 6,435,427    |     |                       |           |                            |             |             |     |                    |         
|                                                   |                                                        |           |             |              |     |                       |            |                            |             |              |     |                    |          
|Funds provided by (used in) investing activities   |                                                        |           | 5,427,947   |              |     |                      |            |                            | (37,941,429 | )            |     | (841,255           | )        
|                                                   |                                                        |           |             |              |     |                       |            |                            |             |              |     |                    |          
|(Decrease) increase in cash and cash equivalents   |                                                        |           | (668,296    | )            |     |                      |            |                            | (54,196     | )            |     | 1,114,766          |          
|Cash and cash equivalents at beginning of the year |                                                        |           | 10,865,302  |              |     |                      |            |                            | 720,105     |              |     | 2,653,622          |          
|                                                   |                                                        |           |             |              |     |                       |            |                            |             |              |     |                    |          
|Cash and cash equivalents at the end of the year   |                                                        | Ps.       | 10,197,006  |              | Ps. |                      |            | Ps.                        | 665,909     |              | Ps. | 3,768,388          |          
|                                                   |                                                        |           |             |              |     |                       |            |                            |             |              |     |                    |          

F-74

---

20. PIDIREGAS liabilities and the Pemex Project Funding Master Trust (continued)

The significant differences between Mexican and U.S. GAAP as they affect PEMEX and the Subsidiary Companies are described in Note 18. The U.S. GAAP
adjustments related to exploration and drilling costs and units of production amortization are exclusive to Pemex Exploration and Production. The U.S. GAAP adjustment related to fixed asset impairment
relates to the Subsidiary Entities. U.S. GAAP adjustments pertaining to advance payment on minimum guaranteed dividends, investment securities, and the sale of Repsol shares relate exclusively to
Petróleos Mexicanos. The U.S. GAAP adjustment to account for derivatives relates primarily to Petróleos Mexicanos. All other U.S. GAAP adjustments relate collectively to
Petróleos Mexicanos, the Subsidiary Guarantors and Pemex-Petrochemicals.

21. Supplementary information on oil and gas exploration and production activities (Unaudited)

The following tables provide supplementary information on the oil and gas exploration, development and producing activities of Pemex-Exploration and Production in
compliance with SFAS No.69 "Disclosures about Oil and Gas Producing Activities" published by the Financial Accounting Standards Board of the United States. All exploration and production activities of
Pemex-Exploration and Production are located in Mexico.

The
supplemental data presented herein reflects information for all of Pemex-Exploration and Production's oil and gas producing activities. Capitalized costs and results of operations
presented herein have been prepared in accordance with U.S. GAAP.

Capitalized costs for oil and gas producing activities:

As of December 31,2000

1999

1998Proved properties

Ps.
202,137,360

Ps.
160,291,686

Ps.
148,324,387Construction in progress


9,654,352


11,079,971


13,070,690Accumulated depreciation and Amortization


(97,073,538
)

(84,905,319
)

(79,057,760
)Net capitalized costs

Ps.
114,718,174

Ps.
86,466,338

Ps.
82,337,317


Costs incurred for oil and gas property exploration and development activities:

Year ended December 31,2000

1999

1998Exploration

Ps.
331,685

Ps.


Ps.
1,528,207Development


6,353,194


4,262,495


9,982,800Total costs incurred

Ps.
6,684,879

Ps.
4,262,495

Ps.
11,511,007


There
are no property acquisition costs because PEMEX exploits oil reserves owned by the Mexican nation.

Development costs include costs of geological and geophysical studies of field development amounting to Ps. 1,710,998, Ps. 920,379 and Ps. 3,400,850 for 2000, 1999 and 1998,
respectively, that are expensed, under successful efforts, as geological and geophysical exploration expense. Development costs also include Ps. 5,494,939 for 2000 related to construction in progress.
Upon project completion, construction in progress amounts will be re-classified either to expenses or capitalized as appropriate.

F-75

---

Results of operations for oil and gas producing activities:

Year Ended December 31,2000

1999

1998Revenues from affiliates

Ps.
312,207,332

Ps.
175,916,078

Ps.
129,925,340Hydrocarbon duties


200,099,233


104,716,228


84,314,489Excess-gains taxes


21,196,536


13,259,914


Production costs (excluding taxes)


44,753,856


33,804,055


31,625,273Exploration expenses


1,710,998


920,379


3,400,850Depreciation, depletion and amortization


11,513,616


9,715,698


6,439,814279,274,239


162,416,274


125,780,426Results of operations for oil and gas producing activities

Ps.
32,933,093

Ps.
13,499,804

Ps.
4,144,914


Crude oil and natural gas reserves:

Sales prices and production costs (unaudited)

The following table summarizes average sales prices (excluding production taxes):

(U.S.
Dollars)

2000

1999

1998December average sales prices

23.03

18.24

8.49Crude oil, per barrel

22.78

20.70

8.46Natural gas, per thousand cubic feet

5.13

1.91

1.73


Crude oil and natural gas reserves (unaudited)

Under the Political Constitution of the United Mexican States and Mexican statutory law, all oil and other hydrocarbon reserves within Mexico are owned by the
Mexican nation and not by PEMEX. Under the Organic Law, PEMEX has the exclusive right to produce these reserves and sell the production, not the reserves, subject to a federal production tax currently
assessed at the rate of 60.8% of revenue from production sales. Crude oil exports are subject to an additional "excess gains" tax. PEMEX's exploration and development activities are limited to
reserves located in Mexico.

Proved
oil and gas reserves are those estimated quantities of crude oil, natural gas and natural gas liquids, which geological and engineering data demonstrate with reasonable certainty
to be recoverable in future years from known reservoirs under existing economic and operating conditionsi.e., prices and costs at the date
of estimation. Mexico's proved reserves are estimated by PEMEX technical staff.

PEMEX
estimates reserves using standard geological and engineering methods generally accepted by the petroleum industry. The choice of method or combinations of methods employed in the
analysis of each reservoir is determined by experience in the area, stage of development, quality and completeness of basic data and production history. The reserve data set forth herein represent
only estimates. Reserve valuation is a subjective process of estimating underground accumulations of crude oil and natural gas that cannot be measured in an exact manner, the accuracy of any reserve
estimate depends on the quality of available data, the engineering and geological interpretation, and judgment. As a result, estimates of different engineers may vary. In addition, results of
drilling, testing and production subsequent to the date of an estimate are among the criteria which may be used to justify revision of such estimate.

F-76

---



The following two tables of oil and gas reserves set forth the PEMEX's official estimates of Mexico's proved reserves at December 31, 2000, 1999 and 1998 in accordance with the
definition of proved reserves under Rule 4-10(a) of Regulation S-X of the Securities Act of 1933.

Crude oil and condensate reserves (including natural gas liquids)(a)

2000

1999

1998(Millions of barrels)Proved developed and undeveloped reservesAt January 1

21,519

21,638

22,410Revisions

(180
)
775

425Extensions and discoveries(b)

91

311

84Production

(1,244
)
(1,205
)
(1,281
)At December 31

20,186

21,519

21,638Proved developed reserves at December 31

12,312

11,414

12,056


---

Note:
Table amounts may not total due to rounding.

Dry gas reserves(a)

2000

1999

1998(Billions of cubic feet)Proved developed and undeveloped reservesAt January 1

18,471

17,054

18,328Revisions

3

2,427

(414
)Extensions and discoveries(a)

58

176

224Production(b)

(1,167
)
(1,186
)
(1,084
)At December 31

17,365

18,471

17,054Proved developed reserves at December 31

9,713

11,127

9,699


---

Note:
Table amounts may not total due to rounding.

Based
on the reservoir performance, new information, and discoveries, proved reserves in accordance with application of the definition of proved reserves under
Rule 4-10(a) of Regulation S-X for all regions as of December 31, 2000 are estimated to be 23,525 million barrels of oil equivalent
(25,071 million barrels of oil equivalent at December 31, 1999 and 24,918 million barrels of oil equivalent at December 31, 1998).

F-77

---

Standardized measure of discounted future net cash flows related to proved oil and gas reserves (unaudited)

The standardized measure tables presented below relate to proved oil and gas reserves (i) after adjusting for the aforementioned reserve revisions in the
Marine, Southern and Northern Regions, and (ii) excluding proved reserves scheduled to be produced after the year 2025.

Estimated
future cash inflows from production are computed by applying average December prices of oil and gas to the year-end quantities. Future development and production
costs are those estimated future expenditures needed to develop and produce the year-end estimated proved reserves, assuming constant year-end economic conditions.

Future
tax expenses are computed by applying the appropriate year-end statutory tax rateswith consideration of the tax rates already legislated for
2000to the future pre-tax net cash flows related to Mexico's proved oil and gas reserves.

In
addition to being subject to the payment of all taxes and contributions set forth by the SHCP (except as indicated below), PEMEX is presently subject to the following special duties:
a hydrocarbon extraction duty, an extraordinary hydrocarbon extraction duty, an additional hydrocarbon extraction duty, a tax on hydrocarbon income and the IEPS tax. These taxes and duties are to be
credited against theDerecho Sobre Hidrocarburos(Hydrocarbon duty), which is calculated by applying a rate of 60.8% to the sales revenue of PEMEX to
third parties (sales revenues are taken to include the IEPS tax generated by the sale of refined products, but not to include VAT). In addition to the payment of the hydrocarbon duty, PEMEX must pay
to the Mexican Government an excess gains tax, which for 2000 was equal to 39.2% on the portion of PEMEX's crude oil export sales revenues in excess of a threshold priceof U.S. $15.00 dollars per
barrel. Since the 2000 prices were higher than U.S. $15.00 dollars per barrel, PEMEX paid excess gains tax. For 2001, the excess gains tax applies to prices in excess of U.S. $18.00 dollars per
barrel. PEMEX is not subject to Income Tax Law (Ley del Impuesto Sobre la Renta) or Asset Tax Law (Ley del Impuesto al
Activo).

The
standardized measure provided below represents a comparative benchmark value rather than an estimate of expected future cash flows or fair market value of PEMEX's production rights.
There are numerous uncertainties inherent in estimating quantities of proved reserves and in projecting future rates of production and timing of development expenditures, including many factors beyond
the control of the producer. Accordingly, reserve estimates may be materially different from the quantities of crude oil and natural gas that are ultimately recovered.

Standardized
measure of discounted net cash flows

|                                                         |  | As of December 31 |             
|-------------------------------------------------------- |  | ----------------- | ------------
|
|Future cash inflows                                      |  | U.S.$             | 452,876,000 
|Future production costs (excluding taxes)                |  |                   | (59,779,000 
|Future development costs                                 |  |                   | (47,456,000 
|                                                         |  |                   |             
|Future cash flows before tax                             |  |                   | 345,641,000 
|Future production-and-excess-gains taxes                 |  |                   | (293,732,000
|Future income taxes                                      |  |                   |            
|                                                         |  |                   |             
|Future net cash flows                                    |  |                   | 51,909,000  
|Effect of discounting net cash flows at 10%              |  |                   | (29,216,000 
|                                                         |  |                   |             
|Standardized measure of discounted future net cash flows |  | U.S.$             | 22,693,000  
|                                                         |  |                   |             

---

Note:
Table amounts may not total due to rounding.

F-78

---

Crude
oil and natural gas prices have decreased approximately 15.7% and 20.3%, respectively, since December 2000, through April 2001. If the standardized measure at
December 31, 2000 had been calculated using crude oil and natural gas prices at April 2001, the standardized measure would have approximated U.S. $19,000,000.

To
comply with SFAS 69, the next table presents the aggregate standardized measure change for each year and significant sources of variance:

Changes in standardized measure of discounted net cash flows

|                                                               |                   | 2000   |             | 1999       |           | 1998        |           
|-------------------------------------------------------------- | ----------------- | ------ | ----------- | ---------- | --------- | ----------- | ----------
|Sales of oil and gas produced, net of production costs         |                   | U.S.$  | (29,919,000 | )          | U.S.$     | (15,603,000 | )         
|Net changes in prices and production costs                     |                   |        | 42,006,000  |            |           | 103,191,000 |           
|Extensions and discoveries                                     |                   |        | 1,060,000   |            |           | 2,876,000   |           
|Development cost incurred during the year                      |                   |        | 5,985,000   |            |           | 4,535,000   |           
|Changes in estimated development costs                         |                   |        | (11,645,000 | )          |           | (6,378,000  | )         
|Reserves revisions, extensions, discoveries and timing changes |                   |        | 11,512,000  |            |           | 10,638,000  |           
|Accretion of discount of pre-tax net cash flows                |                   |        | 13,476,000  |            |           | 3,921,000   |           
|Net changes in production-and excess-gains taxes               |                   |        | (28,196,000 | )          |           | (92,602,000 | )         
|Other                                                          |                   |        |            |            |           |            |           
|                                                               |                   |        |             |            |           |             |           
|Aggregate change in standardized measure                       |                   | U.S.$  | 4,278,000   |            | U.S.$     | 10,579,000  |           
|                                                               |                   |        |             |            |           |             |           
|Standardized measure                                           |                   |        |             |            |           |             |           
|                                                               | As of January 1   |        |             | 18,415,000 |           |             | 7,836,000 
|                                                               | As of December 31 |        |             | 22,693,000 |           |             | 18,415,000
|                                                               |                   |        |             |            |           |             |           
|                                                               |                   | Change |             | U.S.$      | 4,278,000 |             | U.S.$     
|                                                               |                   |        |             |            |           |             |           

---

Note:
Table amounts may not total due to rounding.

In
computing the amounts under each factor of change, the effects of variances in prices and costs are computed before the effects of changes in quantities. Consequently, changes in
reserves are calculated at December prices and costs. The change in computed taxes includes taxes effectively incurred during the year and the change in future tax expense.

F-79

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        UNAUDITED SUPPLEMENTAL CONSOLIDATED FINANCIAL INFORMATION        PREPARED ON A PRICE-LEVEL ADJUSTED BASIS        For the Years Ended December 31, 2000, 1999 and 1998

The unaudited supplementary consolidated price-level adjusted financial information included in the following pages has been prepared pursuant to Rule 3-20 (c) of
Regulation S-X promulgated by the United States Securities and Exchange Commission. Such information is presented for the year ended December 31, 1998 because Mexico was
deemed to be a hyperinflationary economy during this period. At December 31, 2000 and 1999, Mexico was not considered a hyperinflationary economy; however, PEMEX has continued to provide
supplemental price-level adjusted financial information for these subsequent years in lieu of adoption of Mexican GAAP Bulletin B-10.

The supplemental financial information reflects all appropriate U.S. GAAP adjustments and, in the opinion of PEMEX management, all adjustments which are necessary
for a fair presentation of the supplemental price-level adjusted financial information have been included herein. Unless otherwise noted, this financial information has been prepared in a manner
consistent with the historical financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto, presented herein, as of December 31,
2000, 1999 and1998, and for the years then ended.

F-80

---



PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES  UNAUDITED CONSOLIDATED BALANCE SHEETS  AS OF DECEMBER 31, 2000 AND 1999  (in thousands of constant pesos as of December 31, 2000)

|As Restated   |                                                                                               | 2000                                 |                              | 1999       
|------------- | --------------------------------------------------------------------------------------------- | ------------------------------------ | ---------------------------- | -----------
|ASSETS:       |                                                                                               |                                      |                              |            
|              | Current assets:                                                                               |                                      |                              |            
|              |                                                                                               | Cash and cash equivalents            |                              | Ps.        
|              |                                                                                               | Accounts, notes receivable and other |                              |            
|              |                                                                                               | Inventories, net                     |                              |            
|              |                                                                                               |                                      |                              |            
|              |                                                                                               |                                      | Total current assets         |            
|              | Properties, net                                                                               |                                      |                              | 391,661,476
|              | Intangible asset derived from the actuarial computation of labor obligations and other assets |                                      |                              | 71,094,294 
|              |                                                                                               |                                      |                              |            
|              |                                                                                               |                                      | Total assets                 |            
|              |                                                                                               |                                      |                              |            
|LIABILITIES:  |                                                                                               |                                      |                              |            
|              | Current liabilities:                                                                          |                                      |                              |            
|              |                                                                                               | Current portion of long-tem debt     |                              | Ps.        
|              |                                                                                               | Other current liabilities            |                              |            
|              |                                                                                               |                                      |                              |            
|              |                                                                                               |                                      | Total current liabilities    |            
|              | Long-term debt                                                                                |                                      |                              | 104,370,025
|              | Sale of future accounts receivable                                                            |                                      |                              | 51,976,573 
|              | Reserve for retirement payments, pensions and indemnities, sundry creditors and others        |                                      |                              | 186,010,779
|              |                                                                                               |                                      |                              |            
|              |                                                                                               |                                      | Total liabilities            |            
|              |                                                                                               |                                      |                              |            
|TOTAL EQUITY: |                                                                                               |                                      | 127,010,771                  |            
|              |                                                                                               |                                      | Total liabilities and equity |            
|              |                                                                                               |                                      |                              |            

The
accompanying notes are an integral part of this unaudited supplemental consolidated financial information

F-81

---

PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES        UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS        FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998        (In thousands of constant pesos as of December, 31, 2000)

|As Restated                                           |                                          | 2000 |             | 1999        |     | 1998        |            
|----------------------------------------------------- | ---------------------------------------- | ---- | ----------- | ----------- | --- | ----------- | -----------
|Net sales(2)                                          |                                          | Ps.  | 414,430,183 |             | Ps. | 280,497,355 |            
|Other revenues                                        |                                          |      | 9,920,061   |             |     | 8,248,840   |            
|                                                      |                                          |      |             |             |     |             |            
|Total revenues                                        |                                          |      | 424,350,244 |             |     | 288,746,195 |            
|                                                      |                                          |      |             |             |     |             |            
|Cost and operating expenses:                          |                                          |      |             |             |     |             |            
|                                                      | Cost of sales                            |      |             | 175,633,267 |     |             | 131,400,169
|                                                      | Transportation and distribution Expenses |      |             | 13,816,685  |     |             | 12,977,373 
|                                                      | Administrative expenses                  |      |             | 29,510,410  |     |             | 25,573,534 
|                                                      | Financial integral cost, net             |      |             | 1,822,077   |     |             | (3,483,288 
|                                                      | Other expenses                           |      |             | 5,547,662   |     |             | 5,345,552  
|                                                      |                                          |      |             |             |     |             |            
|                                                      | Total costs and operating Expenses       |      |             | 226,330,101 |     |             | 171,813,340
|Income before hydrocarbon Extraction duties and other |                                          |      | 198,020,143 |             |     | 116,932,855 |            
|Hydrocarbon extraction duties and Other               |                                          |      | 233,050,531 |             |     | 137,112,937 |            
|                                                      |                                          |      |             |             |     |             |            
|Loss for the year(1)                                  |                                          | Ps.  | (35,030,388 | )           | Ps. | (20,180,082 | )          
|                                                      |                                          |      |             |             |     |             |            

---

The
accompanying notes are an integral part of this unaudited supplemental consolidated financial information

F-82

---



PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES  UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS  FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998  (In thousands of constant
pesos as of December 31, 2000)

|As Restated                                                                           |                                                             | 2000 |             | 1999        |     | 1998        |            
|------------------------------------------------------------------------------------- | ----------------------------------------------------------- | ---- | ----------- | ----------- | --- | ----------- | -----------
|Operating Activities                                                                  |                                                             |      |             |             |     |             |            
|Net loss                                                                              |                                                             | Ps.  | (35,030,388 | )           | Ps. | (20,180,082 | )          
|Adjustments to reconcile net loss to cash (used in) provided by operating activities: |                                                             |      |             |             |     |             |            
|                                                                                      | Depreciation and amortization                               |      |             | 30,128,742  |     |             | 28,139,030 
|                                                                                      | Reserve for retirement payments, pensions and indemnization |      |             | 37,296,453  |     |             | 34,257,562 
|                                                                                      | Impairment of fixed assets                                  |      |             | 13,504,118  |     |             | 4,040,459  
|                                                                                      | Loss on disposal of fixed assets                            |      |             | 13,828,119  |     |             | 6,099,553  
|                                                                                      | Allowance for uncollectible trade Accounts                  |      |             | 247,250     |     |             | 348,215    
|                                                                                      | Allowance for slow-moving inventory and obsolescence        |      |             | (166,087    | )   |             | 158,759    
|                                                                                      | Foreign exchange loss                                       |      |             | (479,194    | )   |             | (4,136,742 
|                                                                                      | Gain from monetary position                                 |      |             | (8,542,995  | )   |             | (13,670,002
|Changes in operating assets and liabilities:                                          |                                                             |      |             |             |     |             |            
|                                                                                      | Accounts and notes receivable                               |      |             | (9,716,459  | )   |             | (23,724,282
|                                                                                      | Inventories                                                 |      |             | (7,966,927  | )   |             | (4,555,110 
|                                                                                      | Other assets                                                |      |             | (2,196,966  | )   |             | (2,975,328 
|                                                                                      | Accounts payable and accrued Liabilities                    |      |             | 11,272,176  |     |             | 23,733,655 
|                                                                                      | Sales of future accounts receivable                         |      |             | 11,098,786  |     |             | 40,714,920 
|                                                                                      |                                                             |      |             |             |     |             |            
|Cash flows provided by operating activities                                           |                                                             |      | 53,276,628  |             |     | 68,250,607  |            
|                                                                                      |                                                             |      |             |             |     |             |            
|Investing Activities                                                                  |                                                             |      |             |             |     |             |            
|                                                                                      | Loans granted to Pemex Finance                              |      |             | (6,926,132  | )   |             | (6,072,305 
|                                                                                      | Acquisition of fixed assets                                 |      |             | (61,077,184 | )   |             | (44,661,473
|                                                                                      |                                                             |      |             |             |     |             |            
|                                                                                      | Cash flows used in investing activities                     |      |             | (68,003,316 | )   |             | (50,733,778
|                                                                                      |                                                             |      |             |             |     |             |            
|Financing Activities                                                                  |                                                             |      |             |             |     |             |            
|                                                                                      | New long term financing                                     |      |             | 98,675,781  |     |             | 103,823,715
|                                                                                      | Financing payments                                          |      |             | (67,259,689 | )   |             | (96,273,368
|                                                                                      | Dividends paid to the Mexican Government                    |      |             | (6,037,302  | )   |             | (6,083,052 
|                                                                                      |                                                             |      |             |             |     |             |            
|Cash flows provided by financing activities                                           |                                                             |      | 25,378,790  |             |     | 1,467,295   |            
|                                                                                      |                                                             |      |             |             |     |             |            
|Effects of inflation on cash                                                          |                                                             |      | (8,961,130  | )           |     | (10,754,282 | )          
|                                                                                      | (Decrease) increase in cash and equivalents                 |      |             | 1,690,972   |     |             | 8,229,842  
|Cash and cash equivalents, beginning of period                                        |                                                             |      | 26,135,874  |             |     | 17,906,032  |            
|                                                                                      |                                                             |      |             |             |     |             |            
|Cash and cash equivalents, end of Period                                              |                                                             | Ps.  | 27,826,846  |             | Ps. | 26,135,874  |            
|                                                                                      |                                                             |      |             |             |     |             |            

The
accompanying notes are an integral part of this unaudited supplemental consolidated financial information

F-83

---



PETRÓLEOS MEXICANOS, SUBSIDIARY ENTITIES AND SUBSIDIARY COMPANIES  NOTES TO THE UNAUDITED SUPPLEMENTAL CONSOLIDATED FINANCIAL  INFORMATION PREPARED ON A PRICE-LEVEL ADJUSTED BASIS  For the Years Ended
December 31, 2000, 1999 and 1998  (In thousands of constant pesos as of December 31, 2000)

1.    Effects of inflation on the financial information

The following is the methodology utilized in preparing the price-level adjusted financial information.





Year

Change in National Consumer Price Index1998

18.6091
%1999

12.3187
%2000

8.9593
%






F-84

---





2000

1999

1998Interest paid (net of amounts capitalized)

19,953,214

15,696,493

12,575,015Taxes paid

288,474,111

211,557,869

189,414,549




2000

1999

1998Acquisition of fixed assets via contractor Financing

16,152,769



Unrealized gains or (losses) on available for sale securities

(7,440,071
)
3,500,751

2,268,123Additional minimum pension liability

12,157,930

8,389,688

17,841,806


F-85

---

2.    Segment information

The following segment information is prepared on a price level adjusted basis.

|Year ended
December 31:
2000 |              | Exploration and
Production |             | Refining(1) |     | Gas and Basic
Petrochemicals |             | Petrochemicals |            | Corporate and
other |     | Intersegment
Eliminations |            | Total
|---------------------------- | ------------ | -------------------------- | ----------- | ----------- | --- | ---------------------------- | ----------- | -------------- | ---------- | ------------------- | --- | ------------------------- | ---------- | -----
|Sales:                       |              |                            |             |             |     |                              |             |                |            |                     |     |                           |            |      
|                             | Trade        |                            | Ps.         | 142,743,860 |     | Ps.                          | 239,135,109 |                | Ps.        | 66,476,852          |     | Ps.                       | 12,663,535 |      
|                             | Intersegment |                            |             | 181,764,441 |     |                              | 9,978,368   |                |            | 26,919,583          |     |                           | 2,827,201  |      
|                             |              |                            |             |             |     |                              |             |                |            |                     |     |                           |            |      
|Total net sales              |              | Ps.                        | 324,508,301 |             | Ps. | 249,113,477                  |             | Ps.            | 93,396,435 |                     | Ps. | 15,490,736                |            | Ps.  
|                             |              |                            |             |             |     |                              |             |                |            |                     |     |                           |            |      

|Year ended
December 31:
1999 |              | Exploration and
Production |             | Refining(1) |     | Gas and Basic
Petrochemicals |             | Petrochemicals |            | Corporate and
other |     | Intersegment
Eliminations |            | Total
|---------------------------- | ------------ | -------------------------- | ----------- | ----------- | --- | ---------------------------- | ----------- | -------------- | ---------- | ------------------- | --- | ------------------------- | ---------- | -----
|Sales:                       |              |                            |             |             |     |                              |             |                |            |                     |     |                           |            |      
|                             | Trade        |                            | Ps.         | 95,183,021  |     | Ps.                          | 213,256,322 |                | Ps.        | 44,026,822          |     | Ps.                       | 11,500,764 |      
|                             | Intersegment |                            |             | 105,023,528 |     |                              | 7,624,672   |                |            | 15,817,788          |     |                           | 2,196,717  |      
|                             |              |                            |             |             |     |                              |             |                |            |                     |     |                           |            |      
|Total net sales              |              | Ps.                        | 200,206,549 |             | Ps. | 220,880,994                  |             | Ps.            | 59,844,610 |                     | Ps. | 13,697,481                |            | Ps.  
|                             |              |                            |             |             |     |                              |             |                |            |                     |     |                           |            |      

|Year ended
December 31:
1998 |              | Exploration and
Production |             | Refining(1) |     | Gas and Basic
Petrochemicals |             | Petrochemicals |            | Corporate and
other |     | Intersegment
Eliminations |            | Total
|---------------------------- | ------------ | -------------------------- | ----------- | ----------- | --- | ---------------------------- | ----------- | -------------- | ---------- | ------------------- | --- | ------------------------- | ---------- | -----
|Sales:                       |              |                            |             |             |     |                              |             |                |            |                     |     |                           |            |      
|                             | Trade        |                            | Ps.         | 77,265,269  |     | Ps.                          | 195,146,476 |                | Ps.        | 44,165,588          |     | Ps.                       | 13,940,981 |      
|                             | Intersegment |                            |             | 95,127,639  |     |                              | 8,918,618   |                |            | 18,138,241          |     |                           | 2,481,277  |      
|                             |              |                            |             |             |     |                              |             |                |            |                     |     |                           |            |      
|Total net sales              |              | Ps.                        | 172,392,908 |             | Ps. | 204,065,094                  |             | Ps.            | 62,303,829 |                     | Ps. | 16,422,259                |            | Ps.  
|                             |              |                            |             |             |     |                              |             |                |            |                     |     |                           |            |      

---

3.    Financial integral result

Financial integral result is analyzed as follows:

|                         |       | 2000 |            | 1999      |     | 1998        |           
|------------------------ | ----- | ---- | ---------- | --------- | --- | ----------- | ----------
|Exchange loss            |       | Ps.  | (479,194   | )         | Ps. | (3,489,172  | )         
|Monetary position Result |       |      | (8,542,995 | )         |     | (13,670,002 | )         
|Interest cost and other  |       |      | 10,844,266 |           |     | 13,675,886  |           
|                         |       |      |            |           |     |             |           
|                         | Total |      | Ps.        | 1,822,077 |     | Ps.         | (3,483,288

F-86

---



APPENDIX        Reports of Other Independent Accountants

F/A-1

---

GRAPHIC

Report of Independent Accountants

To
the Board of Directors of
Integrated Trade Systems, Inc.:

In
our opinion, the accompanying balance sheet and the related statements of operations, stockholder's equity and cash flows present fairly, in all material respects, the financial
position of Integrated Trade Systems, Inc. (the "Company") as of December 31, 2000 and 1999, and the results of its operations and its cash flows for the years then ended, in conformity
with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America which
require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.

|/s/ PRICEWATERHOUSECOOPERS LLPPricewaterhouseCoopers LLP |  | 
|-------------------------------------------------------- |  | 

March 23,
2001

F/A-2

---

GRAPHIC

Report of Independent Accountants

To
the Board of Directors of
Integrated Trade Systems, Inc.

In
our opinion, the accompanying balance sheets and the related statements of operations, stockholder's equity and cash flows present fairly, in all material respects, the financial
position of Integrated Trade Systems, Inc. as of December 31, 1998 and 1997, and the results of its operations and its cash flows for the years then ended, in conformity with generally
accepted accounting principles in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for the opinion expressed above.

|/s/ PRICEWATERHOUSECOOPERS LLPPricewaterhouseCoopers LLP |  | 
|-------------------------------------------------------- |  | 

Houston,
Texas
March 12, 1999

F/A-3

---

GRAPHIC

REPORT OF THE INDEPENDENT ACCOUNTANT(Translated from the original issued in Spanish)

Mexico
City, March 30, 2001

To
the Stockholders' Meeting of
P.M.I. Trading Limited Mexican Branch:

We
have audited the accompanying balance sheets of P.M.I. Trading Limited Mexican Branch, as of December 31, 2000 and 1999, and the related statements of income and
expenses, changes in equity and changes in financial position for the years then ended. These financial statements are the responsibility of the Branch's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement and are prepared in accordance with accounting principles generally accepted in Mexico. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

The
Mexican Branch carries out its transactions in foreign currencies and its Parent Company is also located abroad. The accounting policies applied are described in Note 2 to the
financial statements. In
view of the foregoing, it is not required to recognize the impact of inflation in Mexico on these financial statements.

As
mentioned in Notes 2.1 and 8 to the financial statements, starting January 1, 2000, the Branch adopted the guidelines of the new Bulletin D-4 "Accounting Treatment
of Income Tax, Assets Tax and Employee Statutory Profit-Sharing".

In
our opinion, the aforementioned financial statements, stated in Mexican pesos, present fairly, in all material respects, the assets, liabilities and equity accounts assigned
(Note 1 to the financial statements) to P.M.I. Trading Limited Mexican Branch, as of December 31, 2000 and 1999, and the income and expenses, changes in equity and changes in
financial position for the years then ended, in conformity with accounting principles generally accepted in Mexico.

PricewaterhouseCoopers

|/s/ MANUEL GARCIA BRAÑAManuel Garcia Braña
Public Accountant |  | 
|------------------------------------------------------------ |  | 

F/A-4

---

GRAPHIC

REPORT OF THE INDEPENDENT ACCOUNTANT(Translated from the original issued in Spanish)

Mexico
City, March 25, 1999

To
the Stockholders' Meeting of
P.M.I. Trading Limited Mexican Branch:

We
have audited the accompanying balance sheets of P.M.I. Trading Limited Mexican Branch, as of December 31, 1998 and 1997, and the related statements of income and
expenses, changes in equity and changes in financial position for the years then ended. These financial statements are the responsibility of the Branch's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement and are prepared in accordance with accounting principles generally accepted in Mexico. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

The
Mexican Branch carries out its transactions in foreign currencies and its Parent Company is also located abroad. The accounting policies applied are described in Note 2 to the
financial statements. In
view of the foregoing, it is not required to recognize the impact of inflation in Mexico on these financial statements.

In
our opinion, the aforementioned financial statements, stated in Mexican pesos, present fairly, in all material respects, the assets, liabilities and equity accounts assigned
(Note 1 to the financial statements) to P.M.I. Trading Limited Mexican Branch, as of December 31, 1998 and 1997, and the income and expenses, changes in equity and changes in
financial position for the years then ended, in conformity with accounting principles generally accepted in Mexico.

PricewaterhouseCoopers

|/s/ MANUEL GARCIA BRAÑAManuel Garcia Braña
Public Accountant |  | 
|------------------------------------------------------------ |  | 

F/A-5

---



GRAPHIC

Report of Independent Accountants

To
the Board of Directors of
P.M.I. Holdings North America, Inc.

In
our opinion, the accompanying balance sheet and the related statements of income, stockholder's equity and cash flows present fairly, in all material respects, the financial position
of P.M.I. Holdings North America, Inc. as of December 31, 2000 and 1999, and the results of its operations and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America which require that
we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.

Our
audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of operating and general expenses for the
years ended December 31, 2000 and 1999 on page 6 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such supplemental information has
been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial
statements taken as a whole.

|/s/ PRICEWATERHOUSECOOPERS LLPPricewaterhouseCoopers LLP |  | 
|-------------------------------------------------------- |  | 

February 2,
2001

F/A-6

---

GRAPHIC

Report of Independent Accountants

Board
of Directors
P.M.I. Holdings North America, Inc.

In
our opinion, the accompanying balance sheet and the related statements of income, changes in stockholder's equity and cash flows present fairly, in all material respects, the
financial position of P.M.I. Holdings North America, Inc. as of December 31, 1998 and 1997 and the results of its operations and its cash flows for the years then ended, in
conformity with the generally accepted accounting principles in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed above.

Our
audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of operating and general expenses for the
years ended December 31, 1998 and 1997 on page 11 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such supplemental information
has been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial
statements taken as a whole.

|/s/ PRICEWATERHOUSECOOPERS LLPPricewaterhouseCoopers LLP |  | 
|-------------------------------------------------------- |  | 

Houston,
Texas
January 29, 1999

F/A-7

---

GRAPHIC

To
the Management and the
Shareholder of
P.M.I. Holdings N.V.
Curaçao

Auditor's report

We have audited the accompanying balance sheet of P.M.I. Holdings N.V., Curaçao, as at December 31, 2000 and the related statements
of income, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We
conducted our audit in accordance with United States Generally Accepted Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.

In
our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2000, and of the results of its
operations and its cash flows for the year then ended in accordance with International Accounting Standards.

Curaçao,
March 22, 2001

|/s/ PRICEWATERHOUSECOOPERSPricewaterhouseCoopers |  | 
|------------------------------------------------ |  | 

F/A-8

---

GRAPHIC

To
the Management and the
Shareholder of
P.M.I. Holdings N.V.
Curaçao

Auditor's report

We have audited the accompanying balance sheet of P.M.I. Holdings N.V., Curaçao, as at December 31, 1999 and the related statements
of income, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We
conducted our audit in accordance with United States Generally Accepted Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.

In
our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 1999, and of the results of its
operations and its cash flows for the year then ended in accordance with International Accounting Standards.

Curaçao,
March 17, 2000

|/s/ PRICEWATERHOUSECOOPERSPricewaterhouseCoopers |  | 
|------------------------------------------------ |  | 

F/A-9

---

GRAPHIC

To
the Management and the
Shareholder of
P.M.I. Holdings N.V.
Curaçao

Auditor's report

We have audited the accompanying consolidated balance sheet of P.M.I. Holdings N.V. as at December 31, 1998 and the related consolidated statements
of income, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.

We
conducted our audit in accordance with United States Generally Accepted Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 1998, and of the
consolidated results of its operations and cash flows for the year then ended in accordance with International Accounting Standards.

Curaçao,
May 4, 1999

|/s/ PRICEWATERHOUSECOOPERSPricewaterhouseCoopers |  | 
|------------------------------------------------ |  | 

F/A-10

---

GRAPHIC

To
the Board of Directors and the Shareholder of
P.M.I. Holdings B.V., Amsterdam

Auditors' report

Introduction

In accordance with your instructions we have audited the financial statements of P.M.I. Holdings B.V., Amsterdam, for the year ended December 31,
2000. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

Scope

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of
the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the company as at December 31, 2000 and of the result for
the year then ended in accordance with accounting principles generally accepted in the Netherlands and comply with the financial reporting requirements included in part 2, Book 2 of the
Netherlands Civil Code.

Amsterdam,
April 17, 2001

|/s/ PRICEWATERHOUSECOOPERS N.V.PricewaterhouseCoopers N.V. |  | 
|---------------------------------------------------------- |  | 

F/A-11

---

GRAPHIC

To
the Board of Directors and the Shareholder of
P.M.I. Holdings B.V., Amsterdam

Auditors' report

Introduction

In accordance with your instructions we have audited the financial statements of P.M.I. Holdings B.V., Amsterdam, for the year ended December 31,
1999. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

Scope

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of
the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the company as at December 31, 1999 and of the result for
the year then ended in accordance with accounting principles generally accepted in the Netherlands and comply with the financial reporting requirements included in part 2, Book 2 of the
Netherlands Civil Code.

Amsterdam,
May 10, 2000

|/s/ PRICEWATERHOUSECOOPERS N.V.PricewaterhouseCoopers N.V. |  | 
|---------------------------------------------------------- |  | 

F/A-12

---

GRAPHIC

To
the Board of Directors and the Shareholder of
P.M.I. Holdings B.V., Amsterdam

Auditors' report

Introduction

In accordance with your instructions we have audited the financial statements of P.M.I. Holdings B.V., Amsterdam, for the year ended December 31,
1998. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

Scope

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of
the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the company as at December 31, 1998 and of the result for
the year then ended in accordance with accounting principles generally accepted in the Netherlands and comply with the financial reporting requirements included in part 2, Book 2 of the
Netherlands Civil Code.

Amsterdam,
March 24, 1999

|/s/ PRICEWATERHOUSECOOPERS N.V.PricewaterhouseCoopers N.V. |  | 
|---------------------------------------------------------- |  | 

F/A-13

---

GRAPHIC

REPORT OF THE INDEPENDENT ACCOUNTANT(Translated from the original issued in Spanish)

Mexico
City, March 23, 2001

To
the Stockholders' Meeting of
P.M.I. Norteamérica, S.A. de C.V.:

We
have audited the accompanying balance sheets of P.M.I. Norteamérica, S.A. de C.V., as of December 31, 2000 and 1999, and the related statements of income,
changes in stockholders' equity and changes in financial position for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement and are prepared in accordance with accounting principles generally accepted in Mexico. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

The
Company carries out its transactions in foreign currencies and its activity is in the United States of America. The accounting policies applied are described in Note 2 to the
financial statements. In view of
the foregoing, it is not required to recognize the impact of inflation in Mexico on these financial statements.

As
mentioned in Note 2g to the financial statements, starting January 1, 2000, the Company adopted the guidelines of the new Bulletin D-4 "Accounting Treatment
of Income Tax, Assets Tax and Employee Statutory Profit-Sharing".

In
our opinion, the aforementioned financial statements, stated in Mexican pesos, present fairly, in all material respects, the financial position of P.M.I.
Norteamérica, S. A. de C. V., as of December 31, 2000 and 1999, and the results of its operations, changes in stockholders' equity and changes in financial position for the years
then ended, in conformity with accounting principles generally accepted in Mexico.

PricewaterhouseCoopers

|/s/ MANUEL GARCIA BRAÑAManuel Garcia Braña
Public Accountant |  | 
|------------------------------------------------------------ |  | 

F/A-14

---

GRAPHIC

REPORT OF THE INDEPENDENT ACCOUNTANT(Translated from the original issued in Spanish)

Mexico
City, March 19, 1999

To
the Stockholders' Meeting of
P.M.I. Norteamérica, S.A. de C.V.:

We
have audited the accompanying balance sheets of P.M.I. Norteamérica, S.A. de C.V., as of December 31, 1998 and 1997, and the related statements of income,
changes in stockholders' equity and changes in financial position for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement and are prepared in accordance with accounting principles generally accepted in Mexico. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

The
Company carries out its transactions in foreign currencies and its activity is in the United States of America. The accounting policies applied are described in Note 2 to the
financial statements. In view of
the foregoing, it is not required to recognize the impact of inflation in Mexico on these financial statements.

In
our opinion, the aforementioned financial statements, stated in Mexican pesos, present fairly, in all material respects, the financial position of P.M.I.
Norteamérica, S. A. de C. V., as of December 31, 1998 and 1997, and the results of its operations, changes in stockholders' equity and changes in financial position for the years
then ended, in conformity with accounting principles generally accepted in Mexico.

PricewaterhouseCoopers

|/s/ FRANCISCO J. HERNANDEZ F.Francisco J. Hernández F.
Public Accountant |  | 
|------------------------------------------------------------------------ |  | 

F/A-15

---

GRAPHIC

REPORT OF THE INDEPENDENT ACCOUNTANT(Translated from the original issued in Spanish)

Mexico
City, March 5, 2001

To
the Stockholders' Meeting of
P.M.I. Marine Limited Mexican Branch:

We
have audited the accompanying balance sheets of P.M.I. Marine Limited Mexican Branch, as of December 31, 2000 and 1999, and the related statements of income and
expenses, changes in equity and changes in financial position for the years then ended. These financial statements are the responsibility of the Branch's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement and are prepared in accordance with accounting principles generally accepted in Mexico. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

The
Mexican Branch carries out its transactions in foreign currencies and its Parent Company is also located abroad. The accounting policies applied are described in Note 2 to the
financial statements. In
view of the foregoing, it is not required to recognize the impact of inflation in Mexico on these financial statements.

As
mentioned in Notes 2g and 7 to the financial statements, starting January 1, 2000, the Branch adopted the guidelines of the new Bulletin D-4 "Accounting Treatment
of Income Tax, Assets Tax and Employee Statutory Profit-Sharing".

In
our opinion, the aforementioned financial statements, stated in Mexican pesos, present fairly, in all material respects, the assets, liabilities and equity accounts assigned
(Note 1 to the financial statements) to P.M.I. Marine Limited Mexican Branch, as of December 31, 2000 and 1999, and the income and expenses, changes in equity and changes in
financial position for the years then ended, in conformity with accounting principles generally accepted in Mexico.

PricewaterhouseCoopers

|/s/ MANUEL GARCIA BRAÑAManuel Garcia Braña
Public Accountant |  | 
|------------------------------------------------------------ |  | 

F/A-16

---

GRAPHIC

REPORT OF THE INDEPENDENT ACCOUNTANT(Translated from the original issued in Spanish)

Mexico
City, March 5, 1999

To
the Stockholders' Meeting of
P.M.I. Marine Limited Mexican Branch:

We
have audited the accompanying balance sheets of P.M.I. Marine Limited Mexican Branch, as of December 31, 1998 and 1997, and the related statements of income and
expenses, changes in equity and changes in financial position for the years then ended. These financial statements are the responsibility of the Branch's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement and are prepared in accordance with accounting principles generally accepted in Mexico. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

The
Mexican Branch carries out its transactions in foreign currencies and its Parent Company is also located abroad. The accounting policies applied are described in Note 2 to the
financial statements. In
view of the foregoing, it is not required to recognize the impact of inflation in Mexico on these financial statements.

In
our opinion, the aforementioned financial statements, stated in Mexican pesos, present fairly, in all material respects, the assets, liabilities and equity accounts assigned
(Note 1 to the financial statements) to P.M.I. Marine Limited Mexican Branch, as of December 31, 1998 and 1997, and the income and expenses, changes in equity and changes in
financial position for the years then ended, in conformity with accounting principles generally accepted in Mexico.

PricewaterhouseCoopers

|/s/ MANUEL GARCIA BRAÑAManuel Garcia Braña
Public Accountant |  | 
|------------------------------------------------------------ |  | 

F/A-17

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GRAPHIC

To
the Board of Directors and the Shareholder of
P.M.I. Services B.V., Amsterdam

Auditors' report

Introduction

In accordance with your instructions we have audited the financial statements of P.M.I. Services B.V., Amsterdam, for the year ended December 31,
2000. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

Scope

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of
the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the company as at December 31, 2000 and of the result for
the year then ended in accordance with accounting principles generally accepted in the Netherlands and comply with the financial reporting requirements included in part 2, Book 2 of the
Netherlands Civil Code.

Amsterdam,
March 21, 2001

|/s/ PRICEWATERHOUSECOOPERS N.V.PricewaterhouseCoopers N.V. |  | 
|---------------------------------------------------------- |  | 

F/A-18

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GRAPHIC

To
the Board of Directors and the Shareholder of
P.M.I. Services B.V., Amsterdam

Auditors' report

Introduction

In accordance with your instructions we have audited the financial statements of P.M.I. Services B.V., Amsterdam, for the year ended December 31,
1999. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

Scope

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of
the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the company as at December 31, 1999 and of the result for
the year then ended in accordance with accounting principles generally accepted in the Netherlands and comply with the financial reporting requirements included in part 2, Book 2 of the
Netherlands Civil Code.

Amsterdam,
March 28, 2000

|/s/ PRICEWATERHOUSECOOPERS N.V.PricewaterhouseCoopers N.V. |  | 
|---------------------------------------------------------- |  | 

F/A-19

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GRAPHIC

To
the Board of Directors and the Shareholder of
P.M.I. Services B.V., Amsterdam

Auditors' report

Introduction

In accordance with your instructions we have audited the financial statements of P.M.I. Services B.V., Amsterdam, for the year ended December 31,
1998. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

Scope

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of
the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the company as at December 31, 1998 and of the result for
the year then ended in accordance with accounting principles generally accepted in the Netherlands and comply with the financial reporting requirements included in part 2, Book 2 of the
Netherlands Civil Code.

Amsterdam,
March 19, 1999

|/s/ PRICEWATERHOUSECOOPERS N.V.PricewaterhouseCoopers N.V. |  | 
|---------------------------------------------------------- |  | 

F/A-20

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GRAPHIC

Report of Independent Accountants

To
the Board of Directors of
P.M.I. Services North America, Inc.

In
our opinion, the accompanying balance sheet and the related statements of income, stockholder's equity and cash flows present fairly, in all material respects, the financial position
of P.M.I. Services North America, Inc. as of December 31, 2000 and 1999, and the results of its operations and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America which require that
we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.

Our
audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of operating and general expenses for the
years ended December 31, 2000 and 1999 on page 7 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such supplemental information has
been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects, in relation to the basic financial
statements taken as a whole.

|/s/ PRICEWATERHOUSECOOPERS LLPPricewaterhouseCoopers LLP |  | 
|-------------------------------------------------------- |  | 

February 2,
2001

F/A-21

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GRAPHIC

Report of Independent Accountants

Board
of Directors of
P.M.I. Services North America, Inc.:

In
our opinion, the accompanying balance sheet and the related statements of income, stockholder's equity and cash flows present fairly, in all material respects, the financial position
of P.M.I. Services North America, Inc. as of December 31, 1998 and 1997, and the results of its operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for the opinion expressed above.

Our
audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of operating and general expenses for the
years ended December 31, 1998 and 1997 on page 11 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such supplemental information
has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects, in relation to the basic financial
statements taken as a whole.

|/s/ PRICEWATERHOUSECOOPERS LLPPricewaterhouseCoopers LLP |  | 
|-------------------------------------------------------- |  | 

Houston,
Texas
January 29, 1999

F/A-22

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GRAPHIC

February 25,
2000

Auditors' Report

To the Shareholder of
Kot Insurance Company Ltd.

We have audited the balance sheet ofKot Insurance Company Ltd.as at December 31, 1999 and the
statements of earnings and retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We
conducted our audit in accordance with auditing standards generally accepted in Bermuda and Canada, which are substantially similar to auditing standards generally accepted in the
United States of America. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation.

In
our opinion, these financial statements present fairly, in all material respects, the financial position of the company as at December 31, 1999 and the results of its
operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in Bermuda and Canada.

|/s/ PRICEWATERHOUSECOOPERSPricewaterhouseCoopers |  | 
|------------------------------------------------ |  | 

Chartered
Accountants

MAILING
ADDRESS: PO BOX HM 1171, Hamilton, Bermuda HM EX.

A
list of partners can be obtained from the above address

F/A-23

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GRAPHIC

March 4,
1999

Auditors' Report

To the Shareholder of
Kot Insurance Company Ltd.

We have audited the balance sheet ofKot Insurance Company Ltd.as at December 31, 1998 and the
statements of earnings and retained earnings and changes in financial position for the year then ended. These financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on our audit.

We
conducted our audit in accordance with auditing standards generally accepted in Bermuda and Canada. Those standards require that we plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In
our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 1998 and the results of its
operations and its changes in financial position for the year then ended in accordance with accounting principles generally accepted in Bermuda and Canada.

|/s/ PRICEWATERHOUSECOOPERSPricewaterhouseCoopers |  | 
|------------------------------------------------ |  | 

Chartered
Accountants

MAILING
ADDRESS: PO BOX HM 1171, Hamilton, Bermuda HM EX.

A
list of partners can be obtained from the above address

F/A-24

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